UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form

20-F

☐	REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934

☑	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended March 31, ~~2020~~2023

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from/to

☐	SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Date of event requiring this shell company report:

Commission file number

1-6439

Sony Group Kabushiki Kaisha

(Exact Name of Registrant as specified in its charter)

SONY GROUP CORPORATION

(Translation of Registrant’s name into English)

Japan

(Jurisdiction of incorporation or organization)

7-1, KONAN 1-CHOME

MINATO-KU

TOKYO

108-0075

JAPAN

(Address of principal executive offices)

J. Justin Hill, Senior Vice President, Finance & Investor Relations

Sony Corporation of America

25 Madison Avenue, 26

Floor

New YorkNY

New York

10010-8601

Telephone:

~~212-833-6722~~

212

-833-6722

E-mail:

ir@sony.com

(Name, Telephone,

E-mail

and Address of Company Contact Person)

Securities registered or to be registered pursuant to Section 12(b) of the Act:

*	American Depositary Shares evidenced by American Depositary Receipts. Each American Depositary Share represents one share of Common Stock.

**	No par value per share. ~~Not~~Not for trading, but only in connection with the listing of American Depositary Shares pursuant to the requirements of the New York Stock Exchange.

Securities registered or to be registered pursuant to Section 12(g) of the Act:

None

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:

None

Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the Annual Report:


	Outstanding as of
	March 31, ~~2020~~2023		March 31, ~~2020~~2023
Title of Class	(Tokyo Time)		(New York Time)
Common Stock		~~1,220,159,940~~ 1,234,497,560
American Depositary Shares				~~114,612,168~~117,871,924

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes

☑

☑ No

☐

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. Yes ☐

☐No

☑

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes

☑

☑ No

☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation

S-T

during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes

☑

☑ No

☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a

non-accelerated

filer, or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer” and “emerging growth company” in Rule

12b-2

of the Exchange Act.


☑ Large accelerated filer		☐ Accelerated filer		☐ Non-accelerated ~~Accelerated~~ filer		☐ ~~Non-accelerated~~ ~~filer~~		☐ Emerging growth company

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section

13(a) of the Exchange Act.

☐

† The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☑

☑If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:


US GAAP ☑ ☐		International Financial Reporting Standards as issued by the International Accounting Standards Board ☐☑			Other ☐

If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow.


Item 17 ☐
~~Item 17~~ ☐						Item 18 ☐

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule

12b-2

of the Exchange Act).


Yes ☐
~~Yes~~ ☐						No ☑

Table of Contents

Cautionary Statement

Statements made in this document 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. 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 network platforms, smartphones and televisions, which are offered in highly competitive markets characterized by severe price competition and continual new product and service introductions, 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 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, 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 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 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, 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 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 against claims that its products or services infringe the intellectual property rights owned by others;

~~Table of Contents~~

(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 and operating income of the Financial Services segment;

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Table of Contents

(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, geopolitical conflicts, 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 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 developments relating to the ~~Coronavirus Disease 2019~~

~~(“COVID-19”)~~

situation in Ukraine and Russia could heighten many of the risks and uncertainties noted above.

Important information regarding risks and uncertainties is also set forth elsewhere in this annual report, including in “Risk Factors” under “Item 3.

Key Information

,” “Item 4.

Information on the Company

,” “Item 5.

Operating and Financial Review and Prospects

,” “Legal Proceedings” included in “Item 8.

Financial Information

,” Sony’s consolidated financial statements referenced in “Item 8.

Financial Information

” and “Item 11.

Quantitative and Qualitative Disclosures about Market Risk

.”

In this document, Sony Group Corporation and its consolidated subsidiaries are together referred to as “Sony” or “Sony Group.” In addition, ~~sales~~“Sales and ~~operating revenue~~financial services revenue” are referred to as “sales” in the narrative description except in the consolidated financial statements.

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Table of Contents

TABLE OF CONTENTS


Item 1. Identity of Directors, Senior Management and Advisers			6
Item 2. Offer Statistics and Expected Timetable			6
Item 3. Key Information			6
A. ~~Selected Financial Data~~[Reserved]			6
B. Capitalization and Indebtedness			6
C. Reasons for the Offer and Use of Proceeds			6
D. Risk Factors			7 6
Item 4.Information on the Company			18 17
A. History and Development of the Company			18 17
B. Business Overview			20
C. Organizational Structure			29 35
D. Property, Plant and Equipment			30 35
Item 4A.Unresolved Staff Comments			31 37
Item 5. Operating and Financial Review and Prospects			31 37
A. Operating Results			31 37
B. Liquidity and Capital Resources			50
C. Research and Development			51 52
D. Trend Information			52 53
E. ~~Off-balance Sheet Arrangements~~			57
~~F. Contractual Obligations, Commitments, and Contingent Liabilities~~			58
Critical Accounting ~~Policies and~~ Estimates			59
~~Recently Adopted Accounting Standards~~			65
~~Recent Accounting Pronouncements~~			65 58
Item 6. Directors, Senior Management and Employees			66 61
A. Directors and Senior Management			66 61
B. Compensation			71 66
C. Board Practices			76 73
D. Employees			85 84
E. Share Ownership			86
Item 7.Major Shareholders and Related Party Transactions			86
A. Major Shareholders			86
B. Related Party Transactions			87
C. Interests of Experts and Counsel			87
Item 8.Financial Information			87
A. Consolidated Statements and Other Financial Information			87
Legal Proceedings			87
Dividend Policy			88 87
B. Significant Changes			88
Item 9.The Offer and Listing			88
A. Offer and Listing Details			88
B. Plan of Distribution			89 88
C. Markets			89 88
D. Selling Shareholders			89 88
E. Dilution			89 88
F. Expenses of the Issue			89 88
Item 10. Additional Information			89 88
A. Share Capital			89 88
B. Memorandum and Articles of Association			89 88
C. Material Contracts			97
D. Exchange Controls			97
E. Taxation			101
F. Dividends and Paying ~~Agent~~Agents			104
G. Statement by Experts			104
H. Documents on Display			104
I. Subsidiary Information			104
~~104~~J. Annual Report to Security Holders			104
Item 11.Quantitative and Qualitative Disclosures about Market Risk			104
Item 12.Description of Securities Other Than Equity Securities			~~106~~ 104
A. Debt Securities			~~106~~

~~Table of Contents~~

			104
B. Warrants and Rights			~~106~~ 104
C. Other Securities			~~106~~ 104
D. American Depositary Shares			~~106~~ 104

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Table of Contents


Item 13.Defaults, Dividend Arrearages and Delinquencies			~~108~~ 106
Item 14.Material Modifications to the Rights of Security Holders and Use of Proceeds			~~108~~ 106
Item 15.Controls and Procedures			~~108~~ 106
Item 16. ~~[Reserved]~~[Reserved]			~~109~~ 107
Item 16A.Audit Committee Financial Expert			~~109~~ 107
Item 16B.Code of Ethics			~~109~~ 107
Item 16C.Principal Accountant Fees and Services			~~110~~ 108
Audit and Non-Audit Fees			~~110~~ 108
Audit Committee’s Pre-Approval Policies and Procedures			~~110~~ 108
Item 16D.Exemptions from the Listing Standards for Audit Committees			~~111~~ 108
Item 16E.Purchases of Equity Securities by the Issuer and Affiliated Purchasers			~~111~~ 109
Item 16F.Change in Registrant’s Certifying Accountant			~~112~~ 110
Item 16G. ~~Disclosure About Differences in~~ Corporate Governance			~~113~~ 111
Item 16H. Mine Safety Disclosure			116
~~118~~Item 16I. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections			116
Item 17.Financial Statements			~~118~~ 116
Item 18.Financial Statements			~~118~~ 116
Item 19.Exhibits			~~119~~ 117
Signatures			~~120~~ 118

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Table of Contents

Item 1.

Identity of Directors, Senior Management and Advisers

Not Applicable

Item 2.

Offer Statistics and Expected Timetable

Not Applicable

Item 3.

Key Information

A.	~~Selected Financial Data~~

Fiscal year ended March 31

2016

2017

2018

2019

2020

(Yen in millions, yen per share amounts)

Income statement data:

Sales and operating revenue

8,105,712

7,603,250

8,543,982

8,665,687

8,259,885

Equity in net income (loss) of affiliated companies

2,238

3,563

8,569

(2,999
)
9,637

Operating income

294,197

288,702

734,860

894,235

845,459

Income before income taxes

304,504

251,619

699,049

1,011,648

799,450

Income taxes

94,789

124,058

151,770

45,098

177,190

Net income attributable to Sony Corporation’s stockholders

147,791

73,289

490,794

916,271

582,191

Comprehensive income (loss)

(44,915
)
143,652

553,220

995,542

666,032

Data per share of Common Stock:

Net income attributable to Sony Corporation’s stockholders*

— Basic

119.40

58.07

388.32

723.41

471.64

— Diluted

117.49

56.89

379.75

707.74

461.23

Cash dividends declared Interim

10.00

10.00

12.50

15.00

20.00

(8.09 cents
)
(8.79 cents
)
(11.11 cents
)
(13.18 cents
)
(18.38 cents
)
Cash dividends declared Fiscal
year-end

10.00

10.00

15.00

20.00

25.00

(9.01 cents
)
(9.13 cents
)
(13.75 cents
)
(18.28 cents
)
(22.76 cents
)
Balance sheet data:

Sony Corporation’s stockholders’ equity

2,463,340

2,497,246

2,967,366

3,746,377

4,125,306

Common stock

858,867

860,645

865,678

874,291

880,214

Net assets

3,124,410

3,135,422

3,647,157

4,436,690

4,789,535

Total assets**

16,673,390

17,660,556

19,065,538

20,981,586

23,039,343

Number of shares issued at fiscal
year-end
(thousands of shares of common stock)

1,262,494

1,263,764

1,266,552

1,271,230

1,261,059

Sony Corporation’s stockholders’ equity per share of common stock

1,952.79

1,977.72

2,344.96

2,995.31

3,380.96

A.	[Reserved]

* Refer to Note 23 of the consolidated financial statements.

** As of April 1, 2019, Sony adopted Accounting Standards Update (“ASU”)

~~2016-02,~~

~~which amends leasing guidance. Sony adopted the ASU on a modified retrospective basis with no restatement of comparative periods. Refer to Note 2 of the consolidated financial statements.~~

B.	Capitalization and Indebtedness

Not Applicable

C.	Reasons for the Offer and Use of Proceeds

Not Applicable

~~Table of Contents~~

D.	Risk Factors

This section contains forward-looking statements that are subject to the Cautionary Statement appearing on page 2 of this annual report. Risks to Sony are also discussed elsewhere in this annual ~~report, including, without limitation in the other sections of this annual report referred to in the Cautionary Statement.~~report.

~~The coronavirus disease 2019~~

~~(COVID-19)~~

~~pandemic has adversely affected, and is expected to continue to adversely affect, Sony’s business operations, operating results and financial condition.~~

The COVID-19 pandemic is adversely affecting the production, development, sale and distribution of the products and services in each of Sony’s business segments, and this negative impact is expected to continue in the future. For example, in the Game & Network Services (“G&NS”) segment, there has been an adverse impact on the production of hardware due to issues in the component supply chain. In the Music segment, CDs and other packaged media sales are decreasing due to restrictions on going outside, and ticket, merchandising and video revenues are decreasing as concerts and other events are being postponed and cancelled in Japan and other areas. In the Pictures segment, box office revenue has been impacted by the closure of movie theaters around the world, and Sony generally has not been able to release its already completed titles in theaters. In the Electronics Products & Solutions (“EP&S”) segment, certain of Sony’s manufacturing sites ceased production for a period of time pursuant to local government policy, and a portion of supply continues to be insufficient to meet demand. Additionally, some partner companies that supply components to several of Sony’s businesses have reduced their operations, causing a delay in the production of some Sony products due to component shortages.

~~In the Financial Services segment, pursuant to the announcement of a state of emergency by the Japanese government, all~~

~~in-person~~

~~sales activity of the Lifeplanner~~

~~salespeople at Sony Life Insurance Co., Ltd. (“Sony Life”) was suspended from April 2020 to May 2020. The impact that these and other~~

~~COVID-19-related~~

~~factors have had on Sony’s ability to produce, develop, sell and distribute the products and services of each of Sony’s business segments is further discussed in “Item 5.~~

~~Operating and Financial Review and Prospects.~~

”

~~The timing and extent to which the pandemic further negatively impacts Sony’s business could vary greatly depending on future developments, such as the possible further spread of or a resurgence in~~

~~COVID-19,~~

as well as the state of lockdowns and other measures in various geographic areas around the world. For example, in the G&NS segment, hardware production and game software development could continue to be delayed due to the impact of

~~COVID-19.~~

The Music segment may continue to be negatively impacted by delays in the release of new music and a global reduction in advertising licensing revenue, and the Pictures segment may continue to be negatively impacted by delays in the production and release schedules of new motion pictures and TV shows, as well as by the global reduction in advertising revenue. The EP&S segment could continue to be adversely impacted by factory shutdowns and supply chain issues, and by the closure of retail stores globally. The Imaging & Sensing Solutions (“I&SS”) segment may be negatively impacted by a decline in demand in the smartphone market, and the Financial Services segment may continue to be negatively affected by the prohibition against all

~~in-person~~

~~sales activity of the Lifeplanner~~

~~salespeople at Sony Life.~~

~~The continued impact of~~

~~COVID-19~~

~~could heighten many of the risks and uncertainties noted below.~~

Sony must overcome increasingly intense competition, which could lead to lower revenue or operating margins.

Sony has several business segments in different industries with many product and service categories, which cause it to compete with many existing and new competitors ranging from large multinational companies to highly specialized entities that focus on only one or a few businesses and also, potentially, with outsourced manufacturing service partners that currently supply products to Sony. These competitors may have greater financial, technical, labor and marketing resources available to them than those available to Sony. Sony’s financial condition and operating results depend on its ability to efficiently anticipate and respond to these established and new competitors.

The competitive factors Sony faces vary depending on the nature of the business. For example, ~~Sony’s~~in the electronics ~~businesses compete~~area, Sony competes on the basis of various factors including price and function, while ~~Sony’s~~in the Music and Pictures ~~businesses compete~~segments, Sony competes for talent, such as artists, songwriters, actors, directors and producers, and for entertainment content that is created, acquired, licensed and/or distributed. Competition on price can lead to lower margins when costs do not fall at a proportional rate, and competition for talent and appealing product can also lead to lower profitability if the higher costs required for such talent and content cannot be recouped through greater sales. Moreover, even for those products where Sony believes it has a strong competitive advantage, such as image sensors, it is possible that its competitors’ technological capabilities will accelerate such that Sony would be unable to maintain its advantageous market position. In ~~its~~terms of consumer electronics ~~businesses,~~products, to produce

~~Table of Contents~~

products that appeal to changing and increasingly diverse consumer preferences, including constantly changing consumer interest in minimizing energy consumption and using environmentally friendly materials for both products and packaging, or to overcome the fact that a relatively high percentage of consumers already possess similar products, Sony must develop superior technology, anticipate consumer tastes, and rapidly develop attractive and differentiated products with competitive prices and features. Sony faces increasingly intense pricing pressure from competitors, retailer consolidation, new sales/distribution channels, and shorter product cycles in a variety of consumer product categories. In the Music and Pictures segments, operating results can be impacted by worldwide consumer acceptance of their products, which is difficult to predict, ~~by competing products released at or near the same time~~ and by alternative forms of entertainment and leisure activities available to ~~consumers. Additionally,~~consumers, as well as by competing products released at or near the same time. For example, in the Pictures segment, as box office revenues recover as restrictions due to the spread of

COVID-19

~~starting in the beginning of the 2020 calendar year resulted in lockdowns~~have been lifted around the world ~~which are influencing changes in consumer behavior.~~and movie theaters continue to reopen, the theatrical release calendar of films by major studios is becoming more crowded, increasing competition for available screen space. This situation could adversely affect the operating results of the Pictures segment.

If Sony is unable to maintain its advantageous market position in the fields in which it has a technological or other competitive advantage, Sony is unable to effectively anticipate and counter the ongoing price erosion that

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Table of Contents

frequently affects its consumer products or the cost pressures affecting its businesses, there is a change in existing business models or consumer preferences, or the average prices of Sony’s products decrease faster than Sony is able to reduce manufacturing costs, Sony’s operating results and financial condition may be adversely impacted.

To remain competitive and stimulate customer demand, Sony must invest in research and development to achieve product and service innovations and successfully manage frequent introductions of such new products and services.

To strengthen the competitiveness of its products and services, Sony continues to invest in research and development (“R&D”), particularly in growth areas such as ~~image sensors~~the Game & Network Services (“G&NS”) and ~~the G&NS segment.~~Imaging & Sensing Solutions (“I&SS”) segments. However, Sony may not be successful in investing in R&D if it fails to identify products, services and market trends with significant growth potential. In addition, Sony’s investments may not yield the innovation or the expected results quickly enough, or competitors may lead Sony in technological innovation. This may hinder Sony’s ability to commercialize new and competitive products and services.

~~In the consumer electronics, network services and smartphone businesses,~~ Sony must continually introduce, enhance and stimulate customer demand for consumer electronic products and network services. Sales of these products and services are particularly sensitive to the significant weighting of consumer demand to the

year-end

holiday season. In ~~Sony’s~~the G&NS segment, the successful introduction and penetration of gaming platforms, including streaming, is a significant factor driving sales and profitability, and this success is affected by the ability to provide customers with attractive software

line-ups

and online services. However, there is no assurance that third-party software developers and publishers, major contributors to this effort, will continue to develop and release software. In addition, Sony believes that integrating its hardware, software, entertainment content and network services and minimizing their energy consumption, as well as investing in R&D to effect such integration, is essential in generating revenue growth and profitability. However, this strategy depends on its ability to further develop network services technologies, coordinate and prioritize strategic and operational issues among Sony’s various business units and sales channels, continually introduce enhanced, energy efficient and competitively priced hardware that is seamlessly connected to energy efficient network platforms with user interfaces that are innovative and attractive to consumers and also standardize technological and interface specifications industry-wide and across Sony’s networked products and business units. In addition, the G&NS, Music and Pictures segments must invest substantial amounts, which may include significant upfront investments, in internally developed software titles, artist advances, ~~catalog acquisitions,~~music catalogs, motion picture productions, television productions and broadcast programming before knowing whether their products will receive customer acceptance. Furthermore, underperformance of Pictures’ products in the initial distribution market is correlated with weak performance in subsequent distribution markets, which would have an adverse effect on Sony’s results in the year of initial release as well as future years.

The successful introductions of, and transitions to, new products and services depend on a number of factors, such as the timely and successful completion of development efforts, market acceptance, planning and executing an effective marketing strategy, managing new product introductions, managing production

ramp-up

issues, the availability of application software for new products, quality control and the concentration of consumer demand in the

year-end

holiday season. If Sony cannot achieve the expected results from its investment in R&D, adequately manage frequent introductions of new products and services and obtain consumer acceptance of its new products and services, or if Sony is not successful in implementing its integration strategy, Sony’s reputation, operating results and financial condition may be adversely impacted.

~~Table of Contents~~

Sony’s strategic initiatives, including acquisitions, joint ventures, investments, capital expenditures and restructurings, may not be successful in achieving their strategic objectives.

Sony actively engages in acquisitions, joint ventures, capital expenditures and other strategic investments to acquire new technologies, efficiently develop new businesses and enhance its business competitiveness. For example, ~~on November 18, 2019,~~in the fiscal year ended March 31, 2022, Sony made an additional strategic investment in Epic Games, Inc. (“Epic Games”), in which Sony already held a minority interest; acquired 100% of the shares and related assets of certain subsidiaries of Kobalt Music Group Limited (“Kobalt”) including AWAL, Kobalt’s music distribution business mainly for independent recording artists, and Kobalt Neighbouring Rights, Kobalt’s music neighboring rights management business; acquired 100% of the equity interest in Ellation Holdings, Inc. (“Ellation”), a subsidiary of AT&T Inc. which operated the anime business Crunchyroll; made a minority investment in Japan Advanced Semiconductor Manufacturing Inc., a subsidiary of Taiwan Semiconductor Manufacturing Company Limited (TSMC); and acquired 100% of the shares and related assets of Som Livre, an independent music label in Brazil. In the fiscal year ended March 31, 2023, Sony acquired ~~the entirety~~100% of the ~~remaining 42% equity interest it did not already own in Game Show Network, LLC (“Game Show Network”), making Game Show Network a wholly-owned subsidiary~~shares of ~~Sony.~~

~~When making~~

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Bungie, Inc. (“Bungie”) an independent videogame developer in the United States; made an additional strategic investment in Epic Games; and established a joint venture with Honda Motor Co., Ltd. in the mobility field.

In some cases, the completion of mergers and acquisitions is subject to certain closing conditions, including regulatory approvals. As a result of anti-trust laws and regulations and anti-trust regulatory authorities becoming stricter, regulatory reviews following the signing of a definitive agreement may take longer than expected, or Sony may fail to obtain regulatory approvals, resulting in the loss of business opportunities and Sony’s inability to realize some or all of the initially expected results of mergers and acquisitions. As of the date of this report, mergers and acquisitions that Sony has already signed definitive agreements for and whose completion is subject to regulatory approvals include the merger of Sony Pictures Networks India (“SPNI”) with Zee Entertainment Enterprises Ltd. (“Zee”), a publicly listed Indian media and content company.

While Sony performs a comprehensive analysis and evaluation of merged or acquired organizations prior to their acquisition from various perspectives such as technology, accounting, tax, finance, human resources (“HR”) and legal, Sony’s financial results may be adversely affected by factors including the significant cost of the acquisition and/or integration expenses, IT and information security risks introduced from newly acquired organizations, failure to achieve initially expected synergies, failure to generate expected revenue and cost improvements, loss of key personnel and assumption of liabilities.

When establishing joint ventures and strategic partnerships, Sony’s financial and operating results may be adversely affected by strategic or cultural differences with partners, conflicts of interest, failure to achieve synergies, additional funding or debt guarantees required to maintain the joint venture or partnership, requirements to buy out a joint venture partner, sell its shares or dissolve a partnership, insufficient management control including control over cash flow, loss of proprietary technology and

know-how,

impairment losses and reputational harm from the actions or activities of a joint venture that uses the Sony brand.

Sony invests heavily in production facilities and equipment, including fabrication facilities used to make image sensors for smartphones and other products. Sony may not be able to execute these capital expenditures as planned or recover these capital expenditures in part or full or in the planned timeframe due to the competitive environment, lower-than-expected consumer demand, or changes in the financial condition or business decisions of Sony’s major ~~customers.~~customers, or delays in the procurement of production facilities and equipment. Sony invested ~~128.9~~237.1 billion yen and ~~265.7~~355.9 billion yen of capital in the fiscal years ended March 31, ~~2019~~2022 and ~~2020,~~2023, respectively, mainly for the purpose of increasing image sensor production capacity.

Further, Sony is implementing initiatives for restructuring and transformation ~~initiatives~~ to enhance profitability, business autonomy and shareholder value ~~and~~or to clearly position each business within the overall business portfolio. ~~For example, Sony transferred its battery business to Murata Manufacturing Co., Ltd. Group in the fiscal year ended March 31, 2018.~~ However, the expected benefits of these initiatives, including the expected level of profitability, may not be realized due to internal and external impediments or market conditions worsening beyond expectations. If Sony is not successful in achieving its restructuring and transformation initiatives, Sony’s operating results, financial condition, reputation, competitiveness or profitability may be adversely affected. ~~Sony incurred restructuring charges in the amount of 22.4 billion yen, 33.1 billion yen and 25.0 billion yen in the fiscal years ended March 31, 2018, 2019 and 2020, respectively.~~

Sony’s sales and profitability may be affected by the operating performance of wholesalers, retailers, other resellers and third-party distributors.

Sony is dependent for the distribution of its products on wholesalers, retailers, other resellers and third-party distributors, many of whom also distribute competitors’ products. For example, in some cases, Sony’s smartphones sold through cellular network carriers are subsidized by the carriers. There is no assurance that such subsidies will be continued at all or in the same amounts upon renewal of Sony’s agreements with these carriers or in agreements Sony enters into with new carriers. In addition, the Pictures segment depends on third parties to theatrically exhibit its motion pictures, and to operate cable, satellite, internet and other distribution systems to distribute its motion pictures and television ~~programming; a~~programming. A decline in the licensing fees received from these third parties may adversely affect the Pictures segment’s sales. The Pictures segment’s worldwide television networks are also distributed on third-party cable, satellite and other distribution systems and the failure to renew, or the renewal on less favorable terms of, television carriage contracts (broadcasting agreements) with these third-party distributors may adversely affect the Pictures segment’s ability to generate advertising and subscription sales through these networks.

Sony invests in programs to incentivize wholesalers, retailers, and other resellers and third-party distributors to position and promote Sony’s products, but there is no assurance that these programs will provide a significant return or incremental revenue by persuading consumers to buy Sony products instead of competitors’ products.

The operating results and financial condition of many wholesalers, retailers, other resellers and third-party distributors have been adversely impacted by competition, especially from online retailers, and weak economic

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conditions. If their financial condition continues to weaken, they stop distributing Sony’s products, or uncertainty regarding demand for Sony’s products or other factors cause them to reduce their ordering, marketing, subsidizing, or distributing Sony’s products, Sony’s operating results and financial condition may be adversely impacted.

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~~impacted. For example, starting in the beginning of the 2020 calendar year, the spread of~~

~~COVID-19~~

~~led to the closure of retail stores and other businesses globally which is negatively impacting sales of Sony’s products.~~

As a global company, Sony is subject to a wide range of laws and regulations and a growing consumer focus on corporate social responsibility in many countries. Those laws and regulations, as well as consumer and regulator focus, might change in significant ways, leading to an increase in the costs of Sony’s operations, a curtailment of Sony’s activities, and/or an adverse effect on Sony’s reputation.

As a global company, Sony is subject to the laws and regulations of many countries throughout the world that affect its business operations in a number of areas, including advertising, promotions, consumer protection, import and export requirements, anti-corruption, ~~anti-competition,~~anti-trust, environmental protection (including decarbonizing regulations in connection with actions against climate change), data privacy and data protection, content and broadcast regulation, intellectual property, labor, product liability, taxation (including taxes from certain revenue on digital services), foreign investment, government procurement, foreign exchange controls, and economic ~~sanctions, as well as laws relating to the collection, use, retention, security and transfer of personally identifiable information.~~sanctions.

Compliance with these laws and regulations may be onerous and expensive. These laws and regulations continue to develop and may be inconsistent from jurisdiction to jurisdiction, further increasing the cost of compliance and doing business. Any such developments could occur frequently and without warning and could make Sony’s products or services less attractive to its customers, delay or prohibit introduction of new products or services in one or more regions or cause Sony to change or limit its business practices. For example, imposition of restrictive trade measures in the United States and elsewhere, as well as retaliatory actions against such measures, could result in increased customs duties applicable to Sony’s products or increased costs for procuring parts and components, and could limit or prohibit the sales of Sony’s products and services to certain of its current or potential customers, which may adversely affect Sony’s operating results and financial condition. In the I&SS segment, Sony suspended product shipments of image sensors to a certain Chinese customer from September 15, 2020, pursuant to export restrictions announced by the U.S. government on August 17, 2020. As a result, image sensor sales decreased compared to before the export restrictions came into effect, although Sony resumed a portion of shipments to the customer after receiving a U.S. export license. Sony also recorded inventory write-downs of certain image sensors for the same customer in the fiscal year ended March 31, 2021. In addition, changes in laws or regulations or the judicial interpretation thereof that Sony relies on or Sony is subject to in conducting its operations, including online operations, as well as Sony’s failure to anticipate such changes, may subject Sony to greater risk of liability, increase the costs of compliance, or limit Sony’s ability to engage in or expand certain operations or lead to discontinuance of certain operations.

Violation of applicable laws or regulations by Sony, its officers or employees, third-party suppliers, business partners ~~and~~or agents may subject Sony to monetary fines, penalties, legal judgments, restrictions on business operations and/or reputational damage. Additionally, there is a growing global regulatory and consumer focus on sustainability efforts, including corporate social responsibility and sourcing practices, ~~and~~as well as increasing regulatory obligations of public disclosure regarding these matters. In particular, there is increased attention on labor practices, including work environments at electronic component manufacturers, ~~and~~ original equipment manufacturers/original design ~~manufacturing/original equipment manufacturing, or ODM/OEM,~~manufacturers (OEM/ODM), and product manufacturers operating in Asia. Increased regulation or public pressure in this area could cause Sony’s compliance costs to increase, particularly since Sony uses many parts, components and materials to manufacture its products and relies on suppliers to provide these parts, components and materials but does not directly control the suppliers’ procurement or employment practices. A finding of

non-compliance,

or the perception that Sony has not responded appropriately to growing consumer concern for such issues, whether or not Sony is legally required to do so, may adversely affect Sony’s reputation, operating results and financial condition.

Sony must manage its large volume of and widespread procurement from third-party suppliers and business partners to control inventory levels, availability, costs and quality of parts, components, materials, software and network services within volatile markets.

Sony’s products and services rely on a large volume of third-party suppliers and business partners for parts, components, materials, software and network services, including semiconductors, chipsets for PlayStation

game consoles and mobile products, LCD (liquid crystal display) panels and the Android OS that is used in mobile products, televisions and services. ~~External~~As a result, external suppliers’ and partners’ supply shortages, fluctuations in pricing, quality issues, discontinued support, changes in business terms or prioritization of customers outside the electronics ~~sector~~area or of Sony’s competitors can adversely affect Sony’s operating results, brand and reputation. For

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example, the Entertainment Technology & Services (“ET&S”)* segment was affected by the global shortage of semiconductors and other components, which became pronounced from the latter half of the fiscal year ended March 31, 2021 through the first half of the fiscal year ended March 31, 2023 and caused Sony to continue to be unable to fully meet market demand. Although global demand for semiconductors and other components was on a declining trend as of the end of the fiscal year ended March 31, 2023, Sony’s operating results and financial condition could be affected if demand becomes strong again. Reliance on third-party software and technologies may make it increasingly difficult for Sony to differentiate its products from competitors’ products. Also, shortages or delayed shipments of critical parts or components may result in a reduction or suspension of production at Sony’s or its business partners’ manufacturing sites, particularly where Sony is substantially reliant on one supplier, where there is limited production capacity for custom parts or components, or where there are initial manufacturing capacity constraints for products, parts or components that use new technologies.

Sony places orders for parts and components in line with production and inventory plans determined in advance based on its forecast of consumer demand, which is highly volatile and difficult to predict. Inaccurate

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forecasts of consumer demand or inadequate business planning can lead to a shortage or excess inventory, which can disrupt production plans and result in lost sales opportunities or inventory adjustments, respectively. Sony writes down the value of its inventory when the underlying parts, components or products have become obsolete, when inventory levels exceed the amount expected to be used, or when the value of the inventory is otherwise recorded at a value higher than net realizable value. Such lost sales opportunities, inventory adjustments, or shortages of parts and components have had and may have an adverse impact on Sony’s operating results and financial condition.

* The former Electronics Products & Solutions (EP&S) segment was renamed the Entertainment, Technology & Services (ET&S) segment effective from April 2022.

Sony’s sales, profitability and operations are sensitive to global and regional economic and political trends and conditions.

Sony’s sales and profitability are sensitive to economic trends in its major ~~markets.~~markets, such as inflation. In the fiscal year ended March 31, ~~2020, 29.9%~~2023, 23.3%, ~~22.6%~~29.5% and ~~20.6%~~19.0% of Sony’s sales and ~~operating~~financial services revenue were attributable to Japan, the U.S. and Europe, respectively. These markets may be subject to significant economic downturns, resulting in an adverse impact on Sony’s operating results and financial condition. An actual or expected deterioration of economic conditions in any of Sony’s major markets may result in a decline in consumers’ consumption and adverse impacts on the businesses of commercial customers, resulting in reduced demand for Sony’s products and services. For example, in the Pictures segment, a general decline in the economy may result in decreased overall spending within the advertising market and a decline in television networks’ ability to generate revenues, which could result in lower advertising revenues for Sony’s own networks and lower license fees paid by

~~third-party~~

~~networks for Sony’s content, which may adversely affect the Pictures segment’s revenues.~~

In addition, Sony’s operations are conducted in many countries and regions around the world, and these international operations, particularly in certain emerging markets, can create challenges. For example, in ~~Sony’s electronics businesses~~the ET&S, I&SS and ~~the~~ G&NS ~~segment,~~segments, production and procurement of products, parts and components in China and other Asian countries and regions increase the time necessary to supply products to other markets worldwide, which can make it more difficult to meet changing customer demand in a timely manner. Further, in certain countries and regions, Sony may encounter difficulty in planning and managing operations due to unfavorable political or economic factors, such as armed conflicts, deterioration in foreign relations, changes in trade policies,

non-compliance

with expected business conduct and a lack of adequate infrastructure. If international or domestic political and military instability disrupts Sony’s business operations or those of its business partners Sony’s operating results and financial condition may be adversely affected. For example, as a response to the worsening of the situation in Ukraine and Russia that began in the fiscal year ended March 31, 2022, as of the date of this report, Sony has suspended its business in Russia. If this situation worsens further in the future, it could create global uncertainty, possibly leading to the worsening of Sony’s businesses in other regions or a deterioration in global economic conditions resulting in an adverse impact on Sony’s operating results and financial condition.

Foreign exchange rate fluctuations can affect Sony’s operating results and financial condition.

Sony’s operating results and financial condition are sensitive to foreign exchange rate fluctuations because many of Sony’s products are sold in countries other than the ones in which they were developed and/or manufactured. For example, within Sony’s electronics ~~businesses, research and development~~area, R&D and headquarters’ overhead costs are incurred mainly in yen, and manufacturing costs, including material costs, costs of procurement of parts and components, and costs of outsourced manufacturing services, are incurred mainly in ~~the~~ U.S. ~~dollar~~dollars and yen. Sales are ~~dispersed and~~ recorded in ~~Japanese~~ yen, ~~the~~ U.S. ~~dollar, euro,~~dollars, euros, Chinese renminbi, and local currencies of other areas, including emerging markets. Consequently, foreign exchange rate fluctuations have had and may have an adverse impact on Sony’s operating results, especially when the yen or the euro weaken significantly against the U.S. dollar, when the yen

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strengthens significantly against the euro, or when the U.S. dollar strengthens against emerging market currencies. Sony’s operating results may also be adversely impacted by foreign exchange rate fluctuations since Sony’s consolidated statements of income are prepared by translating the local currency denominated operating results of its subsidiaries around the world into yen. Furthermore, as Sony’s businesses have expanded in China and other areas, including emerging markets, the impact of fluctuations of foreign currency exchange rates in these areas against the U.S. dollar and yen has increased.

Mid-

to long-term changes in exchange rate levels may interfere with Sony’s global allocation of resources and hinder Sony’s ability to engage in ~~research and development,~~R&D, procurement, production, logistics, and sales activities while maintaining profitability.

Although Sony seeks to reduce its exposure to foreign exchange risk by hedging a portion of its net short-term foreign currency exposure shortly before the transactions occur, such hedging activity may not offset, ~~any,~~ or may offset only a portion of, the adverse financial effects of unfavorable movements in foreign exchange rates over the limited time the hedges are in place.

Moreover, since Sony’s consolidated ~~balance sheet is~~statements of financial position are prepared by translating the local currency denominated assets and liabilities of its subsidiaries around the world into yen, Sony’s equity capital may be adversely impacted when the yen strengthens significantly against the U.S. dollar, the euro and/or other foreign currencies.

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Ratings downgrades or significant volatility and disruption in the global financial markets may adversely affect the availability and cost of Sony’s funding.

Sony’s credit ratings may be adversely impacted by unfavorable operating results and a decline in its financial condition. Any credit rating downgrades may, in turn, result in an increase in Sony’s cost of funding and may have an adverse impact on Sony’s ability to access commercial paper (“CP”) or

mid-

to long-term debt markets on acceptable terms.

Additionally, global financial markets may experience significant levels of volatility and disruption, generally putting downward pressure on financial and other asset prices and impacting credit availability. Historically, Sony’s primary sources of funds have been cash flows from operations, the issuance of ~~commercial paper~~CP and other debt securities, such as term debt, as well as borrowings from banks and other institutional lenders. There can be no assurance that such sources will continue to be available on acceptable terms or be sufficient to meet Sony’s needs.

As a result, Sony may seek other sources of financing to fund operations, such as the draw-down of funds from contractually committed lines of credit from financial institutions or the sale of assets, in order to repay ~~commercial paper~~CP and

mid-

to long-term debt as they become due, and to meet other operational and liquidity needs. However, such funding sources may also not be available at acceptable terms or be sufficient to meet Sony’s requirements. As a result, Sony’s operating results, financial condition and liquidity may be adversely affected.

Sony’s success depends on the ability to recruit, retain and maintain productive relations with ~~highly skilled personnel.~~diverse people who embrace a challenging spirit and possess the ambition to grow.

In order to continue to create content, develop services, design, manufacture, market, and sell products, ~~and services,~~ in increasingly competitive markets, Sony must attract, retain and maintain productive relations with key personnel, both internally and externally, who possess high levels of expertise and broad experience, including its executive team, other management professionals, creative talent, and ~~other highly skilled employees such as~~ hardware and software engineers. However, such key personnel are in high demand. In addition, business divestitures, restructuring or other transformation initiatives may lead to an unintended loss of experienced ~~human resources~~employees or

know-how.

Actual or threatened work slowdowns or stoppages related to unionized workers, particularly in the entertainment ~~businesses,~~field, could lead to delayed releases or cost increases. For example, in the Pictures segment, the Writers Guild of America (“WGA”) went on strike effective May 2, 2023. If this strike is prolonged, it may adversely affect the operating results of the Pictures segment. Furthermore, in Japan, with a declining workforce due to the falling birthrate and aging population, intensifying competition among companies for specialized talent, and rising labor costs, it may become difficult to secure the necessary talent if Sony’s HR system is inadequate in its design and operations. If these incidents occur or if Sony is unable to attract, retain and maintain productive relations with ~~its highly skilled~~ employees with high levels of expertise and broad experience as well as key management professionals, Sony’s operating results and financial condition may be adversely affected.

Sony’s intellectual property might be subject to unauthorized use or theft and it might encounter restrictions in its use of intellectual property owned by third parties.

Sony’s intellectual property ~~relating to Sony’s products and services, including those of the electronics businesses, such as image sensors,~~ might be subject to unauthorized use or theft. For example, digital technology, the availability of digital media, and global internet penetration impact Sony’s ability to protect its copyrighted

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content from unauthorized duplication, digital theft and counterfeiting, putting pressure on legitimate product sales. Sony has incurred and will continue to incur expenses to help protect its intellectual property rights; however, Sony’s various initiatives to prevent such unauthorized use or theft of intellectual property might not achieve their intended result, which could adversely affect Sony’s competitive position and the value of its investment in R&D. Additionally, Sony’s intellectual property rights may be challenged or invalidated, or such intellectual property rights may not be sufficient to provide Sony with competitive advantages.

Many of Sony’s products and services are designed under the license of patents and other intellectual property rights owned by third parties. Based upon past experience and industry practice, Sony believes it will be able to obtain or renew licenses relating to various intellectual property rights that its business needs in the future; however, such licenses may not be available at all or on acceptable terms, and as a consequence Sony may need to redesign or discontinue its marketing, selling or distribution of such products or services.

Claims have been and may be asserted against Sony that its products or services, including third-party parts, components, software and network services used in Sony’s products or services, infringe the intellectual property rights of other parties. Such claims may be asserted by competitors or by other rights holders, particularly as products and services evolve to include new technologies and enhanced functionality. Such claims might require Sony to enter into settlement or license agreements, pay significant damage awards, face an injunction or refrain from marketing, selling or distributing certain of its products and services.

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The failure to prevent unauthorized use or theft of Sony’s intellectual property rights, the failure to enter into licenses for necessary third-party intellectual property rights, the invalidation of Sony’s intellectual property rights or the settlement of an infringement claim against Sony by others may adversely impact Sony’s reputation, operating results and financial condition.

Changes in consumer behavior resulting from new technologies and distribution platforms, as well as increasing concentration of digital music distributors and creation of content by distributors themselves, may adversely affect operating results in ~~Sony’s~~the Music and Pictures segments.

Technology, particularly digital technology, used in the Music and Pictures segments continues to evolve, rapidly leading to alternative methods and platforms for the ~~delivery,~~discovery and consumption ~~and storage~~ of digital content. These technological advancements have changed consumer behavior and empowered consumers to seek more control over when, where and how they consume digital content.

The prevalence of ~~enhanced internet capabilities~~digital streaming networks and other new media may ~~continue to reduce the demand for packaged physical media and~~negatively impact traditional television and

in-theater

motion picture viewership, which could ~~negatively~~adversely affect ~~revenues from Sony’s~~operating results of the Pictures segment.

Furthermore, as more music and video content is consumed over digital streaming networks, digital music distributors are becoming increasingly concentrated, which may decrease ~~competition for~~the competitiveness of Sony’s music content and adversely affect its pricing. In addition, digital music and video distributors may increase the amount of content they create for their own services, which may reduce the demand for content created or produced by ~~Sony’s entertainment businesses.~~Sony. If Sony is unable to adequately respond to these changes or fails to effectively adapt to new market changes, Sony’s operating results and financial condition may be adversely impacted.

Changes in the regulation and performance of financial markets may adversely affect the operating results and financial condition of ~~Sony’s~~the Financial Services segment.

~~Sony’s~~The Financial Services segment operates in industries subject to comprehensive regulation and supervision, including the Japanese insurance and banking industries. Future developments or changes in laws, regulations or policies may lead to increased compliance costs or limitations on operations in the Financial Services segment. In addition, ~~Sony Corporation’s ability to receive funds from its affiliate Sony Financial Holdings Inc.~~lending and borrowing between Sony’s subsidiaries in the ~~form of financial support or loans~~Financial Services segment and other companies within Sony Group is ~~restricted~~strictly limited by guidelines issued by regulatory agencies in Japan.

Changes in interest rates, foreign exchange rates and the value of Japanese government and corporate bonds, U.S. treasury bonds, equities, real estate and other asset classes may have an adverse effect on the operating results and financial condition of the Financial Services segment. For example, the life insurance business has invested most of its general account assets in ultra-long-term Japanese government and corporate bonds, as well as ultra-long-term U.S. treasury bonds, to match the liability characteristics of the long-term maturity insurance policies it has underwritten. The life insurance business has guaranteed yields on outstanding policies while its investment portfolio could be reduced by the market changes discussed above. The banking ~~businesses have~~business has invested most of ~~their~~its total loan balance, or over half of ~~their~~its total assets, in ~~their~~its mortgage loans account. An increase in

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non-performing

loans or a decline in prices of the real estate collateral from the market changes discussed above or deterioration of credit quality may have an adverse effect on the operating results and financial condition through an increase in the allowance for ~~doubtful accounts.~~credit losses.

The market changes discussed above, Sony’s management of these changes or the occurrence of earthquakes, pandemic disease or other catastrophic events in Japan could expose the life and

non-life

insurance businesses to increasing costs or adverse impact on their ability to ~~meet policy commitments.~~satisfy insurance contract liabilities.

~~The insurance businesses’ policy reserves and deferred insurance acquisition costs~~Insurance contract liabilities are calculated based on many actuarial assumptions that are uncertain. Significant ~~differences between~~changes to these actuarial assumptions and ~~actual situations~~the market changes discussed above may result in additional policy reserves being recorded and the accelerated amortization of deferred acquisition costs, through the changes of calculation assumptions. In particular, the insurance businesses calculate policy reserves and deferred insurance acquisition costs basedhave an adverse effect on the ~~actuarial assumptions, assuming~~operating results and financial condition of the ~~future schedule of insurance premium revenue, yield of investments, claims to be paid for occurrence of insured events and other factors.~~Financial Services segment. The review of ~~these actuarial~~ assumptions for insurance contract liabilities is required at ~~least once in~~the end of each ~~fiscal year.~~reporting period.

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Sony’s facilities and operations are subject to damage and disruption as a result of catastrophic disasters, outages, pandemic diseases including

COVID-19,

or similar events that could lead to supply chain, manufacturing and other business disruptions and have an adverse impact on Sony’s operating results.

Sony’s headquarters and many of Sony’s most advanced ~~device~~ manufacturing facilities, including those for ~~semiconductors,~~image sensors, are located in Japan, where the risk of earthquakes is relatively high. A major earthquake in Japan, especially in Tokyo, the Tokai area or the Kyushu and Tohoku areas, where Sony headquarters, certain consumer electronics product manufacturing sites and ~~semiconductor~~image sensor manufacturing sites, respectively, are located, could cause substantial damage to Sony’s business operations, including damage to buildings, machinery, equipment and inventories, and the interruption of production at manufacturing facilities. For example, the earthquake of April 14, 2016 and subsequent earthquakes in the Kumamoto region in Japan caused damage to ~~a semiconductor~~an image sensor manufacturing site in Kyushu, which interrupted production at the site.

In addition, offices and facilities used by Sony, its suppliers, service providers and business partners, including those used for ~~raw materials, parts, components,~~ network, telecommunications and information systems infrastructure, R&D, material procurement, manufacturing, motion picture and television production, logistics, sales, and online and other services are located throughout the world and are subject to possible destruction, temporary stoppage or disruption as a result of unexpected catastrophic events such as natural disasters, pandemic diseases including

COVID-19,

terrorist attacks, armed conflicts, large-scale power outages and large-scale fires. If any of these facilities or offices were to experience a significant loss as a result of any of the above events, it may disrupt Sony’s operations, delay design, development or production, interrupt shipments and postpone the recording of sales, and/or result in large expenses to repair or replace these facilities or offices. For example, ~~starting~~regarding the spread of

COVID-19

beginning in ~~the beginning of~~ the 2020 calendar year, although restrictions including lockdowns have been lifted and the impact on economic activities has lessened around the world, if economic activity stagnates again due to a future resurgence of infections, it could adversely affect the procurement of components and raw materials, production, ~~delays for a portion~~development, sale and distribution of Sony’s products ~~occurred~~and services, resulting in a negative impact on Sony’s operating results and financial position. In the G&NS segment, the production of hardware could be adversely affected again due to ~~temporary~~issues in the component supply chain. In the Music segment,

in-person

concerts and other events could be restricted again, causing related revenues to decrease. In the Pictures segment, if movie theaters are once again forced to close or limit their capacity, Sony’s theatrical revenues may decrease. Additionally, depending on the status of lockdowns or other anti-infection measures, as well as future increases in infections, Sony may be impacted by delays in the production schedules of new motion pictures and television programming, as well as decreased advertising revenue. The ET&S segment could continue to be adversely impacted by factory shutdowns or declines in factory utilization, supply chain issues and ~~reduced operations at~~

~~in-house~~

~~manufacturing plants, factories to which Sony outsources and at Sony’s third-party suppliers, as a result~~the closure of ~~the spread of~~retail stores globally.

~~COVID-19.~~

Sony may also be exposed to price increases for raw materials, parts and components, and lower demand from commercial customers. These situations may have an adverse impact on Sony’s operating results and financial condition. In addition, extreme weather conditions may become more severe and frequent as the temperature rises due to the effects of climate change, and such extreme weather conditions could heighten the risks and uncertainties noted above.

Sony’s brand image, reputation and business may be harmed and Sony may be subject to legal claims if there is a breach or other compromise of Sony’s information security or that of its third-party service providers or business partners.

Sony, its third-party service providers, suppliers and other business partners make extensive use of information technology to support business operations, and to provide network and online services to customers. These operations and services, as well as Sony’s business information, may be intentionally or inadvertently compromised by malicious third parties, including state-sponsored organizations, criminal organizations, ~~Sony~~Sony’s

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officers or employees, third-party service providers or other business partners. Such organizations or individuals may use a variety and combination of techniques, such as installing malicious software, exploiting vulnerabilities in information technology, using social engineering to mislead officers, employees and business partners into disclosing passwords and sensitive information, and coordinating distributed

denial-of-service

attacks to render services unavailable. As cyber-attacks become increasingly sophisticated and automated, and as tools and resources become more readily available, there can be no guarantee that Sony’s actions, security measures and controls designed to prevent, detect or respond to outside intrusion, to limit access to data, to prevent loss, destruction, alteration, or exfiltration of business information, or to limit the negative impact from such attacks can provide absolute security. In addition, Sony’s officers or employees have been working both in the office and at home following the spread of

COVID-19

and this practice is expected to continue. Although Sony takes measures to ensure that appropriate information security ~~against compromise.~~protections are in place for the remote workforce, there can be no guarantee that Sony’s actions, security measures and controls designed to prevent, detect or respond to outside intrusion, limit access to data, prevent loss, destruction, alteration, or exfiltration of business information, or limit the negative impact from such attacks, can provide absolute security. As a result, Sony’s business information, including ~~personal~~personally identifiable information, may be lost, destroyed, disclosed, misappropriated, altered, or accessed without consent, and Sony’s information technology systems or operations, or those of its service providers or other business partners, may be disrupted. Malicious adversaries may also use unauthorized access to Sony’s networks as a platform to compromise Sony’s third-party business partners without Sony’s knowledge. Sony has previously been the subject of sophisticated and targeted attacks. For example, network services in the ~~fiscal year ended March 31, 2015, Sony’s~~G&NS segment, the internal network and IT infrastructure in the Pictures segment, ~~was subject to a cyber-attack that resulted in unauthorized access to,~~ and ~~theft and disclosure of, Sony business information, including employee information and other information, and the destruction of data. Additionally,~~ Sony’s ~~network services, online game businesses and~~ websites have been subject to cyber-attacks, ~~by groups and individuals with a range of motives and expertise,~~ resulting in unauthorized access, denial of service, and the theft and/or disclosure of Sony’s business information, including officer and employee information, customer ~~information.~~information, and other information, as well as the destruction of data.

Any of the above incidents can result in significant remediation costs. In addition, a disruption to Sony’s network and online services, information technology, or other compromise of its information security may have serious consequences to its business and operations, including lost revenues, damage to relationships with business partners and other third parties, disclosure, alteration, destruction or use of proprietary information and the failure to retain or attract customers. Moreover, such disruptions and breaches may result in a diversion of

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management’s attention and resources. Further, it may result in adverse media coverage, which may harm Sony’s brand image and reputation. Sony may also be subject to legal claims or legal proceedings, including regulatory investigations and actions. Sony’s cyber insurance may not cover all expenses and losses and, accordingly, such breaches or other compromises of Sony’s information security or that of its third-party service providers or business partners may have an adverse impact on Sony’s operating results and financial condition.

Sony’s ~~business~~reputation, operating results and financial condition may ~~suffer~~be adversely affected as a result of adverse outcomes of litigation and regulatory actions.

Sony faces the risk of litigation and regulatory actions in different countries in connection with its operations. Legal proceedings, including regulatory actions, may seek to recover very large indeterminate amounts or to limit Sony’s operations, and the possibility that they may arise and their magnitude may remain unknown for substantial periods of time. For example, legal proceedings, including regulatory actions, may result from antitrust scrutiny of market practices for anti-competitive conduct. A substantial legal liability or adverse regulatory outcome and the substantial cost to defend the litigation or regulatory actions may have an adverse effect on Sony’s reputation, operating results and financial condition.

Sony is subject to financial and reputational risks due to product quality, product security, and liability issues.

Sony’s products and services, such as consumer electronics products,

non-consumer

products, parts and components, semiconductors, software and network services are becoming increasingly sophisticated and complicated as rapid advancements in technologies occur and as demand increases for mobile products and online services. Also, many Sony products are connected to the internet, and regularly communicate with services provided by Sony or third parties.

Sony’s efforts to adapt to rapid advancements in technologies and increased demand for mobile products and online services, while also maintaining product quality and product security, may not be successful and may increase exposure to product liability. As a result, Sony may incur both reputational damages and expenses in connection with, for example, product recalls and after-sales services. In addition, Sony may not be successful in introducing after-sales upgrades, enhancements or new features to existing products and services, or in enabling existing products and services to continue to conveniently and effectively integrate with other technologies and online services. Moreover, cyber-attacks targeting internet-connected products have increased significantly. For

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example, customer information and Sony or third-party technical information may be misappropriated, the functionality of Sony’s products and services may be impaired, or Sony products may be used in

denial-of-service

attacks. There can be no guarantee that Sony’s security measures will prevent products from being compromised.

As a result, the quality of Sony’s existing products and services may not remain satisfactory to consumers and become less marketable, less competitive or obsolete, and Sony’s reputation, operating results and financial condition may be adversely affected. Moreover, allegations of security vulnerability, health and safety issues related to Sony products, or lawsuits related to product quality, health issues arising from products or product safety, regardless of merit, may adversely impact Sony’s operating results and financial condition, either directly or as a result of the impact on Sony’s brand image and reputation as a producer of high-quality products and services. These issues are relevant to Sony products sold directly to customers, whether manufactured by Sony or a third party, and also to products of other companies that are equipped with Sony’s components, such as semiconductors.

Sony’s financial results and condition may be adversely affected by its employee benefit obligations.

Sony recognizes ~~an unfunded pension obligation~~a net defined benefit liability or asset for its defined benefit pension plans based on (i) the ~~Projected Benefit Obligation~~present value of defined benefit obligations (“~~PBO”~~DBO”) under each pension plan less (ii) the fair value of ~~the pension plan’s~~plan assets, in accordance with the accounting guidance for defined benefit plans. If the fair value of plan assets is in excess of the present value of DBO, 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. Any decrease in the fair value of ~~the pension~~ plan ~~asset value~~assets or increases in the ~~PBO~~present value of DBO due to a lower discount rate and changes in certain other actuarial assumptions may increase or decrease the ~~unfunded pension obligations~~net defined benefit liability or asset and may have an adverse effect on Sony’s financial results and condition.

Also, Sony’s financial results and condition could be adversely affected by future pension funding requirements pursuant to the Japanese Defined Benefit Corporate Pension Plan Act (“(the “Pension Plan Act”). Under the Pension Plan Act, Sony is required to conduct a periodic actuarial revaluation and to ascertain whether certain financial criteria have been met after the annual accounting closing. In the event that the fair value of ~~pension~~ plan assets falls below the actuarial reserve required by law and the shortfall may not be recovered within a certain moratorium period permitted by laws and/or special legislative decree, Sony may be required to make an additional contribution to

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its plans, which may reduce cash flows. Similarly, if Sony is required to make an additional contribution to a foreign plan to meet any funding requirements in accordance with local laws and regulations in each country, Sony’s cash flows might be adversely affected. If Sony is required to increase cash contributions to its pension plans when actuarial assumptions, such as an expected long-term rate of return of the ~~pension~~ plan assets, are updated for purposes of determining statutory contributions, it may have an adverse impact on Sony’s cash flows.

Further losses in tax jurisdictions where Sony has ~~established valuation allowances against~~assessed deferred tax assets as unrecognized, the inability of Sony to fully utilize its deferred tax assets, limitations on the use of its deferred tax assets under local law, exposure to additional tax liabilities or changes in Sony’s tax rates could adversely affect Sony’s operating results and financial condition.

Sony is subject to income taxes in Japan and numerous other jurisdictions, and in the ordinary course of its business there are many situations where the ultimate tax determination can be uncertain, because of the transfer pricing for its intercompany transactions, and because Sony is subject to continuous review by tax authorities of numerous jurisdictions. The calculation of Sony’s tax provision and the carrying value of tax assets, including net operating loss carryforwards and tax credit carryforwards, require significant judgment and the use of estimates, including estimates of future taxable income. ~~As additional evidence becomes available,~~At the end of each reporting period, Sony reassesses unrecognized deferred tax assets and determines whether these assets ~~to determine if they remain appropriate or whether a reduction by a valuation allowance is appropriate.~~should be recognized. As of March 31, ~~2020, total established valuation allowances were 608.2~~2023, the unrecognized deferred tax assets amounted to 237.3 billion yen. An increase in ~~a valuation allowance~~unrecognized deferred tax assets may have an adverse impact on Sony’s operating results and financial condition.

Deferred tax assets are evaluated on a jurisdiction by jurisdiction basis. As of March 31, ~~2020,~~2023, Sony and/or its subsidiaries had ~~valuation allowances~~unrecognized deferred tax assets, principally in Japan ~~and the U.S.~~for local taxes. Additionally, deferred tax assets could expire unused or otherwise not be realizable for a variety of reasons including the lack of sufficient taxable income in the appropriate jurisdiction. Sony’s operating results and financial condition could be adversely affected when the deferred tax assets expire unused.

In some jurisdictions, the use of net operating loss carryforwards or tax credits to reduce taxable income in a subsequent period is limited to a fixed percentage of taxable income or may only be used to offset taxes on

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income from certain sources. Thus, it is possible that even with significant net operating loss carryforwards or tax credits, Sony could record and pay taxes in a jurisdiction where it has taxable income.

~~In addition to the above,~~ Sony’s future effective tax rates may also be unfavorably affected by changes in both the statutory rates and the mix of earnings in countries with differing statutory rates or by other factors such as changes in tax laws and regulations or their interpretation, including minimum tax requirements and limitations or restrictions on various tax deductions and credits, including deductions for royalties and interest. For example, compliance with the U.S. Tax Cuts and Jobs Act of 2017 (the “U.S. Tax Reform Act”) may require the use of estimates in Sony’s financial statements, and the exercise of significant judgment in accounting for its provisions. As regulations and guidance evolve with respect

In addition to the ~~U.S. Tax Reform Act, Sony~~above, Sony’s businesses may ~~make adjustments~~be subject to ~~amounts that~~new forms of gross basis taxation and transactional taxes, including digital service taxes. Although such taxes may not directly impact Sony’s effective tax rate, they may nevertheless have ~~been previously recorded that may materially affect Sony’s~~an adverse impact on its operating results and financial condition.

Sony could incur asset impairment ~~charges~~losses for goodwill, content assets and other intangible assets or other ~~long-lived~~

non-current

assets.

Sony has a significant amount of goodwill, content assets, other intangible assets and other ~~long-lived~~

non-current

assets, including production facilities and ~~equipment in its electronics businesses.~~equipment. A decline in financial performance, market capitalization, reduced estimates of future cash flows, changes in global economic conditions or changes in estimates and assumptions used in the impairment analysis, which in many cases requires significant judgment, could result in impairment ~~charges~~losses against these assets. ~~Goodwill and indefinite lived intangible assets are tested annually for impairment during the fourth quarter of the fiscal year and between annual tests if an event occurs~~Events or ~~circumstances change that would more likely than not reduce the fair value below the carrying amount. Such an event or change~~changes in circumstances which would indicate impairment include unfavorable variances from or adjustments to established business plans, significant changes in forecasted results or volatility inherent to external markets and industries. The increased levels of global competition and the faster pace of technological change to which Sony is exposed can result in greater volatility of these estimates, assumptions and judgments, and increase the likelihood of impairment charges. In addition, the recoverability of the carrying value of long-lived assets held and used and long-lived assets to be disposed of is reviewed whenever events or changes in circumstances, including the types of events or changes described above with respect to goodwill and intangible assets, indicate that the carrying value of the assets or asset groups may not be recoverable. If the carrying value of the asset or asset group is considered impaired, an impairment charge is recorded for the amount by which the carrying value of the asset or asset group exceeds its fair value. For example, Sony recorded an impairment loss of 31.3 billion yen, 19.2 billion yen and 12.7 billion yen for the fiscal years ended March 31, 2018, 2019 and 2020, respectively,

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against long-lived assets in the EP&S segment, related to the smartphone business asset group, as well as an impairment loss of 12.9 billion yen for the fiscal year ended March 31, 2019, against long-lived assets and goodwill in the All Other segment, related to the storage media business asset group.losses. Any such ~~charge~~loss may adversely affect Sony’s operating results and financial condition.

Holders of American Depositary Shares have fewer rights than shareholders and may not be able to enforce judgments based on U.S. securities laws.

The rights of shareholders under Japanese law to take actions, including voting their shares, receiving dividends and distributions, bringing derivative actions, examining Sony’s accounting books and records, and exercising appraisal rights, are available only to shareholders of record. Because the depositary, through its custodian agents, is the record holder of the shares underlying the American Depositary Shares (“ADSs”), only the depositary can exercise those rights in connection with the deposited shares. The depositary will make efforts to vote the shares underlying ADSs in accordance with the instructions of ADS holders and will pay the dividends and distributions collected from Sony. However, ADS holders will not be able to bring a derivative action, examine Sony’s accounting books and records, or exercise appraisal rights through the depositary.

Sony Group Corporation is incorporated in Japan with limited liability. A majority of Sony’s directors and corporate executive officers are

non-U.S.

residents, and a substantial portion of the assets of Sony Group Corporation and the assets of Sony’s directors and corporate executive officers are located outside the U.S. As a result, it may be more difficult for investors to enforce against Sony Group Corporation or such persons, judgments obtained in U.S. courts predicated upon civil liability provisions of the federal and state securities laws of the U.S. or similar judgments obtained in other courts outside Japan. There is doubt as to the enforceability in Japanese courts, in original actions or in actions for enforcement of judgments of U.S. courts, of civil liabilities predicated solely upon the federal and state securities laws of the U.S.

Prior notification under the Foreign Exchange and Foreign Trade Act of Japan may be required in the case of an acquisition by a foreign investor of a certain portion of our shares.

Because Sony is engaged in certain businesses designated by the Foreign Exchange and Foreign Trade Act of Japan (the “FEFTA”) and its related cabinet orders and ministerial ordinances (collectively, the “Foreign Exchange Regulations”), if a foreign investor intends to consummate an acquisition of shares of common stock of Sony Group Corporation and that acquisition constitutes an “inward direct investment” under the Foreign Exchange Regulations, the foreign investor, subject to certain exemptions, must file a prior notification of such inward direct investment with the Minister of Finance and any other competent Ministers. ~~An amendment to~~Under the Foreign Exchange Regulations, ~~came into effect on May 8, 2020 (the “Amendment”) and the Amendment was fully implemented on June 7, 2020. Under the Amendment,~~ an “inward direct investment” includes an acquisition by a foreign investor of shares of common stock of Sony Group Corporation, the consummation of which results in such foreign investor, in combination with any existing shareholding, directly or indirectly holding 1% or more ~~(lowered from 10% by the Amendment)~~ of the total number of issued shares of common stock or the total number of voting rights of Sony ~~Corporation. The Amendment also introduced~~Group Corporation, unless certain exemptions ~~from the prior notification requirements.~~apply.

If such prior notification is filed, the proposed acquisition may not be consummated until the prescribed screening period expires. In some cases, the Ministers may extend the screening period, and may recommend or

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order any modification or the abandonment of such acquisition. In addition, if certain conditions – including those prescribed in light of the national security of Japan – under the Foreign Exchange Regulations are met, the Ministers may order the foreign investor to divest the shares acquired or take other measures. Consequently, any proposed acquisition by a foreign investor of shares of common stock of Sony Group Corporation that constitutes an “inward direct investment” may not be consummated in an expected time frame in accordance with an intended plan, or at all.

Additionally, ~~after the implementation of the Amendment,~~ if a foreign investor directly or indirectly holds 1% or more of the total voting rights of Sony Group Corporation and, at a general meeting of shareholders, consents to certain proposals having a material influence on the management of Sony Group Corporation such as the (i) election of such foreign investor or any of its related persons (as defined in the Foreign Exchange Regulations) as a director of Sony Group Corporation or (ii) transfer or discontinuation of its business, such consent, subject to certain exemptions, also constitutes an “inward direct investment” requiring prior notification. If such prior notification is filed, such consent cannot be given until the prescribed screening period expires. As a result, such foreign investors may have difficulties giving such consent in accordance with an intended plan, or at all.

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The discussion above is not exhaustive of all possible foreign exchange controls considerations that may apply to a particular investor, and potential investors are advised to satisfy themselves as to the overall foreign exchange controls consequences of the acquisition, ownership and disposition of shares of common stock or voting rights of Sony Group Corporation by consulting their own advisors. For a more detailed discussion on the requirements and procedures regarding the prior notifications under the Foreign Exchange Regulations, refer to “D. Exchange Controls” in “Item 10.

Additional Information

.”

Item 4.

Information on the Company

A.	History and Development of the Company

Sony Group Corporation was established in Japan in May 1946 as Tokyo Tsushin Kogyo Kabushiki Kaisha, a joint stock company (

Kabushiki Kaisha

) under Japanese law. ~~In January 1958, it~~It changed its name to Sony Kabushiki Kaisha (“Sony Corporation” in English). in January 1958, and changed its name again to Sony Group Kabushiki Kaisha (“Sony Group Corporation” in English) in April 2021 in order to focus on its role as the headquarters of the Sony Group.

In December 1958, Sony Group Corporation was listed on the Tokyo Stock Exchange (the “TSE”). In June 1961, Sony Group Corporation issued American Depositary Receipts in the U.S.

In March 1968, Sony Group Corporation established CBS/Sony Records Inc. in Japan, as a

50-50

joint venture company between Sony Group Corporation and CBS Inc. in the U.S. In January 1988, the joint venture became a wholly-owned subsidiary of Sony Group Corporation, and in April 1991, changed its name to Sony Music Entertainment (Japan) Inc. (“SMEJ”). In November 1991, SMEJ was listed on the Second Section of the TSE.

In September 1970, Sony Group Corporation was listed on the New York Stock ~~Exchange.~~Exchange (the “NYSE”).

In August 1979, Sony Group Corporation established Sony Prudential Life Insurance Co., Ltd. in Japan, as a

50-50

joint venture company between Sony Group Corporation and The Prudential Insurance Company of America. In April 1991, the joint venture changed its name to Sony Life Insurance Co., Ltd. (“Sony Life”). In March 1996, Sony Life became a wholly-owned subsidiary of Sony ~~Corporation, and in April 2004, with the establishment of Sony Financial Holdings, Inc. (“SFH”), a financial holding company, Sony Life became a wholly-owned subsidiary of SFH.~~Group Corporation.

In July 1984, Sony Magnescale Inc., a subsidiary of Sony Group Corporation, was listed on the Second Section of the TSE. The subsidiary changed its name to Sony Precision Technology Inc. in October 1996 and then to Sony Manufacturing Systems Corporation in April 2004. In April 2012, Sony Manufacturing Systems was merged into Sony EMCS Corporation. Sony EMCS Corporation changed its name to Sony Global Manufacturing & Operations Corporation in April 2016.

In July 1987, Sony Chemicals Corporation, a subsidiary of Sony Group Corporation, was listed on the Second Section of the TSE. The subsidiary changed its name to Sony Chemical & Information Device Corporation in July 2006, and changed its name again to Dexerials Corporation in October 2012.

In January 1988, Sony Group Corporation acquired CBS Records Inc., the music business division of CBS Inc. in the U.S. The acquired company changed its name to Sony Music Entertainment Inc. in January 1991 and then to Sony Music Holdings Inc. in December 2008.

In November 1989, Sony Group Corporation acquired Columbia Pictures Entertainment, Inc. in the U.S. In August 1991, Columbia Pictures Entertainment, Inc. changed its name to Sony Pictures Entertainment Inc. (“SPE”).

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In November 1993, Sony Group Corporation established Sony Computer Entertainment Inc. ~~(“SCEI”)~~ in Japan. ~~SCEI~~Sony Computer Entertainment Inc. changed its name to Sony Interactive Entertainment Inc. ~~(“SIEI”)~~ in April 2016.

In October 1995, Sony/ATV Music Publishing LLC (“Sony/ATV”) was formed as a

50-50

joint venture company between Sony Group Corporation and Michael Jackson. In September 2016, the joint venture became a wholly-owned subsidiary of Sony Group Corporation. In January 2021, Sony/ATV changed its name to Sony Music Publishing (US) LLC.

In January 2000, acquisition transactions by way of a share exchange were completed such that three subsidiaries which had been listed on the TSE — SMEJ, Sony Chemicals Corporation (currently Dexerials Corporation), and Sony Precision Technology Inc. ~~(which was merged into~~(currently Sony ~~EMCS~~Global Manufacturing & Operations Corporation) — became wholly-owned subsidiaries of Sony Group Corporation. In September 2012, Sony Group Corporation completed the sale of certain of its chemical products businesses, including Sony Chemical & Information Device Corporation (currently Dexerials Corporation) to Development Bank of Japan Inc.

In October 2001, Sony Ericsson Mobile Communications AB (“Sony Ericsson”), a

50-50

joint venture company between Sony Group Corporation and Telefonaktiebolaget LM Ericsson (“Ericsson”) of Sweden, was

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established. In February 2012, Sony acquired Ericsson’s 50% equity interest in Sony Ericsson. As a result of the acquisition, Sony Ericsson became a wholly-owned subsidiary of Sony and changed its name to Sony Mobile Communications AB.

In October 2002, Aiwa Co., Ltd. (“Aiwa”), then a

TSE-listed

subsidiary, became a wholly-owned subsidiary of Sony Group Corporation. In December 2002, Aiwa was merged into Sony Group Corporation.

In June 2003, Sony Group Corporation adopted the “Company with Three Committees” corporate governance system in line with the revised Japanese Commercial Code then effective. (Refer to “Board Practices” in “Item 6.

Directors, Senior Management and Employees.

”)

In April 2004, Sony Group Corporation established ~~SFH,~~Sony Financial Holdings, Inc. (“SFH”), a financial holding company, in Japan. Sony Life, Sony Assurance Inc. (“Sony Assurance”), and Sony Bank Inc. (“Sony Bank”) became subsidiaries of SFH. In October 2007, SFH was listed on the First Section of the TSE in conjunction with the global initial public offering of shares of SFH by Sony Group Corporation and SFH. In September 2020, SFH became a wholly-owned subsidiary of Sony Group Corporation through Sony’s tender offer for the common shares and the related stock acquisition rights of SFH and the subsequent procedures for the purchase of all of SFH’s remaining common shares. In October 2021, SFH changed its company name to Sony Financial Group Inc. (“SFGI”).

In April 2004,

S-LCD

Corporation

(“S-LCD”),

a joint venture between Sony Group Corporation and Samsung Electronics Co., Ltd. of Korea for the manufacture of amorphous thin film transistor LCD (liquid crystal display) panels, was established in Korea. Sony’s stake in

S-LCD

was 50% minus 1 share. In January 2012, Sony sold all of its shares of

S-LCD

to Samsung Electronics Co., Ltd.

In August 2004, Sony combined its worldwide recorded music business, excluding its recorded music business in Japan, with the worldwide recorded music business of Bertelsmann AG (“Bertelsmann”), forming a

50-50

joint venture, SONY BMG MUSIC ENTERTAINMENT (“SONY BMG”). In October 2008, Sony acquired Bertelsmann’s 50% equity interest in SONY BMG. As a result of the acquisition, SONY BMG became a wholly-owned subsidiary of Sony. In January 2009, SONY BMG changed its name to Sony Music Entertainment (“SME”).

In December 2005, Sony Communication Network Corporation, a subsidiary of Sony Group Corporation, was listed on the Mother’s market of the TSE, and was later listed on the First Section of the TSE in January 2008. ~~Sony Communication Network~~It changed its name to

So-net

Entertainment Corporation ~~was renamed~~in October 2006, and changed its name again to

So-net

Corporation

(“So-net”)

in July 2013. In January 2013, Sony Group Corporation acquired all of the common shares of

So-net

through a tender offer and subsequent share exchange and, as a result of the acquisition,

So-net

became a wholly-owned subsidiary of Sony Group Corporation.

So-net

was renamed Sony Network Communications Inc. (“SNC”) in July 2016.

In June 2012, an investor group including Sony Corporation of America (“SCA”) established DH Publishing, L.P. (“EMI”) to own and manage EMI Music Publishing, which it then acquired. This acquisition resulted in Nile Acquisition LLC (“Nile”), of which SCA owned 74.9% and the Estate of Michael Jackson (the “Estate”) owned 25.1%, acquiring approximately 40% of the equity interest in EMI. In July 2018, Sony completed the acquisition of the Estate’s equity interest in Nile, resulting in Sony owning approximately 40% of the equity interest in EMI. In November 2018, Sony completed the acquisition of the remaining approximately 60% equity interest in EMI,

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resulting in EMI becoming a wholly-owned subsidiary of Sony. In January 2021, Nile changed its name to Sony Music Publishing LLC (“SMP”). SMP encompasses both the former Sony/ATV and EMI.

In April 2013, Sony Olympus Medical Solutions Inc. (“SOMED”), a medical business venture between Sony Group Corporation and Olympus Corporation, was established in Japan. Sony’s stake in SOMED is 51%.

In July 2014, Sony Group Corporation sold its personal computer (“PC”) business operated under the VAIO brand to Japan Industrial Partners, Inc.

In July 2014, pursuant to a separation of Sony’s businesses into distinct subsidiaries, the television business was split out and began operations as Sony Visual Products Inc. ~~(“SVP”).~~

In October 2015, the video and sound business was split out and began operations as Sony Video & Sound Products Inc. (“SVS”).

In April 2016, the imaging and sensing solutions business was split out and began operations as Sony Semiconductor Solutions Corporation (“SSS”).

In April 2017, the imaging products and solutions business was split out and began operations as Sony Imaging Products & Solutions Inc. (“SIPS”), which completed the sequential separation of Sony’s business units into distinct subsidiaries.

In September 2017, Sony transferred its battery businesses to the Murata Manufacturing Co., Ltd. Group.

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In April 2019, ~~SVP~~Sony Visual Products Inc. and SVS merged to become Sony Home Entertainment & Sound Products Inc. (“SHES”).

In April 2020, Sony established Sony Electronics Corporation, an intermediate holding company encompassing the electronics products and solutions businesses.

In April 2021, in connection with the above-mentioned launch of Sony ~~will change~~Group Corporation, Sony Electronics Corporation, SHES, SIPS and Sony Mobile Communications Inc. (“SOMC”) were merged into one company, which was renamed Sony Corporation. Additionally, certain support functions for the ~~company names of~~electronics products and solutions businesses and the imaging products and solutions business that had been carried out by Sony Group Corporation were transferred to Sony Corporation and SSS.

In April 2022, due to a restructuring of the segments of the TSE, Sony ~~Electronics~~Group Corporation moved from the First Section to ~~“Sony~~the Prime Market of the TSE.

In July 2022, Sony Interactive Entertainment LLC acquired Bungie, an independent videogame developer in the United States.

In September 2022, Sony Honda Mobility Inc. (“Sony Honda Mobility”), a joint venture in the mobility field between Sony Group ~~Corporation”~~Corporation and ~~“Sony Corporation,” respectively, effective from April 1, 2021.~~Honda Motor Co., Ltd., was established in Japan. Sony’s stake in Sony Honda Mobility is 50%.

Sony Group Corporation’s registered office is located at

7-1,

Konan

1-chome,

Minato-ku,

Tokyo

108-0075,

Japan, telephone

+81-3-6748-2111.

Its website is

https://~~www.sony.net/~~

www.sony.com/en/

The agent in the U.S. for purposes of this Item 4 is Sony Corporation of America, 25 Madison Avenue, 26

Floor, New York, NY 10010-8601 (Attn: Office of the General Counsel).

Sony files reports and other information with the ~~SEC~~U.S. Securities and Exchange Commission (the “SEC”) pursuant to the SEC’s rules and regulations that apply to foreign private issuers. The SEC maintains a website that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. Sony’s electronic filings are available for viewing on this website, at

https://www.sec.gov

Principal Capital Investments

In the fiscal years ended March 31, ~~2018, 2019~~2022 and ~~2020,~~2023, Sony’s capital expenditures were ~~332.1 billion yen, 344.1~~697.2 billion yen and ~~513.1~~809.6 billion yen, respectively. For a breakdown of principal capital expenditures and divestitures (including interests in other companies), refer to “Item 5.

Operating and Financial Review and Prospects.

” The funding requirements of such various capital expenditures are expected to be financed by cash provided principally by operating and financing activities or the existing balance of cash and cash equivalents.

In the fiscal year ended March 31, ~~2020,~~2023, Sony invested approximately ~~276.8~~381.1 billion yen in the ~~Imaging & Sensing Solutions (“~~I~~&SS”)~~&SS segment. This investment included approximately ~~265.7~~355.9 billion yen to increase image sensor production capacity.

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B.	Business Overview

Sony realigned its business segments from the first quarter of the fiscal year ended March 31, 2020 to reflect modifications to the organizational structure of certain segments and a change in the Senior Executives in charge of certain segments as of April 1, 2019. In connection with this decision, theThe former ~~Home Entertainment & Sound, Imaging Products & Solutions and Mobile Communications segments were realigned as the~~ Electronics Products & Solutions (“EP&S”) segment. In connection with this realignment, the sales and operating revenue and operating income (loss) of each segment for the fiscal year ended March 31, 2019 have been reclassified to conform to the presentation for the fiscal year ended March 31, 2020. In addition, the former Semiconductors segment was renamed the ~~Imaging~~Entertainment, Technology & ~~Sensing Solutions (I&SS)~~Services (ET&S) segment effective from ~~the first quarter~~April 2022. This change did not result in any reclassification of ~~the fiscal year ended March 31, 2020.~~businesses across segments.

Sony is engaged in the development, design, production, manufacture and sale of various kinds of electronic equipment, instruments and ~~devices~~components for consumer, professional and industrial markets such as network services, game hardware and software, televisions, audio and video recorders and players, still and video cameras, mobile phones, and image sensors. Sony is engaged in the development, production, manufacture, and distribution of recorded music and the management and licensing of the words and music of songs as well as the production and distribution of animation titles, including game applications based on animation titles. Sony is also engaged in the production, acquisition and distribution of motion pictures and television programming and the operation of television and digital networks. Further, Sony is also engaged in various financial services businesses, including life and

non-life

insurance operations through its Japanese insurance subsidiaries and banking operations through a Japanese internet-based banking subsidiary.

Products and Services

Game & Network Services ~~(“G&NS”)~~(G&NS)

Sony Interactive Entertainment LLC ~~(“SIE”)~~ undertakes product research, development, design, marketing, sales, production, distribution and customer service for PlayStation

hardware, software, content and network services.

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The G&NS segment includes the Digital Software and

Add-on

Content, Network Services and Hardware and Others categories. Digital Software and

Add-on

Content includes distribution of software titles and

add-on

content through ~~digital networks~~the network by Sony Interactive Entertainment; Network Services includes network services relating to game, video and music content; and Hardware and Others includes home ~~and portable game~~gaming consoles, packaged software, game software sold bundled with home gaming consoles, peripheral devices and ~~peripheral devices.~~first-party software for third-party platforms.

Music

Recorded Music:

“Recorded Music” includes the distribution of physical and digital recorded music and revenue derived from artists’ live performances. SME, a global entertainment company, excluding Japan, is engaged primarily in the development, production, marketing and distribution of recorded music in all commercial formats and genres. SMEJ is an entertainment company focused on the Japanese market, which includes a Japanese domestic recorded music business that produces recorded music and music videos through contracts with many artists in all music genres.

Music Publishing:

“Music Publishing” includes the management and licensing of the words and music of songs. ~~Sony/ATV and EMI are~~SMP is a U.S.-based music publishing ~~businesses~~business that ~~own~~owns and ~~acquire~~acquires rights to musical compositions, exploiting and marketing these compositions and receiving royalties or fees for their use.

Visual Media and Platform:

“Visual Media and Platform” includes the production and distribution of animation titles and game applications, ~~based on animation titles~~ and various service offerings for music and visual products. These businesses are operated primarily by SMEJ.

Pictures

Motion Pictures:

“Motion Pictures” includes the worldwide production, acquisition and distribution of live-action and animated motion ~~pictures for theatrical release.~~pictures. SPE’s motion picture production organizations include Columbia Pictures, Screen Gems, TriStar Pictures, 3000 Pictures, Sony Pictures Animation, Stage 6 Films, AFFIRM Films and Sony Pictures Classics. SPE also operates Sony Pictures Imageworks, a visual effects and animation unit, and manages a studio facility, Sony Pictures Studios, which includes post-production facilities.

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Television Productions:

“Television Productions” includes the worldwide production, acquisition and distribution of programming, ~~for initial exhibition on television and digital networks,~~ including scripted series, unscripted “reality” or “light entertainment,” daytime serials, game shows, animated series, made for television movies and miniseries and other programming. ~~Outside the U.S., SPE produces local language programming and licenses~~

~~SPE-owned~~

~~programming and formats around the world.~~

Media Networks:

“Media Networks” includes the operation of television networks and ~~digital networks~~

direct-to-consumer

(“DTC”) streaming services worldwide. SPE’s television networks around the world include ~~Sony Pictures Networks India Private Limited,~~SPNI, which operates television networks in India, and Game Show Network, LLC, which operates a U.S.-based network delivered on cable, satellite and other distribution ~~platforms, as well as an online game business.~~platforms. Digital networks include ~~SonyLIV in India and Funimation primarily~~Crunchyroll, a streaming service based in North ~~America.~~

America primarily focused on anime content, and SonyLIV, a general entertainment streaming service in India.

~~Electronics Products~~Entertainment, Technology & ~~Solutions (EP~~Services (ET&S)

and

Audio

& Video:

~~SHES~~Sony Corporation undertakes product research, development, design, marketing, sales, production, distribution and customer services for televisions and video and sound products.

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Still and Video Cameras:

~~SIPS~~Sony Corporation undertakes product research, development, design, manufacturing, sales, distribution and customer service for interchangeable lens cameras, compact digital cameras, consumer and professional video cameras as well as display products such as projectors and medical equipment. Additionally, ~~SIPS~~it is responsible for the broadcast/professional solutions business and the FeliCa contactless IC (integrated circuit) card technology business. SOMED undertakes development support to provide comprehensive medical and imaging device solutions for operating rooms and other medical areas.

Mobile Communications:

Sony ~~Mobile Communications Inc. (“Sony Mobile”)~~Corporation undertakes product research, development, design, marketing, sales, production, distribution and customer services for mobile phones, ~~tablets,~~ accessories and applications. SNC provides internet broadband network services to subscribers as well as creates and distributes content through its portal services to various electronics product platforms such as PCs and mobile phones.

Imaging & Sensing Solutions (I&SS)

SSS and its subsidiary Sony Semiconductor Manufacturing Corporation undertake product research, development, design, manufacturing, marketing, sales, production, distribution and customer services primarily for complementary metal oxide semiconductor (“CMOS”) image sensors, in addition to charge-coupled devices ~~(“CCDs”)~~(CCDs), large-scale integration systems ~~(“LSIs”)~~(LSIs) and other semiconductors. These CMOS image sensors are used in a wide variety of applications, primarily smartphones, as well as other products such as digital cameras and security cameras, factory automation systems and automobiles.

Financial Services

In the Financial Services segment, on April 1, 2004, Sony established a wholly-owned subsidiary, SFH, a holding company for Sony Life, Sony Assurance and Sony Bank, with the aim of integrating various financial services including insurance and savings and loans, as well as offering individual customers high value-added products and high-quality services. On October 11, 2007, in conjunction with the global initial public offering of shares of SFH, the shares of SFH were listed for trading on the First Section of the TSE. Following this global offering, SFH remains a consolidated subsidiary of Sony Corporation, which is the majority shareholder of SFH. At the meeting of the Board of Directors held on May 19, 2020, Sony resolved to offer to acquire all of the common shares and related stock acquisition rights of SFH not held by Sony through a tender offer, with the aim of making SFH a wholly-owned subsidiary, and Sony commenced the tender offer on May 20, 2020. For further details, refer to Note 30 of the consolidated financial statements.

~~SFH~~SFGI conducts insurance, banking and other operations primarily through Sony Life, a Japanese life insurance company, Sony Assurance, a Japanese

non-life

insurance company, and Sony Bank, a Japanese internet-based bank, which are all wholly-owned by ~~SFH.~~SFGI.

All Other

All Other consists of various operating activities, including the ~~batteries, recording media and storage media businesses, the~~ disc manufacturing business outside of Japan, and the ~~PC business, which was sold in July 2014. Certain costs related to the PC business remain in All Other.~~recording media and storage media businesses.

Sales and Distribution

G&NS, EPET&S and I&SS

In the G&NS segment, PlayStation

hardware and peripheral devices, software and content and network services are marketed and distributed by ~~SIE, SIEI,~~Sony Interactive Entertainment LLC, Sony Interactive Entertainment

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Inc. and Sony Interactive Entertainment Europe Ltd. ~~(“SIEE”).~~Digital software, including

add-on

content, is primarily sold via the PlayStation Store, while software for third-party platforms is sold via third-party distributors. Hardware and physical software are sold both indirectly via third-party distributors as well as directly via PlayStation’s proprietary website. Additionally, Bungie carries out marketing and distribution of its software, content and merchandise under its own brand as an independent studio and publisher, with support from PlayStation.

Sony’s products and services in the EPET&S and I&SS segments are primarily marketed throughout the world under the trademark ~~“Sony,~~“Sony.” ~~which has been registered in approximately 200 countries and territories.~~

In most cases, Sony’s products in the EPET&S and I&SS segments are sold to sales subsidiaries of Sony Group Corporation located in or responsible for sales in ~~the~~various countries and ~~territories where Sony’s products and services are marketed.~~territories. These subsidiaries then sell those products to unaffiliated local distributors and dealers or through direct sales, such as through the internet. Sony Corporation brings its mobile products to market through direct and indirect channels, such as third-party cellular network carriers and retailers, as well as through its own website. In some regions, certain products and services are sold directly to local distributors by Sony Group Corporation.

~~Table of Contents~~

Sales of such products and services are particularly seasonal and vary significantly with the timing of new product introductions and the economic conditions of each country. Sales for the third quarter ending December 31 of each fiscal year are generally higher than other quarters of the same fiscal year mainly in the G&NS and EPET&S segments due to demand induring the

year-end

holiday season.

Japan:

Sony Marketing ~~(Japan)~~ Inc. markets consumer electronics products mainly through retailers. ~~Sony Business Solutions Corporation~~It also markets professional electronics products and services. For electronic components, Sony sells products directly to wholesalers and manufacturers.

United States:

Sony markets its electronics products and services in these segments through Sony Electronics Inc. and other wholly-owned subsidiaries in the U.S.

Europe:

In Europe, Sony’s products and services in these segments are marketed through sales subsidiaries including Sony Europe B.V., which is headquartered in the United Kingdom and has branches in European ~~countries, and Sony Electronics JSC in Russia.~~countries.

China:

Sony markets products and services in these segments through Sony (China) Limited, Sony Corporation of Hong Kong Limited and other wholly-owned subsidiaries in China.

Asia-Pacific:

In Asia-Pacific, Sony’s products and services in these segments are marketed through sales subsidiaries including Sony India Private Limited, Sony Electronics of Korea Corporation, Sony Taiwan Limited and Sony Electronics Vietnam.

Other Areas:

In overseas areas other than the U.S., Europe, China and Asia-Pacific, Sony’s products and services in these segments are marketed through sales subsidiaries including Sony Brasil Ltda., Sony Middle East & Africa FZE in the United Arab Emirates and Sony de Mexico S.A.de C.V.

Along with certain of its global corporate functions in Japan, Sony Mobile has sales and marketing operations in many major regions of the world, as well as a major manufacturing site in Thailand and product development sites in Japan and Sweden. Sony Mobile brings its products to market through direct and indirect distribution channels, such as third-party cellular network carriers and retailers, as well as through its website.

Music

SME and SMEJ develop, produce, market, and distribute recorded music in various commercial formats. SME and its affiliates conduct business globally under “Columbia Records,” “Epic Records,” “RCA Records” and other labels. SMEJ conducts business in Japan under “Sony Music Records,” “Epic Records Japan,” “SME Records,” “Ki/oon Music,” “Sony Music Associated Records” and other labels.

Sony owns and acquires rights to musical compositions, exploits and markets these compositions, receives royalties or fees for their use and conducts its music publishing business in countries other than Japan under the ~~Sony/ATV and EMI names. Sony/ATV, previously a 50%-owned and consolidated joint venture, became a wholly-owned subsidiary of~~ Sony on September 30, 2016 as a result of Sony’s acquisition of the 50% equity interest in Sony/ATV owned by the Estate. Additionally, on July 31, 2018, Sony completed the acquisition of the Estate’s equity interest in Nile, resulting in Sony owning approximately 40% of the equity interest in EMI. On November 14, 2018, Sony completed the acquisition of the remaining approximately 60% equity interest in EMI, resulting in EMI becoming a wholly-owned subsidiary of Sony.Music Publishing name.

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SMEJ creates artwork and produces packaged home entertainment products including music and games. It also organizes various events in Japan through Sony Music Communications Inc. and its affiliates. In addition, SMEJ produces, markets and distributes animation products and game applications based on animation titles under the Aniplex name.

Pictures

SPE generally retains all rights relating to the worldwide distribution of its internally produced motion pictures and television programming, including rights for theatrical exhibition, home entertainment distribution, pay and free television and digital exhibition and other markets. SPE also acquires distribution rights to motion pictures and television programming produced by other companies, and jointly produces and distributes motion pictures and television programming with other studios, television networks and production companies. These rights may be limited to particular geographic regions, specific forms of media or periods of time.

Within the U.S., SPE uses its own distribution service businesses, Sony Pictures Releasing and Sony Pictures Classics, for the U.S. theatrical release of its motion pictures and for the theatrical release of motion pictures acquired from and produced by others.

Outside the U.S., SPE generally distributes and markets motion pictures through one of its Sony Pictures Releasing International ~~subsidiaries.~~subsidiaries or affiliates. In certain countries, however, SPE has joint distribution or

sub-distribution

arrangements with other studios, or arrangements with independent local distributors or other entities.

The worldwide home entertainment distribution of SPE’s motion pictures and television programming (and product acquired or licensed from others) is handled through Sony Pictures Home Entertainment, except in certain countries where SPE has joint distribution or

sub-distribution

arrangements with other studios, or arrangements with independent local distributors. Product is distributed in various home media formats including DVD,

Blu-ray

Disc

™

and Digital Distribution. Digital Distribution includes electronic sell-through and

video-on-demand

distributed on digital platforms, cable networks and direct broadcast satellite (“DBS”) ~~providers and digital platforms.~~providers.

The worldwide television distribution of SPE’s motion pictures and television programming (and product acquired or licensed from others) is handled through Sony Pictures Television. SPE’s library of motion pictures and television programming is licensed to ~~linear~~ distributors such as broadcast television networks, digital platforms, cable networks and DBS ~~providers, as well as to digital~~providers. Digital platforms ~~such as~~include subscription and advertising supported ~~digital~~ platforms (including Sony’s PlayStation

™

Network, Netflix and ~~Amazon)~~Amazon Prime Video).

SPE’s television networks and streaming services (including Crunchyroll primarily in North America and SonyLIV in India) are distributed through digital platforms, cable, DBS providers and telecommunications companies ~~and digital platforms (including SonyLIV in India and Funimation primarily in North America)~~ to viewers around the world. These networks and services generate advertising, subscription and other ancillary revenues.

Financial Services

Sony Life conducts its life insurance business primarily in Japan. Sony Life’s core business is providing death protection and other insurance products to individuals, primarily through a consulting-based sales approach utilizing its experienced team of Lifeplanner

sales ~~employees~~specialists as well as partner independent sales agents. Sony Life provides tailor-made life insurance products that are optimized for each customer. As of March 31, ~~2020,~~2023, Sony Life employed ~~5,146~~5,402 Lifeplanner

sales ~~employees.~~specialists. Sony Life maintains an extensive service network which mainly consists of the Lifeplanner

channel and the independent agent channel in Japan. The Lifeplanner

channel is characterized by recruitment of high-caliber sales professionals from industries outside the life insurance industry, quality improvement through education and training, performance-linked compensation and high productivity. Lifeplanner

sales ~~employees~~specialists offer custom-made packages. Most of the agents in the independent agent channel are corporate and

non-exclusive

agents, primarily shop-style agents. Shop-style agents are a

sub-channel

of the independent agent channel, who offer insurance in local stores and provide customers with opportunities to compare various insurers’ products. To enhance Sony Life’s relationship with independent agents, Sony Life’s agent support staff provides independent agents with various support services, including recruiting, training and sales promotion activities. As part of its plan to expand its sales of individual annuity products, Sony Life established AEGON Sony Life Insurance Co., Ltd. (“AEGON Sony Life”) in August 2007 and SA Reinsurance (“SA Re”) in October 2009, both

50-50

joint venture companies with AEGON N.V. AEGON Sony Life and SA Re began operations in Japan in December 2009 and in Bermuda in January 2010, respectively. In January 2020, Sony Life acquired from AEGON International B.V. the remaining 50% stakes of

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AEGON Sony Life and SA Re, resulting in both AEGON Sony Life and SA Re becoming wholly-owned subsidiaries of ~~SFH. Furthermore,~~Sony Life. AEGON Sony Life changed its trade name to Sony Life With Insurance Co., Ltd. (“Sony Life With”) on April 1, 2020.

24 On April 1, 2021, Sony Life undertook an absorption-type merger with Sony Life With, with Sony Life as the surviving company. Furthermore, Sony Life completed the liquidation of SA Re in March 2023.

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Sony Assurance has conducted a

non-life

insurance business in Japan since October 1999. Sony Assurance’s core business is providing automobile insurance and ~~medical~~fire insurance products, as well as ~~overseas travel~~medical insurance and ~~fire~~overseas travel insurance products, to individual customers, primarily through direct marketing via the internet and via telephone. The direct marketing business model employed by Sony Assurance enables it to improve operating efficiency and lower the costs of marketing and maintaining its insurance policies, creating savings which it passes on to policyholders in the form of competitively priced premiums.

Sony Bank has conducted banking operations in Japan since June 2001. As an internet bank focusing on the asset management and borrowing needs of individual customers, Sony Bank offers an array of products and services including yen and foreign currency deposits, investment trusts and mortgages. By using Sony Bank’s transaction channel, the “MONEYKit” service website, account holders can invest and manage assets over the internet according to their life plans. On July 1, 2011, Sony Bank acquired Sony’s 57% equity interest in Sony Payment Services Inc. (“Sony Payment Services”), resulting in Sony Payment Services becoming a consolidated subsidiary of Sony Bank. Sony Payment Services provides credit card settlement services to members of its internet network.

All Other

Sony Energy Devices Corporation and Sony Storage Media Solutions Corporation sell their battery and storage media products, respectively, through Sony’s sales companies mentioned in the above description of Sales and Distribution for the G&NS, EP&S and I&SS segments, as well as through their own sales forces. Sony DADC group offers Ultra HD

Blu-ray

™

Blu-ray

Disc

™

, DVD and CD media replication services as well as digital and physical supply chain solutions to business customers. Sony Storage Media Solutions Corporation sells its storage media products through its own sales forces, as well as through Sony’s sales companies mentioned in the above description of Sales and Distribution for the G&NS, ET&S and I&SS segments.

Sales to External Customers by Geographic Area

The following table shows Sony’s consolidated sales to external customers in each of its major markets for the periods indicated.

Fiscal year ended March 31

2018

2019

2020

(Yen in millions)

Japan

2,625,619

2,591,784

2,472,479

United States

1,835,705

1,982,135

1,864,390

Europe

1,841,457

1,862,166

1,697,791

China

674,718

770,416

845,235

Asia-Pacific

1,024,179

912,193

892,026

Other Areas

542,304

546,993

487,964

Total

8,543,982

8,665,687

8,259,885


	Fiscal year ended March 31
	2022		2023
	(Yen in millions)
Japan		2,764,321		2,691,972
United States		2,766,021		3,401,402
Europe		1,870,091		2,190,311
China		771,006		855,437
Asia-Pacific		1,149,261		1,563,414
Other Areas		600,813		837,301

Total		9,921,513		11,539,837

Sources of Supply

Sony procures parts, components and raw materials ~~parts and components~~ used in the production of its products on a global basis on the most favorable terms that it can achieve. These items are purchased from various suppliers around the world. Sony has a general policy of maintaining multiple suppliers for important parts and ~~components and, in the fiscal year ended March 31, 2020, Sony continued to optimize the number of its suppliers to achieve efficiencies and to minimize procurement risk when possible.~~components.

When parts, components and raw materials ~~parts and components~~ become scarce, ~~the cost of~~it not only causes production ~~rises.~~costs to rise but also may affect production. For example, semiconductors, LCD panels ~~memory devices~~ and other discrete components, which are used in multiple applications, can influence Sony’s performance when the ~~cost~~availability of such parts and components ~~fluctuates substantially.~~is significantly limited. Additionally, rising energy costs and market prices may cause prices of parts, components and raw materials to increase, which may adversely affect Sony’s financial results. Regarding raw materials, the market price of ~~copper may fluctuate~~resin, sheet steel and ~~impact the cost of the parts and components that utilize~~ copper, ~~such as printed circuit boards and power cables. The price of resin and sheet steel,~~ which are widely used in mechanical parts, electronic parts and components, may also fluctuate because of market factors such as the balance of supply and demand, and such fluctuations may impact the cost of those parts and components.

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After-Sales Service

Sony provides repair and servicing functions in the areas where its G&NS, EPET&S and I&SS products are sold. Sony provides these services through its own online support network, call centers, service centers, factories, authorized independent service centers, authorized servicing dealers and subsidiaries.

~~Table of Contents~~

In line with industry practices of these businesses, almost all of Sony’s

consumer-use

products that are sold in Japan carry a warranty, generally for a period of one year from the date of purchase, covering repairs, free of charge, in the case of a malfunction in the course of ordinary use of the product. Warranties outside of Japan generally provide coverage for various periods of time depending on the product and the area in which it is marketed. In the case of broadcast- and

professional-use

products, Sony maintains support contracts with customers in addition to warranties.

To further help ensure customer satisfaction, Sony maintains customer information centers in its principal markets and web support information for all markets.

Patents and Licenses

Sony has a number of Japanese and foreign patents relating to its ~~products.~~products and services. Sony is licensed to use a number of patents owned by others, covering a wide range of ~~products.~~products and services. Certain of these licenses are important to Sony’s business. Sony products that employ ~~DVD~~

Blu-ray

Disc

™

player functionality, including PlayStation

4 and PlayStation

5 (“~~PS4~~PS5

™

”) hardware, are substantially dependent upon patents that relate to technologies specified in the DVD specifications and are licensed from Dolby Laboratories Licensing Corporation. Sony products that employ

~~Blu-ray~~

~~Disc~~

™

~~player functionality and DVD player functionality, including PS4~~ hardware, are substantially dependent upon patents that relate to technologies specified in the

Blu-ray

Disc

™

specifications and are licensed by MPEG LA LLC and

One-Blue,

~~LLC, in addition to the patents that relate to technologies specified in the DVD specifications, as described above.~~LLC. Sony considers its overall license position beneficial to its operations.

Competition

In each of its principal product lines and services, Sony encounters intense competition throughout the world. Sony believes, however, that in the aggregate it competes successfully and has a major position in all of the principal product lines and services in which it is engaged, although the strength of its position varies with products and markets. Refer to “Risk Factors” in “Item 3.

Key ~~Information~~Information.

.”

G&NS, EPET&S, I&SS and All Other

Sony believes that its product planning and product design expertise, the high quality of its products, its record of innovative product introductions and product improvements, the user experience it provides and the ecosystem that supports such an experience, its price competitiveness derived from reductions in manufacturing and indirect costs, and its extensive marketing and servicing efforts are important factors in maintaining its competitive position. Continuing to provide high-value added products, services and experiences is a key factor by which Sony aims to differentiate itself in these highly competitive markets. Sony believes that the success of the G&NS businesses is determined by the availability of attractive software titles and related content, downloadable content, network services and peripherals. In the I&SS segment, Sony puts significant effort into keeping Sony’s strong competitive position by investing in R&D and production capacity, while also trying to avoid overinvesting and increasing fixed costs by carefully monitoring customer demand, market trends and demand for

end-user

products.

Music

Success in the music industry is dependent to a large extent upon the artistic and creative abilities of artists, producers and employees and is subject to the vagaries of public taste. The Music segment’s future competitive position depends on its continuing ability to attract and develop artists and products that can achieve a high degree of public acceptance as well as offer efficient services. In addition, Sony believes that the success of the Music segment’s animation products and game applications business, Aniplex, is largely dependent on the creative talent of game producers and developers, and is also subject to the vagaries of public taste.

Pictures

SPE faces intense competition from all forms of entertainment and other leisure activities to attract the attention of audiences worldwide. SPE competes with other motion picture studios and production companies to obtain story rights and talent, including writers, actors, directors and producers, which are essential to the success of SPE’s products. SPE competes with other companies, in particular technology companies, who are expanding

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into the production or distribution of film and television programing. In motion picture production and distribution, SPE faces competition to obtain exhibition and distribution outlets and optimal release dates for its products. In addition, SPE faces competition to acquire motion pictures and television programming from third

~~Table of Contents~~

parties. In television production and distribution, competition arises from the increasing fragmentation of audiences among broadcast and cable networks, digital platforms, DBS providers ~~digital platforms~~ and other outlets both within and outside of the U.S. Furthermore, broadcast networks in the U.S., or their affiliated production companies, continue to produce their own shows internally, and major streaming services in and outside the United States are producing more content themselves or acquiring content from affiliated production companies. This competitive environment may result in fewer opportunities to produce shows for such networks and services, and may contribute to shorter lifespans for ordered shows that do not immediately achieve favorable ratings. SPE’s worldwide television networks compete for viewers with broadcast and cable networks, DBS providers, digital platforms and other forms of entertainment. The ~~growth in the~~ number of networks around the world ~~has increased the~~continues to drive competition for advertising and subscription revenues, acquisition of programming, and distribution of SPE’s television networks by cable, DBS providers, digital platforms and other distribution systems.

Financial Services

In the Financial Services segment, Sony faces strong competition in the financial services markets in Japan. ~~In recent years, the regulatory barriers between the life insurance and~~

~~non-life~~

~~insurance industries as well as among the insurance, banking and securities industries have been relaxed, resulting in new competitive pressures.~~

Sony Life competes not only with traditional insurance companies in Japan but also with other companies including online insurance companies, foreign-owned life insurance companies and a number of Japanese cooperative associations.

Sony Assurance competes against insurers that sell their policies through sales agents as well as insurers that, like Sony Assurance, primarily sell their policies through direct marketing via the internet and via telephone. ~~Competition in Japan’s~~

~~non-life~~

~~insurance industry has intensified in recent years, in part due to a number of new market entrants, including foreign-owned insurers.~~

Some of the competitors in the life insurance and

non-life

insurance businesses have advantages over Sony including:

greater financial resources and financial strength ratings;

greater brand awareness;

more extensive marketing and sales networks, including through

tie-ups

with other types of financial institutions;

more competitive pricing;

larger customer bases; and

a wider range of products and services.

Sony Bank has focused on providing retail asset management and mortgage services for individuals, and faces significant competition in Japan’s retail financial services market. Sony Bank competes with traditional banking institutions, regional banks, trust banks,

non-bank

companies, and newer financial groups providing online full-services of bank and brokerage in Japan.

In the Financial Services segment, it is important to maintain a strong and ~~healthy~~sound financial foundation for the business as well as to meet diversifying customer needs. Sony Life and Sony Assurance have maintained a high solvency margin ratio, relative to the Japanese domestic minimum solvency margin ratio requirements. Sony Bank has maintained a sufficient capital adequacy ratio relative to the Japanese domestic criteria.

Government Regulations

Sony’s business activities are subject to various governmental regulations in different countries in which it operates, including regulations relating to: various business/investment approvals; trade affairs, including customs, import and export control; competition and antitrust; anti-bribery; advertising and promotion; intellectual property; broadcasting, consumer and business taxation; foreign exchange controls; economic sanctions; personal information protection; product safety; labor; human rights; conflict; occupational health and safety; environmental; and recycling requirements.

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In Japan, Sony’s insurance businesses are subject to the Insurance Business Act and approvals and oversight from the Financial Services Agency (“FSA”). The primary purpose of the Insurance Business Act and related regulations is to protect policyholders, not shareholders. The Insurance Business Act specifies the types of

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businesses insurance companies may engage in, imposes limits on the types and amounts of investments that can be made and requires insurance companies to maintain specified reserves and a minimum solvency margin ratio. In particular, life insurance companies must maintain a premium reserve (for the portion of their portfolio other than unearned premiums), an unearned premium reserve, a reserve for refunds with respect to certain insurance contracts of life insurance companies specified in the Insurance Business Act’s regulations, and a contingency reserve in amounts nonot lower than the amount of the “standard policy reserve” as set forth by the regulatory guidelines. The FSA maintains a solvency standard which is used by Japanese regulators to monitor the financial strength of insurance companies.

Non-life

insurance companies are also required to provide a policy reserve. Sony Bank is also subject to regulation by the FSA under the Banking Act of Japan, including the requirement that it maintain a minimum capital adequacy ratio in accordance with capital adequacy guidelines adopted by the FSA based on the Basel III agreement. The FSA has broad regulatory powers over insurance and banking businesses in Japan, including the authority to grant or revoke operating licenses and to request information and conduct onsite inspections of books and records. Sony’s subsidiaries in the Financial Services segment are subject to the ~~Japanese~~ Insurance Business Act and the Banking Act that require insurance and banking business companies to maintain their financial credibility and to secure protection for policyholders and depositors in view of the public importance of insurance and banking services. As such, lending and borrowing between subsidiaries in the Financial ~~Service~~Services segment and the other companies within Sony Group is strictly limited.

In addition, Sony’s telecommunication businesses in Japan are subject to approvals and oversight from the Ministry of Internal Affairs and Communications, under the Telecommunications Business Act and other regulations related to the internet businesses and communication methods in Japan.

Social Responsibility Regulations Such as Environmental and Human Rights Regulations

Sony monitors, evaluates, and complies with ~~new environmental requirements~~laws and regulations that may affect its ~~operations.~~global operations and purchasing activities with respect to social responsibility, such as environmental, human rights, labor, and occupational health and safety issues. For example, in Europe, Sony is required to comply with a number of environmental regulations enacted by the EU such as the Restriction of Hazardous Substances (“RoHS”) Directive, the Waste Electrical and Electronic Equipment (“WEEE”) Directive and the Registration, Evaluation, Authorization and Restriction of Chemicals (“REACH”) regulation. Similar regulations are being formulated in other areas of the world, including South American, Southeast Asian and Middle Eastern countries.

Sony has taken steps to address new regulations or governmental policies related to climate change including carbon disclosure, greenhouse gas (“GHG”) emission reduction, carbon taxes and energy efficiency for products in the G&NS, EPET&S and I&SS segments. ~~For example, Sony has established an internal management system in response to the EU directive on energy-related products and their energy efficiency (“ErP”).~~

Sony also monitors and evaluates newly adopted laws and regulations that may affect its operations applicable to purchasing activities including the procurement of raw materials, with respect to environmental, occupational health and safety, human rights, labor and armed conflict issues, and complies as appropriate.

Also refer to “Risk Factors” in “Item 3.

Key Information.

”

Disclosure pursuant to Section 219 of the Iran Threat Reduction and Syria Human Rights Act of 2012

Section 219 of the Iran Threat Reduction and Syria Human Rights Act of 2012 added Section 13(r) to the Securities Exchange Act of 1934 (the “Exchange Act”), as amended. Section 13(r) requires an issuer to disclose in its annual or quarterly reports, as applicable, whether it or any of its affiliates knowingly engaged in certain activities, transactions or dealings relating to Iran or with designated natural persons or entities sanctioned under programs relating to terrorism or the proliferation of weapons of mass destruction. Disclosure is required even where the activities, transactions or dealings are conducted outside the U.S. by

non-U.S.

affiliates in compliance with applicable law, and whether or not the activities are sanctionable under U.S. law.

Sony is aware that certain transactions during the fiscal year ended March 31, ~~2020,~~2023, as described below, may be disclosable pursuant to Section 13(r) of the Exchange Act.

Sony generally does not allocate profits at the level of these activities, and therefore calculates the estimated net profit solely for the purpose of this disclosure, which in any event would not be significant. The information below is to the best of Sony’s knowledge, and in particular Sony may not be aware of all potentially reportable sales by third-party-owned dealers and distributors.

Sony’s representative office in Tehran, Iran, which was established in 1992, has been closed and has been under liquidation processes since before the beginning of the fiscal year ended March 31, 2014. In the course of liquidation, Sony engages in certain incidental transactions (for example, permits, taxes, and similar matters incidental to the wind-down of the office in Iran) with Iranian government-owned entities. No material revenues or profits are associated with these transactions with the Iranian government-owned entities.

non-U.S.

subsidiary of Sony entered into an agreement in March 2023 for the sale of medical instruments, namely, a medical printer and accompanying print media, to a third-party-owned distributor in Japan, which will be delivered to a hospital in Tehran that is under the control of the Iranian Ministry of Health and Medical Education, pursuant to Japan International Cooperation Agency’s (JICA) provision of grant aid to supply certain medical equipment to hospitals in Tehran as part of the

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Government of Japan’s Official Development Assistance (“ODA”). The sale was completed in May 2023. Sony’s expected gross revenue from the ~~course of liquidation,~~sale is approximately 267 thousand yen, and Sony engages in certain incidental transactions (for example, permits, taxes, and similar matters incidental to the wind-down of the office in Iran) with Iranian government-owned entities. No material revenues or profits are associated with these transactions with the Iranian government-owned entities.estimates that its net profit from such sales is 50 thousand yen.

Sony is not aware of any other activity, transaction or dealing by Sony Group Corporation or any of its affiliates during the fiscal year ended March 31, ~~2020~~2023 that is disclosable in this report under Section 13(r) of the Exchange Act. As of the date of this report, Sony does not anticipate that any activity, transaction or dealing that may be disclosable will be conducted during the fiscal year ending March 31, ~~2021,~~2024, except as described above in connection with the wind-down of its representative office in ~~Iran.~~Iran and the sale of medical instruments pursuant to the ODA. Nevertheless, Sony ~~has continued~~continues to monitor developments in this area especially in the light of the United States’ decision that was implemented in its entirety on November 5, 2018 to cease its participation in the Joint Comprehensive Plan of Action of July 14, 2015, among the United States, the United Kingdom, China, France, Russia, Germany, the European Union and Iran and

~~re-impose~~

~~certain secondary sanctions (i.e., laws and regulations that threaten to impose U.S. economic sanctions on~~

~~non-U.S.~~

~~companies engaging in specified transactions with Iran outside U.S. jurisdiction). As~~as sanctions against Iran continue to evolve, ~~Sony will continue to~~and assess whether and to what extent such sanctions may affect Sony’s business activities, which Sony intends to conduct in accordance with applicable laws and regulations.

Sony believes, and maintains policies and procedures designed to ensure that, its transactions with Iran and elsewhere have been conducted in accordance with applicable economic sanctions laws and regulations and do not involve transactions likely to result in the imposition of sanctions or other penalties on Sony. However, there can be no assurance that Sony’s policies and procedures will be effective, and if the relevant authorities were to impose penalties or sanctions against Sony, the impact of such sanctions could be material.

Sustainability Disclosure

Sony’s Approach to Sustainability

Sony Group Corporation has established the following basic policy on sustainability with the approval of the Board of Directors:

Sony manages diverse businesses with people at the core, and aims for sustainable value creation based on such diversity and

mid-to

long-term growth in the Sony Group’s corporate value under its Purpose to “fill the world with emotion, through the power of creativity and technology,” and its Corporate Direction of “getting closer to people.” In order to have people connected to each other through emotion, it is necessary to create a society in which everyone can live with peace of mind in a healthy global environment. Sony acts with due consideration of the impact of its business activities on stakeholders, including shareholders, customers, employees, suppliers, business partners, local communities and other organizations as well as the global environment, and focuses on building trust with stakeholders through dialogue. Through innovation and sound business practice, Sony endeavors to enhance its corporate value and contribute to the development of a sustainable society.

(1) Organizational Structure for Sustainability Initiatives and Efforts

Sony Group Corporation has established the Sustainability Department under the supervision of the Senior Executive in charge of Sustainability. The Sustainability Department promotes various sustainability-related initiatives throughout the Sony Group in cooperation with each business unit and operating company (“Business Unit(s)”) and other corporate divisions, including Compliance, Human Resources, Corporate Planning & Control, Finance and Legal (“Relevant Divisions”).

The Senior Executive in charge of Sustainability regularly reviews and assesses risks and engages in detection, communication, evaluation and response for the risk of loss related to sustainability. The Sustainability Department reports to the Board of Directors at least once a quarter on sustainability initiatives and their progress. In addition, as part of reporting on each Business Unit’s

mid-range

plan, the Board of Directors receives reports from each Business Unit on the sustainability challenges and opportunities relevant to their respective business operations and their efforts in those areas.

The Sustainability Department, operating under the above structure and the aforementioned “Sony’s Approach to Sustainability,” strives to spread this policy across Sony’s business operations. Through dialogue with stakeholders and materiality analysis, the Sustainability Department identifies sustainability issues that need to be addressed by the Sony Group as a whole. Additionally, the Sustainability Department promotes the group-wide sustainability initiatives by formulating relevant Group policies on identified sustainability issues, including a global environmental plan, “Road to Zero,” and communicating across the Sony Group by collaborating with the Senior Executives in charge of Sony’s headquarters functions and the Relevant Divisions.

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The Business Units consider sustainability issues and opportunities for their respective businesses, and, with unique perspectives, implement sustainability-related initiatives that align with their respective business characteristics. In addition, the Business Units, consulting with the Sustainability Department, have introduced key performance indicators (“Sustainability KPIs”), which measure the Business Units’ sustainability efforts. The Sustainability KPIs are incorporated into the Business Units’ performance evaluations, and the Sustainability Department evaluates the status of achievement of such Sustainability KPIs. Additionally, sustainability is incorporated into one of the Senior Executives’ performance-linked renumeration evaluation factors for individual performance from the perspective of social value creation and ESG (Environment, Social, Governance).

In the fiscal year ended March 31, 2023, a global sustainability conference was held, where the Senior Executive in charge of Sustainability, the Senior Executive in charge of Human Resources, and sustainability personnel from the Business Units came together to confirm and share the sustainability initiatives for the Business Units and their progress on the Sustainability KPIs.

For the fiscal year ended March 31, 2023, the Sustainability KPIs included reducing the use of virgin

oil-based

plastic in Sony products, introducing renewable energy at Sony’s manufacturing facilities, reducing GHG emissions in Sony’s manufacturing processes, implementing awareness-raising activities related to the environment and diversity, equity, and inclusion (“DE&I”) using Sony’s content IP, as well as conducting DE&I programs and training.

In order to ensure that Sony’s sustainability initiatives can address changes in the social environment and the expectations of stakeholders from a

mid-

to long-term perspective, the Sustainability Department, under the supervision of the Senior Executive in charge of Sustainability, analyzes and identifies material topics for the Sony Group and periodically reviews their importance. Sony defines materiality as “material topics that are related to sustainability, impact Sony’s value creation, and are determined with longer-term social change and diverse stakeholder needs in mind.” The Sustainability Department most recently refreshed the materiality analysis in the fiscal year ended March 31, 2023 and evaluated sustainability issues which are highly relevant to Sony, including items that have a negative impact on Sony’s value creation from the perspectives of their importance to both Sony and its stakeholders.

The importance of topics from Sony’s perspective is evaluated from the perspective of positive or negative impact on Sony’s ability to create value over the

mid-

to long-term, while the importance of topics from the stakeholders’ perspective is evaluated based on information published by non-governmental organizations (NGOs), investors, rating agencies, mass media and other sources.

Based on such analysis, the most important topics that should be prioritized for Sony have been identified after review by the Senior Executives in charge of Sony’s headquarters functions and the Board of Directors.

(2) Sustainability Strategies

As a result of the above materiality analysis conducted in the fiscal year ended March 31, 2023, Sony has identified “Climate Change,” “DE&I,” “Respect for Human Rights,” and “Technology for Sustainability” as the most important topics that should be prioritized across the Sony Group (collectively, the “Most Important Topics”).

Climate Change: Sony acknowledges that climate change impacts are becoming more apparent and that the transition towards a decarbonized society is a critical issue for all companies and that our stakeholders have elevated expectations of Sony’s environmental initiatives along two axes: the first being its “responsibility,” for instance, to reduce Sony’s environmental impact, and the second being the “contribution” it can make by leveraging its diverse businesses and technologies. Sony’s corporate activities are only possible if the earth, which sustains all life, is healthy. Sony believes that it is important to respond to the environment, including by taking measures against climate change.

DE&I: Sony recognizes that diverse organizations are more innovative in corporate activities than

non-diverse

organizations. Sony believes that it is important to respect our employees’ diverse values, remember the importance of equity, and foster an inclusive organizational culture. Expectations are also rising for corporate initiatives to address social issues such as social justice and inequality, and Sony believes that it is important for the Sony Group to further promote initiatives aimed at resolving issues both inside and outside the Group.

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Respect for Human Rights: Sony is aware of the potential human rights impacts of its global business activities. Sony recognizes that respecting human rights throughout Sony’s value chain and addressing any potential human rights risks, whether the relationship with Sony’s business operation is direct or indirect, are responsibilities that a diverse range of stakeholders expect of Sony. Considering recent changes in the external environment related to respect for human rights, Sony believes that it is important to further strengthen its efforts in this area.

Technology for Sustainability: Sony recognizes that our stakeholders have expectations regarding our ability to both grow our business and solve social and environmental issues through technology. Sony believes that it is an important mission of Sony to lead and contribute to the resolution of sustainability issues not only by increasing business revenue through the technologies and products Sony develops, but also by having a positive impact on society and the environment.

Climate Change

Under the “Road to Zero,” a long-term environmental plan established in 2010 that aims to achieve a zero environmental footprint for the entire Sony Group by the year 2050, Sony is promoting environmental impact reduction activities in each of the following four perspectives: climate change, resources, chemical substances, and biodiversity. In May 2022, Sony announced that it had determined to accelerate its environmental impact reduction activities in the climate change area and to push its goal of achieving a

net-zero

footprint throughout the entire value chain, moving the target year from 2050 to 2040. Sony’s

net-zero

(*1) target for 2040 was approved as the

net-zero

target for the Science Based Targets initiative (“SBTi”) (*2) in August 2022.

*1 Sony’s

net-zero

target follows the SBTi Corporate

Net-zero

Standard below:

(a)

reducing Scope 1, 2 and 3 emissions to zero or a residual level consistent with reaching

net-zero

emissions at the global or sector level in eligible 1.5°C scenarios or sector pathways; and

(b)

neutralizing any residual emissions at the

net-zero

target date – and any GHG emissions released into the atmosphere thereafter.

*2 Science Based Targets initiative (SBTi) is a global initiative that encourages companies to set science-based targets to reduce their GHG emissions toward the goal of limiting the increase in global average temperature due to climate change to 1.5°C above

pre-industrial

levels.

Specific targets for achieving the above

net-zero

target by 2040 are as follows.

By 2030, Sony aims to make direct and indirect GHG emissions (Scopes 1 and 2) of its own business operations

net-zero.

For other emissions originating from stages such as products, supply chains, and logistics (Scope 3), Sony aims to reduce GHG emissions during product use by 45% compared to the fiscal year ended March 31, 2019 by 2035. By 2040, Sony aims to achieve

net-zero

emissions in all Scopes.

By 2030, Sony aims to achieve 100% renewable electricity used at its own business sites. The percentage of electricity use derived from renewable energy targeted to be achieved as of 2025 has been set at 35%.

To achieve the targets in 1 and 2 above, Sony intends to implement the following measures.

Continuous reduction of environmental impact at Sony Group’s own business sites: Acceleration of energy saving, installation of solar power generation equipment, and introduction of renewable energy throughout the Sony Group. Virtual PPA (Power Purchase Agreement) using the FIP

(Feed-in-Premium)

system in Japan.

Promotion of energy-efficient products: Acceleration of initiatives to reduce annual power consumption of Sony products.

Strengthening efforts with partners: Encouragement of business partners engaged in parts, materials and finished product manufacturing to manage their GHG emissions, save energy, and convert to renewable energy.

Contribution to carbon removal/fixation (*3): Exploration of investments in

start-ups

engaged in carbon removal, and development of an index integrating biodiversity and carbon fixation associated with augmented ecosystem businesses, such as Synecoculture

™

(*4) being rolled out by SynecO, Inc.

Process by which carbon from the atmosphere is converted into organic compounds.

Synecoculture is a trademark of Sony Group Corporation.

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DE&I

Refer to “(3) Human Capital Strategies, Metrics and Targets” for DE&I strategies.

Respect for Human Rights

Sony’s policy requiring respect for human rights is set forth in the Sony Group Code of Conduct. Sony expects all Sony Group companies to practice responsible business conduct by respecting all human rights in compliance with the code as well as all relevant laws and regulations.

Under this policy, Sony established and implemented Group policies specific to the human rights area, such as the “Sony Supply Chain Code of Conduct” which sets forth the code of conduct for Sony’s own manufacturing sites and suppliers, and aims to work towards a responsible supply chain, and the “Sony Group AI Ethics Guidelines,” which guide all Sony officers and employees to utilize artificial intelligence (“AI”) and/or conduct

AI-related

R&D in a manner that conforms with our values and emerging social norms. Sony engages in initiatives to prevent or mitigate any potential negative impact on human rights in line with the frameworks set out in the United Nations Guiding Principles on Business and Human Rights (UNGP) issued by the United Nations Human Rights Council and the OECD Guidelines for Multinational Enterprises. As one of our major efforts, Sony conducts human rights risk impact assessments, which serve as the starting point for our human rights due diligence. After identifying potential human rights risks that are highly relevant to Sony’s business activities, the assessments further identified three areas as priority areas for enhancing initiatives throughout the Sony Group: responsible supply chains, respect for DE&I and responsible development and use of technologies. As a result of the assessments, Sony promotes individual initiatives for each of these areas.

Technology for Sustainability

Sony supports technological development that helps businesses grow and innovation that betters society and industry for the future.

For example, Sony’s R&D regarding sensing technology that measures the water content in soil, ultra-wide area sensing network technology, and sophisticated predictive data analytics technology, is underway. Sony promoted the practical application of Triporous

™

, a plant-based porous carbon material made from rice husks, which has now been introduced in the apparel sector, including through deodorant and antibacterial fibers, and in the healthcare sector, including though cleaning agents. Sony is also working to reduce the environmental impact of its products through the development of environmentally conscious materials and technologies to reduce power consumption.

<Sony’s sustainability efforts on other sustainability issues>

Sony Group is driving initiatives to improve accessibility so that people with diverse needs can enjoy our products and services. For example, Sony employs inclusive design, including the participation of employees with disabilities in the planning of products and services, interviews with people with disabilities, and usability tests. In March 2023, the Sony Group exhibited at the CSUN Assistive Technology Conference 2023 through which Sony provided opportunities for more users to experience Sony’s accessible products and services and received various feedback from users for further possible improvements in the accessibility of Sony’s products and services.

In 2018, Sony established and implemented the “Sony Group Ethics Guidelines,” as described above, as Sony has expanded its AI development and usage. In December 2019 Sony established the Sony Group AI Ethics Committee, and in 2021 the AI Ethics Office was established within Sony Group Corporation to provide subject matter expertise on AI ethics to all Business Units. Sony has been strengthening its framework for AI ethics with initiatives such as establishing an internal document stipulating requirements to be complied with in the commercialization process of electronic products and services, and starting AI ethics assessments in the product development life cycle.

(3) Human Capital Strategies, Metrics and Targets

Starting from the electronics business, Sony has continued to evolve, expanding the breadth of its businesses to include semiconductors, music, financial services, motion pictures and games. Furthermore, Sony has developed all its businesses globally, and has tailored its organizational structure with the aim of supporting their optimal global operation. Sony has headquartered half of its six main business segments in the U.S., and Sony’s

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diverse businesses operating across different regions are sustained by our diverse employees, one of Sony’s most important management resources, who form the foundation for creative innovation. Sony considers the diversity of our employees and businesses as drivers for value creation, along with creativity and technology. Sony has approximately 110,000 employees worldwide who are diverse, not only in terms of nationality and race, but also due to the expansion of Sony’s businesses, in terms of job types. Employee diversity constitutes the driving force behind the growth of each business. With their diverse backgrounds and varied specialties, Sony’s employees connect and intersect across businesses and regions, fusing technology and creativity to create new value in alignment with Sony’s Purpose, which is to “fill the world with emotion, through the power of creativity and technology.”

Since its founding, Sony has respected the independence and challenger’s spirit of individuals, and cherished a corporate culture based on the partnership between Sony and each individual employee, where each party is accountable to the needs of the other. Sony’s People Philosophy, “Special You, Diverse Sony,” represents Sony’s approach to employees, which has taken root and been carried on as part of our corporate culture, and conveys the desire that each unique individual and Sony embrace diversity and continue to grow together, centered on a shared Purpose.

The group-wide HR strategy based on Sony’s People Philosophy is defined as: “Attract talented individuals,” “Develop talented individuals,” and “Engage talented individuals.” Sony aims to maximize the performance of the Sony Group as a whole by focusing on measures that support spontaneous employee challenges and their willingness to grow, and in turn maximize the power of each individual employee. With regard to specific initiatives, Business Units’ HR executives formulate and implement the most appropriate HR measures in accordance with the characteristics of their respective businesses and regions.

(i) “Attract talented individuals”

Sony considers it important to attract diverse talent who identify with Sony’s Purpose, possess a high level of skill and expertise, embrace the spirit of challenge, and possess the ambition to grow. In recruitment activities, Sony strategically works with all Sony Group companies worldwide to attract world-class talent, and also focuses on industry-academia collaboration as a

mid-

to long-term measure to develop diverse talent pipelines. Sony is also globally providing opportunities that lead to the success of employees with various business, regional, and social backgrounds. For example, in the U.S., Sony provides early training and educational support to those who do not have sufficient opportunities and links these activities to the recruitment of diverse individuals.

(ii) “Develop talented individuals”

Sony believes that the most effective way for our employees to grow is to provide them with job opportunities where they have autonomy and are able to demonstrate their desire to grow by taking on new challenges. For this reason, Sony systematizes the skills required according to the roles of employees and aims to strengthen each skill throughout the Group. Sony strongly believes that management-level employees play an important role in the growth of the Sony Group and its employees. Sony’s management team and HR departments discuss the direction for the

mid-term

development training and strengthening of the Group’s management and provide management-level employees with various programs such as leadership development and coaching, which aim to expand horizons and increase experience in a broad range of fields. Additionally, Sony has established the “Sony University” program, which was designed to nurture future leaders who will play a key role in each business segment and function. Furthermore, through the “Sony Cross-Mentoring Program,” Sony aims to create strategic connections between the current management team and future key employees in each business segment, to facilitate passing on the current leadership team’s wealth of experience to the next generation and to develop new group synergies and talented individuals.

(iii) “Engage talented individuals”

To fully leverage the diversity of our employees, Sony believes that it is essential for each employee with different personalities, lifestyles, and work styles to continue to take on challenges in pursuit of growth. Sony’s initiatives include its diverse career development programs (including an internal job posting program, the “Free Agent Program” and the “Career Plus” program, among others, which all provide opportunities for professional experience within the Sony Group) and the arrangement of “PORT,” a space for learning and employee interaction within the Sony Group, in which

employee-led

community activities and various training programs are held.

Sony believes that whether our diverse employees are able to maximize their uniqueness depends on their engagement and degree of empathy with our Purpose. At Sony, employee engagement is considered a

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particularly important indicator and is incorporated as part of the evaluation factors of remuneration linked to business results for Senior Executives of the Corporation. Going forward, Sony aims to continue to promote initiatives that lead to greater employee empathy with the Purpose and higher employee engagement, thereby aiming to realize the sustainable growth of Sony.

Similar to a strong stone wall built by skillfully combining stones of different shapes, Sony aims to realize an organization in which diverse personalities, opinions, views, and values coexist in a corporate setting. Sony has implemented priority measures that are suitable for each business, region, and social environment in order to promote the appointment of employees with diverse backgrounds, place importance on the perspective of equity, and achieve true inclusion, which we believe will lead to the sustainable growth of the Sony Group which is comprised of diverse businesses.

As a group-wide initiative, Sony has established a “Diversity Statement” that emphasizes the importance of promoting diversity. In the U.S., Sony creates a wide range of internal and external opportunities. For example, SME has its own framework, “MILES,” for fostering DE&I that contributes to industry development, and SPE has the “Sony Pictures Action” program, which focuses on four pillars — people, content, partners, and community — to provide support for those who are socially disadvantaged. In addition, since 2015, Sony has held a “Diversity Week” every year and Sony Group companies around the world hold events to promote understanding of diversity in terms of gender, race, nationality, sexual orientation, gender identity, and disabilities.

(i) Diversity of experience

Sony believes that adding new knowledge and perspectives gained through experience at other companies will lead to the growth of our businesses and employees. Throughout the years, Sony has aimed to actively promote hiring individuals with such diversity of experience, especially in areas of business need. The ratio of employees with prior experience at other companies to all new hires at Sony Group companies in Japan was 52.5% for the fiscal year ended March 31, 2023, 49.6% for the fiscal year ended March 31, 2022, and 48.7% for the fiscal year ended March 31, 2021. Additionally, the majority of our employees at overseas Group companies have prior experience at other companies. During performance evaluation, Sony does not distinguish between employees with experience at other companies and those who started their careers at Sony.

(ii) Diversity of nationality

As of March 31, 2023, half of the Senior Executive Vice Presidents at Sony Group Corporation, who are responsible for major businesses, were

non-Japanese.

This demonstrates the diversity of backgrounds at the leadership level at Sony. In addition, some of the Sony Group’s major businesses, such as the Pictures and Music Publishing businesses, have foreign nationals playing a major role in their operations. Approximately half of all Sony Group employees are engaged in business activities outside Japan, and more than 90% of these employees are locally hired. In addition, Sony continues to actively recruit talented students and experienced individuals from around the world, regardless of nationality, to become employees capable of enhancing global research and development and cutting-edge technology development, such as AI developed at Sony Research Inc. (formerly Sony AI Inc.).

(iii) Diversity of gender

Sony aims to globally promote greater opportunities for women as part of our efforts to ensure an inclusive work environment in which diverse employees can play an active role. As of March 31, 2023, the ratio of women to men in the workforce was 34.0% and the ratio of women to men in management positions was 30.0% at the whole Sony Group. On the other hand, Sony considers increasing gender diversity as an area of focus for Japan, where the ratio of women to men in management positions is low and the number of women majoring in the fields of science or engineering is limited.

Sony believes that it is essential to promote greater opportunities for women through measures to improve the working environment, as well as development programs and recruitment activities. Specifically, Sony has programs focused on continuously developing female employees, such as development and career training programs for female leaders as well as roundtable discussions and networking events for female employees, and is strengthening recruitment activities geared towards female employees, such as through science programs for female students aimed at supporting the next generation of talent. In addition, Sony Group Corporation and its major subsidiaries in Japan have set targets for increasing both the ratio of women to men in management positions and the ratio of male employees taking childcare leave.

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(iv) Promoting greater opportunities for LGBTQ+

Sony is working to ensure internal infrastructure inclusive of diverse employees and aiming to provide LGBTQ+ employees globally with working environments in which they can feel comfortable being themselves, while acknowledging various national and regional considerations and circumstances.

As a group-wide initiative, Sony introduced a pride logo, a Sony logotype displayed in rainbow colors, to visually express Sony’s respect inside and outside Sony and support for LGBTQ+ employees and communities. In addition to supporting LGBTQ+ employees, Sony has implemented an

e-learning

course for employees that covers LGBTQ+ topics, offers LGBTQ+ workshops, organizes events designed to raise employees’ awareness, and participates in pride parades globally. In the U.S., in partnership with GLAAD, an organization that aims to prevent LGBTQ+ discrimination in the media, SME provided training on LGBTQ+ inclusion and sponsored the 33rd Annual GLAAD Media Awards, which recognizes media outlets for their fair, accurate, and inclusive representation of LGBTQ+. In Japan, Sony has expanded various personnel programs to cover

same-sex

partners, provides gender-neutral restrooms, makes it optional for job applicants to indicate their gender on applications, and provides private restrooms and shower facilities in each room at corporate dormitories, all measures aimed at ensuring a working environment inclusive of diverse employees.

(v) Promoting greater opportunities for individuals with disabilities

Sony aims to create an employment environment where disabilities do not create barriers and no employee feels held back by their disability. Enabling every employee to thrive follows the philosophy of Masaru Ibuka, one of Sony’s founders, who said “we had a spirit of autonomy and a belief in creating workplaces that do not offer charity, but rather create an environment that makes it possible for individuals with disabilities to manufacture products that exceed those manufactured by individuals without disabilities.” To this end, Sony is focused on complying with the laws and norms of each country and region and aims to create an inclusive work environment that enables career building regardless of disabilities, and the entire Group is working to achieve this goal.

Sony has signed the Valuable 500, a World Economic Forum initiative focused on the inclusion of people with disabilities, and Sony’s goal to create inclusive work environments aligns with this initiative. Sony was named one of the Valuable 500 Iconic Leader companies, which are driving forces in their respective countries, regions, and industries. In the U.S., Sony is actively working with Disability:IN, an organization focused on the inclusion of people with disabilities in business, and has created an

e-learning

program to deepen the understanding of accessibility and disabilities among Sony Group companies and delivered it to employees. In Japan, Sony manages three special-purpose subsidiaries as an independent business establishment, and the know-how regarding reasonable workplace accommodation and accessibility related to the employment of persons with disabilities gained through the operation of these subsidiaries is being deployed throughout the Group. For example, employees of overseas Group companies visit the manufacturing sites of the special-purpose subsidiaries in Japan to learn about designing production lines that are accessible for people with disabilities to work on.

Through the foregoing policy, Sony plans to continuously implement various programs to foster the diversity of our employees and build an inclusive organization for Sony’s sustainable growth and value creation for society.

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C.	Organizational Structure

The following table sets forth the significant subsidiaries owned, directly or indirectly, by Sony Group Corporation.


Name of company	Country of incorporation/residence			(As of March 31, ~~2020)~~2023) Percentage owned
Sony Interactive Entertainment Inc.	Japan		100.0
Sony Music Entertainment (Japan) Inc.	Japan		100.0
Sony Corporation	Japan		100.0
Sony Global Manufacturing & Operations Corporation		Japan			100.0
Sony Semiconductor Solutions Corporation		Japan			100.0
Sony Semiconductor Manufacturing Corporation		Japan			100.0
Sony ~~Marketing Inc.~~Semiconductor Energy Management Corporation	Japan		~~Japan~~			100.0
~~Sony Mobile Communications Inc.~~		~~Japan~~			~~100.0~~
Sony Network Communications Inc.		Japan			100.0
Sony ~~Interactive Entertainment~~Marketing Inc.		Japan			100.0
~~Sony Home Entertainment & Sound Products Inc.~~		~~Japan~~			~~100.0~~
Sony Storage Media Solutions Corporation		Japan			100.0
Sony ~~Imaging Products &~~Global Solutions Inc.		Japan			100.0
~~Sony Music Entertainment (Japan) Inc.~~		~~Japan~~			~~100.0~~
Sony Financial ~~Holdings~~Group Inc.*	Japan		~~Japan~~			~~65.1~~ 100.0
Sony Life Insurance Co., Ltd.*	Japan		~~Japan~~			100.0
Sony Bank Inc.*	Japan		~~Japan~~			100.0
Sony Assurance Inc.*	Japan		~~Japan~~			100.0
~~Sony Americas Holding Inc.~~		~~U.S.A.~~			~~100.0~~
Sony Corporation of America		U.S.A.			100.0
~~Sony Electronics Inc.~~		~~U.S.A.~~			~~100.0~~
~~Sony Music Holdings Inc.~~		~~U.S.A.~~			~~100.0~~
Sony Interactive Entertainment LLC		U.S.A.		100.0
~~100.0~~Sony Music Entertainment	U.S.A.		100.0
Sony Music Publishing LLC	U.S.A.		100.0
Sony Pictures Entertainment Inc.		U.S.A.		100.0
~~100.0~~Columbia Pictures Industries, Inc.	U.S.A.		100.0
CPT Holdings, Inc.		U.S.A.			100.0
Sony ~~Music Entertainment~~Electronics Inc.	U.S.A.		~~U.S.A.~~			100.0
~~Sony/ATV Music Publishing LLC~~		~~U.S.A.~~			~~100.0~~
Sony Europe B.V.		U.K.			100.0
Sony Interactive Entertainment Europe Ltd.		U.K.			100.0
Sony Global Treasury Services Plc		U.K.			100.0
Sony Overseas Holding B.V.		Netherlands			100.0
Sony (China) Limited		China			100.0
Sony EMCS (Malaysia) Sdn. Bhd.		Malaysia			100.0
Sony Electronics (Singapore) Pte. Ltd.		Singapore			100.0

* Sony Corporation owns 65.1% of Sony Financial Holdings Inc., and Sony Financial Holdings Inc. owns 100% of Sony Life Insurance Co., Ltd., Sony Bank Inc. and Sony Assurance Inc.

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D.	Property, Plant and Equipment

Sony has a number of offices, plants and warehouses throughout the world. Most of the buildings and land in/on which such offices, plants and warehouses are located are owned by Sony.

The following table sets forth information as of March 31, 2020 with respect to plants used for the production of products mainly for products and services in the G&NS, EP&S and I&SS segments with floor space of more than 500,000 square feet:


~~Location~~	Approximate floor space		~~Principal products produced~~
	~~(square feet)~~
~~In Japan:~~

~~Nagasaki~~ ~~(Sony Semiconductor Manufacturing Corporation~~ ~~— Nagasaki TEC)~~		~~2,381,000~~	~~CMOS Image Sensors~~

~~Kumamoto~~ ~~(Sony Semiconductor Manufacturing Corporation~~ ~~— Kumamoto TEC)~~		~~2,289,000~~	~~CMOS & CCD Image Sensors, Microdisplay~~

~~Kagoshima~~ ~~(Sony Semiconductor Manufacturing Corporation~~ ~~— Kagoshima TEC)~~		~~1,789,000~~	~~Analog LSI, Crystal LED (Panel Process), MMIC~~

~~Oita~~ ~~(Sony Semiconductor Manufacturing Corporation~~ ~~— Oita TEC)~~		~~976,000~~	~~CMOS Image Sensors (Wafer Process)~~

~~Kohda, Aichi~~ ~~(Sony Global Manufacturing & Operations Corporation~~ ~~— Tokai TEC — Kohda Site)~~		~~903,000~~	~~Digital Still Cameras, Video Camera Peripherals, Interchangeable-lens Cameras, Lenses for Interchangeable-lens Cameras, Lenses, Lens Blocks, Audio Devices, aibo~~

~~Inazawa, Aichi~~ ~~(Sony Global Manufacturing & Operations Corporation~~ ~~— Tokai TEC — Inazawa Site)~~		~~842,000~~	~~Surface Mounted Boards, TVs, Crystal LED (Assembly)~~

~~Tsuruoka, Yamagata~~ ~~(Sony Semiconductor Manufacturing Corporation~~ ~~— Yamagata TEC)~~		~~698,000~~	~~CMOS Image Sensors (Wafer Process)~~

~~Kosai, Shizuoka~~ ~~(Sony Global Manufacturing & Operations Corporation~~ ~~— Tokai TEC — Kosai Site)~~		~~576,000~~	~~Broadcasting/Professional Equipment (Cameras/Editing Systems), Projectors,~~ ~~Professional-use~~ ~~Microphones,~~ ~~Professional-use~~ ~~Monitors, Medical Peripheral Equipment, Flow Cytometers~~

~~Kisarazu, Chiba~~ ~~(Sony Global Manufacturing & Operations Corporation~~ ~~— Kisarazu TEC)~~		~~541,000~~	~~PlayStation~~ ® ~~4, FeliCa IC Cards and Related Devices~~

~~Outside of Japan:~~

~~Terre Haute, Indiana, U.S.A.~~ ~~(Sony DADC US Inc.)~~		~~1,352,000~~	~~Blu-ray~~ ~~Disc~~ ™ ~~-ROMs~~

~~Bangi, Malaysia~~ ~~(Sony EMCS (Malaysia) Sdn. Bhd. — KL TEC)~~		~~1,183,000~~	~~TVs, TV Components~~

~~Penang, Malaysia~~ ~~(Sony EMCS (Malaysia) Sdn. Bhd. — PG TEC)~~		~~1,021,000~~	~~System Stereos, Home Audios, BD Players, BD Recorders, Digital Music Players, Headphones, Personal Audios~~

~~Huizhou, China~~ ~~(Sony Precision Devices (Huizhou) Co., Ltd.)~~		~~1,010,000~~	~~Optical Pickups~~

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The status of major property, plants and equipment as of March 31, 2023 is as follows:


~~Location~~	Approximate floor space		~~Principal products produced~~
	~~(square feet)~~

~~Wuxi, China~~ ~~(Sony Digital Products (Wuxi) Co., Ltd.)~~		~~798,000~~	~~Digital Still Cameras, Lens Assembly, Interchangeable-lens Cameras, Lenses for Interchangeable-lens Cameras~~

~~Bangkadi, Thailand~~ ~~(Sony Device Technology (Thailand) Co., Ltd.)~~		~~513,000~~	~~Image Sensor Assembly~~


Facility or Subsidiary Name (Primary Location)	Segment	Details	Carrying Amount (Yen in millions)									Number of employees *2
Facility or Subsidiary Name (Primary Location)	Segment	Details	Land (Area (thousand square meters))			Buildings		Machinery, equipment and other assets *1		Right-of-use assets		Number of employees *2
In Japan (Sony Group Corporation *3 ):

Headquarters (Minato-ku, Tokyo)	Corporate	Headquarters facilities		1,275 (19	)		21,862		14,681		—		1,435

Others *4	Corporate	Headquarters facilities		6,582 (305	)		34,544		3,718		—		1,010

In Japan (Subsidiaries):

Sony Interactive Entertainment Inc. (Minato-ku, Tokyo)	G&NS	Home gaming consoles / cloud-related software		— (—	)		1,407		168,168		11,381		1,900

Sony Corporation (Minato-ku, Tokyo)	ET&S	Research facilities for TVs, audio / video devices, cameras, broadcasting equipment and medical equipment		— (—	)		2,372		47,810		35,495		7,300

Sony Network Communications Inc. *5 (Shinagawa-ku, Tokyo)	ET&S	Data communication facilities		— (—	)		527		69,385		5,177		1,900

Sony Global Manufacturing & Operations Corporation (Kohda Site, etc.) (Minato-ku, Tokyo)	ET&S, I&SS, All Other	Production facilities for electronic devices, etc.		5,543 (468	)		10,870		16,430		5,517		4,000

Sony Semiconductor Solutions Corporation (Atsugi-shi, Kanagawa)	I&SS	Research facilities for image sensors, etc.		— (—	)		1,326		36,070		19,525		7,300

Sony Semiconductor Manufacturing Corporation (Nagasaki TEC, etc.) (Kikuchi-gun, Kumamoto)	I&SS	Production facilities for image sensors, etc.		11,244 (622	)		144,569		545,869		10,075		8,100

Sony Semiconductor Energy Management Corporation (Nagasaki TEC, etc.) (Kikuchi-gun, Kumamoto)	I&SS	Energy supply facilities for the manufacturing of image sensors, etc.		— (—	)		25,638		87,833		35,638		100

Sony Music Entertainment (Japan) Inc. *5 (Chiyoda-ku, Tokyo)	Music	Music facilities and in-house software		22,548 (320	)		11,009		55,105		10,595		4,200

Sony Financial Group Inc. *5 (Chiyoda-ku, Tokyo)	Financial Services	In-house software		6,324 (25	)		6,290		70,064		84,023		13,500

Sony Global Solutions Inc. (Minato-ku, Tokyo)	Corporate	In-house software		— (—	)		490		21,889		995		600

Outside Japan (Subsidiaries):

Sony Corporation of America *5 (New York, United States)	ET&S, I&SS	Production facilities for electronic products, etc.		317 (112	)		18,875		3,841		3,395		1,300
	Music	Music catalogs, etc.		80 (4	)		9,401		797,219		41,901		6,900
	Pictures	Production facilities for motion pictures, television programming, video software, etc.		11,070 (268	)		45,917		814,019		39,486		9,100
	All Other, Corporate	Office buildings and machinery, etc.		871 (142	)		10,473		15,516		17,994		1,600

Sony Interactive Entertainment LLC *5 (California, United States)	G&NS	Cloud-related facilities, etc.		— (—	)		6,909		150,792		104,119		6,100

Sony Europe B.V. *5 (Surrey, United Kingdom)	ET&S, I&SS, All Other	Office buildings and sales facilities, etc.		2,344 (45	)		3,822		11,956		9,078		3,900

Sony EMCS (Malaysia) Sdn. Bhd. (Selangor, Malaysia)	ET&S	Production facilities for electronic devices, etc.		— (—	)		4,589		8,482		185		4,900

Sony Electronics (Singapore) Pte. Ltd. (Singapore)	ET&S, I&SS, All Other, Corporate	In-house software		— (—	)		88		11,802		1,633		400

*1 “Machinery, equipment and other assets” represents machinery, equipment and other tangible fixed assets, as well as content assets and other intangible assets.

- 36 -

Table of Contents

*2 Numbers of employees of subsidiaries are rounded to the nearest hundred.

*3 Includes facilities leased from subsidiaries in Japan. In addition to the ~~above~~listed facilities, Sony ~~has a number~~Group Corporation leases its land, buildings and structures mainly to subsidiaries and affiliates in Japan. Furthermore, Sony Group Corporation subleases its

Right-of-use

assets mainly to subsidiaries and affiliates in Japan.

*4 “Others” primarily includes Sony City Osaki and Atsugi TEC.

*5 Figures for Sony Network Communications Inc., Sony Music Entertainment (Japan) Inc., Sony Financial Group Inc., Sony Corporation of ~~other plants for electronic products throughout the world.~~America, Sony ~~owns R&D facilities,~~Interactive Entertainment LLC and Sony ~~Corporation’s headquarters building, with a total floor space of approximately 1,753,000 square feet, in Tokyo, Japan, where administrative functions and product development activities~~Europe B.V. are carried out. SIEI has its corporate headquarters in Sony Corporation’s headquarters building and leases additional office space in Tokyo from a third party, where administrative functions, product development, and software development are carried out. SIE and SIEE leaseconsolidated financial figures, which include their ~~offices in the U.S. and Europe, respectively.~~subsidiaries’ figures.

SPE’s corporate offices and motion picture and television production facilities are headquartered in Culver City, California, where it owns and operates a studio facility, Sony Pictures Studios, with aggregate floor space of approximately 1,939,200 square feet. SPE also leases office space and motion picture and television support facilities from third parties and affiliates of Sony Corporation in various worldwide locations. SPE’s film and videotape storage operations are located in various leased locations in the U.S. and Europe.

~~SME’s corporate offices are headquartered in New York, NY where it leases office space from SCA. SME also leases office space from third parties in various locations worldwide.~~

~~Most of SMEJ’s offices, including leased premises, are located in Tokyo, Japan.~~

~~SCA’s corporate offices are headquartered in New York, NY where it leases office space from a third party.~~

Item 4A.

Unresolved Staff Comments

None

Item 5.

Operating and Financial Review and Prospects

The following discussion covers the fiscal years ended March 31, 2022 and 2023.

A.	Operating Results

Operating Performance

The following discussion covers the fiscal years ended March 31, ~~2019~~2022 and ~~2020.~~2023. For the discussion covering the fiscal year ended March ~~31, 2018, please~~2021, refer to “Item 5.A.” of Sony’s Form

20-F

for the fiscal year ended March 31, ~~2019~~2022 filed with the SEC on June ~~18, 2019.~~28, 2022.

Fiscal year ended March 31

2019

2020

(Yen in billions)

Sales and operating revenue

8,665.7

8,259.9

Equity in net income (loss) of affiliated companies

(3.0
)
9.6

Operating income

894.2

845.5

Income before income taxes

1,011.6

799.5

Net income attributable to Sony Corporation’s stockholders

916.3

582.2


	Fiscal year ended March 31
	2022		2023
	(Yen in billions)
Sales and financial services revenue		9,921.5		11,539.8
Operating income		1,202.3		1,208.2
Income before income taxes		1,117.5		1,180.3
Net income attributable to Sony Group Corporation’s stockholders		882.2		937.1

Sales

For the fiscal year ended March 31, ~~2020,~~2023, sales ~~and operating revenue (“Sales”) decreased 405.8~~increased 1 trillion 618.3 billion yen compared to the fiscal year ended March 31, ~~2019~~2022

(“year-on-year”)

to 811 trillion ~~259.9~~539.8 billion yen. This significant increase was mainly due to significant ~~decreases~~increases in sales in the ~~Electronics Products & Solutions (“EP&S”)~~G&NS, I&SS, Music and ~~the Game & Network Services (“G&NS”)~~Pictures segments ~~partially offset primarily by a significant~~as well as an increase in sales in the ~~Imaging & Sensing Solutions (“I&SS”)~~ET&S segment. ~~Sales in the current fiscal year also included 7.9 billion yen in patent royalty revenue resulting from the signing of a licensing agreement, recorded within Corporate and elimination.~~ A further breakdown of sales figures is presented under “Operating Performance by Business Segment” below.

~~Table of Contents~~

Cost of Sales, Selling, General and Administrative Expenses and Other Operating (Income) Expense, net

“Sales” in the analysis of the ratio of “cost of sales” to sales, the ratio of “R&D costs” to sales, and the ratio of “selling, general and administrative expenses” (“SGA expenses”) to sales refers only to the net sales ~~and other operating revenue~~ portions of consolidated sales (which excludes financial services revenue). This is because financial services expenses are recorded separately from cost of sales and SGA expenses in the consolidated financial statements. The calculations of all ratios below that pertain to reportable segments include intersegment transactions.

For the fiscal year ended March 31, ~~2020,~~2023, cost of sales ~~decreased 397.6~~increased 1 trillion 328.9 billion yen

year-on-year

to 47 trillion ~~753.2~~174.7 billion yen. The ratio of cost of sales to sales ~~improved~~deteriorated

year-on-year

from ~~69.7%~~69.6% to ~~68.3%~~71.1%.

R&D costs (all R&D costs are included within cost of sales) increased ~~18.1~~117.3 billion yen

year-on-year

to ~~499.3~~735.7 billion yen. The ratio of R&D costs to sales was ~~7.2%~~7.3%, compared to ~~6.5%~~7.4% in the fiscal year ended March 31, ~~2019.~~2022. For further details, refer to “

“Research and Development

” in Item 5.C.

SGA expenses ~~decreased 74.2~~increased 380.7 billion yen

year-on-year

to 1 trillion ~~502.6~~969.2 billion yen. The ratio of SGA expenses to sales deteriorated

year-on-year

from ~~21.3%~~18.9% to ~~21.6%~~19.5%.

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Table of Contents

Other operating ~~income,~~(income) expense, net, decreased ~~68.0~~53.5 billion yen

year-on-year

to ~~3.6~~income of 12.0 billion yen. This significant deterioration was mainly due to the ~~following factors that occurred~~absence of a gain of 70.0 billion yen from the transfer of certain operations of Game Show Network, LLC in the Pictures segment in the fiscal year ended March 31, ~~2020 and the absence of the following factors that occurred in the fiscal year ended March 31, 2019.~~2022. Refer to Note 2131 of the consolidated financial statements.

~~Factors that occurred in~~

Share of profit of investments accounted for using the ~~fiscal year ended March 31, 2020~~

~~Remeasurement and realized gains resulting from the public listing and sale of a portion of shares of SRE Holdings Corporation: 17.3 billion yen (All Other)~~

~~Realized and remeasurement gains resulting from the transfer of a portion of shares of NSF Engagement Corporation: 6.3 billion yen (Corporate and elimination)~~

~~Factors that occurred in the fiscal year ended March 31, 2019~~

~~Remeasurement gain resulting from Sony’s acquisition of the remaining approximately 60%~~ equity ~~interest in DH Publishing, L.P. (“EMI”), which owned and managed EMI Music Publishing: 116.9 billion yen (Music segment)~~

~~An impairment charge against long-lived assets of the smartphone business: 19.2 billion yen (EP&S segment)~~

~~An impairment charge against long-lived assets and goodwill of the storage media business: 12.9 billion yen (All Other)~~

~~Equity in Net Income (Loss) of Affiliated Companies~~method

For the fiscal year ended March 31, ~~2020, equity in net income~~2023, the share of profit (loss) of ~~affiliated companies~~investments accounted for using the equity method was income of ~~9.6~~24.4 billion yen, ~~compared~~essentially flat

year-on-year.

This result was mainly due to ~~a loss of 3.0 billion yen~~increases in the ~~fiscal year ended March 31, 2019.~~share of profit of investments in the Music and Pictures segments, substantially offset by a decrease in the share of profit of the investment in M3 Inc. (“M3”). This ~~improvement~~decrease in the share of profit of the investment in M3 was mainly due to the absence of the ~~11.6~~recording of 5.1 billion yen ~~recording~~in the share of ~~equity in net loss for EMI, mainly due to expenses relating to warrants and management equity plans in connection with Sony’s acquisition~~profit of the ~~remaining approximately 60%~~investment in M3 related to a gain on a change in M3’s equity interest in ~~EMI, recorded in the Music segment~~an affiliated company in the fiscal year ended March 31, ~~2019.~~

2022, resulting from the issuance of new shares in connection with the affiliated company’s public listing.

Operating Income

For the fiscal year ended March 31, ~~2020,~~2023, operating income ~~decreased 48.8~~was 1 trillion 208.2 billion yen, essentially flat

~~year-on-year~~

year-on-year.

~~to 845.5 billion yen.~~

This ~~decrease~~result was ~~primarily~~ due to significant increases in operating income in the Financial Services, I&SS and Music segments as well as a significant decrease in the operating loss in Corporate and elimination, substantially offset by significant decreases in operating income in the ~~Music~~Pictures and G&NS segments ~~partially offset by significant increases~~and a decrease in operating income ~~mainly~~ in the ~~I&SS segment~~ET&S segment. Operating income for the previous fiscal year included the above-mentioned factor being recorded as other operating (income) expense, net. Operating income for the previous fiscal year also included a loss of 16.8 billion yen recorded due to an unauthorized withdrawal of funds at a subsidiary of Sony Life and ~~All Other.~~a settlement gain of 5.5 billion yen in connection with the termination of the defined benefit pension plan at certain U.S. subsidiaries, mainly within Corporate and elimination. Operating income for the current fiscal year ~~as well as~~included the impact of litigation settlements, net of expenses, of 5.7 billion yen received in relation to lawsuits for Recorded Music and Music Publishing and the recovery of 22.1 billion yen of an unauthorized withdrawal of funds at a subsidiary of Sony Life which occurred in the previous fiscal ~~year included the above-mentioned factors being recorded as other operating (income) expense, net.~~year.

~~Other~~Financial Income and Expenses

For the fiscal year ended March 31, ~~2020, other~~2023, financial income ~~decreased~~increased by ~~122.8~~11.8 billion yen

year-on-year,

to ~~21.9~~31.1 billion yen, while ~~other~~financial expenses ~~increased~~decreased by ~~40.6~~45.2 billion yen

year-on-year,

to ~~68.0~~59.0 billion yen. The net

~~Table~~ effect of ~~Contents~~

~~amount of other~~financial income and ~~other~~ expenses was an expense of ~~46.0~~27.9 billion yen, ~~a deterioration~~an improvement of ~~163.4~~56.9 billion yen

~~year-on-year~~

year-on-year.

~~mainly~~

This significant improvement was primarily due to ~~the absence of the 117.8 billion yen realized and~~a decrease in unrealized ~~gains resulting from the public listing and sale of certain~~losses, mainly on Sony’s shares of Spotify Technology S.A. ~~(“Spotify”) recorded in the fiscal year ended March 31, 2019, as well as the recording of a loss on equity securities, net, in the fiscal year ended March 31, 2020 and a~~

~~year-on-year~~

~~increase in net foreign exchange losses.~~

~~The foreign exchange loss, net, increased by 15.5 billion yen~~

~~year-on-year,~~

~~to 26.8 billion yen.~~

~~Interest and dividends in other income of 19.3 billion yen were recorded in the fiscal year ended March 31, 2020, an decrease of 2.3 billion yen~~

~~year-on-year.~~

~~Interest recorded in other expenses totaled 11.1 billion yen, a decrease of 1.3 billion yen~~

~~year-on-year.~~

Income before Income Taxes

For the fiscal year ended March 31, ~~2020,~~2023, income before income taxes ~~decreased 212.2~~increased 62.8 billion yen

year-on-year

to ~~799.5~~1 trillion 180.3 billion yen.

Income Taxes

During the fiscal year ended March 31, ~~2020,~~2023, Sony recorded ~~177.2~~236.7 billion yen of income tax ~~expense, resulting in an~~expenses. The effective tax rate of ~~22.2%, which~~20.1% in the current fiscal year was ~~higher~~lower than the effective tax rate of ~~4.5%~~20.5% in the previous fiscal ~~year ended March 31, 2019. This higher~~year. The effective tax rate in the current fiscal year ~~ended March 31, 2020 was mainly due~~reflects the impact of an increase in tax credits in Japan, and the benefit from a decrease in the deferred tax liabilities related to Japan controlled foreign company taxation. The effective tax rate in the previous fiscal ~~year’s~~year reflected the impact of the reversal of ~~154.2 billion yen~~a previous write-down of ~~valuation allowances against a significant portion of the~~certain deferred tax assets at certain companies in ~~the U.S. consolidated tax group and not recording income tax expense on the remeasurement gain for the equity interest in EMI.~~Japan. Refer to Note 2225 of the consolidated financial statements.

Net Income Attributable to Noncontrolling Interests

For the fiscal year ended March 31, ~~2020,~~2023, net income attributable to noncontrolling interests of ~~40.1~~6.5 billion yen was recorded, ~~a decrease~~an increase of ~~10.2~~0.3 billion yen

year-on-year.

Refer to Note 20 of the consolidated financial statements.

- 38 -

Table of Contents

Net Income Attributable to Sony Group Corporation’s Stockholders

For the fiscal year ended March 31, ~~2020,~~2023, net income attributable to Sony Group Corporation’s stockholders, which excludes net income attributable to noncontrolling interests, ~~decreased 334.1~~increased 54.9 billion yen

year-on-year

to ~~582.2~~937.1 billion yen.

Basic net income per share and diluted net income per share, attributable to Sony Group Corporation’s stockholders for the fiscal year ended March 31, ~~2020~~2023 were ~~471.64~~758.38 yen and ~~461.23~~754.95 yen, respectively, compared with ~~723.41~~711.84 yen and ~~707.74~~705.16 yen, respectively, infor the fiscal year ended March 31, ~~2019.~~2022. Refer to Note 2326 of the consolidated financial statements.

Operating Performance by Business Segment

The following discussion is based on segment information. Sales ~~and operating revenue~~ in each business segment ~~include~~represents sales recorded before intersegment ~~transactions.~~transactions are eliminated. Operating income (loss) in each business segment represents operating income (loss) reported before intersegment transactions are eliminated and excludes unallocated corporate expenses. Refer to Note 294 of the consolidated financial statements.

~~In addition to those significant trends, uncertainties and events listed herein, refer to~~

~~“Trend Information~~

~~” in Item 5.D for more information on significant trends, uncertainties and events that had, or may have, an effect on business segment operating performance.~~

~~Table of Contents~~

Game & Network Services (G&NS)

Key Financial Figures

Fiscal year ended March 31

2019

2020

(Yen in millions)

Sales to external customers by product category

Digital Software and Add-on Content

1,102,231

1,010,296

Network Services

326,524

337,265

Hardware & Others

795,867

572,199

Sales to external customers

2,224,622

1,919,760

Intersegment sales

86,250

57,791

G&NS segment total sales

2,310,872

1,977,551

G&NS segment operating income

311,092

238,400

(Units in millions)

Major product unit sales

PS4 hardware

17.8

13.6


	Fiscal year ended March 31
	2022		2023
	(Yen in millions)
Sales to external customers by product category
Digital Software and Add-on Content		1,424,459		1,523,045
Network Services		409,355		464,676
Hardware & Others		840,542		1,550,812

Sales to external customers		2,674,356		3,538,533
Intersegment sales		65,407		106,065

G&NS segment total sales		2,739,763		3,644,598

G&NS segment operating income		346,089		250,006


	(Units in millions)
Major product unit sales
PS5 ™ hardware		11.5		19.1

For the fiscal year ended March 31, ~~2020,~~2023, sales ~~decreased 333.3~~increased 904.8 billion yen

year-on-year

to 13 trillion ~~977.6~~644.6 billion yen. This significant increase in sales was mainly due to the impact of foreign exchange rates, an increase in sales of hardware and an increase in sales of first-party titles, partially offset primarily by a decrease in sales of

non-first-party

titles including

add-on

content.

Operating income decreased 96.1 billion yen

year-on-year

to 250.0 billion yen. This significant decrease was primarily due to ~~a decrease in PlayStation~~

~~4 (“PS4~~

™

~~”) hardware sales and game software sales, as well as the impact of foreign exchange rates, partially offset by~~ an increase in ~~sales~~costs, mainly for ~~PlayStation~~

~~Plus (“PS Plus”).~~

~~Operating income decreased 72.7 billion yen~~

~~year-on-year~~

~~to 238.4 billion yen. This significant decrease was primarily due~~game software development and expenses associated with acquisitions completed in the current fiscal year, including Bungie*, in addition to the impact of the above-mentioned decrease in ~~game software~~ sales ~~and the negative impact~~ of ~~foreign exchange rates,~~

non-first-party

titles. This decrease in operating income was partially offset by the impact of the above-mentioned increase in sales ~~for PS Plus~~of first-party titles as well as a decrease in losses from hardware. During the current fiscal year, there was a 32.4 billion yen negative impact from foreign exchange rate fluctuations.

* 52.7 billion yen was recorded as expenses associated with acquisitions completed in the current fiscal year. For details regarding the acquisition of Bungie, refer to Note 30 of the consolidated financial statements.

Business Environment and ~~cost reductions.~~Strategy

~~Despite a decline in momentum for~~

~~free-to-play~~

~~games which are monetized via microtransactions rather than~~

~~up-front~~

~~purchases, the~~The operating performance of the G&NS segment for the fiscal year ended March 31, ~~2020~~2023 reflected ~~the continued demand for~~strong sales of hardware ~~software~~ and ~~network services, and continuous market interest surrounding cloud-based game streaming services. In this environment, Sony continued to focus on delivering immersive experiences to PlayStation~~

~~users by expanding its network services business~~peripheral devices resulting from a significant improvement in ~~a variety of ways, including through PS Plus and Sony’s proprietary game streaming services, Remote Play and PlayStation~~PS5

™

~~Now (“PS Now”). In addition, Sony completed~~supply in the ~~acquisition~~second half of ~~Insomniac Games Inc. as part of its strategy to bolster its first-party software lineup in~~ the fiscal year ~~ended March 31, 2020. In the fiscal year ending March 31, 2021, Sony intends to continue these objectives while also focusing on the launch of PlayStation~~

~~5 (“PS5~~

™

~~”).~~

~~Current View Regarding the Impact on the Business~~and a continuous stable revenue contribution from network services resulting from the ~~Spread~~positive impact of ~~the Coronavirus Disease 2019~~

~~(“COVID-19”)~~

Although there has been a slight impact on production of PS4 hardware due to issues in the component supply chain, demand in the short-term is being addressed with current inventory and sales are trending well. Sales of game software that is downloaded from the network, as well as PS Plus and PS Now subscriber numbers have significantly increased. Regarding the launch of PS5, although factors such as employees working from home and restrictions on international travel have presented some challenges in regards to part of the testing process and the qualification of production lines, development is progressing with the launch of the ~~console scheduled for~~new three-tiered PlayStation

Plus service. On the ~~2020 holiday season. At this point~~other hand, software sales were impacted by a reduction in ~~time no major problems have arisen~~users’ game spend as opportunities to go outside increased due to a reduction in ~~the game software development pipeline for Sony’s own first-party studios or its partners’ studios.~~

34- 39 -

Table of Contents

COVID-19

infections compared to the previous fiscal year, despite strong sales of certain new game titles such as

God of War Ragnarök.

In this environment, Sony aims to achieve future growth by increasing the number of active users in the PlayStation ecosystem through pursuit of the three strategies of console growth, portfolio expansion and Sony Group collaboration. Regarding console growth, Sony intends to further accelerate the penetration of PS5

™

and further expand the PS5

™

user base, which is driving user engagement. Regarding portfolio expansion, Sony intends to strengthen the development of new IP and live service games by continuing to invest proactively in PlayStation Studios, as well as investing in or acquiring third-party studios. For example, Sony has been collaborating closely with Bungie following the completion of its acquisition in July 2022, and intends to apply its expertise and experience as it promotes portfolio expansion in the area of live service games. Sony is also working to extend the reach of its existing IP by deploying its first-party titles to multiple platforms such as PC and mobile, a strategy which contributed to significant

year-on-year

growth in revenue from PC titles including

Marvel’s

Spider-Man

and

The Last of Us Part 1

in the fiscal year ended March 31, 2023. Regarding Sony Group collaboration, Sony is striving to consistently create films and television series based on PlayStation game IP, such as the TV series

The Last of Us,

and continues to work towards increased levels of collaboration within the Sony Group.

Music

Key Financial Figures

Fiscal year ended March 31

2019

2020

(Yen in millions)

Sales to external customers by product category

Recorded Music — Streaming

227,513

276,039

Recorded Music — Others

199,413

191,114

Music Publishing

106,666

157,478

Visual Media & Platform

261,433

213,961

Sales to external customers

795,025

838,592

Intersegment sales

12,464

11,317

Music segment total sales

807,489

849,909

Music segment operating income

232,487

142,345

On November 14, 2018, Sony acquired the entirety of the approximately 60% equity interest held by the investor consortium led by Mubadala Investment Company in EMI, resulting in EMI becoming a wholly-owned subsidiary of Sony. Financial results of EMI included in the Music segment for the fiscal year ended March 31, 2019 include equity earnings (loss) from April 1 through November 13, 2018 and sales and operating income (loss) from November 14, 2018 through March 31, 2019. Sales and operating income (loss) for the Music segment in the fiscal year ended March 31, 2020 include the financial results of EMI from April 1, 2019 onward.


	Fiscal year ended March 31
	2022		2023
	(Yen in millions)
Sales to external customers by product category
Recorded Music — Streaming		462,368		598,868
Recorded Music — Others		206,412		286,270
Music Publishing		200,334		276,665
Visual Media & Platform		231,418		203,012

Sales to external customers		1,100,532		1,364,815
Intersegment sales		16,417		15,817

Music segment total sales		1,116,949		1,380,632

Music segment operating income		210,933		263,107

The Music segment results include the

yen-based

results of SMEJ and the

yen-translated

results of ~~Sony Music Entertainment (“SME”), Sony/ATV Music Publishing (“Sony/ATV”)~~SME and ~~EMI, all U.S.-based operations~~SMP, which aggregate the results of their worldwide subsidiaries on a U.S. dollar ~~basis, and the results of Sony Music Entertainment (Japan) Inc., a Japan-based music company which aggregates its results in yen.~~basis.

For the fiscal year ended March 31, ~~2020,~~2023, sales increased ~~42.4~~263.7 billion yen

~~year-on-year~~

to ~~849.9~~1 trillion 380.6 billion yen. This significant increase in sales was primarily due to ~~higher sales for Music Publishing resulting from~~ the ~~consolidation~~impact of ~~EMI,~~foreign exchange rates as well as ~~higher~~increases in sales for Recorded Music ~~primarily due to an increase in streaming revenues,~~and Music Publishing, partially offset by lower sales for Visual Media and Platform due to a decrease in sales in the anime business. The increases in sales for Recorded Music and Music Publishing were primarily due to ~~lower sales for~~

~~Fate/Grand Order~~

,higher revenues from paid subscription streaming services, which also benefited from the success of a ~~mobile game application.~~number of new releases in Recorded Music.

Operating income ~~decreased 90.1~~significantly increased 52.2 billion yen

year-on-year

to ~~142.3~~263.1 billion ~~yen. This significant decrease in operating income was~~yen, primarily due to the ~~absence~~positive impact of the recording of a 116.9 billion yen remeasurement gain resulting from the consolidation of EMI in the previous fiscal year, partially offset by the absence of the 11.6 billion yen recording of equity in net loss resulting from Sony’s acquisition of the remaining approximately 60% equity interest in EMI in the previous fiscal year, as well asforeign exchange rates and the impact of the above-mentioned increase in ~~sales.~~sales for Recorded Music and Music Publishing, as well as the impact of litigation settlements, net of expenses, of 5.7 billion yen received in relation to lawsuits for Recorded Music and Music Publishing, partially offset by the impact of the above-mentioned decrease in sales for Visual Media and Platform.

~~The~~Business Environment and Strategy

As digital streaming continued to expand globally, the operating performance of the Music segment for the fiscal year ended March 31, ~~2020~~2023 reflected ~~continued growth~~an increase in revenues from streaming services resulting from the ~~market for recorded music despite decreases in physical~~enhanced discovery and ~~digital download revenues, mainly due to the expansion~~development of ~~digital streaming.~~artists, including Sony’s past proactive acquisitions such as Alamo Records, Som Livre and AWAL. In this environment, Sony ~~has pursued initiatives~~aims to ~~increase streaming, performance,~~achieve continuous growth that outpaces the market by proactively making investments toward strengthening its content IP and ~~other licensing revenues~~its relationships with artists, strengthening services for distributed labels centered around The Orchard, ensuring early contact with emerging artists through ~~continued investment~~channels such as AWAL and strengthening its approach in emerging markets by proactively investing in local talent and collaborating with local companies. Additionally, new ~~recorded music~~business opportunities in areas such as social media and ~~music publishing rights. In the fiscal year ending March 31, 2021,~~gaming continue to grow, and Sony intends to ~~continue~~further collaborate with various service partners in these ~~initiatives while also continuing~~new business areas to ~~develop and promote mobile game applications based on animation titles.~~both expand its earnings base by creating new opportunities for

~~Current View Regarding the Impact on the Business from the Spread of~~

~~COVID-19~~

Around the world, but especially in the U.S., the release of new music is being delayed primarily due to some artists being unable to record songs and music videos. The impact on profitability from the delays in new music is limited at this time in the U.S. and other countries where the proportion of music that is streamed is high. However, in countries like Japan and Germany where the proportion of music that is streamed is relatively low, CDs and other packaged media sales are decreasing due to restrictions on going outside. Ticket, merchandising and video revenues are decreasing, as concerts and other events are being postponed and cancelled in Japan and other areas. Due to a global reduction in advertising spending, revenue from advertising-supported streaming services and revenue from the licensing of music in TV commercials is decreasing. Additionally, delays in the production of motion pictures and TV shows are causing a decline in music licensing revenue.- 40 -

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the use of music content, and to strengthen its relationships with artists by creating opportunities for artists to increase their own earnings. Additionally, by leveraging the diversity of the Sony Group, Sony aims to provide a wide variety of marketing opportunities to its artists going forward. In Visual Media and Platform, Sony aims to grow its anime business by expanding its merchandising and revenues from outside of Japan as well as strengthening its anime production capabilities, and grow its game business by improving fan engagement and accelerating the development of high-quality games.

Pictures

Key Financial Figures

Fiscal year ended March 31

2019

2020

(Yen in millions)

Sales to external customers by product category

Motion Pictures

436,017

475,061

Television Productions

288,816

301,224

Media Networks

260,437

234,429

Sales to external customers

985,270

1,010,714

Intersegment sales

1,603

1,140

Pictures segment total sales

986,873

1,011,854

Pictures segment operating income

54,599

68,157


	Fiscal year ended March 31
	2022		2023
	(Yen in millions)
Sales to external customers by product category
Motion Pictures		518,840		464,043
Television Productions		419,494		536,250
Media Networks		298,065		364,594

Sales to external customers		1,236,399		1,364,887
Intersegment sales		2,512		4,535

Pictures segment total sales		1,238,911		1,369,422

Pictures segment operating income		217,393		119,255

The Pictures segment results ~~presented in Pictures~~ are athe

~~yen-translation~~yen-translated

~~of the~~ results of ~~Sony Pictures Entertainment Inc. (“SPE”), a U.S.-based operation that~~SPE, which aggregates the results of its worldwide subsidiaries on a U.S. dollar basis. Management analyzes the results of SPE in U.S. dollars, so discussion of certain portions of its results is specified as being on “a U.S. dollar basis.”

For the fiscal year ended March 31, ~~2020,~~2023, sales increased ~~25.0~~130.5 billion yen, ~~(3%)~~an 11% increase

year-on-year

(~~a 5% increase~~an 8% decrease on a U.S. dollar basis), to 1 trillion ~~11.9~~369.4 billion yen. ~~The increase in sales~~This decrease on a U.S. dollar basis was primarily due to ~~higher worldwide~~lower theatrical revenues in Motion Pictures compared to the prior fiscal year which benefited from the strong performance of several franchise films including

Spider-Man:

No Way Home

and

Venom: Let There Be Carnage

, lower licensing revenues in Television Productions as the ~~current~~prior fiscal year benefitted from the ~~strong performances~~licensing of

~~Spider-Man: Far From Home~~

~~Jumanji: The Next Level~~

~~and~~

~~Bad Boys for Life~~Seinfeld,

and ~~higher~~lower licensing revenues ~~for Television Productions.~~in Motion Pictures as the prior fiscal year benefitted from a greater number of new films licensed to digital streaming services. These ~~increases~~decreases in sales were partially offset primarily by ~~a decrease~~an increase in ~~sales for~~series deliveries and the impact of acquisitions of Industrial Media ~~Networks primarily due to~~and Bad Wolf in Television Productions, as well as higher revenues from anime streaming services including the impact of the ~~channel portfolio review that was undertaken in the previous fiscal year.~~acquisition of Crunchyroll.

Operating income ~~increased 13.6~~decreased 98.1 billion yen

year-on-year

to ~~68.2~~119.3 billion ~~yen.~~yen (a 54% decrease on a U.S. dollar basis). This significant ~~increase~~decrease in operating income on a U.S. dollar basis was primarily due to the ~~benefit~~absence of the 70.0 billion yen gain recognized from the transfer of GSN Games, a division of Game Show Network, LLC, in the prior fiscal year and the impact of the above-mentioned ~~channel portfolio review~~decrease in sales.

Business Environment and higher profit margins on Motion Pictures catalog titles. These increases were partially offset by lower profitability in Television Productions due to an increase in development expenses as well as higher costs as a result of an increase inStrategy

Although the number of new programs produced for U.S. broadcast and cable networks. Operating income was also impacted by an increase in charges related to the channel portfolio review which totaled 17.0 billion yen in the current fiscal year as compared to 12.8 billion yen in the previous fiscal year.

~~The~~ operating performance of the Pictures segment for the fiscal year ended March 31, ~~2020 reflected~~2023 was impacted by the absence of the strong performance of franchise films as well as the impact of the recording of a ~~continued shift~~ gain on the transfer of GSN Games and revenue from the licensing of

Seinfeld

in the ~~market~~previous fiscal year, it also reflected Sony’s strengths as a strategic supplier (an independent content supplier with the ability to a

~~non-linear,~~

~~on-demand~~

~~digital business model~~provide content to any distribution platform), which was influenced by continued demand for content from video streaming services and the continued recovery in ~~which media distributors increasingly seek to own more of the content they broadcast.~~U.S. box office revenues. In this environment, Sony ~~has worked~~aims to ~~enhance~~continue to maximize the ~~global appeal~~long-term value of its content ~~and enhance~~by leveraging its developed and acquired intellectual property, while also striving to build and maintain strong relationships with top content creators and major networks around the world. Pursuant to these strategies, in the fiscal year ended March 31, 2020, Sony acquired AT&T Inc.’s minority stake in Game Show Network, LLC and acquired Silvergate Media Group through which Sony aims to solidify its positionstrengths as a ~~leader~~strategic supplier and emphasizing the theatrical release of films. In Motion Pictures, Sony plans to continue to pursue both the development of new IP and the revitalization of its existing IP. For example, in the U.S. TV game show business and to strengthen its entry into the kids genre, respectively. Additionally, in the fiscal year ended March 31, 2020, Sony carried out a further review of the channel portfolio within Media Networks to streamline and strengthen the business. In the fiscal year ending March 31, ~~2021,~~2024, Sony ~~intends~~aims to continue ~~initiatives~~to expand the Sony Pictures Universe of Marvel Characters through the theatrical release of films such as

Spider-Man:

Across the Spider-Verse

and

Kraven the Hunter

. In Television Productions, Sony will continue to strive to strengthen its ~~content while maintaining~~production capabilities in a ~~strong relationship with~~wide variety of nonfiction genres such as documentaries and reality shows in order to meet needs for diverse content. Additionally, in Motion Pictures and Television Productions, efforts towards collaboration within the ~~creative community.~~

Sony Group have continued, and, following the success of the

~~Current View Regarding~~Uncharted

film in 2022 and the ~~Impact on the Business from the Spread~~TV series

The Last of

~~COVID-19~~ Us

~~Although some movie theaters are reopening, a large number are still closed or must limit the number of patrons, leading~~in 2023, Sony plans to ~~box office revenue around the world being impacted. For this reason, Sony generally has not been able to release~~further expand its ~~already completed~~ films ~~in theaters. Due to restrictions on peoples’ movement, the production schedules of new motion pictures~~ and television shows by Sony are significantly delayed around the world, especially in the U.S. As a result, in Motion Pictures, theatrical revenues and revenues generated after theatrical release, including home entertainment and television licensing sales, are expected to decrease. On the other hand, digital rental and sell-through revenues for films which Sony released theatrically prior to the spread of

~~COVID-19~~

~~have been strong.~~based on PlayStation game IP. In Television Productions, revenues are beginning to be impacted by delays in the delivery of shows to TV networks and digital distribution services. Due to a global reduction in advertising spending, advertising revenue in Media Networks, ~~is decreasing significantly, especially in India.~~

Sony aims to further strengthen its

- 41 -

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~~Electronics Products~~DTC services, including Crunchyroll and SonyLIV. For example, in the fiscal year ended March 31, 2023, Crunchyroll strengthened its eCommerce offerings to fans through the acquisition of the anime goods retailer Right Stuf, Inc. The signing of definitive agreements for the merger of SPNI and Zee was announced in December 2021, and Sony believes that the merger represents an opportunity to further accelerate the expansion and digitization of its business by using the strengths of both companies to strengthen its digital distribution service in the rapidly-growing Indian media and entertainment market. Additionally, Sony aims to proactively seek out opportunities for revenue from its existing IP in the area of location-based entertainment.

Entertainment, Technology & ~~Solutions (EP~~Services (ET&S)

Key Financial Figures

Fiscal year ended March 31

2019

2020

(Yen in millions)

Sales to external customers by product category

TVs

788,423

646,513

Audio & Video

362,580

346,060

Still and Video Cameras

421,506

384,142

Mobile Communications

487,330

362,144

Other

243,328

231,021

Sales to external customers

2,303,167

1,969,880

Intersegment sales

17,461

21,388

EP&S segment total sales

2,320,628

1,991,268

EP&S segment operating income

76,508

87,276

(Units in millions)

Major product unit sales

TVs

11.3

9.3

Digital cameras within
Still and Video Cameras*

3.6

2.9

Smartphones within
Mobile Communications

6.5

3.2

* Digital cameras include compact digital cameras and interchangeable single-lens cameras.


	Fiscal year ended March 31
	2022		2023
	(Yen in millions)
Sales to external customers by product category
TVs		858,837		733,251
Audio & Video		326,704		391,608
Still and Video Cameras		414,898		565,018
Mobile Communications		365,864		356,771
Other		331,583		390,091

Sales to external customers		2,297,886		2,436,739
Intersegment sales		41,300		39,286

ET&S segment total sales		2,339,186		2,476,025

ET&S segment operating income		212,942		179,461


	(Units in millions)
Major product unit sales
TVs		8.5		6.6

For the fiscal year ended March 31, ~~2020,~~2023, sales ~~decreased 329.4~~increased 136.8 billion yen

year-on-year

to 12 trillion ~~991.3~~476.0 billion yen. This ~~significant decrease~~increase in sales was primarily due to ~~a decrease in unit sales of smartphones and televisions, as well as~~ the impact of foreign exchange ~~rates.~~rates as well as an increase in sales of digital cameras resulting from higher unit sales, partially offset by a decrease in sales of televisions resulting from lower unit sales.

Operating income ~~increased 10.8~~decreased 33.5 billion yen

year-on-year

to ~~87.3~~179.5 billion yen. This ~~increase~~decrease in operating income was ~~primarily~~mainly due to ~~reductions in operating costs mainly within Mobile Communications, as well as a~~the impact of the above-mentioned decrease in ~~impairment charges against long-lived assets in Mobile Communications,~~sales of televisions, partially offset by the impact of the ~~decrease~~above-mentioned increase in ~~overall segment~~ sales ~~and~~of digital cameras. During the ~~negative~~current fiscal year, there was a 9.4 billion yen positive impact offrom foreign exchange ~~rates.~~rate fluctuations.

~~The operating performance of the EP&S segment for~~Business Environment and Strategy

In the fiscal year ended March 31, ~~2020~~2023, in a challenging business environment impacted by disruption in production and logistics due to the intermittent resurgence of

COVID-19

in China and a slowdown in the market mainly in Europe and the U.S., the operating performance of the ET&S segment reflected ~~shrinking markets for televisions,~~the results of various measures implemented to respond promptly to these conditions, such as thorough supply chain management and reduction of fixed costs, as well as the promotion of a shift to high-value-added products centered on TVs and digital ~~cameras and smartphones.~~cameras. In this environment, Sony ~~continued~~plans to ~~strengthen~~conduct its ~~high value-added products in each product area.~~business based on the direction of establishing a business structure with two axes: the “profit axis business area,” which aims to maintain and increase profitability, and the “growth axis business area,” which aims to realize growth through the creation and expansion of new businesses. In ~~addition, Sony carried out initiatives to reduce operational costs in Mobile Communications, with~~ the ~~goal of eliminating the operating loss in Mobile Communications in the fiscal year ending March 31, 2021.~~profit axis business area, Sony intends to ~~continue to~~ strengthen operations by promoting the advancement of consistent digital transformation and automation from production to sale. Additionally, by adding creative solutions utilizing technologies such as in communications and cloud to its strengths in capturing devices that make use of its original technologies in sound and imaging, Sony aims to create new experience value with creators and shift to a business portfolio with a recurring business model, striving to reduce volatility. In the ~~fiscal year ending March 31, 2021~~growth axis business area, in order to create future entertainment together with creators, Sony plans to evolve its business models through ~~these~~collaboration both within and ~~similar initiatives.~~outside of the Sony Group, aiming to build a new business model to achieve sustainable growth. Sony also plans to promote the virtual production business and software solutions business, which aim to free creators from the constraints of time, space and hardware functionality to enable new video and creative expression, as well as the sports business, which aims to realize

~~Current View Regarding the Impact on the Business from the Spread of COVID-19~~- 42 -

~~Of the four major manufacturing sites for Sony’s TV business, production was ceased in stages from~~

~~mid-March~~

~~at the~~

~~in-house~~

factory in Malaysia and at the factories to which Sony outsources in Mexico and Slovakia, pursuant to local government policy. These three factories have returned to partial production, but a portion of supply continues to be insufficient to meet demand. In China and Thailand, the factories owned by Sony that make digital cameras and smartphones are currently operating as usual. Retail sales have decreased significantly due to the closure of retail stores globally, the impact of which is continuing to affect markets like Asia and Latin America. Conversely, in Japan, Europe, North America and China, retail stores are gradually reopening. In addition, sales and profit from digital cameras are being significantly impacted by a substantial slowdown in demand around the world.

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new sports entertainment connecting “real” and “virtual.” Additionally, in the life science business and the network service business, Sony aims to contribute to the realization of a safe and a sustainable society by utilizing the technologies it has cultivated until now.

Imaging & Sensing Solutions (I&SS)

Key Financial Figures

Fiscal year ended March 31

2019

2020

(Yen in millions)

Sales to external customers

770,622

985,259

Intersegment sales

108,708

85,317

I&SS segment total sales

879,330

1,070,576

I&SS segment operating income

143,874

235,584


	Fiscal year ended March 31
	2022		2023
	(Yen in millions)
Sales to external customers		992,200		1,301,481
Intersegment sales		84,224		100,706

I&SS segment total sales		1,076,424		1,402,187

I&SS segment operating income		155,597		212,214

For the fiscal year ended March 31, ~~2020,~~2023, sales increased ~~191.2~~325.8 billion yen

year-on-year

to 1 trillion ~~70.6~~402.2 billion yen. This significant increase in sales was ~~primarily~~mainly due to ~~a significant~~the impact of foreign exchange rates and an increase in sales of image sensors for mobile products resulting from an improvement in the product mix, ~~as well as an increase in unit sales,~~ partially offset by ~~the impact of foreign exchange rates.~~a decrease in unit sales.

Operating income increased ~~91.7~~56.6 billion yen

year-on-year

to ~~235.6~~212.2 billion yen. This significant increase ~~in operating income~~ was ~~primarily~~mainly due to the positive impact of foreign exchange rates and the impact of the above-mentioned increase in sales, partially offset by an increase in R&D expenses as well as depreciation and amortization expenses, ~~as well as~~and an increase in ~~research and development expenses and~~manufacturing costs. During the ~~negative~~current fiscal year, there was a 120.9 billion yen positive impact offrom foreign exchange ~~rates.~~rate fluctuations.

Business Environment and Strategy

The operating performance of the I&SS segment for the fiscal year ended March 31, 2020 reflected continued growth in demand for image sensors for mobile products, which is currently the most important market for Sony’s image sensors. This growth was largely due to increased demand from smartphone makers for high value-added products such as multi-sensor cameras and

~~larger-sized~~

~~sensors. In this environment, Sony continued to position image sensors as the primary area of focus for capital expenditure in its~~

~~mid-range~~

~~plan for capital allocation, pursuant to which Sony continued to invest in production capacity for image sensors and increased its customer base while carefully monitoring demand~~ in the fiscal year ended March 31, ~~2020.~~2023 reflected the continued trend toward larger size, higher image quality and higher performance image sensors for mobile products, primarily in

high-end

smartphones, despite continued weakness in the Chinese smartphone market. In this environment, Sony plans to continue its efforts to enhance its technical capabilities and production capacity in order to respond to the larger size, higher image quality and higher performance of image sensors, in addition to promoting efforts to improve sales growth and profitability over the medium term, aiming to further strengthen its number one position in image sensors worldwide. Sony also plans to continue actively promoting initiatives in business areas such as automotive and industrial equipment in the sensing area, and in its solutions business via the edge AI sensing platform AITRIOS

™

. The automotive area has been growing steadily, and Sony will continue to work to build and strengthen relationships with OEMs and platformers with the aim of increasing revenue from automotive sensors. In the area of industrial sensors, Sony plans to take advantage of its diverse product lineup to provide solutions that can contribute to solving various

on-site

issues, including labor-saving and automation, which Sony expects to lead to

mid-

to long-term business growth. Sony intends to continue ~~these initiatives in~~to invest capital to increase production capacity to meet the ~~fiscal year ending March 31, 2021.~~

~~Current View Regarding the Impact on the Business from the Spread of COVID-19~~

There has been no major impact on Sony’s manufacturing plants in Japan, which are operating as usual. Sony also understands that factory operations and supply chains at most of its major mobile customers, to whom it sells itsgrowing demand for image sensors ~~have been recovering. On~~over the ~~other hand, Sony continues~~

mid-

to ~~monitor~~long-term, while also keeping in mind the ~~extent to which the final outlet for Sony’s products, the smartphone market, may decelerate going forward.~~

~~G&NS, EP&S and I&SS~~

~~Inventory~~

Fiscal year ended March 31

2019

2020

(Yen in billions)

G&NS

75.1

56.3

EP&S

221.3

206.5

I&SS

253.4

250.5

Total

549.8

513.3

~~Sales to External Customers by Geographic Area~~

Fiscal year ended March 31

2019

2020

Japan

16.6
%
16.6
%
United States

23.8
%
26.7
%
Europe

26.6
%
24.7
%
China

13.0
%
12.3
%
Asia-Pacific (other than Japan and China)

13.3
%
13.0
%
Other

6.7
%
6.8
%

Total

100
%
100
%

~~Table of Contents~~

~~Manufacturing by Geographic Area~~

~~The following tables set forth the G&NS, EP&S and I&SS segments’ total production breakdown of~~

~~in-house~~

~~and outsourced production, and the breakdown of~~

~~in-house~~

~~production by geographic regions.~~

~~Total production breakdown of~~

~~in-house~~

and outsourced production*

Fiscal year ended March 31

2019

2020

In-house
production

64
%
73
%
Outsourced production

36
%
27
%

Total

100
%
100
%

~~Breakdown of~~

~~in-house~~

production by geographic regions*

~~Figures in parentheses indicate the percentage of products that were exported from each geographic region to other regions.~~

Fiscal year ended March 31

2019

2020

Japan

47% (89%
)
63% (92%
)
China

19% (55%
)
12% (60%
)
Asia-Pacific (other than Japan and China)

31% (72%
)
24% (66%
)
Americas and Europe

3% (less than 5%
)
1% (20%
)

Total

100%

100%

~~Because decimals have been rounded upwards, there may be cases in which the sum of individual figures does not equal 100%.~~

~~Conditions at Sony’s Manufacturing Plants Resulting from the Spread of~~

~~COVID-19~~

Sony has four manufacturing plants located in China (two in Shanghai, one in Wuxi, Jiangsu, and one in Huizhou, Guangdong). All of these plants were shut down in accordance with local government mandates, from the beginninguncertainty of the ~~spring holidays on January 24, 2020 until February 9, 2020. From February 10, 2020 all four plants have~~

~~re-started~~

~~operations in increments. Almost no supply chain issues remain,~~future and ~~operations have returned to the level they were before the spread of the virus. In accordance with a mandate by the local government, Sony shut down both of its~~

~~in-house~~

~~manufacturing plants in Malaysia (Kuala Lumpur and Penang) from March 18, 2020. On April 16, 2020, Sony received approval from local authorities to~~

~~re-start~~

its Malaysia manufacturing operations, and operations are returning to the level they were before the spread of the virus. Sony shut down its manufacturing plant in the U.K. (Wales) from March 26, 2020 in accordance with a mandate from the local government. From March 31, 2020, Sony partially

~~re-started~~

its U.K. manufacturing operations after receiving approval from local authorities under certain conditions. Business has been impacted by factors such as restrictions on the movement of people across national borders, making it difficult for Sony to send engineers to manufacturing hubs such as China and countries in Southeast Asia for the purpose of helping with new product launches or giving instructions on manufacturing.carefully examining future investment plans.

Financial Services

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

Key Financial Figures

Fiscal year ended March 31

2019

2020

(Yen in millions)

Financial services revenue

1,282,539

1,307,748

Financial Services segment operating income

161,477

129,597


	Fiscal year ended March 31
	2022		2023
	(Yen in millions)
Financial services revenue		1,533,829		1,454,546
Financial Services segment operating income		150,111		223,935

- 43 -

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For the fiscal year ended March 31, ~~2020,~~2023, financial services revenue ~~increased 25.2~~decreased 79.3 billion yen

year-on-year

to 1 trillion ~~307.7~~454.5 billion ~~yen. This increase in revenue was primarily~~yen, mainly due to ~~an increase~~a decrease in ~~insurance premium~~ revenue ~~mainly from single premium insurance, partially offset by a deterioration in net gains and losses on investments in the separate account, both~~ at Sony Life. Revenue at Sony Life ~~increased 28.6~~decreased 108.4 billion yen

year-on-year

to 1 trillion ~~171.7 billion yen.~~

~~Operating income decreased 31.9 billion yen~~

~~year-on-year~~

~~to 129.6~~242.1 billion yen, due to ~~decreases~~a decrease in net gains on investments in the separate accounts.

Operating income increased 73.8 billion yen

year-on-year

to 223.9 billion yen. This significant increase in operating income was mainly due to the recovery of 22.1 billion yen of an unauthorized withdrawal of funds at a subsidiary of Sony Life in the fiscal year ended March 31, 2023 which was recorded as a 16.8 billion yen loss in the fiscal year ended March 31, 2022, as well as a significant increase in operating income at Sony ~~Life and Sony Bank.~~Life. Operating income at Sony Life ~~decreased 22.1~~increased 29.7 billion yen

year-on-year

to ~~123.5~~177.0 billion ~~yen,~~yen. This increase in operating income was mainly due to a gain recorded on the sale of real estate as well as an increase in ~~the provision~~profits due to accumulation of policy ~~reserves~~amount in force, partially offset by an increase primarily in insurance payments related to

COVID-19.

Business Environment and a deterioration in net gains and losses on investments, primarily driven by a decline in the stock market and lower interest rates. Operating income at Sony Bank decreased due to a deterioration in valuation gains and losses on securities.Strategy

The operating performance of the Financial Services segment for the fiscal year ended March 31, ~~2020~~2023 reflected conditions in the Japanese economy and bond market. ~~The~~As in the previous fiscal year, the Japanese economy ~~remained solid~~faced headwinds due to the

COVID-19

pandemic. In addition, rising imports prices, which accelerated after Russia’s military invasion of Ukraine, put pressure on household budgets through rising food and gasoline prices. However, as the normalization of economic activities progressed gradually, the economy continued on a gradual recovery trend. In the first quarter ended June 30, 2022, as the spread of the Omicron variant that began at the beginning of the year came to a halt, demand for outings for travel and shopping picked up, mainly during the long holidays in May. After that, there was a period when the infection with the Omicron variant spread again, but the Japanese government postponed the request for movement restrictions and self-restraint. As a result, the economy was underpinned by the normalization of economic activities, including an increase in the ~~first half but declined rapidly~~number of people going out and the full-scale easing of restrictions on immigration. On the other hand, production in the manufacturing industry slowed down in the second ~~half. Bond markets were strongly affected by U.S. monetary policy, and market interest rates declined. In addition, the spread~~half of

~~COVID-19~~

from the start of the 2020 calendar year significantly and negatively impacted the economy, and March saw sharp fluctuations in interest rates. Amid these circumstances, SFH strove to become the financial services group most highly trusted by customers in Japan, undertaking a variety of measures to maintain a sound financial base, reinforce and expand product and service offerings in order to deliver high value-added products and high-quality services to each of its customers, and enhance SFH’s internal control system. In the fiscal year ~~ending March 31, 2021,~~due to factors such as the slowdown in overseas economies and the decline in

IT-related

demand for semiconductors. The bond market in Japan was affected by US and Japanese monetary policies. In this environment, Sony aims to achieve sustainable growth in the entire financial group, including growth in profitability, by maximizing the value it provides to its customers. Sony is carrying out initiatives focused on five strategic pillars to realize this goal: strengthening core/unique competitive advantages, altering its profit structure to withstand low interest rates, further evolving customer-centric management, strengthening its competitive edge through technology and maximizing group synergies. These efforts have been proceeding as planned, and Sony has been steadily expanding the scale of its business by taking advantage of its strengths. For example, the productivity per Lifeplanner

sales specialist at Sony Life is improving due to the increase in the new policy amount in the corporate business, which is an area of focus, and the number of Lifeplanner

sales specialists is steadily increasing. Going forward, Sony will continue to work to expand profit growth by making a qualitative shift toward higher productivity of Lifeplanner

sales specialists and improvement of profitability. Additionally, Sony plans to ~~continue~~promote efforts aimed at increasing the value it provides to ~~pursue growth in~~customers by accelerating enhancement of its technological competitiveness through collaboration within the Sony Group, strengthening its acquisition of knowledge and technology from outside partners, and utilizing data that transcends the boundaries between the businesses within the Financial Services segment. The Financial Services segment ~~by focusing~~also intends to focus on ~~differentiating itself through high-quality financial products~~advancing sustainability and ~~services.~~

~~Current View Regarding the Impact on the Business from the Spread of COVID-19~~

~~Pursuant to the announcement of a state of emergency by the Japanese government, all~~

~~in-person~~

~~sales activity of the Lifeplanner~~

salespeople at Sony Life was suspended from April to May 25, 2020, when the state of emergency was lifted. Although these sales activities have resumed from June 1, 2020, the business was impacted by factors such as a decrease in applications for new insurance policies during the period when sales activities were stopped. It is possible that fluctuationsthoroughly enhancing governance in the financial ~~market could impact~~group to fulfill its social responsibility as part of the ~~financial results~~Sony Group. Furthermore, over the

mid-

to long-term, Sony plans to expand its customer base and touchpoints with customers through wider applications of ~~this segment.~~technology and strategic alliances, as well as through its increasing efforts to deepen relationships with core customers, aiming to maximize the lifetime customer value.

Information on Operations Separating Out the Financial Services ~~Segment~~segment

The following schedules show unaudited condensed statements of income for the Financial Services segment and all other segments excluding the Financial ~~Services.~~Services segment. These presentations are not in accordance with ~~U.S. GAAP,~~International Financial Reporting Standards (“IFRS”), which is used by Sony to prepare its 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 consolidated financial statements. Transactions between the Financial Services segment and Sony without the Financial Services segment ~~including noncontrolling interests,~~ are included in those respective presentations, then eliminated in the consolidated figures shown below.

40- 44 -

Table of Contents

Fiscal year ended March 31

        Financial Services segment

2019

2020

(Yen in millions)

Financial services revenue

1,282,539

1,307,748

Financial services expenses

1,120,276

1,179,776

Other operating (income) expenses, net

104

(1,729
)

1,120,380

1,178,047

Equity in net loss of affiliated companies

(682
)
(104
)

Operating income

161,477

129,597

Other income (expenses), net

(73
)
(20
)

Income before income taxes

161,404

129,577

Income taxes

44,763

36,311

Net income

116,641

93,266

Less — Net income attributable to noncontrolling interests

235

483

Net income of Financial Services

116,406

92,783

Fiscal year ended March 31

        Sony without Financial Services segment

2019

2020

(Yen in millions)

Net sales and operating revenue

7,396,401

6,965,971

Costs of sales

5,160,284

4,764,014

Selling, general and administrative

1,572,714

1,497,764

Other operating (income) expense, net

(71,672
)
(3,841
)

6,661,326

6,257,937

Equity in net income (loss) of affiliated companies

(2,317
)
9,741

Operating income

732,758

717,775

Other income (expenses), net

133,929

(28,299
)

Income before income taxes

866,687

689,476

Income taxes

335

141,552

Net income

866,352

547,924

Less — Net income attributable to noncontrolling interests

8,778

7,092

Net income of Sony without Financial Services

857,574

540,832

Fiscal year ended March 31

        Consolidated

2019

2020

(Yen in millions)

Financial services revenue

1,274,708

1,299,847

Net sales and operating revenue

7,390,979

6,960,038

8,665,687

8,259,885

Costs of sales

5,150,750

4,753,174

Selling, general and administrative

1,576,825

1,502,625

Financial services expenses

1,112,446

1,171,875

Other operating (income) expenses, net

(71,568
)
(3,611
)

7,768,453

7,424,063

Equity in net income (loss) of affiliated companies

(2,999
)
9,637

Operating income

894,235

845,459

Other income (expenses), net

117,413

(46,009
)

Income before income taxes

1,011,648

799,450

Income taxes

45,098

177,190

Net income

966,550

622,260

Less — Net income attributable to noncontrolling interests

50,279

40,069

Net income attributable to Sony Corporation’s Stockholders

916,271

582,191


	Fiscal year ended March 31
Financial Services segment	2022			2023
	(Yen in millions)
Financial services revenue		1,533,829			1,454,546
Financial services expenses		1,383,054			1,234,758
Other operating (income) expense, net		664			(4,147	)

		1,383,718			1,230,611

Share of profit (loss) of investments accounted for using the equity method		—			—

Operating income		150,111			223,935
Financial income (expenses), net		—			—

Income before income taxes		150,111			223,935
Income taxes		45,402			63,865

Net income		104,709			160,070
Net income of Financial Services		104,216			159,698

Net income attributable to noncontrolling interests		493			372


	Fiscal year ended March 31
Sony without Financial Services segment	2022			2023
	(Yen in millions)
Sales		8,402,217			10,101,979
Costs of sales		5,856,925			7,186,767
Selling, general and administrative		1,582,850			1,961,906
Other operating (income) expense, net		(66,158	)		(5,566	)

		7,373,617			9,143,107
Share of profit (loss) of investments accounted for using the equity method		23,646			24,449

Operating income		1,052,246			983,321
Financial income (expenses), net		(45,698	)		13,437

Income before income taxes		1,006,548			996,758
Income taxes		183,689			172,528

Net income		822,859			824,230
Net income of Sony without Financial Services		817,123			818,106

Net income attributable to noncontrolling interests		5,736			6,124



	Fiscal year ended March 31
Consolidated	2022			2023
	(Yen in millions)
Sales		8,396,702			10,095,841
Financial services revenue		1,524,811			1,443,996

Total sales and financial services revenue		9,921,513			11,539,837
Costs of sales		5,845,804			7,174,723
Selling, general and administrative		1,588,473			1,969,170
Financial services expenses		1,374,037			1,224,208
Other operating (income) expenses, net		(65,494	)		(12,021	)

		8,742,820			10,356,080
Share of profit (loss) of investments accounted for using the equity method		23,646			24,449

Operating income		1,202,339			1,208,206
Financial income (expenses), net		(84,836	)		(27,893	)

Income before income taxes		1,117,503			1,180,313
Income taxes		229,097			236,691

Net income		888,406			943,622

Net income attributable to Sony Group Corporation’s Stockholders		882,178			937,126

Net income attributable to noncontrolling interests		6,228			6,496

- 45 -

Table of Contents

All Other

Sales for the fiscal year ended March 31, ~~2020~~2023 decreased ~~94.3~~11.2 billion yen

year-on-year

to ~~251.4~~87.6 billion yen. ~~This significant decrease in sales was primarily due to a decrease in sales in the disc manufacturing business and the storage media business.~~

Operating income ~~of 16.3~~decreased 1.1 billion yen ~~was recorded, compared~~

year-on-year

to ~~operating loss of 11.1~~16.8 billion yen in the fiscal year ended March 31, 2019. Despite the impact of the above-mentioned decrease in sales, operating results improved significantly mainly due to the 17.3 billion yen remeasurement and realized gains resulting from the public listing and sale of a portion of shares of SRE Holdings Corporation, as well as the absence of the 12.9 billion yen impairment charge against long-lived assets and goodwill in the storage media business recorded in the fiscal year ended March 31, 2019.

~~Restructuring~~

In a highly competitive landscape, Sony has continued to make efforts to optimize the organization and improve the performance of its businesses, and it has undertaken restructuring initiatives including exiting businesses or product categories, reducing headcount, and streamlining its sales and administrative functions. For example, during the fiscal year ended March 31, 2020, Sony implemented various restructuring initiatives mainly within the EP&S segment, primarily aimed at improving the profitability of Mobile Communications. Additionally, Sony implemented restructuring initiatives in other segments, including the continuation of the review of the channel portfolio within Media Networks in the Pictures segment, which began in the previous fiscal year in an effort to streamline the business.

Sony believes the competitive environment will continue to be difficult, and therefore plans to be vigilant with respect to the scale of its businesses and to changes in the environment. Sony will continue to evaluate the cost and profit structure of its businesses and take action to reduce cost where Sony believes appropriate.

~~The chart below shows the restructuring charges, which include~~

~~non-cash~~

charges related to depreciation associated with restructured assets, recorded in the fiscal years ended March 31, 2019 and 2020. For further details, refer to Note 20 of the consolidated financial statements.

Fiscal year ended March 31

2019

2020

(Yen in millions)

Restructuring charges

33,091

24,966

yen.

Foreign Exchange Fluctuations and Risk Hedging

During the fiscal year ended March 31, ~~2020,~~2023, the average rates of the yen were ~~108.7~~135.4 yen against the U.S. dollar and ~~120.8~~140.9 yen against the euro, which were ~~2.2~~23.1 yen and ~~7.7~~10.4 yen ~~higher,~~weaker, respectively, than the fiscal year ended March 31, ~~2019. For the latest yen exchange rates per U.S. dollar, refer to “Selected Financial Data” in “Item 3.~~

~~Key Information.~~2022.

”

For the fiscal year ended March 31, ~~2020,~~2023, consolidated sales ~~decreased 405.8~~increased 1 trillion 618.3 billion yen ~~(5%~~(16%)

year-on-year

to ~~8,259.9~~11 trillion 539.8 billion yen. On a constant currency basis, sales ~~decreased~~increased approximately 3%4%

year-on-year.

~~Consolidated~~For further details about the impact of foreign exchange rate fluctuations on sales and operating income, ~~decreased 48.8 billion yen~~

~~year-on-year~~

refer to ~~845.5 billion yen. The foreign exchange fluctuations had~~“Note: Sales on a ~~negative impact on~~Constant Currency Basis and the ~~consolidated operating results mainly in the G&NS, EP&S and I&SS segments.~~

~~Table~~Impact of ~~Contents~~Foreign Exchange Rate Fluctuations” below.

The table below indicates the foreign exchange impact on sales and operating results in each of the G&NS, EPET&S and I&SS segments. For further details, refer to “

Operating Performance by Business Segment

” which discusses the impact of foreign exchange rates within segments and categories where foreign exchange rate fluctuations had a significant impact.

Fiscal year ended March 31

Impact of changes in
foreign exchange rates

2019

2020

2019 to 2020

(Yen in billions)

G&NS

Sales

2,310.9

1,977.6

(65.4)

Operating income

311.1

238.4

(12.2)

EP&S

Sales

2,320.6

1,991.3

(59.8)

Operating income

76.5

87.3

(23.0)

I&SS

Sales

879.3

1,070.6

(22.2)

Operating income

143.9

235.6

(18.2)


		Fiscal year ended March 31				Impact of changes in foreign exchange rates
		2022		2023		2022 to 2023
		(Yen in billions)
G&NS	Sales		2,739.8		3,644.6		+419.8
	Operating income		346.1		250.0		-32.4
ET&S	Sales		2,339.2		2,476.0		+237.5
	Operating income		212.9		179.5		+9.4
I&SS	Sales		1,076.4		1,402.2		+202.7
	Operating income		155.6		212.2		+120.9

During the fiscal year ended March 31, ~~2020,~~2023, sales for the Music segment increased 5%24%

year-on-year

to ~~849.9~~1 trillion 380.6 billion yen, while sales increased approximately 7%8%

year-on-year

on a constant currency basis. In the Pictures segment, sales increased 3%11%

year-on-year

to ~~1,011.9~~1 trillion 369.4 billion yen, while sales ~~increased~~decreased approximately 5%8% on a U.S. dollar basis. For a detailed analysis of segment performance, refer to the Music and Pictures segments under “

Operating Performance by Business ~~Segment~~Segment.

.” Sony’s Financial Services segment consolidates the

yen-based

results of ~~SFH.~~SFGI. As most of the operations in this segment are based in Japan, Sony management analyzes the performance of the Financial Services segment on a yen basis only.

During the fiscal year ended March 31, ~~2020,~~2023, Sony estimated that a one yen appreciation against the U.S. dollar would have decreased sales in the G&NS, EPET&S and I&SS segments by approximately ~~22.8~~29.9 billion yen, with ~~almost no impact on~~a corresponding decrease in operating ~~income.~~income of approximately 0.4 billion yen. A one yen appreciation against the euro was estimated to decrease sales in these segments by approximately ~~8.8~~11.1 billion yen, with a corresponding decrease in operating income of approximately ~~5.0~~6.6 billion yen. For more details, refer to “Risk Factors” in “Item 3.

Key ~~Information~~Information.

.”

Sony’s consolidated operating results are subject to foreign currency rate fluctuations primarily due to different currency composition of revenue and costs. In the G&NS segment, a significant proportion of costs is incurred in U.S. dollars but sales are recorded in Japanese yen, U.S. dollars or euros. As a result, the yen appreciation against the U.S. dollar has a positive impact on operating income while the yen appreciation against the euro has a negative impact. In the EPET&S segment, yen appreciation against the U.S. dollar has a positive impact on operating income, mainly due to a high proportion of manufacturing and other costs for certain key products being incurred in U.S. dollars. Meanwhile, a large portion of sales for certain key products is in emerging markets, resulting in yen appreciation against the currencies of emerging markets having a negative impact on operating profit in the EPET&S segment. In the I&SS segment, a significant proportion of sales contracts are denominated in U.S. dollars, but manufacturing operations are located in Japan, and, therefore, yen appreciation against the U.S. dollar has a significantly negative impact on operating income.

In order to reduce the risk caused by foreign exchange rate fluctuations, Sony employs derivatives, including foreign exchange forward contracts and foreign currency option contracts, in accordance with a consistent risk management strategy. Such derivatives are used primarily to mitigate the effect of foreign

- 46 -

Table of Contents

currency exchange rate fluctuations on cash flows generated or anticipated by Sony’s transactions and accounts receivable and payable denominated in foreign currencies.

Sony Global Treasury Services Plc (“SGTS”) in the U.K. provides integrated treasury services for Sony Group Corporation, its subsidiaries, and affiliated companies. Sony’s policy is that Sony Group Corporation and all subsidiaries with foreign exchange exposures should enter into commitments with SGTS to hedge their exposures. Sony Group Corporation and most of its subsidiaries utilize SGTS for this purpose. Sony’s policy of concentrating its foreign exchange exposures means that SGTS and Sony Group Corporation hedge most of the net foreign exchange exposure within the Sony group. Sony has a policy on the use of derivatives that, in principle, SGTS should centrally deal with and manage derivatives with financial institutions for risk management purposes. SGTS enters into foreign exchange transactions with creditworthy third-party financial institutions. Most of these transactions are entered into against projected exposures before the actual export and import transactions take place. In general, SGTS hedges the projected exposures for a period of one ~~to three months~~month before the actual transactions take place. Sony enters into foreign exchange transactions with financial institutions primarily for hedging purposes. Sony does not use these derivative financial instruments for trading or speculative purposes except for certain derivatives in the Financial Services segment. In the Financial Services segment, Sony uses derivatives primarily for asset liability management.

~~Table of Contents~~

To minimize the effects of foreign exchange fluctuations on its operating results, particularly in the G&NS, EP&S and I&SS segments, Sony seeks, when appropriate, to localize material and parts procurement, design and manufacturing operations in areas outside of Japan.

Changes in the fair value of derivatives designated as cash flow hedges are initially recorded in accumulated other comprehensive income and reclassified into earnings when the hedged transaction affects earnings. Foreign exchange forward contracts, foreign currency option contracts and other derivatives that do not qualify as hedges are

marked-to-market

with changes in value recognized in ~~other~~financial income and expenses. ~~The notional amount of all the foreign exchange derivative contracts as of March 31, 2019 and 2020 was 1,842.8 billion yen and 1,697.4 billion yen, respectively.~~ The net fair value of all the foreign exchange derivative contracts as of March 31, ~~2019~~2022 and ~~2020~~2023 was a liability of ~~3.6~~6.4 billion yen and an asset of ~~5.2~~1.4 billion yen, respectively. Refer to Note 1415 of the consolidated financial statements.

* Note: ~~In this section,~~

Sales on a Constant Currency Basis and the Impact of Foreign Exchange Rate Fluctuations

The descriptions of sales on a constant currency basis reflect sales calculated by applying the yen’s monthly average exchange rates from the previous fiscal year to local currency-denominated monthly sales in the current fiscal year. For SME and SMP in the Music segment, and in the Pictures segment, the constant currency amounts are calculated by applying the monthly average U.S. dollar / yen exchange rates after aggregation on a U.S. dollar basis.

Results for the Pictures segment are described on a U.S. dollar basis as the Pictures segment reflects the operations of SPE, a U.S.-based operation that aggregates the results of its worldwide subsidiaries in U.S. dollars.

The impact of foreign exchange rate fluctuations on sales is calculated by applying the change in the yen’s periodic weighted average exchange ~~rates~~rate for the previous fiscal year from the current fiscal year to the major transactional currencies in which the sales are denominated. The impact of foreign exchange rate fluctuations on operating income (loss) is calculated by subtracting from the impact on sales the impact on cost of sales and ~~selling, general and administrative~~SGA expenses calculated by applying the same major transactional currencies calculation process to cost of sales and ~~selling, general and administrative~~SGA expenses as for the impact on sales. The I&SS segment enters into its own foreign exchange hedging transactions, and the impact of those transactions is included in the impact of foreign exchange rate fluctuations on sales and operating income (loss) for that segment. Additionally, the impact of foreign exchange hedging transactions entered into by Mobile Communications during the previous fiscal year is included in the impact of foreign exchange rate fluctuations on operating income (loss) for the EP&S segment. The descriptions of sales on a constant currency basis reflect sales obtained by applying the yen’s monthly average exchange rates from the fiscal year ended March 31, 2019 to local currency-denominated monthly sales in the fiscal year ended March 31, 2020. For SME, Sony/ATV and EMI in the Music segment, and in the Pictures segment, the constant currency amounts are calculated by applying the monthly average U.S. dollar / yen exchange rates after aggregation on a U.S. dollar basis.

This information is not a substitute for Sony’s consolidated financial statements measured in accordance with ~~U.S. GAAP.~~IFRS. However, Sony believes that these disclosures provide additional useful analytical information to investors regarding the operating performance of Sony.

~~Table of Contents~~

Assets, Liabilities and Stockholders’ Equity

The following ~~schedules show~~schedule shows unaudited condensed ~~balance sheets~~statements of financial position for the Financial Services segment and all other segments excluding the Financial ~~Services.~~Services segment. These presentations are not in accordance with ~~U.S. GAAP,~~IFRS, which is used by Sony to prepare its 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 consolidated financial statements. ~~Transactions~~Both financial statements include transactions between the Financial Services segment and Sony without the Financial Services ~~segment, including noncontrolling interests, are included~~segment. The figures shown in ~~those~~the respective presentations ~~then eliminated in~~for the ~~consolidated figures shown below.~~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 “consolidated” column is presented net of the elimination and/or offset of such intercompany balances and deferred tax assets and liabilities.

Financial Services

Sony without
Financial Services

Consolidated

March 31
2019

March 31
2020

March 31
2019

March 31
2020

March 31
2019

March 31
2020

(Yen in millions)

Assets

Current assets:

Cash and cash equivalents (*1)

509,595

550,039

960,478

962,318

1,470,073

1,512,357

Marketable securities (*2)

1,324,538

1,847,772

—

—

1,324,538

1,847,772

Notes and accounts receivable, trade and contract assets

16,479

10,532

1,055,669

999,976

1,065,802

1,002,920

Inventories

—

—

653,278

589,969

653,278

589,969

Other receivables

63,921

73,117

159,758

115,100

223,620

188,106

Prepaid expenses and other current assets

133,214

181,247

376,778

413,496

509,301

594,021

Total current assets

2,047,747

2,662,707

3,205,961

3,080,859

5,246,612

5,735,145

Film costs

—

—

409,005

427,336

409,005

427,336

Investments and advances (*3)

11,400,938

12,457,977

399,696

351,936

11,724,651

12,734,132

Investments in Financial Services, at cost

—

—

153,968

153,968

—

—

Property, plant and equipment

22,920

18,247

752,847

890,640

777,053

908,644

Other assets:

Right-of-use
assets

—

58,897

—

333,753

—

392,610

Intangibles, net (*3)

42,968

49,871

874,998

856,439

917,966

906,310

Goodwill (*3)

7,225

10,834

761,327

773,054

768,552

783,888

Deferred insurance acquisition costs

595,265

600,901

—

—

595,265

600,901

Deferred income taxes

3,533

10,365

198,953

200,021

202,486

210,372

Other

32,085

38,949

311,653

305,028

339,996

340,005

Total other assets

681,076

769,817

2,146,931

2,468,295

2,824,265

3,234,086

Total assets

14,152,681

15,908,748

7,068,408

7,373,034

20,981,586

23,039,343

Liabilities and Equity

Current liabilities:

Short-term borrowings (*4)

564,609

758,737

226,470

81,246

791,079

839,983

Short-term operating lease liabilities

—

9,363

—

59,595

—

68,942

Notes and accounts payable, trade

—

—

492,124

380,810

492,124

380,810

Accounts payable, other and accrued expenses

40,228

40,457

1,653,895

1,591,072

1,693,048

1,630,197

Accrued income and other taxes

19,655

22,825

115,571

123,171

135,226

145,996

Deposits from customers in the banking business

2,302,314

2,440,783

—

—

2,302,314

2,440,783

Other

197,123

226,455

474,926

514,368

666,024

733,732

Total current liabilities

3,123,929

3,498,620

2,962,986

2,750,262

6,079,815

6,240,443

Long-term debt

235,761

240,143

336,349

398,793

568,372

634,966

Long-term operating lease liabilities

—

41,192

—

273,668

—

314,836

Accrued pension and severance costs

33,979

34,211

350,253

290,444

384,232

324,655

Deferred income taxes

355,356

391,883

176,065

173,022

531,421

549,538

Future insurance policy benefits and other (*5)

5,642,671

6,246,047

—

—

5,642,671

6,246,047

Policyholders’ account in the insurance business

3,048,202

3,642,271

—

—

3,048,202

3,642,271

Other

15,488

21,843

288,164

289,574

281,382

289,285

Total liabilities

12,455,386

14,116,210

4,113,817

4,175,763

16,536,095

18,242,041

Redeemable noncontrolling interest

—

—

8,801

7,767

8,801

7,767

Equity:

Stockholders’ equity of Financial Services

1,695,563

1,790,333

—

—

—

—

Stockholders’ equity of Sony without Financial Services

—

—

2,850,380

3,159,071

—

—

Sony Corporation’s stockholders’ equity

—

—

—

—

3,746,377

4,125,306

Noncontrolling interests

1,732

2,205

95,410

30,433

690,313

664,229

Total Equity

1,697,295

1,792,538

2,945,790

3,189,504

4,436,690

4,789,535

Total liabilities and equity

14,152,681

15,908,748

7,068,408

7,373,034

20,981,586

23,039,343

- 47 -

Table of Contents

Condensed Statements of Financial Position


	Yen in millions
	Financial Services				Sony without Financial Services				Consolidated
	March 31, 2022		March 31, 2023		March 31, 2022		March 31, 2023		March 31, 2022		March 31, 2023
ASSETS
Current assets:
Cash and cash equivalents *1	¥	889,140	¥	756,493	¥	1,160,496	¥	724,407	¥	2,049,636	¥	1,480,900
Investments and advances in the Financial Services segment *2		360,673		328,357		—		—		360,673		328,357
Trade and other receivables, and contract assets		169,929		134,404		1,478,620		1,668,257		1,628,521		1,777,939
Inventories *3		—		—		874,007		1,468,042		874,007		1,468,042
Other financial assets		81,174		47,044		68,124		63,906		149,301		110,950
Other current assets		72,441		63,025		450,953		562,442		473,070		610,330

Total current assets		1,573,357		1,329,323		4,032,200		4,487,054		5,535,208		5,776,518
Non-current assets:
Investments accounted for using the equity method		—		—		268,513		325,220		268,513		325,220
Investments and advances in the Financial Services segment *2		18,445,088		18,445,728		—		—		18,445,088		18,445,728
Investments in Financial Services, at cost		—		—		550,483		550,483		—		—
Property, plant and equipment		18,010		15,316		1,095,241		1,329,219		1,113,213		1,344,864
Right-of-use assets		73,774		84,023		339,658		395,210		413,430		478,063
Goodwill and intangible assets, including content assets *4		72,578		78,197		2,672,466		3,322,639		2,745,044		3,400,836
Deferred insurance acquisition costs		676,526		730,864		—		—		676,526		730,864
Deferred tax assets		—		—		332,330		431,533		298,589		384,839
Other financial assets		37,037		46,941		663,233		789,470		696,306		832,344
Other non-current assets		77,657		75,143		284,834		319,306		289,050		321,946

Total non-current assets		19,400,670		19,476,212		6,206,758		7,463,080		24,945,759		26,264,704

Total assets	¥	20,974,027	¥	20,805,535	¥	10,238,958	¥	11,950,134	¥	30,480,967	¥	32,041,222


LIABILITIES AND EQUITY
Current liabilities:
Short-term borrowings	¥	1,964,776	¥	1,891,856	¥	183,187	¥	211,020	¥	2,147,962	¥	2,102,876
Trade and other payables		118,921		77,595		1,744,011		1,812,670		1,843,242		1,865,993
Deposits from customers in the banking business		2,886,361		3,163,237		—		—		2,886,361		3,163,237
Income taxes payables		4,444		13,370		101,648		139,330		106,092		152,700
Participation and residual liabilities in the Pictures segment		—		—		190,162		230,223		190,162		230,223
Other financial liabilities		68,793		43,128		29,050		30,444		97,843		73,572
Other current liabilities		242,937		222,039		1,296,205		1,513,882		1,488,488		1,720,335

Total current liabilities		5,286,232		5,411,225		3,544,263		3,937,569		8,760,150		9,308,936
Non-current liabilities:
Long-term debt		470,498		663,353		733,148		1,104,344		1,203,646		1,767,696
Defined benefit liabilities		37,167		37,183		217,381		198,938		254,548		236,121
Deferred tax liabilities		634,576		304,838		110,715		112,938		696,492		356,324
Future insurance policy benefits and other		7,039,034		7,264,421		—		—		7,039,034		7,264,421
Policyholders’ account in the life insurance business		4,791,295		5,148,579		—		—		4,791,295		5,148,579
Participation and residual liabilities in the Pictures segment		—		—		220,113		192,952		220,113		192,952
Other financial liabilities		128,208		153,724		86,391		199,327		211,959		350,278
Other non-current liabilities		5,864		7,225		121,558		142,096		106,481		127,593

Total non-current liabilities		13,106,642		13,579,323		1,489,306		1,950,595		14,523,568		15,443,964

Total liabilities		18,392,874		18,990,548		5,033,569		5,888,164		23,283,718		24,752,900
Equity:
Stockholders’ equity of Financial Services		2,577,705		1,811,167		—		—		—		—
Stockholders’ equity of Sony without Financial Services		—		—		5,156,059		6,007,177		—		—
Sony Group Corporation’s stockholders’ equity		—		—		—		—		7,144,471		7,229,709
Noncontrolling interests		3,448		3,820		49,330		54,793		52,778		58,613

Total equity		2,581,153		1,814,987		5,205,389		6,061,970		7,197,249		7,288,322

Total liabilities and equity	¥	20,974,027	¥	20,805,535	¥	10,238,958	¥	11,950,134	¥	30,480,967	¥	32,041,222

*1 Refer to ~~Cash Flow section~~“Cash Flows” below for details regarding the

year-on-year

~~increase~~

decrease in ~~cash~~Cash and cash equivalents as of March 31, ~~2020~~2023 in all segments excluding the Financial Services segment.

*2 ~~Marketable securities as~~Refer to Note 5 of ~~March 31, 2020~~the consolidated financial statements for the fluctuations of Investments and advances in the Financial Services segment ~~increased~~

~~year-on-year~~

~~mainly due to the impact of AEGON Sony Life Insurance Co., Ltd. and SA Reinsurance becoming wholly-owned subsidiaries of SFH. Refer to Note 25 of the consolidated financial statements.~~

*3 Investments and advances as of March 31, ~~2020 in the Financial Services segment increased~~

~~year-on-year~~

~~due to increases in investments~~2022 and ~~advances mainly at Sony Life.~~March 31, 2023, respectively.

*~~4 Short-term borrowings~~3 Inventories as of March 31, ~~2020~~2023 in all segments excluding the Financial Services segment ~~decreased primarily~~ increased

year-on-year

due to an increase in inventories mainly in the ~~repayment of the current portion of long-term debt.~~

G&NS segment.

*~~5 Future insurance policy benefits~~4 Goodwill and ~~other~~intangible assets, including content assets as of March 31, ~~2020~~2023 in all segments excluding the Financial Services segment increased

year-on-year

mainly due to the acquisition of the shares of Bungie and an increase in ~~future insurance policy benefits mainly at Sony Life.~~film costs.

~~Investments~~

~~The following table contains~~

~~available-for-sale~~

~~and~~

~~held-to-maturity~~

~~securities, including the breakdown of unrealized gains and losses by investment category.~~

March 31, 2020

Cost

Gross
unrealized
gains

Gross
unrealized
losses

Fair
value

(Yen in millions)

Financial Services Business:

Available-for-sale
securities

Sony Life

1,815,487

309,294

(484
)
2,124,297

Sony Bank

702,462

3,601

(2,065
)
703,998

Other

83,833

137

(822
)
83,148

Held-to-maturity
securities

Sony Life

7,334,780

2,439,769

(6,078
)
9,768,471

Sony Bank

5,418

—

(421
)
4,997

Other

78,314

22,927

(73
)
101,168

Total Financial Services

10,020,294

2,775,728

(9,943
)
12,786,079

Non-Financial
Services:

Available-for-sale
securities

1,370

—

—

1,370

Held-to-maturity
securities

—

—

—

—

Total
Non-Financial
Services

1,370

—

—

1,370

Consolidated

10,021,664

2,775,728

(9,943
)
12,787,449

As of March 31, 2020, Sony Life had debt securities with gross unrealized losses of 6.6 billion yen. Of the unrealized loss, 7.1% related to securities in an unrealized loss position for periods greater than 12 months as of March 31, 2020. Sony Life principally invests in Japanese and foreign government and corporate bonds. Almost all of the debt securities in which Sony Life invested were rated higher than or equal to “BBB” or its equivalent by Standard & Poor’s Ratings Services (“S&P”), Moody’s Investors Service (“Moody’s”) or other rating agencies.

As of March 31, 2020, Sony Bank had debt securities with gross unrealized losses of 2.5 billion yen. Of the unrealized loss, 4.3% related to securities in an unrealized loss position for periods greater than 12 months as of March 31, 2020. Sony Bank principally invests in Japanese government bonds, Japanese corporate bonds, and foreign bonds. Almost all of these securities were rated higher than or equal to “BBB” or its equivalent by S&P, Moody’s or other rating agencies.- 48 -

These unrealized losses related to numerous investments, with no single investment being in a material unrealized loss position for greater than 12 months. In addition, there was no individual security with unrealized losses that met the test for impairment as the decline in values were small both in amount and percentage, and the decline in values for those investments were still determined to be temporary in nature.

Table of Contents

~~For fixed maturity securities with unrecognized losses held by Sony Life as of March 31, 2020 (6.6 billion yen), maturity dates vary as follows:~~


~~• Within 1 year:~~	—
~~• 1 to 5 years:~~	—
~~• 5 to 10 years:~~	—
~~• above 10 years:~~	~~100.0~~	%

~~For fixed maturity securities with unrecognized losses held by Sony Bank as of March 31, 2020 (2.5 billion yen), maturity dates vary as follows:~~


~~• Within 1 year:~~	~~22.4~~	%
~~• 1 to 5 years:~~	~~59.1~~	%
~~• 5 to 10 years:~~	~~1.0~~	%
~~• above 10 years:~~	~~17.5~~	%

~~For the fiscal years ended March 31, 2019 and 2020, Sony Life recorded no net realized gains on~~

~~available-for-sale~~

~~securities.~~

~~In the ordinary course of business, Sony maintains long-term investment securities, included in securities investments and other, issued by various~~

~~non-public~~

~~companies. The aggregate carrying amount of the investments in~~

~~non-public~~

~~companies as of March 31, 2020 was 30.1 billion yen. A~~

~~non-public~~

equity investment is 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 in the same issuer.

For the fiscal years ended March 31, 2019 and 2020, total realized impairment losses were 4.3 billion yen and 9.1 billion yen, respectively, of which 0.02 billion yen and 0.02 billion yen, respectively, were recorded in financial services revenue by the subsidiaries in the Financial Services segment. Realized impairment losses recorded other than by subsidiaries in the Financial Services segment in each of the two fiscal years were reflected in

~~non-operating~~

~~expenses and primarily relate to certain strategic investments in~~

~~non-Financial~~

Services businesses. These investments primarily relate to certain strategic investments in Japan and the U.S. with which Sony has strategic relationships for the purposes of developing and marketing new technologies. Impairment losses were recorded for each of the two fiscal years as certain companies failed to successfully develop and market such technology, resulting in the operating performance of these companies being more unfavorable than previously expected. As a result, the decline in the fair value of these companies was judged as other-than-temporary. None of these impairment losses were individually material to Sony.

Upon determination that the value of an investment is impaired, the value of the investment is written down to its fair value. For an investment where the quoted price is available in an active market, fair value is determined based on unadjusted quoted prices as of the date on which the impairment determination is made. For investments where the quoted price is not available in an active market, fair value is usually determined based on quoted prices of securities with similar characteristics or measured through the use of various methodologies such as pricing models, discounted cash flow techniques, or similar techniques that require significant management judgment or estimation of assumptions that market participants would use in pricing the investments. The impairment losses that were recorded in each of the two fiscal years related to the unique facts and circumstances of each individual investment and did not significantly impact other investments.

Sony Life and Sony Bank’s investments constitute the majority of the investments in the Financial Services segment. As of March 31, 2020, Sony Life and Sony Bank account for approximately 93% and 6% of the investments in the Financial Services segment, respectively.

Cash Flows

Operating Activities: During the current fiscal year ended March 31, ~~2020,~~2023, there was a net cash inflow of ~~1 trillion 349.7~~314.7 billion yen from operating activities, ~~an increase~~a decrease of ~~91.0~~919.0 billion yen

year-on-year.

For all segments excluding the Financial Services segment, there was a net cash inflow of ~~762.9~~415.5 billion yen, ~~an increase~~a decrease of ~~9.4~~397.8 billion yen

year-on-year.

This ~~increase~~decrease was primarily due to a larger

year-on-year

increase in inventories and content assets as well as a decrease in trade payables compared to an increase in ~~net~~the previous fiscal year, partially offset by a

year-on-year

increase in income before income taxes after taking into account

non-cash

adjustments (including depreciation and amortization, including amortization of contract costs, other operating (income) expense, net and (gain) loss on securities, investments, net, as well as the impact of the reversal of valuation allowances against deferred tax assets in Sony Americas Holdings Inc. and its U.S. consolidated tax group in the previous fiscal year) as well as a larger

~~year-on-year~~net).

decrease in notes and accounts receivable, trade and contract assets. This increase in net cash inflow was partially offset by the negative impact of a decrease in accounts payable, trade compared to an increase in the previous fiscal year.

~~Table of Contents~~

The Financial Services segment had a net cash outflow of 56.3 billion yen, compared to a net cash inflow of ~~604.2~~459.7 billion yen ~~an increase of 82.6 billion yen~~

~~year-on-year.~~

in the previous fiscal year. This ~~increase~~change was ~~primarily~~mainly due to a smaller

year-on-year

increase in ~~net income after taking into account~~

~~non-cash~~

~~adjustments such as depreciation~~borrowings in the life insurance business and ~~amortization, including amortization of deferred insurance acquisition costs and contract costs.~~the banking business.

Investing Activities: During the current fiscal year ended March 31, ~~2020,~~2023, Sony used 1 trillion ~~352.3~~52.7 billion yen of net cash in investing activities, an increase of ~~44.8~~323.9 billion yen

year-on-year.

For all segments excluding the Financial Services segment, there was a net cash outflow of ~~363.1~~1 trillion 32.0 billion yen, ~~a decrease~~an increase of ~~157.3~~320.9 billion yen

year-on-year.

This ~~decrease~~increase was mainly due to the cash inflow from the sale of all of Sony’s shares of Olympus Corporation, as well as the absence of payment for the purchase of the approximately 60% equity interest of EMI that occurred in the previous fiscal year. This decrease in net cash outflow was partially offset by an a

year-on-year

increase in payments for fixed asset purchases, the acquisition of ~~fixed assets.~~shares of Bungie, an additional investment in Epic Games and a payment related to the acquisition of Industrial Media. Additionally, the previous fiscal year included ~~net cash inflow resulting from~~ the ~~sale~~purchase of the equity interest in Ellation, which operates the anime business Crunchyroll, the purchase of all shares and related assets of certain ~~shares~~subsidiaries of ~~Spotify.~~Kobalt including AWAL, Kobalt’s music distribution business mainly for independent recording artists, and an additional investment in Epic Games.

The Financial Services segment used ~~989.1~~23.8 billion yen of net cash in investing activities, ~~an increase of 202.0 billion yen year on year. This increase was mainly due to a~~essentially flat

~~year-on-year~~

year-on-year.

~~increase in payments for investments and advances carried out at Sony Life.~~

Financing Activities: Net cash inflow from financing activities during the current fiscal year ended March 31, 2023 was ~~65.7~~84.3 billion yen, compared to a net cash outflow of ~~122.9~~336.6 billion yen in the previous fiscal year.

For all segments excluding the Financial Services segment, there was a ~~377.1~~95.5 billion yen net cash inflow, compared to a net cash outflow ~~a decrease~~ of ~~144.0~~325.8 billion yen

~~year-on-year.~~

~~This decrease~~ in the previous fiscal year. The cash inflow in the current fiscal year was ~~mainly~~primarily due to the

~~year-on-year~~

~~decrease in the redemption of straight bonds and the repayment~~ procurement of long-term ~~debt, as well as funds raised through~~bank loans and the issuance of straight bonds in October 2019, partially offset by a payment related to the repurchases of shares of Sony’s own common stock (33,059,200 shares for a total purchase price of 200.0 billion yen) which was approved at the meeting of its Board of Directors held on May 16, 2019.bonds.

In the Financial Services segment, there was a ~~425.3~~52.6 billion yen net cash ~~inflow, an increase of 43.4 billion yen year on year. This increase was primarily due to an increase in short-term borrowings at Sony Life.~~outflow, essentially flat

year-on-year.

Accounting for the above factors and the effect of fluctuations in foreign exchange rates, the total outstanding balance of cash and cash equivalents atas of March 31, ~~2020~~2023 was 1 trillion ~~512.4~~480.9 billion yen. Cash and cash equivalents of all segments excluding the Financial Services segment was ~~962.3~~724.4 billion yen atas of March 31, ~~2020, an increase~~2023, a decrease of ~~1.8~~436.1 billion yen compared with the balance as of March 31, ~~2019.~~2022. Within the Financial Services segment, the outstanding balance of cash and cash equivalents was ~~550.0~~756.5 billion yen atas of March 31, ~~2020, an increase~~2023, a decrease of ~~40.4~~132.6 billion yen compared with the balance as of March 31, ~~2019.~~2022.

~~Table of Contents~~

Information on Cash Flows Separating Out the Financial Services Segment

The following ~~schedules show~~schedule shows unaudited condensed statements of cash flows for the Financial Services segment and all other segments excluding the Financial ~~Services.~~Services segment. These presentations are not in accordance with ~~U.S. GAAP,~~IFRS, which is used by Sony to prepare its 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 consolidated financial statements. Transactions between the Financial Services segment and Sony without the Financial Services segment ~~including noncontrolling interests,~~ are included in those respective presentations, then eliminated in the consolidated figures shown below.

Fiscal year ended March 31

Financial Services

Sony without
Financial Services

Consolidated

2019

2020

2019

2020

2019

2020

(Yen in millions)

Cash flows from operating activities:

Net income (loss)

116,641

93,266

866,352

547,924

966,550

622,260

Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:

Depreciation and amortization, including amortization of deferred insurance acquisition costs and contract costs

91,179

106,667

282,847

309,975

374,026

416,642

Amortization of film costs

—

—

348,493

329,809

348,493

329,809

Other operating (income) expense, net

104

(1,729
)
(71,672
)
(3,841
)
(71,568
)
(3,611
)
(Gain) loss on marketable securities and securities investments, net

(66,383
)
93,088

(118,630
)
20,177

(185,013
)
113,265

Changes in assets and liabilities:

(Increase) decrease in notes, accounts receivable, trade and contract assets

(867
)
5,947

2,056

55,466

1,144

62,654

(Increase) decrease in inventories

—

—

30,455

40,315

30,455

40,315

(Increase) decrease in film costs

—

—

(410,994
)
(361,194
)
(410,994
)
(361,194
)
Increase (decrease) in notes and accounts payable, trade

—

—

18,534

(91,435
)
18,534

(91,435
)
Increase (decrease) in future insurance policy benefits and other

544,179

520,683

—

—

544,179

520,683

(Increase) decrease in deferred insurance acquisition costs

(88,807
)
(99,433
)
—

—

(88,807
)
(99,433
)
(Increase) decrease in marketable securities held in the life insurance business

(64,034
)
(124,270
)
—

—

(64,034
)
(124,270
)
Other

(10,334
)
10,021

(194,002
)
(84,346
)
(204,227
)
(75,940
)

Net cash provided by (used in) operating activities

521,678

604,240

753,439

762,850

1,258,738

1,349,745

Cash flows from investing activities:

Payments for purchases of fixed assets

(18,610
)
(21,822
)
(294,044
)
(420,149
)
(312,644
)
(439,761
)
Payments for investments and advances

(1,078,250
)
(1,319,888
)
(53,525
)
(48,853
)
(1,131,775
)
(1,367,915
)
Proceeds from sales or return of investments and collections of advances

309,498

343,740

84,909

94,813

394,407

438,553

Other

287

8,873

(257,719
)
11,100

(257,433
)
16,845

Net cash provided by (used in) investing activities

(787,075
)
(989,097
)
(520,379
)
(363,089
)
(1,307,445
)
(1,352,278
)

Cash flows from financing activities:

Increase (decrease) in borrowings, net

160,902

193,709

(325,247
)
(79,572
)
(164,341
)
113,724

Increase (decrease) in deposits from customers, net

246,945

258,720

—

—

246,945

258,720

Dividends paid

(26,100
)
(27,189
)
(38,067
)
(49,574
)
(38,067
)
(49,574
)
Other

112

61

(157,799
)
(247,754
)
(167,421
)
(257,212
)

Net cash provided by (used in) financing activities

381,859

425,301

(521,113
)
(377,080
)
(122,884
)
65,658

Effect of exchange rate changes on cash and cash equivalents

—

—

52,465

(21,643
)
52,465

(21,643
)

Net increase (decrease) in cash and cash equivalents, including restricted

116,462

40,444

(235,588
)
1,038

(119,126
)
41,482

Cash and cash equivalents, including restricted, at beginning of the fiscal year

393,133

509,595

1,199,806

964,218

1,592,939

1,473,813

Cash and cash equivalents, including restricted, at end of the fiscal year

509,595

550,039

964,218

965,256

1,473,813

1,515,295

Less — restricted cash and cash equivalents, included in other current assets and other assets

—

—

3,740

2,938

3,740

2,938

Cash and cash equivalents at end of the fiscal year

509,595

550,039

960,478

962,318

1,470,073

1,512,357

- 49 -

Table of Contents

Condensed Statements of Cash Flows


	Yen in millions

	Fiscal year ended March 31
	Financial Services						Sony without Financial Services						Consolidated
	2022			2023			2022			2023			2022			2023
Cash flows from operating activities:
Income (loss) before income taxes		150,111			223,935			1,006,548			996,758			1,117,503			1,180,313
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		24,932			26,333			810,301			978,257			835,233			1,004,590
Amortization of deferred insurance acquisition costs		69,237			84,523			—			—			69,237			84,523
Other operating (income) expense, net		664			(4,147	)		(66,158	)		(5,566	)		(65,494	)		(12,021	)
(Gain) loss on securities, net (other than Financial Services segment)		—			—			60,402			4,469			60,402			4,469
Change in future insurance policy benefits and other		458,880			234,102			—			—			458,880			234,102
Change in policyholders’ account in the life insurance business, less cash impact		238,309			15,523			—			—			238,309			15,523
Net cash impact of policyholders’ account in the life insurance business		227,262			346,455			—			—			227,262			346,455
Changes in assets and liabilities:
(Increase) decrease in trade receivables and contract assets		(53,819	)		35,524			(121,684	)		(110,668	)		(171,094	)		(70,448	)
(Increase) decrease in inventories		—			—			(194,624	)		(560,382	)		(194,624	)		(560,382	)
(Increase) decrease in investments and advances in the Financial Services segment		(1,724,164	)		(1,250,078	)		—			—			(1,724,164	)		(1,250,078	)
(Increase) decrease in content assets		—			—			(502,253	)		(603,314	)		(502,253	)		(603,314	)
(Increase) decrease in deferred insurance acquisition costs		(117,337	)		(118,096	)		—			—			(117,337	)		(118,096	)
Increase (decrease) in trade payables		37,885			(40,071	)		93,660			(64,765	)		126,989			(109,336	)
Increase (decrease) in deposits from customers in the banking business		230,236			300,201			—			—			230,236			300,201
Increase (decrease) in borrowings in the life insurance business and the banking business		905,139			111,314			—			—			905,139			111,314
Increase (decrease) in taxes payable other than income taxes, net		(5	)		112			17,845			4,071			17,840			4,183
Other		12,380			(21,912	)		(290,769	)		(223,387	)		(278,421	)		(247,307	)

Net cash provided by (used in) operating activities		459,710			(56,282	)		813,268			415,473			1,233,643			314,691

Cash flows from investing activities:
Payments for property, plant and equipment and other intangible assets		(20,562	)		(24,195	)		(420,542	)		(590,320	)		(441,096	)		(613,635	)
Payments for investments and advances (other than Financial Services segment)		—			—			(91,082	)		(191,129	)		(91,082	)		(191,129	)
Proceeds from sales or return of investments and collections of advances (other than Financial Services segment)		—			—			16,081			13,548			16,081			13,548
Other		2,914			393			(215,597	)		(264,125	)		(212,683	)		(261,448	)

Net cash provided by (used in) investing activities		(17,648	)		(23,802	)		(711,140	)		(1,032,026	)		(728,780	)		(1,052,664	)

Cash flows from financing activities:
Increase (decrease) in borrowings, net		(10,975	)		(11,226	)		(151,721	)		273,195			(162,696	)		261,969
Dividends paid		(39,159	)		(41,335	)		(74,342	)		(86,568	)		(74,342	)		(86,568	)
Other		(6	)		(2	)		(99,702	)		(91,100	)		(99,540	)		(91,101	)

Net cash provided by (used in) financing activities		(50,140	)		(52,563	)		(325,765	)		95,527			(336,578	)		84,300

Effect of exchange rate changes on cash and cash equivalents		—			—			94,369			84,937			94,369			84,937

Net increase (decrease) in cash and cash equivalents		391,922			(132,647	)		(129,268	)		(436,089	)		262,654			(568,736	)
Cash and cash equivalents at beginning of the fiscal year		497,218			889,140			1,289,764			1,160,496			1,786,982			2,049,636

Cash and cash equivalents at end of the fiscal year		889,140			756,493			1,160,496			724,407			2,049,636			1,480,900

B.	Liquidity and Capital Resources

The description below covers basic financial policy and figures for Sony’s consolidated operations except for the Financial Services segment and ~~SMN Corporation,~~certain subsidiaries, which secure liquidity on their own. Furthermore, the Financial Services segment is described separately ~~at the end of~~in this section.

- 50 -

Table of Contents

Liquidity Management and Market Access

An important financial objective of Sony is to maintain the strength of its ~~balance sheet,~~financial condition, while securing adequate liquidity for business activities. Sony defines its liquidity sources as the amount of cash and cash equivalents (“cash balance”) (excluding restrictions on capital transfers mainly due to national regulations) and the unused amount of committed lines of credit.

Funding requirements that arise from maintaining liquidity are principally covered by cash flow from operating and investing activities (including asset sales) and by the available cash balance; however, Sony also raises funds as needed from financial and capital markets through means such as corporate bonds, ~~commercial paper (“CP”)~~CP and bank loans.

Sony Group Corporation, SGTS and Sony Capital Corporation (“SCC”), a finance subsidiary in the U.S., maintain CP programs with access to the Japanese, U.S. and European CP markets. The borrowing limits under these CP programs, translated into yen, were ~~1,044.2~~1,166.3 billion yen in total for Sony Group Corporation, SGTS and SCC as of March 31, ~~2020.~~2023. There were no amounts outstanding under the CP programs as of March 31, ~~2020.~~2023.

If disruption and volatility occur in financial and capital markets and Sony becomes unable to raise sufficient funds from these sources, Sony may also draw down funds from contractually committed lines of credit from various financial institutions. Sony has a total, translated into yen, of ~~517.1~~641.5 billion yen in unused committed lines of credit, as of March 31, ~~2020.~~2023. Details of those committed lines of credit are: a 275.0 billion yen committed line of credit contracted with a syndicate of Japanese banks, a 1.7 billion U.S. dollar multi-currency committed line of credit also contracted with a syndicate of Japanese banks and a ~~525~~1,050 million U.S. dollar multi-currency committed line of credit contracted with a syndicate of foreign banks. ~~The above 525 million U.S. dollar committed line with a syndicate of foreign banks was renewed as of April 1, 2020 and increased to 1,050 million U.S. dollars.~~ Sony currently believes that it can sustain sufficient liquidity through access to committed lines of credit with financial institutions, together with its available cash balance, even in the event that financial and capital markets become illiquid.

InSony considers one of management’s top priorities to be the maintenance of stable and appropriate credit ratings in order to ensure financial flexibility for liquidity and capital management and continued adequate access to sufficient funding resources in the financial and capital markets. However, in the event of a downgrade in Sony’s credit ratings, there are no financial covenants in any of Sony’s material financial agreements with financial institutions that would cause an acceleration of the obligation. Even though the cost of borrowing for some committed lines of credit could change according to Sony’s credit ratings, there are no financial covenants that would cause any impairment on the ability to draw down on unused facilities.

~~Ratings~~

Sony considers one of management’s top priorities to be the maintenance of stable and appropriate credit ratings in order to ensure financial flexibility for liquidity and capital management and continued adequate access to sufficient funding resources in the financial and capital markets.

In order to facilitate access to global capital markets, Sony obtains credit ratings from two rating agencies, Moody’s and S&P. In order to facilitate access to Japanese financial and capital markets, Sony obtains credit ratings from two agencies in Japan, Rating and Investment Information, Inc. and Japan Credit Rating Agency, Ltd.

Sony currently believes that it has access to sufficient funding resources in the financial and capital markets. For information regarding a possible further rating downgrade, refer to “Risk Factors” in “Item 3.

~~Key Information~~

.”

Cash Management

Sony manages its global cash management activities primarily through Sony Group Corporation in Japan, SCC in the U.S. and ~~through~~ SGTS in other regions. The excess or shortage of cash at most of Sony’s subsidiaries is invested or funded by Sony Group Corporation, SGTS and SCC on a net basis, although Sony recognizes that fund transfers are limited in certain countries and geographic areas due to restrictions on capital transactions. In order to pursue more efficient cash

~~Table of Contents~~

management, cash surpluses among Sony’s subsidiaries are deposited with Sony Group Corporation, SGTS and SCC, and cash shortfalls among subsidiaries are covered by loans through Sony Group Corporation, SGTS and SCC, so that Sony can make use of excess cash balances and reduce third-party borrowings. Where local restrictions prevent an efficient intercompany transfer of funds, Sony’s intent is that cash balances remain outside of Sony Group Corporation, SGTS and SCC and that Sony ~~meet~~meets its liquidity needs through ongoing cash flows, external borrowings, or both. Sony does not expect restrictions of capital transactions on amounts held outside of Japan to have a material effect on Sony’s overall liquidity, financial condition or results of operations.

Financial Services segment

The management of ~~SFH,~~SFGI, Sony Life, Sony Assurance and Sony Bank recognizes the importance of securing sufficient liquidity to cover the payment of obligations that these companies incur in the ordinary course of business. Sony Life, Sony Assurance and Sony Bank maintain a sufficient cash balance and secure sufficient means to meet their obligations while abiding by laws and regulations such as the Insurance Business Act or the Banking Act of Japan, and restrictions imposed by the ~~Financial Services Agency~~FSA and other regulatory authorities as well as establishing and operating under company guidelines that comply with these regulations. Sony Life and Sony Assurance establish a sufficient level of liquidity for the smooth payment of insurance claims ~~when they invest~~by investing, primarily in ~~various~~ securities, their cash inflows, which ~~are~~come mainly from policyholders’ insurance premiums. Sony Bank maintains a necessary level of liquidity for the smooth settlement of transactions ~~when it uses~~by using its cash inflows,

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which come mainly from customers’ deposits in local currency, ~~in order~~ to offer mortgage loans to individuals and ~~the remaining cash inflows are invested~~to invest mainly in marketable securities. Cash inflows from customers’ deposits in foreign currencies are invested mainly in investment instruments of the same currency.

In addition, Sony’s subsidiaries in the Financial Services segment are subject to the ~~Japanese~~ Insurance Business Act and the Banking Act, which require insurance and banking business companies to maintain their financial credibility and to secure protection for policyholders and depositors in view of the public nature of insurance and banking services. As such, lending and borrowing between subsidiaries in the Financial ~~Service~~Services segment and the other companies within Sony Group is strictly limited. Sony’s subsidiaries in the Financial Services segment are managed separately from Sony’s cash management activities through Sony Group Corporation, SGTS and SCC as mentioned above.

For further information about Sony’s views regarding utilization of cash flow from operating activities generated within the Sony Group for strategic investments, shareholder returns and as cash on hand, refer to “Issues Facing Sony and Management’s Response to those Issues: ~~Third~~Fourth

Mid-Range

Plan — Financial Targets and their Progress.”

Off-balance

Sheet Transactions

Sony has certain

off-balance

sheet transactions that provide liquidity, capital resources and/or credit risk support. These transactions in which Sony has relinquished control of trade receivables are accounted for as sales. Certain trade receivable sales programs also involve structured entities. Refer to Note 28 of the consolidated financial statements.

Contractual Obligations, Commitments, and Contingent Liabilities

Sony’s contractual obligations, commitments and contingent liabilities are summarized as follows:

Short-term borrowings and long-term debt

Refer to Note 6 and Note 14 of the consolidated financial statements.

Loan commitments, purchase commitments and litigation

Refer to Note 33 of the consolidated financial statements.

Insurance contract liabilities

Refer to Note 13 of the consolidated financial statements.

C.	Research and Development

~~As a creative entertainment company with a solid foundation of technology, Sony promotes research and development (“R&D”) based on its mission~~Sony’s Purpose is to “fill the world with emotion (Kando) through the power of ~~technology.~~creativity and technology,” in which the key word is “Kando.”

For the world to continue to be filled with emotion (Kando), Sony ~~also believes~~must continue to create technologies that ~~it is~~unleash people’s creativity and make our civilization sustainable. To clarify this commitment, Sony has set “Push our civilization forward and make this planet sustainable” as its R&D mission.

A wide range of technological domains are essential to ~~align itself with~~realize Sony’s Purpose. The three domains of sensing, AI and the motivations of both creators and users in order to achieve its corporate direction of “getting closer to people.” In September 2019, Sony held the first Sony Technology Day, where it introduced cutting-edge technologies that connect the diverse businesses within the Sony Group. People are atdigital virtual world, as well as integration among these, will be the core drivers toward this. The integration of sensors and AI in the real world is expected to lead to more advanced image and voice recognition. Sensed data and AI enhanced by learning from such data can then be used to generate high-precision simulations and fascinating content in the virtual world. In addition, the insights gained in the virtual world can be fed back to the AI to bolster its ability. In this way, sensing, AI, and the virtual world can be integrated to transform Sony into an AI/Data-driven company.

The Sony Group’s wide-ranging business portfolio, which is centered around the goals of “moving people’s hearts,” “connecting people to people” and “supporting people.” Sony plans to contribute to society through its technology as the societal significance of its businesses grows.

~~Through Corporate R&D (Sony’s~~ research and development ~~organization), Sony is realizing contributions to the entire Sony Group, setting the direction for robust technological development over the~~

~~mid-~~

to long-term, and enhancing open innovation. While supporting R&D activities in each business, Sony is connecting multiple businesses through technology as well as promoting initiatives in fields such as sensing, agent processing and output expression that contribute to differentiation in key areas. In carrying out organization (“Corporate R~~&D activities mainly focused on the next~~

~~three-to-ten~~

years, Sony shares the results of its research with the outside world as intellectual property, and then uses feedback from outside the company on that research to refine its development roadmap and periodically review how its R&D activities are aligned with its corporate strategy. From the standpoint of Sustainable Development Goals (SDGs) and Environment, Social and Governance (ESG), Sony also aims to contribute widely to society through technology, by delivering safety and security and by solving problems surrounding resources and the environment.

~~Sony~~&D”) carries out ~~Corporate~~various R&D activities in collaboration with multiple R&D ~~centers~~organizations located in Japan, ~~China,~~ Europe, ~~and~~ the United States, India and China, utilizing the different characteristics and strengths of each area. ~~Additionally,~~In addition to aiming to acquire excellent local R&D personnel, Sony will strive to promote further collaboration among the businesses within the Sony Group, while also aiming to strengthen collaboration with external creators and academia. Sony is already promoting various activities such as joint development with universities around the world, and plans to further expand such activities in the future.

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is proceeding with preparations to establish a new R&D center in India in an effort to strengthen its R&D presence overseas, and is also enhancing ease of movement for management and personnel between each R&D center and strengthening its R&D from more diverse perspectives. For cross-sectional projects such as those in the Entertainment and Financial Services areas, Sony assembles teams with members from various organizations to promote R&D activities through the flexible and efficient collection of knowledge. Sony is also proactively taking part in open innovation, including collaboration with universities and other research institutions, in an effort to gain insight into the motivations of creators and users from a wider perspective to enhance the potential of its business.

R&D costs for the fiscal year ended March 31, ~~2020~~2023 increased by ~~18.1~~117.3 billion yen (19%) to ~~499.3~~735.7 billion yen. The ratio of R&D costs to total revenue excluding the Financial Services segment was ~~7.2%~~7.3%, compared to ~~6.5%~~7.4% in the previous fiscal year.

The following table ~~includes~~shows a breakdown of R&D costs for each business segment and Corporate R&D in the fiscal years ended March 31, ~~2019~~2022 and ~~2020.~~2023.

Fiscal year ended March 31

2019

2020

(Yen in billions)

R&D costs

G&NS

116.3

126.7

EP&S

162.8

145.9

I&SS

124.2

143.5

Corporate R&D

45.9

44.1

Total

481.2

499.3


	Fiscal year ended March 31
	2022		2023
	(Yen in billions)
R&D costs
G&NS		175.7		271.1
ET&S		141.8		155.7
I&SS		198.0		223.7
Corporate R&D		48.7		46.4

D.	Trend Information

This section contains forward-looking statements about the possible future performance of Sony and should be read in light of the cautionary statement on that subject, which appears on the inside front cover page and applies to this entire document.

Issues Facing Sony and Management’s Response to those Issues

~~The global economy remained sluggish during the first half of~~In the fiscal year ended March 31, 2023, the global economy continued to be greatly affected by inflation. While economic activities have started to normalize following the stagnation caused by the

COVID-19

pandemic that began in 2020, ~~due to heightened geopolitical tensions such as intensifying U.S.-China trade friction~~the prolongation of Russia’s military invasion of Ukraine that began in February 2022 accelerated increases in global commodity prices and inflation reached historic levels. Under these circumstances, in March 2022, the Federal Reserve Board of the United States lifted its zero interest rate policy and began raising interest rates, resulting in the interest rate differential between Japan and the ~~withdrawal of Britain from~~United States widening and the ~~European Union (“Brexit”).~~yen’s exchange rate against the U.S. dollar in October 2022 hitting its weakest level in 32 years. In addition, the ~~second half of~~recent interest rate hikes in various countries have led to instability in financial systems, particularly in Europe and the ~~fiscal year ended March 31, 2020, intermittent upturns in U.S.-China trade negotiations~~United States, and ~~decreased concerns about Brexit occurring without a withdrawal agreement (a~~

~~no-deal~~

~~Brexit) helped raise expectations that~~uncertainty regarding the ~~deceleration~~future of the global economy ~~was bottoming out. However, the situation changed completely after the beginning of 2020 due to the spread of~~has further heightened.

~~COVID-19~~

around the world, and the global economy slowed rapidly toward the end of the fiscal year ended March 31, 2020. Currently, uncertainty in the outlook for the global economy is increasing due to difficulties predicting when the spread of

~~COVID-19~~

~~will diminish, and due to the reignition of trade friction between the U.S. and China.~~

Sony has a wide range of businesses globally. ~~In addition to these~~These changes in the global economy, in addition to increased geopolitical risk due to tensions between the U.S. and China, the rise of new technologies such as AI, and responses to global environmental challenges and social division, are causing major changes in the environment surrounding each of Sony’s business segments.

Sony has responded swiftly to changes in the business environment ~~such as increasingly intense pricing pressure from competitors, shrinking markets for certain key products~~ and ~~services, as well as shorter product cycles, are impacting each~~worked to strengthen the profit structure of ~~Sony’s business segments. For further details about the business environment surrounding~~ each business, ~~segment, refer to “Risk Factors” in “Item 3.~~

~~Key Information~~

~~” and “Operating Results” in “Item 5.~~

~~Operating and Financial Review and Prospects~~

.”

~~In this business environment, Sony has continued~~while continuing to prioritize management with a long-term view, ~~and it has carried out initiatives such as promoting the evolution and growth of each business, as well as accelerating “One Sony” initiatives,~~ with the goal of enhancing the corporate value of the entire Sony Group. ~~These~~

On May 18, 2023, Sony held its Corporate Strategy Meeting for the fiscal year ending March 31, 2024. Chairman and CEO Kenichiro Yoshida spoke on Sony’s management direction, while President, COO and CFO Hiroki Totoki focused on the growth strategies of each business. Kenichiro Yoshida first looked back at the expansion of Sony’s businesses from a long-term perspective, from its founding through to recent initiatives ~~are~~to reorganize Sony Group’s architecture, strengthen creativity, and expand the Kando space, based on Sony’s Purpose ~~which is~~(or reason for being) to “fill the world with emotion (or Kando) through the power of creativity and technology.” He also emphasized Sony’s commitment to creativity, and stated that Sony will continue to create Kando with creators and contribute to expanding it to the world. As an example of this, N.P. Singh, CEO, SPNI underlined the expansion of the Sony Group’s business in India and highlighted growth opportunities.

Hiroki Totoki then provided an overarching view of growth strategies for each of Sony’s businesses from the perspective of group management. He further explained that Sony aims to achieve further growth and enhance its long-term value by continuing to evolve the diversity of its people and businesses and connect them organically.

The details are as follows.

1. Management from a Long-Term Perspective

Sony has continued to expand its business from a long-term perspective, from its origins of sound, to businesses such as electronics, entertainment and semiconductors. The life insurance business within the

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Financial Services segment was started by one of Sony’s founders in 1979 with a long-term vision of 20 years. Following the fiscal year ended March 31, 2022, sales and operating income of the three entertainment businesses, Music, Pictures and G&NS, which were developed in the 20th century, continued to exceed 50% of the consolidated Group in the fiscal year ended March 31, 2023. In order to help make the world sustainable, Sony is also taking a long-term approach to sustainability, including its “Road to Zero” long-term global environmental plan that aims to achieve a zero environmental footprint.

2. Defining Sony’s Purpose and Reorganizing Group Architecture

In 2019, Sony defined its Purpose with Kando as a keyword. Then, in 2020, Sony announced a restructuring of its Group architecture that aimed to connect each business at an equal distance. This included spinning off the electronics business from the Group headquarters and making the Financial Services business a wholly-owned subsidiary. This reorganization has boosted synergies not only between electronics and entertainment, but also between the content IP used by Sony’s entertainment businesses.

3. Enhancement of Creativity

Sony intends to strengthen its creation across business areas including content and technologies with the aim of being the brand most chosen by creators around the world who generate Kando.

(1) Enhancing Content IP

Investing in the ability to create Kando

In order to strengthen its creativity in areas such as music, pictures, games and anime, Sony has focused on getting closer to creators and creating Kando, and at the same time has invested in the ability to create Kando. In terms of content IP, Sony has invested approximately 1 trillion yen over the past five years.

Partner collaboration and group collaboration on content IP

Together with its partners, Sony is working to deliver the Kando content developed by creators to even more people, to “fill the world with emotion.”

The Last of Us

, a first-party PlayStation

title that was made into a TV drama, became the most-watched show in both Europe and Latin America in the history of Sony’s distribution partner’s service, Max (formerly known as HBO Max).

“Communities of Interest” leading to creation

Under the long-term vision of expanding the number of people directly connected to the Sony Group to 1 billion people, Sony aims to continue delivering Kando in specific areas where communities are born, such as anime, games, and in India, learning from its users, and making use of them in its creations.

Crunchyroll, a DTC service specializing in anime, feeds back user viewing data to creators.

In India, Sony is engaged in initiatives to create new value, such as local Kando creation and delivery through SonyLIV, SPNI’s DTC service, and a joint venture between the Music and Pictures businesses to provide opportunities for local artists and creators. Furthermore, through the expected merger of SPNI and Zee, Sony aims to further expand creation rooted in local culture.

(2) Enhancing creation through products and services

Sony’s “VENICE” digital cinema camera series is being widely used across Hollywood studios.

Sony is also focusing on virtual production that supports creators’ new visual expressions with technology.

Hawk-Eye

Innovations, renowned for its sports officiating, provides excitement through entertainment technology services.

(3) Creation semiconductors that create Kando

CMOS image sensors are contributing to capturing the moment and helping users around the world become creators, through Alpha

™

full-frame mirrorless cameras and smartphone cameras.

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Over the past five years, Sony has invested more than 1 trillion yen in this area. Sony intends to continue to focus on the business of image sensors as key devices that support creation.

4. Expansion of Kando space

Leveraging technologies such as VR and AI, Sony is also working on the challenge of expanding the field of Kando from real space into the virtual and mobility spaces from a long-term perspective.

(1) Virtual space

Sony is providing a place of creation where people connect with each other through live service games, live performances by music artists and initiatives that increase sports fan engagement.

Sony is also working to seamlessly connect the virtual and the physical worlds using technologies such as its mobile motion capture system “mocopi,” and skeletal tracking system.

Sony is extending the creativity of creators with AI represented by “Gran Turismo Sophy,” a racing AI agent that enhances the value of the experience within the game space. Sony intends to continue to promote R&D in this area, alongside social implementation.

(2) Mobility space

Sony is contributing to the evolution of mobility in areas such as imaging and sensing technologies and entertainment, as well as communications and networks including 5G, and also plans to provide these technologies to the production model being developed under Sony Honda Mobility’s new brand, “AFEELA.”

Through its collaboration with Epic Games, Sony is pursuing new entertainment possibilities using the Unreal Engine 3D creation tool.

(3) Outer space

Sony will conduct exploration activities to bring emotional experiences through the STAR SPHERE project’s nano satellite “EYE.”

5. Progress on the fourth

mid-range

plan

Three-year cumulative adjusted EBITDA, which is the KPI of the fourth

mid-range

plan (“fourth

mid-range

plan”) that charts the path forward for Sony over the three fiscal years started on April 1, 2021 and ending on March 31, 2024, has progressed significantly beyond the initial plan. In the fiscal year ending March 31, 2024, which is the final year of its fourth

mid-range

plan, Sony intends to promote business operations with a focus on risk management amidst an unstable business environment, and ensure the achievement of its KPIs. For more detailed discussion on the fourth

mid-range

plan, refer to “Fourth

Mid-Range

Plan — Financial Targets and their Progress” below.

6. Growth strategies for each business segment

G&NS segment: Increasing the number of active users

Growth and expansion of PS5

™

. Shipped 6.3 million units of PS5 during the fourth quarter of the fiscal year ended March 31, 2023. Continue to manufacture at full capacity.

Knowledge sharing from Bungie to enhance Sony’s ability to develop and operate live service games. Aim to increase the number of active users on PCs.

Music segment: Outpace the market growth of streaming services and emerging media

1) Promote new songs from Sony Music’s wholly owned labels and signed artists to increase market share. 2) Expand services for distributed labels centered around The Orchard. 3) Ensure early contact with emerging artists through channels such as AWAL. 4) Further explore emerging markets, including unearthing local artists.

Strengthen initiatives to monetize emerging media such as social media and live concerts within games and increase returns for artists.

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Pictures segment: Maximize IP value over the long-term

Leverage Sony’s strengths as a strategic supplier, limiting the burden of investment Sony would incur by having Sony’s own distribution platform, and instead allocating these investment resources to the creative side, enhancing production quality, and supplying content to the distribution platforms that best understand the appeal of each product.

Improve long-term profit by maintaining focus on theatrical releases, which are also supported by the industry.

Across entertainment businesses: Maximizing value by deepening the deployment of IP

Synergies generated between entertainment businesses

Expansion of game IP: Continue work on the production of film and TV adaptations of first-party PlayStation

titles including

The Last of Us

Gran Turismo

and

Twisted Metal

Accelerating the growth of anime: Collaboration between

Demon Slayer: Kimetsu no Yaiba

producer Aniplex and Crunchyroll.

Location Based Entertainment

Water theme park “Columbia Pictures Aquaverse” in Thailand

A ride attraction in Spain with projections showing the world of

Uncharted

“Sword Art Online — Anomaly Quest” at indoor interactive attraction “THE TOKYO MATRIX” in Japan

ET&S segment: Expand the array of solutions and services offered to a wide range of creators

For photographers and broadcasters, expand Sony’s business in the area of services such as efficient virtual production on the cloud, and also optimize these technologies and services for individual creators.

For filmmakers, evolve creation technologies such as the “VENICE” camera series and virtual production to unleash creators from the constraints of time and space.

I&SS segment: Further strengthen No. 1 position in image sensors.

Shift to larger sizes and higher performance CMOS image sensors for smartphones.

Expand business opportunities for sensors in the automotive field, where Sony can contribute to safe mobility, and in the industrial and social infrastructure field, to contribute to the shift to smart societies.

Financial Services segment: Brand reinforcement, leveraging Group infrastructure and investment for growth

Reinforcement of branding, leveraging the Sony Group’s infrastructure, and investing in growth are the keys to growth in the Financial Services business.

To realize further growth within the Financial Services business, Sony will begin the assessment of a partial

spin-off

based on the premise of the listing of the shares of SFGI that operates this business.

Sony will proceed with its assessment based on the premise that Sony will continue to own a portion (slightly less than 20%) of the shares of SFGI, so that the Financial Services business can continue to utilize the Sony brand, including in their company name, and continue to generate synergies with Sony Group companies after the execution of the

spin-off.

The timing of the execution of the

spin-off

has not been determined; however, Sony will proceed with its assessment leading up to the end of the fiscal year ending March 31, 2024, giving consideration to executing the

spin-off

within the next two to three years.

7. Continuous evolution of businesses and people diversity

Through diverse individuals sharing their knowledge and activities beyond boundaries, evolving Sony’s business diversity, and connecting organically, Sony aims to achieve further growth and enhance long-term value across the overall Sony Group.

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Fourth

Mid-Range

Plan — Financial Targets and their Progress

On April 28, 2021, Sony announced the financial targets for the fourth

mid-range

plan. In order to continue managing Sony with a long-term view, Sony’s management established a three-year cumulative key performance indicator. That indicator, which is the most important metric of group performance for the fourth

mid-range

plan (“Group KPI”), is Adjusted EBITDA*. Sony announced that it would target total Adjusted EBITDA of 4.3 trillion yen on a consolidated basis for the three fiscal years started on April 1, 2021 and ending on March 31, 2024. Management believes that Adjusted EBITDA is a performance metric suitable for the long-term management that Sony prioritizes. This is because (i) it represents the sustainable earnings power of a business as it does not include the effects of

one-time

gains and losses, (ii) it enables management to confirm that all the businesses of the Sony Group, including the Financial Services business, are expanding over the

mid-

to long-term through cycles of investment and return, and (iii) it is often used to calculate corporate ~~direction~~value.

Regarding the capital allocation plan in the fourth

mid-range

plan, Sony established a capital expenditure target of ~~“getting closer~~1.5 trillion yen and a strategic investment target of 2 trillion yen or more including share repurchases as it aims to ~~people.”~~ grow its business over the longer-term, beyond the duration of the plan. As in the past, Sony plans to increase dividends in a stable manner over the long term. Sony expects to fund its allocation of capital through expected cash generation of 3.8 trillion yen or more over the three fiscal years started on April 1, 2021 and ending on March 31, 2024. The expected cash generation includes 3.1 trillion yen or more of consolidated operating cash flow excluding the Financial Services segment, 300 billion or more of cash flow generated from the sale of businesses and assets executed as needed as well as borrowing with a strict eye on financial discipline, and 400 billion of cash left-over from the period of the third

mid-range

plan started on April 1, 2018 and ended on March 31, 2021 and before.

Adjusted EBITDA for the fiscal year ended March 31, 2023 was 1 trillion 703.4 billion yen**. Three-year cumulative adjusted EBITDA, which is the Group KPI, has progressed significantly beyond the initial plan, mainly in the Music and Pictures segments.

Regarding capital allocation, capital expenditures are expected to increase from the initial plan to 1.9 trillion yen, with an additional 0.4 trillion yen mainly allocated to image sensor capital expenditures in the I&SS segment and server investments in Corporate R&D and G&NS. In terms of strategic investment, since Sony decided to increase working capital and capital expenditures, and in consideration of the current M&A market environment, Sony reduced the amount from the initial plan of 2 trillion yen to 1.8 trillion yen.

* Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) = Net income attributable to Sony Group Corporation’s stockholders + Net income attributable to noncontrolling interests + Income taxes + Interest expenses, net, recorded in Financial income and Financial expense — Gain on revaluation of equity instruments, net, recorded in Financial income and Financial expense + Depreciation and amortization expense excluding amortization for film costs, broadcasting rights and internally developed game content and master recordings included in Content assets as well as for deferred insurance acquisition costs — the profit and loss amount that Sony deems

non-recurring****.

Adjusted EBITDA is not a measure in accordance with IFRS. However, Sony believes that this disclosure may be useful information to investors. Adjusted EBITDA should be considered in addition to, not as a substitute for, Sony’s results in accordance with IFRS.

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** The following table shows a reconciliation of net income attributable to Sony Group Corporation’s stockholders reported in accordance with IFRS to Adjusted EBITDA for the fiscal year ended March 31, 2023.


	Fiscal year ended March 31
	2023
	(Yen in billions)
Net income attributable to Sony Group Corporation’s stockholders		937.1
Net income attributable to noncontrolling interests		6.5
Income taxes		236.7
Interest expenses, net, recorded in Financial income and Financial expense		4.0
Gain on revaluation of equity instruments, net, recorded in Financial income and Financial expense		4.6
Depreciation and amortization expense***		542.2
Profit and loss amount that Sony deems non-recurring****		(27.8	)
Adjusted EBITDA		1,703.4

*** Depreciation and amortization expense excludes amortization of film costs, broadcasting rights and internally developed game content and master recordings included in Content assets, as well as for deferred insurance acquisition costs.

**** The table below shows the details of the profit and loss amount that Sony deems

non-recurring

for the fiscal year ended March 31, 2023.


	Fiscal year ended March 31
	2023
	(Yen in billions)
Impact of litigation settlements, net of expenses, received in relation to lawsuits for Recorded Music and Music Publishing (Music segment)		5.7
Recovery of an unauthorized withdrawal of funds at a subsidiary of Sony Life which occurred in the previous fiscal year (Financial Services segment)		22.1

Total		27.8

For details on the performance of each business segment in the fiscal year ended March 31, ~~2020,~~2023, as well as the business environment and strategy of each business segment, also refer to “Operating Results” in “Item 5.

Operating and Financial Review and Prospects.

”

~~Table of Contents~~

~~Business Portfolio~~

~~People are at the core of Sony’s business portfolio, and that portfolio is comprised of:~~

~~Content and~~

~~Direct-to-Consumer~~

~~(“DTC”) businesses that “move people’s hearts”~~

~~Content and DTC businesses, which work with creators to make emotionally impactful content and deliver it to users, aim to “move people’s hearts.”~~

~~Branded Hardware and CMOS (complementary metal oxide semiconductor) image sensors that “connect people to people”~~

The Branded Hardware business provides equipment that is essential for creators to create, and for users to enjoy, emotionally impactful content. The CMOS image sensor business provides a key component for smartphones, which are used by people around the world to share their emotions. These businesses aim to “connect people to people.”

~~Automotive sensing, medical and financial services businesses that “support people”~~

The automotive sensing business, which aims to contribute to the future of mobility by supporting people’s safety through imaging and sensing technology for autonomous driving, the medical business, which contributes to people’s health by utilizing technologies such as imaging and mechatronics, and the financial service business, which contributes to people’s lives and financial safety through financial services such as life insurance,

~~non-life~~

insurance and banking, are businesses that aim to “support people.” Sony views these businesses as growth businesses over the long-term and believes they provide opportunities to leverage Sony’s technology.

~~Group Management and Direction of the Evolution of Each Business~~

~~<Actions to Strengthen Group Management>~~

~~Sony will change its group organizational structure in order to drive the evolution of each business and further leverage the diversity of its business portfolio, as set forth below.~~

~~Launch of “Sony Group Corporation” as Sony Group headquarters (Effective April 1, 2021)~~

~~Sony Corporation will change its company name to “Sony Group Corporation” as of April 1, 2021.~~

Sony Corporation currently operates as the headquarters of the Sony Group, and provides headquarters support functions for its electronics business. As a result of the separation and redefinition of these functions, “Sony Group Corporation” will operate as the sole headquarters of the Sony Group.

With the objective of increasing the corporate value of the entire Sony Group from a long-term perspective, the key missions of “Sony Group Corporation” will be: (1) business portfolio management and strategic capital allocation, (2) value creation through group synergies and business incubation, and (3) investment in talent and technology that form the foundations of innovation. Further details regarding specific functions, organizational structure and personnel will be determined by April 2021.

~~The decision to change the company name and amend a part of the Articles of Incorporation was approved at the Ordinary General Meeting of Shareholders held on June 26, 2020.~~

~~Sony Electronics Corporation to inherit the “Sony Corporation” company name (Effective April 1, 2021)~~

In conjunction with the launch of “Sony Group Corporation” on April 1, 2021, Sony Electronics Corporation, which currently operates the electronics business (the EP&S segment) which was the origin of Sony’s business as a whole, will inherit the company name “Sony Corporation.”

Sony Electronics Corporation was established as an intermediate holding company overseeing various Sony electronics subsidiaries effective April 1, 2020. Going forward, Sony Electronics Corporation will proceed with the realignment of its business entities and platform organizations and optimize its structure, talent and business portfolio, while further enhancing competitiveness and promoting new business creation.

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~~Financial Services business to become a wholly-owned subsidiary~~

In order to achieve further growth and strengthen governance within the financial services business with the goal of enhancing the corporate value of the entire Sony Group, Sony Corporation resolved to make a tender offer for all of the common shares and related stock acquisition rights of SFH not held by Sony Corporation, of which it currently owns an approximately 65% stake, with a view to making SFH a wholly-owned subsidiary. Sony Corporation commenced the tender offer on May 20, 2020. Please also refer to Note 30 of the consolidated financial statements.

The financial services business is a core business that is integral to the long-term growth strategies of the Sony Group. SFH has maintained its position as a listed subsidiary primarily considering its ability to flexibly procure capital for growth. However, Sony has decided to make a tender offer with the aim of making SFH a wholly-owned subsidiary in order to ensure the implementation of optimized strategies for each business, and to drive further group-wide synergies rather than continue to operate the business within certain constraints as a listed subsidiary.

~~<G&NS>~~

~~The two keywords for the future direction of PlayStation~~

~~are “immersive” and “seamless.”~~

The launch of PS5, scheduled for the 2020 holiday season, will deliver even more immersive experiences on a game console. In particular, higher speed achieved through improved computational power and a customized ultra-fast broadband solid state drive (SSD), enhanced sensory perceptions generated by the new revolutionary controller, and sound delivered in diverse and sophisticated 3D audio will combine to realize next-generation console game experiences unlike anything before.

~~PS Now, a cloud streaming game service, and “Remote Play” functionality will provide a seamless game experience to users anytime and anywhere.~~

~~Sony will pursue its mission to make PlayStation “The Best Place to Play” by leveraging the latest computing, streaming, cloud and 5G technologies, together with excellent content.~~

~~<Music>~~

To maximize the business opportunities from the continuing growth of the subscription digital streaming market, Sony will seek to reinforce the quality and quantity of its music catalog, while also discovering and nurturing new artists to generate new music content.

The music business is expected to grow steadily due to the strengthening of the music publishing business through the consolidation of EMI in the fiscal year ended March 31, 2019 as well as the growth of the streaming market.

The Sony Music Group, which combines the recorded music and the music publishing businesses outside of Japan, was established in August 2019. With a vision to become the most talent-friendly music company, the Sony Music Group will continue to support artists from all directions.

Within Sony’s music business in Japan, Sony has created hits in diverse IP areas such as music, Japanese animation (“anime”) and character merchandising, and also plans to enhance its artist management business.

~~<Pictures>~~

As new DTC services are continuing to be introduced across the industry and demand for content is ever-increasing, Sony is investing in the development of owned IP and strengthening its creative capacity, as well as continuing to produce outstanding video content across diverse genres.

~~Sony will continue to closely monitor the impact from the spread of~~

~~COVID-19~~

~~on the consumption of video content going forward, while working with the creative community and its supply chain partners, including exhibitors, towards resuming theatrical release of its films.~~

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~~<Animation*>~~

~~Sony aims to engage in group-wide efforts to deliver anime to audiences around the world through its anime DTC services.~~

~~In China, where growth in digital entertainment is expected, Sony will strive to strengthen its relationships with local companies in areas such as anime, games and music.~~

*Animation is not classified as a business segment. Its operating results are included in the operating results of the G&NS, Music and Pictures segments.

~~<EP&S>~~

Sony defines the products that bear the Sony brand, including television, audio and video products, still and video cameras, as well as smartphones, collectively as Branded Hardware. Sony continues to introduce products and services that deliver the value of Reality (spatial value) and Real-Time (time value) through sound, video and communication technologies. Additionally, Sony will aim to address the increasing need for remote solutions that connect people to people, and people to things.

In the medical business, Sony will reinforce its efforts to contribute to the health of people over the long-term by leveraging the imaging, display and mechatronics technologies which it has cultivated over many years.

~~In light of the impact from the spread of~~

~~COVID-19~~

~~on product demand and supply chains, Sony will engage in initiatives designed to enhance its business structure in response to changes in the business environment.~~

~~<I&SS>~~

~~Sony expects that the~~

~~mid-~~

~~to long-term demand for CMOS image sensors will continue to grow due to the adoption of multiple sensors and~~

~~larger-sized~~

sensors in smartphones. Although Sony is carefully reviewing investment in greater production capacity, taking into account the uncertain market environment mainly resulting from the impact of the spread of

~~COVID-19,~~

~~its goal of maintaining the global number one position in imaging applications, and becoming the global number one position in sensing remains unchanged.~~

~~Sony is also strengthening its focus on sensing solutions for mobile devices that “connect people to people,” such as~~

~~Time-of-Flight~~

~~sensors, and automotive sensing solutions that “support people,” which are expected to grow over the long term.~~

Based on its belief that CMOS image sensors will be key devices in the AI era, Sony intends to leverage its world-leading stacked CMOS image sensor technology and provide AI sensing solutions that deliver new value across a wide range of applications.

~~<Financial Services>~~

~~Under the new SFH management team, initiatives will include measures to further increase the value generated by the Lifeplanner~~

~~sales employees who constitute the core value of the life insurance business.~~

~~Sony will also explore further opportunities for synergies including leveraging Sony’s technology in the Financial Services segment.~~

~~Contribution to People, Society, and the Planet~~

Sony’s social mission is to create and deliver emotion. For people to be connected through emotion, it is necessary for people, society and the global environment to be healthy. Sony will continue to contribute to people, society and the planet through all of its business operations and extensive social support activities. For example, Sony is taking various steps to address environmental issues, beginning with its contribution to the future of mobility, which will contribute to the environment in the future. Additionally, as part of its support measures in response to

~~COVID-19,~~

Sony Corporation launched a 100 million U.S. dollar global relief fund to support the medical, education and creative communities. The Sony Music Group also launched a 100 million U.S. dollar global fund to support social justice and anti-racist initiatives around the world.

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~~Third~~

~~Mid-Range~~

~~Plan — Financial Targets and their Progress~~

~~<Financial Targets>~~

~~On May 22, 2018, Sony Corporation unveiled a~~

~~mid-term~~

~~strategy (“third~~

~~mid-range~~

plan”) that charted the path forward for Sony over the next three years, starting with the fiscal year ended March 31, 2019 and finishing with the fiscal year ending March 31, 2021. In order to transition management of Sony’s operations to a more long-term perspective, key performance indicators were set as a cumulative total over a three-year period. In the third

~~mid-range~~

plan, cash flows from operating activities are the most important performance metric, and Sony has been targeting total cash flows from operating activities for all segments excluding the Financial Services segment of 2.2 trillion yen or more for the three-year period from the fiscal year ended March 31, 2019 to the fiscal year ending March 31, 2021. Sony believes that cash flows from operating activities are a performance metric suitable for Sony’s long-term management based on the following perspective: (i) it more appropriately represents the sustainable earnings power of a business because it does not include the effects of temporary profits and losses, and (ii) it is more easily comparable for the purpose of planning capital expenditure, strategic investment and dividends from management’s point of view. In terms of the allocation of cash generated (“capital allocation plan”), Sony planned to spend approximately 1.1 to 1.2 trillion yen on capital expenditure, as a result of greater investment in CMOS image sensors. Regarding the remaining 1 to 1.1 trillion yen, Sony planned to prioritize strategic investment, while also making an appropriate allocation to shareholder returns, in an effort to further enhance Sony’s corporate value. However, Sony is carefully reviewing its capital expenditure plans due to the uncertain market environment. In terms of dividends, Sony has intended to increase them in a stable and long-term manner. In addition, Sony has planned to maintain a Return on Equity (ROE) level of 10% or more.

~~<Progress>~~

Sony generated approximately 1.5 trillion yen of cumulative operating cash flow excluding the Financial Services segment from the fiscal year ended March 31, 2019 to the fiscal year ended March 31, 2020. Approximately 0.2 trillion yen in cash flow was also generated from the sale of businesses and assets. Sony prioritized using this cash to make investments for future growth, such as increasing CMOS image sensor manufacturing capacity and acquiring EMI. From the fiscal year ended March 31, 2019 to the fiscal year ended March 31, 2020, Sony used approximately 0.7 trillion yen of capital for its capital expenditures and approximately 0.9 trillion yen of capital as part of its strategy for strategic investment. The strategic investment was mainly comprised of approximately 390 billion yen of capital used to fully consolidate EMI, including the assumption of EMI’s interest-bearing debt, as well as 300 billion yen in repurchases of Sony’s own shares. In terms of share repurchases, Sony plans to consider engaging in share repurchases in a flexible manner after taking into account the balance between strategic investment opportunities and its financial situation and stock price in accordance with its view to emphasize growth in earnings per share (EPS). For the fiscal year ended March 31, 2019 and the fiscal year ended March 31, 2020, Sony achieved a ROE of 27.3% and 14.8%, respectively, resulting in maintaining the financial target of ROE of 10% or more.

Apart from the above-mentioned capital allocation plan, Sony also plans to use approximately 400 billion yen of capital from the financial and capital markets for a series of transactions, including a tender offer, to make SFH a wholly-owned subsidiary. However, depending on Sony’s cash position, there is a possibility that cash on hand could be allocated for a portion of this transaction.

~~Corporate Policy Regarding the Spread of~~

~~COVID-19~~

Sony is primarily focused on ensuring the safety of its employees and their families, as well as its customers and other stakeholders, in addition to preventing the further spread of the virus. Sony is also striving to answer the needs of society and its customers to the best of its ability, and to minimize the impact of the virus on its business. To accomplish these objectives, Sony is working to gather information and swiftly carry out necessary actions. As discussed above, Sony is also continuing to fulfill its social responsibility as a global company through various measures such as establishing a relief fund to support people around the world who have been affected by the spread of

~~COVID-19.~~

~~For details on the impact on each business segment from the spread of~~

~~COVID-19,~~

~~refer to “Operating Results” in “Item 5.~~

~~Operating and Financial Review and Prospects~~

.”

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~~Group Environmental~~

~~Mid-Term~~

~~Targets “Green Management 2020”~~

~~Sony Corporation announced in June 2015 the establishment of its “Green Management 2020” group environmental~~

~~mid-term~~

targets, effective from fiscal 2016 (the fiscal year ended March 31, 2017) through fiscal 2020 (the fiscal year ending March 31, 2021). Based on the following three pillars, Sony has been implementing various initiatives to reduce the Sony Group’s environmental footprint:

Formulate targets and implement initiatives that leverage the distinctive characteristics of Sony’s businesses. Among these, reduce annual energy consumption by an average of 30% (compared to levels at the fiscal year ended March 31, 2014) in its products in the G&NS, EP&S and I&SS segments, and in the Music and Pictures segments, continue to look to use its content to raise awareness of sustainability issues and inspire environmentally conscious actions;

Enhance efforts to reduce Sony’s environmental footprint across its entire value chain, including manufacturing partners and suppliers, by calling on them to reduce greenhouse gas (GHG) emissions and water consumption; and

~~Accelerate the use of renewable energy.~~

~~Sony’s long-term vision is to achieve a “zero environmental footprint” throughout all stages of its product lifecycles and business activities by 2050. The “Green Management 2020”~~

~~mid-term~~

plan has been backcasted (calculated backwards) in order to determine the necessary intermediate steps that need to be taken by fiscal 2020 on the way to this long-term goal. With “Green Management 2020,” Sony plans to further accelerate its various initiatives directed towards its ultimate goal of a “zero environmental footprint.” As part of this measure Sony Corporation has joined RE100, an initiative operated by the international

~~non-government~~

~~organization (NGO) The Climate Group, in partnership with CDP. In so doing, Sony will aim to use 100% renewable electricity for all of its business sites by 2040.~~

Sony Corporation also plans to continue to participate in the WWF’s Climate Savers Programme, which aims to achieve reductions in greenhouse gas emissions. Climate change targets are verified by WWF and a third-party verification body for their degrees of difficulty and progress.

~~Further details of the group environmental~~

~~mid-term~~

~~targets “Green Management 2020” and actual measures undertaken by Sony are reported in Sony’s Sustainability report available on the following website: https://www.sony.net/SonyInfo/csr_report/.~~

E.	~~Off-balance~~Critical Accounting Estimates ~~Sheet Arrangements~~

~~Sony has certain~~

~~off-balance~~

~~sheet arrangements that provide liquidity, capital resources and/or credit risk support.~~

Refer to Note 6 of the consolidated financial statements for transfers of financial asset transactions in which Sony has relinquished control of receivables and accounted for these transfers as sales, and Note 24 of the consolidated financial statements for various arrangements with variable interest entities, including those where Sony is not the primary beneficiary and therefore does not consolidate the entity.

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F.	~~Contractual Obligations, Commitments, and Contingent Liabilities~~

The following table summarizes Sony’s contractual obligations and commitments as of March 31, 2020. The references to the notes below refer to the corresponding notes within the consolidated financial statements.

Total

Less than
1 year

1 to 3
years

3 to 5
years

More than
5 years

(Yen in millions)

Contractual obligations and commitments:

Short-term debt (Note 11)

810,176

810,176

—

—

—

Long-term debt (Notes 8 and 11)

Finance lease obligations and other

56,350

14,216

15,593

10,011

16,530

Other long-term debt

608,423

15,591

373,126

114,953

104,753

Interest on other long-term debt

4,409

1,489

1,075

729

1,116

Operating lease obligations, including imputed interest (Note 8)

424,965

76,469

125,254

70,967

152,275

Purchase commitments (Note 28)

Contracts for the production or purchase of motion pictures, television programming or certain rights and rights to broadcast certain live action sporting events

126,917

56,385

52,372

17,480

680

Contracts with recording artists, songwriters and companies

128,678

56,662

33,360

16,576

22,080

Sponsorship contracts related to advertising and promotional rights

5,162

4,602

560

—

—

Long-term contracts for development, distribution and publishing of game software

29,243

5,083

4,571

5,115

14,474

Purchase commitments for fixed assets, materials, and other

394,911

255,587

88,711

47,314

3,299

Future insurance policy benefits and other and policyholders’ account in the life insurance business* (Note 10)

26,457,407

594,903

1,299,026

1,370,756

23,192,722

Gross unrecognized tax benefits** (Note 22)

41,268

—

—

—

—

Total

29,087,909

1,891,163

1,993,648

1,653,901

23,507,929

* Future insurance policy benefits and other and policyholders’ account in the life insurance business are the estimated future cash payments to be made to policyholders and others. These cash payments are based upon assumptions including morbidity, mortality, withdrawals and other factors. The sum of the cash payments shown for all years in the table of 26,457.4 billion yen exceeds the corresponding liability amount of 9,824.9 billion yen included in the consolidated balance sheets as of March 31, 2020. Refer to Note 10 of the consolidated financial statements.

** The total amount represents the liability for gross unrecognized tax benefits in accordance with the accounting guidance for uncertain tax positions. The settlement period for the liability, which totaled 41.3 billion yen, cannot be reasonably estimated due to the uncertainty associated with the timing of the settlements with the various taxing authorities. Refer to Note 22 of the consolidated financial statements.

~~The following items are not included in either the above table or the total amount of commitments outstanding as of March 31, 2020:~~

The total amount of expected future pension payments is not included as such amount is not currently determinable. Sony expects to contribute approximately 2 billion yen to Japanese defined benefit pension plans and approximately 8 billion yen to foreign defined benefit pension plans during the fiscal year ending March 31, 2021. Refer to Note 15 of the consolidated financial statements.

The total unused portion of the line of credit extended under loan agreements in the Financial Services segment is not included in the above table as it is not foreseeable what loans will be incurred under such line of credit. The total unused portion of the line of credit extended under these contracts was approximately 34.3 billion yen as of March 31, 2020. Refer to Note 28 of the consolidated financial statements.

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Purchases made during the ordinary course of business from certain component manufacturers and contract manufacturers in order to establish the best pricing and continuity of supply for Sony’s production are not included as there are typically no binding purchase obligations. Purchase obligations are defined as contractual obligations to purchase goods or services that are enforceable and legally binding on Sony. These obligations specify all significant terms, including fixed or minimum quantities to be purchased; fixed, minimum, or variable price provisions; and the approximate timing of the transaction. Purchase obligations do not include contracts that may be cancelled without penalty. These purchases include arrangements with certain component manufacturers whereby Sony procures goods, including product components, for these component manufacturers and is reimbursed for the related purchases. This allows Sony’s supply chain management to have flexible and mutually beneficial purchase arrangements with these manufacturers in order to minimize inventory risk. Consistent with industry practice, Sony purchases processed goods that meet technical criteria from these component manufacturers after issuing to these manufacturers information on Sony’s projected demand and manufacturing needs.

Refer to Item 8 A. “Consolidated Statements and Other Financial Information” for legal proceedings and Note 28 of the consolidated financial statements for guarantees issued, including product warranties.

~~Critical Accounting Policies and Estimates~~

The preparation of the consolidated financial statements in conformity with ~~U.S. GAAP~~IFRS requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. On an ongoing basis, Sony evaluates its estimates, which are based on historical experience, future projections and various other assumptions that are believed to be reasonable under the circumstances. The results of these evaluations form the basis for making judgments about the carrying values of assets and liabilities and the reported amounts of expenses that are not readily apparent from other sources. Actual results may significantly differ from these estimates. ~~The timing and extent to which the spread of~~

~~COVID-19~~

may negatively impact Sony’s business will depend on future developments, which are highly uncertain. This uncertainty could result in greater variability in accounting estimates and assumptions, including, but not limited to, those used in reviewing goodwill and long-lived assets for impairment and the valuation of deferred tax assets. Sony considers an accounting ~~policy~~estimate to be critical if it is important to its financial condition and results, and requires significant judgment and estimates on the part of management in its application. Sony believes that the following represents its critical accounting estimates. The critical accounting estimates should be read in conjunction with Note 3 of the consolidated financial statements regarding Sony’s significant accounting policies.

~~Investments~~Financial instruments

~~Sony’s investments include debt~~Sony recognizes a financial instrument as a financial asset or a financial liability when Sony becomes party to the contractual provisions of the instrument. Financial assets and ~~equity securities accounted~~financial liabilities are initially measured at fair value.

Financial instruments held by Sony are classified according to the measurement method, and for ~~under both the cost and equity method of accounting. If it has been determined that an investment has sustained an other-than-temporary decline in its value, the investment is written down to its~~financial instruments measured at fair value, ~~with a charge to income. Sony regularly evaluates its investment portfolio to identify other-than-temporary impairments of individual debt securities. Factors that are considered by Sony~~future fluctuations in determining whether an other-than-temporary decline in value has occurred include: the length of time and extent to which the market value of the security has been less than its original cost, the financial condition, operating results, business plans and estimated future cash flows of the issuer of the security, other specific factors affecting the market value, deterioration of the credit condition of the issuer, sovereign risk, and whether or not Sony is able to retain the investment for a period of time sufficient to allow for the anticipated recovery in market value.

~~In evaluating the factors for debt securities designated as~~

~~available-for-sale,~~

~~Sony presumes a decline in value to be other-than-temporary if the~~ fair value of the security is 20% or more below its original cost for an extended period of time (generally for a period of up to six months). This criterion is employed as a threshold to identify securities which may have a ~~decline in value that is other-than-temporary. The presumption of an other-than-temporary impairment in such cases may be overcome if there is evidence to support that~~significant impact on the decline is temporary in nature due to the existence of other factors which overcome the duration or magnitude of the decline. On the other hand, there may be cases where impairment losses are recognized when the decline in the fair value of the security is not more than 20% or such decline has not existed for an extended period of time, as a result of considering specific factors which may indicate that the decline in the fair value is other-than-temporary. consolidated financial statements.

~~When an other-than-temporary impairment of a~~

~~held-to-maturity~~

~~debt security has occurred, the amount of the other-than-temporary impairment recognized in income depends on whether Sony intends to sell the debt~~

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security or more likely than not will be required to sell the debt security before recovery of its amortized cost. If the debt security meets either of these two criteria, the other-than-temporary impairment is recognized in income, measured as the entire difference between the security’s amortized cost and its fair value at the impairment measurement date. For an other-than-temporary impairment of a debt security that does not meet these two criteria, the net amount recognized in income is a credit loss, which equals the difference between the amortized cost of the debt security and its net present value calculated by discounting Sony’s best estimate of projected future cash flows at the effective interest rate implicit in the debt security prior to impairment. Any difference between the fair value and the net present value of the debt security at the impairment measurement date is recorded in accumulated other comprehensive income. Unrealized gains or losses on securities for which an other-than-temporary impairment has been recognized in income are presented as a separate component of accumulated other comprehensive income.

The assessment of ~~whether a decline in the value of an investment is other-than-temporary~~credit losses for debt securities is often subjective in nature and involves certain assumptions and estimates concerning the credit risk ratings, expected operating results, business plans and future cash flows of the issuer of the security. Accordingly, it is possible that ~~investments in Sony’s portfolio that have had a decline in value that~~ Sony ~~currently believes to be temporary may be determined to be other-than-temporary~~will record an allowance for credit losses for debt securities in the future, where such an allowance for credit losses is not currently recorded based on ~~Sony’s evaluation~~the assessment of ~~subsequent~~subsequently available information such as a deterioration in the credit risk rating, continued poor operating results, future broad declines in the value of worldwide equity markets and the effect of worldwide interest rate fluctuations. As a result, ~~unrealized losses recorded for investments~~downward adjustments in income may be ~~recognized and reduce income~~recorded in the future ~~periods.~~

~~Valuation of inventory~~

~~Sony values its inventory based on the lower of cost and net realizable value. Sony writes down inventory in an amount equal~~due to the ~~difference between the cost~~recording of the inventory and the net realizable value — i.e., estimated selling price in the ordinary course of business less reasonably predictable costs of completion and disposal. Sony writes down the value of its inventory when the underlying parts, components or products have become obsolete, when inventory levels exceed the amount expected to be used, or when the value of the inventory is otherwise recorded at a higher value than net realizable value. As a result, if actual market conditions are less favorable than projected and further price decreases are needed, additional inventory write-downs may be required in the future.such allowance for credit losses.

Impairment of ~~long-lived~~

non-financial

assets

Sony reviews the recoverability of its

non-financial

assets, except for inventories, contract costs and deferred tax assets, whenever there is any indication that an asset or a cash-generating unit (“CGU”) may be impaired. In addition, an annual impairment test for goodwill, intangible assets with indefinite useful lives or intangible assets not yet available for use is performed during the ~~carrying value of its long-lived assets held and used and long-lived assets to be disposed of, whenever events or changes in circumstances indicate that the carrying value~~fourth quarter of the ~~assets~~fiscal year for each CGU or ~~asset groups may not be recoverable. Long-lived assets~~group of CGUs to be held and used are reviewed for impairment by comparing the carrying value of the asset or asset group with their estimated undiscounted future cash flows. This review is primarily performed using estimates of future cash flows by product category or, in certain cases, by entity. If the carrying value of the asset or asset group is considered impaired, an impairment charge is recorded for the amount by which the carrying ~~value~~amount of these assets is allocated.

For all CGUs or groups of CGUs with goodwill, the recoverable amount exceeded the carrying amount, and therefore no impairment existed in the fiscal year ended March 31, 2023. Also, the recoverable amount of each CGU or group of CGUs with significant goodwill exceeded their respective carrying values by at least 10.0%. For intangible assets with indefinite useful lives or intangible assets not yet available for use, the recoverable amount exceeded the carrying amount, and therefore no impairment existed.

A discussion of the ~~asset~~significant assumptions, other than the

mid-range

plan, including a sensitivity analysis with respect to their impact, of the recoverable amount of each CGU or ~~asset~~ group ~~exceeds its fair value. Fair value~~of CGUs for the impairment analysis for goodwill performed for the fiscal year ended March 31, 2023 is determined using the present value of estimated net cash flows or comparable market values. This approach uses significant estimates and assumptions including projected future cash flows, the timing of such cash flows, included below:

The

post-tax

discount rates ~~reflecting~~ranged from 2.6% to 15.0%. A hypothetical one percentage point increase in the ~~risk inherent~~discount rate, holding all other assumptions constant, would not have resulted in ~~future cash flows, perpetual~~an impairment.

The growth rates applied to ~~determine~~the terminal values ~~determination of appropriate market comparables~~for the CGUs within the G&NS, ET&S, I&SS and Financial Services segments ranged from approximately 1.0% to 1.5%. The growth rates beyond the

mid-range

plan period for the CGUs in the Music segment ranged from 1.0% to 3.0%, and in the Pictures segment ranged from (5.0%) to 21.0%. A hypothetical one percentage point decrease in the growth rate, holding all other assumptions constant, would not have resulted in an impairment.

The earnings multiple used to calculate the terminal value in the Pictures CGU was 1.5x to 12.0x and the ~~determination of whether~~revenue multiple was 1.3x to 1.5x. A hypothetical reduction in earnings multiple by 1.0x and revenue multiple by 0.25x, respectively, holding all other assumptions constant, would not have resulted in a ~~premium or discount should be applied to comparables.~~significant impairment.

Management believes that the ~~estimates of~~assumptions used in the impairment tests are reasonable. However, in the future, ~~cash flows and fair values are reasonable, including, but not limited to, the potential impacts arising from the spread of~~

~~COVID-19.~~

~~As the extent and duration of the impacts from~~

~~COVID-19~~

~~remain unclear, Sony’s estimates and assumptions may evolve as conditions change. Actual results could differ from those estimates. As a result,~~ changes in estimates resulting in lower ~~future cash flows and fair values~~recoverable amounts due to unforeseen changes in ~~Sony’s businesses or~~ assumptions could negatively affect the valuations, ~~of long-lived~~ which may result in Sony recognizing impairment losses for

non-financial

assets.

Business combinations

~~When~~ Sony ~~applies the acquisition method of accounting, the deemed purchase price is allocated to~~recognizes identifiable assets acquired and the liabilities ~~assumed. Any residual purchase price is recorded as goodwill. The allocation~~assumed of an acquiree at their fair values at the acquisition date with limited exceptions. Sony recognizes goodwill when the aggregate of the ~~purchase price utilizes significant estimates~~consideration transferred in ~~determining~~a business combination, the amount of any

non-controlling

interests in the acquiree and the fair ~~values~~value of Sony’s previously held equity interest in the acquiree exceeds the net amount of the identifiable assets ~~acquired~~ and liabilities ~~assumed, especially with respect to intangible assets. Independent third-party appraisal firms are typically engaged in order to assist in~~of the ~~estimation process. The significant estimates and assumptions include,~~

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~~but are not limited to,~~acquiree at the ~~timing and~~acquisition date. If the aggregate above is less than the net amount of ~~revenue~~identifiable assets and ~~future cash flows,~~liabilities, the ~~discount rate reflecting the risk inherent in future cash flows and the perpetual growth rate used to calculate the terminal value.~~ difference is recognized as a gain.

Due to the inherent uncertainties involved in making the estimates and assumptions, the ~~purchase price for acquisitions~~consideration transferred could be valued and allocated to the identifiable assets acquired ~~assets~~ and liabilities assumed differently. Actual results may differ, or unanticipated events and circumstances may affect such estimates, which could require Sony to record an impairment of an identifiable asset acquired ~~asset, including~~and goodwill, or an increase in the amounts recorded for ~~an assumed liability.~~identifiable liabilities assumed.

~~Goodwill and other intangible assets~~

~~Goodwill and indefinite lived intangible assets are tested annually for impairment during the fourth quarter~~Estimation of the fiscal year and between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value below its carrying amount. Such an event or change in circumstances would include unfavorable variances from established business plans, significant changes in forecasted results or volatility inherent to external markets and industries, which are periodically reviewed by Sony’s management.

In the fourth quarter of the fiscal year ended March 31, 2020, Sony elected not to perform an optional qualitative assessment of goodwill and instead proceeded directly to a quantitative impairment test by comparing the fair value of a reporting unit with its carrying amount. Reporting units are Sony’s operating segments or one level below the operating segments. If the fair value of a reporting unit exceeds its carrying amount, goodwill of the reporting unit is not considered impaired. If the carrying amount of a reporting unit exceeds its fair value, an impairment loss is recognized in an amount equal to that excess, not to exceed the total amount of goodwill allocated to the reporting unit. Indefinite lived intangible assets are tested for impairment by comparing the fair value of the intangible asset with its carrying value, and if the carrying value of the intangible asset exceeds its fair value, an impairment loss is recognized in an amount equal to that excess.

Determining the fair value of a reporting unit under the goodwill impairment test is judgmental in nature and often involves the use of significant estimates and assumptions. Similarly, estimates and assumptions are used in determining the fair value of indefinite lived intangible assets. These estimates and assumptions could significantly impact whether or not an impairment charge is recognized as well as the magnitude of any such charge.

In its impairment review, Sony performs internal valuation analyses or utilizes third-party valuations when management believes it to be appropriate, and considers other market information that is publicly available. The fair value of a reporting unit or indefinite lived intangible asset is generally determined using a discounted cash flow analysis. This approach uses significant estimates and assumptions including projected future cash flows, the timing of such cash flows, discount rates reflecting the risk inherent in future cash flows, perpetual growth rates, earnings multiples, the determination of appropriate comparable entities and the determination of whether a premium or discount should be applied to comparables. Consideration is also given to Sony’s market capitalization in relation to the sum of the calculated fair values of the reporting units, including reporting units with no goodwill, and taking into account corporate level assets and liabilities not assigned to individual reporting units as well as a reasonable control premium.

~~The assumptions used for projected future cash flows and the timing of such cash flows are based on the forecast and~~

~~mid-range~~

plan (“MRP”) of each reporting unit and take into account such factors as historical experience, market and industry information, and current and forecasted economic conditions. Perpetual growth rates are utilized to determine a terminal cash flow value and are generally set after the three-year forecasted period for the MRP. Certain reporting units, such as thoseultimate revenue in the Pictures segment ~~utilize longer forecast periods and base~~

An aspect of film accounting that requires the ~~terminal value on an exit price using an earnings multiple applied~~exercise of management’s judgment relates to the ~~final year~~process of estimating the ~~forecasted earnings, which also takes into consideration~~total revenues to be received throughout a ~~control premium. Discount rates are derived from the weighted average cost~~film’s life cycle. Such estimate of ~~capital of market participants in similar businesses.~~a film’s ultimate

For all reporting units with goodwill, fair value exceeded the carrying amount, and therefore no impairment existed in the fiscal year ended March 31, 2020. Also, fair value of reporting units with significant goodwill exceeded their respective carrying values by at least 10.0%. For indefinite lived intangible assets, fair value exceeded the carrying amount, and therefore no impairment existed.

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~~The carrying amounts of goodwill by segment as of March 31, 2020 are as follows:~~


	~~Yen in millions~~
~~Game & Network Services~~		~~170,974~~
~~Music~~		~~391,325~~
~~Pictures~~		~~152,374~~
~~Electronics Products & Solutions~~		~~12,189~~
~~Imaging & Sensing Solutions~~		~~46,192~~
~~Financial Services~~		~~10,834~~

~~Total~~		~~783,888~~

~~A discussion of the significant assumptions, other than the MRP described above, including a sensitivity analysis with respect to their impact, of the fair value of Sony’s reporting units~~revenue is important for the ~~impairment analysis performed for the fiscal year ended March 31, 2020 is included below:~~

~~The discount rates ranged from 5.2% to 10.8%. A hypothetical one percentage point increase in the discount rate, holding all other assumptions constant, would not have resulted in an impairment.~~

~~The growth rates applied to the terminal values for reporting units within the G&NS, EP&S~~measurement of film costs and ~~I&SS~~participation and ~~Financial Services segments ranged from approximately 1.0% to 1.5%. The growth rates beyond the MRP period for the reporting units in the Music segment ranged from 0% to 5.2%, and~~residual liabilities in the Pictures ~~segment ranged from 3.0% to 4.5%. A hypothetical one percentage point decrease in~~segment.

While a film is being produced and the ~~growth rate, holding all other assumptions constant, would not have resulted in an impairment.~~

The earnings multiple used to calculate the terminal value in the Pictures reporting units ranged from 9.0x to 10.0x. A hypothetical reduction in the earnings multiple by 1.0x, holding all other assumptions constant, would not have resulted in an impairment.

~~Management believes that the assumptions used~~related costs are being capitalized, it is necessary for management to estimate the ~~fair~~ultimate revenue, less additional costs to be incurred, including exploitation costs which are expensed as incurred, in order to determine whether the value of a film has been impaired and thus requires an immediate

write-off

of unrecoverable film costs. In addition, the amount of film costs recognized as cost of sales for a given film as it is exhibited in various markets throughout its life cycle is based on the ~~goodwill impairment tests are reasonable, including, but not limited~~ratio of current period actual revenues to the ~~potential impacts arising from~~estimated remaining total revenues.

Management bases its estimates of ultimate revenue for each film on several factors including the ~~spread~~historical performance of

~~COVID-19.~~

As similar genre films, the ~~extent and duration~~star power of the ~~impacts from~~

~~COVID-19~~

remain unclear, Sony’s estimates and assumptions may evolve as conditions change. Actual results could differ from those estimates. As a result, changes in estimates resulting in lower than currently anticipated cash flows and fair values due to unforeseen changes in assumptions could negatively affect the valuations, which may result in Sony recognizing impairment charges for goodwill and indefinite lived intangible assets in the future.

~~Pension benefit costs~~

Employee pension benefit costs and obligations are dependent on certain assumptions including discount rates, retirement rates and mortality rates, which are based upon current statistical data, as well as expected long-term rates of return on pension plan assets and other factors. Specifically, the discount rate and expected long-term rate of return on pension plan assets are two critical assumptions in the determination of periodic pension costs and pension liabilities. Assumptions are evaluated at least annually, or at the time when events occur or circumstances change and these events or changes could have a significant effect on these critical assumptions.

In accordance with U.S. GAAP, actual results that differ from the assumptions are accumulated and amortized over future periods. Therefore, actual results generally affect recognized costs and the recorded obligations for pensions in future periods. While management believes that the assumptions used are appropriate, differences in actual experience or changes in assumptions may affect Sony’s pension obligations and future costs.

~~Sony’s principal pension plans are its Japanese pension plans. No individual foreign pension plan is significant to the consolidated pension plan assets and pension obligations.~~

To determine the benefit obligation of the Japanese pension plans, Sony used a discount rate of 0.6% for its Japanese pension plans as of March 31, 2020. The discount rate was determined by using information about yields on high-quality bonds currently available and expected to be available during the period to maturity of the pension benefit obligation in consideration of amounts and timing of cash outflows for expected benefit payments. Such available information about yields is collected from published market information and credit rating agencies. The 0.6% discount rate is the same as the rate used for the fiscal year ended March 31, 2019 and reflects current Japanese market interest conditions.

~~Table of Contents~~

~~To determine~~lead actors, the expected ~~long-term rate~~number of ~~return on pension plan assets, Sony considers~~theaters at which the current and expected asset allocations, as well as historical and expected long-term rates of return on various categories of pension plan assets. Sony’s pension investment policy recognizes the expected growth and the variability risk associated with the long-term nature of pension liabilities, the returns and risks of diversification across asset classes, and the correlation among assets. The asset allocations are designed to maximize returns consistent with levels of liquidity and investment risk that are considered prudent and reasonable. While the pension investment policy gives appropriate consideration to recent market performance and historical returns, the investment assumptions utilized by Sony are designed to achieve a long-term return consistent with the long-term nature of the corresponding pension liabilities. For Japanese pension plans, the expected long-term rate of return on pension plan assets was 2.6% and 2.5% as of March 31, 2019 and March 31, 2020, respectively. The actual return on pension plan assets for the fiscal years ended March 31, 2019 and 2020 was a 2.7% gain and a 1.3% gain, respectively. The difference between the expected and the actual rate of return on pension plan assets was primarily due to the negativefilm will be released, anticipated performance in the ~~global equity~~home entertainment, television and other ancillary markets, ~~during the fourth quarter of the fiscal year ended March 31, 2020 due to the spread of~~

~~COVID-19.~~

~~Actual results that differ from the expected return~~and agreements for future sales. Management updates such estimates on ~~pension plan assets are accumulated and amortized as~~ a ~~component of pension costs over a certain period, thereby reducing the~~

~~year-to-year~~

volatility in pension costs. As of March 31, 2019 and March 31, 2020, Sony had, with respect to Japanese pension plans, net actuarial losses of 311.1 billion yen and 223.4 billion yen, respectively, including losses related to pension plan assets. Althoughregular basis based on the actual ~~return on pension plan assets was~~results to date and estimated future results for each film. For example, a film with lower than expected theatrical revenues in its initial weeks of release would generally have its theatrical, home entertainment and television distribution ultimate revenues adjusted downward; a failure to do so would result in the ~~net actuarial loss decreased mainly due~~understatement of amortized film costs for the period. Also, participation and residual liabilities are accrued based on the ratio of current period actual revenues to the ~~impact of the amendments to Japanese pension plans. Refer to Note 15 of the consolidated financial statements.~~estimated remaining total revenues.

The following table illustrates the effect on the fiscal year ending March 31, 2021 of changes in the discount rate and the expected return on pension plan assets, while holding all other assumptions as of March 31, 2020 constant, for Japanese pension plans.

~~Change in assumption~~

Projected benefit
obligations

Pension
costs

~~Net income~~

~~(Yen in billions)~~

~~25 basis point increase / decrease in discount rate~~

~~-/+18.6~~

~~/-0.2~~

~~-/+0.1~~

~~25 basis point increase / decrease in expected long-term rate of return on pension plan assets~~

—

~~-/+1.1~~

~~+/-0.7~~

~~Deferred tax asset valuation~~

~~Carrying amounts~~Valuation of deferred tax assets ~~require a reduction by a valuation allowance if, based on~~

Deferred tax assets are recognized to the ~~available evidence,~~extent that it is ~~more likely than not~~probable that ~~such~~taxable profit will be available against which the assets ~~will not~~can be ~~realized prior to expiration.~~utilized. Accordingly, the ~~need to establish a~~ valuation ~~allowance for~~of deferred tax assets is assessed periodically with ~~appropriate consideration given to all positive and negative~~available evidence related to the ~~realization~~realizability of the deferred tax assets. Management’s judgments related to this assessment consider, among other matters, the nature, frequency and severity of current and cumulative losses on an individual tax jurisdiction basis, forecasts of future profitability after consideration of uncertain tax positions, excess of carrying value over the tax basis of net assets, the duration of statutory carryforward periods, the past utilization of net operating loss carryforwards prior to expiration, as well as prudent and feasible tax planning strategies which would be employed by Sony to prevent net operating loss and tax credit carryforwards from expiring unutilized.

As a result of prior losses, as of March 31, 2020, total established valuation allowances against deferred tax assets were 608.2 billion yen. This amount includes a valuation allowance of 274.8 billion yen relating to national tax and 125.5 million yen relating to local tax at Sony Corporation and its national tax filing group in Japan. A critical factor in the analysis of a continuing need for a valuation allowance against these assets is the forecast of future profitability given the relatively short net operating loss carryforward period in Japan. Due to the uncertainty of the forecast of future income after the impact of the spread of

~~COVID-19~~

from early 2020, the valuation allowance established against the net deferred tax assets that are attributable to Sony Corporation and its national tax filing group in Japan was not reversed, even partially, in the fiscal year ended March 31, 2020 despite several years of positive earnings. Valuation allowances also continue to be established on the remaining U.S. deferred tax assets of approximately 600 million U.S. dollars, primarily comprised of foreign tax credits and certain research and development credits. Sony continues to monitor its U.S. tax position and the potential use of such assets, and accordingly, the valuation allowance in respect of those assets may be reversed in the future.

Sony is subject to income taxes in Japan and numerous other jurisdictions, and in the ordinary course of business there are many situations where the ultimate tax determination can be uncertain, particularly with respect to transfer pricing for intercompany transactions. The ~~amount of the deferred tax assets recorded takes~~

~~Table of Contents~~

into account the more likely than not final outcome of these uncertain tax positions based on Sony’s judgement, particularly for final allocations of taxable income among jurisdictions as a result of intercompany transfer pricing decisions. The estimate for the valuation of deferred tax assets, which is based on currently enacted tax laws and rates as of the ~~balance sheet date,~~end of the reporting period, reflects management’s judgment and best estimate of the likely future tax consequences of events that have been recognized in Sony’s financial statements and tax returns, the ability to implement various tax planning strategies and, in certain cases, future forecasts, business plans and other expectations about ~~future~~business outcomes. Changes in existing tax laws or rates in tax jurisdictions in which Sony operates could affect actual tax results, and market or economic deterioration or failure of management to achieve its restructuring objectives could affect future business results, either of which could affect the valuation of deferred tax assets over time. If future results are less than projected, if the results of tax examinations or the negotiations of advance pricing agreements covering transfer pricing of intercompany transactions result in a different allocation of profits and losses than currently anticipated, if tax planning alternatives are no longer viable, or if there is no excess appreciated asset value over the tax basis of the assets contemplated for sale, ~~further valuation allowance~~outstanding deferred tax assets may be required to be written down in the ~~future to reduce the deferred tax assets to their net realizable value.~~future. On the other hand, a forecasted improvement and consistency in future earnings or other factors, such as business reorganizations, could lead in the future, as a result of a review of all relevant factors, to the ~~future~~ reversal of ~~valuation allowance into income~~the previous write down of the deferred tax assets which would be recorded as a reduction to tax ~~expense, subject to review of the relevant qualitative factors and uncertainties.~~expense. These possible factors and other changes, that are not anticipated in current estimates, could have a material impact on Sony’s earnings or financial condition in the period or periods in which the impact is recorded or reversed.

Deferred insurance acquisition costs

Costs that vary with and are directly related to the acquisition or renewal of insurance policies are deferred as long as they are recoverable. The ~~U.S. Tax Reform Act significantly changed how~~deferred insurance acquisition costs include such items as commissions, medical examination costs and inspection report fees, and are subject to recoverability testing at least annually to ensure that the ~~U.S. taxes corporations.~~capitalized amounts do not exceed the present value of anticipated gross profits or premiums less benefits and maintenance expenses, as applicable. The ~~U.S. Tax Reform Act requires complex computations to be performed that were not previously required by U.S. tax law, significant judgments to be made in interpretation~~deferred insurance acquisition costs for traditional life insurance contracts are amortized over the premium-paying period of the ~~provisions of the U.S. Tax Reform Act, significant estimates~~related insurance policies using assumptions consistent with those used in ~~calculations, and the preparation and analysis of information not previously relevant or regularly produced.~~computing future insurance policy benefits. The U.S. Treasury Department, the Internal Revenue Service, and other standard setting bodies will continue to interpret or issue guidance on how provisions of the U.S. Tax Reform Act will be applied or otherwise administered. As future guidance is issued, Sony may make adjustments to amounts that it previously recorded that may materially impact Sony’s financial statements in the period in which the adjustmentsdeferred insurance acquisition costs for

non-traditional

life insurance contracts are ~~made.~~

~~Film accounting~~

An aspect of film accounting that requires the exercise of judgment relates to the process of estimating the total revenues to be received throughout a film’s life cycle. Such estimate of a film’s ultimate revenue is important for two reasons. First, while a film is being produced and the related costs are being capitalized, it is necessary for management to estimate the ultimate revenue, less additional costs to be incurred, including exploitation costs which are expensed as incurred, in order to determine whether the value of a film has been impaired and thus requires an immediate

~~write-off~~

of unrecoverable film costs. Second, the amount of film costs recognized as cost of sales for a given film as it is exhibited in various markets throughout its life cycle is based upon the proportion that current period actual revenues bear to the estimated ultimate total revenues.

~~Management bases its estimates of ultimate revenue for each film on several factors including the historical performance of similar genre films, the star power of the lead actors and actresses,~~amortized over the expected ~~number of theaters~~life at ~~which the film will be released, anticipated performance in the home entertainment, television and other ancillary markets, and agreements for future sales. Management updates such estimates on~~ a ~~regular basis~~constant rate based on the ~~actual results to date~~present value of the estimated gross profit. Investment yields, mortality rates, lapse rates and estimated future results for each film. For example, a film that has resulted in lower than expected theatrical revenues in its initial weeks of release would generally have its theatrical, home entertainment and television distribution ultimate revenues adjusted downward; a failure to do so would result in the understatement of amortized film costsdiscount rates are used as important assumptions for the ~~period.~~

present value of the estimated gross profit.

Future insurance policy benefits

Liabilities for future insurance policy benefits ~~except~~are primarily comprised of the ~~portion~~present value of ~~liabilities for minimum guarantee benefits which is described below, which mainly relate to individual life insurance policies, are established in amounts adequate to meet the~~ estimated future ~~obligations of policies in force.~~payments to policyholders. These liabilities ~~which require significant management judgment and estimates,~~ are computed by the net level premium method based upon the assumptions as to future investment yield, morbidity, mortality, withdrawals and other factors. Future policy benefits are computed using interest rates ranging from 0.5% to 4.5% and are based on factors such as market conditions and expected investment returns. Morbidity, mortality and withdrawal assumptions for all policies are based on either the subsidiary’s own experience or various actuarial tables. Generally these assumptions are

~~locked-in~~

~~throughout the life of the contract upon the issuance of new insurance, although significant changes in~~

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~~experience or~~

assumptions ~~may require Sony~~as to ~~provide for expected~~ future ~~losses.~~investment yield, morbidity rates, mortality rates, lapse rates and other factors. These assumptions are reviewed on a periodic basis. Liabilities for future policy benefits include the ~~liability~~liabilities for the minimum guarantee benefits of individual variable annuities and variable life insurance contracts. Regarding variable annuities and variable life insurance contracts, minimum guarantee benefits (minimum death benefit, minimum accumulation benefit, etc.) are provided, and Sony bears the risk of fulfilling the minimum guarantee benefits prescribed in the contracts to policyholders. The fair value option is applied to a portion of the liabilities for the variable annuity contracts with minimum guarantee benefits. Refer to Note 13 of the consolidated financial statements. Excluding the portion of the liability measured at fair value, the liability for the minimum guarantee benefit is calculated based on the ratio of the present value of expected total excess payments divided by the present value of expected total assessments over the life of the contract. Mortality rates, lapse rates, discount rates and investment yield are used as significant assumptions for this calculation.

Policyholders’ account in the life insurance business

Policyholders’ account in the life insurance business represents an accumulation of account deposits plus credited interest less withdrawals, expenses and mortality charges. Policyholders’ account includes universal life insurance and investment contracts. Universal life insurance includes interest sensitive whole life contracts and variable life insurance contracts. The credited rates associated with interest sensitive whole life contracts range from 1.7% to 2.0%. For variable life insurance contracts, policy values are expressed in terms of investment units. Each unit is linked to an asset portfolio. The value of a unit increases or decreases based on the value of the linked asset portfolio. Investment contracts mainly include single payment educational endowment contracts, individual variable annuities and policies after the start of annuity payments. The credited rates associated with investment contracts, except for individual variable annuities, range from 0.01% to 6.3%. For individual variable annuities, policy values are expressed in terms of investment units. Each unit is linked to an asset portfolio. The value of a unit increases or decreases based on the value of the linked asset portfolio. Liabilities for policyholders’ account in the life insurance business ~~includes~~represent the contract value that has accrued to the benefit of the policyholders as of the end of the reporting period. This liability is generally equal to the accumulated account deposits, plus interest credited, less policyholder withdrawals and other charges assessed against the account balances. Liabilities for policyholders’ account in the life insurance business include the liabilities related to the individual variable annuities and variable life insurance contracts with minimum guarantee benefits. ~~Sony elected the fair value option for certain of these liabilities for policyholders’ account in the life insurance business. Refer to Note 13 of the consolidated financial statements.~~

~~Recently Adopted Accounting Standards~~

~~Refer to Note 2, summary of significant accounting policies, recently adopted accounting pronouncements, of the consolidated financial statements.~~

~~Recent Accounting Pronouncements~~

~~Refer to Note 2, summary of significant accounting policies, recent accounting pronouncements not yet adopted, of the consolidated financial statements.~~

~~Table of Contents~~

Item 6.

Directors, Senior Management and Employees

A.	Directors and Senior Management

Set forth below are the current members of the Board of Directors and Corporate Executive Officers of Sony Group Corporation (the “Corporation”), their responsibility as a director or officer, date of birth, the number of years they have served as a director or officer, and other principal business activities outside the Corporation as of June ~~26, 2020.~~20, 2023.

Board of Directors


Kenichiro Yoshida
Responsibility as a Director: ~~Member of the Nominating Committee~~—
Date of Birth: October 20, 1959
Number of Years Served as a Director: 69 years
Principal Business Activities Outside the Corporation: Outside Director, M3, Inc.
Brief Personal History:
April 1983		Joined ~~Sony~~the Corporation
July 2000		Joined Sony Communication Network Corporation (currently Sony Network Communications Inc.)
September 2000		Outside Director, So-net M3, Inc. (currently M3, Inc.) (present)
May 2001		SVP, Sony Communication Network Corporation
April 2005		President and Representative Director, Sony Communication Network Corporation
December 2013		EVP, CSO and Deputy CFO, Corporate Executive Officer, ~~Sony~~the Corporation
April 2014		EVP and CFO, Representative Corporate Executive Officer, ~~Sony~~the Corporation
June 2014		Director, ~~Sony~~the Corporation (present)
April 2015		Executive Deputy President and CFO, Representative Corporate Executive Officer, ~~Sony~~the Corporation
April 2018		President and CEO, Representative Corporate Executive Officer, ~~Sony~~the Corporation
June 2020		Chairman, President and CEO, Representative Corporate Executive Officer, ~~Sony~~the Corporation
April 2023		Chairman and CEO, Representative Corporate Executive Officer, the Corporation (present)

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Hiroki Totoki
Responsibility as a Director: —
Date of Birth: July 17, 1964
Number of Years Served as a Director: ~~1 year~~4 years
Principal Business Activities Outside the Corporation: Outside Director, Recruit Co., Ltd.
Brief Personal History:
April 1987		Joined ~~Sony~~the Corporation
February 2002		Representative Director, Sony Bank Incorporated
June 2005		Director, Corporate Executive Officer and Senior Managing Director, Sony Communication Network Corporation (currently Sony Network Communications Inc.)
April 2012		Representative Director, Corporate Executive Officer and Senior Managing Director, So-net Entertainment Corporation (currently Sony Network Communications Inc.)
April 2013		Representative Director, Corporate Executive Officer, Deputy President and CFO, So-net Entertainment Corporation
December 2013		SVP, Corporate Executive, ~~Sony~~the Corporation ~~Corporate Executive in charge of Business Strategy, Corporate Development and Transformation~~
November 2014		President and CEO, SOMC (currently Sony ~~Mobile Communications Inc.~~ Corporation)
June 2015		Director, Chairman, So-net Corporation (currently Sony Network Communications Inc.)
April 2016		EVP, Corporate Executive Officer, ~~Sony~~the Corporation Officer in charge of New Business Platform Strategy, ~~Sony~~the Corporation President and Representative Director, So-net Corporation
June 2017		CSO, ~~Sony~~the Corporation Officer in Charge of Mid-to-Long Term Business Strategy, New Business
April 2018		Representative Corporate Executive Officer, CFO, ~~Sony~~the Corporation
June 2018		Senior EVP, ~~Sony~~the Corporation
		Outside Director, Recruit Holdings Co., Ltd. (present)
June 2019		Director, ~~Sony~~the Corporation (present)
June 2020		Executive Deputy President and CFO, Representative Corporate Executive Officer, ~~Sony~~the Corporation ~~(present)~~
April 2023

~~Table of Contents~~

		President, COO and CFO, Representative Corporate Executive Officer, the Corporation (present)

~~Shuzo Sumi~~Yoshihiko Hatanaka
Responsibility as a Director: Chairman of the Board Chair of the Nominating Committee
Date of Birth: ~~July 11, 1947~~April 20, 1957
Number of Years Served as a Director: 34 years
Brief Personal History and Principal Business Activities Outside the Corporation:
April ~~1970~~1980		Joined ~~Tokio Marine & Fire Insurance~~Fujisawa Pharmaceutical Co., Ltd.
~~June 2000~~		~~Director and Chief Representative in London, Overseas Division, Tokio Marine & Fire Insurance Co., Ltd.~~
~~June 2002~~		~~Managing Director, Tokio Marine & Fire Insurance Co., Ltd.~~
~~October 2004~~		~~Managing Director, Tokio Marine & Nichido Fire Insurance Co., Ltd.~~ (currently Astellas Pharma Inc.)
June 2005		~~Senior Managing Director, Tokio Marine & Nichido Fire Insurance Co., Ltd.~~
~~June 2007~~		Corporate Executive, Vice President, ~~& Chief Executive Officer, Tokio Marine & Nichido Fire Insurance Co., Ltd.~~ ~~President & Chief Executive Officer, Tokio Marine Holdings,~~Corporate Planning, Corporate Strategy, Astellas Pharma Inc.
~~June 2013~~		~~Chairman of the Board, Tokio Marine & Nichido Fire Insurance Co., Ltd.~~ ~~Chairman of the Board, Tokio Marine Holdings, Inc.~~
~~June 2014~~		~~Outside Director, Toyota Industries Corporation (present)~~
April ~~2016~~		~~Senior Executive Advisor, Tokyo Marine & Nichido Fire Insurance Co., Ltd. (present)~~
~~June 2017~~		~~Director, Sony Corporation (present)~~

~~Tim Schaaff~~
~~Responsibility as a Director: Director in charge of Information Security~~
~~Date of Birth: December 5, 1959~~
~~Number of Years Served as a Director: 7 years~~
~~Brief Personal History and Principal Business Activities Outside the Corporation:~~
~~December 1982~~		~~Joined New England Digital Corporation~~
~~July 1991~~		~~Joined Apple Computer, Inc.~~
~~1998~~		~~Vice President, Apple Computer, Inc.~~
~~December 2005~~		~~Senior Vice President, Sony Corporation of America~~
~~November~~ 2006		~~Deputy~~Corporate Executive of Astellas Pharma Inc. and President ~~Technology Development Group, Sony Corporation~~ & CEO, Astellas US LLC and President & CEO, Astellas Pharma US, Inc.
June 2008		Senior Corporate Executive of Astellas Pharma Inc. and President ~~Sony Media Software~~& CEO, Astellas US LLC and ~~Services~~President & CEO, Astellas Pharma US, Inc.
~~December~~April 2009		~~Director, President, Sony Network Entertainment International LLC~~ Senior Corporate Executive, Chief Strategy Officer and Chief Financial Officer, Astellas Pharma Inc.
June ~~2013~~2011		Representative Director, ~~Sony Corporation (present)~~
~~July 2015~~		~~Chief Product Officer, Intertrust Technologies Corporation (present)~~

~~Kazuo Matsunaga~~
Responsibility as a Director: Vice Chairman of the Board Chair of the Audit Committee
~~Date of Birth: February 28, 1952~~
~~Number of Years Served as a Director: 6 years~~
~~Brief Personal History and Principal Business Activities Outside the Corporation:~~ President & CEO, Astellas Pharma Inc.
April ~~1974~~2018		~~Joined~~Representative Director, Chairman of the ~~Ministry of International Trade and Industry (currently Ministry of Economy, Trade and Industry (“METI”))~~ Board, Astellas Pharma Inc.
June ~~2004~~2019		~~Director-General, Nuclear and Industrial Safety Agency, METI~~ Director, the Corporation (present)
~~September 2005~~March 2023		~~Assistant Vice-Minister, Minister’s Secretariat, METI~~
~~July 2006~~		~~Deputy Vice-Minister, Minister’s Secretariat, METI~~
~~July 2008~~		~~Director-General, Economic and Industrial Policy Bureau, METI~~
~~July 2010~~		~~Vice-Minister of Economy, Trade and Industry, METI~~
~~April 2012~~		~~Specially-appointed Professor, Graduate School of International Corporate Strategy, Hitotsubashi University (present)~~
~~June 2013~~		Outside Director, ~~Takasago Thermal Engineering Co., Ltd.~~Shiseido Company, Limited (present)
~~June 2014~~		~~Director, Sony Corporation (present)~~ ~~Outside Director, Hashimoto Sogyo Co., Ltd. (currently Hashimoto Sogyo Holdings Co., Ltd.) (present)~~
~~April 2016~~		~~Vice Chairman of the Board, Mitsubishi Fuso Truck and Bus Corporation~~
~~January 2017~~		~~Chairman of the Board, Mitsubishi Fuso Truck and Bus Corporation (present)~~

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Toshiko Oka
Responsibility as a Director: Chair of the Audit Committee Member of the ~~Audit~~Nominating Committee
Date of Birth: March 7, 1964
Number of Years Served as a Director: 25 years
Brief Personal History and Principal Business Activities Outside the Corporation:
April 1986		Joined Tohmatsu Touche Ross Consulting Limited
July 2000		Joined Asahi Arthur Anderson Limited
September 2002		Principal, Deloitte Tohmatsu Consulting Co., Ltd. (currently ABeam Consulting Ltd.)
April 2005		President and Representative Director, ABeam M&A Consulting Ltd. (currently PwC Advisory LLC)
April 2016		Partner, PwC Advisory LLC
June 2016		CEO, Oka & Company Ltd. (present) ~~Outside Director, Hitachi Metals, Ltd. (present)~~
June 2018		Director, ~~Sony~~the Corporation (present)
June 2019		Outside Director, Happinet Corporation (present)
June 2020		Outside Director, ~~JXTG~~ENEOS Holdings, Inc. (present)
April 2021		Professor, Professional Graduate School, Graduate School of Global Business, Meiji University (present)
June 2021		Outside Director, Hitachi Construction Machinery Japan Co., Ltd. (present)

Sakie Akiyama
Responsibility as a Director: Member of the Compensation Committee
Date of Birth: December 1, 1962
Number of Years Served as a Director: ~~1 year~~4 years
Brief Personal History and Principal Business Activities Outside the Corporation:
April 1987		Joined Arthur Andersen & Co.
April 1994		Founder and CEO, Saki Corporation
October 2018		Founder, Saki Corporation (present)
June 2019		Director, ~~Sony~~the Corporation (present) Outside Director, Japan Post Holdings Co., Ltd. (present) Outside Director, Orix Corporation (present)
June 2020		Outside Director, Mitsubishi Corporation (present)

Wendy Becker
Responsibility as a Director: Chair of the Compensation Committee Member of the Nominating Committee
Date of Birth: November 2, 1965
Number of Years Served as a Director: ~~1 year~~4 years
Brief Personal History and Principal Business Activities Outside the Corporation:
September 1987		Brand Manager, Procter & Gamble Company
September 1993		Consultant, McKinsey & Company, Inc.
December 1998		Partner, McKinsey & Company, Inc.
February 2008		~~Management~~Managing Director, Residential, TalkTalk, The Carphone Warehouse Ltd. Board member, Member of Remuneration Committee, Whitbread plc
September 2009		Chief Marketing Officer, Vodafone Group plc
September 2012		Chief Operating Officer, Jack Wills Ltd.
October 2013		CEO, Jack Wills Ltd.
February 2017		Board member, Chair of Remuneration Committee, Great Portland Estates plc ~~(present)~~
September 2017		Board member, Logitech International S.A. (present)
June 2019		Director, ~~Sony~~the Corporation (present)
September 2019		Chair of the Board, Chair of Nominating Committee, Logitech International S.A. (present)
June 2021		Board member, Chair of Remuneration Committee, Oxford Nanopore Technologies plc (present)

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~~Yoshihiko Hatanaka~~
~~Responsibility as a Director: Member of the Nominating Committee~~
~~Date of Birth: April 20, 1957~~
~~Number of Years Served as a Director: 1 year~~
~~Brief Personal History and Principal Business Activities Outside the Corporation:~~
~~April 1980~~		~~Joined Fujisawa Pharmaceutical Co., Ltd. (currently Astellas Pharma Inc.)~~
~~June 2005~~		~~Corporate Executive, Vice President, Corporate Planning, Corporate Strategy, Astellas Pharma Inc.~~
~~April 2006~~		~~Corporate Executive of Astellas Pharma Inc. and President & CEO, Astellas US LLC and President & CEO, Astellas Pharma US, Inc.~~
~~June 2008~~		~~Senior Corporate Executive of Astellas Pharma Inc. and President & CEO, Astellas US LLC and President & CEO, Astellas Pharma US, Inc.~~
~~April 2009~~		~~Senior Corporate Executive, Chief Strategy Officer and Chief Financial Officer, Astellas Pharma Inc.~~
~~June 2011~~		~~Representative Director, President & CEO, Astellas Pharma Inc.~~
~~April 2018~~		~~Representative Director, Chairman of the Board, Astellas Pharma Inc. (present)~~
~~June 2019~~		~~Director, Sony Corporation (present)~~

~~Adam Crozier~~
~~Responsibility as a Director: Member of the Nominating Committee~~
~~Date of Birth: January 26, 1964~~
~~Number of Years Served as a Director: —~~
~~Brief Personal History and Principal Business Activities Outside the Corporation:~~
~~January 1995~~		~~Joint CEO, Saatchi & Saatchi Group Ltd.~~
~~January 2000~~		~~CEO, The Football Association~~
~~February 2003~~		~~CEO, Royal Mail Group Ltd.~~
~~April 2010~~		~~CEO, ITV plc~~
~~April 2017~~		~~Non-Executive~~ ~~Chairman, Whitbread Group plc (present)~~
~~December 2018~~		~~Non-Executive~~ ~~Chairman, ASOS plc (present)~~
~~February 2020~~		~~Non-Executive~~ ~~Chairman, Kantar Group Ltd. (present)~~
~~June 2020~~		~~Director, Sony Corporation (present)~~

Keiko Kishigami
Responsibility as a Director: Member of the Audit Committee
Date of Birth: January 28, 1957
Number of Years Served as a Director: —3 years
Brief Personal History and Principal Business Activities Outside the Corporation:
October 1985		Joined Peat Marwick Minato (currently Ernst & Young ShinNihon LLC)
August 1989		Registered as Certified Public Accountant (present)
December 1997		Partner, Century Audit Corporation (currently Ernst & Young ShinNihon LLC)
May 2004		Representative Partner ~~(position currently defined as “Senior Partner”)~~(Senior Partner), Ernst & Young ShinNihon (currently Ernst & Young ShinNihon LLC)
September 2018		Board Member, WWF Japan (present)
June 2019		Outside Auditor, Okamura Corporation (present)
June 2020		Director, ~~Sony~~the Corporation (present)
June 2021		Outside ~~Auditor,~~Director, Sumitomo Seika Chemicals Company, Limited (present)
March 2023		Outside Auditor, DIC Corporation (present)

Joseph A. Kraft Jr.
Responsibility as a Director: Member of the ~~Compensation~~Audit Committee Director in charge of Information Security
Date of Birth: May 12, 1964
Number of Years Served as a Director: 3 years
Brief Personal History and Principal Business Activities Outside the Corporation:
July 1986		Joined Morgan Stanley Inc.
January 2000		Managing Director, Morgan Stanley Inc.
April 2007		Managing Director, Head of Capital Markets Division, Dresdner Kleinwort Japan
March 2010		Deputy Branch Manager & Managing Director, Bank of America Merrill Lynch Japan
July 2015		CEO, Rorschach Advisory Inc. (present)
June 2020		Director, the Corporation (present)

Neil Hunt
Responsibility as a Director: Director in charge of Information Security
Date of Birth: January 12, 1962
Number of Years Served as a Director: —
Brief Personal History and Principal Business Activities Outside the Corporation:
~~July 1986~~June 1989		Founder, CTO, Iconicon
~~Joined Morgan Stanley~~October 1991		Director of Engineering, Pure Atria, Inc.
December 1999		Chief Product Officer, Netflix, Inc.
September 2010		Board member, Member of Compensation Committee, Logitech, Inc.
June 2017		Board member, Member of Compensation Committee, Roku, Inc. (present)
January 2020		Founder and Chief Product Officer, Vibrant Planet, PBC (present)
June 2023		Director, the Corporation (present)


William Morrow
~~January 2000~~		~~Managing Director, Morgan Stanley Inc.~~Responsibility as a Director: Member of the Compensation Committee
~~April 2007~~		~~Managing Director, Head~~Date of ~~Capital Markets Division, Dresdner Kleinwort Japan~~Birth: July 2, 1959
~~March 2010~~		~~Deputy Branch Manager & Managing Director, Bank~~Number of ~~America Merrill Lynch Japan~~Years Served as a Director: —
~~July 2015~~		~~CEO, Rorschach Advisory Inc. (present)~~Brief Personal History and Principal Business Activities Outside the Corporation:
~~June 2020~~September 1980	Director, Pacific Bell Inc.
November 2001	President, Japan Telecom Holdings Co. Ltd
February 2004	CEO, Vodafone UK Limited
April 2005	President, VODAFONE K.K. Limited
May 2006	CEO Europe, Vodafone Limited
August 2006	President & CEO, Pacific Gas and Electric Company
June 2008	Outside Director, ~~Sony~~Broadcom Inc.
March 2009	CEO, Clearwire Incorporated
March 2012	CEO, Vodafone Hutchison Australia
April 2014	CEO, NBN Co, Limited
December 2018	Outside Director, IkeGPS Group Limited
February 2021	CEO, DirecTV LLC (present)
June 2023	Director, the Corporation (present)

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Corporate Executive Officers

In addition to Kenichiro Yoshida and Hiroki Totoki, the four individuals set forth below are the current Corporate Executive Officers of Sony Group Corporation as of June ~~26, 2020.~~20, 2023. Refer to “Board Practices” below.


~~Shigeki Ishizuka~~Toshimoto Mitomo
Responsibility as an Officer: ~~Vice Chairman, Representative Corporate~~ Executive ~~Officer,~~Deputy President and CSO, Officer in charge of ~~Electronics Products & Solutions~~ Intellectual Property, Business Strategy, Business Development and ~~Storage Media Businesses~~Business Incubation Platform
Date of Birth: ~~November 14, 1958~~January 6, 1963
Number of Years Served as a Corporate Executive Officer: —1 year
Principal Business Activities Outside Sony: None
Brief Personal History:
April ~~1981~~1985		Joined ~~Sony~~the Corporation
~~August 2004~~		~~Managing Director, Corporate Executive, Sony EMCS Corporation (currently Sony Global Manufacturing & Operations Corporation)~~
~~November 2006~~		~~President, Digital Imaging Business Group, Sony Corporation~~
June ~~2007~~		~~SVP, Corporate Executive, Sony Corporation~~
~~June 2009~~		~~President, Device Solutions Business Group, Sony Corporation~~
~~April 2012~~		~~President, Digital Imaging Business Group, Sony Corporation~~
~~April 2015~~		~~EVP, Corporate Executive Officer, Sony Corporation~~
~~April 2017~~		~~Representative Director and President, Sony Imaging Products & Solutions Inc. (present)~~
~~June 2018~~		~~Senior EVP, Sony Corporation~~
~~April 2020~~		~~Representative Director, President and CEO, Sony Electronics Corporation (present)~~
~~June 2020~~		~~Vice Chairman, Representative Corporate Executive Officer, Sony Corporation (present)~~

~~Toru Katsumoto~~
Responsibility as an Officer: Executive Deputy President, Corporate Executive Officer, Officer in charge of R&D and Medical Business
~~Date of Birth: October 14, 1957~~
~~Number of Years Served as a Corporate Executive Officer: 2 years~~
~~Principal Business Activities Outside Sony: None~~
~~Brief Personal History:~~
~~April 1982~~		~~Joined Sony Corporation~~
~~November 2012~~		~~SVP, Corporate Executive, Sony Corporation~~
~~April~~ 2013		~~Representative Director and President, Sony Olympus Medical Solutions Inc.~~
~~January 2016~~		~~Director, Sony Olympus Medical Solutions Inc. (present)~~
~~January 2017~~		~~President, Medical Business Group, Sony Corporation~~
~~April 2017~~		~~Representative Director and Deputy President, Sony Imaging Products & Solutions Inc. (present)~~
~~April 2018~~		~~EVP,~~SVP, Corporate Executive, ~~Officer, Sony~~the Corporation
June 2019		EVP, the Corporation
April 2022		Senior EVP, Corporate Executive Officer, ~~Sony~~the Corporation
~~June 2020~~April 2023		Executive Deputy President and CSO, Corporate Executive Officer, ~~Sony~~the Corporation (present)


Shiro Kambe
Responsibility as an Officer: Senior EVP, Officer in charge of Legal, Compliance, Privacy, Corporate Communications, Brand, Sustainability, External Relations, Quality ~~Information Security~~Management, and ~~Privacy~~the Board Secretariat
Date of Birth: December 18, 1961
Number of Years Served as a Corporate Executive Officer: 69 years
Principal Business Activities Outside Sony: None
Brief Personal History:
April 1984		Joined ~~Sony~~the Corporation
June 2010		SVP, Corporate Executive, ~~Sony~~the Corporation
June 2014		EVP, Corporate Executive Officer, ~~Sony~~the Corporation
June 2020		Senior EVP, Corporate Executive Officer, ~~Sony~~the Corporation (present)

~~Table of Contents~~

Kazushi Ambe

Responsibility as an Officer: Senior EVP, Officer in charge of Human Resources, ~~and~~ General Affairs, Lead of Group Diversity, Equity & Incubation and the Corporate Executive Office and Sony Group China Representative
Date of Birth: April 23, 1961
Number of Years Served as ~~a Corporate Executive Officer: 4 years~~
~~Principal Business Activities Outside Sony: None~~
~~Brief Personal History:~~
~~April 1984~~		~~Joined Sony Corporation~~
~~October 2001~~		~~Vice President, Sony Ericsson Mobile Communications~~
~~April 2006~~		~~Senior Vice President, Sony Corporation of America~~
~~November 2014~~		~~SVP, Corporate Executive, Sony Corporation~~
~~June 2016~~		~~EVP, Corporate Executive Officer, Sony Corporation~~
~~June 2020~~		~~Senior EVP, Corporate Executive Officer, Sony Corporation (present)~~

Kenichiro Yoshida, Hiroki Totoki, Shigeki Ishizuka, Toru Katsumoto, Shiro Kambe and Kazushi Ambe are engaged on a full-time basis by Sony Corporation. There is no family relationship between any of the persons named above. There is no arrangement or understanding with major shareholders, customers, suppliers, or others pursuant to which any person named above was selected as a Director or a Corporate Executive ~~Officer.~~

B.	~~Compensation~~Officer: 7 years

~~Under~~Principal Business Activities Outside Sony: None

Brief Personal History:

April 1984

Joined the ~~Financial Instruments and Exchange Act of Japan and related regulations,~~Corporation

October 2001

Vice President, Sony Ericsson Mobile Communications

April 2006

Senior Vice President, Sony Corporation ~~is required to disclose the total remuneration paid by Sony Corporation to Directors and~~of America

November 2014

SVP, Corporate Executive, ~~Officers, as well as remuneration of any Director or~~the Corporation

June 2016

EVP, Corporate Executive Officer, ~~who receives total aggregate annual remuneration exceeding 100 million yen from Sony in a fiscal year, on an individual basis. The following table and accompanying footnotes show~~ the ~~information on such matters that Sony~~ Corporation ~~has disclosed in its annual Securities Report for the fiscal year ended March 31, 2020 filed on~~

June ~~26,~~ 2020 ~~with the Director General of the Kanto Local Finance Bureau of the Ministry of Finance in Japan.~~

~~(1) Total amounts of remuneration paid by Sony Corporation to Directors and~~

Senior EVP, Corporate Executive ~~Officers~~Officer, the Corporation (present)

Fixed remuneration

Remuneration linked to business results

Phantom restricted stock plan

Number of
persons

Amount
(Yen in millions)

Number of
persons

Amount
(Yen in millions)

Number of
persons

Amount
(Yen in millions)

Directors

14

210

  —

  —

3

111

(*1) (*2)

(*3)

(Outside Directors)

(12)

(174)

(—)

(—)

(3)

(111)

Corporate Executive Officers

5

360

5

446

—

—

(*2)

(*4)

Total (*6)

19

570

5

446

3

111

(*5)

*1 The number of persons does not include Directors who concurrently serve as Corporate Executive Officers, because Sony Corporation does not pay any additional remuneration for services as a Director to Directors who concurrently serve as Corporate Executive Officers.

*2 The number of persons includes three Directors who resigned on the day of the Ordinary General Meeting of Shareholders held on June 18, 2019.

*3 Sony Corporation does not pay remuneration linked to business results to Directors who do not concurrently serve as Corporate Executive Officers.

*4 The amount of remuneration linked to business results for the fiscal year ended March 31, 2020 was paid in June 2020.

*5 The Phantom Restricted Stock Plan includes the amount that will be paid to three Directors who resigned on the day of the Ordinary General Meeting of Shareholders held on June 26, 2020.

*6 In addition to the above, Sony Corporation issued restricted stock and stock acquisition rights for the purpose of granting stock options as remuneration linked to stock price. During the fiscal year ended March 31, 2020, Sony Corporation recorded 37 million yen in expenses for the restricted stock granted to

~~non-executive~~

Directors and 355 million yen in expenses for the restricted stock granted to Corporate Executive Officers. Regarding the stock acquisition rights granted to Corporate Executive Officers, Sony Corporation recorded 479 million yen in expenses during the fiscal year ended March 31, 2020 or in the past for stock option purposes.

Hiroaki Kitano

~~Table~~Responsibility as an Officer: Senior EVP and CTO, Officer in charge of ~~Contents~~R&D and AI Collaboration

~~(2) Amounts~~Date of ~~remuneration paid by Sony Corporation and its subsidiaries to Directors and Corporate Executive Officers on an individual basis.~~Birth: March 16, 1961

Name

Position (*1)

Fixed Remuneration
(*2)
  (Yen in millions)

Remuneration
linked to
business results
(*2) (*3)
  (Yen in millions)

Phantom restricted
stock plan
  (Yen in millions)

Total (*2)

(Yen in millions)


Granted number of
stock acquisition
rights (*4)
  (Ten thousand shares)

Granted number of
restricted stock
(*5)
  (Ten thousand shares)

Kenichiro Yoshida

Sony Corporation
Director, Chairman, President & CEO, and Representative Corporate Executive Officer (*6) (*7)

175

279

—

454

15

5

Hiroki Totoki

Sony Corporation
Director, Executive Deputy President & CFO, and Representative Corporate Executive Officer (*6) (*7)

59

56

—

115

3

1.5

Toru Katsumoto

Sony Corporation
Executive Deputy President, Corporate Executive Officer (*7)

48
(*8)

46
(*8)

—

93
(*8)

2

1

Shiro Kambe

Sony Corporation
Senior Executive Vice President, Corporate Executive Officer

42

39

—

81

2

0.6

Kazushi Ambe

Sony Corporation
Senior Executive Vice President, Corporate Executive Officer

40

36

—

75

2

0.6

*1 The above chart shows remuneration for Directors and Corporate Executive Officers who received, or who became likely to receive, total remuneration exceeding 100 million yen from Sony Corporation and its subsidiaries during the fiscal year ended March 31, 2020. Titles areNumber of Years Served as ~~of the date of submission of this document.~~

*2 Due to rounding, individual sums may not total 100%.

*3 For the indicators and results used to determine the amount of remuneration linked to business results, please refer to “Corporate Executive Officer remuneration linked to business results for the fiscal year ended March 31, 2020” below.

*4 The weighted-average fair value per share at the date of grant of stock acquisition rights granted during the fiscal year ended March 31, 2020 was 1,864 yen and was estimated using the Black-Scholes option-pricing model with several assumptions. Refer to Note 17 of the consolidated financial statements for details. The weighted-average fair value per share does not indicate the actual value that would be realized by a Corporate Executive ~~Officer upon~~Officer: 1 year

Principal Business Activities Outside Sony: None

Brief Personal History:

April 1984

Joined NEC Corporation

August 1993

Joined Sony Computer Science Laboratories, Inc.

June 2002

Director, Deputy Head of Research, Sony Computer Science Laboratories, Inc.

July 2008

Director, Head of Research, Sony Computer Science Laboratories, Inc.

July 2011

President and CEO, Sony Computer Science Laboratories, Inc. (present)

June 2016

Corporate Executive, the ~~exercise of~~Corporation

June 2018

SVP, the ~~above-mentioned stock acquisition rights. The actual value, if any, that is realized by a~~Corporation

April 2020

CEO, Sony AI Inc. (currently Sony Research Inc.) (present)

June 2020

EVP, the Corporation

April 2022

Senior EVP and CTO, Corporate Executive Officer, ~~upon~~ the exercise of any stock acquisition rights will depend on the extent to which the market value of Sony Corporation’s common stock (“Common Stock”) exceeds the exercise price of the stock acquisition rights on the date of exercise, and several other restrictions imposed on the exercise of the stock acquisition rights, including the period when a Corporate Executive Officer could exercise the stock acquisition rights. Accordingly, there is no assurance that the value realized or to be realized by a Corporate Executive Officer upon the exercise of the stock acquisition rights is or will be at or near the weighted-average fair value per share presented above. In addition, the above weighted-average fair value per share was calculated to recognize compensation expense for the fiscal year ended March 31, 2020 for accounting purposes and should not be regarded as any indication or prediction of Sony with respect to its future stock performance.

*5 Indicates the total number of shares of restricted stock granted in the fiscal year ended March 31, 2020 for Corporate Executive Officers. The issue price per share of restricted stock was 5,648 yen.

*6 As noted above, Sony Corporation ~~does not pay any remuneration for services as a Director to Directors who concurrently serve as Corporate Executive Officers.~~

*7 Apart from the remuneration contained in the above table, Sony Corporation also provided certain personal benefits and perquisites, including fringe benefits and in some instances income taxes related to perquisites, totaling 8 million yen to Kenichiro Yoshida, 1 million yen to Hiroki Totoki and 1 million yen to Toru Katsumoto during the fiscal year ended March 31, 2020.

*8 In the above chart, remuneration for Toru Katsumoto includes 13 million yen in fixed compensation and 9 million yen in performance-based compensation from Sony Imaging Products & Solutions Inc.(present)

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Kenichiro Yoshida, Hiroki Totoki, Toshimoto Mitomo, Shiro Kambe, Kazushi Ambe and Hiroaki Kitano are engaged on a full-time basis by Sony Group Corporation. There is no family relationship between any of the persons named above. There is no arrangement or understanding with major shareholders, customers, suppliers, or others pursuant to which any person named above was selected as a Director or a Corporate Executive Officer.

B.	72 Compensation

Under the Financial Instruments and Exchange Act of Japan and related regulations, Sony Group Corporation is required to disclose the total remuneration paid by Sony Group Corporation to Directors and Corporate Executive Officers, as well as remuneration of any Director or Corporate Executive Officer who receives total aggregate annual remuneration exceeding 100 million yen from Sony in a fiscal year, on an individual basis. The following table and accompanying footnotes show the information on such matters that Sony Group Corporation has disclosed in its annual Securities Report for the fiscal year ended March 31, 2023 filed on June 20, 2023 with the Director General of the Kanto Local Finance Bureau of the Ministry of Finance in Japan.

(1) Total amounts of remuneration for Directors and Corporate Executive Officers and the number thereof


	Fixed remuneration		Remuneration linked to business results		Stock acquisition rights (*6)		Restricted stock (8/9)		Phantom Restricted Stock Plan (9/10)
	Number of persons	Amount (Yen in millions)	Number of persons	Amount (Yen in millions)	Number of persons	Amount (Yen in millions)	Number of persons	Amount (Yen in millions)	Number of persons	Amount (Yen in millions)
Directors	8	186	—	—	—	—	8	46	1	95
				(*3)		(*7)				(*11)
(Outside Directors) (*1)	(7)	(159)	(—)	(—)	(—)	(—)	(7)	(41)	(—)	(—)
Corporate Executive Officers	8	574	7	751	6	681	6	1,131	1	221
	(*2)		(*4)	(*5)						(*12)
Total	16	760	7	751	6	681	14	1,178	2	316

*1 The number of persons does not include two Directors who concurrently serve as Corporate Executive Officers, because Sony Group Corporation does not pay any additional remuneration for services as a Director to Directors who concurrently serve as Corporate Executive Officers.

*2 The number of persons includes two Corporate Executive Officers who resigned on the day of the Ordinary General Meeting of Shareholders held on June 28, 2022.

*3 Sony Group Corporation does not pay remuneration linked to business results to Directors who do not concurrently serve as Corporate Executive Officers.

*4 The number of persons includes one Corporate Executive Officer who resigned on the day of the Ordinary General Meeting of Shareholders held on June 28, 2022.

*5 This is the amount of remuneration linked to business results for the fiscal year ended March 31, 2023 that was paid in June 2023.

*6 This is the amount of expenses Sony Group Corporation recorded during the fiscal year ended March 31, 2023 applicable to the stock acquisition rights that were granted.

*7 Sony Group Corporation does not grant stock acquisition rights to Directors who do not concurrently serve as Corporate Executive Officers.

*8 This is the amount of expenses Sony Group Corporation recorded during the fiscal year ended March 31, 2023 applicable to restricted stock.

*9 Due to rounding, individual sums may not total 100%.

*10 The phantom restricted stock plan referenced above includes the amount which is to be paid to one Director who resigned on the day of the Ordinary General Meeting of Shareholders held on June 20, 2023 and one former Corporate Executive Officer who resigned on March 31, 2023. Sony Group Corporation recorded 69 million yen in expenses during the fiscal year ended March 31, 2023 applicable to the phantom restricted stock plan for Directors and Corporate Executive Officers.

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*11 The amount above is equivalent to points accumulated during the terms of the Director up to the fiscal year ended March 31, 2017, when Sony had granted points under the phantom restricted stock plan to certain Directors.

*12 The amount above is equivalent to points accumulated during the terms of the Corporate Executive Officers from April 2015 to June 2018 and from June 2020 to June 2022.

(2) Amounts of remuneration for Directors and Corporate Executive Officers on an individual basis


Name	Position (*1)	Fixed Remuneration (*2) (Yen in millions)	Remuneration linked to business results (2) (3) (Yen in millions)	Phantom restricted stock plan (*2) (Yen in millions)	Total (*2) (Yen in millions)	Granted number of stock acquisition rights (*4) (Ten thousand shares)	Granted number of restricted stock (*5) (Ten thousand shares)
Tim Schaaff	Former Director (Until June 20, 2023)	27	—	95 (*6)	122	—	0.1
Kenichiro Yoshida	Director, Chairman, CEO, and Representative Corporate Executive Officer (7) (8)	240	411	—	651	16	8.0
Hiroki Totoki	Director, President, COO, CFO, and Representative Corporate Executive Officer (7) (8)	80	143	—	223	5	2.5
Shigeki Ishizuka	Former Vice Chairman, Former Representative Corporate Executive Officer (Until March 31, 2023)	17	13	221 (*9)	251	—	—
Toshimoto Mitomo	Executive Deputy President, CSO, and Corporate Executive Officer (*8)	52	49	—	101	2	0.6
Shiro Kambe	Senior Executive Vice President, and Corporate Executive Officer (*8)	52	51	—	103	2	0.6
Kazushi Ambe	Senior Executive Vice President, and Corporate Executive Officer (*8)	52	50	—	102	2	0.6
Hiroaki Kitano	Senior Executive Vice President, CTO and Corporate Executive Officer	52 (*10)	49 (*10)	—	101 (*10)	2	1.0

*1 This chart shows remuneration for Directors and Corporate Executive Officers who received, or who became likely to receive, total remuneration exceeding 100 million yen from Sony Group Corporation and its subsidiaries during the fiscal year ended March 31, 2023. Titles are as of the date of submission of this document.

*2 Due to rounding, individual sums may not total 100%.

*3 For the metrics and actual financial results used to determine the amount of remuneration linked to business results, refer to “Corporate Executive Officer remuneration linked to business results for the fiscal year ended March 31, 2023” below.

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*4 The weighted-average fair value per share at the date of grant of stock acquisition rights granted during the fiscal year ended March 31, 2023 was 3,123 yen and was estimated using the Black-Scholes option-pricing model with several assumptions. Refer to Note 21 of the consolidated financial statements for details. The weighted-average fair value per share does not indicate the actual value that would be realized by a Corporate Executive Officer upon the exercise of the above-mentioned stock acquisition rights. The actual value, if any, that is realized by a Corporate Executive Officer upon the exercise of any stock acquisition rights will depend on the extent to which the market value of Sony Group Corporation’s common stock (“Common Stock”) exceeds the exercise price of the stock acquisition rights on the date of exercise, and several other restrictions imposed on the exercise of the stock acquisition rights, including the period when a Corporate Executive Officer could exercise the stock acquisition rights. Accordingly, there is no assurance that the value realized or to be realized by a Corporate Executive Officer upon the exercise of the stock acquisition rights is or will be at or near the weighted-average fair value per share presented above. In addition, the above weighted-average fair value per share was calculated to recognize compensation expense for the fiscal year ended March 31, 2023 for accounting purposes and should not be regarded as any indication or prediction of Sony with respect to its future stock performance.

*5 This indicates the total number of shares of restricted stock granted in the fiscal year ended March 31, 2023 for Directors and Corporate Executive Officers. The issue price per share of restricted stock was 11,586 yen.

*6 As noted above, the amount is equivalent to points accumulated during the terms of the Director up to the fiscal year ended March 31, 2017, when Sony had granted points under the phantom restricted stock plan to certain Directors.

*7 As noted above, Sony Group Corporation does not pay any remuneration for services as a Director to Directors who concurrently serve as Corporate Executive Officers.

*8 Apart from the remuneration contained in the table, Sony Group Corporation also provided certain personal benefits and perquisites, including fringe benefits and in some instances amounts to pay income taxes related to perquisites, totaling 7 million yen to Kenichiro Yoshida, 1 million yen to Hiroki Totoki, 18 million yen to Toshimoto Mitomo, 1 million yen to Shiro Kambe, and 1 million yen to Kazushi Ambe during the fiscal year ended March 31, 2023.

*9 As noted above, the amount is equivalent to points accumulated during the terms of the Corporate Executive Officers from April 2015 to June 2018 and from June 2020 to June 2022.

*10 Remuneration paid to Hiroaki Kitano includes 10 million yen in fixed compensation and 10 million yen in performance-based compensation from Sony Computer Science Laboratories, Inc. and 5 million yen in fixed compensation and 5 million yen in performance-based compensation from Sony Research Inc. (formerly Sony AI Inc.).

(3) Basic policy regarding Director and Senior Executive remuneration

The basic policy regarding remuneration for respective Directors and Senior Executives determined by the Compensation Committee is as follows:

(a) Basic policy regarding Director remuneration

The primary duty of Directors is to supervise the performance of business operations of Sony as a whole. In order to improve this supervisory function over the business operations of Sony, which is a global company, the following two elements have been established as the basic policy for the determination of remuneration of Directors. No Director remuneration is paid to those Directors who concurrently serve as Corporate Executive Officers.

Attracting and retaining an adequate talent pool of Directors possessing the requisite abilities to excel in the global marketplace; and

~~The basic policy regarding remuneration for Directors and Senior Executives determined by the Compensation Committee, is as follows:~~

~~(a) Basic policy regarding Director remuneration~~

~~Attracting and retaining an adequate talent pool of Directors possessing the requisite abilities to excel in the global marketplace; and~~

~~Ensuring the effectiveness of the supervisory function of Directors.~~

~~Based upon the above, Director remuneration consists of the following three components:~~

~~Fixed remuneration;~~

~~Remuneration linked to stock price; and~~

~~Phantom Restricted Stock Plan.~~

Ensuring the effectiveness of the supervisory function of Directors.

Based on the above, Director remuneration shall consist of the following components. The amount of each component and its percentage of total remuneration shall be at an appropriate level determined in accordance with the basic policy above and based on research conducted by a third party regarding remuneration of directors of both Japanese and

non-Japanese

companies.

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Type of remuneration		Description

Fixed remuneration		• The amount of fixed remuneration shall be at an appropriate level determined in accordance with the basic policy above and based ~~upon~~on research conducted by a third party regarding remuneration of directors of both Japanese and non-Japanese companies.

~~Regarding remuneration linked to stock price,~~ Stock-based compensation (restricted stock ~~is used~~or restricted stock units)		• Restricted stock or restricted stock units (“RSUs”) are granted to further promote shared values between ~~the~~Directors and shareholders ~~and Directors,~~ and incentivize Directors to develop and maintain a sound and transparent management system. ~~Appropriate restrictions~~ • Any Director to whom restricted stock is granted may not sell or transfer the granted shares during his/her tenure, and ~~conditions shall~~in principle, such restriction is to be ~~set in order to enhance~~released when such Director resigns. • In principle, RSUs held by Directors will be vested when he/she resigns, and the ~~effectiveness~~Common Stock of the ~~remuneration programs.~~company will then be delivered to the Directors.

Phantom restricted stock plan		~~Regarding the Phantom Restricted Stock Plan, points~~• Points determined every year by the Compensation Committee ~~shall be~~and granted to certain Directors every year during ~~his/her tenure, and~~their term in office, with the remuneration amount calculated at the time of resignation ~~the remuneration amount shall be calculated~~ by multiplying the ~~common stock~~Common Stock price (closing price) by the individual’s accumulated points. * Because Sony ~~shall not grant any points pursuant to~~replaced the ~~Phantom Restricted Stock Plan to a Director~~phantom restricted stock plan for ~~a fiscal year in which Sony granted~~Directors with restricted stock as ~~Director remuneration~~from the fiscal year ended March 31, 2018, Sony did not grant new points to ~~such Director.~~Directors during the fiscal year ended March 31, 2023.

(b) Basic policy regarding Senior Executive remuneration

Senior Executives are key members of management responsible for executing the operations of Sony as a whole, or their respective businesses of Sony. In order to further improve the business results of Sony, the following two elements have been established as the basic policy for the determination of remuneration of Senior Executives.

Attracting and retaining an adequate talent pool possessing the requisite abilities to excel in the global marketplace; and

Senior Executives are key members of management responsible for executing the operations of Sony as a whole, or respective businesses of Sony. In order to further improve the business results of Sony, the following two elements have been established as the basic policy for the determination of remuneration of Senior Executives.

~~Attracting and retaining an adequate talent pool possessing the requisite abilities to excel in the global marketplace; and~~

~~Providing effective incentives to improve business results on a short-, medium- and long- term basis.~~

~~Based upon the above, Senior Executive remuneration shall basically consist of the following four components:~~

~~Fixed remuneration;~~

~~Remuneration linked to business results;~~

~~Remuneration linked to stock price; and~~

~~Phantom Restricted Stock Plan.~~

Providing effective incentives to improve business results on a short-, medium- and long-term basis.

Based on the above, Senior Executive remuneration shall basically consist of the following components. The amount of each component and its percentage of total remuneration shall be at an appropriate level determined in accordance with the above basic policy and the individual’s level of responsibility and based on research conducted by a third party regarding remuneration of management of both Japanese and

non-Japanese

companies, with emphasis on linking Senior Executive remuneration to business results and shareholder value.



Type of remuneration		Description

Fixed remuneration		• The amount of fixed remuneration shall be at an appropriate level determined ~~in accordance with the above basic policy and the individual’s level of responsibility and~~ based ~~upon~~on research conducted by a third party regarding remuneration of management of both Japanese and non-Japanese companies, ~~emphasizing linking Senior Executive remuneration~~according to ~~business results and shareholder value. In principle, remuneration for a Senior Executive who has a greater management~~his/her responsibility, and ~~influence on~~ 73 ~~Table of Contents~~ ~~Sony as a whole has a higher proportion of remuneration linked~~in order to ~~stock price which is directly linked to the corporate value. (Please see below Reference: Executive Compensation Package Design to Focus on Long-Term Management.)~~maintain competitiveness in recruiting talent.

Remuneration linked to business results ~~shall be structured~~		• Structured appropriately and based ~~upon~~on appropriate indicators to ensure that such remuneration effectively incentivizes Senior Executives to achieve the ~~mid-~~ medium- to long-term ~~and~~as well as the corresponding fiscal year’s, corporate targets. • Specifically, the amount to be paid to Senior Executives shall be determined based ~~upon~~on the level of achievements of the targets of ~~(1) certain key performance~~ indicators ~~linked to consolidated or individual business results~~ of Sony of the corresponding fiscal year, such as Return on Equity (“ROE”), Net Income attributable to Sony Corporation’s Stockholders and Operating Cash Flow (“Financial Performance KPIs”), which indicators are selected based on the areas for which each Senior Executive is responsible(1) and (2) ~~the individual performance of the area(s) for which the relevant Senior Executive is responsible. The amount to be paid to Senior Executives shall~~below, and can fluctuate, in principle, within the range from 0% to 200% of the standard payment amount (“Business Results Linked Standard Payment Amount”) based on the achievement of the ~~above-mentioned~~below-mentioned targets.

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Type of remuneration		Description
		(1) Certain key performance indicators linked to consolidated or individual business results of Sony during the corresponding fiscal year, such as Adjusted EBITDA and Adjusted EPS (net income attributable to Sony Group Corporation’s stockholders per share), and which indicators are selected based on the areas for which each Senior Executive is responsible. (2) The individual performance of the area(s) for which each Senior Executive is responsible. • Efforts to accelerate ~~collaboration~~value creation through collaborations among businesses of Sony, ~~from the viewpoint of value creation as “One Sony,” as well as~~ sustainability initiatives related to social value creation and ESG ~~(environment, social~~ and ~~governance)~~engagement indicators based on employee surveys shall be included in the evaluation ~~indicators of~~factors for individual performance. • The Business Results Linked Standard Payment Amount shall be determined so that such amount is within a certain percentage of the cash compensation (total of the fixed remuneration and the remuneration linked to business results), which percentage shall be determined in accordance with each individual’s level of responsibility.

~~Remuneration linked to the stock price, such as stock options~~ Stock-based compensation (Stock acquisition rights, and restricted stock ~~will be used~~or restricted stock units)		• Stock acquisition rights, and restricted stock or RSUs are granted to incentivize Senior Executives to increase mid- to long-term shareholder value. ~~Appropriate restrictions~~ • The exercise of the stock acquisition rights is, in principle, restricted during a one-year period from the allotment date, and ~~conditions shall~~ one-third of the total number of exercisable stock acquisition rights will be ~~set~~vested and exercisable each year thereafter. (All of the allocated stock acquisition rights will be exercisable on and after three years from the allotment date.) • The Senior Executives to whom restricted stock is granted, in ~~order~~principle, may not sell or transfer the granted stock before the third anniversary date of the Ordinary General Meeting of Shareholders of the fiscal year when the subject restricted stock was granted. • In principle, all RSUs held by the Senior Executives will be vested after three years have passed since the date of grant of the RSUs, and the Common Stock of the company will be delivered to ~~enhance~~ the ~~effectiveness~~Senior Executives. • As a general policy, remuneration for a Senior Executive who has greater management responsibility and influence over Sony as a whole has a higher proportion of ~~such remuneration program.~~stock-based compensation, which is directly linked to the corporate value. (Please see below Reference: Executive Compensation Package Design to Focus on Long-Term Management.) • The amount of ~~remuneration linked to the stock price~~stock-based compensation shall be determined so that the amount is within a certain percentage of the total cash compensation (total of the fixed remuneration and the remuneration linked to business results) and ~~remuneration linked to the~~stock-based compensation.

Phantom restricted stock ~~price.~~plan		~~Regarding the Phantom Restricted Stock Plan, points~~• Points determined every year by the Compensation Committee shall be granted to Senior Executives every year during his/her tenure, ~~in office,~~ and at the time of resignation, the remuneration amount shall be calculated by multiplying the ~~common stock~~Common Stock price (closing price) by the individual’s accumulated points.

~~(Reference: Executive Compensation Package Design to Focus on Long-Term Management)~~

The following bar chart shows the composition of remuneration for Senior Executives applicable to the fiscal year ended March 31, 2020. The proportions of “Remuneration linked to business results” are based on the Business Results Linked Standard Payment Amount.

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(Reference: Executive Compensation Package Designed to Focus on Long-Term Management)

The bar chart below shows the components of remuneration for Corporate Executive Officers for the fiscal year ended March 31, 2023. For this chart, the remuneration linked to business results is based on the Business Results Linked Standard Payment Amount for each Corporate Executive Officer. As to the stock-based compensation, the underlying amount is calculated based on the fair value of a stock acquisition right as of the date such stock acquisition right was granted in the fiscal year ended March 31, 2023 and the issue price of the restricted stock when granted. Accordingly, the components of remuneration based on the amounts actually paid will be different from the chart below.

*Due to rounding, individual sums may not total 100%.

(Reference: Stock-based Compensation)

Sony Group Corporation introduced stock acquisition rights, restricted stock and RSUs as forms of stock-based compensation, granted to the Directors and the Senior Executives including Corporate Executive Officers.

The purpose of the stock-based compensation for the

non-executive

Directors including outside Directors is to incentivize these Directors to develop and maintain a sound and transparent management system by further promoting shared values between the shareholders and these Directors. Furthermore, the purpose of the stock-based compensations for the Senior Executives including Corporate Executive Officers is to further reinforce management’s alignment with shareholder value, and to incentivize management to improve

mid-

to long- term performance and increase shareholder value.

The details of such stock-based compensation, including vesting conditions, recipients and number of grants, are determined or supervised by the Compensation Committee based on research conducted by a third party regarding stock-based compensation of both Japanese and

non-Japanese

companies. In addition, in determining the number of shares or units to be granted, the impact on dilution of the value of the shares of Sony Group Corporation is monitored.

(4) Procedures to determine remuneration of ~~Directors and Senior Executives~~

Based on the policy outlined above, the Compensation Committee determines the amount and content of the compensation for each Director and Senior Executive. Specifically, in principle, each year at the meeting of the Compensation Committee held after the Ordinary General Meeting of the Shareholders, the amount of basic remuneration and the content of each Director’s and Senior Executive’s compensation for the corresponding fiscal year is determined. Thereafter, at the meeting of the Compensation Committee held after the corresponding fiscal year end, the final amount of compensation of each Director and Senior Executive is determined, including the amount of remuneration linked to business results.

~~Table of Contents~~

determined and thereafter, at the meeting of the Compensation Committee held after the corresponding fiscal year end, the amount of such remuneration is determined based on the level of achievement of such targets for the Financial Performance KPIs and the individual performance.

~~The Compensation Committee determined the amount of compensation of each~~ Directors and Senior Executives

Based on the policy outlined above, the amount and content of the compensation for each Director and Senior Executive including Corporate Executive Officers are determined by the Compensation Committee or otherwise under the supervision of the Compensation Committee.

Specifically, in principle, as for Directors, each year at the meeting of the Compensation Committee held after the Ordinary General Meeting of the Shareholders, the amount of basic remuneration and the content of compensation for the corresponding fiscal year are determined. Thereafter, at the meeting of the Compensation Committee held after the corresponding fiscal year end, the final amount of compensation of each Director is determined. As for the Senior Executives, each year at the meeting of the Compensation Committee held at the end of the previous fiscal year, in principle, the amount of basic remuneration and the content of compensation for the corresponding fiscal year are determined or supervised. Thereafter, at the meeting of the Compensation Committee held after the corresponding fiscal year end, the final amount of compensation for each Senior Executive is determined or supervised.

For determining the amount of the remuneration linked to business results for each Senior Executive, the Business Results Linked Standard Payment Amount, the targets for the Financial Performance KPIs and the targets for the individual performance of the areas(s) for which each Senior Executive is responsible are determined and thereafter, the amount of such remuneration is determined based on the level of achievement of such targets for the Financial Performance KPIs and the individual performance at the meeting of the Compensation Committee held after the corresponding fiscal year end for Corporate Executive Officers or otherwise under supervision by Compensation Committee for Senior Executives other than Corporate Executive Officers.

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The amount of compensation of each Director and Senior Executive including Corporate Executive Officers for the fiscal year ended March 31, 2023 was also determined by the Compensation Committee or otherwise under supervision by the Compensation Committee according to the procedure above. The Compensation Committee concluded that the amount and content of the compensation was in accordance with the policy set forth in section (3) above.

(5) Corporate Executive Officer remuneration linked to business results for the fiscal year ended March 31, 2023

The Business Results Linked Standard Payment Amount for each Corporate Executive Officer for the fiscal year ended March 31, 2023 was determined to be in the range between 60% and 100% of the amount of the fixed remuneration of such Corporate Executive Officer according to his/her responsibility.

The formula to calculate the amount of the remuneration linked to business results to be paid to Corporate Executive Officers is as follows.

* Business Results Linked Standard Payment Amount: Determined to be in the range between 60% and 100% of the amount of the fixed remuneration of each Corporate Executive Officer.

** Payment rate of the remuneration linked to business results: Determined in principle, within the range from 0 percent to 200 percent based on the achievement of (i) Financial Performance KPIs based on the areas for which each Corporate Executive Officer is responsible and (ii) the individual performance of the area(s) for which each Corporate Executive Officer is responsible.

The financial performance KPIs and the weighting of such financial performance KPIs used for Corporate Executive Officers in the fiscal year ended March 31, 2023 were as follows:

KPI

Weight

Target to be achieved for the fiscal year ended

March 31, ~~2020 also according to the procedure above.~~2023 (Consolidated)

~~(5) Corporate Executive Officer remuneration linked to business results~~Result for the fiscal year ended
March 31, ~~2020~~2023 (Consolidated)

~~The Business Results Linked Standard Payment~~

Adjusted EBITDA (*1)

50%

Amount for the fiscal year ended March 31, 2020 was between 37.5% and 50.0% of cash compensation (total of the fixed remuneration and the remuneration linked to business results). The Financial Performance KPIs mainly used for the Corporate Executive Officers and their weighting, targets and results were as follows:

KPI

    Weight

Target to be achieved for the fiscal year ended
March 31, 2020 (Consolidated)

Result for the fiscal year ended
March 31, 2020 (Consolidated)

Operating CF

  50%

Amount determined in order to achieve the Operating CF (as defined below) target under Sony’s Third
Mid-Range
Plan of 2.2 trillion yen or more for the three-year period from the fiscal year ended March 31, 2019

762.9 billion yen

Net Income attributable to Sony Corporation’s Stockholders

  40%

500 billion yen

582.2 billion yen

ROE

  10%

12.5%

14.8%

~~Operating cash flow, excluding the Financial Services Segment (“Operating CF”), was selected as a Financial Performance KPI and was weighed the highest due to operating cash flow being~~ determined ~~as the most important performance metric under the Third~~

~~Mid-Range~~

~~Plan of Sony. ROE was also selected due to it being one of the financial targets of Sony’s Third~~

~~Mid-Range~~

~~Plan. Net Income attributable to Sony Corporation’s Stockholders was selected in order to incentivize management to achieve the current fiscal year’s corporate target.~~

~~For the target to be achieved for the Operating CF for the fiscal year ended March 31, 2020, an amount which the Compensation Committee determined as appropriate was set~~ in order to achieve the ~~Operating CF~~Adjusted EBITDA (defined below) target ~~under Sony’s Third~~

~~Mid-Range~~

~~Plan~~ of ~~2.2~~4.3 trillion yen ~~or more~~ for the three-year period from the fiscal year ended March 31, ~~2019. The~~2022

1,703.4 billion
yen

Adjusted EPS (*2)

50%

659.3 yen

737.06 yen
(*3)

Adjusted EBITDA, which is determined as the most important performance KPI under the fourth

mid-range

plan, was selected as a Financial Performance KPI to enhance the growth potential of the entire Sony Group under the fourth

mid-range

plan. Adjusted EPS was selected in order to incentivize awareness of shareholder value and capital efficiency.

For the target to be achieved for Adjusted EBITDA for the fiscal year ended March 31, 2023, an amount that the Compensation Committee determined as appropriate was set in order to achieve the Adjusted EBITDA target under Sony’s fourth

mid-range

plan of 4.3 trillion yen for the three-year period from the fiscal year ended March 31, 2022. The target for Adjusted EPS for the fiscal year ended March 31, 2023 was 659.3 yen, which was obtained by dividing the forecast of net income attributable to Sony Group Corporation’s stockholders for the fiscal year ended March 31, 2023, which was disclosed in May, 2022 (830 billion yen) by the number of diluted shares outstanding at the beginning of such fiscal year. The results for the Financial Performance KPIs for the fiscal year ended March 31, 2023 were as follows: Adjusted EBITDA: 1,703.4 billion yen (while net income attributable to Sony Group Corporation’s stockholders for the fiscal year ended March 31, 2023 was 937.1 billion), and Adjusted EPS: 737.06 yen, each exceeding the targeted amount. For reconciliation of Adjusted EBITDA to net income attributable to Sony Group Corporation’s stockholders, refer to “Issues Facing Sony and Management’s Response to those Issues: Fourth

Mid-Range

Plan — Financial Targets and their Progress” in “Item 5.D

Trend Information.

”

As outlined above under “(3) Basic policy regarding Director and Senior Executive remuneration” remuneration linked to business results for Senior Executives for the fiscal year ended March 31, 2023 was determined based on the level of achievement of the indicators which were selected based on the areas of responsibility of the relevant Senior Executive and the individual performance of such areas of responsibility.

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The amounts to be paid to the Senior Executives were, in principle, determined within the range from 0% to 200% of the Business Results Linked Standard Payment Amount. As a result, the ratio of remuneration linked to business results of Corporate Executive Officers for the fiscal year ended March 31, 2023 varied from 155.2% to 178.5% of the Business Results Linked Standard Payment Amount.

*1 “Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization)” = Net income attributable to Sony Group Corporation’s stockholders + Net income attributable to noncontrolling interests + Income taxes + Interest expenses, net, recorded in Financial income and Financial expense — Gain on revaluation of equity instruments, net, recorded in Financial income and Financial expense + Depreciation and amortization expense excluding amortization for film costs, broadcasting rights and internally developed game content and master recordings included in Content assets, as well as for deferred insurance acquisition costs — the profit and loss amount that Sony deems

non-recurring.

*2 “EPS (Earning Per Share)” means net income attributable to Sony Group Corporation’s stockholders per share.

“Adjusted EPS” is calculated by using the value excluding the profit and loss amount that Sony deems

non-recurring

from the value of the net income attributable to Sony Group Corporation’s stockholders.

*3 Adjusted EPS result for the fiscal year ended March 31, 2023 is calculated by dividing adjusted net income attributable to Sony Group Corporation’s stockholders for the fiscal year ended March 31, 2023 by diluted weighted average number of shares during the fiscal year. The following table shows a reconciliation of net income attributable to Sony Group Corporation’s stockholders for diluted EPS computation reported in accordance with IFRS to Adjusted EPS for the fiscal year ended March 31, 2023.

Fiscal year ended March 31

2023

(Yen in billions,
yen per share amounts)

Net ~~Income~~income attributable to Sony Group Corporation’s ~~Stockholders~~stockholders for ~~the fiscal year ended March 31, 2020 was set as 500 billion yen, which was the forecasted~~diluted EPS computation*

937.2

Profit and loss amount that Sony deems

non-recurring,

including adjustments for ~~the~~income taxes and

non-controlling

interests**

(22.2

)

Adjusted Net ~~Income~~income attributable to Sony Group Corporation’s ~~Stockholders~~stockholders for the fiscal year ended March 31, 2020 announced in April 2019. The target for ROE was 12.5% for the fiscal year ended March 31, 2020. The results for the Financial Performance KPIs for the fiscal year ended March 31, 2020 were as follows: Operating CF: 762.9 billion yen, Net Income attributable to Sony Corporation’s Stockholders: 582.2 billion yen, ROE: 14.8%, each exceeding the targeted amount.

As outlined above under “Basic policy regarding Director and Senior Executive remuneration,” remuneration linked to business results for Corporate Executive Officers for the fiscal year ended March 31, 2020 was determined based upon the level of achievement of the indicators which were selected based on the areas of responsibility of the relevant Corporate Executive Officer and the individual performance of the area(s) for which the relevant Corporate Executive Officer was responsible. The amounts to be paid to the Corporate Executive Officers were determined within the range from 0% to 200% of the Business Results Linked Standard Payment Amount. As a result, the ratio of remuneration linked to business results of Corporate Executive Officers for the fiscal year ended March 31, 2020 was in the range of 149.1% to 155.1% of the Business Results Linked Standard Payment Amount.

~~(For Reference) Restricted Stock~~

Sony Corporation has introduced a restricted stock plan starting from the fiscal year ended March 31, 2018, pursuant to which shares of restricted stock will be allotted to Sony Corporation’s Corporate Executive Officers and other executives, and

~~non-executive~~

~~Directors of Sony Corporation (the~~

~~“Non-Executive~~

~~Directors”). The~~

diluted EPS computation

~~Table of Contents~~

~~purpose of the plan for the Corporate Executive Officers and other executives is to further reinforce management’s alignment with shareholder value, and to incentivize management to improve~~

~~mid-~~

~~to long-term performance and increase shareholder value. Furthermore, the purpose of the plan for the~~

~~Non-Executive~~

~~Directors is to incentivize these Directors to develop and maintain a sound and transparent management system by further promoting shared values between the shareholders and the~~

~~Non-Executive~~

~~Directors.~~915.0

The grantees will not be able to sell or transfer the granted shares during the restricted period, and Sony Corporation will acquire the granted shares from a grantee without any consideration to, or consent of, the grantee under certain conditions. Details of the plan, such as vesting conditions, eligibility and the number of grants, will be determined by the Compensation Committee.

C.	~~Board Practices~~

Weighted-average shares for diluted EPS computation (thousands of shares)*

1,241,377

~~General~~Adjusted EPS (yen)

~~Sony Corporation continuously strives to strengthen its corporate governance system in a way that is suitable for Sony and increases corporate value over the~~

~~mid-~~

to long-term. To operate Sony effectively, Sony Corporation continuously approaches its corporate governance through two basic precepts: (a) the Board of Directors (the “Board”), a majority of which is comprised of independent outside Directors, focuses on effective oversight of management’s operation of the business and maintains a sound and transparent governance framework by utilizing the Nominating Committee, the Audit Committee and the Compensation Committee; and (b) the Board determines Sony’s fundamental management policies and other material matters and delegates to each of the Senior Executives that assume important roles for the management of Sony, including the Corporate Executive Officers, decision-making authority to conduct Sony’s business operations broadly in line with their respective responsibilities, as defined by the Board, with a view to promoting timely and efficient decision-making within Sony. In furtherance of these efforts, Sony Corporation has adopted a “Company with Three Committees” corporate governance system under the Companies Act of Japan (

~~Kaishaho~~

) and related regulations (collectively the “Companies Act”) as the most appropriate system for the company. Under such system, Sony Corporation has introduced its own requirements to help improve and maintain the soundness and transparency of its governance by strengthening the separation of the Directors’ function from that of management; maintaining what the company believes is an appropriate Board size, which enables the members of the Board to actively contribute to discussion; and advancing the proper functioning of the statutory committees.

Sony Corporation is governed by the Board, the members of which are elected at the Ordinary General Meeting of Shareholders. Under the Companies Act, a “Company with Three Committees” is required to have three committees: the Nominating Committee, the Audit Committee and the Compensation Committee, each consisting of Directors appointed by the Board. The Companies Act also requires the Board to appoint Corporate Executive Officers (

~~Shikko-yaku~~737.06

), who make decisions regarding the execution of Sony’s business activities within the scope of the authority delegated to them by the Board. Sony Corporation has appointed its Chief Executive Officer (“CEO”), who is responsible for Sony’s overall management, and other officers who are responsible for important and extensive headquarters functions as Corporate Executive Officers. Sony Corporation has also appointed Corporate Executive Officers, including the CEO and other executives, that assume important roles for the management of Sony as Senior Executives. In addition, Sony grants titles, such as Senior Executive Vice President, Executive Vice President and Senior Vice President, to management team members in accordance with their respective roles and responsibilities.

A summary of the governance system adopted by Sony Corporation is set forth below. For an explanation of the significant differences between the New York Stock Exchange’s corporate governance standards and Sony’s corporate governance practices, refer to “Item 16G.

~~Disclosure About Differences in Corporate Governance~~

.”

~~Table of Contents~~

* Refer to Note 26 of the consolidated financial statements.

** This amount is calculated by subtracting the tax effect of 5.6 billion yen from 27.8 billion yen, the total amount of profit and loss that Sony deems

non-recurring,

included in income before income tax. For further information about the profit and loss amount that Sony deems

non-recurring,

refer to “Issues Facing Sony and Management’s Response to those Issues: Fourth

Mid-Range

Plan — Financial Targets and their Progress” in “Item 5.

Operating and Financial Review and Prospects

.”

Board ~~of Directors~~

~~(1) Members: 12 Directors including 9 outside Directors (as of June 26, 2020)~~



~~Name~~		~~Position~~Practices

~~Kenichiro Yoshida~~

General

Sony Group Corporation continuously strives to strengthen its corporate governance system based on the understanding that corporate governance is an essential basis to promote our management in order to fulfill the company’s corporate social responsibility and increase corporate value over the

mid-

to long-term. To operate Sony effectively, Sony Group Corporation continues to approach its corporate governance through two basic precepts: (a) the Board of Directors (the “Board”), a majority of which is comprised of independent outside Directors, focuses on effective oversight of management’s operation of the business and maintains a sound and transparent governance framework by utilizing the Nominating Committee, the Audit Committee and the Compensation Committee; and (b) the Board determines Sony’s fundamental management policies and other material matters and delegates to the Senior Executives (including Corporate Executive Officers), who assume important roles for the management of Sony, decision-making authority to conduct Sony’s business operations broadly in line with their respective responsibilities, as defined by the Board, with a view to promoting timely

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and efficient decision-making within Sony. In furtherance of these efforts, Sony Group Corporation has adopted a “Company with Three Committees” corporate governance system under the Companies Act of Japan (

Kaishaho

) and related regulations (collectively the “Companies Act”). Under this system, Sony Group Corporation has introduced its own requirements to help improve and maintain the soundness and transparency of its governance by strengthening the separation of the Directors’ function from that of management; maintaining what the company believes is an appropriate Board size, which enables the members of the Board to actively contribute to discussion; and advancing the proper functioning of the statutory committees.

Sony Group Corporation is governed by the Board, the members of which are elected at the Ordinary General Meeting of Shareholders. Under the Companies Act, a “Company with Three Committees” is required to have three committees: a Nominating Committee, an Audit Committee and a Compensation Committee, each consisting of Directors appointed by the Board. The Companies Act also requires the Board to appoint Corporate Executive Officers (

Shikko-yaku

), who make decisions regarding the execution of Sony’s business activities within the scope of the authority delegated to them by the Board. Sony Group Corporation has appointed its Chief Executive Officer (“CEO”), who is responsible for Sony’s overall management, and other officers who are responsible for important and extensive headquarters functions as Corporate Executive Officers. Sony Group Corporation has also appointed Corporate Executive Officers, including the CEO and other executives, that assume important roles for the management of Sony as Senior Executives. In addition, Sony grants titles, such as Senior Executive Vice President, Executive Vice President and Senior Vice President, to management team members in accordance with their respective roles and responsibilities.

A summary of the governance system adopted by Sony Group Corporation is set forth below. For an explanation of the significant differences between the NYSE’s corporate governance standards and Sony’s corporate governance practices, refer to “Item 16G.

Corporate Governance

.”

Board of Directors

(1) Members: 10 Directors including 8 outside Directors (as of June 20, 2023)

~~Director~~

~~Hiroki Totoki~~

~~Director~~

~~Shuzo Sumi~~



Name		Position

Kenichiro Yoshida		Director

Hiroki Totoki		Director

Yoshihiko Hatanaka		Chairman of the Board ~~Outside Director~~

~~Tim Schaaff~~		~~Non-Executive~~ ~~Director~~

~~Kazuo Matsunaga~~		~~Vice Chairman of the Board~~ ~~Outside Director~~

~~Toshiko Oka~~		~~Outside Director~~

~~Sakie Akiyama~~		~~Outside Director~~

~~Wendy Becker~~		~~Outside Director~~

~~Yoshihiko Hatanaka~~		~~Outside Director~~

~~Adam Crozier~~		~~Outside Director~~

~~Keiko Kishigami~~		~~Outside Director~~

~~Joseph A. Kraft Jr.~~		Outside Director

Toshiko Oka		Outside Director

Sakie Akiyama		Outside Director

Wendy Becker		Outside Director

Keiko Kishigami		Outside Director

Joseph A. Kraft Jr.		Outside Director

Neil Hunt		Outside Director

William Morrow		Outside Director

Under the Companies Act, the term of office of Directors expires at the conclusion of the Ordinary General Meeting of Shareholders held with respect to the last business year ending within one year after their election.

(2) Purpose/Authority

The primary roles of the Board are to: (a) determine Sony’s fundamental management policies; (b) oversee the management of Sony’s business operations as an entity independent from Sony’s management; (c) appoint and dismiss the statutory committee members; (d) appoint and dismiss Corporate Executive Officers and oversee the status of appointment/dismissal of Senior Executives other than Corporate Executive Officers; and (e) appoint and dismiss Representative Corporate Executive Officers.

For the matters to be decided by the Board and the matters to be reported to the Board, refer to Appendices 1 and 2 of the Charter of the Board of Directors (the “Board Charter”) attached as Exhibit 1.3 hereto.

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(3) Policy Regarding Composition of the Board

With a view toward securing effective input and oversight by the Board, the Nominating Committee reviews and selects candidates for the Board with the aim of assuring that a substantial part of the Board is comprised of qualified outside Directors that satisfy the independence requirements established by Sony and by law. The Nominating Committee selects candidates that it views as well-suited to be Directors in light of the Board’s purpose of enhancing Sony’s corporate value. The Nominating Committee broadly considers various relevant factors, including a candidate’s capabilities (such as the candidate’s work and other experience, achievements and expertise), availability, and independence, as well as diversity, including gender and internationality, in the boardroom, the appropriate size of the Board, and the knowledge, experience and talent needed for the role. Under the Board Charter, Sony Group Corporation also requires that the Board consist of not fewer than 8 Directors and not more than 14 Directors. In addition, since 2005 the majority of the members of the Board have been outside Directors.

(4) Qualifications for Directors and Limitation of

Re-election

The qualifications for Directors of Sony Group Corporation under the Board Charter are generally as summarized below. As of the date of this report, all Directors satisfy the qualifications for Directors as set forth below, and all outside Directors satisfy the additional qualifications for outside Directors and are also qualified and designated as Independent Directors under the Securities Listing Regulations of the TSE. All Directors must meet the qualifications below:

(a)

He/she shall not be a director, a statutory auditor, a corporate executive officer, a general manager or other employee of any company in competition with Sony in any of Sony’s principal businesses (a “Competing Company”) or own 3% or more of the shares of any Competing Company.

(b)

He/she shall not be or have been a representative partner or partner of Sony’s independent auditor the past three years before being nominated as a Director.

(c)

He/she shall not have any connection with any matter that may cause a material conflict of interest in performing the duties of a Director.

Outside Directors must meet the additional qualifications below:

(a)

He/she shall not have received directly from Sony, during any consecutive twelve-month period within the last three years, more than an amount equivalent to U.S. $120,000, other than Director and committee fees and pension or other forms of deferred compensation for prior service (provided such compensation is not contingent in any way on continued service).

(b)

He/she shall not be an executive director, corporate executive officer, general manager or other employee of any company whose aggregate amount of transactions with Sony, in any of the last three fiscal years, exceeds the greater of an amount equivalent to U.S. $1,000,000, or 2% of the annual consolidated sales of such company.

For additional requirements for outside Directors under the Companies Act, refer to “Item 16G.

Corporate Governance

”.

Also, each outside Director may be nominated as a Director candidate for

re-election

up to five times (six years, in total), and thereafter by resolution of the Nominating Committee and by consent of all of the Directors. Even with the consent of all of the Directors, in no event may any outside Director be

re-elected

more than eight times (nine years, in total).

(5) Matters related to Outside Directors

Sony Group Corporation expects that each outside Director plays an important role in ensuring proper business decisions by Sony and effective input and oversight by the Board through actively exchanging opinions and having discussions about Sony’s business based on his or her various and broad experience, knowledge and expertise. Considering these expectations, the policy and procedures on the election of Director candidates, including independent outside Director candidates, are set forth as described above. As of the date of this report, the Board has 10 Directors, eight of whom are outside Directors. The Chairman of the Board is an outside Director; all members of the Nominating Committee, the Compensation Committee and the Audit Committee are outside Directors.

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Pursuant to the Articles of Incorporation, Sony Group Corporation has entered into a liability limitation agreement with all outside Directors. A summary of such liability limitation agreement is as follows:

(i)

In a case where an outside Director is liable to the company after the execution of the liability limitation agreement for damages pursuant to Article 423, Paragraph 1 of the Companies Act, such liabilities shall be limited to the greater of either 30 million yen or an amount equal to the aggregate sum of the amounts prescribed in each item of Article 425, Paragraph 1 of the Companies Act, only where the outside Director acted in good faith without any gross negligence in performing his/her duties as a Director of the company.

(ii)

In a case where an outside Director is reelected as an outside Director of the company and reassumes his/her office as such on the expiration of the term of his/her office ~~of Directors expires at the conclusion~~as an outside Director of the ~~Ordinary General Meeting of Shareholders held with respect to~~company, the ~~last business year ending within one year after their election.~~

~~(2) Purpose/Authority~~

The primary roles of the Board are to: (a) determine Sony’s fundamental management policies; (b) oversee the management of Sony’s business operations as an entity independent from Sony’s management; (c) appoint and dismiss the statutory committee members; (d) appoint and dismiss Senior Executives including Corporate Executive Officers; and (e) appoint and dismiss Representative Corporate Executive Officers.

~~(3) Policy Regarding Composition of the Board~~

With a view toward securing effective input and oversight by the Board, the Nominating Committee reviews and selects candidates for the Board with the aim of assuring that a substantial part of the Board is comprised of qualified outside Directors that satisfy the independence requirements established by Sony and by law. The Nominating Committee selects candidates that it views as well-suited to be Directors in light of the Board’s purpose of enhancing Sony’s corporate value. The Nominating Committee broadly considers various relevant factors, including a candidate’s capabilities (such as the candidate’s experience, achievements, expertise and international fluency), availability, and independence, as well as diversity in the boardroom, the appropriate size of the Board, and the knowledge, experiences and talent needed for the role. Under the Board Charter, Sony Corporation also requires that the Board consist of not fewer than 10 Directors and not more than 20 Directors. In addition, since 2005 the majority of the members of the Board have been outside Directors.

~~(4) Qualifications for Directors and Limitation of~~

~~Re-election~~

The qualifications for Directors of Sony Corporation under the Board Charter are generally as summarized below. As of June 26, 2020, all Directors satisfy the qualifications for Directors as set forth below, and all outside Directors satisfy the additional qualifications for outside Directors and are also qualified and designated as Independent Directors under the Securities Listing Regulations of the Tokyo Stock Exchange.

~~Table of Contents~~

~~All Directors must meet the qualifications below:~~

~~(a)~~

~~(b)~~

~~He/she shall not be or have been a representative partner or partner of Sony’s independent auditor the past three years before being nominated as a Director.~~

~~(c)~~

~~He/she shall not have any connection with any matter that may cause a material conflict of interest in performing the duties of a Director.~~

~~Outside Directors must meet the additional qualifications below:~~

~~(a)~~

~~(b)~~

~~For additional requirements for outside Directors under the Companies Act, refer to “Item 16G.~~

~~Disclosure About Differences in Corporate Governance~~

”.

~~Also, each outside Director may, by resolution of the Nominating Committee, be nominated as a Director candidate for~~

~~re-election~~

up to five times, and thereafter by resolution of the Nominating Committee and by consent of all of the Directors. Even with the consent of all of the Directors, in no event may any outside Director be

~~re-elected~~

~~more than eight times.~~

~~(5) Matters related to Outside Directors~~

Sony Corporation expects that each outside Director play an important role in ensuring proper business decisions by Sony and effective input and oversight by the Board through actively exchanging opinions and having discussions about Sony’s business based on his or her various and broad experience, knowledge and expertise. Considering these expectations, the policy and procedures on the election of Director candidates, including independent outside Director candidates, are set forth as described above. As of June 26, 2020, the Board has 12 Directors, nine of whom are outside Directors. The Chairman of the Board is an outside Director; the Nominating Committee has four Directors, three of whom are outside Directors; the Compensation Committee has three Directors, all of whom are outside Directors; and the Audit Committee has three Directors, all of whom are outside Directors.

~~Pursuant to the Articles of Incorporation, Sony Corporation has entered into a~~ liability limitation agreement ~~with all~~shall continue to be effective after the reelection and

~~non-executive~~re-assumption

~~Directors including outside Directors. A summary of such liability limitation agreement is as follows:~~without any action or formality.

~~(i)~~

~~In a case where a~~

~~non-executive~~

Director is liable to the company after the execution of the liability limitation agreement for damages pursuant to Article 423, Paragraph 1 of the Companies Act, such liabilities shall be limited to the greater of either 30 million yen or an amount equal to the aggregate sum of the amounts prescribed in each item of Article 425, Paragraph 1 of the Companies Act, only where the

~~non-executive~~

~~Director acted in good faith without any gross negligence in performing his/her duties as a Director of the company.~~

~~(ii)~~

~~In a case where a~~

~~non-executive~~

~~Director is reelected as a~~

~~non-executive~~

~~Director of the company and reassumes his/her office as such on the expiration of the term of his/her office as a~~

~~non-executive~~

~~Director of the company, the liability limitation agreement shall continue to be effective after the reelection and~~

~~re-assumption~~

~~without any action or formality.~~

~~(6) Policy and Procedure for Selection and Dismissal of Senior Executives~~

~~Sony Corporation appoints Corporate Executive Officers including the CEO and other officers that assume important roles for the management of Sony as “Senior Executives.”~~

In addition, Sony Group Corporation has a directors and officers liability insurance policy covering all Directors as insured parties. For an outline of the directors and officers liability insurance policy, refer to “

Outline of the Terms of Directors and Officers Liability Insurance Policy

”.

(6) Policy and Procedure for Selection and Dismissal of Senior Executives

Sony Group Corporation appoints Corporate Executive Officers including the CEO and other officers that assume important roles for the management of Sony as “Senior Executives.”

The Board has the authority to appoint and dismiss and assign the roles and responsibilities of, or to request a report regarding such matters for Senior Executives, including the CEO, and exercises such authority as necessary. In making decisions on the appointment of Corporate Executive Officers, including the CEO, the Board considers whether candidates for CEO meet certain qualifications for the CEO position which are set by the Nominating Committee and whether candidates for other Corporate Executive Officer positions have the necessary skills, capabilities, experiences and achievements that correspond to such Corporate Executive Officers’ expected roles and responsibilities. The Board also receives a report on the status of appointment and dismissal of Senior Executives other than Corporate Executive Officers.

The term of office of Senior Executives, including the CEO, is one year. The Board discusses, determines and/or oversees their

re-appointment

upon the expiration of each term considering the factors described above as well as their latest performance. The Board dismisses a Corporate Executive Officer, as necessary, in the event that the Board recognizes such Corporate Executive Officer is disqualified after discussions amongst the members of the Board or the Nominating Committee, even in the middle of the term for such Corporate Executive Officer.

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The Board, a majority of which is comprised of independent outside Directors, has the authority to appoint and dismiss Senior Executives, including the CEO, and assign the roles and responsibilities of Senior Executives, and exercises its authority as necessary. In making decisions on the appointment of Senior Executives, including the CEO, the Board considers whether candidates for CEO meet certain qualifications for the CEO position which are set by the Nominating Committee and whether candidates for other Senior Executives have the necessary skills, capabilities, experiences and achievements that correspond to such Senior Executives’ expected roles and responsibilities.

~~The tenure of Senior Executives, including the CEO, is one year. The Board determines their~~

~~re-appointment~~

upon the expiration of each term considering the factors described above as well as their latest performance. The Board dismisses a Senior Executive, as necessary, in the event that the Board recognizes such Senior Executive is disqualified after discussions amongst the members of the Board or the Nominating Committee, even in the middle of the term for such Senior Executive.

Nominating Committee

(1)	Members: ~~4 Directors including~~ 3 outside Directors (as of June ~~26, 2020)~~20, 2023)



Name		Position

~~Shuzo Sumi~~Yoshihiko Hatanaka		~~Chairman~~Chair of the Nominating Committee (Outside Director)

~~Adam Crozier~~Toshiko Oka		Nominating Committee Member (Outside Director)

~~Yoshihiko Hatanaka~~Wendy Becker		Nominating Committee Member (Outside Director)

~~Kenichiro Yoshida~~		~~Nominating Committee Member~~ ~~(Director)~~

(2) Purpose/Authority

The primary roles of the Nominating Committee are to: (a) determine the content of proposals regarding the appointment/dismissal of Directors to be submitted for approval at a General Meeting of Shareholders and (b) evaluate management succession plans, which the CEO develops, for the CEO and other executives designated by the Nominating Committee.

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The Nominating Committee determines the content of proposals regarding the appointment and dismissal of Directors, considering the policy on composition of the Board, the qualifications for Directors and the limitation of

re-election

of Directors described above.

(3) Policy Regarding Composition of the Nominating Committee

Under the Companies Act, the Nominating Committee shall consist of at least three Directors, the majority of whom shall be outside Directors. In addition, under the Board Charter, ~~at least one Director of the Nominating Committee shall be a Corporate Executive Officer and~~ the chair is to be selected from among the outside Directors. In determining whether to appoint or remove a member of the Nominating Committee, continuity of the Nominating Committee shall be duly taken into account. As of ~~June 26, 2020,~~the date of this report, the Nominating Committee is comprised of ~~four Directors,~~ three ~~of whom are~~ outside Directors.

(4) Management Succession Plans

The Nominating Committee evaluates the succession plans, and the implementation of such plans, for the CEO and other executives designated by the Nominating Committee and reports the ~~implementation~~results of ~~such plans, and reports~~ its evaluation ~~results~~ to the Board, as appropriate.

~~For such evaluations,~~Evaluations are conducted by having the CEO periodically ~~reports the~~submit draft succession plans to the Nominating Committee, ~~and the Nominating Committee reviews such plans.~~which it reviews. As a part of such review, the Nominating Committee considers the development or promotion of the next ~~generation’s~~generation of management and evaluates whether ~~such plan is~~the succession plans have been prepared in a reasonable manner in light of Sony’s purpose to create sustainable social value and to enhance ~~the~~ corporate value over the

mid-

to long-term.

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Audit Committee

(1) Members: 3 outside Directors (as of June ~~26, 2020)~~20, 2023)



Name		Position

~~Kazuo Matsunaga~~Toshiko Oka		~~Chairman~~Chair of the Audit Committee (Outside Director)

~~Toshiko Oka~~		~~Audit Committee Member~~ ~~(Outside Director)~~

Keiko Kishigami		Audit Committee Member (Outside Director)

Joseph A. Kraft Jr.		Audit Committee Member (Outside Director)

(2) Purpose/Authority

The primary roles of the Audit Committee are to: (a) monitor the performance of duties by Directors and Corporate Executive Officers and (b) oversee and evaluate the independent auditor.

(3) Policy Regarding Composition of the Audit Committee

Under the Companies Act, the Audit Committee shall consist of at least three Directors, the majority of whom shall be outside Directors. In addition, under the Board Charter, each member of the Audit Committee (“Audit Committee Member”) shall satisfy all of the following qualifications: (a) he/she shall not be a Director engaged in the business operations of Sony Group Corporation or any of its subsidiaries, a Corporate Executive Officer, an accounting counselor, a general manager or other employee of Sony and (b) he/she shall meet the independence requirements or such other equivalent requirements of the U.S. securities laws and regulations as may from time to time be applicable to Sony Group Corporation. The chair is to be selected from among the outside Directors. The Audit Committee Members shall be selected from among the persons who possess appropriate experience and talent as well as the necessary finance, accounting and legal knowledge to serve on the Audit Committee. ~~No Audit Committee Member shall become, as a general rule, a member of the Nominating Committee or the Compensation Committee.~~ In determining whether to appoint or remove the Audit Committee Member, continuity of the Audit Committee shall be duly taken into account.

Moreover, at least one Audit Committee Member shall meet the audit committee financial expert requirements or such other equivalent requirements of the U.S. securities laws and regulations as may from time

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to time be applicable to Sony Group Corporation. The Board makes a determination on whether or not such Audit Committee Members meet these requirements. As of ~~June 26, 2020,~~the date of this report, the Audit Committee is comprised of three outside Directors, two of whom (Toshiko Oka and Keiko Kishigami) are “audit committee financial experts” within the meaning of Item 16A of Form

20-F

under the ~~Securities~~ Exchange Act, ~~of 1934,~~ as amended.

(4) Policy on Selection of Independent Auditor Candidates and Independence of the Independent Auditor

With respect to the candidates for independent auditor nominated by the CEO and other Corporate Executive Officers, the Audit Committee evaluates the nomination, prior to making a decision on the candidates. The Audit Committee continues to evaluate the independence, the qualification and the reasonableness as well as the performance of the independent auditor so appointed.

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Compensation Committee

(1) Members: 3 outside Directors (as of June ~~26, 2020)~~20, 2023)



Name		Position

Wendy Becker		~~Chairman~~Chair of the Compensation Committee (Outside Director)

Sakie Akiyama		Compensation Committee Member (Outside Director)

~~Joseph A. Kraft Jr.~~William Morrow		Compensation Committee Member (Outside Director)

(2) Purpose/Authority

The primary roles of the Compensation Committee are to: (a) set policy on the content of individual compensation for Directors, ~~Senior Executives~~Corporate Executive Officers and other officers and (b) determine the amount and content of individual compensation of Directors and ~~Senior Executives~~Corporate Executive Officers in accordance with the ~~policy.~~policy, and oversee the determination regarding the amount and content of individual compensation of Senior Executives other than Corporate Executive Officers.

For the basic policy regarding Director and Corporate Executive Officer compensation, refer to “Item 6B. Compensation”.

(3) Policy Regarding Composition of the Compensation Committee

Under the Companies Act, the Compensation Committee shall consist of at least three Directors, the majority of whom shall be outside Directors. In addition, under the Board Charter, a Director who is a CEO, a Chief Operating Officer (“COO”) or a Chief Financial Officer (“CFO”) of Sony Group Corporation or who holds any equivalent position shall not be a member of the Compensation Committee. In determining whether to appoint or remove a member of the Compensation Committee, continuity of the Compensation Committee shall be duly taken into account. As of ~~June 26, 2020,~~the date of this report, the Compensation Committee is comprised of three outside Directors.

Senior Executives (Corporate Executive Officer, Senior Executive Vice President and Executive Vice President)

(1) Total number of Senior Executives: 1715 (including 6 Corporate Executive Officers) (as of June ~~26, 2020)~~20, 2023)

(2) Purpose/Authority

The primary roles of Senior Executives are to determine and execute Sony’s business activities in accordance with their roles and ~~responsibilities assigned by the Board.~~responsibilities.

(3) Delegation of Authority from the Board

The Board determines the fundamental management policies and other material matters related to the operation of Sony’s business. The Board assigns the duties of ~~Senior Executives,~~Corporate Executive Officers, including the CEO,

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by determining the areas over which each ~~Senior~~Corporate Executive Officer is in charge and ~~widely~~by determining the scope of Senior Executives. Then, it delegates its decision-making authority to the CEO with a view to promoting timely and efficient decision-making within Sony. The CEO further subdelegates a part of such authority to other Senior Executives.

Other Officers (Senior Vice President)

(1) Total number of other officers: 2510 (as of June ~~26, 2020)~~20, 2023)

(2) Purpose/Authority

The primary roles of other officers are to carry out their assignments within designated areas, such as ~~business units,~~ headquarters functions and/or ~~research and development,~~R&D, in accordance with the fundamental policies determined by the Board and Senior Executives.

~~Meeting Record~~Outline of the Terms of Directors and ~~Attendance Record of Outside Directors~~Officers Liability Insurance Policy

~~During~~Sony Group Corporation has, at its expense in respect of insurance premiums, entered into a directors and officers liability insurance policy for all Directors, Corporate Executive Officers, corporate auditors, and persons in equivalent positions (the “Executives”) of itself and its subsidiaries over which Sony Group Corporation has a direct or indirect ownership more than 50%. The outline of the ~~fiscal year ended March 31, 2020, the Board convened nine times. The Nominating Committee met five times, the Audit Committee met six times and the Compensation Committee met five times. All thirteen~~terms of such liability insurance policy is as follows:

(i)

The insurance policy covers compensation for damages, litigation costs (including attorney’s fees) and other costs that may be incurred by the Executives as a result of assuming responsibility for the execution of their duties or receiving claims related to such responsibility.

(ii)

As a measure to ensure the appropriateness of the execution of duties by the Executives, there are certain exemptions, such as in the case of an act committed by the Executives with the knowledge that it constitutes a violation of laws or regulations.

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outside Directors, including Osamu Nagayama and Eiko Harada who retired in June 2019, participated in all meetings of the Board held during their tenure period in the fiscal year ended March 31, 2020. Also, all outside Directors, except for Yoshihiko Hatanaka, who are members of the Committees participated in all of the meetings of each Committee held during the fiscal year ended March 31, 2020. (Yoshihiko Hatanaka, who is a member of the Nominating Committee, attended three of four meetings of the Committee held during his tenure in the fiscal year ended March 31, 2020.)

Support for Activities of Directors, the Board and the Committees

Sony Group Corporation engages in various activities to enhance the oversight function of the Board over management’s operation of Sony’s business as follows:

(1) Outside Director Initiatives

The Chairman of the Board, who is ~~elected from among those Directors that are not also the Representative Corporate Executive Officer, and the Chairman~~an outside Director, leads the Board’s activities and secures the appropriate cooperation, communication and arrangement among outside Directors and Senior Executives. ~~For~~As an example of such initiatives, the ~~Board conducted~~ outside Directors’ meetings have been held, generally on the same day as each Board Meeting, ~~was held.~~for the purpose of exchanging information and sharing information with respect to recognized issues among outside Directors. The Board also conducted Directors’ corporate strategic workshops with management, business site visits by ~~outside~~ Directors, and meetings ofwith the Chairman and the CEO. All of these activities were aimed at securing better understanding by outside Directors of Sony’s business and management’s ~~initiatives~~challenges and encouraging corporate strategic discussions among Directors. In September 2022, the Directors visited the Kumamoto Technology Centre of SSS located in Kumamoto Prefecture, Japan, where they observed manufacturing lines of image sensor products and discussed with the image sensor business’s management the current challenges and future strategies of the business. At a workshop held over two days in December 2022, through direct dialogue with executives in charge of Sony’s main business segments, the Directors intensively discussed a variety of matters, including the business environment and challenges surrounding each of Sony’s businesses and corresponding strategies, as well as Sony’s internal and external conditions related to sustainability and geopolitical risks, which are becoming increasingly important, in addition to Sony’s business portfolio.

(2) Secretariat Offices for the Board and each Committee

The company has established the secretariat offices of the Board and each Committee to support the activities of the members and encourage constructive and proactive discussion at the meetings of the Board and each Committee. Each secretariat office endeavors to distribute necessary materials for the meetings in advance and to provide other information such as accounting information, organizational charts, press releases, external analyst reports and credit rating reports, as appropriate. Each secretariat office explains the meeting agenda to the members and provides them with presentation materials in advance of each meeting date and facilitates deliberation in separate meetings or ~~brief~~briefing sessions depending on the nature of matters to be discussed. Each

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secretariat office also provides the absent members with a follow up briefing, as appropriate. In addition, each secretariat office shares the annual schedule of the meetings and anticipated agenda items in advance with the members in order to appropriately set the frequency of meetings and the number of agenda items to be deliberated at each meeting.

(3) Provision of Necessary Information

When the company is requested to provide additional information, each secretariat office endeavors to provide the members such information promptly. Also, each secretariat office verifies appropriately whether requested information is provided smoothly. In the event that the members consult with external specialists, participate in various seminars and so on to perform their duties, the costs and expenses in connection with such activities are borne by the company in accordance with applicable internal rules.

(4) Audit Committee Aide

With the approval of the Board and with the Audit Committee’s consent, the company has established the Audit Committee Aide to support the activities of the Audit Committee. The Audit Committee Aide does not concurrently hold positions related to the business operations of Sony and, upon instruction by each Audit Committee member, conducts investigations into and ~~analyses of~~analyzes auditing matters and engages in physical inspections or visiting audits either by him/herself or by cooperating with relevant departments in order to support the Audit Committee.

(5) Policy on Director Training

Newly appointed Directors receive briefings by Senior Executives and outside experts regarding their expected roles and responsibilities, including their legal duties as a Director or as a member of the Committees, ~~and~~as well as briefings about the business, financial status, organization and governance structure of Sony. Also, throughout their tenure, each Director receives compliance-related training in accordance with internal protocols and briefings on matters relevant to each Director’s fulfillment of his/her roles and responsibilities including the current status of Sony’s business.

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Evaluation of the Board and the Committees’ Effectiveness

(1) Policy for Evaluation

Sony Group Corporation believes that it is important to endeavor to improve the effectiveness of the Board and each Committee in order to support Sony’s business operations and enhance the corporate value of Sony. To achieve this goal, Sony Group Corporation conducts evaluations of the effectiveness of the Board and of each Committee (the “Evaluation”) at least annually.

(2) Recent Evaluation

From February through April ~~2020,~~2023, under the leadership of the Chairman and the Vice Chairman of the Board, the Board conducted the Evaluation mainly in respect of ~~the~~ Board and Committee activities in the fiscal year ended March 31, ~~2020~~2023 after confirming that actions proposed in response to the results of the previous Evaluation were appropriately taken. The recent Evaluation was conducted, ~~as the company did with the previous Evaluation,~~ with the support of a third-party ~~evaluation by an~~ outside counsel ~~having~~with expertise in Japanese and global corporate governance practices (the “Outside Counsel”) in order to ensure transparency and objectivity and to obtain professional advice.

(3) ~~Procedures for~~Procedure of the Recent Evaluation

First, the Board ~~discussed and~~ confirmed that the actions proposed to be taken in response to the results of the previous Evaluation were taken, and it discussed and confirmed the proposed procedures for the Evaluation for the fiscal year ended March 31, ~~2020.~~2023. Thereafter, the third-party evaluation was conducted by the Outside Counsel in accordance with the following steps:

Reviewed relevant material, such as the minutes of Board meetings, and attended a Board meeting;

Confirmed with the Board secretariat office and each Committee’s secretariat office how meetings of the Board and Committees were conducted;

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Gathered responses to a questionnaire from each Director about the current status and practices of the Board and each Committee, such as the composition of the Board, operation of the Board, commitments of each Director, activities of each Committee and procedures of the previous Evaluation;

Interviewed all the Directors including

through

the Peer Review(*); and

Interviewed the Chairman of the Board, newly-appointed Directors, a Director who is concurrently in the position of the CEO, and certain additional Directors about the Board and Committee status and practices; and

Researched other global companies’ practices in Japan, the United States and Europe, and compared them with the company’s practices.

The Board then received, reviewed and discussed the Outside Counsel’s report on the results of its evaluation. The Board confirmed the effectiveness of the Board and the Committees.

* Peer Review: Mutual evaluation by Directors. We conducted the Evaluation through interviews in the presence of the Chairman or Vice Chairman of the Board.

(4) Summary of the Results of the Recent Evaluation

~~The~~

Based on the following findings, the Outside Counsel reported that, as assessed in the previous Evaluation, the Board is established and operated in a manner sufficient to be highly ~~appreciated, based on various points, including the self-evaluation~~evaluated:

The results of the questionnaire and interviews show that many Directors ~~and comparison~~rate the effectiveness of the Board highly overall.

Outward factors such as the composition of the Board are comparable with ~~benchmarked~~global companies in ~~Japan,~~Europe and North America as well as Japan.

In addition, the ~~United States~~Peer Review was conducted in the fiscal year ended on March 31, 2023, and ~~Europe.~~ the involvement of the Board in the process of appointment of the new president was appropriate.

The Board also received a favorable assessment on its response to the suggestions made by the Outside Counsel in the previous Evaluation and on its overall operations.

Following ~~discussion~~discussions and analysis based on the Outside Counsel’s report, the Board

re-affirmed

that the Board and each Committee were functioning effectively as of April ~~2020.~~2023.

The Outside Counsel also ~~provided examples of potential~~suggested several possible options ~~based on other companies’ practices, to help further improve effectiveness of~~for the Board and ~~Committees. The examples include continuously studying the feasibility of having special committees according~~Committees to ~~recent evolution of the business environment,~~ further progress of the relationship between the Audit Committee and the internal audit department, further expanding disclosure about the enhanced compensation plan and experience/expertise of each Director and development of new methods to hold Board meetings.improve their own effectiveness.

(5) Actions in ~~response~~Response to the Results of the Evaluation

In order to increase the corporate value of Sony, Sony Group Corporation will take appropriate actions to further enhance functions of the Board and the Committees in response to the results of the Evaluation, as well as various comments and opinions given by Directors and the Outside Counsel during the Evaluation process.

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For reference, after the previous Evaluation conducted from February through ~~April 2019,~~May 2022, Sony Group Corporation took the following actions, among others, to help improve the effectiveness of the Board:

~~Enhanced diversity in the boardroom (by newly appointing two~~

~~non-Japanese~~

~~and one female Directors as outside Directors);~~

Continuously made periodic reports to the Board on ~~ESG~~sustainability (Environment ~~Social~~ and ~~Governance)~~Social) related matters;

Enhanced Board’s supervision over risks regarding geopolitics and information security;

~~Focused~~

Conducted deep discussions about Sony’s strategies on ~~information security continuously through the Director in charge of Information Security;~~growth areas and new businesses (gaming, metaverse and mobility) ; and

~~Held additional executive sessions;~~

~~Expanded disclosure regarding compensation of~~Promoted engagement between outside Directors and ~~Senior Executives; and~~investors.

~~Conducted visiting audits by Audit Committee members at Sony’s business sites.~~

Internal Control and Governance Framework

At a Board meeting held on April 26, 2006, the Board reaffirmed the internal control and governance framework in effect as of the date of determination and determined to continue to evaluate and improve such framework going forward, as appropriate. At a Board ~~meeting~~meetings held on May 13, 2009 and April 30, 2015, the Board amended and updated the internal control and governance framework, and ~~with the written resolution of the~~at a Board ~~dated as of May 15, 2020,~~meeting held on April 28, 2023, the Board reaffirmed that such framework was in effect and determined to continue to evaluate and improve such framework going forward, as appropriate. These determinations were required by and met the requirements of the Companies Act.

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A summary of the principal framework inof the internal control and governance framework based on the Board determination above is as follows:

(1) Disclosure Control Framework

The securities of Sony Group Corporation are listed for trading on exchanges in Japan and the U.S. As a result, Sony is obligated to make various disclosures to the public in accordance with applicable securities laws, regulations and rules in those countries and listing standards of the stock exchanges on which Sony Group Corporation’s shares are listed. Sony is committed to full compliance with all requirements applicable to its public disclosures. Sony Group Corporation’s policy on investor relations activities is to aim to disclose accurate information in a timely and fair manner, as well as to endeavor to promote constructive dialogue with shareholders and investors, with a view to maximizing the corporate value by building a relationship of trust with shareholders and investors. Sony Group Corporation has ~~in place~~established disclosure controls and procedures ~~in support of~~as an approach to implement this policy. All personnel responsible for the preparation of submissions to and filings with the ~~Tokyo Stock Exchange,~~TSE, the ~~U.S. Securities and Exchange Commission~~SEC and other regulatory entities, or for other public communications made on behalf of Sony, or who provide information as part of that process, have a responsibility to ensure that such disclosures and information are full, fair, accurate, timely and understandable, and in compliance with the established disclosure controls and procedures.

Sony Group Corporation has established “Disclosure Controls and ~~Procedures,”~~Procedures” outlining the process through which potentially material information is reported from important business units, subsidiaries, affiliated companies and corporate divisions and is reviewed and considered for disclosure in light of its materiality to Sony. As a body to assist the CEO and the CFO of Sony Group Corporation in designing, implementing and evaluating the Disclosure Controls and Procedures, Sony Group Corporation has established the “Disclosure Committee,” which is comprised of members of senior management ~~of Sony Corporation~~ who are in charge of ~~relevant departments.~~a part of Sony’s headquarters functions. In order to assure appropriate and timely disclosure, the Disclosure Committee shall evaluate events that are reported from the important business units, subsidiaries, affiliated companies and corporate divisions in accordance with Sony’s internal rules in light of their materiality to Sony. Based on such evaluation, the Disclosure Committee shall review the necessity of disclosure in accordance with applicable securities laws, regulations and rules, as well as the listing standards of the relevant stock exchanges, and report to the CEO and CFO for their determination.

(2) Risk Management Framework

Each business unit, subsidiary/affiliated company and corporate division of Sony periodically reviews and assesses risks and ~~establish~~establishes and ~~maintain~~maintains necessary risk management systems (such as detection, communication,

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evaluation and response) for the area offor which they are ~~in charge.~~responsible. In addition, Senior Executives, including the Corporate Executive Officers, of Sony Group Corporation have established and currently maintain a system to identify and control risks that may cause losses to Sony regarding the areas offor which they are ~~in charge.~~responsible. The Corporate Executive Officer in charge of group risk control shall comprehensively promote and manage the establishment and maintenance of the systems as stated above.

Details of Actions Taken by the Board and the Committees

(1) Details of Actions Taken by the Board

During the fiscal year ended on March 31, 2023, the Board convened 9 times. The attendance records of respective Directors are as follows.

D.	~~Employees~~

Name *2		Meeting Records *1	Attendance Records *1

Kenichiro Yoshida		9 Times	9 Times (100%)

Hiroki Totoki		9 Times	9 Times (100%)

Shuzo Sumi		9 Times	9 Times (100%)

Yoshihiko Hatanaka		9 Times	9 Times (100%)

Tim Shaaff		9 Times	9 Times (100%)

Toshiko Oka		9 Times	9 Times (100%)

Sakie Akiyama		9 Times	9 Times (100%)

Wendy Becker		9 Times	9 Times (100%)

Keiko Kishigami		9 Times	9 Times (100%)

Joseph A. Kraft Jr.		9 Times	9 Times (100%)

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*1 The numbers of the Meeting Records and the Attendance Records are those applicable to the fiscal year ended on March 31, 2023.

*2 Shuzo Sumi and Tim Shaaff, who were Directors during the fiscal year ended on March 31, 2023, retired as Directors at the conclusion of the Ordinary General Meeting of Shareholders on June 20, 2023. Accordingly, Neil Hunt and William Morrow were newly appointed as Directors at the Ordinary General Meeting of Shareholders on June 20, 2023.

During the fiscal year ended on March 31, 2023, the Board of Directors discussed a variety of matters, such as supervision of the progress of the fourth mid-range plan, formulation of a business plan for the fiscal year ending on March 31, 2024, enhancement of Sony’s management structure (including the appointment of Hiroki Totoki as President, COO and CFO), Sony’s business portfolio, strategically important M&A and capital investments, effectiveness of internal control (including the ethics and compliance program and information security), approach to new risks (including geopolitical risks), and Sony’s situation and initiatives related to sustainability and environment as well as Sony’s strategy related to new technologies (including generative AI).

(2) Details of Actions Taken by the Nomination Committee

During the fiscal year ended on March 31, 2023, the Nomination Committee convened 5 times. The attendance records of respective Directors are as follows.



Name	Meeting Records *1	Attendance Records *1

Shuzo Sumi *2	5 Times	5 Times (100%)

Yoshihiko Hatanaka	5 Times	5 Times (100%)

Wendy Becker	5 Times	5 Times (100%)

*1 The numbers of the Meeting Records and the Attendance Records are those applicable to the fiscal year ended on March 31, 2023.

*2 Shuzo Sumi, who was a member of the Nomination Committee during the fiscal year ended on March 31, 2023, retired both as a Director and a member of the Nomination Committee at the conclusion of the Ordinary General Meeting of Shareholders on June 20, 2023. Accordingly, Toshiko Oka was newly appointed as a member of the Nomination Committee pursuant to the resolution at the Board meeting held on June 20, 2023.

During the fiscal year ended on March 31, 2023, the matters given consideration by the Nominating Committee included policies on selecting outside Director candidates, exploring Director prospects, and CEO succession. In addition, the Nominating Committee assessed succession plans for Senior Executives with key management responsibilities for individual business units and headquarters functions, based on management, including CEO, reports. With respect to the selection of candidates for outside Directors, as a priority item for the current fiscal year, the Nominating Committee confirmed the policy that candidates for outside Directors should be selected from persons who have experience as CEOs of major global companies, backgrounds in technology and/or knowledge of the entertainment industry, and the Nomination Committee held discussions based on such policy. As a result, two new outside Director candidates were appointed based on this policy. Regarding the appointment of Senior Executives, Kenichiro Yoshida, Representative Corporate Executive Officer, Chairman, President and CEO, proposed to the Nominating Committee that Hiroki Totoki, Representative Corporate Executive Officer, Executive Deputy President and CFO, assume the position of President, COO and CFO. After a multifaceted review and discussion, including interviews by the Nominating Committee members, the proposal was shared with the outside Directors other than the Nominating Committee members and confirmed.

(3) Details of Actions Taken by the Audit Committee

During the fiscal year ended on March 31, 2023, the Audit Committee convened 6 times. The attendance records of respective Directors are as follows.



Name	Meeting Records *1	Attendance Records *1

Toshiko Oka	6 Times	6 Times (100%)

Keiko Kishigami	6 Times	6 Times (100%)

Joseph A. Kraft Jr.	6 Times	6 Times (100%)

*1 The numbers of the Meeting Records and the Attendance Records are those applicable to the fiscal year ended on March 31, 2023.

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Specific considerations by the Audit Committee include review of audit plans in

three-way

audits, identification and audit of priority audit items for each fiscal year, review of financial results and disclosure documents related to financial results, review of development and operation of internal control systems, audit of financial reports and SOX

404-related

activities, audit of internal audit activities, review of the content and process for determining the compensation of the independent auditors, audit of the appropriateness of audit by the independent auditors and evaluation of the independent auditors. In addition to these, the Audit Committee held interviews with Senior Executives to receive reports on matters such as the recognition of issues and the status of risk management in the respective areas of responsibility of each business and headquarter function, and engaged in dialogue.

The priority audit items for the fiscal year ended on March 31, 2023 were disclosure of

non-financial

information and risk management. Through audit activities conducted in cooperation with the internal audit division and the divisions of the Sony Group responsible for internal control, the Audit Committee was informed about the latest trends in Japan and overseas regarding the disclosure of

non-financial

information such as climate change disclosure and risk management such as information security, and confirmed the status of internal responses.

(4) Details of Actions Taken by the Compensation Committee

During the fiscal year ended on March 31, 2023, the Compensation Committee convened 5 times. The attendance records of respective Directors are as follows.



Name	Meeting Records *1	Attendance Records *1

Wendy Becker	5 Times	5 Times (100%)

Yoshihiko Hatanaka *2	5 Times	5 Times (100%)

Sakie Akiyama	5 Times	5 Times (100%)

*1 The numbers of the Meeting Records and the Attendance Records are those applicable to the fiscal year ended on March 31, 2023.

*2 Yoshihiko Hatanaka, who was a member of the Compensation Committee during the fiscal year ended on March 31, 2023, retired as a member of the Compensation Committee on June 20, 2023. Accordingly, William Morrow was newly appointed as a member of the Compensation Committee pursuant to the resolution at the Board meeting held on June 20, 2023.

The specific matters given consideration by the Compensation Committee included the Corporation’s policy regarding the determination of individual remuneration for Directors and Senior Executives, including Corporate Executive Officers, for each fiscal year, and the amount and content of such remuneration. The Committee also considered the total number of stock acquisition rights to be issued for the purpose of granting stock options to Corporate Executive Officers, employees of the Corporation, Directors and other officers of the Corporation’s subsidiaries, and other stock-based compensation utilizing shares of the Corporation’s stock. In the fiscal year ended March 31, 2023, the Corporation newly introduced RSUs for the purpose of giving the recipients an incentive to contribute towards the improvement of the business performance of the Sony Group, and the Committee confirmed and discussed the scope of and plans for the recipients and the decision-making authority for the grant of RSUs. For the fiscal year ending March 31, 2024 and beyond, the Committee conducted a comprehensive review and discussion on the ideal KPIs for remuneration linked to business results and the ideal governance of executive compensation, with consideration of other companies’ trends and regulatory developments in Japan and other countries.

Employees

As of March 31, ~~2020,~~2023, Sony had approximately ~~111,700~~113,000 employees, ~~a decrease~~an increase of approximately ~~2,700~~4,100 employees from March 31, ~~2019.~~2022. During the fiscal year ended March 31, ~~2020,~~2023, although ~~there was an increase of employees in the Game & Network Services (“G&NS”) (outside of Japan), Imaging & Sensing Solutions (“I&SS”) (within Japan), Music and Financial Services segments,~~ there was a decrease of employees mainly in the ~~Electronics Products & Solutions (“EP&S”)~~ET&S segment (outside of Japan) due to closure of manufacturing sites in Malaysia, employees of the G&NS, I&SS, and Pictures (outside of Japan) segments ~~as well as in All Other. In the EP&S segment and All Other, this was mainly~~increased due to the ~~restructuring~~expansion of ~~the smartphone business~~these businesses, including through mergers and ~~disc manufacturing business.~~acquisitions. Approximately ~~11%~~9% of the total number of employees were members of labor unions.

As of March 31, ~~2019,~~2022, Sony had approximately ~~114,400~~108,900 employees, a decrease of approximately ~~2,900~~800 employees from March 31, ~~2018.~~2021. During the fiscal year ended March 31, ~~2019,~~2022, although there was an increase of

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employees mainly in the I&SS, Music (outside of Japan) and G&NS (outside of Japan) segments, there was a decrease of employees in the ET&S segment (outside of Japan) and All Other (outside of Japan). In the ET&S segment, this was mainly due to closure of manufacturing sites in Malaysia. Approximately 9% of the total number of employees were members of labor unions.

As of March 31, 2021, Sony had approximately 109,700 employees, a decrease of approximately 2,000 employees from March 31, 2020. During the fiscal year ended March 31, 2021, although there was an increase of employees in the I&SS and Financial Services segments, there was a ~~significant~~ decrease of employees in the EPET&S and Pictures segments, as well as in All Other. In the ET&S segment, ~~and All Other~~this was mainly due to ~~the restructuring~~closure of ~~the smartphone business~~manufacturing sites in Malaysia and ~~disc manufacturing business.~~Brazil. Approximately ~~13% of the total number of employees were members of labor unions.~~

As of March 31, 2018, Sony had approximately 117,300 employees, a decrease of approximately 11,100 employees from March 31, 2017. During the fiscal year ended March 31, 2018, although there was an increase of employees in the Financial Services and Pictures segments, there was a significant decrease of employees in the Electronics segment mainly due to the transfer of the battery business. Approximately 14%10% of the total number of employees were members of labor unions.

The following table shows the number of employees of Sony by segment and region as of March 31, ~~2018, 2019~~2021, 2022 and ~~2020.~~2023.

Number of Employees by Segment and Region

March 31

2018

2019

2020

By segment:

G&NS, EP&S and I&SS total

77,400

75,600

73,000

Music

8,200

8,500

9,900

Pictures

9,800

9,300

8,400

Financial Services

11,400

11,800

12,300

All Other

5,300

4,000

3,200

Unallocated — Corporate employees

5,200

5,200

4,900

By region:

Japan

51,500

52,200

53,700

Outside of Japan

65,800

62,200

58,000

Total

117,300

114,400

111,700


	March 31
	2021		2022		2023
By segment:
G&NS		9,600		10,200		12,700
Music		9,900		10,800		11,100
Pictures		8,000		8,100		9,100
ET&S		43,700		40,200		38,400
I&SS		16,800		18,100		20,300
Financial Services		12,900		13,200		13,500
All Other		2,800		2,300		2,100
Unallocated — Corporate employees		6,000		6,000		5,800
By region:
Japan		54,500		55,100		56,400
Outside of Japan		55,200		53,800		56,600

Total		109,700		108,900		113,000

In addition, the average number of employees for the fiscal years ended March 31, ~~2018, 2019~~2021, 2022 and ~~2020~~2023 calculated by averaging the total number of employees at the end of each quarter, was approximately ~~118,900, 116,000~~110,700, 109,600 and ~~113,000~~112,300 respectively.

Sony generally considers its labor relations to be good.

In Japan, Sony Group Corporation and several subsidiaries have labor unions.

In the G&NS, EPET&S and I&SS segments, Sony owns many manufacturing sites, particularly in Asia, where a few sites have labor unions that have union contracts. In China, most employees are members of ~~labor unions. In the Americas, some manufacturing sites have~~ labor unions. Sony has generally maintained good relationships with these labor unions. In Europe, Sony also maintains good labor relations with the European Works Council and the local Unions and Works Councils.

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In the Music segment, Sony has ~~several~~a labor ~~unions~~union and generally considers its labor relations to be good.

In the Pictures segment, Sony also generally considers its labor relations to be good. A number of Pictures’ subsidiaries are signatories to union contracts. During the fiscal year ended March 31, ~~2020,~~2023, negotiations were conducted and agreements reached with a number of unions. Negotiations were successfully concluded with the International Alliance of Theatrical and Stage Employees (“IATSE”) for agreements with three-year terms covering The Animation Guild as well as for additional local agreements in New York. Negotiations were also completed with Teamsters for agreements for three-year terms covering Location Managers in New York, Casting Directors in New York and Los Angeles and drivers in Miami. Agreements were also reached for new three-year deals with Screen Actors Guild-American Federation of Television and Radio Artists

(“SAG-AFTRA”)

on the Network Code and The Animation Guild Agreement and with the Communications Workers of America,

AFL-CIO

for parking production assistants in New York. Negotiations were completed with Directors Guild of Canada, British Columbia District Council for a three-year agreement. An agreement was reached with the American Federation of Musicians to extend the Theatrical and Television Agreements through November 13, 2023. During the fiscal year, amendments to the

COVID-19

Return to Work Agreement with the

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Directors Guild of America (“DGA”), IATSE,

SAG-AFTRA,

Teamsters and Basic Crafts covering

COVID-19

safety protocols were negotiated and were in effect through May 11, 2023. The WGA agreement expired on May 1, 2023 and the parties have not reached agreement on the terms of a new deal. The WGA went on strike effective May 2, 2023. Negotiations have been completed with the DGA for new three-year ~~terms for~~deals on the Basic Agreement and the Film Live Tape Television ~~Agreement.~~

~~Two-year~~

~~deals were reached with~~Agreement subject to ratification by the ~~American Federation of Musicians~~ DGA. Negotiations have commenced with

SAG-AFTRA

for the ~~Theatrical~~Codified Basic Agreement and the Television ~~Agreement. An agreement was reached with~~Basic Agreement which expire on June 30, 2023. If negotiations to renew expiring collective bargaining agreements are not successful or become unproductive, the ~~Studio Transportation Drivers, Local 399, Cook Helper/Cook Helper Drivers for~~affected unions could take actions such as strikes, work slowdowns or work stoppages. Strikes, work slowdowns, work stoppages or the ~~term January 19, 2020 to July 31, 2021. In addition, a new three-year deal was reached with~~possibility of such actions could result in delays in the ~~International Brotherhood~~production of ~~Teamsters, Local 817 on the Feature Film Agreement with Theatrical Drivers~~television programs and ~~Helpers. Negotiations with the Screen Actors Guild-American Federation of Television and Radio Artists commenced on April 27, 2020. Negotiations for a~~feature films or otherwise disrupt operations. The Pictures segment could also incur higher costs from such actions or new collective bargaining ~~agreement with the Writers Guild of America commenced on May 18, 2020.~~agreements that include rate increases.

Sony continuously strives to provide competitive wages and benefits and good working conditions for all of its employees.

E.	Share Ownership

The total number of shares of Common Stock beneficially owned by Directors and Corporate Executive Officers listed in “Directors and Senior Management” above (out of whom 1312 people own shares) was approximately ~~0.025%~~0.043% of the total shares outstanding as of June ~~4, 2020.~~2, 2023.

During the fiscal year ended March 31, ~~2020,~~2023, Sony Group Corporation granted stock acquisition rights, which represent rights to subscribe for shares of Common Stock, to Corporate Executive Officers and employees of Sony Group Corporation as well as directors, officers and employees of its subsidiaries. The stock acquisition rights cannot be exercised for one year from the date of grant and generally vest ratably up to three years from the date of grant and are generally exercisable up to ten years from the date of grant. The following table shows the portion of those stock acquisition rights which were granted by Sony Group Corporation to Directors and Corporate Executive Officers as of June ~~4, 2020~~2, 2023 and which were outstanding as of the same date.

Year granted
(Fiscal year ended March 31)

Total number of
shares subject to stock
acquisition rights

Exercise price per share

(in thousands)

2020

240

6,705 yen

2019

230

6,440 yen

2018

208

5,231 yen

2017

244

3,364 yen

2016

58

3,404 yen

2015

114

2,410.5 yen

2014

10

2,007 yen

2012

7

1,523 yen

2011

3

2,945 yen


Year granted (Fiscal year ended March 31)	Total number of shares subject to stock acquisition rights		Exercise price per share
	(in thousands)
2023		290		11,390 yen
2022		280		14,350 yen
2021		260		9,237 yen
2020		248		6,705 yen
2019		214		6,440 yen
2018		33		5,231 yen
2017		126		3,364 yen
2016		15		3,404 yen
2015		86		2,410.5 yen

Regarding the above compensation plans, refer to Note 1721 of the consolidated financial statements.

Item 7.

Major Shareholders and Related Party Transactions

A.	Major Shareholders

As of March 31, ~~2020,~~2023, there were ~~1,261,058,781~~1,261,081,781 shares of Common Stock outstanding, including ~~40,898,841~~26,584,521 shares of treasury stock. Out of the total outstanding shares, ~~114,612,168~~117,871,924 shares were in the form of ~~ADRs~~American Depositary Receipts (“ADRs”) and ~~229,425,899~~215,074,779 shares were held of record in the form of Common Stock by residents in the U.S. As of March 31, ~~2020,~~2023, the number of registered ADR holders was ~~4,974~~4,697 and the number of registered holders of Common Stock in the U.S. was ~~401.~~389.

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The Financial Instruments and Exchange Act of Japan requires any person who solely or jointly owns more than 5% of total issued voting shares of a company listed on any Japanese stock exchange to file with the Kanto Local Finance Bureau (the “Bureau”) a Bulk Shareholding Report. The following table summarizes the Bulk Shareholding Reports related to Sony (each a “Report”) submitted to the Bureau, where it is reported that ownership percentage by the reported entity exceeds 5% in the most recent updated Report. The Reports do not specify whether reported ownership is direct or beneficial.

Date of Report*

Reported entities

Reported number of direct or
indirect owned and
deemed owned shares**

Reported percentage of direct or
indirect owned and
deemed owned shares**

March 22, 2017

BlackRock Japan Co., Ltd.

79,184,569

6.27

September 20, 2019

Sumitomo Mitsui Trust Asset Management Co., Ltd.

72,545,958

5.70

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Date of Report*	Reported entities	Reported number of direct or indirect owned and deemed owned shares**		Reported percentage of direct or indirect owned and deemed owned shares**
October 6, 2020	Nomura Asset Management Co., Ltd. and 3 Joint Holders		63,156,882		5.01
June 6, 2022	Sumitomo Mitsui Trust Asset Management Co., Ltd. and 1 Joint Holder		82,189,224		6.52
May 18, 2023	BlackRock Japan Co., Ltd. and 9 Joint Holders		93,769,348		7.43

* The table above contains information from the most recent updated Reports.

** Shares issuable or transferable upon exchange of exchangeable securities, conversion of convertible securities or exercise of warrants or stock acquisition rights (including those incorporated in bonds with stock acquisition rights) are taken into account in determining both the size of the reported entity’s holding and Sony’s total issued share capital.

To the knowledge of Sony Group Corporation, it is not directly or indirectly owned or controlled by any other corporation, by any foreign government or by any other natural or legal person either severally or jointly. As far as is known to Sony Group Corporation, there are no arrangements the operation of which may, at a subsequent date, result in a change in control of Sony Group Corporation.

To the knowledge of Sony Group Corporation, there were no significant changes in the percentage ownership held by any other major beneficial shareholders during the past three fiscal years. Major shareholders of Sony Group Corporation do not have different voting rights from other shareholders.

B.	Related Party Transactions

In the ordinary course of business, Sony purchases materials, supplies, and services from numerous suppliers throughout the world, including firms with which certain members of the Board of Directors are affiliated.

In addition, in the fiscal year ended March 31, 2020, sales to affiliates accounted for under the equity method totaled 36.0 billion yen and purchases from those equity affiliates totaled 3.5 billion yen. Although there were 140 equity affiliates accounted for under the equity method at March 31, 2020, there were no individually significant investments.

As of March 31, 2020, Sony had accounts receivable, trade of 12.0 billion yen due from its equity affiliates and had accounts payable, trade of 1.5 billion yen due to its equity affiliates. Due to the size of these transactions, Sony does not consider the amount involved to be material to its business. Refer to Note 532 of the consolidated financial statements for ~~additional information regarding Sony’s investments in~~account balances and transactions with associates and joint ventures accounted for under the equity ~~affiliates.~~method.

C.	Interests of Experts and Counsel

Not Applicable

Item 8.

Financial Information

A.	Consolidated Statements and Other Financial Information

Refer to the consolidated financial statements and the notes of the consolidated financial statements.

Legal Proceedings

Beginning in 2009, the U.S. Department of Justice, the European Commission and certain other governmental agencies outside the United States have conducted investigations relating to competition in the optical disk drives market. Sony ~~Corporation and/or certain of its subsidiaries have been subject to these investigations. Sony Corporation understands that these investigations have ended. However, proceedings~~

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initiated by the European Commission as a result of its investigation continue. In October 2015, the European Commission adopted a decision in which it fined Sony Corporation and certain of its subsidiaries 31 million euros; however, Sony Corporation filed an appeal against the decision with the European Union’s General Court. In July 2019, the General Court upheld the European Commission’s decision. Sony Corporation reviewed the judgment carefully and filed an appeal with the Court of Justice of the European Union in September 2019. A number of direct and indirect purchaser lawsuits, including class actions, have been filed in certain jurisdictions in which the plaintiffs allege that Sony Corporation and certain of its subsidiaries violated antitrust laws and seek recovery of damages and other remedies. All of these lawsuits have been settled, including the class actions brought by the direct and indirect purchasers in the United States, except one lawsuit which is still pending. Sony believes that final resolution of the pending proceedings will not have a material impact on Sony’s results of operations and financial position.

Since 2011, in relation to the secondary batteries business that was operated by Sony Corporation and certain of its subsidiaries, a number of direct and indirect purchaser lawsuits, including class actions, have been filed in certain jurisdictions in which the plaintiffs allege that Sony Corporation and certain of its subsidiaries violated antitrust laws and seek recovery of damages and other remedies. All of these lawsuits have been settled, including the class actions brought by the direct and indirect purchasers in the United States, except one lawsuit which is still pending. Sony believes that final resolution of the pending proceeding will not have a material impact on Sony’s results of operations and financial position.

~~In addition, Sony~~Group Corporation and certain of its subsidiaries are defendants or otherwise involved in ~~other~~ pending legal and regulatory proceedings. However, based upon the information currently available, Sony believes that the outcome from such legal and regulatory proceedings would not have a material impact on Sony’s results of operations and financial position.

Dividend Policy

Sony believes that continuously increasing corporate value and providing dividends are essential to rewarding shareholders. It is Sony’s policy to utilize retained earnings, after ensuring the perpetuation of stable dividends, to carry out various investments that contribute to an increase in corporate value, such as those that ensure future growth and strengthen competitiveness. Going forward, Sony will determine the amount of dividends based on an overall consideration of Sony’s consolidated operating results, financial condition and future business expectations.

A fiscal

year-end

dividend of 2540 yen per share of Common Stock of Sony Group Corporation was approved ~~with the written resolution of~~at the Board of Directors ~~dated as of May 13, 2020~~meeting held on April 28, 2023 and the payment of such dividend started on June 5, ~~2020.~~

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2023. Sony Group Corporation has already paid an interim dividend for Common Stock of 2035 yen per share to each shareholder; accordingly, the total annual dividend per share of Common Stock for the fiscal year ended March 31, ~~2020~~2023 is 4575 yen.

B.	Significant Changes

Not applicable

Item 9.

The Offer and Listing

A.	Offer and Listing Details

Trading Markets

The principal trading markets for Sony Group Corporation’s ordinary shares are the ~~Tokyo Stock Exchange (“TSE”)~~TSE in the form of Common Stock and the NYSE in the form of ~~American Depositary Shares (“ADSs”)~~ADSs evidenced by ~~American Depositary Receipts (“ADRs”).~~ADRs. Each ADS represents one share of Common Stock.

Sony Group Corporation’s Common Stock, with no par value per share, has been listed on the TSE since 1958 under the stock code “6758.”

Sony Group Corporation’s ADRs have been traded in the U.S. since 1961 and have been listed on the ~~New York Stock Exchange (“NYSE”)~~NYSE since ~~1970 under~~1970. As of April 1, 2021, the ticker symbol ~~“SNE.~~changed from “SNE” to “SONY.” Sony Group Corporation’s ADRs are issued and exchanged by Citibank, N.A., as the Depositary.

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B.	Plan of Distribution

Not Applicable

Markets

~~Please refer~~Refer to “Item 9.A.

Offer and Listing Details.

”

D.	Selling Shareholders

Not Applicable

Dilution

Not Applicable

F.	Expenses of the Issue

Not Applicable

Item 10.

Additional Information

A.	Share Capital

Not Applicable

B.	Memorandum and Articles of Association

Organization

Sony Group Corporation is a joint stock corporation

(Kabushiki Kaisha)

incorporated in Japan under the Companies Act

(Kaishaho)

of Japan. It is registered in the Commercial Register

(Shogyo Tokibo)

maintained by the Minato Branch Office of the Tokyo Legal Affairs Bureau.

Objects and purposes

The Articles of Incorporation of Sony Group Corporation provide that its purpose is to engage in the following business activities:

(i)

manufacture and sale of electronic and electrical machines and equipment, medical instruments, optical instruments and other equipment, machines and instruments;

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(ii)

planning, production and sale of audio-visual software and computer software programs;

(iii)

manufacture and sale of metal industrial products, chemical industrial products and ceramic industrial products, textile products, paper products and wood-crafted articles, daily necessities, foodstuffs and toys, transportation machines and equipment, and petroleum and coal products;

(iv)

real estate activities, construction business, transportation business and warehousing business;

(v)

publishing business and printing business;

(vi)

advertising agency business, insurance agency business, broadcasting enterprise, recreation business such as travel, management of sporting facilities, etc. and other service enterprises;

(vii)

financial business;

(viii)

Type I and Type II telecommunications business under the Telecommunications Business Law;

(ix)

investing in stocks and bonds, etc.;

(x)

manufacture, sale, export and import of products which are incidental to or related to those mentioned above;

(xi)

rendering of services related to those mentioned above;

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(xii)

investment in businesses mentioned above operated by other companies or persons; and

(xiii)

all businesses which are incidental to or related to those mentioned above.

Directors

Under the Companies Act, because Sony Group Corporation has adopted the “Company with Three Committees” system, Directors have no power to execute the business of Sony Group Corporation except in limited circumstances as permitted by law. If a Director also serves concurrently as a Corporate Executive Officer, then he or she can execute the business of Sony Group Corporation in the capacity of Corporate Executive Officer. Under the Companies Act, Directors must refrain from engaging in any business competing with Sony Group Corporation unless approved by the Board of Directors, and any Director who has a material interest in the subject matter of a resolution to be taken by the Board of Directors cannot vote on such resolution. The amount of remuneration to each Director is determined by the Compensation Committee, which consists of Directors, the majority of whom are outside Directors (Refer to “Board Practices” in “Item 6.

Directors, Senior Management and Employees

”). No member of the Compensation Committee may vote on a resolution with respect to his or her own compensation as a Director or a Corporate Executive Officer.

Neither the Companies Act nor Sony Group Corporation’s Articles of Incorporation make a special provision as to the borrowing powers exercisable by Directors (subject to requisite internal authorizations as required by the Companies Act), their retirement age, or a requirement to hold any shares of capital stock of Sony Group Corporation.

For more information on Directors, refer to “Board Practices” in “Item 6.

Directors, Senior Management and Employees.

”

Capital stock

(General)

Unless indicated otherwise, set forth below is information relating to Sony Group Corporation’s capital stock, including brief summaries of the relevant provisions of Sony Group Corporation’s Articles of Incorporation and Share Handling Regulations, currently in effect, and of the Companies Act and related regulations.

~~On January 5, 2009, a~~The central book-entry transfer system for shares of Japanese listed companies ~~was established pursuant to~~under the Act Concerning Book-entry Transfer of Corporate Bonds, Shares, etc. (including regulations promulgated thereunder, “Book-entry Transfer Act”)~~, and this system~~ is applied to the shares of Common Stock of Sony Group Corporation. Under this system, shares of all Japanese companies listed on any Japanese stock exchange are dematerialized, and shareholders must have accounts at account management institutions to hold their shares unless such shareholder has an account at Japan Securities Depository Center, Inc. (“JASDEC”). “Account management institutions” are

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financial instruments traders (i.e., securities companies), banks, trust companies and certain other financial institutions that meet the requirements prescribed by the Book-entry Transfer Act. Transfer of the shares of Common Stock of Sony Group Corporation is effected exclusively through entry in the records maintained by JASDEC and the account management institutions, and title to the shares passes to the transferee at the time when the transfer of the shares is recorded at the transferee’s account at an account management institution. The holder of an account at an account management institution is presumed to be the legal holder of the shares recorded in such account.

Under the Companies Act and the Book-entry Transfer Act, in order to assert shareholders’ rights against Sony Group Corporation, a shareholder of shares must have its name and address registered in Sony Group Corporation’s register of shareholders. Under the central book-entry transfer system operated by JASDEC, shareholders shall notify the relevant account management institutions of certain information prescribed under the Book-entry Transfer Act or Sony Group Corporation’s Share Handling Regulations, including their names and addresses, and the registration on Sony Group Corporation’s register of shareholders is updated upon receipt by Sony Group Corporation of necessary information from JASDEC (as described in “

(Record date)

”). On the other hand, in order to assert, against Sony Group Corporation, shareholders’ rights to which shareholders are entitled, regardless of whether such shareholder held shares on the requisite record date, such as minority shareholders’ rights, including the right to propose a matter to be considered at a General Meeting of Shareholders, except for shareholders’ rights to request that Sony Group Corporation purchase or sell shares constituting less than a full unit (as described in “

(Unit share system)

”), JASDEC shall, upon the shareholder’s request, issue a notice of certain information, including the name and address of such shareholder, to Sony Group Corporation.

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Thereafter, such shareholder ~~is required to present~~shall provide Sony Group Corporation ~~a receipt of the~~with written notice ~~request~~that he or she exercises such shareholder’s right in accordance with the Sony Group Corporation’s Share Handling Regulations. Under the Book-entry Transfer Act, the shareholder shall exercise such shareholders’ right within four weeks after the notice above has been given to Sony Group Corporation.

Mitsubishi UFJ Trust and Banking Corporation is the transfer agent for Sony Group Corporation’s capital stock. As such, it keeps Sony Group Corporation’s register of shareholders in its office at

4-5,

Marunouchi

1-chome,

Chiyoda-ku,

Tokyo.

Non-resident

shareholders are required to appoint a standing proxy in Japan or file notice of a mailing address in Japan. Notices from Sony Group Corporation to

non-resident

shareholders are delivered to such standing proxies or mailing address. Japanese securities companies and commercial banks customarily act as standing proxies and provide related services for standard fees. The recorded holder of deposited shares underlying the ~~American Depositary Shares (“ADSs”)~~ADSs is the depositary for the ADSs. Accordingly, holders of ADSs will not be able to directly assert shareholders’ rights against Sony Group Corporation.

(Authorized capital)

Under the Articles of Incorporation of Sony Group Corporation, Sony Group Corporation may only issue shares of Common Stock. Sony Group Corporation’s Articles of Incorporation provide that the total number of shares authorized to be issued by Sony Group Corporation is 3.6 billion shares.

All shares of capital stock of Sony Group Corporation have no par value. All issued shares are fully-paid and

non-assessable.

(Distribution of Surplus)

Distribution of Surplus — General

Under the Companies Act, distributions of cash or other assets by joint stock corporations to their shareholders, so called “dividends,” are referred to as “distributions of Surplus” (“Surplus” is defined in “— Restriction on distribution of Surplus”). Sony Group Corporation may make distributions of Surplus to shareholders any number of times per business year, subject to certain limitations described in “— Restriction on distribution of Surplus.” Distributions of Surplus are required in principle to be authorized by a resolution of a General Meeting of Shareholders, but Sony Group Corporation may authorize distributions of Surplus by a resolution of the Board of Directors as long as its

non-consolidated

annual financial statements and certain documents for the last business year present fairly its assets and profit or loss, as required by ordinances of the Ministry of Justice.

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Distributions of Surplus may be made in cash or in kind in proportion to the number of shares of Common Stock held by each shareholder. A resolution of the Board of Directors or a General Meeting of Shareholders authorizing a distribution of Surplus must specify the kind and aggregate book value of the assets to be distributed, the manner of allocation of such assets to shareholders, and the effective date of the distribution. If a distribution of Surplus is to be made in kind, Sony Group Corporation may, pursuant to a resolution of the Board of Directors or (as the case may be) a General Meeting of Shareholders, grant a right to the shareholders to require Sony Group Corporation to make such distribution in cash instead of in kind. If no such right is granted to shareholders, the relevant distribution of Surplus must be approved by a special resolution of a General Meeting of Shareholders (refer to “

(Voting rights)

” with respect to a “special resolution”).

Under the Articles of Incorporation of Sony Group Corporation,

year-end

dividends and interim dividends may be distributed in cash to shareholders appearing in Sony Group Corporation’s register of shareholders as of March 31 and September 30 each year, respectively, in proportion to the number of shares of Common Stock held by each shareholder following approval by the Board of Directors or (as the case may be) the General Meeting of Shareholders. Sony Group Corporation is not obliged to pay any dividends in cash unclaimed for a period of five years after the date on which they first became payable.

In Japan, the

ex-dividend

date and the record date for dividends precede the date of determination of the amount of the dividends to be paid. The price of the shares of Common Stock generally goes

ex-dividend

on the business day immediately prior to the record date (or if the record date is not a business day, the second business day prior thereto).

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Distribution of Surplus — Restriction on distribution of Surplus

In making a distribution of Surplus, Sony Group Corporation must, until the sum of its additional

paid-in

capital and legal reserve reaches one quarter of its stated capital, set aside in its additional

paid-in

capital and/or legal reserve an amount equal to

one-tenth

of the amount of Surplus so distributed.

The amount of Surplus at any given time must be calculated in accordance with the following formula:

A + B + C + D -– (E + F + G)

In the above formula:


“A” =
~~“A” =~~						the total amount of other capital surplus and other retained earnings, each such amount being that appearing on the non-consolidated balance sheet as of the end of the last business year

“B” =
~~“B” =~~						(if Sony Group Corporation has disposed of its treasury stock after the end of the last business year) the amount of the consideration for such treasury stock received by Sony Group Corporation less the book value thereof

“C” =						(if Sony Group Corporation has reduced its stated capital after the end of the last business year) the amount of such reduction less the portion thereof that has been transferred to additional paid-in capital or legal reserve (if any)

“D” =						(if Sony Group Corporation has reduced its additional paid-in capital or legal reserve after the end of the last business year) the amount of such reduction less the portion thereof that has been transferred to stated capital (if any)

“E” =
~~“E” =~~						(if Sony Group Corporation has cancelled its treasury stock after the end of the last business year) the book value of such treasury stock

“F” =						(if Sony Group Corporation has distributed Surplus to its shareholders after the end of the last business year) the total book value of the Surplus so distributed

“G” =						certain other amounts set forth in ordinances of the Ministry of Justice, including (if Sony Group Corporation has reduced Surplus and increased its stated capital, additional paid-in capital or legal reserve after the end of the last business year) the amount of such reduction and (if Sony Group Corporation has distributed Surplus to the shareholders after the end of the last business year) the amount set aside in additional paid-in capital or legal reserve (if any) as required by ordinances of the Ministry of Justice.

The aggregate book value of Surplus distributed by Sony Group Corporation may not exceed a prescribed distributable amount (the “Distributable Amount”), as calculated on the effective date of such distribution. The

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Distributable Amount at any given time shall be equal to the amount of Surplus less the aggregate of the following:

(a)

the book value of its treasury stock;

(b)

the amount of consideration for any of treasury stock disposed of by Sony Group Corporation after the end of the last business year; and

(c)

certain other amounts set forth in ordinances of the Ministry of Justice, including (if the sum of

one-half

of goodwill and the deferred assets exceeds the total of stated capital, additional

paid-in

capital and legal reserve, each such amount being that appearing on the

non-consolidated

balance sheet as of the end of the last business year) all or certain part of such exceeding amount as calculated in accordance with ordinances of the Ministry of Justice.

As Sony Group Corporation has become a company with respect to which consolidated balance sheets should also be considered in the calculation of the Distributable Amount (

renketsu haito kisei tekiyo kaisha

), Sony Group Corporation must further deduct from the amount of Surplus the excess amount, if any, of (x) the total amount of stockholders’ equity appearing on the

non-consolidated

balance sheet as of the end of the last business year and certain other amounts set forth by an ordinance of the Ministry of Justice over (y) the total amount of stockholders’ equity and certain other amounts set forth by an ordinance of the Ministry of Justice appearing on the consolidated balance sheet as of the end of the last business year.

If Sony Group Corporation has prepared interim financial statements as described below, and if such interim financial statements have been approved by the Board of Directors or (if so required by the Companies Act) by a

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General Meeting of Shareholders, then the Distributable Amount must be adjusted to take into account the amount of profit or loss, and the amount of consideration for any of the treasury stock disposed of by Sony Group Corporation, during the period in respect of which such interim financial statements have been prepared. Sony Group Corporation may prepare

non-consolidated

interim financial statements consisting of a balance sheet as of any date subsequent to the end of the last business year and an income statement for the period from the first day of the current business year to the date of such balance sheet. Interim financial statements so prepared by Sony Group Corporation must be audited by the Audit Committee and the independent auditor, as required by the Companies Act and in accordance with the details prescribed by ordinances of the Ministry of Justice.

(Capital and reserves)

Sony Group Corporation may generally reduce its additional

paid-in

capital or legal reserve by resolution of a General Meeting of Shareholders and, if so decided by the same resolution, may account for the whole or any part of the amount of such reduction as stated capital. On the other hand, Sony Group Corporation may generally reduce its stated capital by a special shareholders’ resolution (as defined in “

(Voting rights)

”) and, if so decided by the same resolution, may account for the whole or any part of the amount of such reduction as additional

paid-in

capital. In addition, Sony Group Corporation may reduce its Surplus and increase either (i) stated capital or (ii) additional

paid-in

capital and/or legal reserve by the same amount, in either case by resolution of a General Meeting of Shareholders.

(Stock splits)

Sony Group Corporation may at any time split shares in issue into a greater number of shares at the determination of the CEO, and may amend its Articles of Incorporation to increase the number of the authorized shares to be issued to allow such stock split pursuant to a resolution of the Board of Directors or a determination by a Corporate Executive Officer to whom the authority to make such determination has been delegated by a resolution of the Board of Directors, rather than relying on a special shareholders’ resolution, which is otherwise required for amending the Articles of Incorporation.

When a stock split is to be made, Sony Group Corporation must give public notice of the stock split, specifying the record date thereof, at least two weeks prior to such record date. Under the central book-entry transfer system operated by JASDEC, Sony Group Corporation must also give notice to JASDEC regarding a stock split at least two weeks prior to the relevant effective date of the stock split. On the effective date of the stock split, the numbers of shares recorded in all accounts held by Sony Group Corporation’s shareholders at account managing institutions or JASDEC will be increased in accordance with the applicable ratio.

(Consolidation of shares)

Sony Group Corporation may at any time consolidate issued shares into a smaller number of shares by a special shareholders’ resolution. When a consolidation of shares is to be made, Sony Group Corporation must

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give public notice or notice to each shareholder at least two weeks prior to the effective date of the consolidation of shares. Under the central book-entry transfer system operated by JASDEC, Sony Group Corporation must also give notice to JASDEC regarding a consolidation of shares at least two weeks prior to the effective date of the consolidation of shares. On the effective date of the consolidation of shares, the numbers of shares recorded in all accounts held by Sony Group Corporation’s shareholders at account managing institutions or JASDEC will be decreased in accordance with the applicable ratio. Sony Group Corporation must disclose the reason for the consolidation of shares at a General Meeting of Shareholders.

(General Meeting of Shareholders)

The Ordinary General Meeting of Shareholders of Sony Group Corporation for each business year is normally held in June of each year in Tokyo, Japan. In addition, Sony Group Corporation may hold an Extraordinary General Meeting of Shareholders whenever necessary by giving notice thereof at least two weeks prior to the date set for the meeting.

Notice of a shareholders’ meeting setting forth the place, time and purpose thereof must be mailed to each shareholder having voting rights (or, in the case of a

non-resident

shareholder, to such shareholder’s resident proxy or mailing address in Japan) at least two weeks prior to the date set for the meeting. Under the Companies Act, such notice may be given to shareholders by electronic means, subject to obtaining the consent byof the relevant shareholders. The record date for voting rights at an Ordinary General Meeting of Shareholders is March 31 of each year.

Under the Companies Act and the Articles of Incorporation, Sony Group Corporation shall take measures to electronically provide to its shareholders (“Electronic Provision”) the contents of reference materials for a General Meeting of Shareholders, etc.

93Notice of a shareholders meeting must set forth the contents of reference materials for a General Meeting of Shareholders, etc. to be provided by way of Electronic Provision and the URL of the website used for Electronic Provision, in addition to the place, time and purpose of the meeting. The contents of reference materials for a General Meeting of Shareholders, etc. must be posted on the website from the earlier of the date three weeks prior to the date set for the meeting or the date on which the notice of the shareholders meeting is dispatched until the date on which three months have elapsed from the meeting. Any shareholder (other than those shareholders consenting to receipt of notice of shareholders’ meeting by electronic means) is entitled to request printed paper copies of the contents of reference materials for a General Meeting of Shareholders, etc. by the record date for voting rights at the relevant General Meeting of Shareholders.

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Any shareholder or group of shareholders holding at least 3% of the total number of voting rights for a period of six months or more may require the convocation of a General Meeting of Shareholders for a particular purpose. Unless such a shareholders’ meeting is convened promptly or a convocation notice of a meeting ~~which~~that is to be held ~~not~~no later than eight weeks from the day of such ~~demand~~request is dispatched, the ~~requiring~~ shareholder requesting the holding of the meeting may, upon obtaining a ~~court~~court’s approval, convene such a shareholders’ meeting.

Any shareholder or group of shareholders holding at least 300 voting rights or 1% of the total number of voting rights for a period of six months or more may propose a matter to be considered at a General Meeting of Shareholders by submitting a written request to Sony Group Corporation at least eight weeks prior to the date set for such ~~meeting.~~meeting, provided that Sony Group Corporation may limit the number of such matters requested by each shareholder to 10.

If the Articles of Incorporation so provide, any of the minimum voting rights or percentages, time periods and number of voting rights necessary for exercising the minority shareholder rights described above may be decreased or shortened. Sony Group Corporation’s Articles of Incorporation currently do not include any such provisions.

(Voting rights)

So long as Sony Group Corporation maintains the unit share system, a holder of shares constituting one or more units is entitled to one vote for each such unit of stock (refer to “

(Unit share system)

” below; currently 100 shares constitute one unit), except that no voting rights with respect to shares of capital stock of Sony Group Corporation are afforded to Sony Group Corporation or any corporate or certain other entities more than

one-quarter

of the total voting rights of which are directly or indirectly held by Sony Group Corporation. If Sony Group Corporation eliminates from its Articles of Incorporation the provisions relating to units of stock, holders of capital stock will have one vote for each share they hold. Except as otherwise provided by law or by the

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Articles of Incorporation of Sony Group Corporation, a resolution can be adopted at a General Meeting of Shareholders by a majority of the number of voting rights of all the shareholders represented at the meeting. The Companies Act and Sony Group Corporation’s Articles of Incorporation provide, however, that the quorum for the election of Directors shall be

one-third

of the total number of voting rights of all the shareholders. Sony Group Corporation’s shareholders are not entitled to cumulative voting in the election of Directors. Shareholders may cast their votes in writing and may also exercise their voting rights through proxies, provided that the proxies are also shareholders holding voting rights. Shareholders may also exercise their voting rights by electronic means pursuant to the method designated by Sony Group Corporation.

The Companies Act and the Articles of Incorporation of Sony Group Corporation provide that in order to amend the Articles of Incorporation and in certain other instances, including:

(1)

acquisition of its own shares from a specific party other than its subsidiaries;

(2)

consolidation of shares;

(3)

any offering of new shares or existing shares held by Sony Group Corporation as treasury stock at a “specially favorable” price (or any offering of stock acquisition rights to acquire shares of capital stock, or bonds with stock acquisition rights on “specially favorable” conditions) to any persons other than shareholders;

(4)

the exemption of liability of a Director, Corporate Executive Officer or independent auditor with certain exceptions;

(5)

a reduction of stated capital with certain exceptions;

(6)

a distribution of

in-kind

dividends which meets certain requirements;

(7)

dissolution, merger, consolidation, or corporate split with certain exceptions;

(8)

the transfer of the whole or a material part of the business;

(9)

the transfer of the whole or a part of the shares or equity interests in a subsidiary which meets certain requirements;

(10)

the taking over of the whole of the business of any other corporation with certain exceptions; or

(11)

share exchange or share transfer for the purpose of establishing 100% parent-subsidiary relationships with certain ~~exceptions,~~exceptions; or

(12)

partial share exchange for the purpose of establishing parent-subsidiary relationships with certain exceptions,

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the quorum shall be

one-third

of the total number of voting rights of all the shareholders, and the approval by at least

two-thirds

of the number of voting rights of all the shareholders represented at the meeting is required (the “special shareholders’ resolutions”).

(Issue of additional shares and

pre-emptive

rights)

Holders of Sony Group Corporation’s shares of capital stock have no

pre-emptive

rights under its Articles of Incorporation. Authorized but unissued shares may be issued, or existing shares held by Sony Group Corporation as treasury stock may be transferred, at such times and upon such terms as the Board of Directors or the CEO determines, subject to the limitations as to the offering of new shares or transfer of existing shares held by Sony Group Corporation as treasury stock at a “specially favorable” price mentioned under “

(Voting rights)

” above.

In the case of an issuance of shares (including a transfer of existing shares held by Sony Group Corporation as treasury stock) or stock acquisition rights whereby any subscriber will hold more than 50% of the voting rights of all shareholders, generally Sony Group Corporation shall give public notice at least two weeks prior to the payment date for such issuance, and if shareholders who hold

one-tenth

or more of the voting rights of all shareholders dissent from the issuance of shares or stock acquisition rights, the approval by a resolution of a General Meeting of Shareholders is generally required before the payment date pursuant to the Companies Act. In addition, in the case of an issuance of shares (including a transfer of existing shares held by Sony Group Corporation as treasury stock) or stock acquisition rights by way of an allotment to a third party which would dilute the outstanding voting shares by 25% or more or change the controlling shareholder, in addition to a resolution of the Board of Directors or a determination by the CEO, the approval of the shareholders or an

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affirmative vote from a person independent of the management is generally required pursuant to the rules of the TSE. The Board of Directors or the CEO may, however, determine that shareholders shall be given subscription rights regarding a particular issue of new shares, in which case such rights must be given on uniform terms to all shareholders as of a record date of which not less than two weeks’ prior public notice is given. Each of the shareholders to whom such rights are given must also be given notice of the expiry thereof at least two weeks prior to the date on which such rights expire.

Subject to certain conditions, Sony Group Corporation may issue stock acquisition rights by a resolution of the Board of Directors or a determination by the CEO. Holders of stock acquisition rights may exercise their rights to acquire a certain number of shares within the exercise period as prescribed in the terms of their stock acquisition rights. Upon exercise of stock acquisition rights, Sony Group Corporation will be obliged to issue the relevant number of new shares or alternatively to transfer the necessary number of treasury stock held by it.

In cases where a particular issue of new shares or stock acquisition rights (i) violates laws and regulations or Sony Group Corporation’s Articles of Incorporation, or (ii) will be performed in a materially unfair manner, and shareholders may suffer disadvantages therefrom, such shareholders may file an injunction to enjoin such issue with a court.

(Liquidation rights)

In the event of a liquidation of Sony Group Corporation, the assets remaining after payment of all debts, liquidation expenses and taxes will be distributed among the holders of shares of Common Stock in proportion to the respective numbers of shares of Common Stock held.

(Record date)

March 31 is the record date for Sony Group Corporation’s

year-end

dividends, if declared. So long as Sony Group Corporation maintains the unit share system, shareholders who are registered as the holders of one or more unit of stock in Sony Group Corporation’s register of shareholders at the end of each March 31 are also entitled to exercise shareholders’ rights at the Ordinary General Meeting of Shareholders with respect to the business year ending on such March 31. September 30 is the record date for interim dividends, if declared. In addition, Sony Group Corporation may set a record date for determining the shareholders entitled to other rights and for other purposes by giving at least two weeks’ prior public notice.

JASDEC is required to promptly give Sony Group Corporation notice of the names and addresses of Sony Group Corporation’s shareholders, the numbers of shares of Common Stock held by them and other relevant information as of such respective record dates.

The price of shares generally goes

ex-dividends

ex-rights

on Japanese stock exchanges on the business day immediately prior to a record date (or if the record date is not a business day, the second business day prior thereto), for the purpose of dividends or rights offerings.

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(Acquisition by Sony Group Corporation of its capital stock)

Under the Companies Act and the Articles of Incorporation of Sony Group Corporation, Sony Group Corporation may acquire shares of Common Stock (i) from a specific shareholder other than any of its subsidiaries (pursuant to the special shareholders’ resolution), (ii) from any of its subsidiaries (pursuant to a ~~determination by the CEO as delegated by~~resolution of the Board of Directors), or (iii) by way of purchase on any Japanese stock exchange on which Sony Group Corporation’s shares of Common Stock are listed or by way of tender offer (pursuant to a resolution of the Board of Directors, as long as its

non-consolidated

annual financial statements and certain documents for the last business year present fairly its assets and profit or loss, as required by ordinances of the Ministry of Justice).

In the case of (i) above, any other shareholder may make a request to Sony Group Corporation that such other shareholder be included as a seller in the proposed purchase, provided that no such right will be available if the purchase price or any other consideration to be received by the relevant specific shareholder will not exceed the last trading price of the shares on the relevant stock exchange on the day immediately preceding the date on which the resolution mentioned in (i) above was adopted (or, if there is no trading in the shares on the stock exchange or if the stock exchange is not open on such day, the price at which the shares are first traded on such stock exchange thereafter).

The total amount of the purchase price of shares of Common Stock may not exceed the Distributable Amount, as described in “(

Distribution of Surplus

) — Distributions of Surplus — Restriction on distribution of Surplus.”

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Shares acquired by Sony Group Corporation may be held for any period or may be retired at the determination of the CEO. Sony Group Corporation may also transfer (by public or private sale or otherwise) to any person the treasury stock held by it, ~~subject to a determination by~~at such times and upon such terms as the Board of Directors or the CEO determines, and subject also to other requirements similar to those applicable to the issuance of new shares, as described in “

(Issue of additional shares and

pre-emptive

rights)

” above. Sony Group Corporation may also utilize its treasury stock for the purpose of transfer to any person upon exercise of stock acquisition rights or for the purpose of acquiring another company by way of merger, share exchange, partial share exchange or corporate split through exchange of treasury stock for shares or assets of the acquired company.

(Unit share system)

The Articles of Incorporation of Sony Group Corporation provide that 100 shares constitute one “unit” of shares of stock. The Board of Directors or the Corporate Executive Officer to whom the authority to make such a determination has been delegated by a resolution of the Board of Directors is permitted to amend the Articles of Incorporation to reduce the number of shares that constitute a unit or to abolish the unit share system entirely. Under the Companies Act, the number of shares constituting one unit cannot exceed 1,000 shares nor 0.5% of the total number of issued shares.

Under the unit share system, shareholders have one voting right for each unit of stock that they hold. Any number of shares less than one full unit have neither voting rights nor rights related to voting rights. Holders of shares constituting less than one unit will have no other shareholder rights if Sony Group Corporation’s Articles of Incorporation so provide, except that such holders may not be deprived of certain rights specified in the Companies Act or an ordinance of the Ministry of Justice, including the right to receive distribution of Surplus.

A holder of shares constituting less than one full unit may require Sony Group Corporation to purchase such shares at their market value in accordance with the provisions of the Share Handling Regulations of Sony Group Corporation. In addition, the Articles of Incorporation of Sony Group Corporation provide that a holder of shares constituting less than one full unit may request Sony Group Corporation to sell to such holder such amount of shares which will, when added together with the shares constituting less than one full unit, constitute one full unit of stock. Such request by a holder and the sale by Sony Group Corporation must be made in accordance with the provisions of the Share Handling Regulations of Sony Group Corporation. As prescribed in the Share Handling Regulations, such requests shall be made through an account management institution and JASDEC pursuant to the rules set by JASDEC, without going through the notification procedure required for the exercise of the shareholders’ rights to which shareholders are entitled, regardless of whether such shareholder held shares on the requisite record date, as described in “

(General)

.” Shares constituting less than a full unit are transferable, under the central book-entry transfer system described in “

(General)

.” Under the rules of the Japanese stock exchanges, however, shares constituting less than a full unit do not comprise a trading unit, except in limited circumstances, and accordingly may not be sold on the Japanese stock exchanges.

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(Sale by Sony Group Corporation of shares held by shareholders whose location is unknown)

Sony Group Corporation is not required to send a notice to a shareholder if a notice to such shareholder fails to arrive at the registered address of the shareholder in Sony Group Corporation’s register of shareholders or at the address otherwise notified to Sony Group Corporation continuously for five years or more.

In addition, Sony Group Corporation may sell or otherwise dispose of shares of capital stock for which the location of the shareholder is unknown. Generally, if (i) notices to a shareholder fail to arrive continuously for five years or more at the shareholder’s registered address in Sony Group Corporation’s register of shareholders or at the address otherwise notified to Sony Group Corporation, and (ii) the shareholder fails to receive distributions of Surplus on the shares continuously for five years or more at the address registered in Sony Group Corporation’s register of shareholders or at the address otherwise notified to Sony Group Corporation, Sony Group Corporation may sell or otherwise dispose of such shareholder’s shares at the then market price of the shares by a determination of a Corporate Executive Officer and after giving at least three months’ prior public and individual notice, and hold or deposit the proceeds of such sale or disposal of shares for such shareholder.

Reporting of substantial shareholdings

The Financial Instruments and Exchange Act of Japan and its related regulations require any person, regardless of residence, who has become, beneficially and solely or jointly, a holder of more than 5% of the total issued shares of capital stock of a company listed on any Japanese stock exchange or whose shares are traded on the

over-the-counter

market in Japan to file with the Director General of the competent Local Finance Bureau of

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the Ministry of Finance within five business days a report concerning such shareholdings. A similar report must also be filed in respect of any subsequent change of 1% or more in any such holding, or any change in material matters set out in reports previously filed, with certain exceptions. For this purpose, shares issuable to such persons upon conversion of convertible securities or exercise of share subscription warrants or stock acquisition rights are taken into account in determining both the number of shares held by such holders and the issuer’s total issued share capital. Any such report shall be filed with the Director General of the relevant Local Finance Bureau of the Ministry of Finance through the Electronic Disclosure for Investors’ Network (EDINET) system.

Ownership restrictions

Except for the general limitation under Japanese anti-trust and anti-monopoly regulations against holding of shares of capital stock of a Japanese corporation which leads or may lead to a restraint of trade or monopoly, except for the limitations under the Foreign Exchange Regulations as described in “D. Exchange Controls” below, and except for general limitations under the Companies Act or Sony Group Corporation’s Articles of Incorporation on the rights of shareholders applicable regardless of residence or nationality, there is no limitation under Japanese laws and regulations applicable to Sony Group Corporation or under its Articles of Incorporation on the rights of

non-residents

or foreign shareholders to hold or exercise voting rights on the shares of capital stock of Sony Group Corporation.

There is no provision in Sony Group Corporation’s Articles of Incorporation or internal regulations that would have an effect of delaying, deferring or preventing a change in control of Sony Group Corporation and that would operate only with respect to a merger, acquisition or corporate restructuring involving Sony Group Corporation.

C.	Material Contracts

None

D.	Exchange Controls

Japanese Foreign Exchange Controls Regulations

The following is a general summary of major Japanese foreign exchange controls regulations applicable to holders of shares of capital stock or voting rights of Sony Group Corporation

or holders of ADSs

who are “exchange

non-residents”

or “foreign investors,” as described below. The statements regarding Japanese foreign exchange control regulations set forth below are based on the laws and regulations in force and as interpreted by the Japanese authorities as of the date of this annual report and are subject to subsequent changes in the applicable Japanese laws or interpretations thereof. This summary is not exhaustive of all possible foreign exchange controls considerations that may apply to a particular investor, and potential investors are advised to satisfy themselves as to the overall foreign exchange controls consequences of the acquisition, ownership and disposition of shares of capital stock or voting rights of Sony Group Corporation

or ADSs

by consulting their own advisors.

The Foreign Exchange and Foreign Trade Act of Japan (the ~~“FEFTA”)~~FEFTA) and its related cabinet orders and ministerial ordinances (collectively, the “Foreign Exchange Regulations”) govern certain aspects relating to the

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acquisition and holding of shares of capital stock and voting rights of Sony Group Corporation by “exchange

non-residents”

and by “foreign investors” (as these terms are defined below). The Foreign Exchange Regulations also apply to the acquisition and holding of ADSs and the exercise of voting rights by holders of ADSs who are “foreign investors” that constitute an “inward direct investment” (as defined below).

Capital Transaction

Except as described below with respect to an “inward direct investment” by a “foreign investor”, the Foreign Exchange Regulations currently in effect do not affect transactions between exchange

non-residents

to purchase or sell shares of a Japanese listed corporation outside Japan using currencies other than Japanese yen.

In general, the acquisition of shares of a Japanese corporation (such as the shares of capital stock of Sony Group Corporation) by an exchange

non-resident

from an exchange resident requires post facto reporting by the exchange resident to the Minister of Finance. No such reporting requirement is imposed, however, if:

(i)

the aggregate purchase price of the relevant shares is 100 million yen or less;

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(ii)

the acquisition is effected through any bank, financial instruments business operator or other entity prescribed by the Foreign Exchange Regulations acting as an agent or intermediary; or

(iii)

the acquisition constitutes an “inward direct investment” described below (in which case a prior notification requirement may apply).

Exchange residents are defined in the Foreign Exchange Regulations as:

(i)

individuals who reside within Japan; or

(ii)

corporations whose principal offices are located within Japan.

Exchange

non-residents

are defined in the Foreign Exchange Regulations as:

(i)

individuals who do not reside in Japan; or

(ii)

corporations whose principal offices are located outside Japan.

Generally, branches and other offices of

non-resident

corporations that are located within Japan are regarded as exchange residents. Conversely, branches and other offices of Japanese corporations located outside Japan are regarded as exchange

non-residents.

Inward Direct Investment in Shares of Listed Corporations

On May 8, 2020, an amendment to the Foreign Exchange Regulations (the “Amendment”) came into effect. By the full implementation of the Amendment on June 7, 2020 (the “Implementation of the Amendment”), the requirements and procedures regarding the prior notifications of inward direct investment to the Minister of Finance and any other competent Ministers under the FEFTA were amended, as described below.

Definition of Foreign Investor

Foreign investors are defined in the Foreign Exchange Regulations as:

(i)

individuals who are exchange

non-residents;

(ii)

corporations or other entities that are organized under the laws of foreign countries or whose principal offices are located outside Japan;

(iii)

corporations of which 50% or more of the total voting rights are held, directly or indirectly, by individuals and/or corporations falling within (i) and/or (ii) above;

(iv)

partnerships under the Civil Code of Japan established to invest in corporations, limited partnerships for investment under the Limited Partnership Act for Investment of Japan or any other similar partnerships under foreign law of which (a) 50% or more of the total contributions are made by individuals and/or corporations falling within (i), (ii), (iii) above and/or (v) below or any other persons prescribed under the Foreign Exchange Regulations or (b) a majority of the general partners are individuals and/or corporations falling within (i), (ii), (iii) above and/or (v) below or any other persons prescribed under the Foreign Exchange Regulations; or

(v)

corporations or other entities, a majority of whose directors or other officers (or directors or other officers having the power of representation) are individuals who are exchange

non-residents.

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Definition of Inward Direct Investment

~~Prior to the Implementation of the Amendment, if~~If a foreign investor ~~acquired~~acquires shares or voting rights of a Japanese corporation that is listed on a Japanese stock exchange (such as the shares of capital stock of Sony Group Corporation) or that is traded on an

over-the-counter

market in Japan and, as a result of the acquisition, the foreign investor, in combination with any existing holdings, directly or indirectly ~~held 10%~~holds 1% or more of the total number of issued shares or the total number of voting rights of the relevant corporation, such acquisition ~~constituted~~constitutes an “inward direct investment.” ~~By the Implementation of the Amendment, the threshold for the acquisition of shares or voting rights that constitutes an “inward direct investment” was lowered from 10% to 1%.~~ In addition, the acquisition of the authority to exercise, either directly or through instructions, voting rights held by other shareholders that results in the foreign investor, in combination with any existing shareholding, directly or indirectly holding 1% or more of the total number of voting rights of the relevant corporation constitutes an “inward direct investment.”

In addition to the acquisitions of shares or voting rights described above, ~~prior to the Implementation of the Amendment,~~ if a foreign investor (i) ~~was~~is granted the authority to exercise voting rights on behalf of other shareholders of ~~the relevant~~a Japanese listed corporation regarding certain matters ~~controlling~~which may give such foreign investor the power to control, or ~~having~~may have a material influence on the management of such corporation, such as the election or removal of directors, or (ii) ~~obtained~~obtains consent from another foreign investor holding the voting rights of the relevant corporation to exercise the voting rights of such

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corporation held by such other foreign investor jointly, and, in each case, as a result of these arrangements, the number of the voting rights directly or indirectly held by the foreign investor, including the total number of the voting rights subject to such ~~proxy,~~authorization to exercise, or the sum of the number of the voting rights directly or indirectly held by the foreign investor and such other foreign investor subject to such joint voting agreement, as the case may be, ~~was~~is 10% or more of the total number of voting rights of the relevant corporation, each such arrangement regarding voting rights (hereinafter referred to as a “voting arrangement”) also ~~constituted an “inward direct investment,” and still~~ constitutes an “inward direct investment” ~~after the Implementation of the Amendment.~~.

Additionally, ~~after the Implementation of the Amendment,~~ if a foreign investor directly or indirectly holds 1% or more of the total voting rights of a Japanese listed corporation and, at a general meeting of shareholders, consents to certain proposals having a material influence on the management of such corporation such as the (i) election of such foreign investor or any of its related persons (as defined in the Foreign Exchange Regulations) as a director or corporate auditor of the relevant corporation or (ii) transfer or discontinuation of its business, such consent also constitutes an “inward direct investment.”

Prior Notification Requirements regarding Inward Direct Investment

~~Prior to the Implementation of the Amendment, if~~If a foreign investor ~~intended~~intends to consummate an acquisition of shares or voting rights of a Japanese listed corporation or the authority to exercise, either directly or through instructions, voting rights held by other shareholders that ~~constituted~~constitutes an “inward direct investment” as described above, unless certain exemptions ~~applied~~apply (such as where the foreign investor is in a country that is listed on an exemption schedule in the Foreign Exchange Regulations and where that Japanese corporation is not engaged in certain businesses (the “Designated Businesses”) designated by the Foreign Exchange Regulations), a prior notification of the relevant inward direct investment ~~was~~is required to be filed with the Minister of Finance and any other competent Ministers. After the Implementation of the Amendment, such prior notification is still required in such circumstances as described above but the definition of “inward direct investment” is expanded as described in “Definition of Inward Direct Investment.”

However, ~~after the Implementation of the Amendment,~~ if a foreign investor is seeking to acquire shares or voting rights of a Japanese listed corporation or the authority to exercise, either directly or through instructions, voting rights held by other shareholders and such acquisition would constitute an “inward direct investment”, such foreign investor may be eligible for the ~~newly introduced~~ exemptions if certain conditions are met. In the case of an acquisition of shares or voting rights or the authority to exercise, either directly or through instructions, voting rights of a Japanese listed corporation that is engaged in a Designated Business other than certain Designated Business designated by the Foreign Exchange Regulations as a core sector business (the “Core Sector Designated Businesses”), the foreign investor may be exempted from the prior notification requirement if such foreign investor complies with the following conditions (the “Exemption Conditions”):

(i)

the foreign investor or its related persons will not become directors or corporate auditors of the relevant corporation;

(ii)

the foreign investor will not make certain proposals (as prescribed in the Foreign Exchange Regulations) at the general meeting of shareholders, including transfer or discontinuation of the Designated Businesses of the relevant corporation; and

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(iii)

the foreign investor will not access

non-public

technical information in relation to the Designated Businesses of the relevant corporation, or take certain other actions that may lead to the leak of such

non-public

technical information (as prescribed in the Foreign Exchange Regulations).

In addition, in the case of an acquisition of shares or voting rights or the authority to exercise, directly or through instructions, voting rights of a Japanese listed corporation that is engaged in the Core Sector Designated Businesses, the foreign investor may be exempted from the prior notification requirement, if, as a result of such acquisition, the foreign investor, in combination with any existing holdings, directly or indirectly holds less than 10% of the total number of issued shares or voting rights of the relevant corporation and such foreign investor complies with the Exemption Conditions and the following additional conditions:

(i)

the foreign investor will not attend, or not cause any persons designated by it to attend, meetings of the relevant corporation’s board of directors, or meetings of committees having authority to make important decisions, in respect of the Core Sector Designated Businesses of the relevant corporation; and

(ii)

the foreign investor will not make, or not cause any persons designated by it to make, proposals to such board or committees or their members in writing or electronic form requesting any response or actions by certain deadlines in respect of the Core Sector Designated Businesses of the relevant corporation.

Notwithstanding the above, if a foreign investor falls under a category of disqualified investors designated by the Foreign Exchange Regulations (including (a) investors who have ~~records~~been sanctioned during the previous five

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years due to violations of the FEFTA and (b) certain investors that are state-owned enterprises or other related entities that are not otherwise accredited by the Minister of Finance), in no event may such foreign investor be eligible for the exemptions described above. On the other hand, if a foreign investor, excluding the disqualified investors described in the foregoing sentence, falls under a category of certain foreign financial institutions (as prescribed in the Foreign Exchange Regulations) and complies with the Exemption Conditions, such foreign investor may be eligible for the exemptions described above, even if the acquisition results in such foreign investor’s directly or indirectly holding 10% or more of the total number of issued shares or voting rights of the corporation engaged in the Core Sector Designated ~~Businesses, which would have required prior notification before the Implementation of the Amendment.~~Businesses.

For reference purposes only, the Minister of Finance publishes, and may update from time to time, a list that classifies Japanese listed corporations into the following categories: (i) corporations engaged only in businesses other than the Designated Businesses, (ii) corporations engaged in Designated Businesses other than Core Sector Designated Businesses and (iii) corporations engaged in the Core Sector Designated Businesses. According to the list published by the Minister of Finance, as of May ~~8, 2020,~~19, 2023, Sony Group Corporation is classified as category (iii) above.

In addition, if a foreign investor intends to make a voting arrangement with respect to a Japanese listed corporation engaged in the Designated Businesses or ~~after the Implementation of the Amendment,~~ consents to a proposal at the general meeting of shareholders of such corporation, in each case, that constitutes an “inward direct investment” as described in “Definition of Inward Direct Investment” above, in certain circumstances, prior notification of the relevant inward direct investment must be filed with the Minister of Finance and any other competent Ministers. In such cases, the ~~newly introduced~~ exemptions from the prior notification requirements may not be available, except for cases where the relevant voting arrangement is a joint voting agreement with other foreign investors to exercise voting rights regarding matters other than certain matters ~~with respect~~which may give such foreign investor the power to ~~controlling~~control, or ~~having~~may have a material influence on the management of the relevant corporation, such as the election or removal of ~~directors, which would have required prior notification before the Implementation of the Amendment.~~directors.

Acquisitions of shares by foreign investors by way of stock split are not subject to the foregoing notification requirements.

Procedures for Prior Notification regarding Inward Direct Investment

If such prior notification is filed, the proposed inward direct investment may not be consummated until 30 days after the date of filing during which time the Ministers will review the proposed inward direct investment, although this screening period may be shortened ~~to two weeks~~ by such Ministers if they no longer deem it necessary to review the proposed inward direct ~~investment.~~investment, or may be shortened to five business days, if the proposed inward direct investment is determined not to raise concerns from the perspective of national security or certain other factors. The Ministers may extend the screening period up to five months if they deem it necessary to continue to review the proposed inward direct investment, and may

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recommend any modification or abandonment of the proposed inward direct investment and, if the foreign investor does not accept such recommendation, the Ministers may order the modification or abandonment of such inward direct investment. In addition, if the Ministers consider the proposed inward direct investment to be an inward direct investment that is likely to cause damage to the national security of Japan, to interfere with the maintenance of public order or to pose an obstacle to the preservation of public safety, and, if a foreign investor (i) consummates such inward direct investment without filing the prior notification described above; (ii) consummates such inward direct investment before the expiration of the screening period described above; (iii) in connection with such inward direct investment, makes false statements in the prior notification described above; or (iv) does not follow the recommendation or order issued by the Ministers to modify or abandon such inward direct investment, the Ministers may order such foreign investor to divest all or part of the shares acquired or take other measures.

Post Facto Reporting Requirements regarding Inward Direct Investment

~~After the Implementation of the Amendment, a~~A foreign investor who consummates an inward direct investment as described above through an acquisition of shares or voting rights or the authority to exercise, directly or through instructions, voting rights of a Japanese listed corporation that is engaged in the Designated Businesses, but is not subject to the prior notification requirements described above due to the exemptions from such prior notification requirements, in general, must file a post facto report of the relevant inward direct investment with the Minister of Finance and any other competent Ministers having jurisdiction over such Japanese corporation within 45 days of the date when, as a result of such acquisition, the foreign investor, in combination with any existing holdings, directly or indirectly holds (i) 1% or more but less than 3% of the total number of issued shares or voting rights, for the first time, (ii) 3% or more but less than 10% of the total number of issued shares or voting rights, for the first time, or (iii) 10%

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or more of the total number of issued shares or voting rights (excluding, in the cases of (i) and (ii) above, a foreign investor who falls under a category of certain foreign financial institutions (as prescribed in the Foreign Exchange Regulations)). In addition, if a foreign investor consummates the inward direct investment described above through the acquisition of shares or voting rights or the authority to exercise, directly or through instructions, voting rights of a Japanese listed corporation that is not engaged in the Designated Businesses (which is, in general, not subject to the prior notification requirements described above) and, as a result of such inward direct investment, such foreign investor, in combination with any existing holdings, directly or indirectly holds 10% or more of shares or voting rights of the total number of issued shares or voting rights of the relevant corporation, such foreign investor, in general, must file a post facto report of the relevant inward direct investment with the Minister of Finance and any other competent Ministers having jurisdiction over such Japanese corporation within 45 days of such inward direct investment.

In addition, ~~after the Implementation of the Amendment,~~ if a foreign investor consummates the inward direct investment described above through a voting arrangement with respect to a Japanese listed corporation that is not engaged in the Designated Businesses (which is, in general, not subject to the prior notification requirements described above), such foreign investor, in general, must file a post facto report of the relevant inward direct investment with the Minister of Finance and any other competent Ministers having jurisdiction over such Japanese corporation within 45 days of such inward direct investment.

Acquisitions of shares by foreign investors by way of stock split are not subject to the foregoing reporting requirements.

Dividends and Proceeds of Sale

Under the Foreign Exchange Regulations, dividends paid on and the proceeds from sales in Japan of shares of capital stock of Sony Group Corporation held by exchange

non-residents

may generally be converted into any foreign currency and repatriated abroad.

Taxation

The following is a summary of the major Japanese national tax and U.S. federal income tax consequences of the ownership, acquisition and disposition of shares of Common Stock of Sony Group Corporation and of ADRs evidencing ADSs representing shares of Common Stock of Sony Group Corporation by a

non-resident

of Japan or a

non-Japanese

corporation without a permanent establishment in Japan. The summary does not purport to be a comprehensive description of all of the tax considerations that may be relevant to any particular investor, and does not take into account any specific individual circumstances of any particular investor. Accordingly, holders of shares of Common Stock or ADSs of Sony Group Corporation are encouraged to consult their tax advisors regarding the application of the considerations discussed below to their particular circumstances.

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This summary is based upon the representations of the depositary and the assumption that each obligation in the deposit agreement in relation to the ADSs dated as of October 15, 2014, and in any related agreement, will be performed in accordance with its terms.

For purposes of the income tax convention between Japan and the United States (the “Treaty”) and the U.S. Internal Revenue Code of 1986, as amended (the “Code”), U.S. holders of ADSs generally will be treated as owning shares of Common Stock of Sony Group Corporation underlying the ADSs evidenced by the ADRs. For the purposes of the following discussion, a “U.S. holder” is a holder that:

(i)

is a resident of the U.S. for purposes of the Treaty;

(ii)

does not maintain a permanent establishment in Japan (a) with which shares of Common Stock or ADSs of Sony Group Corporation are effectively connected and through which the U.S. holder carries on or has carried on business or (b) of which shares of Common Stock or ADSs of Sony Group Corporation form part of the business property; and

(iii)

is eligible for benefits under the Treaty with respect to income and gain derived in connection with shares of Common Stock or ADSs of Sony Group Corporation.

The following is a summary of the principal Japanese tax consequences (limited to national taxes) to

non-residents

of Japan or

non-Japanese

corporations without a permanent establishment in Japan

(“non-resident

Holders”) who are holders of shares of Common Stock of Sony Group Corporation or of ADRs evidencing ADSs representing shares of Common Stock of Sony Group Corporation. The information given below regarding Japanese taxation is based on the tax laws and tax treaties in force and their interpretations by the Japanese tax

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authorities as of June ~~26, 2020.~~20, 2023. Tax laws and tax treaties as well as their interpretations may change at any time, possibly with retroactive effect. Sony Group Corporation will not update this summary for any changes in the tax laws or tax treaties or their interpretation that occurs after such date.

Generally,

non-resident

Holders are subject to Japanese withholding tax on dividends paid by Japanese corporations. Such taxes are withheld prior to payment of dividends as required by Japanese law. Stock splits are, in general, not a taxable event.

In the absence of an applicable tax treaty, convention or agreement reducing the maximum rate of Japanese withholding tax or allowing exemption from Japanese withholding tax, the rate of Japanese withholding tax applicable to dividends paid by Japanese corporations to

non-resident

Holders is generally 20.42%, provided, with respect to dividends paid on listed shares issued by a Japanese corporation (such as the shares of Common Stock or ADSs of Sony Group Corporation) to

non-resident

Holders other than any

non-resident

Holder who is an individual ~~shareholder who holds~~holding 3% or more of the total shares issued by the relevant Japanese corporation, the aforementioned 20.42% withholding tax rate is reduced to 15.315% for dividends due and payable on or before December 31, 2037. Due to the imposition of a special additional withholding tax ~~(2.1 %~~(2.1% of the original withholding tax amount) to secure funds for reconstruction from the Great East Japan Earthquake, the original withholding tax rates of 15% and 20% as applicable, have been effectively increased to 15.315% and 20.42%, respectively, until December 31, 2037.

As of the date of this document, Japan has income tax treaties, conventions or agreements in force, whereby the above-mentioned withholding tax rate is reduced, in most cases to 15%, 10% or ~~10%~~5% for portfolio investors (15% under the income tax treaties with, among other countries, Canada, Denmark, Finland, Germany, Iceland, Ireland, Italy, Luxembourg, New Zealand, Norway ~~Singapore~~ and ~~Spain, and~~Singapore, 10% under the income tax treaties with, among other countries, Australia, Austria, Belgium, France, Hong Kong, the Netherlands, Portugal, Sweden, Switzerland, the U.K. and the United ~~States)~~States, and 5% under the income tax treaties with, among other countries, Spain). Under the Treaty, the maximum rate of Japanese withholding tax that may be imposed on dividends paid by a Japanese corporation to a U.S. holder that does not own directly or indirectly at least 10% of the voting stock of the Japanese corporation is generally reduced to 10% of the gross amount actually distributed, and dividends paid by a Japanese corporation to a U.S. holder that is a pension fund are exempt from Japanese income taxation by way of withholding or otherwise unless such dividends are derived from the carrying on of a business, directly or indirectly, by such pension fund.

If the maximum tax rate provided for in the income tax treaty applicable to dividends paid by Sony Group Corporation to any particular

non-resident

Holder is lower than the withholding tax rate otherwise applicable under Japanese tax law, or if any particular

non-resident

Holder is exempt from Japanese income tax with respect to such dividends under the income tax treaty applicable to such particular

non-resident

Holder, such

non-resident

Holder who is entitled to a reduced rate of or exemption from Japanese withholding tax on payment of dividends on shares of Common Stock by Sony Group Corporation is, in principle, required to submit an Application Form for Income Tax Convention Regarding Relief from Japanese Income Tax and Special Income Tax for Reconstruction on Dividends (together with any other required forms and documents) in advance through the

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withholding agent to the relevant tax authority before the payment of dividends. A standing proxy for

non-resident

Holders of a Japanese corporation may provide this application service. In this regard, a certain simplified special filing procedure is available for

non-resident

Holders to claim treaty benefits of exemption from or reduction of Japanese withholding tax, by submitting a Special Application Form for Income Tax Convention Regarding Relief from Japanese Tax and Special Income Tax for Reconstruction on Dividends of Listed Stock (together with any other required forms and documents). With respect to ADSs, this reduced rate or exemption is applicable if the depositary or its agent submits two Application Forms (one before payment of dividends and the other within eight months after the record date concerning such payment of dividends). To claim this reduced rate or exemption, a

non-resident

Holder of ADSs will be required to file a proof of taxpayer status, residence and beneficial ownership (as applicable) and to provide other information or documents as may be required by the depositary. A

non-resident

Holder who is entitled, under an applicable income tax treaty, to a reduced rate which is lower than the withholding tax rate otherwise applicable under Japanese tax law or an exemption from the withholding tax, but failed to submit the required application in advance will be entitled to claim the refund of taxes withheld in excess of the rate under an applicable tax treaty (if such

non-resident

Holder is entitled to a reduced treaty rate under the applicable income tax treaty) or the full amount of tax withheld (if such

non-resident

Holder is entitled to an exemption under the applicable income tax treaty) from the relevant Japanese tax authority, by complying with a certain subsequent filing procedure. Sony Group Corporation does not assume any responsibility to ensure withholding at the reduced treaty rate or to ensure the absence of withholding for shareholders who would be so eligible under any applicable income tax treaty but where the required procedures as stated above are not followed.

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Gains derived from the sale of shares of Common Stock or ADSs of Sony Group Corporation outside Japan by a

non-resident

Holder holding such shares or ADSs as portfolio investors are, in general, not subject to Japanese income tax or corporation tax under Japanese tax law. U.S. holders are not subject to Japanese income or corporation tax with respect to such gains under the Treaty.

Japanese inheritance tax and gift tax at progressive rates may be payable by an individual who has acquired from another individual shares of Common Stock or ADSs of Sony Group Corporation as a legatee, heir or donee even though neither the acquiring individual nor the deceased nor donor is a Japanese resident.

Holders of shares of Common Stock or ADSs of Sony Group Corporation should consult their tax advisors regarding the effect of these taxes and, in the case of U.S. holders, the possible application of the Estate and Gift Tax Treaty between the U.S. and Japan.

United States Taxation with respect to shares of Common Stock and ADSs

The U.S. dollar amount of dividends received (prior to deduction of Japanese taxes) by a U.S. holder of ADSs or Common Stock of Sony Group Corporation will be included in income as ordinary income for U.S. federal income tax purposes to the extent paid out of current or accumulated earnings and profits of Sony Group Corporation as determined for U.S. federal income tax purposes. ~~Subject to certain exceptions for short-term and hedged positions, the~~The U.S. dollar amount of dividends received by a

non-corporate

U.S. holder with respect to the ADSs or Common Stock will be subject to taxation at a reduced rate if the dividends are “qualified dividends.” ~~Dividends~~Subject to certain exceptions for short-term and hedged positions, dividends paid on the ADSs or Common Stock will be treated as qualified dividends if Sony Group Corporation was not, in the year prior to the year in which the dividend was paid, and is not, in the year in which the dividend is paid a passive foreign investment company (“PFIC”). Based on Sony Group Corporation’s audited financial statements and relevant market and shareholder data, Sony Group Corporation believes that it was not treated as a PFIC for U.S. federal income tax purposes with respect to its taxable year ended March 31, ~~2020.~~2023. In addition, based on Sony Group Corporation’s audited financial statements and Sony Group Corporation’s current expectations regarding the value and nature of its assets, the sources and nature of its income, and relevant market and shareholder data, Sony Group Corporation does not anticipate becoming a PFIC for the taxable year ending March 31, ~~2021.~~2024. Holders of ADSs and Common Stock of Sony Group Corporation should consult their own tax advisors regarding the availability of the reduced dividend tax rate in light of the considerations discussed above and their own particular circumstances. Dividends paid by Sony Group Corporation to U.S. corporate holders of ADSs or Common Stock of Sony Group Corporation will not be eligible for the dividends-received deduction.

Subject to applicable limitations and special considerations discussed below, a U.S. holder of ADSs or Common Stock of Sony Group Corporation ~~will~~may be entitled to a credit for Japanese tax withheld in accordance with the Treaty from dividends paid by Sony Group Corporation. ~~For purposes~~The applicable limitations include new requirements recently adopted by the U.S. Internal Revenue Service that any Japanese tax will need to satisfy in order to be eligible to be a creditable tax for a U.S. holder. In the case of a U.S. holder that properly elects the benefits of the ~~foreign~~Treaty, the Japanese tax ~~credit limitation,~~on dividends will be ~~foreign source income,~~treated as meeting the new requirements and ~~will generally constitute “passive” income.~~therefore as a creditable tax. In the case of all other U.S. holders, the application of these requirements to the Japanese tax on dividends is uncertain and Sony Group Corporation has not determined whether these requirements have been met. Foreign tax credits will not be allowed for withholding taxes imposed in respect of certain short-term or hedged positions and may not be allowed in respect of arrangements in which economic profit, after

non-U.S.

taxes, is insubstantial. If the Japanese dividend tax is not a creditable tax for a U.S. holder or the U.S. holder does not elect to claim a foreign tax credit for any foreign income taxes paid or accrued in the same taxable year, the U.S. holder may be able to deduct the Japanese tax in computing such U.S. holder’s taxable income for U.S. federal income tax purposes. Holders of ADSs and Common Stock of Sony Group Corporation should consult their own tax advisors regarding the implications of these rules in light of their particular circumstances.

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~~Table~~For purposes of ~~Contents~~

~~Dividends paid by Sony Corporation to U.S. corporate holders of ADSs or Common Stock of Sony Corporation~~the foreign tax credit limitation, dividends will ~~not~~ be ~~eligible for the dividends-received deduction.~~foreign source income, and will generally constitute “passive” income.

In general, a U.S. holder will recognize capital gain or loss upon the sale or other disposition of ADSs or Common Stock of Sony Group Corporation equal to the difference between the amount realized on the sale or disposition and the U.S. holder’s tax basis in the ADSs or Common Stock. Such capital gain or loss will be long-term capital gain or loss if the ADSs or Common Stock have been held for more than one year on the date of the sale or disposition. The net amount of long-term capital gain recognized by an individual holder is subject to lower rates of federal income taxation than ordinary income or short-term capital gain rates.

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Under the Code, a U.S. holder of ADSs or Common Stock of Sony Group Corporation may be subject, under certain circumstances, to information reporting and possibly backup withholding with respect to dividends and proceeds from the sale or other disposition of ADSs or Common Stock, unless the U.S. holder provides proof of an applicable exemption or correct taxpayer identification number and otherwise complies with applicable requirements of the backup withholding rules. Any amount withheld under the backup withholding rules is not an additional tax and may be refunded or credited against the U.S. holder’s federal income tax liability, so long as the required information is furnished to the U.S. Internal Revenue Service.

F.	Dividends and Paying ~~Agent~~Agents

Not Applicable

G.	Statement by Experts

Not Applicable

H.	Documents on Display

It is possible to read and copy documents referred to in this annual report on Form

20-F

that have been filed with the SEC at the SEC’s public reference room located at 100 F Street, N.E., Washington, D.C. 20549. Please call the SEC at

1-800-SEC-0330

for further information on the public reference rooms and their copy charges. You can also access the documents at the SEC’s home page ~~(http:~~(https://~~www.sec.gov/index.html)~~www.sec.gov).

I.	Subsidiary Information

Not Applicable

J.	Annual Report to Security Holders

Not Applicable

Item 11.

Quantitative and Qualitative Disclosures about Market Risk

Sony’s business is continuously exposed to market fluctuation, such as fluctuations in currency exchange rates, interest rates or stock prices. ~~Sony utilizes several derivative instruments, such as foreign exchange forward contracts, foreign currency option contracts, interest rate swap agreements~~For risk management policies and ~~currency swap agreements~~exposures for each risk, refer to Note 6 of the consolidated financial statements. For risk inherent in ~~order to hedge~~ the ~~potential downside risk on the cash flow from the normal course of~~insurance business, caused by market fluctuation. Sony uses foreign exchange forward contracts and foreign currency option contracts primarily to reduce the foreign exchange volatility risk that transactions and accounts receivable or accounts payable denominated in yen, U.S. dollars, euros or other currencies have through the normal course of Sony’s worldwide business. Interest rate swap agreements and currency swap agreements are utilized to diversify funding conditions or to reduce funding costs, andwhich is included in the Financial Services segment, ~~these transactions are used~~refer to Note 13 of the consolidated financial statements. For derivative instruments and hedging activities utilized by Sony to reduce such risk, refer to Note 15 of the consolidated financial statements. For credit risk exposure for ~~asset liability management. Sony uses these derivative~~ financial assets of debt instruments mainly for risk-hedging purposes as described above, and some derivative transactions, such as bond futures and bond options, are held or utilized for trading purposes in the Financial Services segment. If hedge accounting cannot be applied because the accounts receivable or accounts payabledesignated to be hedged are not yet booked, or because cash flows from derivative transactions do not coincide with the underlying exposures recorded on Sony’s balance sheet, such derivatives agreements are subject to a

~~mark-to-market~~

evaluation and their unrealized gains or losses are recognized in earnings. In addition, Sony holds marketable securities, such as straight bonds and stocks in yen or other currencies, in the Financial Services segment to obtain interest income or capital gain on the financial assets under management. These securities include a concentration of investments in long-term Japanese national government bonds, for which Sony monitors the related credit ratings and other market information on an ongoing basis. Investments in marketable securities are also subject to market fluctuation.

~~Sony measures the economic impact of market fluctuations on the value of derivatives agreements and marketable securities by using~~

~~Value-at-Risk~~

~~(“VaR”) analysis in order to comply with Item 11 disclosure~~

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~~requirements. VaR in this context indicates the potential maximum amount of loss in~~measured at fair value ~~resulting from adverse market fluctuations for a selected period~~through profit or loss, refer to Note 6 of ~~time and at a selected level of confidence.~~the consolidated financial statements.

The following table shows the results of VaR. These analyses for the fiscal year ended March 31, 2020 indicate the potential maximum loss in fair value as predicted by the VaR analysis resulting from market fluctuations in one day at a 95% confidence level. The VaR of currency exchange rate risk principally consists of risks arising from the volatility of the exchange rates between the yen and the U.S. dollar and between the yen and the euro, the currencies in which a significant amount of financial assets and liabilities and derivative transactions are maintained on a consolidated basis. The VaR of interest rate risk and stock price risk consists of risks arising from the volatility of the interest rates and stock prices against invested securities and derivatives transactions in the Financial Services segment.

The net VaR for Sony’s entire portfolio is smaller than the simple aggregate of VaR for each component of market risk. This is due to the fact that market risk factors such as currency exchange rates, interest rates and stock prices are not completely independent and potential profits and losses arising from each market risk may be mutually offsetting to some degree.

~~The disclosed VaR amounts simply represent the calculated maximum potential loss on the specified date and do not necessarily indicate an estimate of actual or future loss.~~

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~~Consolidated~~

June 30,
2019

September 30,
2019

December 31,
2019

March 31,
2020

(Yen in billions)

Net VaR

1.2

1.2

0.9

1.3

VaR of currency exchange rate risk

1.2

1.1

0.9

1.3

VaR of interest rate risk

0.1

0.1

0.1

0.1

VaR of stock price risk

0.0

0.0

0.0

0.0

~~Financial Services~~

June 30,
2019

September 30,
2019

December 31,
2019

March 31,
2020

(Yen in billions)

Net VaR

1.3

0.9

0.8

1.1

VaR of currency exchange rate risk

1.2

0.9

0.7

1.0

VaR of interest rate risk

0.1

0.1

0.1

0.1

VaR of stock price risk

0.0

0.0

0.0

0.0

~~Sony without the Financial Services segment~~

June 30,
2019

September 30,
2019

December 31,
2019

March 31,
2020

(Yen in billions)

Net VaR

0.8

0.6

0.5

0.8

VaR of currency exchange rate risk

0.8

0.6

0.5

0.8

VaR of interest rate risk

0.0

0.0

0.0

0.0

VaR of stock price risk

0.0

0.0

0.0

0.0

Item 12.

Description of Securities Other Than Equity Securities

A.	Debt Securities

Not Applicable

B.	Warrants and Rights

Not Applicable

C.	Other Securities

Not Applicable

D.	American Depositary Shares

Citibank N.A. (the “Depositary”) serves as the depositary for Sony Group Corporation’s ~~American Depositary Shares (“ADSs”)~~ADSs pursuant to a deposit agreement between Sony Group Corporation, the Depositary, and the holders and beneficial owners of ADSs issued thereunder from time to time (the “Deposit Agreement”) (attached as Exhibit 2.1 to this report). ADS holders (“Holders”) may be required to pay various fees to the Depositary and the Depositary may refuse to provide any service for which a fee is assessed until the applicable fee has been paid. The following fees may at any time and from time to time be changed by agreement between Sony Group Corporation and the Depositary.

~~106~~- 104 -

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Under the terms of the Deposit Agreement, Holders may have to pay the following service fees to the Depositary.


Service	Rate	By Whom Paid

Issuance of ADSs upon deposit of Sony Group Corporation’s Common Stock	Up to 5.00 U.S. dollar per 100 ADSs (or fraction thereof) issued	Person depositing Sony Group Corporation’s Common Stock or person receiving ADSs

Delivery of deposited securities against surrender of ADSs	Up to 5.00 U.S. dollar per 100 ADSs (or fraction thereof) surrendered	Person surrendering ADSs for the purpose of withdrawal of deposited securities or person to whom deposited securities are delivered

Distribution of cash dividends or other cash distributions (i.e., sale of rights and other entitlements)	Up to 5.00 U.S. dollar per 100 ADSs (or fraction thereof) held	Person to whom distribution is made

Distribution of ADSs pursuant to (i) stock dividends or other free stock distributions, (ii) exercise of rights to purchase additional ADSs	Up to 5.00 U.S. dollar per 100 ADSs (or fraction thereof) held	Person to whom distribution is made

Distribution of securities other than ADSs or rights purchase Additional ADSs (i.e., spin-off shares)	Up to 5.00 U.S. dollar per 100 ADSs (or fraction thereof) held	Person to whom distribution is made

ADS Services	Up to 5.00 U.S. dollar per 100 ADSs (or fraction thereof) held on the applicable record ~~date(s)~~date (s) established by the Depositary	Person holding ADSs on the applicable record ~~date(s)~~date (s) established by the Depositary

Holders will also be responsible for paying certain charges such as: (i) taxes (including applicable interest and penalties) and other governmental charges; (ii) such registration fees as may from time to time be in effect for the registration of Sony Group Corporation’s Common Stock or other deposited securities on the share register and applicable to transfer of Sony Group Corporation’s Common Stock or other deposited securities to or from the name of the custodian, the Depositary or any nominees upon the making of deposits and withdrawals, respectively; (iii) such cable, telex and facsimile transmission and delivery expenses as are expressly provided in the Deposit Agreement to be at the expense of the person depositing Sony Group Corporation’s Common Stock or withdrawing deposited securities or of the Holders and beneficial owners of ADSs; (iv) the expenses and charges incurred by the Depositary in the conversion of foreign currency; (v) such fees and expenses as are incurred by the Depositary in connection with compliance with exchange control regulations and other regulatory requirements applicable to Sony Group Corporation’s Common Stock, deposited securities, ADSs and ADRs; and (vi) the fees and expenses incurred by the Depositary, the custodian, or any nominee in connection with the servicing or delivery of deposited property.

ADS fees and charges payable upon (i) deposit of shares against issuance of ADSs and (ii) surrender of ADSs for cancellation and withdrawal of deposited securities will be payable by the person to whom the ADSs so issued are delivered by the Depositary (in the case of ADS issuances) or by the person who delivers the ADSs for cancellation to the Depositary (in the case of ADS cancellations). In the case of ADSs issued by the Depositary into the Depository Trust Company ~~(DTC)~~ or presented to the Depositary via ~~DTC,~~the Depository Trust Company, the ADS issuance and cancellation fees and charges will be payable by the ~~DTC~~Depository Trust Company participant(s) receiving the ADSs from the Depositary or the ~~DTC~~Depository Trust Company participant(s) surrendering the ADSs to the Depositary for cancellation, as the case may be, on behalf of the beneficial owner(s) and will be charged by the ~~DTC~~Depository Trust Company participant(s) to the account(s) of the applicable beneficial owner(s) in accordance with the procedures and practices of the ~~DTC~~Depository Trust Company participant(s) as in effect at the time. ADS fees and charges in respect of distributions and the ADS service fee are payable by Holders as of the applicable ADS record date established by the Depositary. In the case of distributions of cash, the amount of the applicable ADS fees and charges is deducted from the funds being distributed. In the case of (i) distributions other than cash and (ii) the ADS service fee, the applicable Holders as of the ADS record date established by the Depositary will be invoiced for the amount of the ADS fees and charges. For ADSs held through ~~DTC,~~the Depository Trust Company, the ADS fees and charges for distributions other than cash and the ADS service fee are charged to the ~~DTC~~Depository Trust Company participants in accordance with

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the procedures and practices prescribed by ~~DTC~~the Depository Trust Company from time to time and the ~~DTC~~Depository Trust Company participants in turn charge the amount of such ADS fees and charges to the beneficial owners for whom they hold ADSs.

~~107~~

~~Table of Contents~~

In the event of refusal by a Holder to pay the Depositary fees, the Depositary may, under the terms of the Deposit Agreement, refuse the requested service until payment is received or may set off the amount of the Depositary fees from any distribution to be made to the Holder. Note that the fees and charges Holders may be required to pay may vary over time and may be changed by Sony Group Corporation and by the Depositary. Holders will receive prior notice of such changes. The Depositary may reimburse Sony Group Corporation for certain expenses incurred by Sony Group Corporation in respect of the ADR program, by making available a portion of the ADS fees charged in respect of the ADR program or otherwise, upon such terms and conditions as Sony Group Corporation and the Depositary agree from time to time.

Direct and Indirect Payments by the Depositary to Sony

The Depositary reimburses Sony for certain expenses Sony incurs in connection with its ADR program, subject to certain ceilings. These reimbursable expenses currently include, but are not limited to, legal and accounting fees, investor relations expenses and fees payable to service providers for the distribution of material to ADR holders. For the fiscal year ended March 31, ~~2020,~~2023, such reimbursements totaled ~~approximately 4,319,163.74~~3,399,247.27 U.S. dollars.

In addition, as part of its service to Sony, the Depositary waives fees in connection with its ADR program, subject to a ceiling. These waived expenses currently include, but are not limited to, standard costs associated with the administration of the ADR program, associated operating expenses, investor relations advice and access to an internet-based tool used in Sony’s investor relations activities. For the fiscal year ended March 31, ~~2020,~~2023, the amount of such indirect payments was estimated to total 5,000 U.S. dollars.

Item 13.

Defaults, Dividend Arrearages and Delinquencies

None

Item 14.

Material Modifications to the Rights of Security Holders and Use of Proceeds

None

Item 15.

Controls and Procedures

Item 15(a). Disclosure Controls and Procedures

Sony has carried out an evaluation under the supervision and with the participation of Sony’s management, including the CEO and CFO, of the effectiveness of the design and operation of Sony’s disclosure controls and procedures, as defined in Rules

13a-15(e)

and

15d-15(e)

under the ~~Securities~~ Exchange Act, ~~of 1934,~~ as of March 31, ~~2020.~~2023. Disclosure controls and procedures require that information to be disclosed in the reports Sony Group Corporation files or submits under the Securities and Exchange Act of 1934 is recorded, processed, summarized and reported as and when required, within the time periods specified in the applicable rules and forms, and that such information is accumulated and communicated to Sony’s management, including the CEO and CFO, as appropriate to allow timely decisions regarding required disclosure. There are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures. Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance of achieving their control objectives. Based upon Sony’s evaluation, the CEO and CFO have concluded that, as of March 31, ~~2020,~~2023, the disclosure controls and procedures were effective at the reasonable assurance level.

Item 15(b). Management’s Annual Report on Internal Control over Financial Reporting

Sony’s management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rules

13a-15(f)

and

15d-15(f)

under the ~~Securities~~ Exchange ~~Act of 1934.~~Act. Sony’s internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with ~~generally accepted accounting principles in the United States of America.~~IFRS. Sony’s internal control over financial reporting includes those policies and procedures that:

(i)

pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of Sony;

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(ii)

provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and

~~108~~

~~Table of Contents~~

expenditures of Sony are being made only in accordance with authorizations of management and directors; and

(iii)

provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of Sony’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Sony’s management excluded ~~AEGON Sony Life Insurance Co., Ltd. (subsequently renamed Sony Life With Insurance Co., Ltd. as of April 1, 2020) and SA Reinsurance Ltd. (collectively, the “Companies”),~~Bungie, which became a wholly-owned ~~subsidiaries of Sony Life Insurance Co., Ltd. and consolidated subsidiaries~~subsidiary of Sony on ~~January 29, 2020,~~July 15, 2022, from its assessment of the effectiveness of Sony’s internal control over financial reporting as of March 31, ~~2020, except for the recognition~~2023. Bungie’s total assets and ~~measurement~~total sales excluded from its assessment represented less than 1% of ~~the goodwill. The Companies represented approximately 3% of~~(i) Sony’s total consolidated assets as of March 31, ~~2020 (after excluding the goodwill)~~2023 and ~~less than 1% of~~(ii) Sony’s total consolidated sales and ~~operating~~financial services revenue for the fiscal year ended March 31, ~~2020. This~~2023. The Bungie acquisition is discussed in Note 2530 to the consolidated financial statements.

Sony’s management evaluated the effectiveness of Sony’s internal control over financial reporting as of March 31, ~~2020~~2023 based on the criteria established in “Internal Control — Integrated Framework (2013)” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on the evaluation, management has concluded that Sony maintained effective internal control over financial reporting as of March 31, ~~2020.~~2023.

Sony’s independent registered public accounting firm, PricewaterhouseCoopers Aarata LLC, has issued an audit report on the effectiveness of Sony’s internal control over financial reporting as of March 31, ~~2020,~~2023, presented on page

(F-2).

Item 15(c). Attestation Report of the Registered Public Accounting Firm

Refer to the Report of Independent Registered Public Accounting Firm on page

(F-2).

Item 15(d). Changes in Internal Control over Financial Reporting

There has been no change in Sony’s internal control over financial reporting during the fiscal year ended March 31, ~~2020~~2023 that has materially affected, or is reasonably likely to materially affect, Sony’s internal control over financial reporting.

Item 16.

[Reserved]

Item 16A.

Audit Committee Financial Expert

Sony Group Corporation’s Board of Directors has determined that Toshiko Oka and Keiko Kishigami each qualifies as an “audit committee financial expert” as defined in Item 16A of Form

20-F

under the ~~Securities~~ Exchange Act, ~~of 1934,~~ as amended. In addition, both are determined to be independent as defined under the ~~New York Stock Exchange~~NYSE Corporate Governance Standards.

Item 16B.

Code of Ethics

Sony has adopted a code of ethics, as defined in Item 16B of Form

20-F

under the ~~Securities~~ Exchange Act, ~~of 1934,~~ as amended. The code of ethics applies to ~~Sony’s Chief Executive Officer, Chief Financial Officer, chief accounting officer and persons performing similar functions, as well as to~~all directors, ~~and all other~~ officers and employees of ~~Sony, as defined in the code of ethics.~~Sony. The code of ethics is available at:

https://~~www.sony.net/~~www.sony.com/en/SonyInfo/csr_report/compliance/~~code.html~~code_of_conduct_En.pdf

~~109~~- 107 -

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Item 16C.

Principal Accountant Fees and Services

Audit and

Non-Audit

Fees

The following table presents fees for audit and other services rendered by PricewaterhouseCoopers for the fiscal years ended March 31, ~~2019~~2022 and ~~2020.~~2023.

Fiscal year ended
March 31

2019

2020

Yen in millions

Audit Fees (1)

3,716

4,011

Audit-Related Fees (2)

480

400

Tax Fees (3)

0

0

All Other Fees (4)

197

118

4,393

4,529


	Fiscal year ended March 31
	2022		2023
	Yen in millions
Audit Fees (1)		4,514		4,901
Audit-Related Fees (2)		175		334
Tax Fees (3)		0		28
All Other Fees (4)		16		9

		4,705		5,272

(1)	Audit Fees consist of fees for the annual audit services engagement and other audit services, which are those services that only the external auditor can provide.

(2)	Audit-Related Fees consist of fees billed for assurance and related services, and audit services relating to benefit plans, business acquisitions and dispositions.

(3)	Tax ~~Fees~~fees primarily consist of fees for tax advice.

(4)	All Other Fees consist of fees primarily for services rendered with respect to advisory services.

Audit Committee’s

Pre-Approval

Policies and Procedures

Consistent with the ~~U.S. Securities and Exchange Commission~~SEC rules regarding auditor independence, Sony Group Corporation’s Audit Committee is responsible for appointing, reviewing and setting compensation, retaining, and overseeing the work of Sony’s independent auditor, so that the auditor’s independence will not be impaired. The Audit Committee established a formal policy requiring

pre-approval

of all audit and permissible

non-audit

services provided by the independent auditor to Sony Group Corporation or any of its subsidiaries. The Audit Committee periodically reviews this policy with due regard for compliance with laws and regulations of host countries where Sony Group Corporation is listed.

Prior to the engagement of the independent auditor for the following fiscal year’s audit, management in charge of accounting or other relevant areas (“Accounting Management”) submits an application form to the Audit Committee for comprehensive

pre-approval

of all recurring services expected to be rendered during that year, other than services that are classified as “Tax” related services (“Tax Services”). In order to obtain comprehensive

pre-approval,

Accounting Management must designate in which of two categories (Audit and

Non-Audit)

the services will be classified as well as fees expected, both for each category in the aggregate and for each individual service, and detailed

back-up

information regarding each service to the extent possible to ensure that the Audit Committee knows precisely what particular service and the expected fees it is being asked to

pre-approve

and that the scope of any service or the expected fees approved is unambiguous. Any additional services not within the scope of comprehensive

pre-approval

and Tax Services require the Audit Committee’s separate

pre-approval

on an individual basis. The Audit Committee approves, if necessary, any changes in terms, conditions and fees resulting from changes in the scope of services to be provided or from other circumstances, with respect to both services that are subject to comprehensive and individual

pre-approval.

The Audit Committee or its designee establishes procedures to assure that the independent auditor is aware in a timely manner of the services that have been

pre-approved.

Item 16D.

~~110~~

~~Table of Contents~~

~~Item 16D.~~

Exemptions from the Listing Standards for Audit Committees

Not Applicable

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Item 16E.

Purchases of Equity Securities by the Issuer and Affiliated Purchasers

The following table sets out information concerning purchases made by Sony Group Corporation during the fiscal year ended March 31, ~~2020.~~2023.

Period

(a) Total
number of
shares
purchased

(b) Average
price paid per
share (yen)

(c) Total number of
shares purchased as
part of publicly
announced plans or
programs
*1,2

(d) Maximum
number of shares that
may yet be purchased
under the plans or
programs
*1,2

April 1 — 30, 2019

1,489

5,037.13

N/A

N/A

May 1 — 31, 2019

480,832

5,429.21

     479,200

59,520,800

June 1 — 30, 2019

4,269,608

5,325.07

  4,266,900

55,253,900

July 1 — 31, 2019

577,002

5,872.74

     573,700

54,680,200

August 1 — 31, 2019

11,469,846
*3
5,852.46

11,467,300

43,212,900

September 1 — 30, 2019

4,624,744

6,315.99

  4,622,500

38,590,400

October 1 — 31, 2019

2,018,014

6,309.94

  2,016,500

36,573,900

November 1 — 30, 2019

1,422,829

6,777.15

  1,419,800

35,154,100

December 1 — 31, 2019

1,218,592

7,164.95

  1,212,200

33,941,900

January 1 — 31, 2020

572,214

7,804.01

     567,800

33,374,100

February 1 — 29, 2020

340,430

7,381.84

     338,500

33,035,600

March 1 — 31, 2020

6,095,878
*4
6,077.24

  6,094,800

N/A

Total

33,091,478

6,050.24

33,059,200

N/A


Period	(a) Total number of shares purchased		(b) Average price paid per share (yen)		(c) Total number of shares purchased as part of publicly announced plans or programs *1,2,3,4		(d) Maximum number of shares that may yet be purchased under the plans or programs *1,2,3,4
April 1 — 30, 2022		620,533		11,365.92		619,300	N/A
May 1 — 31, 2022		495,331		10,882.17		494,200	24,692,800
June 1 — 30, 2022		33,008		10,973.15		31,300	24,661,500
July 1 — 31, 2022		1,867		11,395.93		0	24,661,500
August 1 — 31, 2022		2,070,093		11,279.85		2,068,600	22,592,900
September 1 — 30, 2022		1,519,072		10,468.75		1,517,500	21,075,400
October 1 — 31, 2022		2,810,154		9,655.97		2,808,900	18,266,500
November 1 — 30, 2022		1,331		11,139.33		0	18,266,500
December 1 — 31, 2022		1,143,106		10,565.40		1,084,400	17,182,100
January 1 — 31, 2023		738,822		10,553.67		727,700	16,454,400
February 1 — 28, 2023		6,297		11,693.43		0	16,454,400
March 1 — 31, 2023		6,056		11,560.96		0	16,454,400

Total		9,445,670		10,507.22		9,351,900	N/A

Column (a) represents the combined total number of shares purchased during the fiscal year ended March 31, ~~2020,~~2023, including both fractional shares purchased from fractional shareholders in accordance with the Companies Act, and shares purchased in accordance with publicly announced plans, as shown in column (c).

Under the Companies Act, a holder of shares constituting less than one full unit may require Sony Group Corporation to purchase such shares at their market value (Refer to “B. Memorandum and Articles of Association —

Capital stock

—

~~(Unit~~(Unit share system)

” in “Item 10.

Additional Information

”). During the fiscal year ended March 31, ~~2020,~~2023, Sony Group Corporation purchased ~~32,278~~93,770 shares of common stock for a total purchase price of ~~212,075,397~~1,028,945,637 yen upon such requests from holders of shares constituting less than one full unit.

*1 Sony approved on April 28, 2021 by resolution of the ~~repurchase~~Board of ~~shares~~Directors the setting of the following parameters for repurchase of its own common stock ~~as follows at~~pursuant to the ~~meeting~~Companies Act and Sony Group Corporation’s Articles of ~~its Board of Directors held on May 16, 2019.~~Incorporation

Total number of shares for repurchase: 6025 million shares (maximum) ~~(4.80%~~(2.02% of total number of shares issued and outstanding (excluding treasury stock))

Total purchase price for repurchase of shares: 200 billion yen (maximum)

Period of repurchase: From ~~May 17, 2019~~April 30, 2021 to ~~March 31, 2020~~April 28, 2022

*2 The repurchase of shares of common stock based on the ~~above~~ approval at the Board of Directors set forth in Note 1 above was completed. The details are as follows.

Total number of shares repurchased: ~~33,059,200~~8,206,900 shares

Total purchase price for repurchased shares: ~~199,999,200,300~~97,381,577,700 yen

Period of repurchase: ~~May 17, 2019~~April 30, 2021 to ~~March 17, 2020~~April 28, 2022

*3 ~~This figure does not include shares~~Sony approved on May 10, 2022 by resolution of ~~restricted stock that were acquired without cash consideration (16,600 shares).~~

*4 This figure does not include shares of restricted stock that were acquired without cash consideration (45,000 shares).

~~Note: Sony cancelled treasury stock as follows in accordance with a decision by Sony’s Representative Corporate Executive Officer as delegated by~~ the Board of ~~Directors.~~Directors the setting of the following parameters for repurchase of its own common stock pursuant to the Companies Act and Sony Group Corporation’s Articles of Incorporation

~~Class of shares cancelled: Common stock~~

Total number of shares ~~cancelled: 12,737,400~~for repurchase: 25 million shares

~~Date~~ (maximum) (2.02% of ~~cancellation: March 26, 2020~~

total number of shares issued and outstanding (excluding treasury stock))

~~111~~

Total purchase price for repurchase of shares: 200 billion yen (maximum)

Period of repurchase: From May 11, 2022 to May 10, 2023

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*4 The repurchase of shares of common stock based on the approval at the Board of Directors set forth in Note 3 above was completed. The details are as follows.

Total number of shares repurchased: 9,343,600 shares

Total purchase price for repurchased shares: 99,118,323,800 yen

Period of repurchase: May 11, 2022 to May 10, 2023

Item 16F.

Change in Registrant’s Certifying Accountant

Not Applicable

~~112~~- 110 -

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Item 16G.

~~Disclosure About Differences in~~

Corporate Governance

The table below discloses the significant ways in which Sony’s corporate governance practices differ from those required for U.S. companies under the listing standards of the ~~New York Stock Exchange (“NYSE”).~~NYSE. As a foreign private issuer listed on the NYSE, Sony Group Corporation is exempt from most of the exchange’s corporate governance standards requirements. For further information on Sony’s corporate governance practices and history, ~~please~~ refer to “Board Practices” in “Item 6.

Directors, Senior Management and Employees

.”


NYSE Standards		Sony’s Corporate Governance Practices
Board Independence. A majority of board directors must be independent.		Sony Group Corporation has adopted the “Company with Three Committees” corporate governance system under the Companies Act. Sony Group Corporation’s Board Charter requires its board to consist of between 108 to 2014 directors. The Companies Act does not require Sony Group Corporation to have a majority of “independent” (in the meaning given by the NYSE Corporate Governance Standards) directors on its board; rather, it requires Sony Group Corporation to have a majority of “outside” directors (the definition of the term “outside” director is summarized below) on each of three statutory committees (the Nominating Committee, the Audit Committee and the Compensation Committee).

Director Independence. A director is not independent if such director is (i) a person who the board determines has a material direct or indirect relationship with the company, its parent or a consolidated subsidiary; (ii) a person who, within the last three years, has been an employee of the company or has an immediate family member of an executive officer of the company, its parent or a consolidated subsidiary; (iii) a person who had received, or whose immediate family member had received, during any 12-month period within the last three years, more than 120,000 U.S. dollars per year in direct compensation from the company, its parent or a consolidated subsidiary, other than director and committee fees or deferred compensation for prior services (provided such compensation is not contingent in any way on continued service); (iv) (A) a person who is, or whose immediate family member is, a current partner or employee of a firm that is the company’s internal or external auditor; (B) a person whose immediate family member is a partner of such a firm; (C) a person who has an immediate family member who is a current employee of such a firm and who personally participates in the firm’s audit, assurance or tax compliance (but not tax planning) practice; or (D) a person who was, or has an immediate family member who was, within the last three years, a partner or employee of such a firm and personally worked on the listed company’s audit within that time; (v) a person who is, or whose immediate family member is, or has been within the last three years, employed as an executive officer of another company where any of		“Outside” director is defined in the Companies Act as a person who satisfies all of the requirements (i) through (v) below: (i) a person who is not a Director of Sony Group Corporation or any of its subsidiaries engaged in the business operations of Sony Group Corporation or such subsidiaries, as the case may be, or a Corporate Executive Officer or general manager or other employee (“Group Executive Director, etc.”) of Sony Group Corporation or any of its subsidiaries and who has not been a Group Executive Director, etc. of Sony Group Corporation or any of its subsidiaries for ten years prior to assuming his/her office; (ii) if a person who has been a director, accounting counselor (if the accounting counselor is a juridical person, a member who is in charge of the affairs), or corporate auditor of Sony Group Corporation or any of its subsidiaries (excluding a person who has been a Group Executive Director, etc.) at the time within ten years prior to assuming his/her office, a person who has not been a Group Executive Director, etc. of Sony Group Corporation or any of its subsidiaries for ten years prior to assuming his/her office as a director, an accounting counselor, or a corporate auditor; (iii) a person who is not a director or a Corporate Executive Officer or general manager or other employee of a parent company or any entity which controls the management of Sony Group Corporation; (iv) a person who is not a Group Executive Director, etc. of a direct/indirect subsidiary of Sony Group Corporation or any entity the management of which is directly or indirectly controlled by Sony Group Corporation; and (v) a person who is not a spouse or relative within the second degree of kinship of a Director or a Corporate Executive Officer or general manager or other ~~employee of Sony Corporation.~~

~~113~~

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NYSE Standards		Sony’s Corporate Governance Practices

the listed company’s present executive officers at the same time serves or served on that company’s compensation committee; or (vi) an executive officer or employee of a company, or has an immediate family member of an executive officer of a company, that makes payments to, or receives payments from, the listed company, its parent or a consolidated subsidiary for property or services in an amount which, in any of the last three fiscal years, exceeds the greater of 1 million U.S. dollars or 2% of such other company’s consolidated gross revenues		employee of Sony Group Corporation. Under the Companies Act, a director’s status as an “outside” director is unaffected by the director’s compensation, his or her affiliation with business partners, or the board’s affirmative determination of independence. On the other hand, under the Companies Act, a director who has had a career as a management director, corporate executive officer, or other employee of the company, its subsidiaries or other group companies is by definition not an “outside” director.


		Sony Group Corporation’s Board Charter includes a provision requiring that each “outside” director: (i) Shall not have received directly from Sony Group, during any consecutive 12-month period within the last three years, more than an amount equivalent to 120,000 U.S. dollars, other than Director and committee fees and pension or other forms of deferred compensation for prior service (provided such compensation is not contingent in any way on continued service); and (ii) Shall not be an executive director, a corporate executive officer, a general manager or other employee of any company whose aggregate amount of transactions with Sony Group, in any of the last three fiscal years, exceeds the greater of an amount equivalent to 1,000,000 U.S. dollars, or 2% of the annual consolidated sales of such company;

		In addition, the Securities Listing Regulations of the ~~Tokyo Stock Exchange~~TSE require Sony Group Corporation to make efforts to have at least one “Independent Director” on the Board of Directors. “Independent Director” is defined in the Securities Listing Regulations of the ~~Tokyo Stock Exchange~~TSE as an “outside” director who is unlikely to have conflicts of interest with shareholders. According to the guidelines of the ~~Tokyo Stock Exchange,~~TSE, if a person falls in any of the categories listed below, such person, in principle, will be considered to have a conflict of interest with shareholders of the listed company. (1) A person for which the listed company is a major client or a person who executes business of a person for which the listed company is a major client; (2) A major client of the listed company or a person who executes business of a major client of the listed company; (3) A consultant, accounting professional, or legal professional (or, if such consultant, accounting professional, or legal professional is a juridical person, a member of such juridical person) of

		the listed company who receives a large amount of money or other consideration other than remuneration for directorship/auditorship from such listed company;

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NYSE Standards		Sony’s Corporate Governance Practices

		(4) A person who has fallen in any of categories (1) through (3) listed above until recently; (5) A person who has fallen in any of categories (a) or (b) listed below for ten years prior to assuming his/her office: (a) A person who executes business of a parent company of the listed company or a director who does not execute business of a parent company of the listed company; or (b) A person who executes business of a fellow subsidiary of the listed company.

		(6) A close relative of a person who falls in any of categories (a) through (f) listed below (only if such person is significant): (a) A person who falls in any of (1) through (5) listed above; (b) A person who executes business of a subsidiary of the listed company; (c) A director who does not execute business of a subsidiary of the listed ~~company of a subsidiary of the listed~~ company; (d) A person who executes business of a parent company of the listed company or a director who does not execute business of a parent company of the listed company; (e) A person who executes business of a fellow subsidiary of the listed company; or (f) A person who has fallen in any of categories (b) or (c) listed above or a person who has executed business of the listed company until recently.

		As of June ~~26, 2020, 9~~20, 2023, 8 of the 1210 members of Sony Group Corporation’s Board of Directors qualified as “outside” directors. In addition, all 98 “outside” directors are qualified and designated as “Independent Directors” under the Securities Listing Regulations of the ~~Tokyo Stock Exchange.~~TSE.


Executive Sessions. Non-management directors must meet in regularly scheduled executive sessions without management. Independent directors should meet alone in an executive session at least once a year.		An “outside” director, as defined under the Companies Act, is equivalent to a “non-management director” under the NYSE rules because an “outside” director does not engage in the execution of business operations of the company. The outside/non-management Directors generally meet several times a year without management, though neither the Companies Act nor Sony Group Corporation’s Board Charter requires non-management Directors to meet regularly without management and there is no requirement for the outside Directors to meet alone in an executive session at least once a year.

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NYSE Standards		Sony’s Corporate Governance Practices

Nominating/Corporate Governance Committee. A nominating/corporate governance committee of independent directors is required. The committee must have a charter that addresses the purpose, responsibilities (including development of corporate governance guidelines) and annual performance evaluation of the committee.		Sony Group Corporation’s Nominating Committee shall consist of at least three Directors. Under the Companies Act, the Committee is responsible for determining the contents of proposals regarding the appointment and dismissal of Directors to be submitted for approval to the shareholders’ meeting. Unlike listed U.S. companies under NYSE rules, it is not responsible for developing governance guidelines or overseeing the evaluation of the board and management. Under the Companies Act, a majority of its members shall be “outside” directors, as defined under the Companies Act. ~~Sony Corporation’s Board Charter requires at least one of the Directors on the Committee to be a Corporate Executive Officer.~~


Compensation Committee. A compensation committee of independent directors is required. The committee must have a charter that addresses the purpose, responsibilities and annual performance evaluation of the committee. In addition, in accordance with the SEC rules adopted pursuant to Section 952 of the Dodd-Frank Act, NYSE listing standards expanded the factors relevant in determining whether a committee member has a relationship to the company that will materially affect that member’s duties to the compensation committee and provided compensation committees the authority to engage compensation advisers. Additionally, the committee may obtain or retain the advice of a compensation adviser only after taking into consideration all factors relevant to determining that adviser’s independence from management, unless the adviser’s role is (i) limited to consulting on a generally applicable broad-based plan or (ii) is providing information that is not customized for the issuer or is not customized by the adviser and about which the adviser does not provide advice.		Sony Group Corporation’s Compensation Committee shall consist of at least three Directors. Under the Companies Act, a majority of its members shall be “outside” directors, as defined under the Companies Act. Sony Group Corporation’s Board Charter prohibits the CEO, the COO and/or the CFO (or a person at any equivalent position) from serving on the Compensation Committee. Under the Companies Act, the Committee is responsible for, among others, determining the compensation of each director and Corporate Executive Officer.


Audit Committee. An audit committee satisfying the independence and other requirements of Rule 10A-3 under the Exchange Act is required. The committee must have at least three members. All members must be independent. The committee must have a charter addressing the committee’s purpose, an annual performance evaluation of the committee and the duties and responsibilities of the committee.		Sony Group Corporation’s Audit Committee shall consist of at least three Directors. Under the Companies Act, a majority of its members shall be “outside” Directors, as defined under the Companies Act. In addition, pursuant to the Companies Act, no member of the Committee shall be a Director of the company or any of its subsidiaries who is engaged in the business operations of the company or such subsidiary, as the case may be, or a corporate executive officer of the company or any of its subsidiaries, or an accounting counselor, general manager or other employee of any of such subsidiaries. Sony Group Corporation’s Board Charter also requires each member of the Audit Committee to meet the independence requirements of the applicable U.S. securities laws and regulations, and requires at least one member to meet the audit committee financial expert requirements. Currently, all the members of Sony Group Corporation’s Audit Committee are also “independent” as defined in the NYSE Corporate Governance Standards, and two members of the Committee are qualified as audit committee financial experts.

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NYSE Standards	Sony’s Corporate Governance Practices
		~~committee financial experts. Sony Corporation’s Board Charter discourages any Audit Committee member from concurrently being a member of other Committees.~~


Equity Compensation Plans. Equity compensation plans require shareholder approval, subject to limited exemptions.	Under the Companies Act, if Sony Group Corporation wishes to adopt an equity compensation plan under which stock acquisition rights or shares of common stock are granted on specially favorable conditions, except where all of its shareholders are granted rights to subscribe for such stock acquisition rights/shares of common stock or such stock acquisition rights/shares of common stock are gratuitously allocated to all of its shareholders, each on a pro rata basis, then Sony Group Corporation must obtain shareholder approval by a “special resolution” at a General Meeting of Shareholders, where the quorum is one-third of the total number of voting rights of all of its shareholders and the approval by at least two-thirds of the number of voting rights of all the shareholders represented at the meeting is required under Sony Group Corporation’s Articles of Incorporation. On the other hand, under the Companies Act, if Sony Group Corporation wishes to adopt an equity compensation plan under which stock acquisition rights or shares of common stock are granted against fair value thereof, such plan can be adopted by the resolution of Sony Group Corporation’s Compensation Committee, and grants of stock acquisition rights or shares pursuant to such plan may be decided by a resolution of the Board of Directors or a determination by a Corporate Executive Officer to whom the authority to make such determination has been delegated, and no shareholder approval is required.


Corporate Governance Guidelines. Corporate governance guidelines must be adopted and disclosed.	Sony Group Corporation is required to disclose the status of its corporate governance under the Companies Act, Financial Instruments and Exchange Act and its related regulations, and the Securities Listing Regulations of the ~~Tokyo Stock Exchange;~~TSE; however, Sony Group Corporation does not have corporate governance guidelines that cover all the requirements described in the NYSE Corporate Governance Standards, as many of the provisions do not apply to Sony Group Corporation. ~~Details of the status are posted on the following website:~~ ~~https://www.sony.net/SonyInfo/csr_report/governance/~~Refer to “Board Practices” in “Item 6. Directors, Senior Management and Employees.”


Code of Ethics. A code of business conduct and ethics for directors, officers and employees must be adopted and disclosed, along with any waivers of the code for directors or executive officers.	Although this provision of the NYSE Corporate Governance Standards does not apply to Sony Group Corporation, Sony Group Corporation has adopted a code of conduct to be observed by all its directors, officers and other employees. The code of conduct is available at: https://~~www.sony.net/~~www.sony.com/en/SonyInfo/csr_report/compliance/~~code.html~~code_of_conduct_En.pdf The code’s content covers principal items described in the NYSE Corporate Governance Standards.

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Item 16H.

Mine Safety Disclosure

Not Applicable

Item ~~17.~~16I.

~~Financial Statements~~

Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

Not Applicable

Item ~~18.~~17.

Financial

~~Financial~~

Statements

Not Applicable

Item 18.

Financial

Statements

Refer to the consolidated financial statements.

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Item 19.

Exhibits

Documents filed as exhibits to this annual report:


	1.1		Amended Articles of Incorporation of Sony Group Corporation (English Translation), incorporated by reference to Exhibit 1.1 to Sony’s annual report on Form 20-F for the fiscal year ended March 31, ~~2015~~2022 (Commission file number 001-06439) filed on June ~~23, 2015~~28, 2022

1.2
	~~1.2~~		~~Amended Articles of Incorporation of Sony Corporation (English Translation), which will be effective as of April 1, 2021~~

	~~1.3~~		Share Handling Regulations (English Translation), incorporated by reference to Exhibit ~~1.3~~1.2 to Sony’s annual report on Form 20-F for the fiscal year ended March 31, 2010 (Commission file number 001-06439) filed on June 28, 2010

1.3
	~~1.4~~		Charter of the Board of Directors, as amended (English Translation), incorporated by reference to Exhibit ~~1.4 to~~1.3 of Sony’s annual report on Form 20-F for the fiscal year ended March 31, ~~2018~~2021 (Commission file number 001-06439) filed on June ~~19, 2018~~22, 2021

2.1
	~~2.1~~		Amended and Restated Deposit Agreement, dated as of October 15, 2014, by and among Sony Group Corporation, Citibank, ~~N.A.~~N. A. and the holders and beneficial owners of American Depositary Shares issued thereunder, incorporated by reference to Exhibit ~~99.A~~99. A to Sony’s registration statement on Form F-6 (Commission file number 333-198953) filed on September 26, 2014

	2.2		Form of American Depositary Receipt for American Depositary Shares representing Deposited Shares of Common Stock of Sony Group Corporation, incorporated by reference to Sony’s prospectus filed pursuant to Rule 424(b)(3) on April 1, 2021, to the registration statement on Form F-6 (Commission file number 333-198953)

2.3		Description of Rights of each Class of Securities Registered under Section 12 of the Securities Exchange Act of 1934 (the “Exchange Act”), incorporated by reference to Exhibit 2.3 to Sony’s annual report on Form 20-F for the fiscal year ended March 31, 2022 (Commission file number 001-06439) filed on June 28, 2022

	8.1		Significant subsidiaries (as defined in ~~§210.1-02(w)~~§210.1-02(w) of Regulation S-X) of Sony Group Corporation, including additional subsidiaries that management has deemed to be significant, as of March 31, ~~2020:~~2022: Incorporated by reference to “Business Overview” and “Organizational Structure” in “Item 4. Information on the Company”

	12.1		302 Certification

	12.2		302 Certification

	13.1		906 Certification

	15.1		Consent of PricewaterhouseCoopers Aarata LLC

	101.INS		Inline XBRL Instance Document — the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document

	101.SCH		Inline XBRL Taxonomy Extension Schema Document

	101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document

	101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document

	101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document

	101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document

	104		The cover page for the Company’s Annual Report on Form 20-F for the fiscal year ended March 31, ~~2020,~~2023, has been formatted in Inline XBRL

~~119~~

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SIGNATURES

Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, the registrant hereby certifies that it meets all of the requirements for filing on Form

20-F

and that it has duly caused and authorized the undersigned to sign this annual report on its behalf.


SONY GROUP CORPORATION
(Registrant)

By:		/s/ HIROKI TOTOKI

		(Signature)
		Hiroki Totoki
		~~Executive Deputy~~ President, Chief Operating Officer and Chief Financial Officer

Date: June ~~26, 2020~~20, 2023

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INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

SONY GROUP CORPORATION AND CONSOLIDATED SUBSIDIARIES


	Page
Report of Independent Registered Public Accounting Firm (PCAOB ID 2743)		F-F-2 2
Consolidated ~~Balance Sheets at March 31, 2019 and 2020~~Statements of Financial Position		F-F-4 6
Consolidated Statements of Income ~~for the years ended March 31, 2018, 2019 and 2020~~		F-F-6 8
Consolidated Statements of Comprehensive Income ~~for the years ended March 31, 2018, 2019 and 2020~~		F-F-7 9
~~Consolidated Statements of Cash Flows for the years ended March 31, 2018, 2019 and 2020~~		F- 10
Consolidated Statements of Changes in Stockholders’ Equity ~~for the years ended March 31, 2018, 2019 and 2020~~	F-8
Consolidated Statements of Cash Flows	F-F-10 12
Index to Notes to Consolidated Financial Statements		F-F-12 15
Notes to Consolidated Financial Statements		F- 16
~~Financial Statement Schedule II for the years ended March 31, 2018, 2019 and 2020 — Valuation and Qualifying Accounts~~F-13		F- 91

All other schedules are omitted because they are not applicable or the required information is shown in the financial statements or the notes thereto.

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Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders of Sony Group Corporation (Sony Group Kabushiki Kaisha)

Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying consolidated ~~balance sheets~~statements of financial position of Sony Group Corporation and its subsidiaries (the “Company”) as of March 31, ~~2020~~2023 and ~~2019,~~2022, and the related consolidated statements of income, comprehensive income, ~~cash flows and~~ changes in stockholders’ equity and cash flows for each of the three years in the period ended March 31, ~~2020,~~2023, including the related notes ~~and financial statement schedule listed in the accompanying index~~ (collectively referred to as the “consolidated financial statements”). We also have audited the Company’s internal control over financial reporting as of March 31, ~~2020,~~2023, based on criteria established in

Internal Control — Integrated Framework

(2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of March 31, ~~2020~~2023 and ~~2019,~~2022, and the results of its operations and its cash flows for each of the three years in the period ended March 31, ~~2020~~2023 in conformity with ~~accounting principles generally accepted in~~International Financial Reporting Standards as issued by the ~~United States of America.~~International Accounting Standards Board. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of March 31, ~~2020,~~2023, based on criteria established in

Internal Control — Integrated Framework

(2013) issued by the COSO.

~~Change in Accounting Principle~~

~~As discussed in Note 2 to the consolidated financial statements, the Company changed the manner in which it accounts for leases as of April 1, 2019.~~

Basis for Opinions

The Company’s management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Annual Report on Internal Control over Financial Reporting appearing under Item 15(b). Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company’s internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

As described in Management’s Annual Report on Internal Control over Financial Reporting, management has excluded ~~AEGON Sony Life Insurance Co., Ltd. (subsequently renamed Sony Life With Insurance Co., Ltd. as of April 1, 2020) and SA Reinsurance Ltd. (collectively, the “Companies”)~~Bungie, Inc. from its assessment of internal control over financial reporting as of March 31, ~~2020~~2023 because ~~they were~~it was acquired by the Company in a purchase business ~~combinations~~combination during the year ended March 31, ~~2020.~~2023. We have also excluded ~~the Companies~~Bungie, Inc. from our audit of internal control over financial reporting. ~~The Companies are~~Bungie, Inc. is a wholly-owned ~~subsidiaries~~subsidiary whose total assets and total sales ~~and operating revenue~~ excluded from management’s assessment and our audit of internal control over financial reporting ~~collectively~~ represent ~~approximately 3% and~~ less than 1%~~, respectively,~~ of the related total consolidated assets and total consolidated sales and financial ~~statement amounts~~services revenue as of and for the year ended March 31, ~~2020.~~2023.

~~F-2~~

~~Table of Contents~~

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable

F-2

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assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Critical Audit Matters

The critical audit ~~matters~~matter communicated below ~~are matters~~is a matter arising from the current period audit of the consolidated financial statements that ~~were~~was communicated or required to be communicated to the audit committee and that (i) ~~relate~~relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit ~~matters~~matter below, providing a separate ~~opinions~~opinion on the critical audit ~~matters~~matter or on the accounts or disclosures to which ~~they relate.~~it relates.

~~Realizability~~

Valuation of ~~deferred tax assets for entity’s national tax filing group in Japan~~

As described in Note 2 and Note 22 to the consolidated financial statements, carrying amounts of deferred tax assets require a reduction by a valuation allowance if, based on the available evidence, it is more likely than not that such assets will not be realized. Accordingly, the need to establish a valuation allowance for deferred tax assets is assessed periodically with appropriate consideration given to all positive and negative evidence related to the realization of the deferred tax assets. Management’s judgments related to this assessment consider, among other matters, the nature, frequency and severity of current and cumulative losses on an individual tax jurisdiction basis, forecasts of future income after consideration of uncertain tax positions, excess of carrying value over the tax basis of net assets, the duration of statutory carryforward periods, the past utilization of net operating loss carryforwards prior to expiration, as well as prudent and feasible tax planning strategies which would be employed by the Company to prevent net operating loss and tax credit carryforwards from expiring unutilized. For the fiscal year ended March 31, 2020, based on an assessment of the available positive and negative evidence including the Company’s positive earnings for the past several years, due to the uncertainty of the forecast of future income impacted by the spread of

~~COVID-19~~

from early 2020, the Company has continued to establish a valuation allowance against the deferred tax assets in the Japan consolidated national tax filing group, except for the amounts expected to be offset with taxable temporary differences. The valuation allowance of 274,761 million yen relating to Japan national taxes was established as of March 31, 2020.

The principal considerations for our determination that performing procedures relating to the realizability of deferred tax assets for the Japan consolidated national tax filing group was a critical audit matter are (i) there was significant judgment involved by management in an assessment of the available positive and negative evidence including forecasted income, and (ii) this in turn led to a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating audit evidence related to management’s assessment, including forecasts of future income.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to management’s assessment of the realizability of deferred tax assets, including assessing positive and negative evidence including future forecasts for the Japan consolidated national filing group. These procedures also included, among others, evaluating management’s weighing of positive and negative evidence; testing the completeness of the positive and negative evidence used; and evaluating the reasonableness of assumptions used by management, including the uncertainty regarding the Company’s ability

~~F-3~~

~~Table of Contents~~

to generate income in the Japan consolidated national filing group. Evaluating management’s assumptions related to generating income in Japan involved evaluating whether the assumptions used by management were reasonable considering the current and past performance of the Company.

~~Liabilities~~liabilities for future insurance policy benefits and deferred acquisition costs

As described in ~~Note 2~~Notes 3 and 1013 to the consolidated financial statements, liabilities for future insurance policy benefits include liabilities for minimum guarantee benefits related to certain variable ~~annuity and variable~~ life insurance contracts. The Company has elected fair value options for variable annuity contracts with minimum guarantee benefits in their entirety, which includes liabilities for minimum guarantee benefits. The fair value of the liabilities for minimum guarantee benefits is calculated as the present value of future expected cash flows. The significant assumptions used in the valuation include mortality rates, lapse rates, discount rates, and investment yields. As of March 31, 2020, the liabilities for minimum guarantee benefits for the variable annuity contracts were 64,045 million yen. Liabilities are also established for the variable life contracts that include minimum guarantee benefits features. For these contract features, the liabilities for minimum guarantee benefits are calculated using current ~~best estimate~~best-estimate assumptions and are based on the ratio of the present value of expected total excess payments divided by the present value of expected total assessments over the life of the contract. The significant assumptions in the valuation include mortality rates, lapse rates, discount rates and investment yields. As of March 31, ~~2020,~~2023, the liabilities for minimum guarantee benefits for the variable life contracts were ~~79,860~~76,012 million yen.

Also, the Company defers acquisition costs that vary with and are directly related ~~directly~~ to the acquisition or renewal of insurance policies ~~to the extent such costs~~as long as they are ~~determined to be recoverable from future profits.~~recoverable. Among them, the deferred insurance acquisition costs for

non-traditional

life insurance contracts such as interest sensitive whole life contracts, variable life insurance contracts, individual variable annuity contracts ~~variable~~and other contracts without life ~~contracts, and investment contracts~~contingencies are amortized over the expected life at a constant rate based on the present value of the estimated gross profit. The present value of the estimated gross profit is affected by a number of significant assumptions, including investment yields, mortality rates, lapse rates and discount rates. AtAs of March 31, ~~2020,~~2023, deferred insurance acquisition costs for

non-traditional

life insurance contracts were ~~206,363~~324,862 million yen.

The principal considerations for our determination that performing procedures relating to ~~assumptions used for measurement~~the valuation of ~~the~~ liabilities for ~~minimum guarantee~~future insurance policy benefits and deferred ~~insurance~~ acquisition costs ~~for~~

~~non-traditional~~

~~life insurance contracts~~ is a critical audit matter are (i) ~~there was~~management’s significant judgment involved ~~by management~~ in developing the aforementioned assumptions, (ii) this in turn led to a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating audit evidence related to management’s significant assumptions, and (iii) the audit effort involved the use of professionals with specialized skill and ~~knowledge to assist in performing procedures and evaluating the audit evidence obtained.~~knowledge.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the ~~design and operating~~ effectiveness of controls relating to the ~~significant assumptions of the~~valuation of: (i) liabilities for minimum guarantee benefits for certain variable life insurance contracts and (ii) deferred insurance acquisition costs for

non-traditional

life insurance ~~contracts, which included~~contracts; including controls over the ~~development~~determination of significant assumptions ~~such as~~related to mortality rates, lapse rates, discount rates, and investment yields, and controls over the completeness and accuracy of data used by management ~~in developing~~to develop the assumptions, such as past ~~claim, lapse,~~claims, lapses, discount rates, and investment ~~yield data.~~yields. These procedures also included, among others, testing the completeness and accuracy of data used by management ~~in developing~~to develop the significant assumptions; and considering the reasonableness of the significant assumptions across products, in relation to prior periods, and in relation to management’s historical experience or industry knowledge. Professionals with specialized skill and knowledge were used to assist in evaluating the reasonableness of the methodology used by management to determine their assumptions and the reasonableness of the aforementioned assumptions used in the valuation of ~~the~~ liabilities for minimum guarantee benefits for certain variable life contracts and deferred insurance acquisition costs for

non-traditional

life insurance contracts based on industry knowledge and the Company’s historical data and experience.

/s/ PricewaterhouseCoopers Aarata LLC

Tokyo, Japan

June ~~26, 2020~~20, 2023

We have served as the Company’s auditor since 2006.

~~F-4~~

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SONY GROUP CORPORATION AND CONSOLIDATED SUBSIDIARIES

~~[THIS PAGE IS INTENTIONALLY LEFT BLANK]~~

Consolidated Statements of Financial Position


		Yen in millions
	Note	March 31, 2022		March 31, 2023
ASSETS
Current assets:
Cash and cash equivalents	27		2,049,636		1,480,900
Investments and advances in the Financial Services segment (including assets pledged that secured parties are permitted to sell or repledge of 94,147 million yen, and 85,494 million yen as of March 31, 2022 and 2023, respectively)	5, 14		360,673		328,357
Trade and other receivables, and contract assets	5, 22		1,628,521		1,777,939
Inventories	7		874,007		1,468,042
Other financial assets	5		149,301		110,950
Other current assets	19		473,070		610,330
Total current assets			5,535,208		5,776,518
Non-current assets:
Investments accounted for using the equity method	8		268,513		325,220
Investments and advances in the Financial Services segment (including assets pledged that secured parties are permitted to sell or repledge of 2,700,603 million yen and 2,427,446 million yen as of March 31, 2022 and 2023, respectively)	5, 14		18,445,088		18,445,728
Property, plant and equipment	9		1,113,213		1,344,864
Right-of-use assets	10		413,430		478,063
Goodwill	11		952,895		1,275,112
Content assets	11		1,342,046		1,561,882
Other intangible assets	11		450,103		563,842
Deferred insurance acquisition costs	13		676,526		730,864
Deferred tax assets	25		298,589		384,839
Other financial assets	5		696,306		832,344
Other non-current assets	19		289,050		321,946
Total non-current assets			24,945,759		26,264,704
Total assets			30,480,967		32,041,222

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~~Table of Contents~~

~~SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES~~

~~Consolidated Balance Sheets~~

~~March 31~~

Yen in millions

2019

2020

ASSETS

Current assets:

Cash and cash equivalents

1,470,073

1,512,357

Marketable securities (including assets pledged that secured parties are permitted to sell or repledge of 15,437 yen and 17,521 yen in 2019 and 2020)

1,324,538

1,847,772

Notes and accounts receivable, trade and contract assets

1,091,242

1,028,793

Allowance for doubtful accounts

(25,440
)
(25,873
)
Inventories

653,278

589,969

Other receivables

223,620

188,106

Prepaid expenses and other current assets

509,301

594,021

Total current assets

5,246,612

5,735,145

Film costs

409,005

427,336

Investments and advances:

Affiliated companies

163,365

207,922

Securities investments and other (including assets pledged that secured parties are permitted to sell or repledge of 832,984 yen and 930,882 yen in 2019 and 2020)

11,561,286

12,526,210

11,724,651

12,734,132

Property, plant and equipment:

Land

83,992

81,482

Buildings

664,157

659,556

Machinery and equipment

1,585,382

1,725,720

Construction in progress

39,208

76,391

2,372,739

2,543,149

Less — Accumulated depreciation

1,595,686

1,634,505

777,053

908,644

Other assets:

Operating lease
right-of-use
assets

—

359,510

Finance lease
right-of-use
assets

—

33,100

Intangibles, net

917,966

906,310

Goodwill

768,552

783,888

Deferred insurance acquisition costs

595,265

600,901

Deferred income taxes

202,486

210,372

Other

339,996

340,005

2,824,265

3,234,086

Total assets

20,981,586

23,039,343

(Continued on the following page.)

F-

Table of Contents

SONY GROUP CORPORATION AND CONSOLIDATED SUBSIDIARIES

Consolidated ~~Balance Sheets~~Statements of Financial

Position

(Continued)

Yen in millions

2019

2020

LIABILITIES

Current liabilities:

Short-term borrowings

618,618

810,176

Current portion of long-term debt

172,461

29,807

Current portion of long-term operating lease liabilities

—

68,942

Notes and accounts payable, trade

492,124

380,810

Accounts payable, other and accrued expenses

1,693,048

1,630,197

Accrued income and other taxes

135,226

145,996

Deposits from customers in the banking business

2,302,314

2,440,783

Other

666,024

733,732

Total current liabilities

6,079,815

6,240,443

Long-term debt

568,372

634,966

Long-term operating lease liabilities

—

314,836

Accrued pension and severance costs

384,232

324,655

Deferred income taxes

531,421

549,538

Future insurance policy benefits and other

5,642,671

6,246,047

Policyholders’ account in the life insurance business

3,048,202

3,642,271

Other

281,382

289,285

Total liabilities

16,536,095

18,242,041

Redeemable noncontrolling interest

8,801

7,767

Commitments and contingent liabilities

EQUITY

Sony Corporation’s stockholders’ equity:

Common stock, no par value —

2019 — Shares authorized: 3,600,000,000; shares issued: 1,271,230,341

874,291

2020 — Shares authorized: 3,600,000,000; shares issued: 1,261,058,781

880,214

Additional
paid-in
capital

1,266,874

1,289,719

Retained earnings

2,320,586

2,768,856

Accumulated other comprehensive income —

Unrealized gains on securities, net

135,035

161,191

Unrealized gains (losses) on derivative instruments, net

(19
)
1,248

Pension liability adjustment

(310,457
)
(235,520
)
Foreign currency translation adjustments

(435,229
)
(509,872
)
Debt valuation adjustments

—

1,973

(610,670
)
(580,980
)
Treasury stock, at cost

Common stock

2019 — 20,483,474 shares

(104,704
)
2020 — 40,898,841 shares

(232,503
)

3,746,377

4,125,306

Noncontrolling interests

690,313

664,229

Total equity

4,436,690

4,789,535

Total liabilities and equity

20,981,586

23,039,343


		Yen in millions
	Note	March 31, 2022			March 31, 2023
LIABILITIES
Current liabilities:
Short-term borrowings	5, 14		1,976,553			1,914,934
Current portion of long-term debt	5, 14		171,409			187,942
Trade and other payables	5		1,843,242			1,865,993
Deposits from customers in the banking business	5		2,886,361			3,163,237
Income taxes payables			106,092			152,700
Participation and residual liabilities in the Pictures segment	18		190,162			230,223
Other financial liabilities	5		97,843			73,572
Other current liabilities	19		1,488,488			1,720,335
Total current liabilities			8,760,150			9,308,936
Non-current liabilities:
Long-term debt	5, 14		1,203,646			1,767,696
Defined benefit liabilities	17		254,548			236,121
Deferred tax liabilities	25		696,492			356,324
Future insurance policy benefits and other	13		7,039,034			7,264,421
Policyholders’ account in the life insurance business	13		4,791,295			5,148,579
Participation and residual liabilities in the Pictures segment	18		220,113			192,952
Other financial liabilities	5		211,959			350,278
Other non-current liabilities	19		106,481			127,593
Total non-current liabilities			14,523,568			15,443,964
Total liabilities			23,283,718			24,752,900
EQUITY
Sony Group Corporation’s stockholders’ equity:	20
Common stock			880,365			880,365
Additional paid-in capital			1,461,053			1,463,807
Retained earnings			3,760,763			4,614,637
Accumulated other comprehensive income			1,222,332			494,407
Treasury stock, at cost			(180,042	)		(223,507	)
Equity attributable to Sony Group Corporation’s stockholders			7,144,471			7,229,709
Noncontrolling interests			52,778			58,613
Total equity			7,197,249			7,288,322
Total liabilities and equity			30,480,967			32,041,222

The accompanying notes are an integral part of these statements.

F-

F-5

Table of Contents

SONY GROUP CORPORATION AND CONSOLIDATED SUBSIDIARIES

Consolidated Statements of Income

~~Fiscal year ended March 31~~

Yen in millions

2018

2019

2020

Sales and operating revenue:

Net sales

7,231,613

7,306,235

6,856,090

Financial services revenue

1,221,235

1,274,708

1,299,847

Other operating revenue

91,134

84,744

103,948

8,543,982

8,665,687

8,259,885

Costs and expenses:

Cost of sales

5,188,259

5,150,750

4,753,174

Selling, general and administrative

1,583,197

1,576,825

1,502,625

Financial services expenses

1,042,163

1,112,446

1,171,875

Other operating (income) expense, net

4,072

(71,568
)
(3,611
)

7,817,691

7,768,453

7,424,063

Equity in net income (loss) of affiliated companies

8,569

(2,999
)
9,637

Operating income

734,860

894,235

845,459

Other income:

Interest and dividends

19,784

21,618

19,278

Gain on sale of securities investments, net

1,517

—

—

Gain on equity securities, net

—

118,677

—

Other

2,427

4,440

2,671

23,728

144,735

21,949

Other expenses:

Interest

13,566

12,467

11,090

Loss on devaluation of securities investments

4,955

—

—

Loss on equity securities, net

—

—

20,180

Foreign exchange loss, net

30,634

11,279

26,789

Loss on pension plan amendment

—

—

6,358

Other

10,384

3,576

3,541

59,539

27,322

67,958

Income before income taxes

699,049

1,011,648

799,450

Income taxes:

Current

127,685

166,748

172,391

Deferred

24,085

(121,650
)
4,799

151,770

45,098

177,190

Net income

547,279

966,550

622,260

Less — Net income attributable to noncontrolling interests

56,485

50,279

40,069

Net income attributable to Sony Corporation’s stockholders

490,794

916,271

582,191

Yen

2018

2019

2020

Per share data:

Common stock

Net income attributable to Sony Corporation’s stockholders

— Basic

388.32

723.41

471.64

— Diluted

379.75

707.74

461.23


		Yen in millions
		Fiscal year ended March 31
	Note	2021			2022			2023
Sales and financial services revenue:
Sales	22		7,333,670			8,396,702			10,095,841
Financial services revenue	5, 13		1,664,991			1,524,811			1,443,996
Total sales and financial services revenue			8,998,661			9,921,513			11,539,837
Costs and expenses:
Cost of sales	7, 17, 23		5,065,879			5,845,804			7,174,723
Selling, general and administrative	17, 23		1,473,154			1,588,473			1,969,170
Financial services expenses	5, 13, 17		1,501,674			1,374,037			1,224,208
Other operating (income) expense, net	23, 31		14,250			(65,494	)		(12,021	)
Total costs and expenses			8,054,957			8,742,820			10,356,080
Share of profit (loss) of investments accounted for using the equity method	8		11,551			23,646			24,449
Operating income			955,255			1,202,339			1,208,206
Financial income	24		83,792			19,304			31,058
Financial expenses	24		41,082			104,140			58,951
Income before income taxes			997,965			1,117,503			1,180,313
Income taxes	25		(45,931	)		229,097			236,691
Net income			1,043,896			888,406			943,622
Net income attributable to
Sony Group Corporation’s stockholders			1,029,610			882,178			937,126
Noncontrolling interests			14,286			6,228			6,496

		Yen
		Fiscal year ended March 31
	Note	2021			2022			2023
Per share data:	26
Net income attributable to Sony Group Corporation’s stockholders
— Basic			836.75			711.84			758.38
— Diluted			823.77			705.16			754.95

The accompanying notes are an integral part of these statements.

F-

8-6

Table of Contents

SONY GROUP CORPORATION AND CONSOLIDATED SUBSIDIARIES

Consolidated Statements of Comprehensive Income

~~Fiscal year ended March 31~~

Yen in millions

2018

2019

2020

Net income

547,279

966,550

622,260

Other comprehensive income, net of tax —

Unrealized gains on securities

1,070

33,285

40,390

Unrealized gains (losses) on derivative instruments

(1,184
)
1,223

1,267

Pension liability adjustment

12,390

(13,960
)
74,971

Foreign currency translation adjustments

(6,335
)
8,444

(75,888
)
Debt valuation adjustments

—

—

3,032

Total comprehensive income

553,220

995,542

666,032

Less — Comprehensive income attributable to noncontrolling interests

60,403

57,669

54,151

Comprehensive income attributable to Sony Corporation’s stockholders

492,817

937,873

611,881


		Yen in millions
		Fiscal year ended March 31
	Note	2021			2022			2023
Net income			1,043,896			888,406			943,622
Other comprehensive income, net of tax —	20
Items that will not be reclassified to profit or loss
Changes in equity instruments measured at fair value through other comprehensive income			144,740			(106,426	)		(36,862	)
Remeasurement of defined benefit pension plans			11,555			33,641			18,891
Share of other comprehensive income of investments accounted for using the equity method			87			577			145
Items that may be reclassified subsequently to profit or loss
Changes in debt instruments measured at fair value through other comprehensive income			(205,549	)		(416,904	)		(884,678	)
Cash flow hedges			51			4,735			12,379
Insurance contract valuation adjustments			(3,120	)		599			1,714
Exchange differences on translating foreign operations			115,321			226,275			178,275
Share of other comprehensive income of investments accounted for using the equity method			798			1,501			3,554
Total other comprehensive income, net of tax			63,883			(256,002	)		(706,582	)
Comprehensive income			1,107,779			632,404			237,040
Comprehensive income attributable to
Sony Group Corporation’s stockholders			1,118,628			623,678			227,794
Noncontrolling interests			(10,849	)		8,726			9,246

The accompanying notes are an integral part of these statements.

F-

-7

Table of Contents

SONY GROUP CORPORATION AND CONSOLIDATED SUBSIDIARIES

Consolidated Statements of ~~Cash Flows~~

Changes in Stockholders’ Equity

~~Fiscal year ended March 31~~

Yen in millions

2018

2019

2020

Cash flows from operating activities:

Net income

547,279

966,550

622,260

Adjustments to reconcile net income to net cash provided by
operating activities —

Depreciation and amortization, including amortization of deferred
insurance acquisition costs and contract costs

361,444

374,026

416,642

Amortization of film costs

359,274

348,493

329,809

Accrual for pension and severance costs, less payments

4,113

(33,631
)
8,948

Other operating (income) expense, net

4,072

(71,568
)
(3,611
)
(Gain) loss on securities investments, net (other than financial services business)

3,438

(118,630
)
20,177

(Gain) loss on marketable securities and securities investments held in the financial services business, net

(47,119
)
(66,383
)
93,088

Deferred income taxes

24,085

(121,650
)
4,799

Equity in net (income) loss of affiliated companies, net of dividends

(2,956
)
7,947

(5,114
)
Changes in assets and liabilities:

(Increase) decrease in notes and accounts receivable, trade and contract assets

(80,004
)
1,144

62,654

(Increase) decrease in inventories

(51,508
)
30,455

40,315

Increase in film costs

(362,496
)
(410,994
)
(361,194
)
Increase (decrease) in notes and accounts payable, trade

(87,939
)
18,534

(91,435
)
Increase (decrease) in accrued income and other taxes

29,181

(20,039
)
(40,144
)
Increase in future insurance policy benefits and other

495,419

544,179

520,683

Increase in deferred insurance acquisition costs

(86,779
)
(88,807
)
(99,433
)
Increase in marketable securities held in the life insurance business

(89,797
)
(64,034
)
(124,270
)
(Increase) decrease in other current assets

3,776

16,576

(37,286
)
Increase (decrease) in other current liabilities

151,805

56,723

(27,083
)
Other

78,683

(110,153
)
19,940

Net cash provided by operating activities

1,253,971

1,258,738

1,349,745

Cash flows from investing activities:

Payments for purchases of fixed assets

(262,989
)
(312,644
)
(439,761
)
Proceeds from sales of fixed assets

60,599

17,585

18,758

Payments for investments and advances by financial services business

(963,210
)
(1,078,250
)
(1,319,062
)
Payments for investments and advances (other than financial services business)

(13,801
)
(53,525
)
(48,853
)
Proceeds from sales or return of investments and collections of advances by financial services business

317,159

309,498

343,740

Proceeds from sales or return of investments and collections of advances (other than financial services business)

6,596

2,442

14,456

Payment for EMI Music Publishing acquisition, net of cash acquired

—

(244,197
)
—

Proceeds from sales of businesses

44,624

—

12,816

Proceeds related to sales of Spotify Technology S.A. Shares

—

82,467

—

Proceeds from sales of Olympus Corporation Shares

—

—

80,357

Other

(12,046
)
(30,821
)
(14,729
)
Net cash used in investing activities

(823,068
)
(1,307,445
)
(1,352,278
)


			Yen in millions
	Note		Common stock		Additional paid-in capital			Retained earnings			Accumulated other comprehensive income			Treasury stock, at cost			Sony Group Corporation’s stockholders’ equity			Noncontrolling 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									1,029,610									1,029,610			14,286			1,043,896
Other comprehensive income, net of tax		20										89,018						89,018			(25,135	)		63,883
Total comprehensive income									1,029,610			89,018						1,118,628			(10,849	)		1,107,779
Transfer to retained earnings									5,472			(5,472	)					—						—
Transactions with stockholders and other:
Exercise of stock acquisition rights						(354	)		(735	)					18,074			16,985						16,985
Conversion of convertible bonds						(3,671	)		(8,198	)					89,402			77,533						77,533
Stock-based compensation						1,577												1,577						1,577
Dividends declared (50.00 yen per share)									(61,343	)								(61,343	)		(12,996	)		(74,339	)
Purchase of treasury stock															(366	)		(366	)					(366	)
Reissuance of treasury stock						354									1,165			1,519						1,519
Transactions with noncontrolling interests shareholders and other		20				194,137						457,235						651,372			(1,052,197	)		(400,825	)
Balance at March 31, 2021				880,214		1,489,597			2,914,503			1,520,257			(124,228	)		6,680,343			43,996			6,724,339

			Yen in millions
	Note		Common stock		Additional paid-in capital			Retained earnings			Accumulated other comprehensive income			Treasury stock, at cost			Sony Group Corporation’s stockholders’ equity			Noncontrolling 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									882,178									882,178			6,228			888,406
Other comprehensive income, net of tax		20										(258,500	)					(258,500	)		2,498			(256,002	)
Total comprehensive income									882,178			(258,500	)					623,678			8,726			632,404
Transfer to retained earnings									39,425			(39,425	)					—						—
Transactions with stockholders and other:
Issuance of new shares				151		151												302						302
Exercise of stock acquisition rights						547									12,785			13,332						13,332
Conversion of convertible bonds						(2,805	)		(958	)					18,278			14,515						14,515
Stock-based compensation						6,643												6,643						6,643
Dividends declared (60.00 yen per share)									(74,385	)								(74,385	)		(4,955	)		(79,340	)
Purchase of treasury stock		20													(88,624	)		(88,624	)					(88,624	)
Reissuance of treasury stock						1,544									1,747			3,291						3,291
Transactions with noncontrolling interests shareholders and other						(34,624	)											(34,624	)		5,011			(29,613	)
Balance at March 31, 2022				880,365		1,461,053			3,760,763			1,222,332			(180,042	)		7,144,471			52,778			7,197,249

~~(Continued on following page.)~~

F-

10F-8

Table of ~~Contents~~Contents

SONY GROUP CORPORATION AND CONSOLIDATED SUBSIDIARIES

Consolidated Statements of ~~Cash Flows~~Changes in Stockholders’ Equity (Continued)

Yen in millions

2018

2019

2020

Cash flows from financing activities:

Proceeds from issuance of long-term debt

125,092

94,351

118,447

Payments of long-term debt

(44,561
)
(382,671
)
(198,055
)
Increase in short-term borrowings, net

35,145

123,979

193,332

Increase in deposits from customers in the financial services business, net

169,479

246,945

258,720

Dividends paid

(28,490
)
(38,067
)
(49,574
)
Payments for purchase of treasury stock

(198
)
(100,177
)
(200,211
)
Payment for purchase of noncontrolling interest in Nile Acquisition LLC

—

(32,041
)
—

Payment for purchase of noncontrolling interest in Game Show Network, LLC

—

—

(39,894
)
Other

(10,011
)
(35,203
)
(17,107
)
Net cash provided by (used in) financing activities

246,456

(122,884
)
65,658

Effect of exchange rate changes on cash and cash equivalents, including restricted

(53,044
)
52,465

(21,643
)
Net increase (decrease) in cash and cash equivalents, including restricted

624,315

(119,126
)
41,482

Cash and cash equivalents, including restricted, at beginning of the fiscal year

968,624

1,592,939

1,473,813

Cash and cash equivalents, including restricted, at end of the fiscal year

1,592,939

1,473,813

1,515,295

Less — Restricted cash and cash equivalents, included in other current assets and other assets

6,610

3,740

2,938

Cash and cash equivalents at end of the fiscal year

1,586,329

1,470,073

1,512,357

Supplemental data:

Cash paid during the fiscal year for —

Income taxes

101,092

210,499

216,922

Interest

12,169

10,882

10,000

Non-cash
investing and financing activities —

Obtaining assets by entering into finance leases

21,762

32,541

6,478



			Yen in millions
	Note		Common stock		Additional paid-in capital			Retained earnings			Accumulated other comprehensive income			Treasury stock, at cost			Sony Group Corporation’s stockholders’ equity			Noncontrolling interests			Total equity
Balance at April 1, 2022				880,365		1,461,053			3,760,763			1,222,332			(180,042	)		7,144,471			52,778			7,197,249
Comprehensive income:
Net income									937,126									937,126			6,496			943,622
Other comprehensive income, net of tax		20										(709,332	)					(709,332	)		2,750			(706,582	)
Total comprehensive income									937,126			(709,332	)					227,794			9,246			237,040
Transfer to retained earnings									18,593			(18,593	)					—						—
Transactions with stockholders and other:
Exercise of stock acquisition rights						(14	)		(1,352	)					10,364			8,998						8,998
Conversion of convertible bonds						(2,588	)		(13,858	)					42,993			26,547						26,547
Stock-based compensation						11,064												11,064						11,064
Dividends declared (70.00 yen per share)									(86,635	)								(86,635	)		(5,980	)		(92,615	)
Purchase of treasury stock		20													(99,248	)		(99,248	)					(99,248	)
Reissuance of treasury stock						1,242									2,426			3,668						3,668
Transactions with noncontrolling interests shareholders and other						(6,950	)											(6,950	)		2,569			(4,381	)
Balance at March 31, 2023				880,365		1,463,807			4,614,637			494,407			(223,507	)		7,229,709			58,613			7,288,322

The accompanying notes are an integral part of these statements.

F-

11F-9

Table of Contents

SONY GROUP CORPORATION AND CONSOLIDATED SUBSIDIARIES

Consolidated Statements of ~~Changes in Stockholders’ Equity~~Cash Flows

Yen in millions

Common
stock

Additional
paid-in

capital

Retained
earnings

Accumulated
other
comprehensive
income

Treasury
stock, at
cost

Sony
Corporation’s
stockholders’
equity

Noncontrolling
interests

Total equity

Balance at March 31, 2017

860,645

1,275,337

984,368

(618,769
)
(4,335
)
2,497,246

638,176

3,135,422

Issuance of new shares

488

488

976

976

Exercise of stock acquisition rights

4,533

4,532

9,065

9,065

Conversion of convertible bonds

12

12

24

24

Stock-based compensation

3,160

3,160

3,160

Comprehensive income:

Net income

490,794

490,794

56,485

547,279

Other comprehensive income, net of tax —

Unrealized gains (losses) on securities

(444
)
(444
)
1,514

1,070

Unrealized losses on derivative
instruments

(1,184
)
(1,184
)
(1,184
)
Pension liability adjustment

12,292

12,292

98

12,390

Foreign currency translation adjustments

(8,641
)
(8,641
)
2,306

(6,335
)

Total comprehensive income

492,817

60,403

553,220

Stock issue costs, net of tax

(879
)
(879
)
(879
)
Dividends declared (27.50 yen per share)

(34,775
)
(34,775
)
(14,361
)
(49,136
)
Purchase of treasury stock

(199
)
(199
)
(199
)
Reissuance of treasury stock

0

4

4

4

Transactions with noncontrolling interests
shareholders and other

(73
)
(73
)
(4,427
)
(4,500
)

Balance at March 31, 2018

865,678

1,282,577

1,440,387

(616,746
)
(4,530
)
2,967,366

679,791

3,647,157


			Yen in millions
			Fiscal year ended March 31
	Note		2021			2022			2023
Cash flows from operating activities:
Income before income taxes				997,965			1,117,503			1,180,313
Adjustments to reconcile income before income taxes to net cash provided by operating activities:
Depreciation and amortization, including amortization of contract costs				687,373			835,233			1,004,590
Amortization of deferred insurance acquisition costs				44,738			69,237			84,523
Other operating (income) expense, net		23		14,250			(65,494	)		(12,021	)
(Gain) loss on securities, net (other than Financial Services segment)		24		(62,704	)		60,402			4,469
Share of profit of investments accounted for using the equity method, net of dividends				(5,012	)		(13,934	)		(17,696	)
Change in future insurance policy benefits and other				358,666			458,880			234,102
Change in policyholders’ account in the life insurance business, less cash impact				558,539			238,309			15,523
Net cash impact of policyholders’ account in the life insurance business				134,299			227,262			346,455
Changes in assets and liabilities:
Increase in trade receivables and contract assets				(137,939	)		(171,094	)		(70,448	)
Increase in inventories				(56,509	)		(194,624	)		(560,382	)
Increase in investments and advances in the Financial Services segment				(1,977,092	)		(1,724,164	)		(1,250,078	)
Increase in content assets				(309,178	)		(502,253	)		(603,314	)
Increase in deferred insurance acquisition costs				(98,122	)		(117,337	)		(118,096	)
Increase (decrease) in trade payables				288,854			126,989			(109,336	)
Increase in deposits from customers in the banking business				333,075			230,236			300,201
Increase in borrowings in the life insurance business and the banking business				462,751			905,139			111,314
Increase in taxes payable other than income taxes, net				19,164			17,840			4,183
(Increase) decrease in other financial assets and other current assets				(9,703	)		(17,681	)		5,965
Increase in other financial liabilities and other current liabilities				23,906			66,407			122,878
Income taxes paid		25		(102,732	)		(269,885	)		(297,881	)
Other				(24,372	)		(43,328	)		(60,573	)
Net cash provided by operating activities				1,140,217			1,233,643			314,691

(Continued on the following page.)

~~F-1~~

2F-10

Table of Contents

SONY GROUP CORPORATION AND CONSOLIDATED SUBSIDIARIES

Consolidated Statements of ~~Changes in Stockholders’ Equity~~Cash Flows (Continued)

Yen in millions

Common
stock

Additional
paid-in

capital

Retained
earnings

Accumulated
other
comprehensive
income

Treasury
stock, at
cost

Sony
Corporation’s
stockholders’
equity

Noncontrolling
interests

Total equity

Balance at March 31, 2018

865,678

1,282,577

1,440,387

(616,746
)
(4,530
)
2,967,366

679,791

3,647,157

Cumulative effect of newly adopted ASUs

7,976

(15,526
)
(7,550
)
5,432

(2,118
)
Issuance of new shares

431

431

862

862

Exercise of stock acquisition rights

8,174

8,174

16,348

16,348

Conversion of convertible bonds

8

8

16

16

Stock-based compensation

1,159

1,159

1,159

Comprehensive income:

Net income

916,271

916,271

50,279

966,550

Other comprehensive income, net of tax —

Unrealized gains on securities

24,370

24,370

8,915

33,285

Unrealized gains on derivative
instruments

1,223

1,223

1,223

Pension liability adjustment

(14,013
)
(14,013
)
53

(13,960
)
Foreign currency translation adjustments

10,022

10,022

(1,578
)
8,444

Total comprehensive income

937,873

57,669

995,542

Stock issue costs, net of tax

(147
)
(147
)
(147
)
Dividends declared (35.00 yen per share)

(44,048
)
(44,048
)
(28,961
)
(73,009
)
Purchase of treasury stock

(100,177
)
(100,177
)
(100,177
)
Reissuance of treasury stock

1

3

4

4

Transactions with noncontrolling interests
shareholders and other

(25,329
)
(25,329
)
(23,618
)
(48,947
)

Balance at March 31, 2019

874,291

1,266,874

2,320,586

(610,670
)
(104,704
)
3,746,377

690,313

4,436,690

~~(Continued on following page.)~~

~~F-1~~

~~Table of Contents~~

~~SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES~~

~~Consolidated Statements of Changes in Stockholders’ Equity (Continued)~~

Yen in millions

Common
stock

Additional
paid-in

capital

Retained
earnings

Accumulated
other
comprehensive
income

Treasury
stock, at
cost

Sony
Corporation’s
stockholders’
equity

Noncontrolling
interests

Total equity

Balance at March 31, 2019

874,291

1,266,874

2,320,586

(610,670
)
(104,704
)
3,746,377

690,313

4,436,690

Cumulative effect of ASU
2016-02

(7,472
)
(7,472
)
(7,472
)
Issuance of new shares

529

529

1,058

1,058

Exercise of stock acquisition rights

5,179

5,180

10,359

10,359

Conversion of convertible bonds

215

215

430

430

Stock-based compensation

1,980

1,980

1,980

Comprehensive income:

Net income

582,191

582,191

40,069

622,260

Other comprehensive income, net of tax —

Unrealized gains on securities

26,156

26,156

14,234

40,390

Unrealized gains on derivative
instruments

1,267

1,267

1,267

Pension liability adjustment

74,937

74,937

34

74,971

Foreign currency translation adjustments

(74,643
)
(74,643
)
(1,245
)
(75,888
)
Debt valuation adjustments

1,973

1,973

1,059

3,032

Total comprehensive income

611,881

54,151

666,032

Stock issue costs, net of tax

(80
)
(80
)
(80
)
Dividends declared (45.00 yen per share)

(55,111
)
(55,111
)
(25,885
)
(80,996
)
Purchase of treasury stock

(200,211
)
(200,211
)
(200,211
)
Reissuance of treasury stock

0

2

2

2

Cancellation of treasury stock
(1,072 ) (71,338 )
72,410

—

—

Transactions with noncontrolling interests
shareholders and other

16,093

16,093

(54,350
)
(38,257
)

Balance at March 31, 2020

880,214

1,289,719

2,768,856

(580,980
)
(232,503
)
4,125,306

664,229

4,789,535


			Yen in millions
			Fiscal year ended March 31
	Note		2021			2022			2023
Cash flows from investing activities:
Payments for property, plant and equipment and other intangible assets				(477,931	)		(441,096	)		(613,635	)
Proceeds from sales of property, plant and equipment and other intangible assets				15,893			11,409			11,595
Payments for investments and advances (other than Financial Services segment)				(103,351	)		(91,082	)		(191,129	)
Proceeds from sales or return of investments and collections of advances (other than Financial Services segment)				20,352			16,081			13,548
Payments for purchases of businesses				(15,260	)		(277,618	)		(283,402	)
Proceeds from sales of businesses				3,151			64,609			1,221
Other				(6,764	)		(11,083	)		9,138
Net cash used in investing activities				(563,910	)		(728,780	)		(1,052,664	)
Cash flows from financing activities:
Increase (decrease) in short-term borrowings, net		14, 27		(18,334	)		408			32,391
Proceeds from issuance of long-term debt		14, 27		236,935			31,458			361,776
Payments of long-term debt		14, 27		(89,918	)		(194,562	)		(132,198	)
Proceeds from issuance of short-term borrowings in connection with payment for purchase of noncontrolling interest in Sony Financial Group Inc.				396,500			—			—
Payments of short-term borrowings in connection with payment for purchase of noncontrolling interest in Sony Financial Group Inc.				(396,500	)		—			—
Dividends paid				(61,288	)		(74,342	)		(86,568	)
Payments for purchases of treasury stock		20		(366	)		(88,624	)		(99,248	)
Payment for purchase of noncontrolling interest in Sony Financial Group Inc.		20		(396,698	)		—			—
Other				(8,864	)		(10,916	)		8,147
Net cash provided by (used in) financing activities				(338,533	)		(336,578	)		84,300
Effect of exchange rate changes on cash and cash equivalents				36,685			94,369			84,937
Net increase (decrease) in cash and cash equivalents				274,459			262,654			(568,736	)
Cash and cash equivalents at beginning of the fiscal year		27		1,512,523			1,786,982			2,049,636
Cash and cash equivalents at end of the fiscal year		27		1,786,982			2,049,636			1,480,900

The accompanying notes are an integral part of these statements.

~~F-1~~

4F-11

Table of Contents

SONY GROUP CORPORATION AND CONSOLIDATED SUBSIDIARIES

Index to Notes to Consolidated Financial Statements

Sony Group Corporation and Consolidated Subsidiaries


			Page
	Notes to Consolidated Financial Statements
	1.	~~Nature of operations~~Reporting entity		~~F-16~~ F-13
	2.	2.Basis of preparation		F-13
	3.	Summary of significant accounting policies		~~F-16~~ F-14
	4.	3.Business segment information		F-38
	5.	Financial instruments		F-43
	6.	Financial risk management		F-53
	7.	Inventories		~~F-28~~ F-64
	4.	~~Film costs~~		~~F-29~~
	5. 8.	Investments in ~~affiliated companies~~associates and joint ventures		~~F-29~~ F-65
	6. 9.	~~Transfer of financial assets~~Property, plant and equipment		~~F-31~~ F-66
	7.	~~Marketable securities and securities investments~~		~~F-31~~
	8. 10.	Leases		~~F-34~~ F-67
	9. 11.	Goodwill and ~~other~~ intangible assets		~~F-36~~ F-68
	12.	~~10.~~Impairment of non-financial assets		F-72
	13.	Insurance-related accounts		~~F-37~~ F-72
	~~11.~~ 14.	Short-term borrowings and long-term debt		~~F-40~~ F-79
	~~12.~~	~~Housing loans and deposits from customers in the banking business~~		~~F-42~~
	~~13.~~	~~Fair value measurements~~		~~F-43~~
	~~14.~~ 15.	Derivative instruments and hedging activities		~~F-50~~ F-81
	~~15.~~ 16.	~~Pension~~Offsetting of financial assets and ~~severance plans~~financial liabilities		~~F-55~~ F-84
	17.	~~16.~~Employee benefits		F-85
	18.	Participation and residual liabilities in the Pictures segment		F-91
	19.	Other assets and other liabilities		F-91
	20.	Stockholders’ equity		~~F-63~~ F-92
	~~17.~~ 21.	Stock-based compensation plans		~~F-67~~ F-97
	~~18.~~	~~Kumamoto Earthquake~~		~~F-68~~
	~~19.~~ 22.	Revenue		~~F-68~~ F-99
	~~20.~~	~~Restructuring charges~~		~~F-69~~
	~~21.~~ 23.	Supplemental consolidated statements of income information		~~F-72~~ F-100
	24.	~~22.~~Financial income and expense		F-101
	25.	Income taxes		~~F-73~~ F-101
	~~23.~~ 26.	Reconciliation of the differences between basic and diluted EPS		~~F-77~~ F-106
	~~24.~~ 27.	~~Variable interest~~Supplemental cash flow information		F-106
	28.	Structured entities		~~F-77~~ F-109
	29.	~~25.~~Subsidiaries		F-111
	30.	Acquisitions		~~F-79~~ F-111
��	~~26.~~ 31.	~~Divestitures~~Divestiture		~~F-82~~ F-114
	~~27.~~ 32.	~~Collaborative arrangements~~Related party transactions		~~F-83~~ F-114
	~~28.~~ 33.	~~Commitments,~~Purchase commitments, contingent liabilities and other		~~F-83~~ F-115
	~~29.~~	~~Business segment information~~		~~F-85~~
	~~30.~~ 34.	Subsequent ~~events~~event		~~F-90~~ F-116

F-12

~~F-15~~

Table of Contents

SONY GROUP CORPORATION AND CONSOLIDATED SUBSIDIARIES

Notes to Consolidated Financial Statements

Sony Group Corporation and Consolidated Subsidiaries

11.

~~Nature of operations~~

Reporting entity

Sony Group Corporation is a public company domiciled in Japan. Sony Group Corporation and its consolidated subsidiaries (hereinafter collectively referred to as “Sony” or “Sony Group”) are engaged in the development, design, production, manufacture, offer and sale of various kinds of electronic equipment, instruments, and devices for consumer, professional and industrial markets such as network services, ~~game hardware~~home gaming consoles and software, televisions, audio and video recorders and players, still and video cameras, smartphones, and image sensors. Sony’s primary manufacturing facilities are located in Asia including Japan. Sony also utilizes third-party contract manufacturers for certain products. Sony’s products and services are marketed throughout the world by sales subsidiaries and unaffiliated distributors as well as direct sales and offers via the internet. Sony is engaged in the development, production, manufacture, and distribution of recorded music and the management and licensing of the words and music of songs as well as production and distribution of animation titles ~~including~~and game ~~applications based on the animation titles.~~applications. Sony is also engaged in the production, acquisition and distribution of motion pictures and television programming and the operation of television networks and ~~digital networks.~~direct-to-consumer (“DTC”) streaming services. Further, Sony is also engaged in various financial services businesses, including life and

non-life

insurance ~~operations~~businesses through its Japanese insurance subsidiaries and banking ~~operations~~business through a Japanese internet-based banking subsidiary.

22.

Basis of preparation

Compliance with International Financial Reporting Standards

The consolidated financial statements of Sony have been prepared in accordance with International Financial Reporting Standards (“IFRS”), as issued by the International Accounting Standards Board (“IASB”). The term “IFRS” also includes International Accounting Standards (IASs) and the related interpretations of the interpretations committees (Standard Interpretations Committee (SIC) and International Financial Reporting Interpretations Committee (IFRIC)).

Approval of consolidated financial statements

The consolidated financial statements were approved by Kenichiro Yoshida, Chairman and Chief Executive Officer and Representative Corporate Executive Officer, and Hiroki Totoki, President, Chief Operating Officer and Chief Financial Officer and Representative Corporate Executive Officer, on June 20, 2023.

Basis of measurement

The consolidated financial statements have been prepared on a historical cost basis except for items such as financial instruments measured at fair value as separately described in Note 3.

Functional currency and presentation currency

The consolidated financial statements have been presented in Japanese yen, which is the functional currency of Sony Group Corporation. All financial information presented in Japanese yen has been rounded to the nearest million Japanese yen.

Use of estimates and judgments

The preparation of the consolidated financial statements in accordance with IFRS requires management to make judgments, estimates and assumptions that affect the application of accounting policies, the reported amounts of assets, liabilities, revenues and expenses, and disclosure of contingent assets and liabilities. Actual results could differ from these estimates and assumptions. These estimates and assumptions are reviewed on a continuous basis. Changes in these accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected.

Information about judgments that have been made in the process of applying accounting policies that have significant effects on the amounts reported in the consolidated financial statements is as follows:

Classification of financial instruments (Note 3 I (5))

F-13

Table of Contents

SONY GROUP CORPORATION AND CONSOLIDATED SUBSIDIARIES

Information about accounting estimates and assumptions that have significant effects on the amounts reported in the consolidated financial statements is as follows:

Fair value of financial instruments (Note 3 I (5) and (15) and Note 5)

Impairment of

non-financial

assets (Note 3 I (10) and Note 12)

Measurement of deferred insurance acquisition costs, future insurance policy benefits, and policyholders’ account in the life insurance business (Note 3 I (11) and Note 13)

Measurement of film costs and participation and residual liabilities in the Pictures segment (Note 3 I (9) and (12), Note 11, and Note 18)

Recoverability of deferred tax assets (Note 3 I (23) and Note 25)

Measurement of fair value of assets acquired and liabilities assumed in business combinations (Note 3 I (2) and Note 30)

Change in presentation

Consolidated Statements of Cash Flows

Adjustments for foreign exchange fluctuations related to investments in the Financial Services segment and adjustments for foreign exchange fluctuations related to content assets, which were included in “Other” in cash flows from operating activities in the previous fiscal year, have been reclassified to “Increase in investments and advances in the Financial Services segment” and “Increase in content assets,” respectively, of cash flows from operating activities from the current fiscal year considering the materiality and the nature of the adjustments. Also, adjustments for changes in taxes payable other than income taxes, net, which were included in “Other” in cash flows from operating activities in the previous fiscal year, have been presented separately as “Increase in taxes payable other than income taxes, net” in cash flows from operating activities from the current fiscal year considering, among other things, the increase in materiality of the adjustments during the fiscal year ended March 31, 2023. As a result of these changes in presentation, reclassifications within cash flows from operating activities in the consolidated statements of cash flows for the fiscal years ended March 31, 2021 and 2022 have been made to conform to the presentation for the fiscal year ended March 31, 2023.

As a result, in the consolidated statements of cash flows for the fiscal year ended March 31, 2021 (39,514) million yen, which was previously included in “Other” in cash flows from operating activities, has been reclassified to (75,164) million yen of “Increase in investments and advances in the Financial Services segment” and 16,486 million yen of “Increase in content assets,” and also has been presented separately in 19,164 million yen of “Increase in taxes payable other than income taxes, net” of cash flows from operating activities. In the consolidated statements of cash flows for the fiscal year ended March 31, 2022

(189,295)

million yen, which was previously included in “Other” in cash flows from operating activities, has been reclassified to

(194,499)

million yen of “Increase in investments and advances in the Financial Services segment” and

(12,636)

million yen of “Increase in content assets,” and also has been presented separately in 17,840 million yen of “Increase in taxes payable other than income taxes, net” of cash flows from operating activities.

3.	Summary of significant accounting policies

I.	Significant accounting policies

(1)	Basis of consolidation -

Subsidiaries

A subsidiary is an entity controlled by Sony Group Corporation. Control is obtained when Sony Group Corporation is exposed, or has rights to variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity.

The ~~accompanying~~financial statements of subsidiaries are included in the consolidated financial statements ~~are presented in accordance with accounting principles generally accepted in~~of Sony from the ~~United States of America (“U.S. GAAP”). Certain adjustments and reclassifications have been incorporated in~~date on which control is obtained until the accompanying consolidated financial statements to conform with U.S. GAAP. These adjustments were not recorded in the statutory books and records as Sony Corporation and its subsidiaries in Japan maintain their records and prepare their statutory financial statements in accordance with accounting principles generally accepted in Japan, while its foreign subsidiaries maintain their records and prepare their financial statements in conformity with accounting principles generally accepted in the countries of their domicile.

~~(1)~~

~~Significant accounting policies~~

~~Basis of consolidation and accounting for investments in affiliated companies -~~

date on which control is lost.

The consolidated financial statements include the accounts of Sony Corporation and its majority-owned subsidiary companies, general partnerships and other entities in which Sony has a controlling interest, and variable interest entities (“VIEs”) for which Sony is the primary beneficiary. All intercompany transactions and ~~accounts~~balances are ~~eliminated. Investments~~eliminated in ~~business entities in which Sony does not have control, but has~~ the ~~ability to exercise significant influence over operating and financial policies, generally through~~

~~20-50%~~

ownership, are accounted for under the equity method. In addition, investments in general partnerships in which Sony does not have a controlling interest and limited partnerships are also accounted for under the equity method if more than minor influence over the operationpreparation of the ~~investee exists (generally through more than~~

~~3-5%~~

ownership). When the interest in the partnership is so minor that Sony has no significant influence over the operation of the investee, the interest in the partnership is carried at fair value. Under the equity method, investments are stated at cost plus/minus Sony’s portion of equity in undistributed earnings or losses. Sony’s equity in current earnings or losses of such entities is reported net of income taxes and is included in operating income (loss) after the elimination of unrealized intercompany profits. If the value of an investment has declined and is judged to be other-than-temporary, the investment is written down to its estimated fair value.consolidated financial statements.

On occasion, a consolidated subsidiary or an affiliated company accounted for by the equity method may issue its shares to third parties in either a public or private offering or upon conversion of convertible debt to common stock at amounts per share in excess of or less than Sony’s average per share carrying value. With respect to such transactions, the resulting gains or losses arising from the change in ownership interest are recorded in earnings within the fiscal year in which the change in interest transactions occurs.

Gains or losses that result from a loss of a controlling financial interest in a subsidiary are recorded in earnings along with fair value remeasurement gains or losses on any retained investment in the entity, while a change in interest

inF-14

~~a consolidated subsidiary that does not result in a change in control is accounted for as a capital transaction and no gains or losses are recorded in earnings.~~

~~F-1~~

Table of Contents

SONY

GROUP CORPORATION AND CONSOLIDATED SUBSIDIARIES

~~The excess~~

any accounting

policies applied by a subsidiary differ from those applied by Sony, adjustments are made to the financial statements of the ~~cost over the underlying net equity~~subsidiary as necessary.

Any changes in ownership interest in a subsidiary that do not result in a loss of ~~investments in consolidated subsidiaries and affiliated companies~~control are accounted for ~~on an~~as equity ~~basis is allocated to identifiable tangible~~transactions. The difference between the amount by which the

non-controlling

interests are adjusted and ~~intangible assets and liabilities based on~~the fair ~~values at the date of acquisition. The unassigned residual~~ value of the ~~excess~~consideration is directly recognized in equity and attributed to the owners of Sony. When control over a subsidiary is lost, the investment retained in the former subsidiary is remeasured at fair value as of the ~~cost over Sony’s underlying net equity~~date when control is lost, and any gain or loss resulting from the loss of control is recognized ~~as goodwill~~in profit or loss.

ii)

Associates and joint ventures

An associate is an entity over which Sony has significant influence, but does not have control or joint control, in terms of financial and operating policies.

A joint venture is an investee whereby two or more parties including Sony have the rights to the net assets of the investee in accordance with the terms of the joint arrangement. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require the unanimous consent of the parties sharing control.

Investments in associates and joint ventures are accounted for using the equity method from the date on which significant influence or joint control is obtained until the date on which significant influence or joint control is lost. Under the equity method, investments in associates and joint ventures are recognized at cost, adjusted for Sony’s share of the profit or loss and other comprehensive income of the associates and joint ventures from the date on which Sony obtains significant influence or joint control to the date on which Sony loses such significant influence or joint control. Sony recognizes its share of profit or loss of the investees, net of income taxes after the elimination of unrealized intercompany profits, in the consolidated operating income (loss) to the extent of Sony’s interest in these entities.

For investments accounted for using the equity method, the carrying amount of each investment is tested for impairment as a ~~component~~single asset, when there is objective evidence that the investments may be impaired.

If any accounting policies applied by an associate or a joint venture differ from those applied by Sony, adjustments are made to the financial statements of the associate or the joint venture as necessary.

When an investment ~~balance.~~ceases to be an associate or a joint venture and the use of the equity method is discontinued, any gain or loss arising from discontinuation of the equity method is recognized in profit or loss.

iii)

Joint operations

A joint operation is a joint arrangement whereby two or more parties including Sony have the rights to the assets, and obligations for the liabilities, relating to the investee in accordance with the terms of the joint arrangement.

Sony recognizes its share of the assets, liabilities, revenue and expenses related to joint operations.

iv)

Structured entities

A structured entity is an entity designed so that voting or similar rights are not the dominant factor in deciding who controls the entity.

Sony has control and, therefore, consolidates a structured entity when Sony has exposure or rights to variable returns and has the ability to use its power over the structured entity to affect returns.

(2)	Business combinations -

Sony recognizes identifiable assets acquired and the liabilities assumed of an acquiree at their fair

valu

es at the acquisition date with

~~Use of estimates -~~limited exceptions.

~~The preparation~~

F-15

Table of the consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The most significant estimates include those used in determining the valuation of investment securities, valuation of inventories, fair values of long-lived assets, fair values of goodwill and other intangible assets, fair values of assets and liabilities assumed in business combinations, product warranty liability, pension and severance plans, valuation of deferred tax assets, uncertain tax positions, film costs, and insurance related liabilities. Actual results could significantly differ from those estimates. The timing and extent to which the spread of COVID-19 may negatively impact Sony’s business will depend on future developments, which are highly uncertain. This uncertainty could result in greater variability in accounting estimates and assumptions, including, but not limited to, those used in reviewing goodwill and long-lived assets for impairment and the valuation of deferred tax assets.Contents

~~Translation of foreign currencies -~~SONY GROUP CORPORATION AND CONSOLIDATED SUBSIDIARIES

All asset and liability accounts of foreign subsidiaries and affiliates are translated into Japanese yen at appropriate fiscal year end exchange rates and all income and expense accounts are translated at exchange rates that approximate those rates prevailing at

Sony recognizes goodwill when the ~~time~~aggregate of the ~~transactions. The resulting translation adjustments are accumulated as~~consideration transferred in a ~~component~~business combination,

the

amount of ~~accumulated other comprehensive income. Upon remeasurement~~any

non-controlling

interests in the acquiree and the fair value of aSony’s previously held equity interest in ~~accordance with~~ the ~~accounting guidance~~acquiree exceeds the net amount of the identifiable assets and liabilities of the acquiree at the acquisition date. If the aggregate above is less than the net amount of identifiable assets and liabilities, the difference is recognized as a gain. The consideration transferred is calculated as the sum of the fair values of the assets transferred, liabilities assumed and equity interest issued.

Non-controlling

interests are measured either at fair value or based on the

non-controlling

interests’ proportionate share of the acquiree’s net identifiable assets for each business ~~combinations achieved~~combination transaction.

Acquisition-related costs are recognized as expenses in ~~stages, accumulated translation adjustments, if any,~~the period they are ~~included in earnings.~~incurred.

(3)	Foreign currency translation -

Foreign currency transactions

Foreign currency transactions are translated at the exchange rates prevailing at the transaction date or rates that approximate such rates. Monetary assets and liabilities denominated in foreign currencies are translated into the functional currency using the exchange rate at ~~appropriate fiscal year~~the end of the period. Foreign exchange gains and losses resulting from translation and settlement are generally recognized in profit or loss. They are deferred in other comprehensive income if they relate to qualifying cash flow hedges.

ii)

Foreign operations

Assets and liabilities of foreign operations such as overseas subsidiaries and associates are translated using the exchange rates at the end of the period, and revenue and expense items are translated using the ~~resulting~~average exchange rates for the period unless the exchange rates fluctuate significantly. Exchange differences arising from the translation ~~gains or losses~~ are recognized ~~into~~in other comprehensive income.

On the disposal of a foreign operation, the cumulative amount of exchange differences relating to that foreign operation is reclassified to profit or loss.

(4)	Cash and cash equivalents ~~and restricted cash~~ -

Cash and cash equivalents include all highly liquid investments, with original maturities of three months or less, that are readily convertible to known amounts of cash and which are ~~so near maturity that they present~~subject to an insignificant risk of changes in ~~value because of changes in interest rates. Sony includes restricted cash within cash and cash equivalents in the statement of cash flows.~~value.

~~Marketable debt and equity~~

~~securities~~

(5)	Financial instruments -

Sony recognizes a financial instrument as a financial asset or a financial liability when Sony becomes party to the contractual provisions of the instrument.

~~Debt securities designated as~~

~~available-for-sale~~

Financial assets and financial liabilities are ~~carried~~initially measured at fair value. Except for financial assets and financial liabilities measured at fair value ~~with~~

~~unrealized~~

~~gains~~through profit or losses included as a component of accumulated other comprehensive income, net of applicable taxes. Equity securities that have a readily determinable fair value, and debt securities classified as trading securities, are carried at fair value with unrealized gains or losses included in income. Debt securitiesloss, transaction costs that are ~~expected~~directly attributable to be

~~held-to-maturity~~

~~are carried at amortized cost. Individual securities classified as either~~

~~available-for-sale~~

~~held-to-maturity~~

~~are reduced to fair value by a charge to income when an other-than-temporary impairment is recognized. Realized gains and losses are determined on~~ the ~~average cost method and are reflected in income.~~

Sony regularly evaluates its investment portfolio to identify other-than-temporary impairments of individual debt securities. Factors that are considered by Sony in determining whether an other-than-temporary decline in value has occurred include: the length of time and extent to which the market valueacquisition or issuance of the ~~security has been less than its original cost, the~~ financial condition, operating results, business plans and estimated future cash flows of the issuer of the security, other specific factors affecting the market value, deterioration of the credit condition of the issuer, sovereign risk, and whetherasset or ~~not Sony is able~~financial liability are added to ~~retain the investment for a period of time sufficient to allow for the anticipated recovery in market value.~~

~~In evaluating the factors for debt securities designated as~~

~~available-for-sale,~~

~~Sony presumes a decline in value to be other-than-temporary if~~ the fair value of financial assets or subtracted from the ~~security~~fair value of financial liabilities at initial recognition.

Non-derivative

financial assets

Classification and measurement

Non-derivative

financial assets held by Sony are classified as either financial assets measured at amortized cost, debt instruments measured at fair value through other comprehensive income, equity instruments measured at fair value through other comprehensive income or financial assets measured at fair value through profit or loss.

Financial assets measured at amortized cost

Sony classifies a financial asset as measured at amortized cost if the financial asset is ~~20 percent or more below its original cost for an extended period~~held within a business model whose objective is to collect contractual cash flows and the

cont

ractual terms of time (generally for a period of up to six months). This criterion is employed as a threshold to identify securities which may have a decline in value that is other-than-temporary. The presumption of an other-than-temporary impairment in such cases may be overcome if there is evidence to support that

the ~~decline~~

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financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. The financial asset is ~~temporary~~measured at amortized cost by using the effective interest method after initial recognition. On derecognition of a financial asset measured at amortized cost, the difference between the carrying amount and the consideration received or receivable is recognized in ~~nature due to~~profit or loss.

Debt instruments measured at fair value through other comprehensive income

A debt instrument is classified as a financial asset measured at fair value through other comprehensive income if the ~~existence of other factors which overcome~~debt instrument is held within a business model whose objective is achieved by both collecting contractual cash flows and selling the ~~duration or magnitude~~financial asset and the contractual terms of the ~~decline. On~~financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the ~~other hand, there may be cases where impairment losses are recognized when the decline~~principal amount outstanding. Changes in the fair value of the ~~security~~financial asset after initial recognition, except for impairment gains or losses and foreign exchange gains or losses, are recognized in other comprehensive income. Interest income from these financial assets is ~~not more than 20 percent~~recognized in profit or ~~such decline has not existed~~loss using the effective interest method. On derecognition of a debt instrument measured at fair value through other comprehensive income, the cumulative amount previously recognized in other comprehensive income is reclassified to profit or loss.

In the life insurance business, the financial assets are held mainly from the perspective of asset-liability management (“ALM”). The objective of holding financial assets in the life insurance business is to match the interest rate sensitivity (duration) of financial assets and insurance contract liabilities (which mainly consist of future insurance policy benefits and the policyholders’ account in the life insurance business) as much as possible, in order to ensure sufficient cash flows are available to settle insurance claims when they come due. Sony manages these assets as one portfolio, based on the overall objective of managing duration and liquidity needs in a capital efficient manner. While some assets within the portfolio may be held for ~~an extended~~a longer period of time, ~~as a result~~Sony considers, because of ~~considering specific factors~~its overall objective for these assets, that all the financial assets are held within one business model whose objective is achieved by both collecting cash flows and selling financial assets.

Equity instruments measured at fair value through other comprehensive income

For investments in equity instruments which are not held for trading, Sony may ~~indicate that~~make an irrevocable election at initial recognition to present subsequent changes in fair value of the ~~decline~~investments in other comprehensive income.

These financial assets are measured at fair value and subsequent changes in the fair value ~~is other-than-temporary.~~

~~When an other-than-temporary impairment of a~~

~~held-to-maturity~~

~~debt security has occurred, the amount of the other-than-temporary impairment~~are recognized in income depends on whether Sony intends to sell the debt security or more likely than not will be required to sell the debt security before recovery of its amortized cost. If the debt security meets either of these two criteria, the other-than-temporary impairment isother comprehensive income. Dividends from financial assets are recognized in ~~income, measured as~~profit or loss, and the entire difference between the security’s amortized cost and its fair value at the impairment measurement date. For other-than-temporary impairment of the debt security that does not meet these two criteria, the netcumulative amount recognized in other comprehensive income is ~~a credit~~transferred to retained earnings upon derecognition.

Financial assets measured at fair value through profit or loss ~~which equals the difference between the~~

Financial assets other than those measured at amortized cost or fair value through other comprehensive income are classified as financial assets measured at fair value through profit or loss. Financial assets measured at fair value through profit or loss include financial assets held for trading.

In the life insurance business, investments held for variable life insurance and individual variable annuity contracts mainly consist of equity securities, debt securities and investment funds, which are measured at fair value through profit or loss.

For certain financial assets that would not normally be measured at fair value through profit or loss, Sony may, at initial recognition, choose the irrevocable option to measure such financial assets at fair value through profit or loss in order to eliminate or significantly reduce an accounting mismatch.

In the banking business, Sony has made the irrevocable election as mentioned above for some fixed-rate debt ~~security and its net present value calculated by discounting Sony’s best estimate of projected future cash flows at~~securities. In relation to such debt securities, Sony utilizes derivatives to hedge the ~~effective interest rate implicit~~risk arising from the changes in the ~~debt security prior to impairment. Any difference between the~~ fair ~~value and the net present~~ value of the debt ~~security~~securities due to unfavorable fluctuations of interest rates. Thus, this election is made to mitigate accounting mismatches derived from the changes in the fair value of the debt securities and derivatives used as

hed

ging instruments by recognizing gains and losses from the changes in the fair value of the debt securities in profit or loss.

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Derecognition

Sony derecognizes a financial asset when the co

ntrac

tual rights to the cash flows from the financial asset expire, or when Sony transfers the contractual rights to receive the cash flows of the financial asset and transfers substantially all of the risks and rewards of the financial asset.

Impairment

Sony estimates expected credit losses and recognizes loss allowances for financial assets measured at ~~the impairment measurement date is recorded in accumulated~~amortized cost and debt instruments measured at fair value through other comprehensive income. ~~Unrealized gains~~At each reporting date, Sony measures the loss allowance for a financial instrument at an amount equal to the lifetime expected credit losses if the credit risk on that financial instrument has increased significantly since initial recognition. If, at the reporting date, the credit risk on a financial instrument has not increased significantly since initial recognition, Sony measures the loss allowance for that financial instrument at an amount equal to

12-month

expected credit losses. In assessing whether the credit risk has increased significantly or not, Sony uses the change in the risk of a default occurring over the expected life of the financial instrument and estimates expected credit losses by using the method which reflects the past loss rate and other reasonable and supportable forward-looking information on macroeconomic factors affecting the ability of the customers to settle the receivables.

Sony measures the expected credit losses of a financial asset in a way tha

t r

eflects an unbiased and probability-weighted amount incorporating the time value of money and reasonable and supportable information that is available at the reporting date about past events, current conditions and forecasts of future economic conditions.

However, for trade and other receivables, and contract assets including

non-current

other receivables in the Pictures segment, the loss allowance is measured at an amount equal to lifetime expected credit losses irrespective of the change of credit risk on a collective basis or an individual basis incorporating factors such as the

past-due

status and the attributes of the counterparties.

Sony determines a financial asset is credit-impaired when one or more events that have a detrimental impact on the estimated future cash flows of that financial asset have occurred. The criteria that Sony uses to determine that a financial asset is credit-impaired include a default or delinquency of more than 90 days past due in interest or principal payments.

Sony writes off the gross carrying amount of a financial asset when it cannot reasonably expect to recover all or part of the asset.

Debt securities and housing loans in the Financial Services segment

The expected credit losses for debt securities and housing loans in the Financial Services segment are the product of the probability of default (“PD”), loss given default (“LGD”) and exposure at default (“EAD”), by leveraging the Basel III regulatory framework or based on the external information published by major credit rating agencies. Forward-looking economic information is also included in determining the PD.

Assessments on significant increases in credit risk are performed at the reporting date by comparing the risk of default occurring with that at initial recognition. Sony recognizes and measures the expected credit losses on a collective basis or an individual basis using reasonable and supportable information that is available without undue cost or effort, such as asset type, credit ratings, collateral collectability,

past-due

status and other relevant characteristics of financial instruments.

In addition, Sony has applied the low credit risk exemption for certain debt securities ~~for which an other-than-temporary impairment~~rated “investment grade” by major credit rating agencies at the reporting date. For such instruments, Sony assumes that the credit risk has not increased significantly since initial recognition.

If contractual terms of a loan have been

modified

, it is ~~recognized~~necessary to recalculate the gross carrying amount of that loan by using the original effective interest rate and recognize a modification gain or loss in ~~income are presented as a separate component of accumulated other comprehensive income.~~profit or

loss.

~~Equity securities that do not have readily determinable fair values -~~

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SONY GROUP CORPORATION AND CONSOLIDATED SUBSIDIARIES

ii)

Non-derivative

financial liabilities

Sony classifies

non-derivative

financial liabilities as either financial liabilities subsequently measured at amortized cost by using the effective interest method or financial liabilities measured at fair value through profit or loss.

Sony derecognizes a financial liability when it is extinguished, meaning when the obligation specified in the contract is discharged, cancelled or expired.

iii)

Derivative financial instruments and hedge accounting

All derivatives are recognized as either assets or liabilities in the consolidated statements of financial position at fair value. Changes in the fair value of derivative financial instruments are either recognized periodically through profit or loss or other comprehensive income, depending on whether the derivative financial instrument qualifies as a hedge and the derivative is being used to hedge changes in cash flows.

Derivative financial instruments held by Sony are accounted for as described below.

Cash flow hedges

Changes in the fair value of derivatives that doare designated and determined to be effective as cash flow hedges for forecasted transactions or exposures associated with recognized assets or liabilities are initially recorded in other comprehensive income and reclassified to profit or loss when the hedged transaction affects profit or loss. Changes in the fair value of the ineffective portion are immediately recognized in profit or loss.

Derivatives not designated as hedges

Changes in the fair value of derivatives not designated as hedges are immediately recognized in profit or loss.

Assessment of hedge effectiveness

When applying hedge accounting, Sony formally documents all hedging relationships between the derivatives designated as hedges and the hedged items, as well as its risk management objectives and strategies for undertaking various hedging activities. Sony links all hedges that are designated as cash flow hedges to specific assets or liabilities in the consolidated statements of financial position or to the specific forecasted transactions. Sony also assesses, both at the inception of the hedge and on an

on-going

basis, whether the derivatives that are designated as hedges have ~~readily determinable~~an economic relationship with the hedged item in offsetting changes in fair ~~values~~value or cash flows of hedged items. The effect of credit risk does not dominate the value changes that result from the underlying economic relationship. In addition, the hedge ratio of the hedging relationship is designed to be the same as that resulting from the quantity of the hedged item that Sony actually hedges and the quantity of the hedging instrument that Sony actually uses to hedge that quantity of the hedged item. When it is determined that a derivative no longer has an economic relationship with the hedged item, Sony discontinues hedge accounting.

iv)

Offsetting a financial asset and a financial liability

Sony offsets a financial asset and a financial liability and presents the net amount in the consolidated statements of financial position when Sony currently has a legally enforceable right to set off the recognized amounts and intends either to settle on a net basis or to realize the asset and settle the liability simultaneously.

(6)	Inventories -

Inventories are measured at the lower of cost ~~minus impairment, if any, plus~~ or ~~minus changes resulting from observable price changes in orderly transactions for~~net realizable value. The cost of inventories is determined on the identical or a similar investment of the same issuer. If the value of equity securities that do not have readily determinable fair values is estimated to have declined and such decline is judged to be other-than-temporary, Sony recognizes the impairment of the investment and the carrying

“

weighted average cost

”

basis. Net realizable value is ~~reduced to its fair value. Determination of impairment is based on~~ the consideration of several factors, including operating results, business plans and estimated future cash flows. Fair value is determined through the use of various methodologies such as discounted cash flows, valuation of recent financings and comparable valuations of similar companies.

~~Allowance for doubtful accounts -~~

Sony maintains an allowance for doubtful accounts to reserve for potentially uncollectible receivables. Sony reviews accounts receivable by amounts due from customers which are past due to identify specific customers with known disputes or collectability issues. In determining the amount of the reserve, Sony makes judgments about the creditworthiness of customers based on past collection experience and ongoing credit risk evaluations.

~~Inventories -~~

~~Inventories in the Game & Network Services (“G&NS”), Music, Electronics Products & Solutions (“EP&S”) and Imaging & Sensing Solutions (“I&SS”) segments as well as~~

~~non-film~~

~~inventories for the Pictures segment are valued at cost, not in excess of the net realizable value – i.e.,~~ estimated selling price in the ordinary course of business less ~~reasonably predictable~~the estimated costs of completion and ~~disposal, cost being determined on~~ the ~~“average cost” basis.~~estimated costs necessary to make the sale.

~~Other receivables -~~

Other receivables include receivables which relate to arrangements with certain component manufacturers whereby Sony procures goods, including product components, for these component manufacturers and is reimbursed for the related purchases. No revenue or profit is recognized on these transfers. Sony will repurchase the inventory at a later date from the component manufacturers as either finished goods inventory or as partially assembled product.

~~Film costs -~~F-19

Film costs include direct production costs, production overhead and acquisition costs for both motion picture and television productions and are stated at the lower of unamortized cost or estimated fair value and

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GROUP CORPORATION AND CONSOLIDATED SUBSIDIARIES

~~classified as noncurrent assets. Film~~

(7)	Property, plant and equipment and depreciation -

Sony has adopted the cost model for the measurement of property, plant and equipment and presents an item of property, plant and equipment at its cost less any accumulated depreciation and any accumulated impairment losses. The cost of an item of property, plant and equipment includes any costs ~~are amortized, and the estimated liabilities for residuals and participations are accrued using an individual-film-forecast method based on the ratio of current period actual revenues~~directly attributable to the ~~estimated remaining total revenues. Film~~acquisition of the asset as well as costs ~~also include broadcasting rights, which~~of its dismantlement, removal or restoration. Property, plant and equipment are recognized when the license period begins and the program is available for use, and consist of acquired programming to be aired on Sony’s worldwide channel network. Broadcasting rights are stated at the lower of unamortized cost or net realizable value, classified as either current or noncurrent assets based on timing of expected use. Broadcasting rights are amortized based on estimated usage ordepreciated on a straight-line basis over ~~the~~their useful life, as appropriate, although broadcasting rights licensed under multi-year live-event sports programming agreements are generally amortized based on the ratio of the current period’s actual advertising revenue and an allocation of subscription fee revenue to the estimated total remaining attributable revenues. Estimates used in calculating the fair value of film costs and the net realizable value of broadcasting rights are based upon assumptions about future demand and market conditions and are reviewed on a periodic basis.

~~Property, plant and equipment and depreciation -~~

~~Property, plant and equipment are stated at cost. Depreciation is computed using the straight-line method. Useful~~ lives ~~for depreciation range~~(depreciation period ranging from 2 to 50 years for buildings and from 2 to 10 years for machinery and ~~equipment. Significant renewals~~equipment). Sony reviews the residual values and ~~additions are capitalized~~the useful lives at ~~cost. Maintenance and repairs, and minor renewals and betterments are charged to income as incurred.~~each fiscal

year-end,

or sooner if circumstances require.

~~Leases -~~

(8)

Leases -

When entering into a contract, Sony determines whether an arrangement contains a lease at its inception. An arrangement contains a lease if it conveys the right to control the use of an identified ~~property, plant, or equipment (an identified asset)~~asset for a period of time in exchange for consideration. ~~Operating~~Assets and liabilities recognized from leases are included in ~~operating lease~~

right-of-use

(“ROU”) assets, ~~current portion of long-term operating lease liabilities, and long-term operating lease liabilities on Sony’s consolidated balance sheets. Finance leases are included in finance lease~~

~~right-of-use~~

~~assets,~~the current portion of long-term debt, and long-term debt onin Sony’s consolidated ~~balance sheets.~~

statements of financial position.

~~Right-of-use~~

ROU assets represent Sony’s right to use an underlying asset for the lease term and lease liabilities represent Sony’s obligation to make lease payments arising from the lease. ~~Right-of-use~~ROU assets and lease liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. ~~Right-of-use~~ROU assets also include any lease payments orand initial direct costs incurred on or before the commencement date and ~~excludes~~exclude lease incentives. In determining the present value of lease payments, Sony generally uses its incremental borrowing rate, as the implicit rate is not available for most of its leases. Sony determines its incremental borrowing rate based on the estimated rate of interest for collateralized ~~borrowing,~~borrowings, taking into account the lease term and the economic ~~environment~~conditions of each country or region at commencement date. The lease terms may include options to extend or terminate the lease when it is reasonably certain that Sony will exercise that option. ~~Lease expense for operating leases recorded on~~If the ~~balance sheet~~lease transfers ownership of the underlying asset to the lessee by the end of the lease term or the purchase option is ~~recognized on a straight-line basis over~~reasonably certain to be exercised, Sony depreciates the ROU assets from the commencement date to the end of the useful life of the underlying assets. Otherwise, Sony depreciates the ROU assets from the commencement date to the earlier of the end of the useful life of the ROU assets or the end of the lease term. Sony accounts for the lease and

non-lease

components ~~of all underlying asset classes~~ as a single lease component. Sony has applied the short-term lease exception for leases with a term of one year or less, where ~~right-of-use~~ROU assets and lease liabilities are not recognized and the expense is recognized on a straight-line ~~basis~~basis.

(9)	Intangible assets and amortization, including content assets -

Intangible assets are measured using the cost model and stated at cost less accumulated amortization and impairment losses. Intangible assets acquired separately are initially recognized at cost.

AsIntangible assets with finite useful lives mainly consist of ~~April 1, 2019, Sony adopted Accounting Standards Update (“ASU”) 2016-02, which amends leasing guidance,~~patent rights,

know-how,

license agreements, customer relationships, trademarks, software, television carriage contracts (broadcasting agreements), film costs, broadcasting rights, music catalogs, artist contracts, music distribution rights and game content. Patent rights,

know-how,

license agreements, trademarks and software are generally amortized on a ~~modified retrospective~~straight-line basis ~~with no restatement~~over 3 to 10 years. Customer relationships, television carriage contracts (broadcasting agreements), music catalogs, artist contracts, music distribution rights and game content are generally amortized on a straight-line basis, over 10 to 44 years. Film costs are amortized using an ultimate revenue method based on the ratio of ~~comparative periods. Prior~~current period actual revenues to the ~~adoption of ASU 2016-02 on April 1, 2019, right-of-use assets~~estimated remaining total revenues. Sony considers that amortization pursuant to the ultimate revenue method reflects the rate at which it plans to consume the future economic benefits related to the asset, and ~~lease liabilities for operating leases were not recognized in Sony’s consolidated balance sheet. For~~there is a high correlation between revenue and the ~~detailed effect~~consumption of the ~~adoption of~~economic benefits embodied in the ~~new standard~~intangible assets. Broadcasting rights are generally amortized based on ~~Sony’s results of operations and financial position, refer to Note 2 (2) Recently adopted accounting pronouncements.~~

estimated usage or on a straight-line basis over the useful life.

~~Goodwill and other~~Amortization of intangible assets -

~~Goodwill~~is included in cost of sales and ~~indefinite lived~~selling, general and administrative expenses in the consolidated statements of income. Certain intangible assets are ~~tested annually~~assessed to have indefinite lives because there is no foreseeable limit to the period over which such assets are expected to generate net cash flows for Sony.

Film costs, broadcasting rights, music catalogs, artist contracts, music distribution rights and game content are collectively classified and presented as content assets in the consolidated statements of financial position.

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Film costs include direct production costs, production overhead, and costs for acquisition and distribution rights for both motion picture and television productions. Broadcasting rights, consisting of acquired programming to be aired on Sony’s television networks and DTC streaming services, are recognized when the license period begins and the program is available for use. Music catalogs are exclusive rights to the recorded music master or music copyrights, which consist of melodies and lyrics of songs, that can be exploited and marketed in various markets. Artist contracts are contracts with recorded music artists or songwriters that provide Sony with exclusive rights to musical works. Music distribution rights are agreements to distribute music content owned by third parties. Game content includes internally developed content, content developed through a third-party arrangement where Sony owns the rights to the content, content acquired externally through contracts with third parties, and agreements to distribute game content owned by third

parties

(10)	Impairment of non-financial assets -

Sony reviews the recoverability of its

non-financial

assets, except for inventories, contract costs and deferred tax assets, whenever there is any indication that an asset or a cash-generating unit (“CGU”) may be impaired. In addition, an annual impairment test for goodwill, intangible assets with indefinite useful lives or intangible assets not yet available for use is performed during the fourth quarter of the fiscal year ~~and between annual tests if an event occurs~~for each CGU or circumstances change that would more likely than not reduce the fair value below its carrying amount. Such an event or change in circumstances would include unfavorable variances from established business plans, significant changes in forecasted results or volatility inherentgroup of CGUs to ~~external markets and industries,~~ which ~~are periodically reviewed by Sony’s management.~~

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~~SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES~~

~~level below the operating segments. If the fair value of a reporting unit exceeds its carrying amount, goodwill of the reporting unit is not considered impaired. If~~ the carrying amount of these assets is allocated.

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. Goodwill is allocated to each CGU or group of CGUs that is expected to benefit from the synergies of a ~~reporting unit exceeds~~business combination. A CGU or group of CGUs to which goodwill is allocated is not larger than an operating segment.

The recoverable amount of an asset, a CGU or group of CGUs is the higher of its value in use and fair value ~~an impairment loss is recognized~~less costs of disposal. In assessing value in ~~an amount equal~~use, the estimated future cash flows are discounted to their present value using a

pre-tax

discount rate that ~~excess, not to exceed~~reflects current market assessments of the ~~total amount~~time value of ~~goodwill allocated~~money and the risks specific to the reporting unit. Indefinite lived intangible assets are tested for impairment by comparing the fair value of the intangible asset with its carrying value, and if the carrying value of the intangible asset exceeds its fair value, an impairment loss is recognized in an amount equal to that excess.

~~The fair value of a reporting unit or indefinite lived intangible asset is generally determined using a discounted cash flow analysis.~~assets. This approach uses significant estimates and assumptions, including ~~projected~~estimated future cash flows, the timing of such cash flows, discount rates reflecting the risk inherent in future cash flows, perpetual growth rates, earnings or revenue multiples, the determination of appropriate comparable entities and the determination of whether a premium or discount should be applied to comparables. Consideration is also given to Sony’s market capitalization in relation to the sum of the calculated fair values of the reporting units, including reporting units with no goodwill, and taking into account corporate level assets and liabilities not assigned to individual reporting units as well as a reasonable control premium.

The assumptions used for ~~projected~~estimated future cash flows and the timing of such cash flows for each CGU are generally based on the ~~forecast and~~three-year

mid-range

plan (“MRP”) ~~of each reporting unit~~ and take into account such factors as historical experience, market and industry information, and current and forecasted economic conditions. Perpetual growth rates are generally utilized to determine a terminal ~~cash flow~~ value and are generally set after the three-year forecasted period for the MRP. ~~Certain reporting units, such as those in~~

If the ~~Pictures segment, utilize longer forecast periods and base~~recoverable amount is determined to be less than the ~~terminal value on~~carrying amount of a CGU or group of CGUs, an ~~exit price using an earnings multiple applied~~impairment loss would be recognized equal to the ~~final year~~amount by which the carrying amount exceeds the recoverable amount. Such impairment losses are recognized by first reducing the carrying amount of ~~the forecasted earnings, which also takes into consideration a control premium. Discount rates are derived from the weighted average cost of capital of market participants in similar businesses.~~

Management believes that the assumptions used to estimate the fair value in the goodwill impairment tests are reasonable, including, but not limited to, the potential impacts arising from the spread of COVID-19. As the extent and duration of the impacts from COVID-19 remain unclear, Sony’s estimates and assumptions may evolve as conditions change. Actual results could differ from those estimates. As a result, changes in estimates resulting in lower than currently anticipated cash flows and fair values due to unforeseen changes in assumptions could negatively affect the valuations, which may result in Sony recognizing impairment charges forany allocated goodwill and ~~indefinite lived intangible assets in the future.~~

~~When a business within a reporting unit is disposed of, goodwill is~~then are allocated to the ~~disposed business using~~other assets of the ~~relative fair value method.~~

~~Intangible assets with finite useful lives mainly consist of patent rights,~~

~~know-how,~~

~~license agreements, customer relationships, trademarks, software to be sold, leased or otherwise marketed,~~

~~internal-use~~

~~software, music catalogs, artist contracts, and television carriage contracts (broadcasting agreements). Patent rights,~~

~~know-how,~~

~~license agreements, trademarks, software to be sold, leased or otherwise marketed, and~~

~~internal-use~~

~~software are generally amortized~~CGU on a ~~straight-line~~pro rata basis ~~over 3 to 10 years. Customer relationships, music catalogs, artist contracts~~of the carrying amount of each asset in the CGU. Impairment losses except for content assets are included in other operating (income) expense, net, and ~~television carriage contracts (broadcasting agreements)~~impairment losses for content assets are ~~generally amortized on a straight-line basis over 10 to 44 years.~~

~~Capitalized software -~~

~~The costs related to establishing the technological feasibility of software to be sold, leased or otherwise marketed are expensed as incurred as a part of research and development~~included in cost of ~~sales. Costs~~sales in the consolidated statements of income.

Assets other than goodwill are reviewed to assess whether there is any indication that ~~are incurred to produce~~an impairment loss recognized in prior periods may no longer exist or may have decreased. If any such indication exists, the ~~finished product after technological feasibility~~recoverable amount of the asset is ~~established are capitalized~~determined and ~~amortized to cost~~a reversal of ~~sales over the estimated economic life, which~~an impairment loss is ~~generally three years. The technological feasibility of game software is established~~recognized when the ~~product master is completed. Consideration to capitalize game software development costs before this point is limited~~recoverable amount of the asset exceeds the carrying amount. Any increase in the carrying amount of an asset attributable to the ~~development costs~~reversal of ~~games for which technological feasibility can be proven at~~ an ~~earlier stage. At each balance sheet date, Sony performs reviews to ensure that unamortized capitalized software costs remain recoverable from future profits~~impairment loss does not exceed the carrying amount of the ~~related software products.~~asset, net of depreciation and amortization, which would have been determined if an impairment loss had never been recognized for the asset in prior periods.

~~The costs incurred for~~

~~internal-use~~

~~software during the application development stage~~

(11)	Insurance-related accounts -

In accordance with IFRS 4 “Insurance Contracts” (“IFRS 4”), insurance contracts are ~~capitalized~~recognized and ~~amortized, mainly to selling, general and administrative expenses, on a straight-line basis over the estimated useful life. Costs related~~measured according to the ~~preliminary project stage and post implementation activities are expensed as incurred.~~same accounting principles previously applied under generally accepted accounting principles in the United States.

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Deferred insurance acquisition costs -

Costs that vary with and are directly related to the acquisition or renewal of insurance policies are deferred as long as they are recoverable. The deferred insurance acquisition costs include such items as

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commissions, medical examination costs and inspection report fees, and are subject to recoverability testing at least annually to ensure that the capitalized amounts do not exceed the present value of anticipated gross profits or premiums less benefits and maintenance expenses, as applicable. The deferred insurance acquisition costs for traditional life insurance contracts are amortized over the premium-paying period of the related insurance policies using assumptions consistent with those used in computing future insurance policy ~~reserves.~~benefits. The deferred insurance acquisition costs for

non-traditional

life insurance contracts are amortized over the expected life at a constant rate based on the present value of the estimated gross profit. Investment yields, mortality rates, lapse rates and discount rates are used as ~~important~~significant assumptions for the present value of the estimated gross profit.

~~Product warranty -~~

ii)

Future insurance policy benefits

Sony provides for the estimated cost of product warranties at the time revenue is recognized. The product warranty is calculated based upon product sales, estimated probability of failure and estimated cost per claim. The variables used in the calculation of the provision are reviewed on a periodic basis.

~~Future insurance policy benefits -~~

Liabilities for future insurance policy benefits are primarily comprised of the present value of estimated future payments to policyholders. These liabilities are computed by the net level premium method based upon the assumptions as to future investment yield, morbidity rates, mortality ~~withdrawals~~rates, lapse rates and other factors. These assumptions are reviewed on a periodic basis. Liabilities for future insurance policy benefits ~~includes~~include the liabilities for the minimum guarantee benefits of individual variable ~~annuities~~annuity and variable life insurance contracts. ~~As discussed below in “Fair value measurement,” Sony elected the fair value option for certain of these liabilities for future insurance policy benefits.~~

~~Policyholders’ account in the life insurance business -~~

iii)

Policyholders’ account in the life insurance business

Liabilities for policyholders’ account in the life insurance business represent the contract value that has accrued to the benefit of the policyholders as of the ~~balance sheet date.~~end of the reporting period. This liability is generally equal to the accumulated account deposits, plus interest credited, less policyholder withdrawals and other charges assessed against the account balances. Liabilities for policyholders’ account in the life insurance business ~~includes~~include the liabilities related to the individual variable ~~annuities~~annuity and variable life insurance contracts with minimum guarantee benefits. ~~As discussed below in “Fair value measurement,”~~

iv)

Insurance-related accounts measured at fair value

Sony ~~elected the~~measures at fair value ~~option for~~ certain ~~of these liabilities for~~future insurance policy benefits and policyholders’ account in the life insurance business. The fair value measurement mitigates accounting mismatches related to the changes in the fair value between liabilities for those future insurance policy benefits and policyholders’ account due to changes in the minimum guarantee risk of individual variable annuity contracts with minimum guarantee benefits, and the underlying investment managed for policyholders and derivatives entered into related to such investments. Changes in fair value resulting from changes in instrument-specific credit risk were estimated by incorporating the certain subsidiary’s current credit spreads, and are recognized in other comprehensive income, net of tax. The amount recognized in other comprehensive income is reclassified to profit or loss when the insurance contract liabilities are derecognized.

~~Impairment of long-lived assets -~~

Shadow accounting in the life insurance business

Sony reviews the recoverability of the carrying value of its long-lived assets held and used, other than goodwill and intangible assets with indefinite lives, and assets to be disposed of, whenever events or changes in circumstances indicate that the individual carrying amount of an asset or asset group may not be recoverable. Long-lived assets to be held and used are reviewed for impairment by comparing the carrying value of the asset or asset group with their estimated undiscounted future cash flows. If the cash flows are determined to be less than the carrying value of the asset or asset group, an impairment loss would be recognized during the period for the amount by which the carrying value of the asset or asset group exceeds estimated fair value. Long-lived

When holding financial assets that are ~~to be disposed of other than by sale are considered held and used until they are disposed of. Long-lived assets that are to be disposed of by sale are reported~~measured at ~~the lower of their carrying value or~~ fair value ~~less cost~~through other comprehensive income and which correspond to ~~sell~~insurance contract liabilities, shadow accounting is applied to evaluate insurance-related accounts as if the financial assets were sold as of the end of reporting period and realized valuation gains or losses for the purpose of reducing the accounting mismatches between the insurance contract liabilities and the financial assets.

Sony performs a shadow liability adequacy test on life insurance contracts quarterly. In a shadow liability adequacy test, mainly, future insurance policy benefits minus deferred insurance acquisition costs in the consolidated statements of financial position are ~~not depreciated. Fair value is determined using~~compared to the present value of ~~estimated net cash flows or comparable market values. This approach uses significant estimates and assumptions including projected~~ future cash ~~flows,~~flow on a best-estimate basis as of the ~~timing~~end of ~~such cash flows, discount rates reflecting the risk inherent in future cash flows, perpetual growth rates applied~~reporting period to determine ~~terminal values, determination of appropriate market comparables and the determination of whether a premium or discount should be applied to comparables.~~

~~Management believes~~ that the ~~estimates~~future insurance policy benefits are recorded at a sufficient level. If there is a shortage compared to the present value of future cash flows ~~and fair values are reasonable, including, but not limited~~on a best-estimate basis at the time, the deferred insurance acquisition costs will be decreased to the ~~potential impacts arising from the spread of COVID-19. As the~~ extent ~~and duration~~ of the ~~impacts from COVID-19 remain unclear, Sony’s estimates~~shortage through other comprehensive income. If the deferred insurance acquisition costs are decreased to zero and ~~assumptions may evolve as conditions change. Actual results could differ from those estimates. As a result, changes in estimates resulting in lower~~the shortage remains, the future ~~cash flows and fair values due to unforeseen changes in Sony’s businesses or assumptions could negatively affect~~insurance policy benefits are increased by the ~~valuations of long-lived assets.~~remaining shortage through other comprehensive income.

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Shadow accounting is an accounting treatment that affects the measurement of the insurance-related accounts in response to unrealized gains or losses recognized for the assets in a manner consistent with realized gains or losses. When the gains or losses from the assets are recognized in other comprehensive income, the fluctuations in the carrying amount of insurance-related accounts are also recognized in other comprehensive income.

(12)	Provisions -

Provisions are recognized when Sony has present legal or constructive obligations as a result of past events, it is probable that outflows of resources embodying economic benefits will be required to settle the obligations, and reliable estimates can be made of the amount of obligations.

Provisions mainly consist of participation and residual liabilities in the Pictures segment and product warranties.

Participation and residual liabilities in the Pictures segment

Parties involved in the production or exploitation of film and television content may be compensated in part by contingent payments based on the financial results of a film or television show pursuant to contractual formulas (participations) and by contingent amounts due under provisions of collective bargaining agreements (residuals). Such parties are collectively referred to as participants, and such costs are referred to collectively as participation and residual costs. Participation and residual costs may be given to creative talent, such as actors or writers, investors or to entities from whom distribution rights are licensed.

Participation and residual liabilities are accrued based on the ratio of current period actual revenues to the estimated remaining total revenues. The participation and residual liabilities are expected to be relieved when the contingent payments are fixed and paid. The majority of the

non-current

portion of participation and residual liabilities is expected to be paid within the next 10 years.

Sony also enters into arrangements with other studios to jointly produce and distribute films, under which each partner is responsible for the distribution of the film in specific territories or distribution windows. The partners’ shares in the profits and losses of the films under these arrangements are included within participation and residual costs.

ii)

Product warranties

Sony issues contractual product warranties under which it generally guarantees the performance of products delivered and services rendered for a certain period or term. Product warranties are calculated based upon product sales, estimated probability of failure and estimated cost per claim. The estimates and forecasts used in the calculation of product warranties are reviewed on a periodic basis.

(13)	Employee benefits -

Post-employment benefits

Sony adopts defined benefit plans and defined contribution plans.

Defined benefit plans

~~Fair~~

Sony recognizes the net defined benefit liability or asset of defined benefit plans in the consolidated statements of financial position as the amount of the present value ~~measurement -~~of defined benefit obligations less the fair value of plan assets.

The present value of defined benefit obligations is calculated by discounting the expected future benefit, and service costs are determined by using the projected unit credit method. 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 discount rate is determined by

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reference to market yields at each fiscal

year-end

on high-quality corporate bonds which have approximately the same term as the defined benefit obligations and are payable in the same currency as the benefit payments. Net interest on the net defined benefit liability or asset is calculated by multiplying the net defined benefit liability or asset by the discount rate.

Past service cost, which is the change in the present value of the defined benefit obligation resulting from a plan amendment or curtailment, is recognized in profit or loss.

Remeasurements of the net defined benefit liability or asset are recognized in other comprehensive income when they occur and transferred to retained earnings immediately.

Defined contribution plans

Sony recognizes contributions to defined contribution plans as expenses when employees have rendered related services.

ii)

Short-term employee benefits

Sony recognizes short-term employee benefits, such as salaries, bonuses and annual paid absences, as expenses at the amount expected to be paid in exchange for services when employees have rendered such services.

(14)	Stock-based compensation -

Stock option plan

Sony estimates the cost of stock options at their fair value on the grant date and recognizes the expense over the vesting period with a corresponding increase in equity. The fair value of options granted is calculated using the Black-Scholes option-pricing model with consideration for terms and conditions of the stock options.

ii)

Restricted stock plan

Sony estimates the cost of restricted stock by the fair value of the stock granted on the grant date and recognizes the expense over the vesting period with a corresponding increase in equity.

iii)

Restricted stock unit plan

Sony estimates the cost of restricted stock units by the fair value of the units granted on the grant date and recognizes the expense over the vesting period with a corresponding increase in equity.

(15)	Fair value measurement -

Sony measures fair value as an exit price, or the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants as of the measurement date. Sony has elected the fair value option in the banking business for certain foreign securities. The election was made to mitigate accounting mismatches related to fluctuations of foreign exchange rates by allowing the gains and losses on the translation of these securities to be included in current earnings. Sony has also elected the fair value option for certain future insurance policy benefits and policyholders’ account in the life insurance business which are not normally measured at fair value. The election was made to mitigate accounting mismatches related to the changes in the fair value between liabilities for those future insurance policy benefits and policyholders’ account due to changes in the minimum guarantee risk of contracts of variable annuities with minimum guarantee benefits, and the underlying investment managed for policyholders and derivatives. Changes in fair value resulting from changes in instrument-specific credit risk were estimated by incorporating the certain subsidiary’s current credit spreads, and are recognized in other comprehensive income, net of tax.

~~The accounting guidance for fair value measurements specifies~~Sony determines a hierarchy of inputs to valuation techniques based on the extent to which inputs used in measuring fair value are observable in the market. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect ~~Sony’s~~ assumptions ~~about~~which Sony developed using the ~~assumptions~~information that market participants would use in pricing the asset or liability. Observable market data is used if such data is available without undue cost and effort. Each fair value measurement is reported in one of three levels which is determined by the lowest level input that is significant to the fair value measurement in its entirety.

These levels are:

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When available, Sony uses unadjusted quoted market prices in active markets to measure fair value and classifies such items within ~~level~~Level 1. If quoted market prices are not available, fair value is based upon internally developed valuation techniques that use, where possible, current market-based or independently sourced market parameters, such as interest rates, currency rates and option volatilities. Items valued using internally generated models are classified according to the lowest level input that is significant to the valuation. For certain financial assets and liabilities, Sony determines fair value using third-party information such as indicative quotes from dealers and quantitative input from investment advisors following Sony’s established valuation procedures including validation against internally developed prices. Additionally, Sony considers both counterparty credit risk and Sony’s own creditworthiness in determining fair value. Sony attempts to mitigate credit risk to third parties by entering into netting agreements and actively monitoring the creditworthiness of counterparties and its exposure to credit risk through the use of credit limits and by selecting major international banks and financial institutions as counterparties.

Transfers between levels are deemed to have occurred at the beginning of the interim period in which the transfers occur.

~~Derivative financial instruments -~~

All derivatives are recognized as either assets or liabilities in the consolidated balance sheets at fair value on a gross basis. Changes in the fair value of derivative financial instruments are either recognized periodically in income or stockholders’ equity (as a component of accumulated other comprehensive income), depending on whether the derivative financial instrument qualifies as a hedge and the derivative is being used to hedge changes in fair value or cash flows.

The accounting guidance for hybrid financial instruments permits an entity to elect fair value remeasurement for any hybrid financial instrument if the hybrid instrument contains an embedded derivative that would otherwise be required to be bifurcated and accounted for separately under accounting guidance for

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~~derivative instruments and hedging activities. The election to measure the hybrid instrument at fair value is made on an~~

~~instrument-by-instrument~~

basis and is irreversible. Certain subsidiaries in the Financial Services segment had hybrid financial instruments, disclosed in Note 7 as debt securities, that contain embedded derivatives where the entire instrument was carried at fair value.

~~In accordance with accounting guidance for derivative instruments and hedging activities, various derivative financial instruments held by Sony are classified and accounted for as described below.~~

~~Fair value hedges~~

Changes in the fair value of derivatives designated as fair value hedges for recognized assets or liabilities or unrecognized firm commitments are recognized in earnings as offsets to changes in the fair value of the related hedged assets or liabilities.

~~Cash flow hedges~~

Changes in the fair value of derivatives designated as cash flow hedges for forecasted transactions or exposures associated with recognized assets or liabilities are initially recorded in other comprehensive income and reclassified into earnings when the hedged transaction affects earnings. The time value component of the fair value of option contracts is excluded from the assessment of hedge effectiveness and recognized in earnings on a straight-line basis over the life of the hedging instruments. Any difference between the change in fair value of the excluded component and

~~the~~

~~accumulated amount recognized in earnings on a straight-line basis is recognized in other comprehensive income.~~

~~Derivatives not designated as hedges~~

~~Changes in the fair value of derivatives that are not designated as hedges are recognized immediately in earnings.~~

~~Assessment of hedges~~

When applying hedge accounting, Sony formally documents all hedging relationships between the derivatives designated as hedges and the hedged items, as well as its risk management objectives and strategies for undertaking various hedging activities. Sony links all hedges that are designated as fair value or cash flow hedges to specific assets or liabilities on the consolidated balance sheets or to the specific forecasted transactions. Sony also assesses, both at the inception of the hedge and on an

~~on-going~~

basis, whether the derivatives that are designated as hedges are highly effective in offsetting changes in fair value or cash flows of hedged items. When it is determined that a derivative is not highly effective as a hedge, Sony discontinues hedge accounting.

~~Stock-based compensation -~~

~~Sony accounts for stock-based compensation using the fair value~~

based method and the expense is mainly included in selling, general and administrative expenses. Sony accounts for its stock acquisition rights plan using the fair value measured on the date of grant using the Black-Scholes option-pricing model. The stock acquisition rights plan is recognized, net of an estimated forfeiture rate, over the requisite service period using the accelerated method of amortization for grants with graded vesting. The estimated forfeiture rate is based on Sony’s historical experience in the stock acquisition rights plans where the majority of the vesting terms have been satisfied.

(16)	Revenue recognition -

Sony recognizes revenue in an amount that reflects the consideration Sony expects in exchange for satisfying performance obligations to transfer the goods or services promised in contracts with customers. This is in accordance with the following steps:

Step 1: Identify the contract(s) with a customer.

Step 2: Identify the performance obligations in the contract.

Step 3: Determine the transaction price.

Step 4: Allocate the transaction price to the performance obligations in the contract.

Step 5: Recognize revenue when (or as) Sony satisfies a performance obligation.

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Sony owns a variety of intellectual property throughout its segments and recognizes revenue through the licensing of such intellectual property. Sony ~~has both functional~~licenses rights to use its intellectual property and ~~symbolic~~rights to access its intellectual property. ~~The licensing of functional intellectual property~~When Sony grants a customer athe right to use Sony’s intellectual property, ~~as it exists at a point in time, and~~ Sony satisfies its performance obligation at the point in time when the customer obtains control and is entitled to benefit from the license. ~~The licensing of symbolic intellectual property~~When Sony grants a customer athe right to access Sony’s intellectual property, ~~over time, and~~ Sony satisfies its performance obligation over the license ~~period as Sony maintains the intellectual property.~~period.

Incremental costs of obtaining a contract and costs to fulfill a contract are recognized as assets when Sony expects to recover these costs. The incremental costs of obtaining a contract are those costs that would not have been incurred if the contract had not been obtained. Costs to fulfill a contract are those costs that are directly related to a contract or to an anticipated contract and that generate or enhance resources for Sony to satisfy its performance obligations. Sony applies a practical expedient and recognizes the incremental costs of obtaining a contract as an expense when incurred if the amortization period of the asset that would have been recognized is one year or less.

Performance obligations in contracts for the ~~EP&S~~Entertainment, Technology & Services (“ET&S”) and Imaging & Sensing Solutions (“I~~&SS~~&SS”) segments are primarily to deliver various kinds of electronic equipment, instruments and devices to customers. Revenues from these performance obligations are generally recognized when a promised good is delivered to a customer. However, if the sales contract contains a customer acceptance provision, then revenues are recognized when the customer accepts the promised good or when a deemed acceptance occurs by the lapse of time. Revenues are also recognized over time, primarily from the provision of internet broadband network services to subscribers over the subscription period. Revenues are recognized net of anticipated returns and sales incentives.

Within the Game & Network Services (“G~~&NS~~&NS”) segment, revenues from hardware, peripherals and software discs are recognized when performance obligations are satisfied by transferring control to the retailer/distributor, net of anticipated returns, sales incentives and cooperative advertising obligations. Revenues from platform licensing to publishers are recognized when physical software discs are delivered. Revenues from digital game content, which is ~~licensed functional~~a right to use Sony’s intellectual property, are recognized when the digital content is made available for use by the licensee via an online platform, net of anticipated sales incentives and credit card chargebacks. Revenues from digital game content involving multiple performance obligations, such as obligations to make content available on future dates, are allocated to each performance obligation based on the

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relative standalone selling prices that are observable in the market or Sony’s best estimate. Revenues from subscription fees for digital subscription services are recognized over the subscription period.

Within the Music segment, Sony licenses intellectual property that transfer to a customer either a right to use Sony’s intellectual property, ~~as it exists at the point in time in which the license is granted,~~ or a right to access Sony’s intellectual ~~property as it exists throughout the license period.~~property. Revenues are recognized when the customer has the right to use or access the intellectual property and obtains control of the use or access of that license. Digital revenues include revenues from contracts with digital streaming services typically recognized as a single performance obligation, which is ongoing access to intellectual property in an evolving library of content over the contract term, predicated on: (1) the business practice and contractual ability to remove specific content without a requirement to replace the content and without impact to minimum royalty guarantees and (2) the contracts not containing a specific listing of content subject to the license. For these contracts, revenues are recognized based on ~~the basis of~~ sales and usage royalties, except where there is ~~an amount of~~ a minimum royalty guarantee that is not expected to be recouped, or a fixed fee, which is recognized on a straight-line basis over the term of the contract. Revenues from the sale of physical ~~product~~products such as CDs, net of anticipated returns and sales incentives, are recognized when delivery has occurred and the product is available for sale to the public.

Within the Pictures segment, revenues from the theatrical exhibition of motion pictures are recognized as the customer exhibits the film. Revenues from the licensing of motion picture and television programming for pay and free television exhibition and other markets are recognized when the product is available for use by the licensee. Revenues for motion picture and television program licensing arrangements involving multiple performance obligations, for example a fee for multiple titles, territories or availability dates, are allocated based on the relative standalone selling price of each performance obligation using Sony’s best estimate based on available information such as market conditions and internal pricing guidelines. Each individual motion picture or television programming product delivered generally represents a separate performance obligation. Licensing revenue associated with ~~certain~~ renewals or extensions of existing agreements for motion pictures and television programming is recognized when the licensee can use and benefit from the content under the renewal or extension. Licensing revenue associated with minimum guarantees for ~~symbolic~~a right to access Sony’s intellectual property is

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recognized ratably over the license term. For home entertainment distribution, revenues from the sale of physical ~~product~~products such as DVDs and

Blu-ray

Disc

TM™

, net of anticipated returns and sales incentives, are recognized when delivery has occurred and the product is available for sale to the public. Revenues from electronic sell-through and

video-on-demand

are recognized when the product is made available for viewing via digital distribution platforms. Revenues from the sale of broadcast advertising are recognized when the advertisement is aired, and the performance obligation in these arrangements is the delivery of advertising spots and may include a guaranteed amount of impressions. When a guarantee for a number of impressions is not achieved, revenues are not recognized until additional advertising spots are delivered to provide the guaranteed impressions. Revenues from subscription fees received by television networks and DTC streaming services are recognized when the service is provided. The performance obligation under network subscription arrangements is a ~~license of functional~~right to use Sony’s intellectual property that is satisfied as programming is provided over the term of the arrangement.

~~Traditional~~Within the Financial Services segment, traditional life insurance policies that Sony underwrites in the life insurance ~~subsidiary underwrites,~~business, most of which are categorized as long-duration contracts, mainly consist of whole life, term life, and ~~accident~~disease and health insurance contracts. Premiums from these policies are reported as revenue when due from policyholders.

Amounts received as payment for

non-traditional

contracts such as interest sensitive whole life contracts, variable life insurance contracts, individual variable annuity contracts and other contracts without life contingencies are recognized in policyholders’ account in the life insurance business. Revenues from these contracts are comprised of fees earned for administrative and contract-holder services, which are recognized over the period of the contracts, and included in financial services revenue.

Property and casualty insurance policies that Sony underwrites in the

non-life

insurance ~~subsidiary underwrites~~business are primarily automotive insurance contracts which are categorized as short-duration contracts. Premiums from these policies are reported as revenue over the period of the contract in proportion to the amount of insurance protection provided.

Revenue is recognized net of any taxes collected from customers and subsequently remitted to governmental authorities.

(17)	Cost of sales -

Costs classified as cost of sales relate to the producing and manufacturing of products and include items such as material cost, subcontractor cost, depreciation of ~~fixed assets,~~property, plant and equipment, amortization of intangible assets ~~personnel~~including content assets, employee benefits expenses and research and development ~~costs, and amortization~~costs.

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Table of ~~film costs related to motion picture and television productions.~~

Contents

~~Research and development costs~~SONY GROUP CORPORATION AND CONSOLIDATED SUBSIDIARIES

(18)	Research and development expenditures -

Research and development ~~costs, included in cost of sales,~~expenditures include items such as ~~salaries, personnel~~employee benefits expenses and other direct and indirect expenses associated with research and product development. ~~Research~~Development expenditures are capitalized only when technical feasibility is achieved, Sony has the intention, ability and sufficient resources to use or sell the outcome of the development, it is probable that the outcome will generate a future economic benefit, and the cost can be reliably measured. Capitalized development costs are measured as the sum of total expenditures for development upon achieving the foregoing conditions for capitalization until development is completed. Research expenditures and other development expenditures that do not meet the foregoing conditions are expensed as ~~incurred.~~incurred and included in the cost of sales in the consolidated statements of income.

(19)	Selling, general and administrative -

Costs classified as selling expenses relate to promoting and selling products and include items such as advertising, promotion, shipping and warranty expenses. General and administrative expenses include operating items such as ~~officers’ salaries, personnel~~employee benefits expenses, depreciation of ~~fixed assets,~~property, plant and equipment, office rental for sales, marketing and administrative divisions, ~~a provision~~loss allowance for ~~doubtful accounts~~trade receivables and amortization of intangible assets.

(20)	Financial services expenses -

Financial services expenses include a provision for policy reserves and amortization of deferred insurance acquisition costs, interest expenses in the banking business, and all other operating costs, such as ~~personnel~~employee benefits expenses, depreciation of ~~fixed assets,~~property, plant and equipment, and office rental of subsidiaries, in the Financial Services segment.

(21)	Advertising costs -

Advertising costs are expensed ~~when the advertisement or commercial appears in the selected media.~~

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as incurred.

~~SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES~~

(22)	Shipping and handling costs -

The majority of shipping and handling, warehousing and internal transfer costs for finished goods are included in selling, general and administrative expenses. ~~An exception to this is~~However, in the Pictures segment, ~~where such~~certain costs are charged to cost of sales as they are an integral part of producing and distributing motion pictures and television programming. All other costs related to Sony’s distribution network are included in cost of sales, including inbound freight charges, purchasing and receiving costs, inspection costs and warehousing costs for raw materials and

in-process

inventory. Shipping and handling activities that occur after control of the related good transfers are treated as separate performance obligations. Amounts paid by customers for shipping and handling costs are included in ~~net~~ sales.

(23)	Income taxes -

Income taxes -

consist of current and deferred taxes. Current and deferred taxes are recognized in profit or loss, except to the extent that the tax arises from a business combination, or a transaction or event which is recognized, in the same or a different period, outside profit or loss, either in other comprehensive income or directly in equity.

~~The provision for income~~Current taxes isare computed based on taxable profit or loss for the ~~pretax income included in the consolidated statements of income, and~~year, using the tax ~~liability attributed to~~rates enacted or substantively enacted at the end of the reporting period.

Deferred tax assets and liabilities are recognized for temporary differences between the tax bases of assets and liabilities and their carrying amounts at the end of the reporting period. Deferred tax liabilities include the liabilities being recognized for undistributed ~~earnings~~profits of subsidiaries and ~~affiliated companies~~associates accounted for byunder the equity method that are expected to be remitted in the foreseeable future. ~~The~~Deferred income taxes are determined using tax rates and laws that have been enacted or substantively enacted by the end of the reporting period and are expected to apply when the related deferred income tax asset ~~and~~is realized or the deferred income tax liability ~~approach~~ is ~~used to recognize deferred~~settled. Deferred tax assets and liabilities ~~for the expected future tax consequences~~are not recognized in respect of temporary differences ~~between~~that arise from the ~~carrying amounts~~initial recognition of an asset or liability in a transaction which is not a business combination and which, at the ~~tax bases~~time of ~~assets and liabilities.~~the transaction, affects neither accounting profit nor taxable profit (tax loss).

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~~Carrying amounts of deferred~~

Deferred tax assets ~~require a reduction by a valuation allowance if, based on~~are recognized to the ~~available evidence,~~extent that it is ~~more likely than not~~probable that ~~such~~taxable profit will be available against which the assets ~~will not~~can be ~~realized.~~utilized. Accordingly, the ~~need to establish~~ valuation ~~allowances for~~of the deferred tax assets is assessed periodically with ~~appropriate consideration given to all positive and negative~~available evidence related to the ~~realization~~recoverability of the deferred tax assets. Management’s ~~judgments~~judgment related to this assessment ~~consider, among other matters,~~considers the nature, frequency and severity of current and cumulative losses on an individual tax jurisdiction basis, forecasts of future profitability after consideration of uncertain tax positions, excess of appreciated asset value over the tax basis of net assets, the duration of statutory carryforward periods, the past utilization of net operating loss carryforwards prior to expiration, as well as prudent and feasible tax planning strategies which would be employed by Sony to prevent net operating loss and tax credit carryforwards from expiring unutilized.

Sony records assets and liabilities ~~for unrecognized tax benefits~~ resulting from uncertain tax positions taken or expected to be taken in a tax return. Sony continues to recognize interest and penalties, if any, with respect to income taxes, including unrecognized tax benefits, as interest expense and as income tax expense, respectively, in the consolidated statements of income. The amount of income taxes Sony pays is subject to ongoing audits by various taxing authorities, which may result in proposed assessments. In addition, several significant items related to intercompany transfer pricing are currently the subject of negotiations between taxing authorities in different jurisdictions as a result of pending advance pricing agreement applications and competent authority requests. Sony’s estimate for the potential outcome for any uncertain tax issues is judgmental and requires significant estimates. Sony assesses its income tax positions and records tax benefits and expenses for all years subject to examinations based upon the evaluation of the facts, circumstances and information available at that reporting date. For those tax positions for which it is more likely than not that a tax benefit will be sustained, Sony records the amount that has a greater than 50% likelihood of being realized upon settlement with a taxing authority that has full knowledge of all relevant information. If Sony does not believe that it is more likely than not that a tax benefit will be sustained, no tax benefit is recognized. However, Sony’s future results may include favorable or unfavorable adjustments to Sony’s estimated tax liabilities due to closure of income tax examinations, the outcome of negotiations between taxing authorities in different jurisdictions, new regulatory or judicial pronouncements or other relevant events. As a result, the amount of unrecognized tax benefits, and the effective tax rate, may fluctuate significantly.

The U.S. Tax Cuts and Jobs Act of 2017 (the “U.S. Tax Reform Act”) subjects a U.S. entity to tax on Global Intangible Low Tax Income (“GILTI”) earned by its foreign subsidiaries. Sony has elected to account for GILTI as a current period expense when incurred.

(24)	Net income (loss) attributable to Sony Group Corporation’s stockholders per share (“EPS”) -

Basic EPS is computed based on the weighted-average number of shares of common stock outstanding during each period. The computation of diluted EPS reflects the maximum possible dilution from conversion, exercise, or contingent issuance of securities. All potentially dilutive securities are excluded from the calculation in a situation where there is a net loss attributable to Sony Group Corporation’s stockholders.

II.	Recently adopted accounting standards

~~F-2~~

6Amendments to IAS 12 “Income taxes”

In May 2023, the IASB issued “International Tax Reform-Pillar Two Model Rules”. The amendments (i) introduce a temporary exception to the accounting for deferred taxes arising from the implementation of the Pillar Two model rules published by the Organization for Economic Co-operation and Development (OECD) and (ii) require additional disclosures. Sony retrospectively adopted the provision of the temporary exception to the accounting for deferred taxes from the fiscal year ended March 31, 2023. The additional disclosure requirements will be effective for Sony from the fiscal year ending March 31, 2024.

III.	New accounting standards and interpretations not yet adopted

Major new or amended standards and interpretations that have been issued as of the date of approval of the consolidated financial statements which are not effective and have not yet been adopted by Sony as of March 31, 2023 are as follows:

IFRS 17 “Insurance Contracts”

The IASB issued IFRS 17 “Insurance Contracts” (“IFRS 17”) in May 2017 and Amendments to IFRS 17 in June 2020 and December 2021. IFRS 17 replaces IFRS 4 and sets out principles for the recognition, measurement, presentation and disclosure of insurance contracts within the scope of IFRS 17. IFRS 17 provides a general model, supplemented by a specific approach for contracts with direct participation features (the variable fee approach) and a simplified approach (the premium allocation approach) mainly for short-duration contracts.

IFRS 17 become

effective for Sony as of April 1, 2023. On transition, Sony is required to apply IFRS 17 retrospectively unless such application is impracticable. If it is impracticable to apply IFRS 17 retrospectively for a group of insurance contracts, either the modified retrospective approach, which uses reasonable and supportable information, or the fair value approach, which uses the fair value as of April 1, 2022, the transition date for IFRS 17, may be applied. If Sony cannot obtain reasonable and supportable information necessary to apply the modified retrospective approach, Sony will apply the fair value approach. Sony adopted IFRS 9 “Financial Instruments” (“IFRS 9”) before its initial application of IFRS 17 and will redesignate the measurement method of certain financial assets based on the facts and circumstances existing at the date of the initial application of IFRS 17 (April 1, 2023) in order to mitigate accounting mismatches arising from the assets and liabilities in the insurance business.

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Applying IFRS 17 affects the measurement and presentation of insurance-related accounts, which are primarily included in future insurance policy benefits and other, policyholders’ account in the life insurance business, and deferred insurance acquisition costs in the consolidated statements of financial position under the currently applied standard, IFRS 4. These insurance-related accounts, after applying IFRS 17, are primarily recorded as insurance contracts liability in the consolidated statements of financial position. The financial services revenue, after applying IFRS 17, consists of insurance revenue and other financial services revenue, which are separately presented in the consolidated statements of income. The insurance revenue differs from insurance premium revenue under IFRS 4 mainly because the insurance revenue excludes any investment components that are deposits, as described in “(1) Significant accounting policies of IFRS 17, which Sony will apply from the fiscal year ending March 31, 2024.”

The estimated

effect of adopting IFRS 17 on Sony’s total equity as of April 1, 2022, the transition date for IFRS 17, is expected to be a reduction of approximately 1.5 trillion yen mainly due to the effect of the changes in discount rate used in measuring insurance contract liabilities.

These assessments and expectations above are preliminary and the actual result may differ upon adoption, as not all of the transition work has been finalized.

(1)	Significant accounting policies of IFRS 17, which Sony will apply from the fiscal year ending March 31, 2024

Insurance contract liabilities -

Definition and classification of insurance contracts

Sony defines insurance contracts as the contracts under which Sony accepts significant insurance risk by agreeing to compensate the policyholder if a specified uncertain future event adversely affects the policyholder. In making this assessment, all substantive rights and obligations, including those arising from laws and regulations, are considered on a

contract-by-contract

basis. Sony uses judgment in assessing whether there is a scenario with commercial substance in which there is the possibility of a loss on a present value basis and whether the accepted insurance risk is significant. Contracts that have a legal form of an insurance contract but do not transfer significant insurance risk to Sony are classified as investment contracts and accounted for as financial liabilities.

Insurance contracts that Sony underwrites in the life insurance business, which is included in the Financial Services segment, mainly consist of whole life, term life, disease and health insurance, variable life insurance, and individual variable annuity contracts. Sony classifies certain variable life insurance and individual variable annuity contracts as insurance contracts with direct participation features, if they meet all of the following conditions on initial recognition:

the contractual terms specify that the policyholder participates in a share of a clearly identified pool of underlying items;

Sony expects to pay to the policyholder an amount equal to a substantial share of the fair value returns on the underlying items; and

Sony expects a substantial proportion of any change in the amounts to be paid to the policyholder to vary with the change in the fair value of the underlying items.

All other insurance contracts are classified as insurance contracts without direct participation features.

ii)

Aggregation of insurance contracts

In measuring insurance contracts, Sony aggregates the insurance contracts into groups. Each group of insurance contracts is determined by identifying portfolios of insurance contracts. Each portfolio is comprised of contracts that are subject to similar risks and are managed together, and Sony divides each portfolio by each quarterly accounting period (to which the issue date of the insurance contracts belongs). The portfolios are then classified into one of the following three groups based on the profitability of contracts:

any contracts that are onerous on initial recognition;

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any contracts that, on initial recognition, have no significant possibility of becoming onerous subsequently; and

any remaining contracts.

iii)

Recognition and derecognition of insurance contracts

A group of insurance contracts issued by Sony is recognized from the earliest of:

the beginning of the coverage period of the group of insurance contracts;

when the first payment from the policyholder in the group of insurance contracts becomes due; and

when facts and circumstances indicate that the group to which the insurance contract belongs is onerous.

If there is no contractual due date, the due date is considered as the day when the first payment is received from the policyholder.

In addition, only contracts that individually meet the recognition criteria by the end of the reporting period are included in the groups. When contracts individually meet the recognition criteria after the end of the reporting period, they are added to the groups in the reporting period in which they meet the recognition criteria. Composition of the groups is not reassessed in subsequent periods.

Insurance acquisition cash flows are allocated to groups of insurance contracts using a systematic and rational method and considering, in an unbiased way, all reasonable and supportable information that is available without undue cost or effort.

If insurance acquisition cash flows are directly attributable to a group of insurance contracts, they are allocated to that group. If insurance acquisition cash flows are directly attributable to a portfolio but not to a group of insurance contracts, then they are allocated to the groups in that portfolio using a systematic and rational method.

Sony derecognizes an insurance contract when it is extinguished, i.e., when the obligation specified in the insurance contract expires or is discharged or canceled. When an insurance contract is derecognized, Sony:

adjusts the fulfillment cash flows allocated to the group of insurance contracts to eliminate those relating to the derecognized rights and obligations;

adjusts the contractual service margin (“CSM”) of the group of insurance contracts for the change in the fulfillment cash flows; and

adjusts the number of coverage units expected for the remaining insurance contract services to reflect the number of coverage units derecognized from the group of insurance contracts.

iv)

Contract boundaries

In measuring groups of insurance contracts, Sony includes all of the future cash flows within the boundary of each contract in the group. Cash flows are within the contract boundary if they arise from substantive rights and obligations that exist during the reporting period in which the policyholder is obliged to pay premiums or Sony has a substantive obligation to provide services (including insurance coverage and any investment services).

A substantive obligation to provide services ends when Sony:

(a)

has the practical ability to reassess the risks of the particular policyholder and can set a price or level of benefits that fully reflects those reassessed risks; or

(b)

has the practical ability to reassess the risks of the portfolio that contains the contract and can set a price or level of benefits that fully reflects the risks of that portfolio, and the pricing of the premiums up to the reassessment date does not take into account risks that relate to periods after the reassessment date.

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For cash flows arising during the period after the renewal of the insurance contract, which has automatic renewal clauses, Sony assesses the contract boundaries and determines that they are within the existing contract boundaries when Sony does not have the above practical ability to reassess the risks.

Initial measurement of insurance contracts not measured under the premium allocation approach (“PAA”)

On initial recognition, Sony measures a group of insurance contracts as the total of the following:

(a)

Fulfillment cash flows

The fulfillment cash flows of the groups of insurance contracts consist of estimates of the future cash flows and risk adjustments for

non-financial

risk. The estimates of the future cash flows are adjusted to reflect the time value of money and the associated financial risks, and do not reflect Sony’s

non-performance

risk. The discount rates reflect the characteristics of the cash flows arising from the groups of insurance contracts, including timing, currency and liquidity of cash flows. The determination of the discount rate that reflects the characteristics of the cash flows and liquidity characteristics of the insurance contracts involves significant estimation. The risk adjustment for

non-financial

risk, determined separately from the other estimates, is designed to reflect the compensation required for bearing uncertainty about the amount and timing of the cash flows that arises from

non-financial

risk.

(b)

CSM

The CSM of a group of insurance contracts represents the unearned profit that Sony will recognize as it provides insurance contract services under those contracts.

vi)

Subsequent measurement of insurance contracts not measured under the PAA

The carrying amount of a group of insurance contracts at each reporting date is the sum of the liability for incurred claims and the liability for remaining coverage. The liability for incurred claims comprises the fulfillment cash flows for incurred claims and expenses that have not yet been paid, including claims that have been incurred but not yet reported. The liability for remaining coverage comprises the items described below.

(a)

Fulfillment cash flows

The fulfillment cash flows of groups of insurance contracts are measured at the reporting date using current estimates of future cash flows, current discount rates and current estimates of the risk adjustment for

non-financial

risk.

(b)

CSM

The carrying amount of the CSM of contracts without direct participation features at each reporting date is the carrying amount at the beginning of the fiscal year, adjusted for the following items (among these, (2) and (3)1, (3)2 and (3)4 are measured using the discount rate determined at initial recognition

(locked-in

discount rate):

(1)

the effect of any new contracts that are added to the group during the current fiscal year;

(2)

interest accreted on the carrying amount of the CSM during the current fiscal year;

(3)

the changes in fulfillment cash flows relating to future service including the following items below:

experience adjustments arising from premiums received in the current fiscal year that relate to future services (including those for related cash flows such as insurance acquisition cash flows and premium-based taxes);

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~~(2)~~

~~Recently adopted accounting pronouncements~~

changes in estimates of the present value of future cash flows in the liability for remaining coverage (excluding the effect of the time value of money, financial risk and changes therein);

differences between any investment component expected to become payable in the current fiscal year and the actual investment component that becomes payable in the current fiscal year; and

changes in the risk adjustment for

non-financial

risk that relate to future services;

(4)

the effect of any currency exchange differences; and

(5)

the amount recognized as insurance revenue for insurance contract services provided during the current fiscal year, which is determined after all the adjustments above.

~~Leases -~~

~~In February 2016, the Financial Accounting Standards Board (“FASB”) issued ASU~~

~~2016-02,~~

~~which amends the accounting guidance for leases.~~ The ASU requires substantially all leases to be recognized on the balance sheet. Sony has adopted this ASU effective April 1, 2019, on a modified retrospective basis with no restatement of comparative periods. Sony has elected the package of practical expedients for leases that expired or existed prior to the adoption date. As a result, Sony did not reassess whether any expired or existing contracts are or contain leases, the lease classification for any expired or existing leases, or whether initial direct costs for any existing leases qualify for capitalization. In addition, Sony has applied the short-term lease exception.

~~As a result~~carrying amount of the ~~adoption~~CSM of ~~this ASU, Sony recognized 316,923 million yen~~contracts with direct participation features at each reporting date is the carrying amount at the beginning of ~~operating lease~~

~~right-of-use~~

assets and 341,251 million yen of lease liabilities for operating leases on the consolidated balance sheets at April 1, 2019. This impact is mainly due to operating leases of real estate. The difference of 24,328 million yen between

~~right-of-use~~

~~assets and lease liabilities represents deferred rent for leases that existed as of the date of adoption, which was offset against the opening balance of operating lease~~

~~right-of-use~~

~~assets. Finance lease~~

~~right-of-use~~

~~assets which are included in property, plant and equipment in the consolidated balance sheets for~~ the fiscal year, ~~ended March 31, 2019,~~adjusted for the following items:

(1)

the effect of any new contracts that are added to the group during the current fiscal year;

(2)

changes in Sony’s share of the fair value of the underlying items;

(3)

changes in the fulfillment cash flows that do not vary based on the returns of underlying items including the following items below:

changes in the effect of the time value of money and financial risks including the effect of financial guarantees;

changes in estimates of the present value of future cash flows in the liability for remaining coverage (excluding the effect of the time value of money, financial risk and changes therein);

differences between any investment component expected to become payable in the current fiscal year and the actual investment component that becomes payable in the current fiscal year; and

changes in the risk adjustment for

non-financial

risk that relate to future services;

(4)

the effect of any currency exchange differences; and

(5)

the amount recognized as insurance revenue for insurance contract services provided during the current fiscal year, which is determined after all the adjustments above.

Sony selects an accounting policy to update accounting estimates related to insurance contracts made in the previous interim consolidated financial statements in the subsequent annual and interim consolidated financial statements and to measure the annual results using the

year-to-date

approach.

Changes in the fulfillment cash flows that relate to current or past services are ~~now presented~~recognized as ~~finance lease~~

~~right-of-use~~profit or loss. Changes in the fulfillment cash flows that relate to future services are adjusted to the extent of the CSM carrying amount as follows:

~~assets from April 1, 2019 onward.~~

~~Premium amortization on purchased callable debt securities~~

~~In March 2017,~~when an increase in the ~~FASB issued ASU 2017-08, which requires certain premiums on callable debt securities~~fulfillment cash flows exceeds the carrying amount of the CSM, the CSM is reduced to ~~be amortized to~~zero and the ~~earliest call date. The amortization period for callable debt securities purchased at~~excess is recognized as insurance service expenses and such excess is recorded as a ~~discount will not be affected. This ASU was effective for Sony as~~loss component of ~~April 1, 2019. The adoption of this ASU did not have a material impact on Sony’s results of operations and financial position.~~

~~Targeted improvements to accounting for hedging activities -~~

~~In August 2017,~~ the ~~FASB issued ASU~~

~~2017-12,~~

~~which made targeted improvements to the accounting for hedging activities. The amendments in this update simplify certain aspects of hedge accounting for both~~

~~non-financial~~

and financial risks and better align the recognition and measurement of hedge results with an entity’s risk management activities. This ASU also amends certain presentation and disclosure requirements for hedging activities and changes how an entity assesses hedge effectiveness. This ASU was effective for Sony as of April 1, 2019. The adoption of this ASU did not have a material impact on Sony’s results of operations and financial position.

~~(3)~~

~~Recent accounting pronouncements not yet adopted~~

~~Measurement of credit losses on financial instruments -~~

~~In June 2016, the FASB issued ASU~~

~~2016-13,~~

which amends the accounting guidance for credit losses on financial instruments. The ASU requires the consideration of all available relevant information when estimating expected credit losses, including past events, current conditions and forecasts and their implications for expected credit losses. This ASU is effective for Sony as of April 1, 2020. The adoption of this ASU is not expected to have a material impact on Sony’s results of operations and financial position.

~~Improvements to Accounting for Costs of Films and License Agreements for Program Materials -~~

~~In March 2019, the FASB issued ASU~~

~~2019-02,~~

~~which updates the guidance~~liability for the capitalization of film costs associated with episodic television series, requires the use of fair value rather than net realizable value when determining potential impairments of broadcasting rights, and modifies the presentation and disclosure requirements for films and broadcasting rights. In addition, upon capitalization of film costs entities are required to determine qualitatively whether the predominant monetization strategy is on a

~~title-by-title~~remaining coverage;

basis or together with other films and/or broadcast rights as part of a film group, such as in the case of a release of a film as part of a library of content on a streaming service. In the case of a film group, impairments are evaluated at the overall film group level rather than the individual title level. This ASU is effective for Sony as of April 1, 2020 and is applied on a prospective basis. Upon adoption, Sony will reclassify

~~approximately~~

~~24.1~~

~~illion yen of broadcasting rights in the Pictures segment and~~

~~proximately~~

~~7.4~~

~~illion yen of animation film production costs in the Music segment included in inventor~~

~~ies~~

~~to film costs.~~

~~F-2~~

when the CSM is zero, changes in the fulfillment cash flows adjust the loss component within the liability for remaining coverage with correspondence to insurance service expenses; and

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the excess of any decrease in the fulfillment cash flows over the loss component reduces the loss component to zero and reinstates the CSM.

When a loss component exists, Sony allocates the following items between the loss component and the remaining component of the liability for the remaining coverage for the respective group of insurance contracts, based on the ratio of the loss component to the fulfillment cash flows relating to the expected future cash outflows:

(1)

expected incurred claims and expenses for the period;

(2)

changes in the risk adjustment for

non-financial

risk for the risk expired; and

(3)

finance income (expenses) from insurance contracts issued.

The amounts of loss component allocation in (1) and (2) above reduce the respective components of insurance revenue and are reflected in insurance service expenses.

vii)

Application of the PAA

For certain insurance contracts in a group with a coverage period of one year or less at initial recognition, Sony uses the PAA to simplify the measurement of the group of insurance contracts.

Under the PAA, on initial recognition of each group of insurance contracts, the carrying amount of the liability for remaining coverage is measured at the premiums received on initial recognition, minus any insurance acquisition cash flows allocated to the group at the date of the receipt of the premiums. Sony amortizes insurance acquisition cash flows over the coverage period of the group of insurance contracts.

Subsequently, the carrying amount of the liability for remaining coverage is increased by any premiums received and the amortization of insurance acquisition cash flows recognized as expenses, and decreased by the amount recognized as insurance revenue for services provided and any additional insurance acquisition cash flows allocated after initial recognition.

viii)

Presentation

Portfolios of insurance contracts that are assets and those that are liabilities are presented separately in the consolidated statements of financial position. If no insured event has occurred and the surrender option has not been exercised as of the reporting date, the insurance contract liabilities are classified as

non-current

liabilities. However, if an insured event occurs or the surrender option is exercised, Sony loses its rights to postpone the payment of these liabilities. In this case, the insurance contract liabilities are classified as current liabilities, as they are due to be settled within 12 months after the end of the reporting period.

Sony disaggregates amounts recognized in the consolidated statements of income and the consolidated statements of comprehensive income into an insurance service result, which is comprised of insurance revenue and insurance service expenses, and insurance finance income or expenses. Sony does not disaggregate changes in the risk adjustment for

non-financial

risk between the insurance service result and insurance finance income or expenses and includes them in the insurance service result.

(a)

Insurance revenue

Insurance revenue excludes any investment components and is recognized as follows:

(1)

Contracts not measured under the PAA

Sony recognizes insurance revenue as it provides insurance contract services. For contracts not measured under the PAA, the insurance revenue relating to services provided for each period represents the total of the changes in the liability for remaining coverage that relate to services for which Sony expects to receive consideration, and primarily comprises the following items:

a release of the CSM, measured based on coverage units provided during the fiscal year;

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changes in the risk adjustment for

non-financial

risk relating to current services;

claims and other insurance service expenses incurred during the year, measured at the amounts expected at the beginning of the fiscal year; and

allocation of the amount of insurance acquisition cash flows in a systematic way based on the passage of time.

The release amount of the CSM of a group of insurance contracts that is recognized as insurance revenue in each fiscal year is determined by identifying the coverage units in the group and recognizing in profit or loss the amount of the CSM allocated to the coverage units provided during the fiscal year. The number of coverage units is the quantity of services provided based on the insurance contracts in the group, determined by considering the quantity of benefits to be provided by each insurance contract in the group and the expected coverage period.

Services provided based on insurance contracts include insurance coverage and, for all direct participating contracts, investment related services for managing underlying items on behalf of policyholders. Insurance contracts other than direct participating contracts include investment return services for generating an investment return for the policyholder.

(2)

Contracts measured under the PAA

For contracts measured under the PAA, the insurance revenue for each period is the amount of expected premium receipts for providing services during the period. Sony allocates the expected premium receipts to each period based mainly on the passage of time.

(b)

Insurance service expenses

Insurance service expenses arising from insurance contracts comprise the following items:

(1)

incurred claims and benefits excluding investment components and reduced by the loss component allocation;

(2)

other incurred and directly attributable insurance service expenses (reduced by the loss component allocation);

(3)

amortization of insurance acquisition cash flows;

(4)

changes that relate to past services (e.g., changes in the fulfillment cash flows relating to the liability for incurred claims; and

(5)

changes that relate to future services (e.g., losses on onerous insurance contracts and reversal of those losses arising from changes in the loss components).

For contracts not measured under the PAA, amortization of insurance acquisition cash flows is reflected in insurance service expenses in the same amount as insurance acquisition cash flows recovery reflected within insurance revenue as described above.

(c)

Insurance finance income and expenses

Insurance finance income and expenses comprise changes in the carrying amounts of groups of insurance contracts arising from the effects of the time value of money, financial risk and changes therein. Sony has chosen to disaggregate insurance finance income or expenses between profit or loss and other comprehensive income for contracts without direct participation features, excluding certain variable life insurance and individual variable annuity contracts. The amount included in profit or loss is determined by a systematic allocation of the expected total insurance finance income or expenses over the duration of the group of insurance contracts. The amount of systematic allocation is determined using the discount rates determined on initial recognition of the group of insurance contracts. For insurance finance income or expenses arising from the CSM, the discount rates determined on initial recognition of the group of insurance contracts are used. As a result of this systematic allocation, the total amounts recognized in other comprehensive income is equal to zero over the duration of the group of insurance contracts. In addition, the cumulative amount recognized in other comprehensive income at any point in time is the difference between the carrying amount of the group of insurance contracts and the amount measured by this systematic allocation.

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~~Targeted Improvements~~

SONY GRO

P CORPORATION AND CONSOLIDATED SUBSIDIARIES

For contracts with direct participation features, the insurance finance income or expenses include changes in the value of underlying items (excluding additional premium payments and withdrawals), all of which are recognized in profit or loss.

(2)	Significant judgments and estimates for IFRS 17, which Sony will apply from the fiscal year ending March 31, 2024

Measurement methods and inputs for insurance contracts

Sony estimates the mortality and morbidity rates based on the most recent actual outcomes and analyzes the historical experience and trends in data using statistical methods. When estimating the mortality and morbidity rates for each group of insurance contracts, Sony takes into account the characteristics of policyholders including gender, health conditions and smoking habits and the characteristics of the group of insurance contracts such as the selective effects over time. The estimates are revised in a timely manner to reflect changes in lifestyle, as well as changes in social conditions such as improvement of mortality and morbidity rates in the future.

Sony estimates the lapse and surrender rates based on the most recent actual outcomes and determines the probability-weighted lapse and surrender rates for each group of insurance contracts by analyzing historical experience and trends in data using statistical methods. Lapse and surrender rates are estimated, taking into account both ordinary and dynamic lapses, and reflect the tendency to higher surrender rates when the yield on contracts increases or exceeds the guaranteed minimum for certain insurance contracts. In determining the lapse and surrender rates, historical actual data is considered. If no clear correlation is found in historical actual data, the actual results of similar products as well as domestic and overseas practical trends are used as reference.

Sony projects estimates of future expenses based on the current expense levels. The expenses comprise expenses directly attributable to the ~~Accounting~~group of insurance contracts, including the allocation of fixed and variable overhead expenses. In addition, Sony applies inflation adjustments to the estimated claims to be paid in future.

ii)

Discretionary participation features of future cash flows

For certain participating insurance contracts other than direct participating contracts, the effect of discretionary changes on the fulfillment cash flows is adjusted in the contractual service margin. Although Sony has discretionary participation features related to the investment policy for ~~Long-Duration Contracts -~~these contracts, the investment policy is established based on the market conditions. Therefore, the effect of changes in assumptions that relate to financial risk on the investment policy is included in insurance finance income or expenses. In addition, since the dividend policy can be changed at Sony’s discretion, the effect of changes in the dividend policy on the fulfillment cash flows is adjusted in the contractual service margin.

iii)

Risk adjustments for

non-financial

risk

Risk adjustments for

non-financial

risk are determined to reflect the compensation that each insurance subsidiary would require for bearing

non-financial

risk, and are allocated to groups of insurance contracts based on an analysis of the risk profiles of the groups. Risk adjustments for

non-financial

risk reflect the diversification benefits, in a way that is consistent with the compensation that the insurance company would require and that reflects its degree of risk aversion.

The risk adjustments for

non-financial

risk are determined mainly using a cost of capital technique. In applying a cost of capital technique, Sony determines the risk adjustment for

non-financial

risk by applying a

cost-of-capital

rate to the amount of capital required for each future reporting date and discounting the result using risk-free rates adjusted for illiquidity. The required capital is determined by estimating the probability distribution of the present value of future cash flows from insurance contracts at each future reporting date and calculating the capital that Sony would require to meet its contractual obligations to pay claims and expenses arising over the duration of the contracts at a 99.5% confidence level. The

cost-of-capital

rate represents the additional reward that investors would require for exposure to the

non-financial

risk.

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iv)

Discount rates

All

cash flows are discoun

d using risk-free yield curves adjusted to reflect the characteristics of the cash flows and the liquidity of the insurance contracts. Sony determines the risk-free yield curves using the yields on government bonds. The yield curve is determined by incorporating long-term real interest rate and inflation expectations. For extrapolation for the periods in which market data is not available, a method using an ultimate forward rate is used. To be specific, the method uses an ultimate forward rate

3.5

and starts extrapolation in the 40th year (or the 30th year for U.S. dollar). The forward rates for the 41st year (or the 31st year for U.S. dollar) and onwards are extrapolated so that they will converge to the level of the ultimate forward rate in 30 years, using the Smith-Wilson method. To reflect the liquidity characteristics of the insurance contracts, the risk-free yield curves are adjusted by an illiquidity premium. Illiquidity premiums are determined by setting up a reference portfolio of Sony’s assets.

Investment components

Sony identifies the investment component of an insurance contract by determining the amount that it would be required to repay to the policyholder in all circumstances, regardless of whether an insured event occurs or not. These include circumstances in which an insured event occurs or the contract matures or is terminated without an insured event occurring. Investment components are excluded from insurance revenue and insurance service expenses.

vi)

Determination of coverage units

The amount of the CSM of a group of insurance contracts that is recognized as insurance revenue in each year is determined by identifying the coverage units in the group and recognizing in profit or loss the amount of the CSM allocated to the coverage units provided during the year. The number of coverage units is determined by considering for each contract the quantity of benefits provided and its expected coverage period. To be specific, Sony determines the quantity of benefits based on:

the death benefit amount in the case of contracts for which the death benefit amount increases or decreases based on the period (e.g., whole life, term life and variable life insurance contracts);

the premium amount proportionate to the insurance period in the case of contracts whose host contract and riders have different coverage types (e.g., disease and health insurance contracts); and

the cash surrender value (or the premium reserve during the annuity payment period) in the case of annuity contracts with investment-related services (e.g., individual variable annuity contracts).

Sony considers the characteristics of insurance contracts and aggregates quantities of benefits related to insurance coverage, investment-return services and investment-related services when determining the relative weighting of the benefits provided to the policyholder by these services.

(3)	Disclosure of transition to IFRS 17

Upon transition to IFRS 17 as of April 1, 2022, Sony determined that it was impracticable to apply the full retrospective approach to certain groups of insurance contracts, as the necessary information was unavailable due to restrictions of contract data and systems in the past or it was impossible to recreate past estimation without the use of hindsight. Sony will apply alternative transition methods (the modified retrospective approach or the fair value approach) to groups of insurance contracts for which the full retrospective approach is impracticable as of the date of the transition.

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SONY GROUP CORPORATION AND CONSOLIDATED SUBSIDIARIES

Sony will apply the following approaches on transition to

IFRS 17:


Year of issue (fiscal year)		Transition approach
2015 and thereafter		For all groups of insurance contracts: Full retrospective approach
1993 – 2014		For groups of insurance contracts with direct participation features and certain groups of insurance contracts without direct participation features: Fair value approach
1993 – 2014		For other groups of insurance contracts: Modified retrospective approach
In and before 1992		For all groups of insurance contracts: Fair value approach

Modified retrospective approach

The objective of the modified retrospective approach is to achieve the closest outcome to retrospective application possible using reasonable and supportable information available without undue cost or effort. Sony will apply each of the following modifications only to the extent that it does not have reasonable and supportable information to apply IFRS 17 retrospectively.

Sony will apply the following modifications to certain groups of insurance contracts:

For groups of contracts issued,

initiated

or acquired from April 1, 1993 to March 31, 2015, the future cash flows on initial recognition are estimated by adjusting the amount as of April 1, 2015, which can be determined retrospectively, for the cash flows that are known to have occurred before that date;

For groups of contracts issued, initiated or acquired from April 1, 1993 to March 31, 2013, the illiquidity premiums applied to the observable risk-free yield curves on initial recognition are estimated by determining an average spread between the observable risk-free yield curves and the discount rates, which can be determined retrospectively, for the period from April 1, 2013 to March 31, 2022. The amount of insurance finance income or expenses recognized in accumulated other comprehensive income as of April 1, 2022 is calculated by using this discount rate; and

The risk adjustment for

non-financial

risk on initial recognition is determined by adjusting the amount as of April 1, 2022 for the expected release of risk before April 1, 2022.

After applying such modifications to fulfillment cash flows, the CSM (or the loss component) on initial recognition is determined as follows:

the amount of the CSM recognized as profit or loss before April 1, 2022 is determined by comparing the remaining coverage units as of the date of the transition and the coverage units provided based on groups of insurance contracts before the date of the transition; and

the amount allocated to the loss component before April 1, 2022 is determined using the proportion of the loss component relative to the total estimate of the present value of the future cash outflows plus the risk adjustment for

non-financial

risk on initial recognition.

Fair value approach

Under the fair value approach, the CSM (or the loss component) as of April 1, 2022 is determined as the difference between the fair value of a group of insurance contracts at that date and the fulfillment cash flows at that date.

For all insurance contracts measured under the fair value approach, Sony uses reasonable and supportable information available as of April 1, 2022 to determine the following matters:

how to identify groups of contracts;

whether a contract meets the definition of an insurance contract with direct participation features; and

how to identify discretionary cash flows for contracts without direct participation features.

For groups of contracts measured under the fair value approach, the discount rates on initial recognition are determined as of April 1, 2022 instead of at the date of initial

recognition.

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SONY GROUP CORPORATION AND CONSOLIDATED SUBSIDIARIES

For all insurance contracts measured under the fair value approach, the amount of insurance finance income or expenses recognized in accumulated other comprehensive income as of April 1, 2022 is determined to be zero.

Amendments to IAS 1 “Presentation of Financial Statements”

In ~~August 2018,~~January 2020, the ~~FASB~~IASB issued ~~ASU~~“Classification of Liabilities as Current or

~~2018-12,~~Non-current”

~~which revises~~(“Amendments to IAS 1”). The amendments clarify the ~~accounting for certain long-duration insurance contracts, and in November 2019, the FASB issued ASU~~

~~2019-09~~

right to defer settlement, which is one of the ~~effective date of ASU~~

~~2018-12~~

existing requirements when classifying a liability to ~~January 1, 2022.~~ current or

non-current.

The ASU prescribes comprehensive changes to recognition and measurement of certain long-duration insurance contracts and assumptions and introduces certain financial statement presentation requirements, as well as significant additional qualitative and quantitative disclosures. This ASUamendments will be effective for Sony as of April 1, ~~2022.~~2024. The impact of ~~this ASU~~the amendments on Sony’s results of operations and financial position is being evaluated.

~~Disclosures for Fair Value Measurement -~~

In ~~August 2018,~~October 2022, the ~~FASB~~IASB issued ~~ASU~~“A

~~2018-13,~~Non-current

~~which amends disclosure requirements related~~Liability with Covenants” (“Amendments to ~~fair value measurement. This ASU is effective for Sony as of April 1, 2020. Since this ASU only impacts disclosures,~~IAS 1”). The amendments were issued to improve the ~~adoption will have no impact on Sony’s results of operations and financial position.~~

~~Disclosures for Defined Benefit Plans -~~

~~In August 2018,~~information a company provides about long-term debt with covenants by enabling investors to understand the ~~FASB issued ASU~~

~~2018-14,~~

which amends disclosure requirements related to defined benefit pension and other postretirement plans. This ASU is effective for Sony as of April 1, 2020 and will be applied on a retrospective basis. Since this ASU only impacts disclosures, the adoption will have no impact on Sony’s results of operations and financial position.

~~Income Taxes -~~

~~In December 2019, the FASB issued ASU 2019-12, which simplifies the accounting requirements for income taxes. This ASU~~risk that such debt could become repayable within twelve months. The amendments will be effective for Sony as of ~~April~~A

il 1, ~~2021 and amendments within this ASU are required to be applied on a prospective basis, except certain amendments must be applied on a retrospective or modified retrospective basis.~~2024. The impact of ~~this ASU~~the amendments on Sony’s results of operations and financial position is being evaluated.

4.	Business segment information

The reportable segments presented below are the segments of Sony for which separate financial information is available and for which operating income or loss amounts are evaluated regularly by the chief operating decision maker (“CODM”) in deciding how to allocate resources and in assessing performance. The CODM does not evaluate segments using discrete asset information. Sony’s CODM is its Chairman, President and Chief Executive Officer.

~~Reference Rate Reform -~~

In March 2020, the FASB issued ASU 2020-04, which provides optional relief for certain contracts impacted by reference rate reform. The relief provided by the amendments is permitted to be adopted any time through December 31, 2022. Sony is still evaluating the impact of reference rate reform and whether to apply the optional relief.

~~(4)~~

~~Reclassifications~~

Certain reclassifications of the financial statements and accompanying footnotes for the fiscal years ended March 31, 2018 and 2019 have been made to conform to the presentation for the fiscal year ended March 31, 2020.

3.	~~Inventories~~

~~Inventories are comprised of the following:~~

Yen in millions

March 31

2019

2020

Finished products

407,295

345,231

Work in process

154,178

149,969

Raw materials, purchased components and supplies

91,805

94,769

Inventories

653,278

589,969

~~F-2~~

The former Electronics Products & Solutions segment has been renamed the Entertainment, Technology & Services (ET&S) segment effective from April 2022. This change has not resulted in any reclassification of businesses across segments.

The G&NS segment includes the 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 ET&S segment includes the Televisions business, the Audio and Video business, the Still and Video Cameras business, the smartphone business and the 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.

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SONY GROUP CORPORATION AND CONSOLIDATED SUBSIDIARIES

4.	~~Film costs~~

~~Film costs are comprised of the following:~~

Yen in millions

March 31

2019

2020

Motion picture productions:

Released

87,158

99,482

Completed and not released

3,189

18,776

In production and development

130,736

67,199

Television productions:

Released

144,316

186,344

In production and development

9,147

25,093

Broadcasting rights

70,401

61,959

Less: current portion included in inventories

(35,942
)
(31,517
)

Film costs

409,005

427,336

Sony estimates that approximately 92% of the unamortized film costs of released motion picture and television productions at March 31, 2020 will be amortized within the next three years. Approximately 217 billion yen of completed film costs are expected to be amortized during the next twelve months. Approximately 163 billion yen of accrued participation liabilities included in accounts payable, other and accrued expenses are expected to be paid during the next twelve months.

5.	~~Investments in affiliated companies~~

The summarized combined financial information that is based on information provided by the equity investees including information for significant equity affiliates and the reconciliation of such information to the consolidated financial statements is shown below:

~~Balance Sheets~~Segment sales and financial services revenue:

Yen in millions

March 31

2019

2020

Current assets

355,320

389,195

Noncurrent assets

608,626

164,852

Current liabilities

188,905

194,219

Noncurrent liabilities and noncontrolling interests

584,714

60,469

Percentage of ownership in equity investees

20%-50
%
20%-50
%


	Yen in millions
	Fiscal year ended March 31
	2021			2022			2023
Sales and financial services revenue:
Game & Network Services —
Customers		2,604,713			2,674,356			3,538,533
Intersegment		51,565			65,407			106,065

Total		2,656,278			2,739,763			3,644,598
Music —
Customers		927,250			1,100,532			1,364,815
Intersegment		12,617			16,417			15,817

Total		939,867			1,116,949			1,380,632
Pictures —
Customers		751,800			1,236,399			1,364,887
Intersegment		1,187			2,512			4,535

Total		752,987			1,238,911			1,369,422
Entertainment, Technology & Services —
Customers		2,016,887			2,297,886			2,436,739
Intersegment		51,200			41,300			39,286

Total		2,068,087			2,339,186			2,476,025
Imaging & Sensing Solutions —
Customers		937,859			992,200			1,301,481
Intersegment		74,638			84,224			100,706

Total		1,012,497			1,076,424			1,402,187
Financial Services —
Customers		1,664,991			1,524,811			1,443,996
Intersegment		9,011			9,018			10,550

Total		1,674,002			1,533,829			1,454,546
All Other —
Customers		84,202			82,264			72,338
Intersegment		16,534			16,519			15,285

Total		100,736			98,783			87,623
Corporate and elimination		(205,793	)		(222,332	)		(275,196	)

Consolidated total		8,998,661			9,921,513			11,539,837

G&NS intersegment amounts primarily consist of transactions with the ET&S segment. ET&S intersegment amounts primarily consist of transactions with the G&NS segment. I&SS intersegment amounts primarily consist of transactions with the G&NS segment and the ET&S segment. Corporate and elimination includes certain brand and patent royalty income.

~~Statements~~

F-3

Table of ~~Income~~

Yen in millions

Fiscal year ended March 31

2018

2019

2020

Net revenues

468,933

390,457

387,678

Operating income

56,729

53,920

58,431

Net income attributable to controlling interests

27,301

5,539

34,916

Percentage of ownership in equity investees

20%-50
%
20%-50
%
20%-50
%

Contents

~~F-2~~

9SONY GROUP CORPORATION AND CONSOLIDATED SUBSIDIARIES

Segment profit (loss):


	Yen in millions
	Fiscal year ended March 31
	2021			2022			2023
Operating income (loss):
Game & Network Services		341,718			346,089			250,006
Music		184,786			210,933			263,107
Pictures		79,851			217,393			119,255
Entertainment, Technology & Services		127,859			212,942			179,461
Imaging & Sensing Solutions		145,884			155,597			212,214
Financial Services		154,765			150,111			223,935
All Other		7,178			17,981			16,849

Total		1,042,041			1,311,046			1,264,827
Corporate and elimination		(86,786	)		(108,707	)		(56,621	)

Consolidated operating income		955,255			1,202,339			1,208,206
Financial income		83,792			19,304			31,058
Financial expenses		(41,082	)		(104,140	)		(58,951	)

Consolidated income before income taxes		997,965			1,117,503			1,180,313

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.

Other significant items:


	Yen in millions
	Fiscal year ended March 31
	2021			2022			2023
Share of profit (loss) of investments accounted for using the equity method:
Game & Network Services		—			14			144
Music		570			4,073			7,063
Pictures		123			(664	)		515
Entertainment, Technology & Services		57			1,103			1,076
Imaging & Sensing Solutions		(123	)		(603	)		(1,128	)
Financial Services		—			—			—
All Other		10,924			19,723			16,779

Consolidated total		11,551			23,646			24,449

Depreciation and amortization:
Game & Network Services		52,987			61,219			87,201
Music		46,217			61,465			67,240
Pictures		290,895			396,251			506,697
Entertainment, Technology & Services		82,174			91,759			97,448
Imaging & Sensing Solutions		159,469			172,842			196,674
Financial Services, including deferred insurance acquisition costs		68,598			94,169			110,856
All Other		7,686			4,300			4,376

Total		708,026			882,005			1,070,492
Corporate		24,085			22,465			18,621

Consolidated total		732,111			904,470			1,089,113

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Table of Contents

SONY GROUP CORPORATION AND CONSOLIDATED SUBSIDIARIES

Sales to customers by product category:

The ~~carrying value~~following table is a breakdown of ~~Sony’s investment in M3, Inc. (“M3”)~~sales and financial services revenue to external customers by product category for each segment. Sony management views each segment as a single operating segment.

~~exceeded its proportionate share in~~


	Yen in millions
	Fiscal year ended March 31
	2021		2022		2023
Sales and financial services revenue:
Game & Network Services
Digital Software and Add-on Content		1,454,654		1,424,459		1,523,045
Network Services		382,950		409,355		464,676
Hardware and Others		767,109		840,542		1,550,812

Total		2,604,713		2,674,356		3,538,533
Music
Recorded Music — Streaming		337,100		462,368		598,868
Recorded Music — Others		179,167		206,412		286,270
Music Publishing		156,862		200,334		276,665
Visual Media and Platform		254,121		231,418		203,012

Total		927,250		1,100,532		1,364,815
Pictures
Motion Pictures		265,301		518,840		464,043
Television Productions		267,123		419,494		536,250
Media Networks		219,376		298,065		364,594

Total		751,800		1,236,399		1,364,887
Entertainment, Technology & Services
Televisions		709,007		858,837		733,251
Audio and Video		313,975		326,704		391,608
Still and Video Cameras		338,694		414,898		565,018
Mobile Communications		358,580		365,864		356,771
Other		296,631		331,583		390,091

Total		2,016,887		2,297,886		2,436,739
Imaging & Sensing Solutions		937,859		992,200		1,301,481
Financial Services		1,664,991		1,524,811		1,443,996
All Other		84,202		82,264		72,338
Corporate		10,959		13,065		17,048

Consolidated total		8,998,661		9,921,513		11,539,837

In the ~~underlying net assets~~G&NS segment, Digital Software and

Add-on

Content includes distribution of M3software titles and

add-on

content through the network by ~~56,140 million yen at March 31, 2020. The excess is substantially attributable~~Sony Interactive Entertainment; Network Services includes network services relating to game, video and music content; Hardware and Others includes home gaming consoles, packaged software, game software sold bundled with home gaming consoles, peripheral devices and first-party software for third-party platforms. In the ~~remeasurement to fair value~~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 ~~remaining shares~~words and music of ~~M3,~~songs; Visual Media and ~~allocated to identifiable tangible~~Platform includes the production and ~~intangible assets. The intang~~

~~ible assets relate primarily to M3’s medical~~

~~web-portal.~~

~~The unassigned residual value~~distribution of animation titles and game applications, and various service offerings for music and visual products. In the ~~excess is recognized as goodwill as a component~~Pictures segment, Motion Pictures includes the worldwide production, acquisition and distribution of live-action and animated motion pictures; Television Productions includes the ~~investment balance. The amounts allocated to intangible assets are amortized net~~production, acquisition and distribution of television programming; Media Networks includes the ~~related tax effects to equity in net income (loss)~~operation of ~~affiliated companies over their respective estimated useful lives, principally 10 years, using~~television networks and DTC streaming services worldwide. In the ~~straight-line method.~~

~~With the exception of M3 as described above, there was no significant difference between Sony’s proportionate share in the underlying net assets of the investees~~ET&S segment, Televisions includes LCD and ~~the carrying value of investments in affiliated companies at March 31, 2019~~OLED televisions; Audio and ~~2020.~~Video includes

Blu-ray

On December 19, 2019, SRE Holdings Corporation (“SRE”), Sony’s consolidated subsidiary, became a publicly listed company on the Tokyo Stock Exchange Mothers market (the “Listing”). Upon the Listing, Sony sold a portion of its shares of SRE,disc players and shares issued by SRE were publicly offered (collectively, the “Sale”). Sony’s ownership of SRE’s total shares, which was 56.3% before the Sale, has decreased to 44.5% after the Sale. As a result, SRE has become an affiliate accounted for under the equity method of Sony. In connection with the Sale, Sony recorded a gain of 17,266 million yen, which consisted of both a remeasurement gain based on fair value for the shares Sony continues to hold after the Sale, and a realized gain for the sold shares, in other operating (income) loss, net in the consolidated statements of income for the fiscal year ended March 31, 2020.

On January 29, 2020, Sony Life Insurance Co., Ltd.(“Sony Life”), Sony’s consolidated subsidiary, completed the acquisition of the entirety of 50% equity interest held by AEGON International B.V. in AEGON Sony Life Insurance Co., Ltd. and SA Reinsurance Ltd. (collectively, the “JVs”). As a result of this acquisition, the JVs became consolidated subsidiaries of Sony as described in Note 25. AEGON Sony Life Insurance Co., Ltd. has changed its name to “Sony Life With Insurance Co., Ltd.,”

~~as of~~

~~April 1, 2020.~~

recorders, home audio, headphones

Several affiliated companies are listed on the Tokyo Stock Exchange and Sony’s investments in these companies have an aggregate carrying value and fair value of 141,508 million yen and 756,073 million yen, respectively, as of March 31, 2020.

~~The number~~

F-41

Table of ~~affiliated companies accounted for under the equity method as of March 31, 2019 and 2020 were 133 and 140, respectively.~~Contents

SONY GROUP CORPORATION AND CONSOLIDATED SUBSIDIARIES

Account balances and transactions with affiliated companies accounted for under the equity method are presented below. There are no other material transactions or account balances with any other related parties.

Yen in millions

March 31

2019

2020

Accounts receivable, trade

12,404

12,030

Other receivables

134

1,589

Other current assets

33

9,757

Accounts payable, trade

1,087

1,497

Short-term borrowings

29,744

31,557

Finance lease liabilities and other*

20,265

34,564

Operating lease liabilities

—

2,393

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.

~~Finance lease liabilities and other were represented as Capital lease obligations as of the fiscal year ended March 31, 2019.~~

Yen in millions

Fiscal year ended March 31

2018

2019

2020

Sales

45,415

41,437

35,951

Purchases

3,180

5,584

3,479

~~Sony entered into sale~~Geographic Information:

Sales and ~~leaseback transactions regarding certain machinery~~financial services revenue attributed to countries and ~~equipment with SFI Leasing Company, Limited (“SFIL”), a leasing company in Japan, in~~areas based on location of external customers for the fiscal years ended March 31, ~~2018~~2021, 2022 and 2023 and

non-current

assets (property, plant and equipment, ROU assets, goodwill, content assets and other intangible assets) as of March 31, 2022 and 2023 are as follows:


	Yen in millions
	Fiscal year ended March 31
	2021		2022		2023
Sales and financial services revenue:
Japan		2,965,936		2,764,321		2,691,972
United States		2,147,686		2,766,021		3,401,402
Europe		1,817,854		1,870,091		2,190,311
China		762,766		771,006		855,437
Asia-Pacific		861,623		1,149,261		1,563,414
Other Areas		442,796		600,813		837,301

Total		8,998,661		9,921,513		11,539,837


			Yen in millions
			March 31
			2022		2023
Non-current assets (property, plant and equipment, right-of-use assets, goodwill, content assets and other intangible assets):
Japan				1,592,981		1,875,354
United States				1,830,602		2,417,228
Europe				565,044		603,338
China				34,029		34,322
Asia-Pacific				158,030		186,359
Other Areas				91,001		107,162

Total				4,271,687		5,223,763

Major countries and ~~2019. SFIL is accounted for under the equity method~~areas in each geographic segment excluding Japan, United States and ~~is 34% owned by Sony.~~China are as follows:

F-


(1) Europe:		United Kingdom, France, Germany, Russia, Spain and Italy
(2) Asia-Pacific:		India, South Korea, Oceania, Thailand and Malaysia
(3) Other Areas:		The Middle East/Africa, Brazil, Mexico and Canada

There are no individually material countries with respect to sales and financial services revenue or

non-current

assets (property, plant and equipment, ROU assets, goodwill, content assets and other intangible assets) included in Europe, Asia-Pacific and Other Areas. As of March 31, 2023, Sony has suspended its business in Russia.

Transfers between reportable business segments or geographic areas are made at individually negotiated prices that are intended to reflect a market-based transfer price.

There were no sales or financial services revenue with any single major external customer for the fiscal years ended March 31, 2021, 2022 and 2023.

F-4

Table of Contents

SONY GROUP CORPORATION AND CONSOLIDATED SUBSIDIARIES

MITSUI-SOKO Supply Chain Solutions, Inc. is accounted for under the equity method and is 34% owned by Sony as a result of the sale of the logistics business on April 1, 2015. As of the fiscal years ended March 31, 2019 and 2020, account balances with MITSUI-SOKO Supply Chain Solutions, Inc. and its subsidiaries were 3,435 million yen and 1,181 million yen, respectively, which are mainly included in accrued expenses. For the fiscal years ended March 31, 2019 and 2020, transactions were 10,606 million yen and 6,069 million yen, respectively, which are mainly included in general and administrative expenses.

Dividends from affiliated companies accounted for under the equity method for the fiscal years ended March 31, 2018, 2019 and 2020 were 5,613 million yen, 4,948 million yen and 4,523 million yen, respectively.

~~Transfer of financial assets~~Financial instruments

Sony has established several accounts receivable sales programs mainly within the EP&S segment. Through these programs, Sony can sell receivables to a commercial bank or a special purpose entity associated with a sponsor bank. Total receivables sold during the fiscal years ended March 31, 2018, 2019 and 2020 were 84,718 million yen, 81,947 million yen and 65,214 million yen, respectively. These transactions are accounted for as sales in accordance with the accounting guidance for transfers of financial assets, because Sony has relinquished control of the receivables. Sony includes the sales proceeds from these receivables as cash flows within operating activities in the consolidated statement of cash flows because the receivables are the result of operating activities and are short term in nature. Gains and losses from these transactions were insignificant. Although Sony continues servicing the receivables subsequent to being sold or contributed, no servicing assets or liabilities are recorded as the costs of collection of the sold receivables and the income from servicing such receivables are insignificant.

~~Certain accounts receivable sales programs above also involve VIEs. Refer to Note 24.~~

(1)

~~Marketable securities and securities investments~~Financial instruments by measurement method

~~Marketable securities~~

The carrying amount of Sony’s assets and ~~securities investments, primarily held in the Financial Services segment, include debt securities for which the aggregate cost, gross unrealized gains~~liabilities by measurement method as of March 31, 2022 and ~~losses and fair value pertaining to~~

~~available-for-sale~~

~~securities and~~

~~held-to-maturity~~

~~securities~~2023 are as ~~follow~~

sfollows:


	Yen in millions
	March 31
	2022		2023
Assets:
Financial assets required to be measured at amortized cost (“AC”)
Investments and advances in the Financial Services segment
Debt securities		358,238		422,025
Housing loans in the banking business		2,752,985		3,129,393
Other loans		230,516		229,666
Trade and other receivables *
Trade receivables		1,617,323		1,761,025
Other receivables		2,736		2,712
Other financial assets
Time deposit		39,223		36,671
Security deposit		121,856		95,813
Non-current other receivables in the Pictures segment		166,279		152,619
Other		16,425		19,582
Financial assets required to be measured at fair value through profit or loss (“FVPL”)
Investments and advances in the Financial Services segment
Debt securities		1,012,057		1,059,718
Equity securities		1,798,536		2,123,062
Other financial assets
Debt securities		16,013		20,905
Equity securities		120,274		125,590
Derivative assets		61,023		70,144
Financial assets designated to be measured at FVPL
Investments and advances in the Financial Services segment
Debt securities		267,169		188,906
Financial assets required to be measured at fair value through other comprehensive income (“FVOCI”)
Investments and advances in the Financial Services segment
Debt securities		12,378,244		11,615,862
Other financial assets
Debt securities		522		125
Financial assets designated to be measured at FVOCI
Investments and advances in the Financial Services segment
Equity securities		8,016		5,453
Other financial assets
Equity securities		303,992		421,845

Total assets		21,271,427		21,481,116

Current assets		2,130,033		2,203,044
Non-current assets		19,141,394		19,278,072

*	The amounts of trade and other receivables exclude contract assets within trade and other receivables, and contract assets in the consolidated statements of financial position.

Yen in millions

March 31, 2019

March 31, 2020

Cost

Gross
unrealized
gains

Gross
unrealized
losses

Fair value

Cost

Gross
unrealized
gains

Gross
unrealized
losses

Fair value

Debt securities:

Available-for-sale securities:

Japanese national government bonds

1,422,620

220,989

(20
)

1,643,589

1,552,036

210,459

(566
)

1,761,929

Japanese local government bonds

67,461

70

(34
)

67,497

69,132

73

(33
)

69,172

Japanese corporate bonds

202,433

17,178

(223
)

219,388

202,164

19,112

(567
)

220,709

Foreign government bonds

153,429

8,669

(603
)

161,495

198,777

81,014

(14
)

279,777

Foreign corporate bonds

360,299

944

(376
)

360,867

361,422

507

(2,179
)

359,750

Securitized products

190,111

1

—

190,112

205,223

0

—

205,223

Other

2,286

2,402

—

4,688

14,398

1,867

(12
)

16,253

2,398,639

250,253

(1,256
)

2,647,636

2,603,152

313,032

(3,371
)

2,912,813

Held-to-maturity
securities:

Japanese national government bonds

6,042,635

2,016,786

—

8,059,421

6,204,505

2,098,885

(1,397
)

8,301,993

Japanese local government bonds

3,518

388

—

3,906

2,504

331

—

2,835

Japanese corporate bonds

409,329

44,348

(5,845
)

447,832

482,050

61,176

(4,754
)

538,472

Foreign government bonds

386,392

18,609

(13,742
)

391,259

723,937

302,297

—

1,026,234

Foreign corporate bonds

198

11

—

209

98

7

—

105

Securitized products

—

—

—

—

5,418

—

(421
)

4,997

6,842,072

2,080,142

(19,587
)

8,902,627

7,418,512

2,462,696

(6,572
)

9,874,636

Total

9,240,711

2,330,395

(20,843
)

11,550,263

10,021,664

2,775,728

(9,943
)

12,787,449

F-4

F-

313

Table of Contents

SONY GROUP CORPORATION AND CONSOLIDATED SUBSIDIARIES

~~The following table presents the cost and fair value of debt securities classified as~~

~~available-for-sale~~

~~securities and~~

~~held-to-maturity~~

~~securities by contractual maturity:~~

Yen in millions

March 31, 2020

Available-for-sale
securities

Held-to-maturity
securities

Cost

Fair value

Cost

Fair value

Due in one year or less

145,867

146,084

6,075

6,109

Due after one year through five years

432,281

435,443

199,509

217,983

Due after five years through ten years

561,098

637,363

246,072

283,086

Due after ten years

1,463,906

1,693,923

6,966,856

9,367,458

Total

2,603,152

2,912,813

7,418,512

9,874,636

~~Proceeds from sales of~~

~~available-for-sale~~

securities were 39,982 million yen, 66,906 million yen and 84,362 million yen for the fiscal years ended March 31, 2018, 2019 and 2020, respectively. On these sales, gross realized gains were 1,257 million yen, 240 million yen and 354 million yen and gross realized losses were 2 million yen, 475 million yen and 128 million yen, respectively, for the fiscal years ended March 31, 2018, 2019 and 2020. Sony adopted ASU

~~2016-01~~

~~from April 1, 2018, and as a result, the~~

~~available-for-sale~~

~~classification is eliminated for equity securities for the fiscal year~~

~~ended March 31, 2019 and 2020.~~

Marketable securities classified as trading securities, which are held primarily in the Financial Services segment, totaled 234,117 million yen and 270,120 million yen as of March 31, 2019 and 2020, respectively. Sony recorded net unrealized gains of 48,047 million yen, net unrealized gains of 3,610 million yen, and net

unrealized gains of 1,705 million yen for the fiscal years ended March 31 2018, 2019 and 2020, respectively. Changes in the fair value of trading securities are primarily recognized in financial services revenue in the consolidated statements of income. Sony adopted ASU 2016-01 from April 1, 2018, and as a result, the trading classification is eliminated for equity securities for the fiscal years ended March 31, 2019 and 2020.

The following tables present the gross unrealized losses on, and fair value of, Sony’s investment securities with unrealized losses, aggregated by investment category and the length of time that individual investment securities have been in a continuous unrealized loss position, at March 31, 2019 and 2020.

Yen in millions

March 31, 2019

Less than 12 months

12 months or more

Total

Fair
value

Unrealized
losses

Fair
value

Unrealized
losses

Fair
value

Unrealized
losses

Debt securities:

Available-for-sale securities:

Japanese national government bonds

—

—

4,063

(20
)
4,063

(20
)
Japanese local government bonds

27,404

(29
)
4,872

(5
)
32,276

(34
)
Japanese corporate bonds

25,725

(21
)
19,925

(202
)
45,650

(223
)
Foreign government bonds

—

—

15,878

(603
)
15,878

(603
)
Foreign corporate bonds

50,281

(117
)
15,455

(259
)
65,736

(376
)
Securitized products

—

—

—

—

—

—

Other

—

—

—

—

—

—

103,410

(167
)
60,193

(1,089
)
163,603

(1,256
)

Held-to-maturity
securities:

Japanese national government bonds

—

—

—

—

—

—

Japanese local government bonds

—

—

—

—

—

—

Japanese corporate bonds

—

—

97,984

(5,845
)
97,984

(5,845
)
Foreign government bonds

—

—

151,229

(13,742
)
151,229

(13,742
)
Foreign corporate bonds

—

—

—

—

—

—

—

—

249,213

(19,587
)
249,213

(19,587
)

Total

103,410

(167
)
309,406

(20,676
)
412,816

(20,843
)

~~F-3~~

~~Table of Contents~~

~~SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES~~

Yen in millions

March 31, 2020

Less than 12 months

12 months or more

Total

Fair
value

Unrealized
losses

Fair
value

Unrealized
losses

Fair
value

Unrealized
losses

Debt securities:

Available-for-sale securities:

Japanese national government bonds

51,746

(539
)
2,032

(27
)
53,778

(566
)
Japanese local government bonds

25,010

(10
)
16,340

(23
)
41,350

(33
)
Japanese corporate bonds

62,118

(548
)
10,694

(19
)
72,812

(567
)
Foreign government bonds

—

—

1,537

(14
)
1,537

(14
)
Foreign corporate bonds

86,220

(2,133
)
18,896

(46
)
105,116

(2,179
)
Securitized products

—

—

—

—

—

—

Other

12,055

(12
)
—

—

12,055

(12
)

237,149

(3,242
)
49,499

(129
)
286,648

(3,371
)

Held-to-maturity
securities:

Japanese national government bonds

134,320

(1,397
)
—

—

134,320

(1,397
)
Japanese local government bonds

—

—

—

—

—

—

Japanese corporate bonds

98,172

(4,285
)
3,727

(469
)
101,899

(4,754
)
Foreign government bonds

—

—

—

—

—

—

Foreign corporate bonds

—

—

—

—

—

—

Securitized products

5,418

(421
)
—

—

5,418

(421
)

237,910

(6,103
)
3,727

(469
)
241,637

(6,572
)

Total

475,059

(9,345
)
53,226

(598
)
528,285

(9,943
)

~~At March 31, 2020, Sony determined that the decline in value for securities with unrealized losses shown in the above table is not other-than-temporary in nature.~~

~~For the~~

~~fiscal~~

~~years~~

~~ended March 31, 2019~~Cash and 2020, with respect to equity securities included in marketable securities and securities investments, Sony recorded net realized gains of 77,495 million yen and 20,176 million yen due to the sale of equity securities and net unrealized gains of 104,168 million yen and net

~~unrealized~~

loss of 134,831 million yen due to revaluation of equity securities held as of March 31, 2019 and 2020, respectively. Gains or losses arising from equity securities held in the Financial Services segmentcash equivalents are ~~recorded in financial services revenue, and gains or losses arising from equity securities held in all segments other than the Financial Services segment are recorded in gain~~

~~(loss)~~

~~on equity securities, net in the consolidated statement of income. Included in the~~

~~gains and (losses)~~

~~noted above were~~

~~gains and (losses)~~

~~recorded by Sony with respect to the equity securities held by Sony in Spotify Technology S.A. (“Spotify”).~~

~~On April 3, 2018, Spotify was publicly listed for trading on the New York Stock Exchange. Sony owned 5.707% of Spotify’s shares at the time of the public listing.~~

During the fiscal year ended March 31, 2019, Sony sold a portion of the Spotify shares that it owned for aggregate consideration of 82,616 million yen (768 million U.S. dollars) in cash proceeds. The sale of such shares, offset by costs to be paid to Sony’s artists and distributed labels and other transaction costs which directly related to the gains recognizedexcluded from the ~~sale of Spotify shares, resulted in a net~~

~~pre-tax~~

realized gain of 54,179 million yen (504 million U.S. dollars) recorded in gain on equity securities, net in the consolidated statement of income. The payments to Sony’s artists and distributed labels are included within Other in the cash flows from investing activities of the consolidated statement of cash flows.

~~The remaining Spotify shares retained as of March 31, 2019 had a gross fair value of 78,947 million yen (711 million U.S. dollars), and the revaluation of such shares resulted in a~~

~~pre-tax~~

unrealized gain, net of costs to be paid to Sony’s artists and distributed labels and other costs which directly related to the gains recognized from the revaluation of Spotify shares, of 47,543 million yen (449 million U.S. dollars) recorded in gain on equity securities, net in the consolidated statement of income.

~~During the fiscal year ended March 31, 2020,~~

~~Sony did 0t sell any portion of the Spotify shares that it owned. The~~

~~revaluation of the remaining Spotify shares retained as of March 31, 2020 resulted in a~~

~~pre-tax~~

~~unrealized loss, net of~~

~~a decrease in~~

~~costs to be paid to Sony’s artists and distributed labels, of 6,063 million yen (57 million U.S. dollars) recorded in loss on equity securities, net in the consolidated statements of income.~~

~~F-3~~

~~Table of Contents~~

~~SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES~~

~~The aggregate carrying amounts of securities that do not have readily determinable fair values~~

~~as of March 31, 2019 and 2020 totaled 25,720 million yen and 30,120 million yen, respectively. Sony recorded no upward adjustments~~

~~for securities that do not have readily determinable fair values~~

~~for~~

~~the fiscal year ended March 31, 2019~~

~~, and~~

~~upward adjustments of 1,070 million yen~~

~~for securities that do not have readily determinable fair values~~

~~for~~

the fiscal year ended March 31, 2020. Sony recorded downward adjustments (including impairments) of 4,285 million yen and 9,075 million yen for securities that do not have readily determinable fair values for the fiscal year

~~ended March 31, 2019 and 2020, respectively.~~

8.	~~Leases~~

~~Sony leases certain communication and commercial equipment, plant, office space, warehouses, employees’ residential facilities and other assets under both finance and operating leases.~~

~~(1)~~

~~Lease cost~~

~~The components of lease cost are as follows:~~


	~~Yen in millions~~
	Fiscal year ended March 31
	~~2020~~
~~Finance Lease cost~~
~~Amortization of~~ ~~right-of-use~~ ~~assets~~		~~10,077~~
~~Interest on lease liabilities~~		~~1,266~~

~~Total finance lease cost~~		~~11,343~~
~~Operating lease cost~~		~~76,863~~
~~Short-term lease cost~~		~~20,620~~
~~Variable lease cost~~		~~141~~
~~Sublease income~~		~~(3,860~~	)

~~Total lease cost~~		~~105,107~~

~~(2)~~

~~Supplemental~~

~~consolidated~~

~~balance sheet information related to leases~~

~~Supplemental consolidated balance sheet information related to leases is as follows:~~


	~~Yen in millions~~
	~~March 31~~
	~~2020~~
~~Finance leases~~
~~Current portion of long-term debt~~		~~9,240~~
~~Long-term debt~~		~~29,843~~

~~Total finance lease liabilities~~		~~39,083~~


~~Weighted average remaining lease term~~
~~Operating leases~~		~~9.91 years~~
~~Finance leases~~		~~8.61 years~~

~~Weighted average discount rate~~
~~Operating leases~~		~~3.147~~	%
~~Finance leases~~		~~2.338~~	%

~~F-3~~

~~Table of Contents~~

~~SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES~~

~~(3)~~

~~Rental payments and sublease rentals under operating leases~~

~~The minimum rental payments required under operating leases that have initial or remaining~~

~~noncancelable~~

~~lease terms in excess of one year at March~~

~~2019~~

~~are as follows:~~

Fiscal year ending March 31

Yen in millions

2020

58,901

2021

48,823

2022

34,726

2023

25,355

2024

22,152

Later fiscal years

78,507

Total minimum future rentals

268,464

Rental expenses under operating leases for the fiscal years ended March 31, 2018 and 2019 were 77,950 million yen and 71,516 million yen, respectively. Sublease rentals received under operating leases for the fiscal years ended March 31, 2018 and 2019 were 1,325 million yen and 1,013 million yen, respectively. The total minimum rentals to be received in the future under noncancelable subleases for operating leases as of March 31, 2019 were 1,598 million yen.

~~(4)~~

~~Maturities of lease liabilities~~

~~as of March 31, 2020~~

~~are as follows:~~

Yen in millions

Fiscal year ending March 31

Operating leases

Finance leases

2021

76,469

10,213

2022

69,606

7,323

2023

55,648

5,990

2024

40,303

4,689

2025

30,664

3,163

Later fiscal years

152,275

23,088

Total lease payments

424,965

54,466

Less imputed interest

41,187

15,383

Total

383,778

39,083

~~(5)~~

~~Other information~~

~~Other information related to leases is as follows:~~


	~~Yen in millions~~
	Fiscal year ended March 31
	~~2020~~
~~Cash paid for amounts included in the measurement of lease liabilities~~
~~Payments for operating leases, included in cash flows from operating activities~~		~~71,612~~
~~Payments for finance leases, included in cash flows from financing activities~~		~~33,088~~
~~Right-of-use~~ ~~assets obtained in exchange for new operating lease liabilities~~		~~124,380~~

~~F-3~~

~~Table of Contents~~

~~SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES~~

9.	~~Goodwill and other intangible assets~~

Intangible assets other than goodwill acquired during the fiscal year ended March 31, 2020 totaled 146,023 million yen, of which 145,596 million yen is subject to amortization, and are comprised of the following:

Intangible assets
acquired during the
fiscal year

Weighted-average

amortization period

Yen in millions

Years

Patent rights,
know-how
and license agreements

7,848

8

Software to be sold, leased or otherwise marketed

16,609

3

Internal-use
software

93,768

4

Music catalogs

19,837

14

Other

7,534

11

~~In the fiscal year ended March 31, 2020, additions to~~

~~internal-use~~

~~software primarily related to the capitalization of new software across several business platforms.~~

~~Intangible assets subject to amortization are comprised of the following:~~

Yen in millions

March 31, 2019

March 31, 2020

Gross carrying
amount

Accumulated
amortization

Gross carrying
amount

Accumulated
amortization

Patent rights,
know-how
and license agreements

169,761

(145,525
)
166,076

(146,051
)
Customer relationships

15,759

(11,825
)
16,104

(12,467
)
Trademarks

15,768

(9,863
)
11,152

(6,114
)
Software to be sold, leased or otherwise marketed

125,350

(96,322
)
141,111

(110,663
)
Internal-use
software

529,022

(345,935
)
594,109

(384,236
)
Music catalogs

615,206

(106,725
)
612,266

(124,787
)
Artist contracts

42,575

(29,108
)
41,764

(29,017
)
Television carriage contracts (broadcasting agreements)

74,605

(28,685
)
53,266

(21,645
)
Other

61,675

(49,288
)
64,456

(51,317
)

Total

1,649,721

(823,276
)
1,700,304

(886,297
)

The aggregate amortization expense for intangible assets for the fiscal years ended March 31, 2018, 2019 and 2020 was 123,450 million yen, 109,452 million yen and 110,819 million yen, respectively. The estimated aggregate amortization expense for intangible assets for the next five fiscal years is as follows:

Fiscal year ending March 31

Yen in millions

2021

97,978

2022

82,057

2023

66,079

2024

50,098

2025

38,658

~~F-3~~

~~Table of Contents~~

~~SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES~~

~~Total carrying amount of intangible assets having an indefinite life~~

~~comprised of the following:~~

Yen in millions

March 31

2019

2020

Trademarks

69,447

69,975

Distribution agreements

18,834

18,834

Other

3,240

3,494

Total

91,521

92,303

~~The changes in the carrying amount of goodwill by segment for the fiscal years ended March 31, 2019 and 2020 are as follows:~~

G&NS

Music

Pictures

EP&S

I&SS

Financial
Services

All
Other

Total

Balance, March 31, 2018:

Goodwill — gross

150,606

165,700

246,620

194,468

45,793

7,931

27,912

839,030

Accumulated impairments

—

(306
)
(102,208
)
(181,665
)
—

(706
)
(23,653
)
(308,538
)

Goodwill

150,606

165,394

144,412

12,803

45,793

7,225

4,259

530,492

Increase (decrease) due to:

Acquisitions
*

2,261

240,396

387

—

—

—

—

243,044

Sales and dispositions

—

—

—

—

—

—

—

—

Impairments

—

—

—

(776
)
—

—

(4,331
)
(5,107
)
Translation adjustments

1,088

(2,420
)
3,673

(73
)
771

—

72

3,111

Other

—

—

(2,988
)
—

—

—

—

(2,988
)

Balance, March 31, 2019:

Goodwill — gross

153,955

403,676

252,262

194,416

46,564

7,931

28,570

1,087,374

Accumulated impairments

—

(306
)
(106,778
)
(182,462
)
—

(706
)
(28,570
)
(318,822
)

Goodwill

153,955

403,370

145,484

11,954

46,564

7,225

—

768,552

Increase (decrease) due to:

Acquisitions
*

17,945

2,956

14,889

364

—

3,609

—

39,763

Sales and dispositions

—

—

(609
)
—

—

—

—

(609
)
Impairments

—

—

—

—

—

—

—

—

Translation adjustments

(926
)
(13,802
)
(5,410
)
(129
)
(372
)
—

—

(20,639
)
Other

—

(1,199
)
(1,980
)
—

—

—

—

(3,179
)

Balance, March 31, 2020:

Goodwill — gross

170,974

391,631

257,074

194,635

46,192

11,540

28,269

1,100,315

Accumulated impairments

—

(306
)
(104,700
)
(182,446
)
—

(706
)
(28,269
)
(316,427
)

Goodwill

170,974

391,325

152,374

12,189

46,192

10,834

—

783,888

Sony realigned its business segments from the first quarter of the fiscal year ended March 31, 2020. As a result of this realignment, the former HE&S, IP&S and MC segments have been realigned as the EP&S segment. In connection with this realignment, the carrying amounts of associated goodwill for the former HE&S, IP&S and MC segments have been reclassified to the EP&S segment for the fiscal years ended March 31, 2018 and 2019.table above. Refer to Note ~~29.~~

27.


	Yen in millions
	March 31
	2022		2023
Liabilities:
Financial liabilities required to be measured at AC
Short-term borrowings		1,976,553		1,914,934
Current portion of long-term debt		171,409		187,942
Trade and other payables
Trade payables		1,716,316		1,701,598
Other payables		126,926		162,475
Deposits from customers in the banking business *1		3,004,215		3,306,981
Long-term debt		1,203,646		1,767,696
Deferred consideration *2		—		87,937
Other financial liabilities		63,281		61,128
Financial liabilities required to be measured at FVPL
Other financial liabilities
Derivative liabilities		72,120		34,123
Contingent consideration		21,552		51,512
Financial liabilities designated to be measured at FVPL
Other financial liabilities
Redeemable noncontrolling interests		34,995		47,326

Total liabilities		8,391,013		9,323,652

Current liabilities		6,975,408		7,205,678
Non-current liabilities		1,415,605		2,117,974

Acquisitions for the fiscal year ended March 31, 2019 relate mainly to the acquisition of EMI Music Publishing in the Music segment. Acquisitions for the fiscal year ended March 31, 2020 relate mainly to the acquisition of Insomniac Games, Inc. in the G&NS segment, Silvergate Media in the Pictures segment and AEGON Sony Life Insurance Co., Ltd. and SA Reinsurance Ltd. in the Financial Services segment. Refer to Note 25.

~~10.~~1

~~Insurance-related accounts~~

Sony’s Financial Services segment subsidiaries in Japan maintain their accounting records as described in Note 2 in accordance with the accounting principles and practices generally accepted in Japan, which vary in some respects from U.S. GAAP.

~~Those differences are mainly that insurance acquisition costs for life and~~

~~non-life~~

~~insurance contracts are charged to income when incurred in Japan whereas in the United States those costs are deferred and amortized~~

~~F-3~~

~~Table of Contents~~

~~SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES~~

generally over the premium-paying period of the related insurance policies, and that future policy benefits for life insurance contracts calculated locally under the authorization of the supervisory administrative agencies are comprehensively adjusted using mainly the net level premium method with certain adjustments of actuarial assumptions for U.S. GAAP purposes. For the purpose of preparing the consolidated financial statements, appropriate adjustments have been made to reflect the accounting for these items in accordance with U.S. GAAP.

The combined amounts of statutory net equity of the insurance subsidiaries, which is not measured in accordance with U.S. GAAP, as of March 31, 2019 and 2020 were 548,730 million yen and 586,983 million yen, respectively.

~~(1)~~

~~Insurance policies~~

Life insurance policies that subsidiaries in the Financial Services segment underwrite, most of which are categorized as long-duration contracts, mainly consist of whole life, term life and accident and health insurance contracts. The life insurance revenues for the fiscal years ended March 31, 2018, 2019 and 2020 were 857,766 million yen, 910,011 million yen and 1,052,316 million yen, respectively. Property and casualty insurance policies that a subsidiary in the Financial Services segment underwrites are primarily automotive insurance contracts, which are categorized as short-duration contracts. The

~~non-life~~

~~insurance revenues for the fiscal years ended March 31, 2018, 2019 and 2020 were 105,497 million yen, 111,392 million yen and 115,730 million yen, respectively.~~

~~(2)~~

~~Deferred insurance acquisition costs~~

Amortization of deferred insurance acquisition costs charged to income for the fiscal years ended March 31, 2018, 2019 and 2020 amounted to 68,137 million yen, 79,906 million yen and 93,734 million yen, respectively.

~~At March 31, 2019 and 2020, the balances of deferred insurance acquisition costs of non-traditional life insurance contracts were~~

~~209,897 million yen and 206,363 million yen, respectively.~~

~~(3)~~

~~Future insurance policy benefits~~

~~Liabilities for future~~

~~insurance~~

~~policy benefits, except the portion of liabilities for minimum guarantee~~

benefits which is described below, which mainly relate to individual life insurance policies, are established in amounts adequate to meet the estimated future obligations of policies in force. These liabilities, which require significant management judgment and estimates, are computed by the net level premium method based upon the assumptions as to future investment yield, morbidity, mortality, withdrawals and other factors. Future policy benefits are computed using interest rates ranging from 0.5% to 4.5% and are based on factors such as market conditions and expected investment returns. Morbidity, mortality and withdrawal assumptions for all policies are based on either the subsidiary’s own experience or various actuarial tables. Generally these assumptions are

~~locked-in~~

~~throughout the life of the contract upon the issuance of new insurance, although significant changes in experience or assumptions may require Sony to provide for expected future losses.~~

Liabilities for future policy benefits includes the liabilities for the minimum guarantee benefits of variable annuities and variable life insurance contracts. The details regarding the minimum guarantee benefits are presented in (5) below. Sony elected the fair value option for certain of these liabilities for future insurance policy benefits. Refer to Note 13.

~~At March 31, 2019 and 2020, future insurance policy benefits amounted to 5,633,865 million yen and 6,237,048 million yen, respectively.~~

~~(4)~~

~~Policyholders’ account in the life insurance business~~

~~variable~~

~~life~~

~~insurance~~

~~contracts. The credited rates associated with interest sensitive whole life contracts range from 1.7% to 2.0%. For variable~~

~~life insurance~~

contracts, policy values are expressed in terms of investment units. Each unit is linked to an asset portfolio. The value of a unit increases or decreases based on the value of the linked asset portfolio. Investment contracts mainly include single payment endowment contracts, single payment educational endowment contracts, individual variable annuities and policies after the start of annuity payments.

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The credited rates associated with investment contracts, except for individual variable annuities, range from 0.01% to 6.3%. For individual variable annuities, policy values are expressed in terms of investment units. Each unit is linked to an asset portfolio. The value of a unit increases or decreases based on the value of the linked asset portfolio. The liabilities for policyholders’ account in the life insurance business includes the liabilities related to the variable annuities and variable life insurance contracts with minimum guarantee benefits. Sony elected the fair value option for certain of these liabilities for policyholders’ account in the life insurance business. Refer to Note 13.

~~Policyholders’ account in the life insurance business is comprised of the following:~~

Yen in millions

March 31

2019

2020

Universal life insurance

2,104,646

2,611,577

Investment contracts

816,903

885,690

Other

126,653

145,004

Total

3,048,202

3,642,271

~~(5)~~

~~Minimum guarantee benefit for variable annuities and variable life insurance contracts~~

Regarding variable annuities and variable life insurance contracts, minimum guarantee benefits (minimum death benefit, minimum accumulation benefit, etc.) are provided, and Sony bears the risk of fulfilling the minimum guarantee benefits prescribed in the contracts to policyholders. The fair value option is applied to the portion of the liability for variable annuity contracts with minimum guarantee benefits. Refer to Note 13. Excluding the portion of the liability measured at fair value, the liability for the minimum guarantee benefit is calculated based on the ratio of the present value of expected total excess payments divided by the present value of expected total assessments over the life of the contract. Mortality rates, lapse rates, discount rates and investment yield are used as significant assumptions for this calculation.

~~The policyholders’ account value, net amount at risk, liability for the minimum guarantee benefit, and average attained age at March 31, 2019 and 2020 are as follows.~~

Yen in million
s

March 31, 2019

Variable annuities

Variable life
insurance contracts

Total

Policyholder
s
’ account value

—

1,092,559

1,092,559

Net amount at risk

—

4,334,224

4,334,224

Liability for minimum guarantee benefit

—

63,423

63,423

	~~Age~~
	~~March 31 2019~~
	~~Variable annuities~~		~~Variable life~~ ~~insurance contracts~~
~~Average attained age~~		—		44

Yen in million
s

March 31
,
2020

Variable annuities

Variable life
insurance contracts

Total

Policyholder
s
’ account value

464,093

1,096,935

1,561,028

Net amount at risk

71,685

4,564,214

4,635,899

Liability for minimum guarantee benefit

64,045

79,860

143,905

Age

March 31 2020

Variable annuities

Variable life
insurance contracts

Average attained age

60

45

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~~11.~~

~~Short-term borrowings and long-term debt~~

~~Short-term borrowings are comprised of the following:~~

Yen in millions

March 31

2019

2020

Unsecured loans:

with a weighted-average interest rate of 2.52%

55,186

with a weighted-average interest rate of 0.86%

91,725

Repurchase agreement:

with a weighted-average interest rate of 0.56%

432,820

with a weighted-average interest rate of 0.93%

567,194

Secured call money:

with a weighted-average interest rate of 0.18%

130,612

with a weighted-average interest rate of 0.13%

151,257

618,618

810,176

At March 31, 2020, certain subsidiaries in the Financial Services segment pledged marketable securities and securities investments with a book value of 474,644 million yen as collateral for 567,194 million yen of short-term repurchase agreements. The repurchase agreement provides for net settlement upon a termination event.

At March 31, 2020, certain subsidiaries in the Financial Services segment pledged marketable securities and securities investments with a book value of 42,576 million yen as collateral for 151,257 million yen of secured call money.

In addition, certain subsidiaries in the Financial Services segment pledged marketable securities and securities investments with an aggregate book value of 12,445 million yen as collateral for cash settlements, variation margins of futures markets and certain other purposes.

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~~Long-term debt is comprised of the following:~~

Yen in millions

March 31

2019

2020

Unsecured loans, representing obligations principally to banks:

Due 2019 to 2024, with interest rates ranging from 0.01 % to 7.89 % per annum

57,321

Due 2020 to 2029, with interest rates ranging from 0.01 % to 5.10 % per annum

17,880

Unsecured 0.05% bonds, due 2019

69,964

Unsecured 2.07% bonds, due 2019

50,000

Unsecured 0.23% bonds, due 2021

89,819

89,894

Unsecured 0.11% bonds, due 2022

10,000

10,000

Unsecured 1.41% bonds, due 2022

10,000

10,000

Unsecured 0.28% bonds, due 2023

15,000

15,000

Unsecured 0.13% bonds, due 2024

29,886

Unsecured 0.22% bonds, due 2025

10,000

10,000

Unsecured 0.42% bonds, due 2026

24,911

24,923

Unsecured 0.18% bonds, due 2026

10,000

Unsecured 0.30% bonds, due 2029

59,738

Unsecured zero coupon convertible bonds, due 2022:

Conversion price 5,008.0 yen per common share

119,961

Conversion price 4,996.0 yen per common share

119,531

Secured 0.00% loans, due 2020 to 2023

200,003

201,205

Finance lease liabilities and
other*:

Due 2019 to 2048, with interest rates ranging from 0.36% to 9.14% per annum

72,991

Due 2020 to 2050, with interest rates ranging from 0.01% to 12.59% per annum

56,350

Guarantee deposits received

10,863

10,366

740,833

664,773

Less — Portion due within one year

172,461

29,807

568,372

634,966

*	~~Finance lease liabilities and other were represented as Capital lease obligations and other as of the fiscal year ended March 31, 2019.~~

At March 31, 2020, certain subsidiaries in the Financial Services segment pledged marketable securities and securities investments with a book value of 52,942 million yen and housing loans with a book value of 378,241 million yen as collateral for a 200,000 million yen long-term secured loan.

On July 21, 2015, Sony issued 120,000 million yen of 130% callable unsecured zero coupon convertible bonds with stock acquisition rights due 2022 (the “Zero Coupon Convertible Bonds”). The bondholders are entitled to stock acquisition rights effective from September 1, 2015 to September 28, 2022. The initial conversion price was 5,008.0 yen per common share. In addition to the standard anti-dilution provisions, the conversion price is reduced for a certain period before an early redemption triggered upon the occurrence of certain corporate events including a merger, corporate split and delisting event. The reduced amount of the conversion price will be determined by a formula that is based on the effective date of the reduction and Sony’s common stock price. The reduced conversion price ranges from 3,526.5 yen to 5,008.0 yen per common share. The conversion price is also adjusted for dividends in excess of 25 yen per common share per fiscal year. The conversion price has been adjusted to 4,982.5 yen per common share since June 10, 2020 because the payment of the total annual dividend per common share for the fiscal year ended March 31, 2020 was 45 yen, which is in excess of 25 yen. Sony has the option to redeem all of the Zero Coupon Convertible Bonds outstanding at 100% of the principal amount after July 21, 2020, if the closing sales price per share of Sony’s common stock on the Tokyo Stock Exchange is 130% or more of the conversion price of the Zero Coupon Convertible Bonds for 20 consecutive trading days. Sony was not required to bifurcate any of the embedded features contained in the Zero Coupon Convertible Bonds for accounting purposes. There are no significant adverse debt covenants under the Zero Coupon Convertible Bonds.

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~~In October 2019, Sony issued unsecured straight bonds in the aggregate principal amount of 100,000 million yen. Sony used all of the proceeds of the issued bonds for the repayment of debt.~~

~~There are no significant adverse debt covenants or cross-default provisions related to the other short-term borrowings and long-term debt.~~

~~Aggregate amounts of annual maturities of long-term debt are as follows:~~

Fiscal year ending March 31

Yen in millions

2021

29,807

2022

159,102

2023

229,617

2024

81,041

2025

43,923

Later fiscal years

121,283

Total

664,773

At March 31, 2020, Sony had unused committed lines of credit amounting to 518,147 million yen and can generally borrow up to 180 days from the banks with whom Sony has committed line contracts. Furthermore, at March 31, 2020, Sony ha

~~commercial paper programs totaling 1,044,150 million yen. Sony can issue commercial paper for a period generally not in excess of 270 days up to the size of the programs.~~

~~12.~~

~~Housing loans and deposits from customers in the banking business~~

~~(1)~~

~~Housing loans in the banking business~~

Sony acquires and holds certain financial receivables in the normal course of business. The majority of financing receivables held by Sony consists of housing loans in the banking business and no other significant financial receivables exist.

A subsidiary in the banking business monitors the credit quality of housing loans based on the classification set by the financial conditions and the past due status of individual obligors. Past due status is monitored on a daily basis and the aforementioned classification is reviewed on a quarterly basis.

The allowance for the credit losses is established based on the aforementioned classifications and the evaluation of collateral. The amount of housing loans in the banking business and the corresponding allowance for credit losses as of March 31, 2019 were 1,685,504 million yen and 829 million yen, respectively, and as of March 31, 2020 were 1,927,054 million yen and 780 million yen, respectively. During the fiscal years ended March 31, 2019 and 2020, charge-offs on housing loans in the banking business and changes in the allowance for credit losses were not significant.

~~The balance of housing loans placed on nonaccrual status or past due status were not significant as of March 31, 2019 and 2020.~~

~~(2)~~

Deposits from customers in the banking business include the

non-current

portion that is recorded within other financial liabilities in the consolidated statements of financial position.

All deposits from customers in the banking business within the Financial Services segment are interest bearing deposits. At March 31, 2019 and 2020, the balances of time deposits issued in amounts of 10 million yen or more were 292,968 million yen and 306,449 million yen, respectively. These amounts have been classified as current liabilities mainly due to the ability of the customers to make withdrawals prior to maturity.

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~~At March 31, 2020, aggregate amounts of annual maturities of time deposits with a remaining term of more than one year are as follows:~~

Fiscal year ending March 31

Yen in millions

2022

39,145

2023

16,102

2024

10,513

2025

3,238

2026

2,190

Later fiscal years

12,823

Total

84,011

~~13.~~*2

~~Fair value measurements~~Deferred consideration is recorded within other financial liabilities or trade and other payables in the consolidated statements of financial position.

~~As discussed in Note 2, assets and liabilities subject to the accounting guidance for fair value measurements held by Sony are classified and accounted for as described below.~~

~~(1)~~

(2)

~~Assets and liabilities that are~~

Financial instruments measured at fair value on a recurring basis

The following section describes the valuation techniques used by Sony to measure different financial instruments at fair value, including an indication of the level in the fair value hierarchy in which each instrument is generally classified.

Debt ~~securities,~~instruments and equity ~~securities, and other investments~~instruments

Where quoted prices of financial instruments are available in an active market, ~~securities~~these instruments are classified in ~~level~~Level 1 of the fair value hierarchy. Level 1 ~~securities~~financial instruments include exchange-traded ~~equities.~~equity instruments. If quoted market prices are not available for the specific ~~security~~financial instruments or the market is inactive, then fair values are estimated by using pricing models, quoted prices of ~~securities~~financial instruments with similar characteristics or discounted cash flows and mainly classified in ~~level~~Level 2 of the fair value hierarchy. Level 2 ~~securities~~financial instruments include debt ~~securities~~instruments with quoted prices that are not traded ~~less frequently than~~as actively as exchange-traded instruments, such as the majority of government bonds and corporate bonds. In certain cases where there is limited activity or less transparency around inputs to the valuation, ~~securities~~these instruments are classified within ~~level~~Level 3 of the fair value hierarchy. Level 3 ~~securities~~financial instruments primarily include ~~certain securitized products, certain hybrid financial instruments,~~ certain private equity investments, investment funds, securitized products which are not classified within Level 1 or Level 2 and ~~certain~~ domestic and foreign corporate bonds for which quoted prices are not available in a market and where there is less transparency around inputs. Sony estimates the fair value for private equity investments primarily by using comparable company analysis and discounted cash flow method. The price b

ok-value ratio and price earnings ratio of comparable companies, as well as cost of capital and EBITDA multiples for the terminal value used in

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discounted cash flow method, are primarily used as significant unobservable inputs in the fair value measurement of equity securities classified ~~within level 1~~as Level 3. The fair value increases (decreases) as the price book-value ratio and price earnings ratio of comparable companies rise (decline). In addition, the fair value increases (decreases), as the cost of capital declines (rises) and EBITDA multiples rise (decline), both of which are used in discounted cash flow. Sony estimates the fair value for certain investment funds by using the net asset value. Sony estimates the fair value for securitized products and domestic and foreign corporate bonds for which quoted prices are not available in a market and where there is less transparency around inputs by using third-party information such as indicative quotes from dealers without adjustment or ~~level 2.~~discounted cash flows. For validating the fair values of Level 3 financial instruments, Sony primarily uses internal models which include management judgment or estimation of assumptions that market participants would use in pricing the asset.

Derivatives

Exchange-traded derivatives valued using quoted prices are classified within ~~level~~Level 1 of the fair value hierarchy. However, few classes of derivative contracts are listed on an exchange; thus, the majority of Sony’s derivative positions are valued using internally developed models that use as their basis readily observable market parameters, ~~— i.e.,~~meaning parameters that are actively quoted and can be validated to external sources, including ~~industry~~ pricing services. Depending on the types and contractual terms of derivatives, fair value can be modeled using a series of techniques, such as the Black-Scholes option pricing model, which are consistently applied. ~~Where~~For derivative products that have been established for some time, Sony uses models that are widely accepted in the financial services industry. These models reflect the contractual terms of the derivatives, including the period to maturity, and market-based parameters such as interest rates, volatility, and the credit rating of the counterparty. Further, many of these models do not contain a high level of subjectivity as the techniques used in the models do not require significant judgment, and inputs to the model are readily observable from actively quoted markets. Such instruments are generally classified within ~~level~~Level 2 of the fair value hierarchy.

In determining the fair value of Sony’s interest rate swap derivatives, Sony uses the present value of expected cash flows based on market observable interest rate yield curves commensurate with the term of each instrument. For foreign currency derivatives, Sony’s approach is to use forward contract ~~and option~~ valuation models employing market observable inputs, such as spot currency rates and time ~~value and option volatilities.~~value. These derivatives are classified within ~~level~~Level 2 since Sony primarily uses observable inputs in its valuation of its derivative assets and liabilities.

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The fair value of Sony’s assets and liabilities that are measured at fair value on a recurring basis as of March 31, 2022 and 2023 is as follows:


	Yen in millions
	March 31, 2022
									Presentation in the consolidated statements of financial position
	Level 1		Level 2		Level 3		Total		Investments and advances in the Financial Services segment (Current)		Other financial assets (Current)		Investments and advances in the Financial Services segment (Non-current)		Other financial assets (Non-current)
Assets:
Financial assets required to be measured at FVPL
Debt securities
Japanese national government bonds		—		368,273		—		368,273		—		—		368,273		—
Japanese local government bonds		—		600		—		600		—		—		600		—
Japanese corporate bonds		—		15,350		18		15,368		—		—		15,317		51
Foreign government bonds		29,237		185,238		—		214,475		—		—		214,475		—
Foreign corporate bonds		—		—		117		117		—		—		—		117
Securitized products		—		—		3,713		3,713		—		—		3,713		—
Investment funds		—		377,004		48,520		425,524		3		—		409,676		15,845
Equity securities		1,906,244		9,349		3,217		1,918,810		—		—		1,798,536		120,274
Derivative assets
Interest rate contracts		—		26,795		—		26,795		—		32		—		26,763
Foreign exchange contracts		—		30,204		—		30,204		—		28,147		—		2,057
Equity contracts		—		—		4,024		4,024		—		3,669		—		355
Financial assets designated to be measured at FVPL
Debt securities
Japanese national government bonds		—		48,711		—		48,711		4,002		—		44,709		—
Japanese local government bonds		—		26,612		—		26,612		5,315		—		21,297		—
Japanese corporate bonds		—		7,228		—		7,228		3,907		—		3,321		—
Foreign government bonds		—		17,598		—		17,598		1,466		—		16,132		—
Foreign corporate bonds		—		163,395		3,625		167,020		33,690		—		133,330		—
Financial assets required to be measured at FVOCI
Debt securities
Japanese national government bonds		—		9,667,158		—		9,667,158		—		—		9,667,158		—
Japanese local government bonds		—		36,369		—		36,369		12,435		—		23,934		—
Japanese corporate bonds		—		746,223		154,245		900,468		10,257		—		890,211		—
Foreign government bonds		—		1,353,394		—		1,353,394		—		—		1,353,277		117
Foreign corporate bonds		—		318,699		20,837		339,536		65,000		—		274,131		405
Securitized products		—		41,982		39,859		81,841		—		—		81,841		—
Financial assets designated to be measured at FVOCI
Equity securities		106,499		—		205,509		312,008		—		—		8,016		303,992

Total assets		2,041,980		13,440,182		483,684		15,965,846		136,075		31,848		15,327,947		469,976


									Presentation in the consolidated statements of financial position
	Level 1		Level 2		Level 3		Total		Other financial liabilities (Current)		Other financial liabilities (Non-current)
Liabilities:
Financial liabilities required to be measured at FVPL
Derivative liabilities
Interest rate contracts		—		7,530		—		7,530		471		7,059
Foreign exchange contracts		—		36,582		—		36,582		36,582		—
Equity contracts		11,903		16,105		—		28,008		28,008		—
Contingent consideration		—		—		21,552		21,552		1,475		20,077
Financial liabilities designated to be measured at FVPL
Redeemable noncontrolling interests		—		—		34,995		34,995		2,435		32,560

Total liabilities		11,903		60,217		56,547		128,667		68,971		59,696

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	Yen in millions
	March 31, 2023
									Presentation in the consolidated statements of financial position
	Level 1		Level 2		Level 3		Total		Investments and advances in the Financial Services segment (Current)		Other financial assets (Current)		Investments and advances in the Financial Services segment (Non-current)		Other financial assets (Non-current)
Assets:
Financial assets required to be measured at FVPL
Debt securities
Japanese national government bonds		—		422,739		—		422,739		—		—		422,739		—
Japanese local government bonds		—		600		—		600		—		—		600		—
Japanese corporate bonds		—		16,872		38		16,910		—		—		16,872		38
Foreign government bonds		30,100		173,393		—		203,493		—		—		203,493		—
Foreign corporate bonds		—		5,515		3,377		8,892		—		—		5,515		3,377
Securitized products		—		—		—		—		—		—		—		—
Investment funds		—		367,193		60,796		427,989		—		—		410,499		17,490
Equity securities		2,236,646		5,217		6,789		2,248,652		—		—		2,123,062		125,590
Derivative assets
Interest rate contracts		—		43,844		—		43,844		—		438		—		43,406
Foreign exchange contracts		—		21,318		—		21,318		—		19,978		—		1,340
Equity contracts		290		—		4,692		4,982		—		4,982		—		—
Financial assets designated to be measured at FVPL
Debt securities
Japanese national government bonds		—		8,830		—		8,830		1,001		—		7,829		—
Japanese local government bonds		—		16,038		—		16,038		2,010		—		14,028		—
Japanese corporate bonds		—		3,315		—		3,315		—		—		3,315		—
Foreign government bonds		—		15,325		—		15,325		—		—		15,325		—
Foreign corporate bonds		—		141,857		3,541		145,398		21,227		—		124,171		—
Financial assets required to be measured at FVOCI
Debt securities
Japanese national government bonds		—		9,095,550		—		9,095,550		—		—		9,095,550		—
Japanese local government bonds		—		43,655		—		43,655		1,369		—		42,286		—
Japanese corporate bonds		—		736,204		171,622		907,826		6,815		—		901,011		—
Foreign government bonds		—		1,166,279		—		1,166,279		—		—		1,166,154		125
Foreign corporate bonds		—		307,717		24,672		332,389		46,367		—		286,022		—
Securitized products		—		29,697		40,591		70,288		—		—		70,288		—
Financial assets designated to be measured at FVOCI
Equity securities		103,270		—		324,028		427,298		—		—		5,453		421,845

Total assets		2,370,306		12,621,158		640,146		15,631,610		78,789		25,398		14,914,212		613,211


									Presentation in the consolidated statements of financial position
	Level 1		Level 2		Level 3		Total		Other financial liabilities (Current)		Other financial liabilities (Non-current)
Liabilities:
Financial liabilities required to be measured at FVPL
Derivative liabilities
Interest rate contracts		—		5,656		—		5,656		427		5,229
Foreign exchange contracts		—		19,876		—		19,876		18,679		1,197
Equity contracts		3,321		5,270		—		8,591		8,591		—
Contingent consideration		—		—		51,512		51,512		14,790		36,722
Financial liabilities designated to be measured at FVPL
Redeemable noncontrolling interests		—		—		47,326		47,326		—		47,326

Total liabilities		3,321		30,802		98,838		132,961		42,487		90,474

Cash and cash equivalents are excluded from the tables above. Refer to Note 27.

Transfers of debt securities from Level 2 to Level 1 were 1,953 million yen and 2,704 million yen for the fiscal years ended March 31, 2022 and 2023, respectively, as quoted prices in

acti

ve markets for certain debt securities became available. Transfers of debt securities from Level 1 to Level 2 were 2,523 million yen

and

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1,982 million yen for the fiscal years ended March 31, 2022 and 2023, respectively, as quoted prices in active markets for certain debt securities were not available.

Transfers of equity securities from Level 2 to Level 1 were 12,276 million yen and 24,958 million yen for the fiscal year

ended March 31, 2022 and 2023, respectively, as quoted prices in active markets for certain equity securities became available.

The valuation techniques used to measure the fair value of assets and liabilities classified as Level 3, significant unobservable inputs, and their range are as follows:

Valuation
technique(s)

Significant
unobservable
inputs

Range

March 31, 2022

March 31, 2023

Financial assets required to be measured at FVOCI

Debt securities

Japanese corporate bonds

Discounted cash
flow

Credit spread *

26bp-67bp

34bp-63bp

Foreign corporate bonds

0bp-170bp

10bp

Securitized products

100bp-160bp

150bp-190bp

*	bp = basis point

The decrease (increase) in fair value is the result of rise (decline) of credit spreads.

For the above assets classified as Level 3, the fair value would not change significantly, even if one or more of the significant unobservable inputs are changed to reflect reasonably possible alternative assumptions.

The changes in fair value of Level 3 assets and liabilities for the fiscal years ended March 31, 2022 and 2023 are as follows:


	Yen in millions
	Fiscal year ended March 31, 2022
			Total gains (losses) *1
	Beginning balance		Net income *2			Other comprehensive income *3			Purchases		Sales and settlements			Transfers into Level 3 *4		Transfers out of Level 3 *5			Other			Ending balance
Assets:
Financial assets required to be measured at FVPL
Debt securities
Japanese corporate bonds		62		—			—			20		—			—		(34	)		(30	)		18
Foreign corporate bonds		213		5			—			10		—			—		—			(111	)		117
Securitized products		6,142		—			—			—		(2,429	)		—		—			—			3,713
Investment funds		37,254		5,678			394			22,079		(16,885	)		—		—			—			48,520
Equity securities		3,172		(395	)		(15	)		477		(22	)		—		—			—			3,217
Derivative assets
Equity contracts		10,176		(6,629	)		477			—		—			—		—			—			4,024
Financial assets designated to be measured at FVPL
Debt securities
Foreign corporate bonds		—		337			—			—		—			3,288		—			—			3,625
Financial assets required to be measured at FVOCI
Debt securities
Japanese corporate bonds		93,288		(1	)		(13,006	)		73,964		—			—		—			—			154,245
Foreign corporate bonds		18,066		700			(5	)		12,000		(9,868	)		—		—			(56	)		20,837
Securitized products		9,402		279			(82	)		41,763		(10,625	)		3,166		(4,044	)		—			39,859
Financial assets designated to be me asured a t FVOCI
Equity securities		104,541		—			25,614			89,274		(5,825	)		63		(7,884	)		(274	)		205,509
Liabilities:
Financial liabilities required to be measured at FVPL
Contingent consideration		6,161		297			1,645			15,221		(1,762	)		—		—			(10	)		21,552
Financial liabilities designated to be measured at FVPL
Redeemable noncontrolling interests		8,179		2,008			2,978			27,240		(5,285	)		—		—			(125	)		34,995

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	Yen in millions
	Fiscal year ended March 31, 2023
			Total gains (losses) *1
	Beginning balance		Net income *2			Other comprehensive income *3			Purchases		Sales and settlements			Transfers to Level 3 *4		Transfers out of Level 3 *5			Other			Ending balance
Assets:
Financial assets required to be measured at FVPL
Debt securities
Japanese corporate bonds		18		—			—			20		—			—		—			—			38
Foreign corporate bonds		117		(14	)		—			3,434		(70	)		—		—			(90	)		3,377
Securitized products		3,713		—			—			—		(3,713	)		—		—			—			—
Investment funds		48,520		(2,541	)		395			17,254		(2,832	)		—		—			—			60,796
Equity securities		3,217		(413	)		—			4,021		(36	)		—		—			—			6,789
Derivative assets
Equity contracts		4,024		(393	)		356			705		—			—		—			—			4,692
Financial assets designated to be measured at FVPL
Debt securities
Foreign corporate bonds		3,625		(84	)		—			—		—			—		—			—			3,541
Financial assets required to be measured at FVOCI
Debt securities
Japanese corporate bonds		154,245		6			(30,203	)		47,574		—			—		—			—			171,622
Foreign corporate bonds		20,837		598			—			24,362		(21,125	)		—		—			—			24,672
Securitized products		39,859		(389	)		6			13,575		(15,048	)		6,712		(4,124	)		—			40,591
Financial assets designated to be measured at FVOCI
Equity securities		205,509		—			(24,913	)		143,611		(126	)		146		(600	)		401			324,028
Liabilities:
Financial liabilities required to be measured at FVPL
Contingent consideration		21,552		(475	)		1,240			43,455		(13,951	)		—		—			(309	)		51,512
Financial liabilities designated to be measured at FVPL
Redeemable noncontrolling interests		34,995		(1,410	)		2,877			13,670		(2,802	)		—		—			(4	)		47,326

*1	For liability items, gains are presented as negative and losses are presented as positive.

*2	Gains (losses) recognized in net income are includ ed in financ ial services revenue, other operating (income) expense, net, financial income and financial expenses in the consolidated statements of income.

Gains (losses) recognized in other comprehensive income are included in changes in equity instruments measured at fair value through other comprehensive income, changes in debt instruments measured at fair value through other comprehensive income and exchange differences on translating foreign operations in the consolidated statements of comprehensive income.

*4	Certain fi nancial assets were transferred to Level 3 because the observability of the inputs used decreased.

*5	Certain financial assets were transferred from Level 3 because observable market data became available.

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The changes in unrealized gains (losses) recognized in net income for Level 3 assets and liabilities held as of March 31, 2022 and 2023 are as follows:


	Yen in millions
	Fiscal year ended March 31
	2022			2023
Assets:
Financial assets required to be measured at FVPL
Debt securities
Foreign corporate bonds		5			(14	)
Investment funds		4,562			(2,420	)
Equity securities		98			(413	)
Derivative assets
Equity contracts		(6,629	)		(393	)
Financial assets designated to be measured at FVPL
Debt securities
Foreign corporate bonds		337			(84	)
Financial assets required to be measured at FVOCI
Debt securities
Japanese corporate bonds		—			6
Foreign corporate bonds		700			598
Securitized products		238			(389	)
Liabilities:
Financial liabilities required to be measured at FVPL
Contingent consideration		(513	)		(2,683	)
Financial liabilities designated to be measured at FVPL
Redeemable noncontrolling interests		(1,878	)		1,410

Gains (losses) recognized in net income are included in financial services revenue, other operating (income) expense, net, financial income and financial expenses in the consolidated statements of income.

Sony generally elects to designate investments in equity instruments held to promote its businesses and to maintain and enhance the business relationship as financial assets measured at fair value through other comprehensive income based on the purposes of holding the investments.

Equity instruments measured at fair value through other comprehensive income as of March 31, 2022 and 2023 comprise the following:


	Yen in millions
	March 31
	2022		2023
Marketable equity instruments		106,499		103,270
Non-marketable equity instruments		205,509		324,028

Total		312,008		427,298

Significant marketable equity instruments measured at fair value through other comprehensive income as of March 31, 2022 and 2023 are as follows:


	Yen in millions
	March 31
	2022		2023
Bilibili Inc.		54,162		54,214
Toei Animation Co., Ltd.		8,371		10,407
ANYCOLOR Inc.		—		10,061
KADOKAWA Corporation		9,161		8,017

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The balances of the

non-marketable

instruments measured at fair value through other comprehensive income by major sector categories as of March 31, 2022 and 2023 are as follows:


	Yen in millions
	March 31
	2022		2023
Entertainment *1		148,283		259,214
Manufacturing *2		35,406		35,182
Information technology, Communication and Service *3		20,327		27,136

*1	Major investments included Epic Games, Inc. and Scopely, Inc.

*2	Major investments included Nichia Corporation.

*3	Major investments included Semiconductor Energy Laboratory Co., Ltd.

In order to enhance the efficiency of using assets held effectively, Sony derecognizes equity instruments measured at fair value through other comprehensive income upon the sale of the investment. Information relating to investments derecognized during the fiscal years ended March 31, 2022 and 2023 is as follows:


	Yen in millions
	Fiscal year ended March 31
	2022		2023
Fair value at derecognition		11,015		625
Cumulative amount recognized in other comprehensive income, net of tax *		5,784		(298	)
Dividend received		70		8

*	The cumulative amount recognized in other comprehensive income, net of tax, was transferred to retained earnings upon derecognition of the equity instruments.

(3)	Financial instruments measured at amortized cost

The fair values by fair value hierarchy level of certain financial instruments that are measured at amortized cost as of March 31, 2022 and 2023 are summarized as follows:


	Yen in millions
	March 31, 2022
	Fair value								Carrying amount
	Level 1		Level 2		Level 3		Total		Total
Assets:
Debt securities
Japanese national government bonds		—		86,622		—		86,622		75,634
Japanese local government bonds		—		1,963		—		1,963		1,717
Japanese corporate bonds		—		3,727		—		3,727		3,583
Foreign corporate bonds		—		5,121		—		5,121		5,047
Securitized products		—		—		269,376		269,376		271,308
Other		—		41		909		950		949
Housing loans in the banking business		—		—		2,837,349		2,837,349		2,752,985

Total assets		—		97,474		3,107,634		3,205,108		3,111,223

Liabilities:
Long-term debt including the current portion		—		841,249		60,873		902,122		909,706

Total liabilities		—		841,249		60,873		902,122		909,706

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LID

ATED SUBSIDIARIES


	Yen in millions
	March 31, 2023
	Fair value								Carrying amount
	Level 1		Level 2		Level 3		Total		Total
Assets:
Debt securities
Japanese national government bonds		—		83,357		—		83,357		79,550
Japanese local government bonds		—		1,803		—		1,803		1,618
Japanese corporate bonds		—		3,337		—		3,337		3,483
Foreign corporate bonds		—		4,814		—		4,814		4,796
Securitized products		—		—		324,153		324,153		331,354
Other		—		41		1,173		1,214		1,224
Housing loans in the banking business		—		—		3,184,060		3,184,060		3,129,393

Total assets		—		93,352		3,509,386		3,602,738		3,551,418

Liabilities:
Long-term debt including the current portion		—		1,343,077		67,844		1,410,921		1,423,392

Total liabilities		—		1,343,077		67,844		1,410,921		1,423,392

The table above does not include financial instruments measured at amortized cost whose carrying amounts approximate their fair values mainly due to their short-term nature.

The fair values of long-term debt, including the current portion classified as Level 2, were estimated mainly based on discounted future cash flows using Sony’s current rates for similar liabilities.

Financial instruments classified as Level 3 mainly include housing loans in the banking business, securitized products and certain bonds issued by Sony. In determining the fair value of such financial instruments, Sony uses the present value of expected cash flows based on risk-free interest rate yield curves with certain credit risk.

(4)	Income and expenses related to financial instruments in the Financial Services segment

Income and expenses related to financial instruments in the Financial Services segment are recorded in financial services revenue and financial services expenses in the consolidated statements of income. Income and expenses related to financial instruments in all segments other than Financial Services segment are recorded in Financial income and Financial expenses in the consolidated statements of income. Refer to Note 24.

The breakdown of income and expenses related to financial instruments in the Financial Services segment for the fiscal years ended March 31, 2021, 2022 and 2023 is as follows:


	Yen in millions
	March 31, 2021
	Financial instruments required to be measured at FVPL		Financial instruments designated to be measured at FVPL		Financial assets measured at AC			Financial liabilities measured at AC			Debt instruments measured at FVOCI		Equity instruments measured at FVOCI		Total
Income
Net gains (losses) recognized in profit or loss		412,957		4,936		(14,069	)		(5,569	)		51,194		—		449,449
Total interest income		—		—		26,141			—			169,072		—		195,213
Dividend income		—		—		—			—			—		2		2
Expenses
Total interest expenses		—		—		—			4,577			—		—		4,577
Impairment losses (gains) on financial assets		—		—		(15	)		—			18		—		3

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	Yen in millions
	March 31, 2022
	Financial instruments required to be measured at FVPL		Financial instruments designated to be measured at FVPL			Financial assets measured at AC		Financial liabilities measured at AC			Debt instruments measured at FVOCI		Equity instruments measured at FVOCI		Total
Income
Net gains (losses) recognized in profit or loss		225,922		(6,673	)		14,765		(49,110	)		148,813		—		333,717
Total interest income		—		—			32,839		—			180,006		—		212,845
Dividend income		—		—			—		—			—		85		85
Expenses
Total interest expenses		—		—			—		3,838			—		—		3,838
Impairment losses (gains) on financial assets		—		—			19		—			24		—		43

	Yen in millions
	March 31, 2023
	Financial instruments required to be measured at FVPL		Financial instruments designated to be measured at FVPL			Financial assets measured at AC		Financial liabilities measured at AC			Debt instruments measured at FVOCI		Equity instruments measured at FVOCI		Total
Income
Net gains (losses) recognized in profit or loss		47,709		(2,493	)		14,944		(58,484	)		140,589		—		142,265
Total interest income		—		—			47,054		—			198,549		—		245,603
Dividend income		—		—			—		—			—		195		195
Expenses
Total interest expenses		—		—			—		29,774			—		—		29,774
Impairment losses (gains) on financial assets		—		—			144		—			8		—		152

6.	Financial risk management

(1)	Capital risk

Sony uses Return on Equity (“ROE”) as an indicator for capital risk management.


	March 31
	2022			2023
ROE*		12.8	%		13.0	%

*	ROE is calculated using equity attributable to Sony Group Corporation’s stockholders.

Sony manages capital separately for the Financial Services segment and the Sony Group without the Financial Services segment because certain subsidiaries in the Financial Services segment are subject to the below restrictions. Sony also refers to the ratio of stockholders’ equity to total assets of the Sony Group without the Financial Services segment to ensure financial soundness.

In the Financial Services segment, Sony is required to maintain the capital adequacy ratio and net assets at a certain level or higher based on the Insurance Business Act and the Banking Act in Japan. Material requirements which Sony is subject to are as follows:

Insurance business: Maintain solvency margin ratio

The life insurance subsidiary and the

non-life

insurance subsidiary have maintained a high solvency margin ratio, relative to the Japanese domestic minimum solvency margin ratio requirements.

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Banking business: Maintain capital adequacy ratio

The banking subsidiary has maintained a capital adequacy ratio relative to the Japanese domestic criteria.

Accordingly, lending and borrowing between subsidiaries in the Financial Services

segment and the other companies within Sony Group is strictly limited. The carrying amounts of total assets of Sony Financial Group Inc. (“SFGI”) as of March 31, 2022 and 2023 are 20,974,027 million yen and 20,805,535 million yen, respectively. Total liabilities of SFGI as of March 31, 2022 and 2023 are 18,392,874 million yen and 18,990,548 million yen, respectively.

(2)	Interest rate risk

For interest rate risk inherent in the insurance business, which is included in the Financial Services segment, refer to Note 13. For interest rate risk inherent in the banking business, which is included in the Financial Services segment, refer to (7) Market risks for the banking business.

Risk management policy and exposure

Interest rate risk is the risk the fair value of a financial instrument or future cash flows of the financial instrument will fluctuate because of changes in market interest rates.

Sony without the Financial Services segment is exposed to interest rate risk that is mainly related to its liabilities such as short-term borrowings and long-term debt as well as bonds. The amount of interest will be affected by changes in market interest rates; therefore, Sony is exposed to the interest rate risk that the future cash outflows for interest payments will fluctuate.

Sony raises funds by issuing fixed-rate bonds in order to avoid an increase in future interest payments that is mainly resulting from an increase in interest rates.

Also, Sony utilizes interest rate swap agreements to reduce funding costs, to diversify sources of funding, and to hedge the downside risk on borrowings and debt securities resulting from unfavorable fluctuations of interest rates and currency exchange rates, and from changes in the fair value of financial instruments. Therefore, the interest

rate

risk associated with cash flows of Sony without the Financial Services segment is not significant.

(3)	Price risk

For price risk inherent in the insurance business, which is included in the Financial Services segment, refer to Note 13. For price risk inherent in the banking business, which is included in the Financial Services segment, refer to (7) Market risks for the banking business.

Risk management policy and exposure

Sony is exposed to securities price risk inherent in holding of equities in other entities in Japan and overseas countries. Sony periodically assesses fair values of equity instruments and the financial conditions of the issuers of such equity instruments, and reviews its portfolio on a regular basis.

Price sensitivity analysis

The table below shows the effects on income before income taxes and other comprehensive income (before considering the tax effects) as of March 31, 2022 and 2023 if market prices of marketable equity instruments (e.g., stocks) had decreased by 10%.


	Yen in millions
	March 31
	2022			2023
Income before income taxes		(11,604	)		(11,734	)
Other comprehensive income (before considering the tax effects)		(9,871	)		(9,800	)

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(4)	Liquidity risk

For liquidity risk inherent in the insurance business, which is included in the Financial Services segment, refer to Note 13. This section does not include information regarding the insurance business other than maturity analysis for financial liabilities.

Risk management policy

The description below covers basic financial policy and figures for Sony’s consolidated operations except for the Financial Services segment and certain subsidiaries, which secure liquidity on their own. Furthermore, the banking business in the Financial Services segment is described separately at the end of this section.

Liquidity Management and Market Access

An important financial objective of Sony is to maintain the strength of its financial condition, while securing adequate liquidity for business activities. Sony defines its liquidity sources as the amount of cash and cash equivalents (“cash balance”) (excluding restrictions on capital transfers mainly due to national regulations) and the unused amount of committed lines of credit. Funding requirements that arise from maintaining liquidity are principally covered by cash flow from operating and investing activities (including asset sales) and by the available cash balance; however, Sony also raises funds as needed from financial and capital markets through means such as corporate bonds, commercial paper (“CP”) and bank loans. Sony Group Corporation, Sony Global Treasury Services Plc (“SGTS”), a finance subsidiary in the U.K. and Sony Capital Corporation (“SCC”), a finance subsidiary in the U.S., maintain CP programs with access to the Japanese, U.S. and European CP markets. The borrowing limits under these CP programs, translated into yen, were 1,166.3 billion yen in total for Sony Group Corporation, SGTS and SCC as of March 31, 2023. There were no amounts outstanding under the CP programs as of March 31, 2023. If disruption and volatility occur in financial and capital markets and Sony becomes unable to raise sufficient funds from these sources, Sony may also draw down funds from contractually committed lines of credit from various financial institutions. Sony has a total, translated into yen, of 641.5 billion yen in unused committed lines of credit, as of March 31, 2023. Details of those committed lines of credit are: a 275.0 billion yen committed line of credit contracted with a syndicate of Japanese banks, a 1.7 billion U.S. dollar

multi-currency

committed line of credit also contracted with a syndicate of Japanese banks and a 1,050 million U.S. dollar multi-currency committed line of credit contracted with a syndicate of foreign banks. Sony currently believes that it can sustain sufficient liquidity through access to committed lines of credit with financial institutions, together with its available cash balance, even in the event that financial and capital markets become illiquid. Sony considers one of management’s top priorities to be the maintenance of stable and appropriate credit ratings in order to ensure financial flexibility for liquidity and capital management and continued adequate access to sufficient funding resources in the financial and capital markets. However, in the event of a downgrade in Sony’s credit ratings, there are no financial covenants in any of Sony’s material financial agreements with financial institutions that would cause an acceleration of the obligation. Even though the cost of borrowing for some committed lines of credit could change according to Sony’s credit ratings, there are no financial covenants that would cause any impairment on the ability to draw down on unused facilities.

Cash Management

Sony manages its global cash management activities primarily through Sony Group Corporation in Japan, SCC in the U.S. and SGTS in other regions. The excess or shortage of cash at most of Sony’s subsidiaries is invested or funded by Sony Group Corporation, SGTS and SCC on a net basis, although Sony recognizes that fund transfers are limited in certain countries and geographic areas due to restrictions on capital transactions. In order to pursue more efficient cash management, cash surpluses among Sony’s subsidiaries are deposited with Sony Group Corporation, SGTS and SCC, and cash shortfalls among subsidiaries are covered by loans through Sony Group Corporation, SGTS and SCC, so that Sony can make use of excess cash balances and reduce third-party borrowings. Where local restrictions prevent an efficient intercompany transfer of funds, Sony’s intent is that cash balances remain outside of Sony Group Corporation, SGTS and SCC and that Sony meets its liquidity needs through ongoing cash flows, external borrowings, or both. Sony does not expect restrictions of capital transactions on amounts held outside of Japan to have a material effect on Sony’s overall liquidity, financial condition or results of operations.

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Banking business in the Financial Services segment

In the banking business in the Financial Services segment, by formulating and conforming with liquidity risk management policies, Sony manages a variety of liquidity risks. Sony defines liquidity risk as cash flow risk and market liquidity risk. Cash flow risk is the risk associated with losses due to Sony’s inability to make cash payments because of a failure to maintain sufficient cash reserves at settlement, as well as risks associated with losses if Sony is forced to raise funds under unfavorable conditions in order to fulfill cash payment obligations. The levels of cash flow risks are classified into phases based on the degree of pressure, and methods of risk management and reporting are set out for each phase, while guidelines are formulated and reviewed as necessary. Market liquidity risk is the risk associated with losses due to Sony’s inability to conduct market transactions, in particular due to an inability to unwind its market position at a given time, or due to Sony being forced to complete transactions under unfavorable market conditions, due to market turmoil or other factors. To manage market liquidity risk, Sony works to understand market liquidity conditions that pertain to the types of products it handles. Sony formulates and revises guidelines on a

product-by-product

basis, as necessary. To manage liquidity risk and ensure a robust liquidity buffer, Sony carries out stress tests regularly. Sony estimates potential cash outflow and determines the required buffer, if the liquidity stress scenario would happen. The liquidity buffer consists of highly liquid assets, such as cash and government bonds, which can be immediately converted to cash even in a liquidity crisis. The aforementioned liquidity risk management is carried out by the risk management division. The division periodically reports risk management conditions to the banking subsidiary’s Board of Directors and Executive Committee. In addition, the banking subsidiary’s internal audit division conducts regular audits.

Maturity analysis

The following table summarizes Sony’s financial liabilities as of March 31, 2022 and 2023.


	Yen in millions
	March 31, 2022
	Carrying amount		Total		Within 1 year		1 year to 2 years		2 years to 3 years		3 years to 4 years		4 years to 5 years		5+ years
Deposits from customers in the banking business *1		3,004,215		3,004,215		2,886,361		48,676		15,860		3,038		1,186		49,094
Bonds		216,103		218,676		36,976		25,363		40,326		20,303		35,243		60,465
Borrowings		2,670,156		2,687,135		2,053,340		58,767		76,434		115,460		23,813		359,321
Loan commitments		—		33,587		33,587		—		—		—		—		—
Derivative liabilities *2		72,120		72,118		66,017		688		718		753		721		3,221
Guarantee deposits received		39,296		39,296		28,872		345		27		8		8		10,036
Redeemable noncontrolling interests		34,995		37,046		2,435		19,927		9,046		2,381		—		3,257


	Yen in millions
	March 31, 2022
	Carrying amount	Total		Within 1 year		1 year to 2 years		2 years to 3 years		3 years to 4 years		4 years to 5 years
Lease liabilities	465,349		511,883		81,421		69,791		59,214		45,063		37,363
			5 years to 6 years		6 years to 7 years		7 years to 8 years		8 years to 9 years		9 years to 10 years		10+ years
			35,841		32,369		30,593		27,864		19,913		72,451

*1	Demand deposits are included in the “Within 1 year” category.

*2	Breakdown of net settlements and gross settlements in the derivative liabilities are presented below.

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	Yen in millions
	March 31, 2022
	Total		Within 1 year		1 year to 2 years		2 years to 3 years		3 years to 4 years		4 years to 5 years		5+ years
Derivative contracts
—Net settled
Paid		72,118		66,017		688		718		753		721		3,221
Derivative contracts
—Gross settled
Received		—		—		—		—		—		—		—
Paid		—		—		—		—		—		—		—


	Yen in millions
	March 31, 2023
	Carrying amount		Total		Within 1 year		1 year to 2 years		2 years to 3 years		3 years to 4 years		4 years to 5 years		5+ years
Deposits from customers in the banking business *1		3,306,981		3,316,556		3,171,377		30,215		14,933		1,060		2,410		96,561
Bonds		349,332		354,169		26,039		40,986		110,862		35,591		80,416		60,275
Borrowings		2,988,994		3,025,480		1,998,315		70,690		147,447		270,268		62,571		476,189
Loan commitments		—		35,831		35,831		—		—		—		—		—
Derivative liabilities *2		34,123		33,766		28,886		623		1,041		912		918		1,386
Guarantee deposits received		40,568		40,568		31,085		272		19		58		13		9,121
Redeemable noncontrolling interests		47,326		48,616		—		24,844		10,397		4,572		198		8,605


	Yen in millions
	March 31, 2023
	Carrying amount	Total		Within 1 year		1 year to 2 years		2 years to 3 years		3 years to 4 years		4 years to 5 years
Lease liabilities	532,246		593,967		90,244		80,476		68,143		55,189		47,665
		5 years to 6 years		6 years to 7 years		7 years to 8 years		8 years to 9 years		9 years to 10 years		10+ years
			56,603		37,539		34,588		25,798		18,384		79,338

*1	Demand deposits are included in the “Within 1 year” category.

*2	Breakdown of net settlements and gross settlements in the derivative liabilities are presented below.


	Yen in millions
	March 31, 2023
	Total		Within 1 year		1 year to 2 years		2 years to 3 years		3 years to 4 years		4 years to 5 years		5+ years
Derivative contracts
—Net settled
Paid		32,881		27,820		769		1,076		912		918		1,386
Derivative contracts
—Gross settled
Received		29,092		25,894		156		3,042		—		—		—
Paid		29,977		26,960		10		3,007		—		—		—

(5)	Foreign exchange risk

For foreign exchange risk inherent in the insurance business, which is included in the Financial Services segment, refer to Note 13. For foreign exchange risk inherent in the banking business, which is included in the Financial Services segment, refer to (7) Market risks for the banking business.

Risk management policy and exposure

Costs and prices of products and services in transactions denominated in foreign currencies are affected by currency exchange rate fluctuation, which may have adverse impacts on Sony’s business, operating results, and

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financial condition. Sony seeks to reduce its exposure to foreign exchange risk mainly by using derivatives such as currency forward contracts or investing in securities denominated in the same currency.

The net amount of Sony’s exposure to foreign exchange risk mainly includes the following. Foreign exchange risk exposures that are mitigated by the use of derivatives are excluded.


	Yen in millions
	March 31
	2022			2023
U.S. dollar		(6,384	)		45,316
Euro		(22,713	)		1,459

*	Net exposures resulting in a liability are presented as negative and net exposures resulting in an asset are presented as positive.

Sensitivity analysis

The table below shows the effects on the income before income taxes regarding the financial instruments denominated in foreign currencies held by Sony as of March 31, 2022 and 2023 if the Japanese yen had strengthened by 10% against the U.S. dollar or euro. If the Japanese yen had weakened by 10% against the U.S. dollar or euro, there would be an opposite impact on income before income taxes in the same amount. This analysis was performed based on the assumption that all other variables stay the same.


	Yen in millions
	March 31
	2022		2023
U.S. dollar		638		(4,532	)
Euro		2,271		(146	)

(6)	Credit risk

Risk management policy and exposure

Sony is exposed to credit risk in relation to its customers with outstanding trade receivables and the financial institutions who are the counterparties of derivative instruments that Sony holds to hedge the foreign exchange risk related to such trade receivables.

In order to manage risks inherent in trade receivables, Sony assesses management conditions and creditworthiness of prospective customers and sets credit limits before commencement of business in accordance with Sony’s internal rules regarding credit management. After commencement of business, in accordance with Sony’s internal rules regarding receivable management, Sony seeks to promptly identify and mitigate the risk of uncollectible receivables due to deterioration in the financial conditions of customers by managing payment due dates and outstanding balances by customer, consistently reviewing the status of transactions, payment history, and trends in the outstanding balance of customers, and actively monitoring their management and business conditions. Sony makes judgments about the creditworthiness of customers based on past collection experience, the current conditions, forecasts of future economic conditions and ongoing credit risk evaluations when calculating the loss allowances for the expected credit losses from trade receivables.

In addition, the credit risk inherent in derivative transactions is considered low since Sony enters into derivative transactions only with financial institutions with high creditworthiness or central clearing house counterparties, and such derivative transactions are collateralized.

The Financial Services segment formulates Fundamental Principles for Risk Management and manages risks depending on its subsidiaries’ size, characteristics and business. Risk Management Guidelines in the Financial Services segment establish a detailed framework for risk management, and each of the subsidiaries in the Financial Services segment has developed a framework for risk management on its own depending on the

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characteristics of financial assets, including issuer credit risk on debt securities, counterparty risks, credit screenings, the management of credit information, credit ratings, the setting of guarantees or collateral and handling of problem assets on a

case-by-case

basis. Relevant departments of subsidiaries in the Financial Services segment periodically report risk management conditions to their Boards of Directors and their Executive Committees.

Risk exposure analysis

(a)	Changes in the loss allowances

Trade and other receivables, and contract assets including

non-current

other receivables in the Pictures segment


	Yen in millions
	Lifetime expected credit losses
	Fiscal year ended March 31
	2022			2023
Balance at beginning of the fiscal year		30,066			31,341

Changes due to financial assets recognized at beginning of the fiscal year:
— Financial assets that have been derecognized		(935	)		(4,568	)
New financial assets originated or purchased		5,998			6,401
Write-offs		(9,501	)		(6,647	)
Changes in models/risk parameters		4,269			(1,409	)
Foreign exchange and other movements		1,444			2,416

Balance at end of the fiscal year		31,341			27,534

Debt Securities
	Yen in millions
	12-month expected credit losses *
	Fiscal year ended March 31
	2022			2023
Balance at beginning of the fiscal year		29			53

Changes due to financial assets recognized at beginning of the fiscal year:
— Financial assets that have been derecognized		(6	)		(4	)
New financial assets originated or purchased		44			13
Changes in models/risk parameters		(14	)		(1	)
Foreign exchange and other movements		—			—

Balance at end of the fiscal year		53			61

*	For all debt securities, Sony considers that the credit risk has not increased significantly since initial recognition, and therefore the loss allowance is measured at an amount equal to 12-months of expected credit losses.

Substantially all of the loss allowances for debt securities are for debt securities measured at fair value through other comprehensive income as of March 31, 2022 and 2023.

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Loans


	Yen in millions
	12-month expected credit losses			Lifetime expected credit losses			Total
Balance as of April 1, 2021		122			946			1,068
Changes due to financial assets recognized as of April 1, 2021:
— Transfer to lifetime expected credit losses		(1	)		1			—
— Transfer to 12-month expected credit losses		103			(103	)		—
— Financial assets that have been derecognized		(59	)		(97	)		(156	)
New financial assets originated or purchased		33			17			50
Changes in models/risk parameters		(34	)		163			129
Foreign exchange and other movements		—			—			—

Balance as of March 31, 2022		164			927			1,091

Changes due to financial assets recognized as of March 31, 2022:
— Transfer to lifetime expected credit losses		(1	)		1			—
— Transfer to 12-month expected credit losses		80			(80	)		—
— Financial assets that have been derecognized		(6	)		(285	)		(291	)
New financial assets originated or purchased		51			20			71
Changes in models/risk parameters		25			241			266
Foreign exchange and other movements		—			—			—

Balance as of March 31, 2023		313			824			1,137

Loans that are credit-impaired as of March 31, 2022 and 2023 were not significant.

(b)	Description of collateral held as security and other credit enhancements

Sony assesses creditworthiness of each customer on an individual project basis. When it is determined to extend credit to a customer, the amount of collateral to be obtained will be based on the credit assessment for the customer by management. Collateral held as security includes, but is not limited to the following:

Floating charges on all assets and businesses of the customer

Specific or related guarantees

Debt guarantees from customers and loan agreements with favorable and unfavorable covenant terms

The carrying amount of the financial assets, without taking into account any collateral held or credit enhancements, represents Sony’s maximum exposure to credit risk on these assets. For maximum exposure to credit risk of securities to which impairment requirements in IFRS 9 are not applied without taking into account any collateral held or other credit enhancements, refer to Note 5.

In the Financial Services segment, housing loans have sufficient collateral, which results in no significant loss allowance being recognized. In addition, certain securities received as collateral for short-term lending transactions are permitted to be sold or repledged. The fair value of the securities which were not sold or repledged as collateral was 530,589 million yen and 4,691 million yen as of March 31, 2022 and 2023, respectively. None of the securities were sold or repledged as collateral as of March 31, 2022 or 2023. The securities are not recognized in the consolidated statements of financial position until being sold or repledged as collateral.

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(c)	Credit risk exposure by risk rating grades

Credit risk exposure by risk rating grades as of March 31, 2022 and 2023, is as follows:

Trade and other receivables, and contract assets including

non-current

other receivables in the Pictures segment


	Yen in millions
	March 31
	2022		2023
Outstanding receivables by overview period of overdue (Gross carrying amount)
Not past due or due within 30 days		1,732,371		1,849,112
Due over 30 to 90 days		52,895		46,332
Due over 90 days		45,269		63,519

Total		1,830,535		1,958,963

Debt securities

Debt securities held in the Financial Services segment are substantially all composed of investment grade debt securities, and, as a financial instrument subject to IFRS 9 impairment requirements,

12-month

expected losses are recorded.

The following table shows an analysis of the gross carrying amount for debt securities measured at amortized cost or at fair value through other comprehensive income based on a credit rating system in the Financial Services segment, which is primarily a composite of external credit ratings as of March 31, 2022 and 2023.


	Yen in millions
	March 31
	2022		2023
Debt securities by credit ratings (Gross carrying amount)
AAA		488,275		559,271
AA		2,431,758		2,807,508
A		8,560,523		8,695,883
BBB		12,948		9,625
Other		32,422		6,434

Total		11,525,926		12,078,721

Loans

Loans held in the banking business in the Financial Services segment are regularly reassessed by the credit ratings of debtors, and as a financial instrument subject to IFRS 9 impairment requirements,

12-month

or lifetime expect

d credit losses are recorded depending on whether or not the credit risk has increased significantly since initial recognition or not.

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DATED SUBSIDIARIES

The following table shows an analysis of the gross carrying amount for loans measured at amortized cost based on credit ratings by debtors in the banking business in the Financial Services segment as of March 31, 2022 and 2023.


	Yen in millions
	March 31, 2022
	Normal*						Other than Normal						Total
	12-month expected credit losses		Lifetime expected credit losses		Sub total		12-month expected credit losses		Lifetime expected credit losses		Sub total		Total
Loans
Housing loans		2,747,406		156		2,747,562		2,532		3,423		5,955		2,753,517
Other		24,522		282		24,804		11		85		96		24,900

Total		2,771,928		438		2,772,366		2,543		3,508		6,051		2,778,417


	Yen in millions
	March 31, 2023
	Normal*						Other than Normal						Total
	12-month expected credit losses		Lifetime expected credit losses		Sub total		12-month expected credit losses		Lifetime expected credit losses		Sub total		Total
Loans
Housing loans		3,124,410		140		3,124,550		2,173		3,350		5,523		3,130,073
Other		16,852		242		17,094		4		74		78		17,172

Total		3,141,262		382		3,141,644		2,177		3,424		5,601		3,147,245

*	Normal is defined as borrowers who have strong results and no particular problems with their financial position.

(d)	Credit risk for debt securities designated to be measured at fair value through profit or loss

The credit risk exposures for debt securities designated to be measured at fair value through profit or loss were 267,169 million yen, and 188,906 million yen as of March 31, 2022 and 2023, respectively. The change in the fair value attributable to the changes in credit risk was an increase of 1,425 million yen for the fiscal year ended March 31, 2022 and an increase of 509 million yen for the fiscal year ended March 31, 2023. The cumulative changes are 2,026 million yen and 2,535 million yen as of March 31, 2022 and 2023, respectively.

(7)	Market risks for the banking business

In the banking business, by formulating and conforming with market risk management policies, Sony manages the risk of loss for when the value of assets and liabilities (including

off-balance-sheet

items), and income from assets and liabilities could be adversely affected by changes in various market risk factors, such as interest rates, exchange rates and stock prices. Market risk management policies specify details such as risk management methods and procedures. ALM and risk management policies are determined by the bank

ing

subsidiary’s Board of Directors. Based on these policies, an ALM committee and a risk management committee typically meet once each month to understand and confirm actual conditions and deliberate future measures and risk conditions. On a daily basis, the risk management division maintains an overall understanding of interest, exchange rates and duration of financial assets and liabilities, and monitors Value at Risk (“VaR”), which quantifies the maximum expected loss which could occur during a given holding period and at a given probability, and interest rate sensitivity analysis, and confirms regulatory compliance. Sony also conducts interest rate swaps and other derivative transactions to hedge against interest and exchange rate fluctuation risks. In the measurement of VaR, the historical method (time period: 250 days, confidence level: 99.0%) is used, and interest rate risk, exchange rate risk, and price risk are measured as the amount of market risk. The total market risk volume as of March 31, 2022 and 2023 was 8,230 million yen and 21,433 million yen, respectively. VaR employs statistical methods to estimate the maximum loss that could occur in a defined period of time in the future based on market fluctuation data for a defined period of time in the past; therefore, VaR may not capture the risk in situations in which the market environment undergoes drastic changes that are unpredictable under normal circumstances.

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(8)	Effect of IBOR reform

Due to the reform and replacement of benchmark interest rates such as the London Interbank Offered Rate (“LIBOR”), the use of other interbank offered rates (“IBORs”) has become a priority for global regulators. The use of panel-based LIBOR ceased as of December 2021, except for the use of certain U.S. dollar (“USD”) LIBORs. The

1-,

3-,

and 6-months panel-based USD LIBOR settings are expected to be abolished and lose their representativeness at the end of June 2023. The overnight and 12 months USD LIBOR settings will permanently cease immediately after June 2023. As of March 31, 2023, Sony has contracts that reference USD LIBOR.

As mentioned above, the JPY and GBP IBORs have been abolished on December 31, 2021 and replaced by alternative interest rates such as the Tokyo Overnight Average rate and the Sterling Overnight Index Average. Currently, the Secured Overnight Financing Rate (“SOFR”) is gradually replacing USD LIBOR as a reference rate. There remains key differences between USD LIBOR and SOFR. USD LIBOR is a “term rate,” which means that it is published for a specific borrowing period (such as three months or six months) and is “forward-looking,” because it is published at the beginning of the borrowing period. On the other hand, SOFR is currently a “backward-looking” rate, based on overnight rates from actual transactions, and is published at the end of the borrowing period. Furthermore, LIBOR includes a credit spread over the risk-free rate, while SOFR currently does not include such a spread. To transition existing contracts and agreements that reference USD LIBOR to SOFR, adjustments for term differences and credit differences need to be applied to SOFR, to enable the two benchmark rates to be economically equivalent on transition.

As of March 31, 2023, the Alternative Reference Rates Committee, a working group for a transition from USD LIBOR to a more robust reference rate, recommends SOFR instead of LIBOR. However, some market participants are calling for the use of credit sensitive rates (“CSRs”) that include a credit spread, and these rates might be used in addition to SOFR.

After 2021, Sony established a LIBOR transition project plan in the banking business. In the initial stages of this transition project, Sony planned for the transition out of LIBOR, including USD LIBOR. As the cessation date for the publication of major tenors of USD LIBOR has been set as the end of June 2023, the transition out of USD LIBOR has not been completed as of March 31, 2023. Sony is continuing to drive the transition project to meet the objective of moving out of LIBOR prior to the cessation date for the publication of USD LIBOR. This transition project considered changes to business processes, risk management and valuation models, as well as managing any related tax and accounting implications. As of March 31, 2023, changes to business processes and risk management are largely complete, except for some valuation model changes. However, some contractual changes, such as securities and derivatives transactions that reference USD LIBOR, have not yet been implemented. Therefore, there is a risk that Sony will not be able to make the necessary contractual changes before the end of June 2023, when the

1-,

3-,

and

6-months

panel-based USD LIBOR are abolished. In addition, CSRs, rather than SOFR, might be used as an alternative interest rate for debt securities, which would require the implementation of system changes in a short period of time. To avoid the above risks, Sony communicates closely with its counterparty. Sony is also flexible in responding to systemic issues through collaboration among project members and other departments.

Sony has a loan contract and interest swap agreement, related to the loan contract, aiming to manage certain borrowing costs, both of which reference USD LIBOR. From March 31, 2023 to the date of submission of this document, Sony has completed the execution of amendment agreements for the transition to alternative interest rate benchmarks for contracts that used USD LIBOR as a reference rate.

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The following table contains details of all of the financial instruments that Sony holds at March 31, 2023 which reference USD LIBOR and SOFR and have not yet transitioned to SOFR or an alternative interest rate benchmark:


	Yen in millions
	March 31, 2023
	Carrying Value			Of which have yet to transition to an alternative benchmark interest rate
Debt securities
Financial assets required to be measured at FVOCI		18,529			3,291
Financial assets required to be measured at AC		290,178			223,111
Long-term debt		(159,918	)		(159,918	)
Derivatives*		35,483			34,375

Total		184,272			100,859

*	Derivatives are presented on a net basis.

7.	Inventories

Inven

ries are comprised of the following:


	Yen in millions
	March 31
	2022		2023
Finished products		533,612		1,028,614
Work in process		163,206		244,140
Raw materials, purchased components and supplies		177,189		195,288

Inventories		874,007		1,468,042

For the fiscal year

ended March 31, 2021, 2022 and 2023 the write-downs of inventories

were 73,594 million yen, 80,546 million yen and 110,901 million yen, respectively.

For the fiscal years ended March 31, 2021, 2022, and 2023 the amounts of inventories expensed and included in cost of sales were 2,057,248 million yen, 2,495,769 million yen, and 3,317,553 million yen, respectively. Included within these amounts for the fiscal years ended March 31, 2021, 2022 and 2023 were employee benefits expenses of 269,428 million yen, 282,765 million yen and 238,133 million yen, respectively, and depreciation and amortization expenses of 192,760 million yen, 201,860 million yen and 189,230 million yen, respectively. Other cost of sales mainly consists of material costs, subcontractor costs and other professional service

fees.

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8.	Investments in associates and joint ventures

There are no associates or joint ventures that are individually material to Sony.

The carrying amounts of investments in associates and joint ventures that are not individually material to Sony, as of March 31, 2022 and 2023 are as follows:


	Yen in millions
	March 31
	2022		2023
Investments accounted for using the equity method
Associates		235,671		279,640
Joint ventures		32,842		45,580

Total		268,513		325,220

Sony’s

share of comprehensive income, profit or loss and other comprehensive income, of associates and joint ventures that are not individually material to Sony for the fiscal years ended March 31, 2021, 2022 and 2023 are as follows:


	Yen in millions
	Fiscal year ended March 31
	2021			2022		2023
Share of profit or loss
Associates		14,086			21,920		22,637
Joint ventures		(2,535	)		1,726		1,812

Total		11,551			23,646		24,449

Share of other comprehensive income
Associates		884			2,077		3,659
Joint ventures		1			1		40

Total		885			2,078		3,699

Share of comprehensive income
Associates		14,970			23,997		26,296
Joint ventures		(2,534	)		1,727		1,852

Total		12,436			25,724		28,148

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9.	Property, plant and equipment

The changes in property, plant and equipment for the fiscal years ended March 31, 2022 and 2023 are as follows:


	Yen in millions
	Land			Buildings			Machinery and equipment			Construction in progress			Total
Balance as of April 1, 2021:
Cost		76,077			755,115			1,864,034			102,310			2,797,536
Accumulated depreciation and impairment losses		(37	)		(491,156	)		(1,314,220	)		(1,582	)		(1,806,995	)

Carrying amount		76,040			263,959			549,814			100,728			990,541

Changes in carrying amount:
Additions		2,461			25,434			91,189			229,094			348,178
Acquisitions through business combinations		—			1,946			1,437			—			3,383
Reclassifications		24			48,600			134,660			(185,979	)		(2,695	)
Disposals or classified as held for sale *1		(1,628	)		(2,248	)		(4,690	)		(158	)		(8,724	)
Depreciation *2		—			(29,906	)		(205,920	)		—			(235,826	)
Impairment losses		—			(235	)		(579	)		(74	)		(888	)
Translation adjustment		1,226			9,640			7,032			1,036			18,934
Other		—			282			22			6			310

Total changes		2,083			53,513			23,151			43,925			122,672

Balance as of March 31, 2022:
Cost		78,160			832,785			1,953,985			145,940			3,010,870
Accumulated depreciation and impairment losses		(37	)		(515,313	)		(1,381,020	)		(1,287	)		(1,897,657	)

Carrying amount		78,123			317,472			572,965			144,653			1,113,213

Changes in carrying amount:
Additions		700			17,369			112,351			364,450			494,870
Acquisitions through business combinations		—			168			2,480			5,939			8,587
Reclassifications		75			75,608			232,218			(314,742	)		(6,841	)
Disposals or classified as held for sale *1		(876	)		(1,610	)		(2,793	)		(644	)		(5,923	)
Depreciation *2		—			(33,682	)		(234,530	)		—			(268,212	)
Impairment losses		—			(317	)		(570	)		(52	)		(939	)
Translation adjustment		1,232			8,931			5,315			531			16,009
Other		—			(4,636	)		(1,264	)		—			(5,900	)

Total changes		1,131			61,831			113,207			55,482			231,651

Balance as of March 31, 2023:
Cost		79,291			921,156			2,202,010			201,299			3,403,756
Accumulated depreciation and impairment losses		(37	)		(541,853	)		(1,515,838	)		(1,164	)		(2,058,892	)

Carrying amount		79,254			379,303			686,172			200,135			1,344,864

*1	An asset or disposal group for which the cash flows are expected to arise principally from sale rather than continuing use is classified to current asset as an asset held for sale.

Depreciation expenses are allocated to the cost of inventory and are recognized in cost of sales as inventory is sold, or are directly recognized in selling, general and administrative expenses and research and development expenditures in the consolidated statements of income, depending on the use of the asset.

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10.

Leases

Sony leases communication and commercial equipment, plant, office space, warehouses, employees’ residential facilities and other assets.

(1)	Right-of-use assets as a lessee

The changes in

right-of-use

assets for the fiscal years ended March 31, 2022 and 2023 are as follows:


	Yen in millions
	Land			Buildings			Machinery and equipment			Total
Balance as of April 1, 2021:
Carrying amount		15,394			327,350			15,290			358,034

Changes in the carrying amount
Increase due to new lease agreements and remeasurement of lease liabilities		2,908			104,456			12,816			120,180
Decrease due to termination of lease agreements and remeasurement of lease liabilities		(159	)		(5,685	)		(356	)		(6,200	)
Depreciation		(1,140	)		(72,944	)		(7,700	)		(81,784	)
Other		797			22,091			312			23,200

Net changes		2,406			47,918			5,072			55,396

Balance as of March 31, 2022:
Carrying amount		17,800			375,268			20,362			413,430

Changes in the carrying amount
Increase due to new lease agreements and remeasurement of lease liabilities		1,533			90,395			36,604			128,532
Decrease due to termination of lease agreements and remeasurement of lease liabilities		(3,323	)		(10,654	)		(214	)		(14,191	)
Depreciation		(1,171	)		(77,368	)		(7,808	)		(86,347	)
Other		399			35,422			818			36,639

Net changes		(2,562	)		37,795			29,400			64,633

Balance as of March 31, 2023:
Carrying amount		15,238			413,063			49,762			478,063

(2)	Income, expenses, and cash flows (except for depreciation) arising from lease contracts as a lessee and lessor are as follows:


	Yen in millions
	Fiscal year ended March 31
	2021			2022			2023

Interest expenses on lease liabilities		8,292			8,223			10,382
Expenses related to short-term leases accounted for applying an exemption		17,805			19,764			36,807
Income from subleases		(2,256	)		(2,256	)		(1,784	)
Net cash outflows for leases		81,399			83,546			89,681

Refer to Note 6 for the maturity analysis of Sony’s financial liabilities including lease liabilities.

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11.	Goodwill and intangible assets

(1)

Goodwill

The changes in goodwill for the fiscal years ended March 31, 2022 and 2023 are as follows:


	Yen in millions
	Fiscal year ended March 31
	2022			2023
Balance at beginning of the fiscal year
Cost		1,073,178			1,312,615
Accumulated impairments		(347,069	)		(359,720	)

Carrying amount		726,109			952,895

Increase (decrease) due to:
Acquisitions		197,644			274,499
Disposals or classified as held for sale *		(40,201	)		(445	)
Impairments		—			—
Translation adjustments		69,343			48,163
Other		—			—
Balance at end of the fiscal year
Cost		1,312,615			1,649,041
Accumulated impairments		(359,720	)		(373,929	)

Carrying amount		952,895			1,275,112

*	Disposals or classified as held for sale for the fiscal year ended March 31, 2022 relate mainly to the transfer of certain operations of Game Show Network, LLC, a wholly-owned subsidiary in the Pictures segment. Refer to Note 31 for the details of the transfer.

The carrying amounts of goodwill by segment as of March 31, 2022 and 2023 are as follows:


	Yen in millions
	March 31
	2022		2023
Game & Network Services *1		200,206		407,121
Music *2		539,055		579,969
Pictures *3		187,658		259,055
Entertainment, Technology & Services		11,949		14,654
Imaging & Sensing Solutions		3,193		3,479
Financial Services		10,834		10,834
All Other		—		—

Total		952,895		1,275,112

Game & Network Services

All of the goodwill shown in the G&NS line of the table above is allocated to a group of CGUs which comprise the entire G&NS segment.

Intangible assets with indefinite useful lives related to the G&NS business have carrying amounts of 57,217 million yen and 57,409 million yen, as of March 31, 2022 and 2023, 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 foreseeable future as well.

The recoverable amount of the group of CGUs 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

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cash flows are prepared based on the MRP. A terminal value after the final year of the total forecasted period is determined by utilizing a perpetual growth rate. The growth rate and the

pre-tax

discount rate were 1.5% and 9.6% as of March 31, 2022, and 1.5% and 10.8% as of March 31, 2023, respectively.

Music

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

Goodwill related to the worldwide recorded music CGU has carrying amounts of 235,746 million

yen

and 255,834 million yen, as of March 31, 2022 and 2023, 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 the MRP. A terminal value after the final year of the total forecasted period is determined by utilizing a perpetual growth rate. The growth rate and the

pre-tax

discount rate were 1.0% and 8.9% as of March 31, 2022, and 1.0% and 12.8% as of March 31, 2023, respectively.

Goodwill related to the music publishing CGU has carrying amounts of 270,116 million yen and 290,833 million yen, as of March 31, 2022 and 2023, 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 the MRP. A terminal value after the final year of the total forecasted period is determined by utilizing a perpetual growth rate. The growth rate and the

pre-tax

discount rate were 2.5% and 8.5% as of March 31, 2022, and 3.0% and 11.1% as of March 31, 2023, respectively

Pictures

Goodwill shown in the Pictures line of the table above is primarily allocated to the animation distribution CGU.

Goodwill related to the animation distribution CGU has carrying amounts of 102,590 million yen and 124,265 million yen, as of March 31, 2022 and 2023, 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 the MRP, with revenues in years beyond the MRP based on declining growth rates. A terminal value is based on a revenue multiple applied to the final year of the total forecasted period. The growth rates beyond the MRP period were 5.0% to 15.0% and 5.0% to 15.0%, and the

pre-tax

discount rate were 13.5% and 16.2% as of March 31, 2022 and 2023, respectively.

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.

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(2)	Content assets

The changes in content assets for the fiscal years ended March 31, 2022 and 2023 are as follows:


	Yen in millions
	Film costs			Broadcasting rights			Music catalogs			Artist contracts			Music distribution rights			Game content			Content assets Total
Balance as of April 1, 2021:
Cost		2,909,102			304,036			724,513			26,709			32,019			14,178			4,010,557
Accumulated amortization and impairment losses		(2,514,627	)		(239,403	)		(167,761	)		(14,232	)		(7,008	)		(4,979	)		(2,948,010	)

Carrying amount		394,475			64,633			556,752			12,477			25,011			9,199			1,062,547

Changes in carrying amount:
Additions*		313,648			75,841			87,350			2,209			—			20,997			500,045
Acquisitions through business combinations		11,724			32,124			28,194			—			9,760			10,797			92,599
Disposals or classified as held for sale		(932	)		(4,747	)		—			—			—			—			(5,679	)
Amortization		(294,350	)		(70,514	)		(25,182	)		(604	)		(1,648	)		(8,602	)		(400,900	)
Impairment losses		(13,870	)		(738	)		—			—			—			—			(14,608	)
Translation adjustment		42,782			4,619			57,676			1,161			938			866			108,042
Other		—			—			—			—			—			—			—

Total changes		59,002			36,585			148,038			2,766			9,050			24,058			279,499

Balance as of March 31, 2022:
Cost		3,549,934			395,045			914,418			30,278			43,219			46,086			4,978,980
Accumulated amortization and impairment losses		(3,096,457	)		(293,827	)		(209,628	)		(15,035	)		(9,158	)		(12,829	)		(3,636,934	)

Carrying amount		453,477			101,218			704,790			15,243			34,061			33,257			1,342,046

Changes in carrying amount:
Additions*		526,273			83,491			27,839			942			35			10,725			649,305
Acquisitions through business combinations		419			7			607			—			1,171			46,079			48,283
Disposals or classified as held for sale		(38,899	)		—			—			—			—			(7	)		(38,906	)
Amortization		(381,753	)		(76,824	)		(31,686	)		(1,285	)		(2,755	)		(15,820	)		(510,123	)
Impairment losses		(13,815	)		—			(236	)		—			—			(152	)		(14,203	)
Translation adjustment		27,228			4,665			50,980			1,086			937			294			85,190
Other		—			—			—			—			—			290			290

Total changes		119,453			11,339			47,504			743			(612	)		41,409			219,836

Balance as of March 31, 2023:
Cost		4,320,022			419,025			1,008,942			32,484			45,988			97,386			5,923,847
Accumulated amortization and impairment losses		(3,747,092	)		(306,468	)		(256,648	)		(16,498	)		(12,539	)		(22,720	)		(4,361,965	)

Carrying amount		572,930			112,557			752,294			15,986			33,449			74,666			1,561,882

The additions in Film costs include the cost of films internally produced and acquired from third party projects. Film costs acquired from third party projects are not a significant portion of Film costs recorded by Sony. The additions in Broadcasting rights, Music catalogs, Artist contracts and Music distribution rights mainly represent acquisitions through contracts with third parties. The additions in Game content primarily include externally acquired game content for the fiscal year ended March 31, 2022 and internally developed game content for the fiscal year ended March 31, 2023.

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(3) Other intangible assets

The changes in other intangible assets for the fiscal years ended March 31, 2022 and 2023 are as follows:


	Yen in millions
	Patent rights, know-how and license agreements			Customer relationships			Trademarks			Software			Television carriage contracts			Other			Total
Balance as of April 1, 2021:
Cost		218,192			41,494			24,250			827,210			55,752			148,729			1,315,627
Accumulated amortization and impairment losses		(200,406	)		(36,775	)		(6,397	)		(582,875	)		(27,162	)		(70,957	)		(924,572	)

Carrying amount		17,786			4,719			17,853			244,335			28,590			77,772			391,055
Changes in carrying amount:
Additions		4,668			639			158			93,642			—			3,538			102,645
Acquisitions through business combinations		2,488			19,121			7,076			6,895			—			8,132			43,712
Internal development		—			—			—			15,681			—			—			15,681
Disposals or classified as held for sale		(49	)		(565	)		(550	)		(2,599	)		—			(107	)		(3,870	)
Amortization		(5,576	)		(4,975	)		(1,875	)		(87,113	)		(3,361	)		(6,904	)		(109,804	)
Impairment losses		(6	)		—			(313	)		(3,218	)		—			(202	)		(3,739	)
Translation adjustment		216			2,146			2,280			5,534			2,829			1,577			14,582
Other		140			—			1			819			—			(1,119	)		(159	)

Total changes		1,881			16,366			6,777			29,641			(532	)		4,915			59,048

Balance as of March 31, 2022:
Cost		213,649			58,427			32,683			952,153			61,939			155,479			1,474,330
Accumulated amortization and impairment losses		(193,982	)		(37,342	)		(8,053	)		(678,177	)		(33,881	)		(72,792	)		(1,024,227	)

Carrying amount		19,667			21,085			24,630			273,976			28,058			82,687			450,103

Changes in carrying amount:
Additions		6,432			—			17			117,019			—			3,323			126,791
Acquisitions through business combinations		2,056			9,237			16,655			26,298			—			38,394			92,640
Internal development		—			—			—			19,835			—			—			19,835
Disposals or classified as held for sale		(8	)		(112	)		(14	)		(2,907	)		—			(129	)		(3,170	)
Amortization		(8,152	)		(9,437	)		(4,290	)		(94,821	)		(3,954	)		(14,566	)		(135,220	)
Impairment losses		(8	)		(93	)		—			(342	)		—			(66	)		(509	)
Translation adjustment		156			1,483			1,516			3,715			2,176			613			9,659
Other		(1,121	)		158			699			4,299			—			(322	)		3,713

Total changes		(645	)		1,236			14,583			73,096			(1,778	)		27,247			113,739

Balance as of March 31, 2023:
Cost		201,243			66,593			51,747			1,045,743			66,583			199,311			1,631,220
Accumulated amortization and impairment losses		(182,221	)		(44,272	)		(12,534	)		(698,671	)		(40,303	)		(89,377	)		(1,067,378	)

Carrying amount		19,022			22,321			39,213			347,072			26,280			109,934			563,842

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12.	Impairment of non-financial assets

There were no material impairment losses for the fiscal years ended March

, 2021, 2022 and 2023.

13.	Insurance-related accounts

(1)	Assets, liabilities, revenues and expenses included in the insurance business

Insurance policies

Life insurance policies that Sony underwrites in the life insurance business, which

are

included in the Financial Services segment, most of which are categorized as long-duration contracts, mainly consist of whole life, term life, disease and health insurance, variable life insurance and individual variable annuit

contracts. The life insurance revenues for the fiscal years ended March 31, 2021, 2022 and 2023 were 913,361 million yen, 943,092 million yen and 975,799 million yen, respectively. Property and casualty insurance policies that Sony underwrites in the

non-life

insurance business, which is included in the Financial Services segment, are primarily automotive insurance contracts, which are categorized as short-duration contracts. The

non-life

insurance revenues for the fiscal years ended March 31, 2021, 2022 and 2023 were 123,574 million yen, 132,908 million yen and 139,678 million yen, respectively.

The insurance contract liability in which an insured event has not occurred or a surrender option has not been exercised at the reporting date is classified as

non-current.

However, if either the insured event has occurred or the surrender option has been exercised, Sony would no longer have the right to defer payment of these amounts. Since the insurance contract liability would be due to be settled within twelve months after the reporting period, it is classified as current.

Deferred insurance acquisition costs

As of March 31, 2022 and 2023, the balances of deferred insurance acquisition costs

for

non-traditional

life insurance contracts were 261,475 million yen and 324,862 million yen, respectively.

Future insurance policy benefits

Liabilities for future insurance policy benefits, except the portion of liabilities for minimum guarantee benefits described below, which mainly relate to individual life insurance policies, are established in amounts adequate to meet the estimated future obligations of policies in force. These liabilities, which require significant management judgment and estimates, are computed by the net level premium method based upon the assumptions as to future investment yield, morbidity, mortality rates, lapse rates and other factors. Future insurance policy benefits are computed using interest rates ranging from 0.5% to 4.5% and are based on factors such as market conditions and expected investment returns. Morbidity, mortality rates and lapse rates used as assumptions for all policies are based on either the subsidiary’s own experience or various actuarial tables. Generally these assumptions are locked in throughout the life of the contract upon the issuance of new insurance contracts, although significant changes in experience or assumptions may require Sony to provide for expected future losses.

Liabilities for future insurance policy benefits include the liabilities for the minimum guarantee benefits of individual variable annuit

and variable life insurance contracts. The details regarding the minimum guarantee benefits are presented in “Minimum guarantee benefit for individual variable annuit

and variable life insurance contracts” below. Sony measures certain of these liabilities for future insurance policy benefits at fair value. Refer to (4).

Policyholders’ account in the life insurance business

Policyholders’ account in the life insurance business represents an accumulation of account deposits plus credited interest less withdrawals, expenses and mortality charges. Policyholders’ account in the life insurance business includes universal life insurance and investment contracts. Investment contracts are defined by the previous accounting practices in accordance with the provisions of IFRS 4. Universal life insurance includes interest sensitive whole life contracts and variable life insurance contracts. The credited rates associated with interest sensitive whole life contracts range from 1.7% to 2.0%. For variable life insurance contracts, policy values are expressed in terms of investment units. Each unit is linked to an asset portfolio. The value of a unit

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increases or decreases based on the value of the linked asset portfolio. Investment contracts mainly include single payment endowment contracts, single payment educational endowment contracts, individual variable annuity contracts and policies after the start of annuity payments. The credited rates associated with investment contracts, except for individual variable annuity contracts, range from 0.01% to 6.3%. For individual variable annuity contracts, policy values are expressed in terms of investment units. Each unit is linked to an asset portfolio. The value of a unit increases or decreases based on the value of the linked asset portfolio. The liabilities for policyholders’ account in the life insurance business includes the liabilities related to the individual variable annuit

and variable life insurance contracts with minimum guarantee benefits. Sony measures certain of these liabilities for policyholders’ account in the life insurance business at fair value. Refer to Note (4).

Policyholders’ account in the life insurance business is comprised of the following:


	Yen in millions
	March 31
	2022		2023
Universal life insurance		3,278,148		3,348,137
Investment contracts		1,393,257		1,715,921
Other		119,890		84,521

Total		4,791,295		5,148,579

Minimum guarantee benefit for individual variable annuit

and variable life insurance contracts

Regarding individual variable annuity and variable life insurance contracts, minimum guarantee benefits (minimum death benefit, minimum accumulation benefit, etc.) are provided, and Sony bears the risk of fulfilling the minimum guarantee benefits prescribed in the contracts to policyholders. The fair value measurement is applied to the liability for individual variable annuity contracts with minimum guarantee benefits. Refer to Note (4). Excluding the portion of the liability measured at fair value, the liabilities for the minimum guarantee benefits are calculated using current best-estimate assumptions and are based on the ratio of the present value of expected total excess payments divided by the present value of expected total assessments over the life of the contract. Mortality rates, lapse rates, discount rates and investment yield are used as significant assumptions for this calculation. The policyholders’ account value, net amount at risk, liability for the minimum guarantee benefit, and average attained age as of March 31, 2022 and 2023 are as follows:


	Yen in millions
	March 31, 2022
	Individual variable annuity contracts		Variable life insurance contracts		Total
Policyholders’ account value		467,924		1,686,488		2,154,412
Net amount at risk		58,961		6,361,770		6,420,731
Liability for minimum guarantee benefit		37,382		63,392		100,774


	Age
	March 31, 2022
	Individual variable annuity contracts		Variable life insurance contracts
Average attained age		63		45


	Yen in millions
	March 31, 2023
	Individual variable annuity contracts		Variable life insurance contracts		Total
Policyholders’ account value		419,628		1,778,451		2,198,079
Net amount at risk		78,322		7,727,061		7,805,383
Liability for minimum guarantee benefit		41,214		76,012		117,226

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	Age
	March 31, 2023
	Individual variable annuity contracts		Variable life insurance contracts
Average attained age		64		45

Shadow liability adequacy test in the life insurance business

When holding financial assets that are measured at fair value through other comprehensive income and correspond to insurance contract liabilities, shadow accounting is applied to evaluate insurance-related accounts as if the financial assets were sold as of the end of reporting period and valuation gains or losses were realized for the purpose of reducing the accounting mismatches between the insurance contract liabilities and the financial assets. Sony performs a shadow liability adequacy test on life insurance contracts quarterly.

Mortality rates, morbidity rates, lapse rates and discount rates are used as significant assumptions for this shadow liability adequacy test.

As a result of the shadow liability adequacy test, the net amounts of future insurance policy benefits minus deferred insurance acquisition costs were recorded at a sufficient level as of March 31, 2022 and 2023, and accordingly, a decrease of deferred insurance acquisition costs and an increase of future insurance policy benefits were not recorded as of those dates.

(2)	Changes in insurance contract liabilities and deferred insurance acquisition costs

Changes in insurance contract liabilities

The changes in insurance contract liabilities are as follows:


	Yen in millions
	Future insurance policy benefits and other			Policyholders’ account in the life insurance business			Total
Balance as of April 1, 2021		6,749,450			4,328,894			11,078,344

Current portion *1		134,865			—			134,865
Non-current portion		6,614,585			4,328,894			10,943,479

Net premiums		813,856			468,299			1,282,155
Insurance liabilities released		(539,586	)		(251,169	)		(790,755	)
Unwind of discount and actuarial items *2		149,869			201,797			351,666
Changes in valuation of expected future benefits		(11,144	)		946			(10,198	)
Shadow accounting adjustments		(15,692	)		(3,169	)		(18,861	)
Other		(65,198	)		29,328			(35,870	)
Currency exchange rate fluctuations		110,485			16,369			126,854

Balance as of March 31, 2022		7,192,040			4,791,295			11,983,335

Current portion *1		153,006			—			153,006
Non-current portion		7,039,034			4,791,295			11,830,329

Net premiums		821,226			594,239			1,415,465
Insurance liabilities released		(778,728	)		(261,212	)		(1,039,940	)
Unwind of discount and actuarial items *2		151,058			(31,604	)		119,454
Changes in valuation of expected future benefits		7,378			12,142			19,520
Shadow accounting adjustments		2,083			(4,694	)		(2,611	)
Other		(76,745	)		38,177			(38,568	)
Currency exchange rate fluctuations		108,200			10,236			118,436

Balance as of March 31, 2023		7,426,512			5,148,579			12,575,091

Current portion *1		162,091			—			162,091
Non-current portion		7,264,421			5,148,579			12,413,000

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The current portion of future insurance policy benefits and other is included in other current liabilities in the consolidated statements of financial position.

Mainly includes interests credited to reserves, expenses and mortality charges.

Changes in deferred insurance acquisition costs

The changes in deferred insurance acquisition costs are as follows:


	Yen in millions
	Fiscal year ended March 31
	2022			2023
Balance at beginning of the fiscal year		631,231			683,836

Current portion*		7,245			7,310
Non-current portion		623,986			676,526

New deferred insurance acquisition costs		109,320			110,108
Amortization amount for current period		(69,237	)		(84,523	)
Shadow accounting adjustments		4,505			20,604
Currency exchange rate fluctuations		8,017			7,988

Balance at end of the fiscal year		683,836			738,013

Current portion*		7,310			7,149
Non-current portion		676,526			730,864

The current portion of deferred insurance acquisition costs is included in other current assets in the consolidated statements of financial position.

(3)	Significant assumptions regarding insurance contracts

Significant assumptions

The significant assumptions and the ranges used to measure the insurance contract liabilities as of March 31, 2022 and 2023 are as follows:


	Fiscal year ended March 31
	2022		2023
Discount rate		(0.075%)-6.25%		(0.115%)-6.25%

Other significant assumptions are mortality rates and lapse rates.

Impact from changes made to assumptions


	Yen in millions
	Fiscal year ended March 31
	2022			2023
Impact on gains (losses)		6,643			15,640
Changes in economic assumptions		7,091			15,378
Changes in non-economic assumptions		(448	)		262
Impact on capital		18,087			31,244
Changes in economic assumptions		16,874			30,858
Changes in non-economic assumptions		1,213			386

Economic assumptions including discount rates and

non-economic

assumptions including mortality rates and morbidity rates, lapse rates, and operating expense rates are developed based on best estimates by product as of each cutoff date. Best-estimate assumptions are developed to reflect past and current experiences as well as expected experiences in the future. Expected future changes in assumptions should be reflected only when they are supported by sufficient rationales. Except for a deteriorating trend in mortality rates and morbidity rates, no other expected future changes are assumed in the best-estimate assumptions applied.

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(4)	Insurance-related accounts measured at fair value

In determining the fair value of future insurance policy benefits and policyholders’ account in the life insurance business to which Sony ~~applies the~~measures at fair value, ~~option,~~ Sony uses the present value of future expected cash flows based on mortality rates, lapse rates, discount rates, investment yield and various actuarial assumptions. These are classified within ~~level~~Level 3 of the fair value hierarchy since Sony primarily uses unobservable inputs in its valuation.

~~In determining the fair value of liability for the minimum guarantee benefits of variable annuities, Sony uses mortality rates (0.004%~44.865%), lapse rates (1.000~~

~~~7.500%), and discount rates (-0.061%~1.433%) as significant unobservable inputs. The fair value of the minimum guarante~~

~~accumulation benefits, which is the primary minimum guarantee risk, generally declines with higher mortality rates, higher lapse rates, or higher discount rates.~~

The fair value of ~~Sony’s assets and liabilities that are measured at fair value on a recurring basis at March 31, 2019 and 2020 are as follows.~~

Yen in millions

March 31, 2019

Presentation in the consolidated balance sheets

Level 1

Level 2

Level 3

Total

Marketable
securities

Securities
investments
and other

Other
current
assets

Other
noncurrent
assets

Assets:

Debt securities

Trading securities

22,105

212,012

—

234,117

234,117

—

—

—

Available-for-sale
securities

Japanese national government bonds

—

1,643,589

—

1,643,589

18,719

1,624,870
��
—

—

Japanese local government bonds

—

67,497

—

67,497

7,768

59,729

—

—

Japanese corporate bonds

—

219,388

—

219,388

11,472

207,916

—

—

Foreign government bonds
*1

—

161,495

—

161,495

3,984

157,511

—

—

Foreign corporate bonds
*2

—

338,163

22,704

360,867

90,801

270,066

—

—

Securitized products
*3

—

25,029

165,083

190,112

—

190,112

—

—

Other

—

4,688

—

4,688

—

4,688

—

—

Equity securities

1,037,100

135,794

—

1,172,894

951,390

221,504

—

—

Other investments
*4

5,489

1,507

6,918

13,914

—

13,914

—

—

Derivative assets
*5

444

10,042

—

10,486

—

—

9,431

1,055

Total assets

1,065,138

2,819,204

194,705

4,079,047

1,318,251

2,750,310

9,431

1,055

Presentation in the consolidated balance sheets

Level 1

Level 2

Level 3

Total

Future insurance policy benefits

Policyholders’ account

Other current liabilities

Other noncurrent liabilitie
s

Liabilities:

Derivative liabilities
*5

136

32,686

—

32,822

—

—

19,852

12,970

Total liabilities

136

32,686

—

32,822

—

—

19,852

12,970

~~F-4~~

~~Table of Contents~~

~~SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES~~

Yen in millions

March 31, 2020

Presentation in the consolidated balance sheets

Level 1

Level 2

Level 3

Total

Marketable
securities

Securities
investments
and other

Other
current
assets

Other
noncurrent
assets

Assets:

Debt securities

Trading securities

24,330

245,790

—

270,120

270,120

—

—

—

Available-for-sale
securities

Japanese national government bonds

—

1,761,929

—

1,761,929

10,011

1,751,918

—

—

Japanese local government bonds

—

69,172

—

69,172

15,334

53,838

—

—

Japanese corporate bonds

—

220,679

30

220,709

14,774

205,935

—

—

Foreign government bonds
*1

—

279,777

—

279,777

2,690

277,087

—

—

Foreign corporate bonds
*2

—

343,980

15,770

359,750

94,156

265,594

—

—

Securitized products
*3

—

33,383

171,840

205,223

—

205,223

—

—

Other

—

4,152

12,101

16,253

—

16,253

—

—

Equity securities

950,744

581,642

—

1,532,386

1,434,612

97,774

—

—

Other investments
*4

7,162

816

9,242

17,220

—

17,220

—

—

Derivative assets
*5

1,310

41,073

—

42,383

—

—

40,784

1,599

Total assets

983,546

3,582,393

208,983

4,774,922

1,841,697

2,890,842

40,784

1,599

Presentation in the consolidated balance sheets

Level 1

Level 2

Level 3

Total

Future
insurance
policy
benefits

Policyholders’
account

Other
current
liabilities

Other
noncurrent
liabilities

Liabilities:

Future insurance policy benefits and policyholders’ account in the life insurance business
*6

—

—

532,191

532,191

64,045

468,146

—

—

Derivative liabilities
*5

2,077

33,789

—

35,866

—

—

16,814

19,052

Total liabilities

2,077

33,789

532,191

568,057

64,045

468,146

16,814

19,052

4,910 million yen and 7,771 million yen are included in foreign securities for which the fair value option has been elected and classified in level 2 for the fiscal years ended March 31, 2019 and 2020

In the consolidated balance sheets, 2,386 million yen are included as marketable securities for the fiscal years ended March 31, 2020 and 4,910 million yen and 5,385 million yen are included as securities investment and other for the fiscal years ended March 31, 2019 and 2020, respectively.

173,964 million yen and 188,426 million yen are included in foreign securities for which the fair value option has been elected and classified in level 2 for the fiscal years ended March 31, 2019 and 2020, respectively. In the consolidated balance sheets, 33,391 million yen and 34,502 million yen are included as marketable securities and 140,573 million yen and 153,924 million yen are included as securities investment and other for the fiscal years ended March 31, 2019 and 2020, respectively.

185,195 million yen and 193,430 million yen are included in foreign securities for which the fair value option has been elected and classified in level 2 and level 3 for the fiscal years ended March 31, 2019 and 2020, respectively, and are included in the consolidated balance sheets as securities investments and other.

*4	~~Other investments include certain hybrid financial instruments and certain private equity investments.~~

~~F-4~~

~~Table of Contents~~

~~SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES~~

*5	~~Derivative assets and liabilities are recognized and disclosed on a gross basis.~~

*6	~~Future insurance policy benefits and policyholders’ account in the life insurance business are those for which the fair value option has been elected.~~

~~Net gains of 85 million yen and net loss of 12,408 million yen arising from~~

~~assets and liabilities~~

for which the fair value option has been elected are included in financial services revenue and financial services expense in the consolidated statements of income for the fiscal years ended March 31, 2019 and 2020, respectively.

Transfers into level 1 were 1,769 million yen and 4,395 million yen for the fiscal years ended March 31, 2019 and 2020, respectively, as quoted prices for certain trading debt securities and equity securities became available in an active market. Transfers out of level 1 were 2,508 million yen and 3,216 million yen for the fiscal years ended March 31, 2019 and 2020, respectively, as quoted prices for certain trading debt securities were not available in an active market.

~~The changes in fair value of level 3 assets and liabilities for the fiscal years ended March 31, 2019 and 2020 are as follows:~~

Yen in millions

Fiscal year ended March 31, 2019

Assets

Liabilities

Debt securities

Future
insurance
policy benefits
and
Policyholders’
account

Available-for-sale securities

Japanese
corporate
bonds

Foreign
corporate
bonds

Securitized
products

Other

Other
investments

Beginning balance

—

27,878

83,614
—
9,104

—

Total realized and unrealized gains (losses):

Included in earnings
*1

—

465

562
—
276

—

Included in other comprehensive income

(loss)
*2

—

131

1

—

—

—

Purchases and Issuances

—

5,787

94,696
—
4

—

Sales

—

—

—
—
(6
)
—

Settlements

—

(10,435
)
(13,601
) —
(2,460
)
—

Transfers into level 3
*3

—

20,863

5,284
—
—

—

Transfers out of level 3
*4

—

(21,985
)
(5,473
) —
—

—

Ending balance

—

22,704

165,083

—

6,918

—

Changes in unrealized gains (losses)

relating

to

instruments
still held at

reporting date:

Included in earnings
*1

—

219

510

—

441

—

F-

~~Table of Contents~~

~~SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES~~

Yen in millions

Fiscal year ended March 31, 2020

Assets

Liabilities

Debt securities

Future
insurance
policy benefits
and
Policyholder
s
’

account

Available-for-sale securities

Japanese
corporate
bonds

Foreign
corporate
bonds

Securitized
products

Other

Other
investments

Beginning balance

—

22,704

165,083
—
6,918

—

Acquisition of AEGON Sony Life Insurance Co.,

Ltd. and
SA Reinsurance Ltd.
*5

—

—

—
—
—

547,190

Total realized and unrealized gains (losses):

Included in earnings
*1

—

311

(18,151
) —
(500
)
12,500

Included

in

other

comprehensive

income

(loss)
*2

—

(73
)
1

—

—

3,032

Purchases and Issuances

30

13,597

40,175
12,101
4,711

5,295

Sales

—

—

—
—
(9
)
—

Settlements

—

(20,867
)
(12,967
) —
(1,878
)
(4,762
)
Transfers into level 3
*3

—

3,374

—
—
—

—

Transfers out of level 3
*4

—

(3,276
)
(2,301
)

—

—

—

Ending balance

30

15,770

171,840

12,101

9,242

532,191

Changes in unrealized gains (losses) relating to instruments still held at reporting date:

Included in earnings
*1

—

(94
)
(16,507
) —
(376
)
10,273

~~Earning effects are included in financi~~

~~l services revenue and financial services expense in the consolidated statements of income.~~

Unrealized gains (losses) are included in unrealized gains (losses) on securities, net for available-for-sale securities and included in debt valuation adjustments for future insurance policy benefits and policyholders’ account in the consolidated statements of comprehensive income.

Certain corporate bonds and certain securitized products were transferred into level 3 because differences between the fair value determined by indicative quotes from dealers and the fair value determined by internally developed prices became significant and the observability of the inputs used decreased.

~~Certain corporate bonds and certain securitized products were transferred out of level 3 because observable market data became available.~~

~~Refer to Note 25~~

~~Level 3~~

assets include certain securitized products, certain private equity investments, and certain domestic and foreign corporate bonds for which quoted prices are not available in a market and where there is less transparency around inputs. In determining the fair value of such assets, Sony uses third-party information such as indicative quotes from dealers without adjustment. Level 3 liabilities include future insurance policy benefits and policyholders’ account in the life insurance business ~~whose underlying figures~~as of March 31, 2022 and 2023 is as follows:


	Yen in millions
	Fair value		Presentation in the consolidated statements of financial position
	Fair value		Future insurance policy benefits and other		Policyholders’ account in the life insurance business
March 31, 2022		507,699		37,382		470,317
March 31, 2023		462,684		41,214		421,470

The valuation techniques, significant unobservable inputs, and the ranges used to measure the fair value of the future insurance policy benefits and policyholders’ account in the life insurance business as of March 31, 2022 and 2023 are ~~unobservable, and whose~~as follows:


Valuation techniques	Significant unobservable inputs	Range
Valuation techniques	Significant unobservable inputs	March 31, 2022	March 31, 2023
Present value of future expected cash flows	Credit spread*	47.5bp	83.6bp
	Mortality rates	0.003% - 35.693%	0.003% - 37.438%
	Lapse rates	0% - 7.500%	0% - 7.500%

* bp = basis point

The decrease (increase) in fair value is ~~calculated in-house. For validating~~ the result of higher (lower) credit spreads, mortality rates or lapse rates. The fair ~~values, Sony primarily uses internal models which include management judgment~~value of the future insurance policy benefits and policyholders’ account in the life insurance business measured at fair value would not change significantly, even if one or ~~estimation~~more of ~~assumptions that market participants would use in pricing~~ the ~~asset.~~

~~F-4~~

~~Table of Contents~~

significant unobservable inputs are changed to reflect reasonably possible alternative assumptions.

~~SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES~~

~~(2)~~

~~Assets and liabilities that are~~The changes in fair value of future insurance policy benefits and policyholders’ account in the life insurance business measured at fair value ~~on a nonrecurring basis~~

Sony also has assets and liabilities that are required to be remeasured to fair value on a nonrecurring basis when certain circumstances occur. During the fiscal years ended March 31, 2019 and 2020, such remeasurements to fair value related primarily to the following:

During the fiscal year ended March 31, 2019

Estimated fair value

Amounts included
in earnings

Level 1

Level 2

Level 3

Assets:

Long-lived assets impairments

—

—

4,389

(44,135
)
Goodwill impairment

—

—

0

(5,107
)

(49,242
)

During the fiscal year ended March 31, 2020

Estimated fair value

Amounts included
in earnings

Level 1

Level 2

Level 3

Assets:

Remeasurement of retained investment in SRE

15,911

—

—

13,347

Long-lived assets impairments

—

—

8,155

(36,003
)

(22,656
)

~~Long-lived assets impairments~~

~~Sony recorded an impairment loss of 31,341 million yen, 19,172 million yen and 12,714 million yen~~ for the fiscal years ended March 31, ~~2018, 2019~~2022 and 2020, respectively, included within the EP&S segment, related to long-lived assets in the smartphone business asset group. For the smartphone business asset group, the corresponding estimated future cash flows leading to the impairment charge reflected smartphone sales results and expectation of continued difficulty in the business environment.2023 are as follows:

Sony recorded an impairment loss of 12,858 million yen for the fiscal year ended March 31, 2019, included within All Other, related to long-lived assets and goodwill in the storage media business asset group. As a result of conducting a strategic review of the business and evolving market trends, Sony reduced the corresponding estimated future cash flows of this business and the estimated ability to recover the entire carrying amount of the long-lived assets and goodwill within the period applicable to the impairment determination, resulting in an impairment charge for the fiscal year ended March 31, 2019.


	Yen in millions
	Fiscal year ended March 31
	2022			2023
Balance at beginning of the fiscal year		536,189			507,699

Total (gains) losses *1 :
Included in net income *2		830			(11,740	)
Included in other comprehensive income *3		(797	)		(2,380	)
Issuances		—			—
Settlements		(28,523	)		(30,895	)

Balance at end of the fiscal year		507,699			462,684

Changes in unrealized gains (losses) relating to future insurance policy benefits and policyholders’ account in the life insurance business still held as of the end of the reporting period included in net income *2		(13,638	)		(501	)

Gains presented as negative and losses presented as positive.

Included in financial services revenue and financial services expense

in the consolidated statements of income.

Included in insurance contract valuation adjustments in the consolidated statements of comprehensive income.

These measurements are classified as level 3 because significant unobservable inputs, such as the condition of the assets or projections of future cash flows, the timing of such cash flows and the discount rate reflecting the risk inherent in future cash flows, were considered in the fair value measurements. For the fiscal year ended March 31, 2018, a discount rate of 8.5% and projected revenue growth rates ranging from (8)% to 6% were used in the fair value measurements related to the long-lived assets for the smartphone business. For the fiscal year ended March 31, 2019, a discount rate of 8.5% and projected revenue growth rates ranging from (26)% to 24% were used in the fair value measurements related to the long-lived assets for the smartphone business. For the fiscal year ended March 31, 2020, a discount rate of 10.6% and projected revenue growth rates ranging from (10)% to 70% were used in the fair value measurements related to the long-lived assets for the smartphone business. For the fiscal year ended March 31, 2019, a discount rate of 8.9% and projected revenue growth rates ranging from (34)% to 21% were used in the fair value measurements related to the long-lived assets and goodwill for the storage media business.

F-7

Except as described above, no other impairment losses were individually material for the fiscal year ended March 31, 2020. The other impairment losses were primarily related to the impairment losses in asset groups within Media Networks in the Pictures segment related to a review of the channel portfolio.6

~~Remeasurement of previously owned equity interest in EMI~~

During the fiscal year ended March 31, 2019, Sony remeasured to fair value the previously owned equity interests in EMI in connection with EMI Music Publishing acquisition. The measurement is classified as level 3 because significant unobservable inputs, such as projections of future cash flows and market comparables of similar transactions and companies were considered in the fair value measurements. Refer to Note 25.

~~F-4~~

Table of Contents

SONY GROUP CORPORATION AND CONSOLIDATED SUBSIDIARIES

(5)	Insurance and market risks

~~Remeasurement of retained investment in SRE~~

Risk management policy and exposure

~~During~~In the ~~fiscal year ended March 31, 2020,~~life insurance business, Sony ~~sold~~manages various market-related risks in the following manner:

(a)	Insurance risk management

Insurance risk

With respect to insurance underwriting risk, based on the level of policy reserves and capital levels, the life insurance subsidiary manages the insurance portfolio appropriately, such as setting policy limits for each type of insurance as necessary. In addition, underwriting standards and standards for revising and abolishing each product are clearly defined as internal rules and are regularly reviewed.

Concentration of insurance risk

The insurance contract portfolio does not have excessive concentration risk.

(b)	Market risk management

Interest rate risk management

Interest rate risk is managed by the risk management div

isi

on of the life insurance subsidiary based on the policies for interest rate risk management that specify details such as risk management methods and procedures. Based on ALM policies that are determined through such methods as deliberation by the life insurance subsidiary’s Executive Committee, the subsidiary determines and confirms actual risk conditions with its Board of Directors. The division maintains an overall understanding of the interest rates and durations of financial instruments, monitors them based on the analysis of the quantity of risk using VaR, and periodically reports the status of each risk to the life insurance subsidiary’s Board of Directors and the Executive Committee. As part of ~~its shares~~the ALM management, the life insurance subsidiary invests in ~~SRE~~financial assets that match the characteristics of the insurance contract obligations, and ~~remeasured~~thereby reduces interest rate risk as much as possible. Through the ~~remaining shares~~purchase and sale of financial assets included in their portfolio, the interest rate sensitivity (duration) of financial assets and insurance contract obligations is matched as much as possible so that they ensure sufficient cash flow to ~~fair value. This measurement is classified~~settle insurance claims as ~~level 1 because a quoted price for the shares of SRE is available on the Tokyo Stock Exchange. Refer to Note 5.~~

~~Remeasurement of previously owned equity interest in AEGON Sony Life Insurance Co., Ltd. and SA Reinsurance Ltd.~~they come due.

During the fiscal year ended March 31, 2020, Sony remeasured to fair value the previously owned equity interests in AEGON Sony Life Insurance Co., Ltd. and SA Reinsurance Ltd. (collectively, the “JVs”) in connection with acquisition of the JVs. The measurement is classified as level 3 because significant unobservable inputs, such as projections of future cash flows and market comparables of similar transactions and companies, were considered in the fair value measurements. AEGON Sony Life Insurance Co., Ltd. changed its name to “Sony Life With Insurance Co., Ltd.,” as of April 1, 2020. Refer to Note 25.Exchange rate risk

~~(3)~~

~~Financial instruments~~

~~The estimated fair values by fair value hierarchy level of certain financial instruments that are not reported at fair value are summarized as follows:~~

Yen in millions

March 31, 2019

Estimated fair value

Carrying
amount

Level 1

Level 2

Level 3

Total

Total

Assets:

Housing loans in the banking business

—

1,861,384

—

1,861,384

1,685,504

Total assets

—

1,861,384

—

1,861,384

1,685,504

Liabilities:

Long-term debt including the current portion

—

737,529

—

737,529

740,833

Investment contracts included in policyholders’ account in the life insurance business

—

877,157

—

877,157

816,903

Total liabilities

—

1,614,686

—

1,614,686

1,557,736

Yen in millions

March 31, 2020

Estimated fair value

Carrying
amount

Level 1

Level 2

Level 3

Total

Total

Assets:

Housing loans in the banking business

—

2,161,432

—

2,161,432

1,927,054

Total assets

—

2,161,432

—

2,161,432

1,927,054

Liabilities:

Long-term debt including the current portion

—

699,358

—

699,358

664,773

Investment contracts included in policyholders’ account in the life insurance business

—

969,464

—

969,464

885,690

Total liabilities

—

1,668,822

—

1,668,822

1,550,463

~~F-4~~Exchange rate risk is managed by the risk management division of the life insurance subsidiary based on the policies for exchange rate risk management that specify details such as risk management methods and procedures. The division periodically reports the status of each risk to the life insurance subsidiary’s Board of Directors and Executive Committee.

Equity market price fluctuation risk

Equity market price fluctuation risk is managed by the risk management division of the life insurance subsidiary based on the policies for equity market price fluctuation risk management that specify details such as risk management methods and procedures. The division periodically reports the status of each risk to the life insurance subsidiary’s Board of Directors and Executive Committee.

Derivative transactions

Derivative transactions are managed by the risk management division of the life insurance subsidiary based on the policies for derivative transactions that specify details such as risk management methods and procedures. The division periodically reports the status of each risk to the life insurance subsidiary’s Board of Directors and Executive Committee.

Sensitivity analysis

Market risk

For the purpose of pursuing a stable and sustainable increase of corporate value, in the life insurance business, Sony uses Market Consistent Embedded Value (“MCEV”), which is an indicator used to support the analysis of the value of a life insurance business and is compliant with the European Insurance CFO Forum Market Consistent Embedded Value Principles

(“MCEV Principles”). MCEV is also used for sensitivity analysis of market risk and insurance risk.

F-77

Table of Contents

SONY GROUP CORPORATION AND CONSOLIDATED SUBSIDIARIES

MCEV represents the present value of the current and future distributable earnings to shareholders generated from assets allocated to the covered business after sufficient allowance for the aggregate risks in the covered business. MCEV consists of the adjusted net worth and the value of the existing business. Adjusted net worth is the amount of assets allocated to the covered business as of the valuation date and is calculated as the amount of its market value in excess of statutory policy reserves and other liabilities. The value of the existing business consists of the present value of certainty-equivalent profit, the time value of options and guarantees, frictional costs and the cost of

non-hedgeable

risks. The main assumptions, including mortality rates, morbidity rates, lapse and surrender rates, and operating expense rates, were developed based on best estimates by product. The Board of Directors of the life insurance subsidiary has confirmed that, with the exception of certain noncompliance items, the MCEV presented below has been produced following the methodology set out in the MCEV Principles. The main noncompliance item referred to above is the reference rate, which is used in the calculations and has been defined as the government bond nominal spot rate curve rather than the swap rate curve as stipulated in the MCEV Principles.

MCEV is not an estimate of “fair value” as it does not include the value of new businesses to be sold in the future and does not include the

non-life

insurance business, such as the property and casualty insurance business and the banking business. The calculation of MCEV is based on numerous assumptions with respect to economic conditions, operating conditions, taxes and other matters, many of which are beyond Sony’s control. In general, deviations between projection assumptions and actual experience in the future are to be expected and such deviations may materially impact the value calculated.

The ~~summary excludes~~tables below show the sensitivities of changing the underlying assumptions of MCEV as of March 31, 2022 and 2023.


		March 31, 2022
Assumption	Changes in assumptions, etc.	Yen in millions					Rate of change
Assumption	Changes in assumptions, etc.	MCEV		Change in amount			Rate of change
Base	No change		2,066,357		—			—
Interest rates*	50bp decrease		2,107,521		41,164			1.99	%
	50bp increase		2,004,841		(61,516	)		(2.98	%)
Stock / Real estate market value	10% decrease		2,049,089		(17,268	)		(0.84	%)
Maintenance expenses	10% decrease		2,097,153		30,796			1.49	%
Lapse and surrender rate	10% decrease		2,083,260		16,903			0.82	%
Mortality rates (death protection)	5% decrease		2,136,304		69,948			3.39	%
Mortality rates (third sector / annuity products)	5% decrease		2,052,870		(13,487	)		(0.65	%)
Morbidity rates	5% decrease		2,136,413		70,057			3.39	%
Foreign exchange rates	10% appreciation of the Yen		2,051,249		(15,108	)		(0.73	%)

* bp = basis point


		March 31, 2023
Assumption	Changes in assumptions, etc.	Yen in millions					Rate of change
Assumption	Changes in assumptions, etc.	MCEV		Change in amount			Rate of change
Base	No change		2,121,135		—			—
Interest rates*	50bp decrease		2,244,971		123,836			5.84	%
	50bp increase		1,990,132		(131,003	)		(6.18	%)
Stock / Real estate market value	10% decrease		2,103,460		(17,675	)		(0.83	% )
Maintenance expenses	10% decrease		2,158,765		37,630			1.77	%
Lapse and surrender rate	10% decrease		2,182,037		60,902			2.87	%
Mortality rates (death protection)	5% decrease		2,191,177		70,042			3.30	%
Mortality rates (third sector / annuity products)	5% decrease		2,110,640		(10,495	)		(0.49	%)
Morbidity rates	5% decrease		2,184,127		62,992			2.97	%
Foreign exchange rates	10% appreciation of the Yen		2,118,499		(2,636	)		(0.12	%)

* bp = basis point

F-78

Table of Contents

SONY GROUP CORPORATION AND CONSOLIDATED SUBSIDIARIES

Liquidity risk

(a)	Risk management policy and exposure

In line with liquidity risk management policies, the accounting division of each insurance subsidiary prepares and updates cash flow plans in a timely manner based on the reports from departments and manages cash ~~equivalents, call loans, time deposits, notes~~flows, and ~~accounts receivable, trade, call money, short-term borrowings, notes~~the risk management division of each insurance subsidiary manages the liquidity risk. The accounting division and ~~accounts payable, trade~~risk management division periodically or as needed report such information to each insurance subsidiary’s Board of Directors and ~~deposits~~Executive Committee.

(b)	Maturity analysis

The following table summarizes the estimated timing of the remaining undiscounted net cash flows from ~~customers~~insurance contract liabilities and the contractual timing of the remaining undiscounted cash flows arising from securities held in the ~~banking~~insurance business ~~because~~as of March 31, 2022 and 2023. The cash flows of insurance liabilities are based on assumptions regarding morbidity rates, mortality rates, and lapse rates, which are consistent with the estimates used for the carrying ~~values~~amounts.


	Yen in millions
	March 31, 2022
	Total		Indefinite Terms		Within 1 year		1 to 2 years		2 to 3 years		3 to 4 years		4 to 5 years		More than 5 years
Insurance contract liabilities		25,561,549		—		165,028		155,586		198,370		234,987		263,679		24,543,899
Securities held in the insurance business		18,536,483		2,008,071		656,948		223,111		348,527		335,791		311,466		14,652,569


	Yen in millions
	March 31, 2023
	Total		Indefinite Terms		Within 1 year		1 to 2 years		2 to 3 years		3 to 4 years		4 to 5 years		More than 5 years
Insurance contract liabilities		27,737,139		—		165,746		153,881		198,154		224,698		263,708		26,730,952
Securities held in the insurance business		19,640,244		2,408,401		636,352		367,283		345,113		322,176		428,997		15,131,922

Since the total of ~~these financial instruments approximated their fair values due to their short-term nature. The summary also excludes~~

~~held-to-maturity~~

the above estimated amounts is the amount before discounting, it exceeds the amount of insurance contract liabilities and securities ~~disclosed~~which is included in ~~Note 7.~~

~~Cash~~investments and ~~cash equivalents, call loans and call money are classified in level 1. Time deposits, short-term borrowings, deposits from customers~~advances in the ~~banking business are classified in level 2.~~

~~Held-to-maturity~~

~~securities, included in marketable securities and securities investments and other~~Financial Services segment shown in the consolidated ~~balance sheets, primarily include~~statements of financial position.

14.	Short-term borrowings and long-term debt

Short-term borrowings and long-term debt are comprised of the following:


	March 31, 2022
	Book value (Yen in millions)		Weighted average interest rate			Due
Short-term borrowings		1,976,553		0.18	%
Long-term debt
Long-term loans		693,603		0.70	%		2022-2056
Unsecured bonds		189,608		0.25	%		2022-2029
Unsecured zero coupon convertible bonds		26,495		—	%		2022
Lease liabilities		465,349		2.10	%

		1,375,055
Less — Portion due within one year		171,409

		1,203,646

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	March 31, 2023
	Book value (Yen in millions)		Weighted average interest rate			Due
Short-term borrowings		1,914,934		1.89	%
Long-term debt
Long-term loans		1,074,060		1.70	%		2023-2056
Unsecured bonds		349,332		0.30	%		2023-2029
Lease liabilities		532,246		2.35	%

		1,955,638
Less — Portion due within one year		187,942

		1,767,696

the Financial Services segment, Sony pledged assets as collateral for short-term borrowings and long-term debt and the pledged assets are comprised of the following:


	Yen in millions
	March 31
	2022		2023
Securities		1,490,663		1,678,553
Housing loans in the banking business		782,175		829,659

addition to the above, in the Financial Services segment, Sony pledged securities ~~with quoted prices that~~for

securities-for-securities

lending transactions and the pledged securities are ~~traded less frequently than exchange-traded instruments,~~as follows:


	Yen in millions
	March 31
	2022		2023
Securities		521,912		4,728

Furthermore

, in the Financial Services segment, Sony pledged securities as collateral for cash settlements, variation margins of futures markets and certain other purposes and the pledged securities are as follows:


	Yen in millions
	March 31
	2022		2023
Securities		21,271		80,328

July 21, 2015, Sony issued 120,000 million yen of 130% Callable Unsecured Zero Coupon Convertible Bonds due on September 28, 2022 (the “Zero Coupon Convertible Bonds”). The bondholders w

re entitled to convert the Zero Coupon Convertible Bonds into shares of common stock from September 1, 2015 to September 28, 2022, and the initial conversion price was 5,008 yen per share. The conversion price is subject to anti-dilution provisions, where the conversion price is adjusted in certain cases such as the ~~majority~~issuance or disposal of ~~government bonds~~the shares of Sony Group Corporation’s common stock at below market price, stock splits, bonus issues of shares, and dividends in excess of 25 yen per common share per fiscal year. In addition, an early redemption is triggered upon the occurrence of certain corporate ~~bonds~~events including a merger or corporate split, and ~~are substantially all classified in level 2. The fair values~~the completion of ~~housing loans~~a takeover bid resulting in the ~~banking~~delisting of the shares of common stock of Sony Group Corporation. The conversion price is reduced for a certain period prior to the early redemption date, which is determined by a formula that is based on time to maturity and Sony’s common stock price, in order to compensate bondholders for the time value up to the original maturity date. The reduced conversion price ranged from 3,526.5 yen to 5,008 yen per share. The conversion price has been adjusted to 4,952.8 yen per common share since June 10, 2022 because the payment of the total annual dividend per common share for the fiscal year ended March 31, 2022 was 65 yen, which is in excess of 25 yen. At the early redemption date, the remaining Zero Coupon Convertible Bonds would be redeemed at 100% of the principal amount. The conversion right is bifurcated from the host contract and classified as equity.

Sony had the option to redeem all of the Zero Coupon Convertible Bonds outstanding at 100% of the principal amount on or after July 21, 2020, if the closing price per share of Sony Group Corporation’s common stock on the Tokyo Stock Exchange was 130% or more of the conversion price of the Zero Coupon

Convertible

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Bonds

applicable on each trading day for 20 consecutive trading days. As the option is conside

red

closely related to the host contract, Sony does not bifurcate the option from the host contract.

There

were no significant adverse debt covenants under the Zero Coupon Convertible Bonds.

Sony redeemed the Zero Coupon Convertible Bonds at maturity on September 30, 2022.

In August and October 2022, in order to enhance liquidity, Sony executed an approximate 1,175

illion U.S. dollar bank loan from a group of banks with three, five and

ten-year

maturity terms for the purpose of covering the consideration for the acquisition of 100% of the equity interest in Ellation, a subsidiary of AT&T Inc., which operates the anime business ~~included~~“Crunchyroll,” in ~~securities investments~~August 2021. This bank loan utilizes the

co-financing

facility of Japan Bank for International Cooperation (“JBIC”), which aims to facilitate overseas mergers and ~~other~~acquisitions by Japanese companies. Approximately 60%, or 705

million

U.S. dollars, is from the JBIC and was borrowed in U.S. dollars in October 2022, and approximately 40%, or 70,000

illion yen (approximately 470

illion U.S. dollars) is from Japanese private banks and was borrowed in yen in August 2022.

In December 2022, Sony Group Corporation issued unsecured straight bonds in the ~~consolidated balance sheets, were estimated based on~~total principal amount of 150,000

illion yen. Sony Group Corporation used all of the ~~discounted future cash flows using interest rates reflecting London Interbank Offered Rate base yield curves with certain risk premiums. The fair values~~proceeds of the issued bonds for the repayment of CP by the end of December 2022.

There are no significant adverse debt covenants or cross-default provisions related to the other short-term borrowings and long-term debt including the current portion and investment contracts included in policyholders’ account in the life insurance business were estimated based on either the market value or the discounted future cash flows using Sony’s current incremental borrowing rates for similar liabilities.debt.

~~14.~~

15.

Derivative instruments and hedging activities

Sony has certain financial instruments including financial assets and liabilities acquired in the normal course of business. Such financial instruments are exposed to market risk arising from the changes in foreign currency exchange rates and interest rates. In applying a consistent risk management strategy for the purpose of reducing such risk, Sony uses derivative financial instruments, which include foreign exchange forward contracts, ~~foreign~~swap agreements, currency option contracts, and interest rate swap agreements (including interest rate and currency swap agreements). Certain other derivative financial instruments are entered into in the Financial Services segment for ~~asset-liability management (“ALM”)~~ALM purposes. These instruments are executed with creditworthy financial institutions, and virtually all foreign currency contracts are denominated in U.S. dollars, euros and other currencies of major countries. ~~These derivatives generally mature or expire within six months after the balance sheet date.~~ Other than derivatives utilized in the Financial Services segment for ALM, Sony does not use derivative financial instruments for trading or speculative purposes. These derivative transactions utilized for ALM in the Financial Services segment are executed within certain limits in accordance with an internal risk management policy.

~~Derivative financial instruments held by Sony are classified and accounted for as described below.~~

~~Fair value hedges~~

Both the derivatives designated as fair value hedges and the hedged items are reflected at fair value in the consolidated balance sheets. Changes in the fair value of the derivatives designated as fair value hedges, as well as offsetting changes in the carrying value of the underlying hedged items, are recognized in income. For the fiscal years ended March 31, 2018

~~019~~

~~and~~

~~, there were 0 amounts excluded from the assessment of hedge effectiveness of fair value hedges.~~

~~Cash flow hedges~~

Changes in the fair value of derivatives designated as cash flow hedges are initially recorded in other comprehensive income (“OCI”) and reclassified into earnings when the hedged transaction affects earnings. The time value component of the fair value of option contracts is excluded from the assessment of hedge effectiveness and recognized in earnings on a straight-line basis over the life of the hedging instruments. Any difference between the change in fair value of the excluded component and

~~the~~

~~accumulated amount recognized in earnings on a straight-line basis~~

~~is recognized in OCI.~~

~~Derivatives not designated as hedges~~

~~Changes in the fair value of derivatives not designated as hedges are recognized in income.~~

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~~SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES~~

A description of the purpose and classification of the derivative financial instruments held by Sony is as follows:

Foreign exchange forward contracts, swap agreements and ~~foreign~~ currency option contracts

Foreign exchange forward contracts, swap agreements and purchased and written foreign currency option contracts are utilized primarily to limit the exposure affected by changes in foreign currency exchange rates on cash flows generated or anticipated by Sony’s transactions and accounts receivable and payable denominated in foreign currencies. The majority of written foreign currency option contracts are a part of range forward contract arrangements and expire in the same month with the corresponding purchased foreign currency option contracts.

Sony also entered into foreign exchange forward contracts and foreign exchange range forward contracts which effectively fixed the cash flows from certain forecasted purchase and sale transactions denominated in foreign currencies for the fiscal years ended March 31,

~~2018~~

~~, 2019~~

2021, 2022 and 20

.2023. The ineffective portions of the hedging relationships were not significant. Accordingly, these derivatives have been designated as cash flow hedges.

Foreign exchange forward contracts and foreign currency option contracts that do not qualify as hedges are

~~marked-to-market~~

measured at fair value with changes in value recognized in ~~other~~financial income and financial expenses.

Foreign exchange forward contracts, foreign currency option contracts and ~~currency~~ swap agreements held by certain subsidiaries in the Financial Services segment are

~~marked-to-market~~

measured at fair value with changes in value recognized in financial services

revenue.

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Interest rate swap agreements (including interest rate and currency swap agreements)

Interest rate swap agreements are utilized primarily to lower funding costs, to diversify sources of funding and to limit Sony’s exposure associated with underlying borrowings and

~~available-for-sale~~

debt securities resulting from adverse fluctuations in interest rates, foreign currency exchange rates and changes in fair values.

Interest rate swap agreements entered into in the Financial Services segment are used for reducing the risk arising from the changes in the fair value of fixed rate

~~available-for-sale~~

debt securities. ~~These derivatives are considered to be a hedge against changes in the fair value of~~

~~available-for-sale~~

~~debt securities in the Financial Services segment. Accordingly, these derivatives have been designated as fair value hedges.~~

Certain subsidiaries in the Financial Services segment have interest rate swap agreements as part of their ALM, which are

~~marked-to-market~~

measured at fair value with changes in value recognized in financial ~~service revenues.~~services revenue.

Any other interest rate swap agreements that do not qualify as hedges, which are used for reducing the risk arising from changes of variable rate debt, are

~~marked-to-market~~

measured at fair value with changes in value recognized in ~~other~~financial income and financial expenses.

Other agreements

Certain subsidiaries in the Financial Services segment have equity future contracts, equity swap agreements, bond future contracts, commodity future contracts, interest rate swaption agreements, other currency contracts and hybrid financial instruments as part of their ALM, which are

marked-to-market

with changes in value recognized in financial services revenue. The hybrid financial instruments, disclosed in Note 75 as debt securities, contained embedded derivatives that are not required to be bifurcated because the entire instruments are ~~carried~~measured at fair value.

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~~SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES~~

The estimated fair values of Sony’s outstanding derivative instruments are su

marized as follows:


	Yen in millions
	March 31, 2022				March 31, 2023
	Asset derivatives		Liability derivatives		Asset derivatives		Liability derivatives
Interest rate contracts
Interest rate swap agreements		26,795		6,455		43,464		3,139
Interest rate swaptions agreements		—		1,075		380		2,517

Foreign exchange contracts
Foreign exchange forward contracts		14,687		34,284		12,496		12,257
Swap agreements		11,897		925		3,774		5,781
Currency option contracts purchased		42		—		508		835
Currency option contracts written		—		172		—		5
Other currency contracts		3,578		1,201		4,540		998

Equity contracts
Equity future contracts		—		11,903		290		3,321
Equity swap agreements		—		16,105		—		5,270
Option contracts purchased		4,024		—		4,692		—

Total derivatives		61,023		72,120		70,144		34,123

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The estimated fair values and maturity analysis for notional amounts of Sony’s outstanding derivative instruments which are designated as hedging instruments are summarized as follows:

Derivatives designated as hedging
instruments

Yen in millions

Balance sheet location

Fair value

Balance sheet location

Fair value



March 31



March 31

Asset derivatives

2019

2020

Liability derivatives

2019

2020

Interest rate contracts

Prepaid expenses and other current assets

10

9

Current liabilities: Other

141

183

Interest rate contracts

Other assets: Other

101

27

Liabilities: Other

8,274

8,177

Foreign exchange contracts

Prepaid expenses and other current assets

131

1,799

Current liabilities: Other

42

—

242

1,835

8,457

8,360

Derivatives not designated as
hedging instruments

Yen in millions

Balance sheet location

Fair value

Balance sheet location

Fair value



March 31



March 31

Asset derivatives

2019

2020

Liability derivatives

2019

2020

Interest rate contracts

Prepaid expenses and other current assets

39

44

Current liabilities: Other

344

200

Interest rate contracts

Other assets: Other

882

1,523

Liabilities: Other

3,637

9,120

Foreign exchange contracts

Prepaid expenses and other current assets

8,807

19,655

Current liabilities: Other

11,549

14,580

Foreign exchange contracts

Other assets: Other

72

49

Liabilities: Other

1,059

1,755

Equity contracts

Prepaid expenses and other current assets

444

18,886

Current liabilities: Other

7,776

1,476

Bond contracts

Prepaid expenses and other current assets

—

306

Current liabilities: Other

—

290

Commodity contracts

Prepaid expenses and other current assets

—

85

Current liabilities: Other

—

85

10,244

40,548

24,365

27,506

Total derivatives

10,486

42,383

32,822

35,866


	Yen in millions
	March 31, 2022
	Notional amounts							Fair Value
	Within 1 Year		Over 1 Year			Total		Asset derivatives		Liability derivatives		Balance sheet location
Cash flow hedging relationships
Foreign exchange forward contracts		138,135		—			138,135		—		7,618		Current liabilities: Other financial liabilities
Average rate (JPY/USD)		115.3		—
Currency option bought contracts		4,830		—			4,830		28		—		Current assets: Other financial assets
Average rate (JPY/USD)		115.0		—
Currency option sold contracts		4,975		—			4,975		—		161		Current liabilities: Other financial liabilities
Average rate (JPY/USD)		118.5		—
Interest rate swap agreements		—		146,778			146,778		17,987		—		Non-current assets: Other financial assets
Average rate		—		1.5	%


	Yen in millions
	March 31, 2023
	Notional amounts							Fair Value
	Within 1 Year		Over 1 Year			Total		Asset derivatives		Liability derivatives		Balance sheet location

Cash flow hedging relationships
Foreign exchange forward contracts		70,125		—			70,125		458		—		Current assets: Other financial assets
Average rate (JPY/USD)		131.3		—
Currency option bought contracts		45,789		—			45,789		502		—		Current assets: Other financial assets
Average rate (JPY/USD)		125.8		—
Currency option sold contracts		47,995		—			47,995		—		835		Current liabilities: Other financial liabilities
Average rate (JPY/USD)		131.9		—
Interest rate swap agreements		—		159,918			159,918		28,513		—		Non-current assets: Other financial assets
Average rate		—		1.5	%

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SONY GROUP CORPORATION AND CONSOLIDATED SUBSIDIARIES

~~Presented below~~Changes in the fair value of hedging instruments related to cash flow hedges are ~~the effects of derivative instruments on the consolidated statements of income and the consolidated statements of~~recorded in accumulated other comprehensive income for the fiscal years ended March 31, ~~2018, 2019~~2022 and ~~2020.~~2023.

Derivatives under fair value
hedging relationships

Yen in millions

Location of gains or (losses) recognized
in income on derivative instruments

Amounts of gains or (losses) recognized
in income on derivative instruments

Fiscal year ended March 31

2018

2019

2020

Interest rate contracts

Financial services revenue

(52
)
(1,835
)
(3,925
)

Total

(52
)
(1,835
)
(3,925
)


	Yen in millions
	Foreign exchange contracts			Interest rate contracts			Total
Balance as of April 1, 2021		(4,282	)		5,581			1,299

Changes in fair value of hedging instruments recognized in other comprehensive income		(14,645	)		6,942			(7,703	)
Reclassification adjustments to profit (loss) for the year *1,2		12,886			1,643			14,529
Deferred tax		538			(2,629	)		(2,091	)

Balance as of March 31, 2022		(5,503	)		11,537			6,034

Changes in fair value of hedging instruments recognized in other comprehensive income		(26,950	)		13,975			(12,975	)
Reclassification adjustments to profit (loss) for the year *1,2		34,825			(4,012	)		30,813
Deferred tax		(2,408	)		(3,051	)		(5,459	)

Balance as of March 31, 2023		(36	)		18,449			18,413

*1	In the consolidated statements of income, the amount reclassified to profit (loss) is included in sales for hedges of foreign exchange contracts and in financial expenses for hedges of interest rate contracts.

*2	For the fiscal years ended March 31, 2022 and 2023, hedge ineffectiveness recognized in profit or loss was not material.

~~F-5~~16. Offsetting of financial assets and financial liabilities

Tables below show the gross amounts of financial assets and liabilities, amounts offset, and net amounts presented in the consolidated statements of financial position, as well as the financial assets and liabilities that are subject to enforceable master netting agreements or similar agreements, as of March 31, 2022 and 2023.


	Yen in millions
	March 31, 2022
	Gross amounts recognized financial assets and financial liabilities		Amount s offset in the consolidated statements of financial position		Net amounts presented in the consolidated statements of financial position		Gross amounts not offset in the consolidated statements of financial position
							Financial instruments		Cash collateral		Net amounts
Derivative assets *1		37,847		—		37,847		24,504		10,782		2,561
Trade receivables *2		30,370		26,739		3,631		—		—		3,631

Total assets		68,217		26,739		41,478		24,504		10,782		6,192

Derivative liabilities *1		72,004		—		72,004		33,514		29,530		8,960
Trade payables *2		60,056		26,739		33,317		—		—		33,317
Short-term borrowings *3		1,272,040		—		1,272,040		1,269,188		—		2,852

Total liabilities		1,404,100		26,739		1,377,361		1,302,702		29,530		45,129

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SONY GROUP CORPORATION AND CONSOLIDATED SUBSIDIARIES

Yen in millions

Derivatives under cash flow
hedging relationships

Fiscal year ended March 31

2018

2019

2020

Amounts recognized in unrealized gains (losses) on derivative
instruments in OCI
(before tax)

Foreign exchange contracts
:

Components included in the assessment of hedge effectiveness

(2,295
)
2,315

1,712

Components excluded from the assessment of hedge effectiveness that were recognized based on amortization approach

                             —

                             —

                        1,087

Total

(2,295
)
2,315

2,799


	Yen in millions
	March 31, 2023
	Gross amounts recognized financial assets and financial liabilities		Amounts offset in the consolidated statements of financial position		Net amounts presented in the consolidated statements of financial position		Gross amounts not offset in the consolidated statements of financial position
							Financial instruments		Cash collateral		Net amounts
Derivative assets *1		34,382		—		34,382		16,430		13,852		4,100
Trade receivables *2		175,872		174,930		942		—		—		942

Total assets		210,254		174,930		35,324		16,430		13,852		5,042

Derivative liabilities *1		31,997		—		31,997		21,700		5,216		5,081
Trade payables *2		281,295		174,930		106,365		—		—		106,365
Short-term borrowings *3		1,557,652		—		1,557,652		1,556,595		—		1,057

Total liabilities		1,870,944		174,930		1,696,014		1,578,295		5,216		112,503

Certain subsidiaries have entered into master netting agreements or other similar agreements, which are mainly International Swaps and Derivatives Association (ISDA) Master Agreements. An ISDA Master Agreement is an agreement between two counterparties that may have multiple derivative contracts with each other, and such ISDA Master Agreement may provide for the net settlement of all or a specified group of these derivative contracts, through a single payment, in a single currency, in the event of a default on or affecting any one derivative contract, or a termination event affecting all or a specified group of derivative contracts. Master netting agreements create a right of set off, but the master netting agreements do not automatically provide for such set off.

*2	Amounts offset in the consolidated statements of financial position are related to repurchase agreements of products.

*3	Short-term borrowings relate to repurchase agreements (repos).

Derivatives under cash flow
hedging relationships

Yen in millions

Affected line item in consolidated
statements of income

Fiscal year ended March 31

2018

2019

2020

Amounts reclassified from unrealized
gains (losses) on derivative instruments
in accumulated OCI (before tax)

Foreign exchange contracts
:

Components included in
the assessment of hedge effectiveness

Cost of sales

1,111

(1,093
)
—

Net sales

—

—

106

Components excluded from
the assessment of hedge effectiveness that were recognized based on amortization approach

Net sales

—

—

(1,087
)

Total

1,111

(1,093
)
(981
)

Derivatives not designated as
hedging instruments

Yen in millions

Location of gains or (losses) recognized
in income on derivative instruments

Amounts of gains or (losses) recognized
in income on derivative instruments

Fiscal year ended March 31

2018

2019

2020

Interest rate contracts

Financial services revenue

(1,544
)
(3,192
)
1,190

Foreign exchange contracts

Financial services revenue

2,013

(8,198
)
2,473

Foreign exchange contracts

Foreign exchange loss, net

21,370

(7,437
)
10,184

Equity contracts

Financial services revenue

(11,665
)
(7,649
)
15,438

Bond contracts

Financial services revenue

—

—

(2,954
)
Commodity contracts

Financial services revenue

—

—

110

Total

10,174

(26,476
)
26,441

17.	Employee benefits

Presented below are the amortized cost of hedged items, which are available-for-sale debt securities, and cumulative amount of fair value hedging adjustments to hedged items under fair value hedging relationships as of March 31, 2020.


Derivatives under fair value ~~hedging relationships~~	~~Yen in millions~~
	~~Balance sheet location of~~ ~~hedged items~~	~~March 31, 2020~~
	~~Balance sheet location of~~ ~~hedged items~~	~~Amortized cost~~		~~Cumulative effect to~~ ~~carrying amount of~~ ~~hedged items by fair value hedges~~
~~Interest rate contracts~~	~~Marketable securities~~		~~15,255~~		—
~~Interest rate contracts~~	~~Securities investments and other~~		~~91,080~~		—
		(1)
~~Total~~			~~106,335~~		—

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~~Table of Contents~~

~~SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES~~

~~The following table summarizes additional information, including notional amounts, for each type of derivative:~~

Yen in millions

March 31, 2019

March 31, 2020

Notional
amount

Fair value

Notional
amount

Fair value

Foreign exchange contracts:

Foreign exchange forward contracts

701,880

(304
)
740,464

4,361

Currency option contracts purchased

53,846

179

473

7

Currency option contracts written

58,825

(35
)
460

(5
)
Currency swap agreements

959,777

(5,564
)
893,874

(1,006
)
Other currency contracts

68,513

2,084

62,080

1,811

Interest rate contracts:

Interest rate swap agreements

339,934

(11,346
)
994,133

(16,019
)
Interest rate swaption agreements

5,300

(18
)
18,700

(58
)
Equity contracts:

Equity future contracts

58,725

308

63,354

(871
)
Equity swap agreements

63,107

(7,640
)
103,409

18,281

Bond contracts:

Bond
future contracts

—

—

56,546

16

Commodity contracts:

Commodity future contracts

—

—

1,465

0

All derivatives are recognized as either assets or liabilities in the consolidated balance sheets on a gross basis, but certain subsidiaries have entered into master netting agreements or other similar agreements, which are mainly International Swaps and Derivatives Association (ISDA) Master Agreements. An ISDA Master Agreement is an agreement between two counterparties that may have multiple derivative contracts with each other, and such ISDA Master Agreement may provide for the net settlement of all or a specified group of these derivative contracts, through a single payment, in a single currency, in the event of a default on or affecting any one derivative contract, or a termination event affecting all or a specified group of derivative contracts. Presented below are the effects of offsetting derivative assets, derivative liabilities, financial assets and financial liabilities as of March 31, 2019 and 2020.

Yen in millions

As of March 31, 2019

Gross amounts
presented in the
consolidated
balance sheet

Gross amounts not offset in the
consolidated balance sheet that are
subject to master netting agreements

Financial
instruments

Cash collateral

Net amounts

Derivative assets subject to master netting agreements

6,855

3,442

136

3,277

Derivative assets not subject to master netting agreements

3,631

3,631

Total assets

10,486

3,442

136

6,908

Derivative liabilities subject to master netting agreements

25,872

3,970

20,191

1,711

Derivative liabilities not subject to master netting agreements

6,950

6,950

Repurchase, securities lending and similar arrangements

432,820

432,820

—

—

Total liabilities

465,642

436,790

20,191

8,661

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Yen in millions

As of March 31, 2020

Gross amounts
presented in the
consolidated
balance sheet

Gross amounts not offset in the
consolidated balance sheet that are
subject to master netting agreements

Financial
instruments

Cash collateral

Net amounts

Derivative assets subject to master netting agreements

38,281

12,614

20,545

5,122

Derivative assets not subject to master netting agreements

4,102

4,102

Total assets

42,383

12,614

20,545

9,224

Derivative liabilities subject to master netting agreements

31,896

7,086

23,873

937

Derivative liabilities not subject to master netting agreements

3,970

3,970

Repurchase, securities lending and similar arrangements

567,194

564,874

—

2,320

Total liabilities

603,060

571,960

23,873

7,227

~~15.~~

~~Pension~~Defined benefit and severance plans

~~(1)~~

~~Defined benefit and severance plans~~

Upon terminating employment, employees of Sony Group Corporation and its subsidiaries in Japan are entitled, under most circumstances, to

lump-sum

indemnities or pension payments as described below. Sony Group Corporation and certain of its subsidiaries’ pension plans utilize a point-based plan under which a point is added every year reflecting the individual employee’s performance over that year. Under the point-based plan, the amount of payment is determined based on the sum of cumulative points from past services and interest points earned on the cumulative points regardless of whether or not the employee is voluntarily retiring.

Under the plans, in general, the defined benefits cover 65% of the indemnities under existing regulations to employees. The remaining indemnities are covered by severance payments by the companies. The pension benefits are payable at the option of the retiring employee either in a

lump-sum

amount or monthly pension payments. Contributions to the plans are funded through several financial institutions in accordance with the applicable laws and regulations.

From April 1, 2012, Sony Group Corporation and substantially all of its subsidiaries in Japan have modified existing defined benefit pension plans such that life annuities will no longer accrue additional service benefits, with those participants instead accruing fixed-term annuities. The defined benefit pension plans were closed to new participants and a defined contribution plan was also introduced.

From October 1, 2019, Sony Group Corporation and substantially all of its subsidiaries in Japan have amended their defined benefit pension plans and have implemented defined contribution plans for all employees other than those employees that had retired before the amendments. As a result, accrued pension and severance costs decreased 74,872 million yen and accumulated other comprehensive income increased 81,230 million yen in the consolidated balance sheets as of the fiscal year ended March 31, 2020. In addition, a loss on the pension plan amendment of 6,358 million yen was recorded in other expenses in the consolidated statements of income for the fiscal year ended March 31, 2020.

In addition, several of Sony’s foreign subsidiaries have defined benefit pension plans or severance indemnity plans, which cover substantially all of their employees. Under such plans, the related cost of benefits is currently funded or accrued. Benefits awarded under these plans are based primarily on the current rate of pay and length of service.

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Net defined benefit liability (asset) recognized in the consolidated statements of financial position

Amounts recognized in the consolidated statements of financial position are as follows:


	Yen in millions
	Japanese plans						Foreign plans
	March 31						March 31
	2022			2023			2022			2023
Present value of defined benefit obligations		614,763			573,143			277,903			124,702
Fair value of plan assets		(474,933	)		(447,747	)		(198,791	)		(56,987	)
The impact of minimum funding requirement and asset ceiling		4,870			6,897			2,491			3,455

Net amount		144,700			132,293			81,603			71,170

Amount recognized in the consolidated statements of financial position
Net defined benefit asset		(21,057	)		(28,334	)		(6,544	)		(1,775	)
Net defined benefit liability		165,757			160,627			88,147			72,945

Net amount		144,700			132,293			81,603			71,170

Present value of defined benefit obligations

The ~~components of net periodic benefit costs~~changes in the defined benef

it o

bligations for the fiscal years ended March 31, ~~2018, 2019~~2022 and ~~2020 were~~2023 are as follows:

~~Japanese plans~~

Yen in millions

Fiscal year ended March 31

2018

2019

2020

Service cost

25,185

23,128

17,948

Interest cost

8,024

7,020

4,162

Expected return on plan assets

(16,440
)
(16,695
)
(17,040
)
Recognized actuarial loss

16,099

15,365

12,969

Amortization of prior service costs

(8,693
)
(7,864
)
(4,294
)
Losses on curtailments and settlements

—

—

6,358

Net periodic benefit costs

24,175

20,954

20,103

~~Foreign plans~~

Yen in millions

Fiscal year ended March 31

2018

2019

2020

Service cost

3,181

2,780

3,616

Interest cost

10,393

10,083

9,212

Expected return on plan assets

(11,687
)
(11,797
)
(10,916
)
Amortization of net transition asset

5

—

—

Recognized actuarial loss

3,014

2,656

2,606

Amortization of prior service costs

(574
)
(269
)
2

Losses on curtailments and settlements

1,058

1,804

68

Net periodic benefit costs

5,390

5,257

4,588

~~The components of net periodic benefit costs other than service cost for the fiscal year~~

~~ended March 31, 2019 and 2020 are included within other expenses (income) in the consolidated statements of income.~~

The estimated net actuarial loss and prior service cost for the defined benefit pension plans that will be amortized from accumulated other comprehensive income into net periodic benefit costs over the next fiscal year are 12,185 million yen and 1,412 million yen, respectively.


	Yen in millions
	Japanese plans						Foreign plans
	Fiscal year ended March 31						Fiscal year ended March 31
	2022			2023			2022			2023
Beginning balance of the fiscal year		640,061			614,763			371,239			277,903

Current service cost		12,868			12,660			2,424			2,319
Past service cost		4			5			(34	)		(365	)
Interest cost		3,751			4,367			5,117			4,623
Remeasurements:
Change in demographic assumptions		(536	)		2,974			630			(458	)
Change in financial assumptions		(8,594	)		(27,314	)		(16,789	)		(60,179	)
Other		(95	)		(569	)		(91	)		(940	)
Translation adjustments		—			—			19,372			11,213
Plan participants’ contributions		—			—			333			516
Benefits paid		(32,909	)		(33,741	)		(38,923	)		(9,798	)
Curtailments and settlements *		—			—			(65,375	)		(100,132	)
Other		213			(2	)		—			—

Ending balance of the fiscal year		614,763			573,143			277,903			124,702

Curtailments and settlements of the foreign plans for the fiscal year ended March 31, 2022 relate mainly to the termination of the defined benefit pension plan at certain U.S. subsidiaries. Curtailments and settlements of the foreign plans for the fiscal year ended March 31, 2023 relate mainly to the termination of the defined benefit pension plan at certain U.K. subsi

aries.

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The ~~changes in the benefit obligation and plan assets as well as the funded status and composition~~weighted average duration of ~~amounts recognized in the consolidated balance sheets were as follows:~~

Japanese plans

Foreign plans

Yen in millions

Yen in millions

March 31

March 31

2019

2020

2019

2020

Change in benefit obligation:

Benefit obligation at beginning of the fiscal year

1,010,574

1,034,954

356,397

351,918

Service cost

23,128

17,948

2,780

3,616

Interest cost

7,020

4,162

10,083

9,212

Plan participants’ contributions

—

—

462

487

Plan amendments

—

—

—

10,210

Actuarial (gain) loss

29,295

(3,330
)
1,700

19,776

Foreign currency exchange rate changes

—

—

(1,554
)
(16,919
)
Curtailments and settlements

—

(359,205
)
(6,120
)
(4,434
)
Effect of changes in consolidated subsidiaries

—

—

1,947

—

Other

6

2

—

—

Benefits paid

(35,069
)
(35,668
)
(13,777
)
(14,055
)

Benefit obligation at end of the fiscal year

1,034,954

658,863

351,918

359,811

Change in plan assets:

Fair value of plan assets at beginning of the fiscal year

711,077

742,204

269,745

274,749

Actual return on plan assets

18,701

2,942

15,243

26,738

Foreign currency exchange rate changes

—

—

(838
)
(14,904
)
Employer contribution

36,875

7,453

8,542

9,916

Plan participants’ contributions

—

—

462

487

Curtailments and settlements

—

(284,333
)
(5,960
)
(3,146
)
Benefits paid

(24,449
)
(31,060
)
(12,445
)
(12,730
)

Fair value of plan assets at end of the fiscal year

742,204

437,206

274,749

281,110

Funded status at end of the fiscal year

(292,750
)
(221,657
)
(77,169
)
(78,701
)

~~Amounts recognized in the consolidated balance sheets consist of:~~

Japanese plans

Foreign plans

Yen in millions

Yen in millions

March 31

March 31

2019

2020

2019

2020

Noncurrent assets

3,476

3,391

14,745

24,777

Current liabilities

—

—

(4,412
)
(4,355
)
Noncurrent liabilities

(296,226
)
(225,048
)
(87,502
)
(99,123
)

Ending balance

(292,750
)
(221,657
)
(77,169
)
(78,701
)

~~Amounts recognized in accumulated other comprehensive income, excluding tax effects, consist of:~~

Japanese plans

Foreign plans

Yen in millions

Yen in millions

March 31

March 31

2019

2020

2019

2020

Prior service cost (credit)

(8,859
)
(369
)
(45
)
10,058

Net actuarial loss

311,128

223,354

71,906

66,326

Ending balance

302,269

222,985

71,861

76,384

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~~SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES~~

~~The accumulated benefit obligations for all~~ defined benefit ~~pension plans were as follows:~~

Japanese plans

Foreign plans

Yen in millions

Yen in millions

March 31

March 31

2019

2020

2019

2020

Accumulated benefit obligations

1,029,910

654,209

336,185

354,100

~~The projected benefit~~ obligations ~~the accumulated benefit obligations and fair value of plan assets for pension plans with accumulated benefit obligations in excess of plan assets were as follows:~~

Japanese plans

Foreign plans

Yen in millions

Yen in millions

March 31

March 31

2019

2020

2019

2020

Projected benefit obligations

1,022,235

645,544

200,596

230,058

Accumulated benefit obligations

1,017,191

640,890

196,928

226,080

Fair value of plan assets

726,009

420,497

123,937

130,955

~~Weighted-average assumptions used to determine benefit obligations as of March 31, 2019 and 2020 were as follows:~~

Japanese plans

Foreign plans

March 31

March 31

2019

2020

2019

2020

Discount rate

0.6
%
0.6
%
2.8
%
2.0
%
Rate of compensation increase

*

*

2.3

2.2

~~Substantially all of Sony’s Japanese pension plans were point-based. Point-based plans do not incorporate a measure of compensation rate increases.~~

~~Weighted-average assumptions used to determine the net periodic benefit costs~~ for the fiscal years ended March 31, ~~2018, 2019~~2022 and ~~2020 were~~2023 is as follows:

Japanese plans

Foreign plans

Fiscal year ended March 31

Fiscal year ended March 31

2018

2019

2020

2018

2019

2020

Discount rate

0.9
%
0.8
%
0.6
%
3.1
%
2.9
%
2.8
%
Expected return on plan assets

2.4

2.6

2.6

4.6

4.4

4.2

Rate of compensation increase

*

*

*

2.4

2.6

2.3

Japanese plans

Foreign plans

March 31

2022

2023

2022

2023

Weighted average duration of defined benefit obligations

11.5 years

11.2 years

15.7 years

12.2 years

* Substantially all of Sony’s Japanese pension plans were point-based. Point-based plans do not incorporate a measure of compensation rate increases.

~~Sony reviews these assumptions for changes in circumstances.~~

~~The weighted-average rate of compensation increase is calculated based only on the~~

~~pay-related~~

~~plans. The point-based plans discussed above are excluded from the calculation because payments made under the plan are not based on employee compensation.~~

The ~~mortality rate~~significant actuarial assumptions used to determine the present value of defined benefit obligations as of March 31, 2022 and 2023 are as follows:


	Japanese plans						Foreign plans
	March 31						March 31
	2022			2023			2022			2023
Discount rate		0.7	%		1.1	%		2.5	%		4.3	%

The sensitivities of the defined benefit obligations to changes in the significant weighted-average actuarial assumptions are ~~based on life expectancy and death rates for different types of participants.~~as follows:


	Yen in millions
	Japanese plans						Foreign plans
	March 31						March 31
Change in assumptions	2022			2023			2022			2023
Discount rate
0.25% decrease		18,069			16,042			11,055			3,487
0.25% increase		(15,372	)		(13,201	)		(10,439	)		(3,316	)

The sensitivity analyses are calculated using the same method used to determine the ~~expected long-term rate~~defined benefit liability recognized in the consolidated statements of ~~return on pension plan assets, Sony considers the current and expected asset allocations, as well as the historical and expected long-term rates of returns on various categories~~financial position while holding all other assumptions consistent.

Fair value of plan ~~assets.~~ assets

Sony’s pension investment policy recognizes the expected growth and the variability risk associated with the long-term nature of pension liabilities, the returns and risks of diversification across asset classes, and the correlation among assets. The asset allocations are designed to maximize returns consistent with

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~~SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES~~

levels of liquidity and investment risk that are considered prudent and reasonable. While the pension investment policy gives appropriate consideration to recent market performance and historical returns, the investment assumptions utilized by Sony are designed to achieve a long-term return consistent with the long-term nature of the corresponding pension liabilities.

The investment objectives of Sony’s plan assets are designed to generate returns that will enable the plans to meet their future obligations. The precise amount for which these obligations will be settled depends on future events, including the retirement dates and life expectancy of the plans’ participants. The obligations are estimated using actuarial assumptions, based on ~~the~~ current economic ~~environment~~conditions and other pertinent factors. Sony’s investment strategy balances the requirement to generate returns, using potentially higher yielding assets such as equity securities, with the need to control risk in the portfolio with less volatile assets, such as fixed-income securities. Risks include, among others, inflation, volatility in equity values and changes in interest rates that could negatively impact the funding level of the plans, thereby increasing ~~its~~their dependence on contributions from Sony. To mitigate any potential concentration risk of plan assets, thorough consideration is given to balancing the portfolio among industry sectors and geographies, taking into account interest rate sensitivity, dependence on economic growth, currency and other factors that affect investment returns. The target allocations as of March 31, ~~2020,~~202

, are, as a result of Sony’s asset liability management, ~~17%~~15% (202

: 16%) of equity securities, ~~54%~~53

% (2022:

52%

)

of fixed income securities and ~~29%~~32% (202

: 32%) of other investments for the pension plans of Sony Group Corporation and most of its subsidiaries in Japan, and, on a weighted average basis, ~~14%~~1% (202

: 1%) of equity securities, ~~63%~~28% (202

: 22%) of fixed income securities and ~~23%~~71

(202

: 77%) of other investments for the pension plans of foreign subsidiaries.

~~The fair values of the assets held by Japanese and foreign plans, which are classified in accordance with the fair value hierarchy described in Note 2, are as follows:~~

Japanese plans

Yen in millions

Fair value
at March 31,
2019

Fair value measurements
using inputs considered as

Asset class
Level 1

Level 2

Level 3

Cash and cash equivalents

10,689

10,689

—

—

Equity:

Equity securities
*1

140,559

135,713

4,846

—

Fixed income:

Government bonds
*2

210,817

—

210,817

—

Corporate bonds
*3

97,519

—

97,519

—

Asset-backed securities
*4

1,537

—

1,537

—

Commingled funds
*5

138,455

—

138,455

—

Commodity funds
*6

21,674

—

21,674

—

Private equity
*7

27,956

—

—

27,956

Hedge funds
*8

71,606

—

—

71,606

Real estate and other
*9

21,392

—

—

21,392

Total

742,204

146,402

474,848

120,954

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Japanese plans

Yen in millions

Fair value
at March 31,
2020

Fair value measurements
using inputs considered as

Asset class
Level 1

Level 2

Level 3

Cash and cash equivalents

24,851

24,851

—

—

Equity:

Equity securities
*1

50,646

47,308

3,338

—

Fixed income:

Government bonds
*2

107,478

1,087

106,391

—

Corporate bonds
*3

71,192

20

71,172

—

Asset-backed securities
*4

1,090

—

1,090

—

Commingled funds
*5

58,740

—

58,740

—

Commodity funds
*6

21,823

—

21,823

—

Private equity
*7

30,191

—

—

30,191

Hedge funds
*8

48,410

—

—

48,410

Real estate and other
*9

22,785

—

(2,586
)
25,371

Total

437,206

73,266

259,968

103,972

Includes approximately 51 percent and 37 percent of Japanese equity securities, and 49 percent and 63 percent of foreign equity securities for the fiscal years ended March 31, 2019 and 2020, respectively.

Includes approximately 48 percent and 36 percent of debt securities issued by Japanese national and local governments, and 52 percent and 64 percent of debt securities issued by foreign national and local governments for the fiscal years ended March 31, 2019 and 2020, respectively.

~~Includes debt securities issued by Japanese and foreign corporation and government related agencies.~~

~~Includes primarily mortgage-backed securities.~~

Commingled funds represent pooled institutional investments, including primarily investment trusts. They include approximately 50 percent and 50 percent of investments in equity, 49 percent and 45 percent of investments in fixed income, and 1 percent and 5 percent of investments in other for the fiscal years ended March 31, 2019 and 2020, respectively.

~~Represents commodity futures funds.~~

~~Includes multiple private equity funds of funds that primarily invest in venture, buyout, and distressed markets in the United States and Europe.~~

~~Includes primarily funds that invest in a portfolio of a broad range of hedge funds to diversify the risks and reduce the volatilities associated with a single hedge fund.~~

~~Includes primarily private real estate investment trusts.~~

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SONY GROUP CORPORATION AND CONSOLIDATED SUBSIDIARIES

Foreign plans

Yen in millions

Fair value
at

March 31,
2019

Fair value measurements
using inputs considered as

Asset class
Level 1

Level 2

Level 3

Cash and cash equivalents

4,340

4,340

—

—

Equity:

Equity securities
*1

23,766

23,113

653

—

Fixed income:

Government bonds
*2

84,761

—

84,761

—

Corporate bonds
*3

32,749

—

32,749

—

Asset-backed securities

1,115

—

1,115

—

Insurance contracts
*4

18,308

—

5,814

12,494

Commingled funds
*5

76,503

—

76,503

—

Real estate and other
*6

33,207

—

11,118

22,089

Total

274,749

27,453

212,713

34,583

Foreign plans

Yen in millions

Fair value
at

March 31,
2020

Fair value measurements
using inputs considered as

Asset class
Level 1

Level 2

Level 3

Cash and cash equivalents

4,632

4,632

—

—

Equity:

Equity securities
*1

18,380

17,762

618

—

Fixed income:

Government bonds
*2

93,826

—

93,826

—

Corporate bonds
*3

31,769

—

31,769

—

Asset-backed securities

1,320

—

1,320

—

Insurance contracts
*4

19,334

—

7,156

12,178

Commingled funds
*5

78,280

—

78,280

—

Real estate and other
*6

33,569

—

11,272

22,297

Total

281,110

22,394

224,241

34,475

~~Includes primarily foreign equity securities.~~

~~Includes primarily foreign government debt securities.~~

~~Includes primarily foreign corporate debt securities.~~

~~Represents annuity contracts with or without profit sharing.~~

Commingled funds represent pooled institutional investments including mutual funds, common trust funds, and collective investment funds. They are primarily comprised of foreign equities and fixed income investments.

~~Includes primarily private real estate investment trusts.~~

Each level in the fair value hierarchy in which each plan asset is classified is determined based on inputs used to measure the fair values of the asset, and does not necessarily indicate the risks or rating of the asset.

The ~~following is a description of the valuation techniques used to measure Japanese and foreign plan assets at fair value. The valuation techniques are applied consistently from period to period.~~

~~Equity securities are valued at the closing price reported in the active market in which the individual securities are traded. These assets are generally classified as level 1.~~

The fair value of fixed income securities is typically estimated using pricing models, quoted prices of securities with similar characteristics or discounted cash flows and are generally classified as level 2.

F-

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~~SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES~~

Commingled funds are typically measured using the valuation provided by the administrator of the fund and reviewed by Sony. The valuation is based on Sony’s interest in the value of the underlying assets owned by the fund minus liabilities. These assets are classified as level 1, level 2 or level 3 depending on availability of quoted market prices.

~~Commodity funds are valued using inputs that are derived principally from or corroborated by observable market data. These assets are generally classified as level 2.~~

Private equity and private real estate investment trust valuations require significant judgment due to the absence of quoted market prices, the inherent lack of liquidity and the long-term nature of such assets. These assets are initially valued at cost and are reviewed periodically utilizing available and relevant market data to determine if the carrying value of these assets should be adjusted. These investments are classified as level 3.

Hedge funds are measured using the valuation provided by the administrator or custodian of the fund and reviewed by Sony. The valuation is based on Sony’s interest in the value of the underlying assets owned by the fund minus liabilities. These investments are classified as level 3.

~~The following table sets forth a summary of~~ changes in the ~~fair values of Japanese and foreign plans’ level 3~~plan assets for the fiscal years ended March 31, ~~2019~~2022 and ~~2020:~~2023 are as follows:

Japanese plans

Yen in millions

Fair value measurement using significant unobservable inputs
(Level 3)

Private equity

Hedge funds

Real estate
and other

Total

Beginning balance at April 1, 2018

24,144

70,204

19,431

113,779

Return on assets held at end of year

4,428

659

1,622

6,709

Purchases, sales, and settlements, net

(616
)
743

339

466

Ending balance at March 31, 2019

27,956

71,606

21,392

120,954

Return on assets held at end of year

2,649

(648
)
418

2,419

Purchases, sales, and settlements, net

(414
)
(22,548
)
3,561

(19,401
)

Ending balance at March 31, 2020

30,191

48,410

25,371

103,972

Foreign plans

Yen in millions

Fair value measurement using significant unobservable inputs
(Level 3)

Insurance
contracts

Corporate
bonds

Real estate
and other

Total

Beginning balance at April 1, 2018

12,729

5,303

25,976

44,008

Return on assets held at end of year

736

—

559

1,295

Purchases, sales, and settlements, net

(389
)
—

(3,809
)
(4,198
)
Transfers, net

—

(5,540
)
123

(5,417
)
Other
*

(582
)
237

(760
)
(1,105
)

Ending balance at March 31, 2019

12,494

—

22,089

34,583

Return on assets held at end of year

559

—

132

691

Purchases, sales, and settlements, net

(373
)
—

755

382

Transfers, net

—

—

—

—

Other
*

(502
)
—

(679
)
(1,181
)

Ending balance at March 31, 2020

12,178

—

22,297

34,475


	Yen in millions
	Japanese plans						Foreign plans
	Fiscal year ended March 31						Fiscal year ended March 31
	2022			2023			2022			2023
Beginning balance of the fiscal year		476,411			474,933			288,394			198,791

Interest income		3,026			3,649			3,955			2,804
Remeasurements:
Return on plan assets excluding interest income		17,617			(13,378	)		(10,121	)		(43,173	)
Translation adjustments		—			—			13,880			5,760
Employer contribution		2,476			5,650			4,573			3,444
Plan participants’ contributions		—			—			333			516
Benefits paid		(24,597	)		(23,107	)		(37,545	)		(8,240	)
Refunds from the plans		—			—			(5,005	)		—
Curtailments and settlements *		—			—			(59,673	)		(102,915	)

Ending balance of the fiscal year		474,933			447,747			198,791			56,987

~~Primarily consists~~

Curtailments and settlements of ~~translation adjustments.~~the foreign plans for the fiscal year ended March 31, 2022 relate mainly to the termination of the defined benefit pension plan at certain U.S. subsidiaries. Curtailments and settlements of the foreign plans for the fiscal year ended March 31, 2023 relate mainly to the termination of the defined benefit pension plan at certain U.K. subsidiaries.

~~F-6~~

~~Table of Contents~~

~~SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES~~

Sony makes contributions to its defined benefit pension plans as deemed appropriate by management after considering the fair value of plan assets, expected return on plan assets and the present value of defined benefit obligations. Sony expects to contribute approximately 2 billion yen to the Japanese plans and approximately 85 billion yen to the foreign plans during the fiscal year ending March 31, ~~2021.~~2024.

The ~~expected future benefit payments~~fair values of the assets held by Japanese and foreign plans are as follows:

Japanese plans

Foreign plans

Fiscal year ending March 31

Yen in millions

Yen in millions

2021

37,384

20,825

2022

36,228

104,988

2023

36,985

12,089

2024

38,271

12,269

2025

37,216

13,074

2026 — 2030

185,218

112,218


	Yen in millions
	Japanese plans
	March 31 2022		Market price in active market
Asset class	March 31 2022		Quoted		Unquoted
Cash and cash equivalents		13,843		13,843		—
Equity securities *1		31,660		28,175		3,485
Fixed income:
Government bonds *2		10,005		1,122		8,883
Corporate bonds *3		4,222		31		4,191
Commingled funds *4		316,319		—		316,319
Private equity		49,777		—		49,777
Hedge funds		49,107		—		49,107

Total		474,933		43,171		431,762

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	Yen in millions
	Japanese plans
	March 31 2023		Market price in active market
Asset class	March 31 2023		Quoted		Unquoted
Cash and cash equivalents		18,060		18,060		—
Equity securities *1		37,562		33,335		4,227
Fixed income:
Government bonds *2		10,369		975		9,394
Corporate bonds *3		4,587		25		4,562
Commingled funds *4		287,978		—		287,978
Private equity		40,612		—		40,612
Hedge funds		48,579		—		48,579

Total		447,747		52,395		395,352

~~(2)~~

Represents primarily Japanese equity securities.

Includes approximately 84% and 85% of debt securities issued by Japanese national and local governments, and 16%

and

15%

of debt securities issued by foreign national and local governments as of the fiscal years ended March 31, 2022 and 2023, respectively.

Includes debt securities issued by Japanese and foreign corporation

and government related agencies.

Commingled funds represent pooled institutional investments, including primarily investment trusts.


	Yen in millions
	Foreign plans
	March 31 2022		Market price in active market
Asset class	March 31 2022		Quoted		Unquoted
Cash and cash equivalents		2,350		2,350		—
Equity securities *1		61		61		—
Fixed income:
Government bonds *2		19,141		—		19,141
Corporate bonds *3		23,546		—		23,546
Asset-backed securities		63		—		63
Insurance contracts *4		129,084		432		128,652
Commingled funds *5		22,316		—		22,316
Real estate and other		2,230		8		2,222

Total		198,791		2,851		195,940

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	Yen in millions
	Foreign plans
	March 31 2023		Market price in active market
Asset class	March 31 2023		Quoted		Unquoted
Cash and cash equivalents		2,403		2,403		—
Equity securities *1		65		65		—
Fixed income:
Government bonds *2		2,135		—		2,135
Corporate bonds *3		12,052		—		12,052
Asset-backed securities		61		—		61
Insurance contracts *4		19,401		341		19,060
Commingled funds *5		18,113		—		18,113
Real estate and other		2,757		8		2,749

Total		56,987		2,817		54,170

Includes primarily foreign equity securities.

Includes primarily foreign government debt securities.

Includes primarily foreign corporate debt securities.

Represents annuity contracts with or without profit sharing and bulk insurance contracts.

Commingled funds represent pooled institutional investments, including primarily investment trusts.

The impact of minimum funding requirement and asset ceiling

The impact of minimum funding requirement and asset ceiling for the fiscal years ended March 31, 2022 and 2023 is as follows:


	Yen in millions
	Japanese plans				Foreign plans
	Fiscal year ended March 31				Fiscal year ended March 31
	2022		2023		2022			2023
Beginning balance of the fiscal year		3,990		4,870		13,156			2,491

Interest income		25		39		187			65
Remeasurements:
Change in asset ceiling excluding interest income		855		1,988		(11,018	)		811
Translation adjustments		—		—		166			88

Ending balance of the fiscal year		4,870		6,897		2,491			3,455

(2)	Defined contribution plans

Total defined contribution expenses for the fiscal years ended March 31, ~~2018, 2019~~2021, 2022 and ~~2020 were~~2023 are as follows:

Yen in millions

Fiscal year ended March 31

2018

2019

2020

Japanese plans

3,237

3,353

6,925

Foreign plans

11,379

11,602

10,313


	Yen in millions
	Fiscal year ended March 31
	2021		2022		2023
Japanese plans		10,992		11,137		11,461
Foreign plans		9,639		11,154		17,271

F-90

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SONY GROUP CORPORATION AND CONSOLIDATED SUBSIDIARIES

~~16.~~

(3)

~~Stockholders’ equity~~Employee benefits expenses

~~(1)~~

~~Common stock~~

~~Changes~~Employee benefits expenses included in cost of sales, selling, general and administrative, and financial services expenses in the ~~number~~consolidated statements of ~~shares of common stock issued and outstanding during~~income for the fiscal years ended March 31, ~~2018, 2019~~2021, 2022 and ~~2020 have resulted from~~2023 are as follows:


	Yen in millions
	Fiscal year ended March 31
	2021		2022		2023
Total employee benefits expenses		1,187,119		1,253,148		1,539,965

Employee benefits expenses include salaries, bonuses, stock-based compensation, social security, welfare and expenses relating to post-employment benefits.

18.	Participation and residual liabilities in the Pictures segment

The changes in participation and residual liabilities for the ~~following:~~fiscal year ended March 31, 2023 are as follows:


			Yen in millions
	Fiscal year ended March 31
	~~Number of shares~~ 2023
Balance at ~~March 31, 2017~~beginning of the fiscal year		410,275
	~~1,263,763,660~~
~~Issuance of new shares~~Current portion		190,162
~~218,000~~Non-current portion		220,113

~~Exercise of stock acquisition rights~~Additional participation and residual liabilities		~~2,565,700~~ 210,226
~~Conversion of convertible bonds~~Amounts paid during the year		(220,415	)
~~4,789~~Unpaid amounts reversed during the year		(13,605	)
Translation adjustment		36,694

Balance at ~~March 31, 2018~~end of the fiscal year		423,175
	~~1,266,552,149~~
~~Issuance of new shares~~Current portion		230,223
~~149,900~~Non-current portion		192,952

There was no material change

due to

discounting during the

fiscal

year.

19.	Other assets and other liabilities

(1)	Other assets

Components of other assets as of March 31, 2022 and 2023 are as follows:


	Yen in millions
	March 31
	2022		2023
Advance payments and prepaid expenses		384,299		481,080
Income taxes receivable and other taxes receivable		169,580		243,569
Other		208,241		207,627

Total		762,120		932,276

Current assets		473,070		610,330
Non-current assets		289,050		321,946

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SONY GROUP CORPORATION AND CONSOLIDATED SUBSIDIARIES

(2)	Other liabilities

Components of other liabilities as of March 31, 2022 and 2023 are as follows:


	Yen in millions
	March 31
	2022		2023
Contract liabilities		366,227		508,454
Accrued short-term employee benefits		347,023		395,110
Refund liabilities		197,791		197,836
Taxes payable other than income taxes		163,316		185,224
Accrued expenses		177,404		177,789
Future insurance policy benefits and other		153,006		162,091
Other long-term employee benefit obligations		15,030		64,684
Product warranties		28,606		26,167
Other		146,566		130,573

Total		1,594,969		1,847,928

Current liabilities		1,488,488		1,720,335
Non-current liabilities		106,481		127,593

(Changes in presentation)

Other long-term employee benefit obligations, which were included within Other as of March 31, 2022, are now reclassified and presented as part of a separate caption due to an increase in materiality. Other long-term employee benefit obligations of 15,030 million yen, which were included within Other as of March 31, 2022 have been reclassified to conform to this change in presentation.

The changes in product warranties for the fiscal year ended March 31, 2023 are as follows:


	Yen in millions
	Fiscal year ended March 31
	2023
~~Exercise~~Balance at beginning of ~~stock acquisition rights~~the fiscal year		28,606
	~~4,525,300~~
~~Conversion of convertible bonds~~Additional product warranties		22,963
~~2,992~~Amounts used during the year		(20,442	)
Unused amounts reversed during the year		(6,359	)
Translation adjustment		1,399

Balance at ~~March 31, 2019~~end of the fiscal year		~~1,271,230,341~~ 26,167

~~Issuance of new shares~~		~~184,900~~
~~Exercise of stock acquisition rights~~		~~2,294,900~~
~~Conversion of convertible bonds~~		~~86,040~~
~~Cancellation of treasury stock~~		~~(12,737,400~~	)
	20.	Stockholders’ equity

(1)
~~Balance at March 31, 2020~~ Common stock			~~1,261,058,781~~

~~At March 31, 2020, 36,802,040~~The number of shares of common stock ~~would be~~authorized as of March 31, 2021, 2022 and 2023 was 3,600,000,000.

The following table shows the changes in the number of shares of common stock issued ~~upon~~and outstanding during the ~~conversion or exercise~~fiscal years ended March 31, 2021, 2022 and 2023. All of ~~all convertible bonds~~the shares of common stock of Sony Group Corporation are issued with no par value, and the issued stock ~~acquisition rights outstanding.~~was fully paid.


	Number of shares
	Fiscal year ended March 31
	2021		2022		2023
Balance at beginning of the fiscal year		1,261,058,781		1,261,058,781		1,261,081,781

Issuance of new shares		—		23,000		—

Balance at end of the fiscal year		1,261,058,781		1,261,081,781		1,261,081,781

~~F-6~~

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SONY GROUP CORPORATION AND CONSOLIDATED SUBSIDIARIES

~~Conversions~~

As of ~~convertible bonds into~~March 31, 2021, 2022 and 2023, the number of shares of treasury stock, which was included in the balance of common stock ~~are accounted for in accordance with the provisions of the Companies Act of Japan (~~

~~Kaishaho~~

)shares issued above, were 21,831,206 shares, 24,078,136 shares and ~~related regulations (collectively the “Companies Act”) by crediting approximately~~

~~one-half~~26,584,221 shares, respectively.

~~of the conversion proceeds to the common stock account and the remainder to the additional~~

~~paid-in~~

~~capital account.~~

Sony Group Corporation may purchase its own shares at any time by a resolution of the Board of Directors up to the retained earnings available for dividends to shareholders, in accordance with the Companies ~~Act.~~Act of Japan.

Although Sony ~~Corporation’s~~

Group Corporation approved on August 4, 2020 by resolution of the Board of Directors ~~resolved and authorized~~the setting of parameters for the repurchase of shares of its own common stock pursuant to the Companies Act ~~at the meeting~~ of ~~the Board~~Japan and Sony Group Corporation’s Articles of ~~Directors held on February 8, 2019. During the year ended March 31, 2019, Sony~~

~~Corporation~~

~~repurchased~~

~~19,309,100 shares of its~~Incorporation, no common stock ~~for an amount of 100,000 million yen under the above resolution.~~was acquired based on these parameters.

Sony Group Corporation’s

Board of Directors resolved and ~~authorized~~approved the setting of parameters for the repurchase of shares of its own common stock pursuant to the Companies Act of Japan and Sony Group Corporation’s Articles of Incorporation at the meeting of the Board of Directors held on April 28, 2021. Under the above resolution, Sony Group Corporation repurchased 7,400,600 shares of its common stock for an amount of 88,281

million yen during the fiscal year ended March 31, 2022, and repurchased 806,300 shares of its common stock for an amount of 9,100 million yen during the fiscal year ended March 31, 2023.

Sony Group Corporation’s Board of Directors resolved and approved the setting of parameters for the repurchase of shares of its own common stock pursuant to the Companies Act of Japan and Sony Group Corporation’s Articles of Incorporation at the meeting of the Board of Directors held on May ~~16, 2019. During~~10, 2022. Under the ~~year ended March 31, 2020,~~above resolution, Sony

Group Corporation

repurchased ~~33,059,200~~8,545,600 shares of its common stock for an amount of ~~199,999~~ 89,118

million yen ~~under the above resolution.~~

~~Based on the resolution of Sony~~

~~Corporation~~

~~’s Representative Corporate Executive Officer delegated by the Board of Directors, Sony Corporation canceled 12,737,400 shares of its common stock held as treasury stock on March 26, 2020.~~

~~(2)~~

~~Retained earnings~~

~~The amount of statutory retained earnings of Sony Corporation available for dividends to shareholders as of March 31, 2020 was 683,084 million yen.~~

~~The appropriation of retained earnings for~~during the fiscal year ended March 31, ~~2020, including~~2023.

(2)	Additional paid-in capital

Additional

paid-in

capital consists of surplus that is derived from equity transactions and not recorded in common stock, and its primary component is capital reserves. The Companies Act of Japan provides that no less than 50% of the

paid-in

amount or proceeds of issuance of shares shall be incorporated in common stock, and that the remaining shall be incorporated in capital reserves. Capital reserves may be incorporated in common stock upon approval of the General Meeting of Shareholders.

(3)	Retained earnings

Retained earnings consist of legal reserves and accumulated earnings. The Companies Act of Japan provides that earnings in an amount equal to 10% of cash dividends ~~for~~from retained earnings shall be appropriated as a capital reserve or a legal reserve on the ~~six-month period~~date of distribution of retained earnings until an aggregated amount of capital reserve and legal reserve equals 25% of common stock. Legal reserves may be used upon approval of the General Meeting of Shareholders.

Dividends whose record date falls in the fiscal years ended March 31, ~~2020, has been incorporated~~2022 and 2023, and whose effective date falls in the ~~consolidated financial statements. This appropriation of retained earnings was approved by the written resolution of the Board of Directors of Sony Corporation~~subsequent period are as ~~of May 13, 2020 and was then recorded in the statutory books of account, in accordance with the Companies Act.~~follows:

Retained earnings include Sony’s equity in undistributed earnings of affiliated companies accounted for by the equity method in the amount of 46,477 million yen and 61,226 million yen at March 31, 2019 and 2020, respectively.

(Resolution)

Type of

Total amount of

dividends

(Yen in millions)

Source of

dividends

Dividends

per share (Yen)

Record date

Effective
date

Board of Directors’ meeting held on May 10, 2022

Common stock

43,295

Retained earnings

35.00

March 31, 2022

June 3, 2022

Board of Directors’ meeting held on April 28, 2023

Common stock

49,380

Retained earnings

40.00

March 31, 2023

June 5, 2023

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SONY GROUP CORPORATION AND CONSOLIDATED SUBSIDIARIES

~~(3)~~

(4)

Other comprehensive income

Changes in accumulated other comprehensive income, net of tax, by component for the fiscal years ended March 31, ~~2018, 2019~~2021, 2022 and ~~2020 were~~2023 are as follows:

Yen in millions

Unrealized
gains (losses)
on securities

Unrealized
gains (losses)
on derivative
instruments

Pension
liability
adjustment

Foreign
currency
translation
adjustments

Total

Balance at March 31, 2017

126,635

(58
)
(308,736
)
(436,610
)
(618,769
)
Other comprehensive income before reclassifications

2,013

(2,295
)
1,779

(4,480
)
(2,983
)
Amounts reclassified out of accumulated other
comprehensive income
*

(943
)
1,111

10,611

(1,855
)
8,924

Net other comprehensive income

1,070

(1,184
)
12,390

(6,335
)
5,941

Less: Other comprehensive income attributable to noncontrolling interests

1,514

—

98

2,306

3,918

Balance at March 31, 2018

126,191

(1,242
)
(296,444
)
(445,251
)
(616,746
)


	Yen in millions
	Balance at April 1, 2020			Other comprehensive income attributable to Sony Group Corporation’s stockholders			Transfer to retained earnings			Transactions with noncontrolling interests shareholders and other			Balance at March 31, 2021
Changes in equity instruments measured at fair value through other comprehensive income		(8,882	)		144,544			6,085			(2,125	)		139,622
Changes in debt instruments measured at fair value through other comprehensive income		985,234			(179,251	)		—			458,754			1,264,737
Cash flow hedges		1,248			51			—			—			1,299
Remeasurement of defined benefit pension plans		—			11,555			(11,555	)		—			—
Exchange differences on translating foreign operations		—			113,771			—			130			113,901
Insurance contract valuation adjustments		1,973			(2,537	)		—			476			(88	)
Share of other comprehensive income of investments accounted for using the equity method		(97	)		885			(2	)		—			786

Total		979,476			89,018			(5,472	)		457,235			1,520,257


	Yen in millions
	Balance at April 1, 2021			Other comprehensive income attributable to Sony Group Corporation’s stockholders			Transfer to retained earnings			Balance at March 31, 2022
Changes in equity instruments measured at fair value through other comprehensive income		139,622			(106,426	)		(5,784	)		27,412
Changes in debt instruments measured at fair value through other comprehensive income		1,264,737			(416,904	)		—			847,833
Cash flow hedges		1,299			4,735			—			6,034
Remeasurement of defined benefit pension plans		—			33,641			(33,641	)		—
Exchange differences on translating foreign operations		113,901			223,777			—			337,678
Insurance contract valuation adjustments		(88	)		599			—			511
Share of other comprehensive income of investments accounted for using the equity method		786			2,078			—			2,864

Total		1,520,257			(258,500	)		(39,425	)		1,222,332

~~F-6~~

4F-94

Table of Contents

SONY GROUP CORPORATION AND CONSOLIDATED SUBSIDIARIES

Yen in millions

Unrealized
gains (losses)
on securities

Unrealized
gains (losses)
on derivative
instruments

Pension
liability
Adjustment

Foreign
currency
translation
adjustments

Total

Balance at March 31, 2018

126,191

(1,242
)
(296,444
)
(445,251
)
(616,746
)
Cumulative effect of
ASU2016-01

(15,526
)
—

—

—

(15,526
)
Other comprehensive income before reclassifications

33,124

2,316

(23,448
)
10,071

22,063

Amounts reclassified out of accumulated other comprehensive income
*

161

(1,093
)
9,488

(1,627
)
6,929

Net other comprehensive income

33,285

1,223

(13,960
)
8,444

28,992

Less: Other comprehensive income attributable to noncontrolling interests

8,915

—

53

(1,578
)
7,390

Balance at March 31, 2019

135,035

(19
)
(310,457
)
(435,229
)
(610,670
)

Yen in millions

Unrealized
gains (losses)
on securities

Unrealized
gains (losses)
on derivative
instruments

Pension
liability
adjustment

Foreign
currency
translation
adjustments

Debt
valuation
adjustments

Total

Balance at March 31, 2019

135,035

(19
)
(310,457
)
(435,229
)
—

(610,670
)

Other comprehensive income before reclassifications

40,334

1,193

(17,519
)
(75,814
)
3,032

(48,774
)
Amounts reclassified out of accumulated other
comprehensive income
*

56

74

92,490

(74
)
—

92,546

Net other comprehensive income

40,390

1,267

74,971

(75,888
)
3,032

43,772

Less: Other comprehensive income attributable to noncontrolling interests

14,234

—

34

(1,245
)
1,059

14,082

Balance at March 31, 2020

161,191

1,248

(235,520
)
(509,872
)
1,973

(580,980
)

*	Foreign currency translation adjustments were transferred from accumulated other comprehensive income to net income as a result of a complete or substantially complete liquidation or sale of certain foreign subsidiaries and affiliates.


	Yen in millions
	Balance at April 1, 202 2		Other comprehensive income attributable to Sony Group Corporation’s stockholders			Transfer to retained earnings			Balance at March 31, 202 3
Changes in equity instruments measured at fair value through other comprehensive income		27,412		(36,862	)		298			(9,152	)
Changes in debt instruments measured at fair value through other comprehensive income		847,833		(884,678	)		—			(36,845	)
Cash flow hedges		6,034		12,379			—			18,413
Remeasurement of defined benefit pension plans		—		18,891			(18,891	)		—
Exchange differences on translating foreign operations		337,678		175,525			—			513,203
Insurance contract valuation adjustments		511		1,714			—			2,225
Share of other comprehensive income of investments accounted for using the equity method		2,864		3,699			—			6,563

Total		1,222,332		(709,332	)		(18,593	)		494,407

~~F-6~~

~~Table~~Each component of ~~Contents~~

~~SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES~~

~~Reclassifications out of accumulated~~ other comprehensive income ~~for~~and the ~~fiscal years ended March 31, 2018, 2019 and 2020 were as follows:~~

Yen in millions

Comprehensive income components

Amounts reclassified from
accumulated other
comprehensive income

Affected line items in consolidated
statements of income

2018

2019

2020

Unrealized gains (losses) on securities

(646
)
235

82

Financial services revenue

(561
)
—

—

Gain on sale of securities investments, net

Total before tax

(1,207
)
235

82

Tax expense or (benefit)

264

(74
)
(26
)

Net of tax

(943
)
161

56

Unrealized gains (losses) on derivative instruments

1,111

(1,093
)
—

Cost of sales

—

—

106

Net sales

Total before tax

1,111

(1,093
)
106

Tax expense or (benefit)

—

—

(32
)

Net of tax

1,111

(1,093
)
74

Pension liability adjustment

11,034

9,891

92,514

*
Tax expense or (benefit)

(423
)
(403
)
(24
)

Net of tax

10,611

9,488

92,490

Foreign currency translation adjustments

(1,855
)
(1,627
)
(74
)
Foreign exchange loss, net and other operating (income) expense, net
Tax expense or (benefit)

—

—

—

Net of tax

(1,855
)
(1,627
)
(74
)

Total amounts reclassified out of accumulated other comprehensive income, net of tax

8,924

6,929

92,546

*	~~The amortization of pension and postretirement benefit components~~ is ~~included in the computation of net periodic pension cost. Refer to Note 15.~~

~~(4)~~

~~Equity transactions with noncontrolling interests~~

~~Net income attributable to Sony Corporation’s stockholders and transfers (to) from the~~related tax effect including noncontrolling interests for the fiscal years ended March 31, ~~2018, 2019~~2021, 2022 and ~~2020 were~~2023 are as follows:

Yen in millions

Fiscal year ended March 31

      2018

      2019

      2020

Net income attributable to Sony Corporation’s stockholders

490,794

916,271

582,191

Transfers (to) from the noncontrolling interests:

Increase (decrease) in additional
paid-in
capital for purchase of additional shares in consolidated subsidiaries

(74
)
(22,775
)
16,372

Change from net income attributable to Sony Corporation’s stockholders and transfers (to) from the noncontrolling interests

490,720

893,496

598,563


	Yen in millions
	Fiscal year ended March 31
Comprehensive income components	2021			2022			2023
Items that will not be reclassified to profit or loss
Changes in equity instruments measured at fair value through other comprehensive income
Amount incurred during the year		191,122			(139,511	)		(45,708	)

Total before tax		191,122			(139,511	)		(45,708	)
Tax expense or (benefit)		(46,382	)		33,085			8,846

Net of tax		144,740			(106,426	)		(36,862	)
Remeasurement of defined benefit pension plans
Amount incurred during the year		17,856			43,134			27,136

Total before tax		17,856			43,134			27,136
Tax expense or (benefit)		(6,301	)		(9,493	)		(8,245	)

Net of tax		11,555			33,641			18,891
Share of other comprehensive income of investments accounted for using the equity method
Amount incurred during the year		98			869			197

Total before tax		98			869			197
Tax expense or (benefit)		(11	)		(292	)		(52	)

Net of tax		87			577			145

Total		156,382			(72,208	)		(17,826	)

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	Yen in millions
	Fiscal year ended March 31
Comprehensive income components	2021			2022			2023
Items that may be reclassified subsequently to profit or loss
Changes in debt instruments measured at fair value through other comprehensive income
Amount incurred during the year		(285,504	)		(572,692	)		(1,223,450	)
Reclassification to profit or loss		(98	)		(6,408	)		(5,300	)

Total before tax		(285,602	)		(579,100	)		(1,228,750	)
Tax expense or (benefit)		80,053			162,196			344,072

Net of tax		(205,549	)		(416,904	)		(884,678	)
Cash flow hedges
Amount incurred during the year		7,481			(7,703	)		(12,975	)
Reclassification to profit or loss		(7,228	)		14,529			30,813

Total before tax		253			6,826			17,838
Tax expense or (benefit)		(202	)		(2,091	)		(5,459	)

Net of tax		51			4,735			12,379
Insurance contract valuation adjustments
Amount incurred during the year		(3,081	)		807			2,463
Reclassification to profit or loss		(39	)		(10	)		(83	)

Total before tax		(3,120	)		797			2,380
Tax expense or (benefit)		—			(198	)		(666	)

Net of tax		(3,120	)		599			1,714
Exchange differences on translating foreign operations
Amount incurred during the year		115,304			227,017			177,645
Reclassification to profit or loss		17			(742	)		630

Total before tax		115,321			226,275			178,275
Tax expense or (benefit)		—			—			—

Net of tax		115,321			226,275			178,275
Share of other comprehensive income of investments accounted for using the equity method
Amount incurred during the year		798			1,501			3,554
Reclassification to profit or loss		—			—			—

Total before tax		798			1,501			3,554
Tax expense or (benefit)		—			—			—

Net of tax		798			1,501			3,554

Total		(92,499	)		(183,794	)		(688,756	)

Total other comprehensive income		63,883			(256,002	)		(706,582	)

(5)	Equity transactions with noncontrolling interests shareholders

During the fiscal year ended March 31, ~~2019,~~2021, Sony Group Corporation acquired ~~from~~all the ~~Estate of Michael Jackson (the “Estate”)~~common shares and the ~~25.1% interest in Nile Acquisition LLC (“Nile”)~~related stock acquisition rights not held by ~~the Estate. A total~~Sony Group Corporation of ~~287.5~~SFGI, a consolidated subsidiary of Sony Group Corporation, and SFGI became a wholly-owned subsidiary of Sony Group Corporation. Consideration for this acquisition was 396,698 million ~~U.S.~~

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~~SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES~~

~~dollars was paid to the Estate for the acquisition.~~yen. The net difference between the ~~cash~~ consideration, ~~paid and~~the decrease in the carrying amount of the noncontrolling interests ~~was recognized as a decrease to additional~~

~~paid-in~~

~~capital~~ of ~~295.9 million U.S. dollars. As a result of the acquisition, Nile became a wholly-owned subsidiary of Sony.~~

On November 18, 2019, Sony, through a wholly-owned subsidiary in the Pictures segment, acquired AT&T Inc.’s (“AT&T”) 42% equity interest in Game Show Network, LLC (“Game Show Network”), a U.S.-based media network subsidiary. As a result of this acquisition, Game Show Network has become a wholly-owned subsidiary of Sony. Sony paid 53,9921,046,380 million yen ~~(496 million U.S. dollars) to AT&T, including 129 million U.S. dollars of dividends Sony distributed to AT&T prior to the acquisition. The difference between the cash paid~~ and the ~~carrying amount~~increase in accumulated other comprehensive income of ~~the noncontrolling interests~~457,072 million yen was recognized as an increase to additional

paid-in

~~capital.~~capital of 192,610 million yen.

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~~17.~~

21.

Stock-based compensation plans

The stock-based compensation expense for the fiscal years ended March 31, ~~2018, 2019~~2021, 2022 and ~~2020~~2023 was ~~5,249~~8,892 million yen, ~~5,499~~11,105 million yen and ~~5,958~~15,781 million yen, respectively.

Sony Group Corporation principally has a stock-based compensation incentive plan for ~~selected directors,~~the corporate executive officers and employees of Sony Group Corporation, and the directors, other officers and employees of its subsidiaries in the form of a stock ~~acquisition rights~~option plan. The stock acquisition rights granted under the stock option plan generally have ~~three year graded~~three-year vesting schedules and are exercisable up to ~~ten~~10 years from the date of grant.

The total cash received from exercises under all of the stock acquisition rights plans during the fiscal years ended March 31, 2018, 2019 and 2020 was 7,129 million yen, 12,757 million yen and 7,560 million yen, respectively. Sony ~~issued~~Group Corporation either issues new shares of common stock or reissues existing treasury stock upon the exercise of these rights.

The weighted-average fair value per share at the date of grant of stock acquisition rights granted during the fiscal years ended March 31, ~~2018, 2019~~2021, 2022 and ~~2020~~2023 was ~~2,045~~2,207 yen, ~~1,593~~2,994 yen and ~~1,864~~3,123 yen, respectively. The fair value of stock acquisition rights granted on the date of grant and used to recognize compensation expense for the fiscal years ended March 31, ~~2018, 2019~~2021, 2022 and ~~2020~~2023 was estimated using the Black-Scholes option-pricing model with the following weighted-average assumptions:

Fiscal year ended March 31

        2018

        2019

        2020

Weighted-average assumptions

Risk-free interest rate

1.14
%
1.37
%
0.70
%
Expected lives

6.55
years
5.98
years
5.73
years
Expected volatility
*

38.49
%
32.52
%
29.30
%
Expected dividends

0.40
%
0.35
%
0.32
%


	Fiscal year ended March 31
	2021			2022			2023
Weighted-average assumptions
Share price at the grant date		9,202	yen		14,361	yen		11,389	yen
Risk-free interest rate		0.17	%		0.60	%		1.88	%
Expected lives		5.41	years		5.33	years		5.46	years
Expected volatility*		26.97	%		22.47	%		26.55	%
Expected dividends		0.34	%		0.29	%		0.47	%

Expected volatility was based on the historical volatilities of Sony Group Corporation’s common stock over the expected life of the stock acquisition rights.

A summary of the activities regarding the stock ~~acquisition rights plan during the fiscal year ended March 31, 2020 is as follows:~~

Fiscal year ended March 31, 2020

Number of
shares

Weighted-
average
exercise price

Weighted-
average
remaining life

Total
intrinsic
value

Yen

Years

Yen in millions

Outstanding at beginning of the fiscal year

12,213,900

3,665

Granted

3,279,700

6,669

Exercised

2,294,900

3,294

Forfeited or expired

322,000

5,500

Outstanding at end of the fiscal year

12,876,700

4,982

7.52

19,459

Exercisable at end of the fiscal year

6,235,700

3,581

6.43

15,552

~~The total intrinsic value of shares exercised under the stock acquisition rights~~option plan during the fiscal years ended March 31, ~~2018, 2019~~2021, 2022 and ~~2020~~2023 is as follows:


	Fiscal year ended March 31
	2021				2022				2023
	Number of shares		Weighted- average exercise price		Number of shares		Weighted- average exercise price		Number of shares		Weighted- average exercise price
	Number of shares		Yen		Number of shares		Yen		Number of shares		Yen


Outstanding at beginning of the fiscal year		12,876,700		4,982		14,022,400		6,653		16,544,300		9,397

Granted		4,534,600		9,221		4,876,400		14,188		4,744,300		10,979
Exercised		3,178,300		3,911		1,944,900		5,313		1,260,800		5,565
Forfeited or expired		210,600		6,280		409,600		9,484		336,300		12,654

Outstanding at end of the fiscal year		14,022,400		6,653		16,544,300		9,397		19,691,500		10,312

Exercisable at end of the fiscal year		5,800,700		4,535		7,044,700		5,883		9,683,000		8,033

The weighted-average stock price at the time when the stock acquisition rights were exercised during the fiscal years ended March 31, 2021, 2022 and 2023 was ~~6,970 million~~9,311 yen, ~~13,325 million~~12,627 yen and ~~7,575 million~~11,404 yen, respectively.

~~F-6~~

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A summary of unexercised stock acquisition rights as of March 31, 2021, 2022 and 2023 is as follows:


Series	Date of grant	Exercise term	Exercise price		Outstanding at end of the fiscal year (shares)
Series	Date of grant	Exercise term	Exercise price		2021		2022		2023

22 nd	November 22, 2011	November 22, 2012 to November 21, 2021	¥	1,523		24,700		—		—
23 rd	November 22, 2011	November 22, 2012 to November 21, 2021	$	19.44		77,500		—		—
24 th	December 4, 2012	December 4, 2013 to December 3, 2022	¥	932		24,000		14,700		—
25 th	December 4, 2012	December 4, 2013 to December 3, 2022	$	11.23		102,600		77,900		—
26 th	November 20, 2013	November 20, 2014 to November 19, 2023	¥	2,007		88,500		47,000		14,400
27 th	November 20, 2013	November 20, 2014 to November 19, 2023	$	20.01		140,900		127,300		110,700
28 th	November 20, 2014	November 20, 2015 to November 19, 2024	¥	2,410.5		243,700		190,900		132,500
29 th	November 20, 2014	November 20, 2015 to November 19, 2024	$	20.67		167,300		154,100		135,500
30 th	November 19, 2015	November 19, 2016 to November 18, 2025	¥	3,404		323,900		252,600		186,900
31 st	November 19, 2015	November 19, 2016 to November 18, 2025	$	27.51		218,800		170,800		148,200
32 nd	November 22, 2016	November 22, 2017 to November 21, 2026	¥	3,364		672,100		516,300		390,400
33 rd	November 22, 2016	November 22, 2017 to November 21, 2026	$	31.06		446,200		367,900		330,500
34 th	November 21, 2017	November 21, 2018 to November 20, 2027	¥	5,231		872,800		572,500		434,200
35 th	November 21, 2017	November 21, 2018 to November 20, 2027	$	45.73		787,200		676,400		620,500
36 th	February 28, 2018	February 28, 2019 to February 27, 2028	¥	5,442		5,800		4,500		3,900
38 th	November 20, 2018	November 20, 2019 to November 19, 2028	¥	6,440		1,290,600		977,800		839,900
39 th	November 20, 2018	November 20, 2019 to November 19, 2028	$	56.22		987,300		826,800		760,500
40 th	November 20, 2019	November 20, 2020 to November 19, 2029	¥	6,705		1,645,300		1,389,700		1,210,100
41 st	November 20, 2019	November 20, 2020 to November 19, 2029	$	60.99		1,393,400		1,190,800		1,076,300
42 nd	April 17, 2020	April 17, 2021 to April 16, 2030	$	63.75		20,000		13,300		13,300
43 rd	November 18, 2020	November 18, 2021 to November 17, 2030	¥	9,237		2,252,000		2,193,000		2,060,400
44 th	November 18, 2020	November 18, 2021 to November 17, 2030	$	87.48		2,222,800		1,974,800		1,862,100
45 th	November 18, 2021	November 18, 2022 to November 17, 2031	¥	14,350		—		2,399,100		2,367,500
46 th	November 18, 2021	November 18, 2022 to November 17, 2031	$	124.90		—		2,391,100		2,277,100
47 th	November 16, 2022	November 16, 2023 to November 15, 2032	¥	11,390		—		—		2,427,100
48 th	November 16, 2022	November 16, 2023 to November 15, 2032	$	77.89		—		—		2,289,500

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SONY GROUP CORPORATION AND CONSOLIDATED SUBSIDIARIES

~~As of March 31, 2020, there was 5,912~~

~~million yen~~

~~of total unrecognized compensation expense related to nonvested stock acquisition rights. This expense is expected to be recognized over a weighted-average period of 1.97~~

~~years.~~

~~18.~~

~~Kumamoto Earthquake~~22.

In April 2016, a series of earthquakes occurred in the Kumamoto region of Japan. These earthquakes caused damage to certain fixed assets, including buildings, machinery and equipment, as well as inventories in manufacturing sites located in the Kumamoto region.

For the fiscal year ended March 31, 2017, Sony incurred incremental losses and associated expenses including repair costs of fixed assets and a loss on disposal of inventories directly related to the damage caused by the earthquakes of 16,682 million yen. These losses and expenses were primarily recorded in cost of sales in the consolidated statements of income and were offset by insurance recoveries of 10,682 million yen, as described below. In addition, Sony incurred other expenses of 9,365 million yen, which included idle facility costs at manufacturing sites. These expenses were primarily recorded in cost of sales in the consolidated statements of income.

Sony has insurance policies that cover certain damage directly caused by the earthquakes for Sony Corporation and certain of its subsidiaries, including damage at manufacturing sites. The insurance policies cover the damage and costs associated with fixed assets and inventories, as well as incremental expenses including removal and cleaning costs. These policies also provide business interruption coverage, including coverage for lost profits. For the fiscal year ended March 31, 2017, Sony recorded insurance receivables of 10,682 million yen, representing a portion of the insurance recoveries that were deemed probable of collection up to the extent of the amount of corresponding losses recognized in the same period. Of the insurance receivables recorded during the period, substantially all relate to damaged assets and inventories, and do not include amounts for business interruption or lost profits. Sony concluded that the recoveries from insurance claims are probable based on the coverage under valid policies, communications with the insurance carriers, Sony’s past claims history with the insurance carriers, and Sony’s assessment that the insurance carriers have the financial ability to pay the claims. In March 2017, 10,000 million yen was agreed to by the insurance carriers. These receivables are recorded within other receivables, whereas the remaining receivables of 682 million yen is recorded in other current assets in the consolidated balance sheets as of the fiscal year ended March 31, 2017.

Sony has underwritten 2,000 million yen in reinsurance policies for the above insurance carriers related to the policy described above. The amount was recorded in other current liabilities in the consolidated balance sheets as of the fiscal year ended March 31, 2017 and was paid to the insurance carriers in the fiscal year ended March 31, 2018.

In April 2017, the remaining insurance claims of 10,000 million yen that were mainly for business interruption coverage were agreed to by the carriers. As a result, the total amount of insurance recoveries paid to Sony in April 2017 was 20,000 million yen. 9,318 million yen, which was the difference between 20,000 million yen and 10,682 million yen as described above, was recorded in other operating revenue for the fiscal year ended March 31, 2018. The proceeds from insurance recoveries were presented as cash flows from operating activities in the consolidated statements of cash flows for the fiscal year ended March 31, 2018.

~~19.~~

Revenue

(1)	Contract balances

Receivables from contracts with customers, contract assets and contract liabilities are comprised of the following:

Yen in millions

March

3
1,
2019

March 31,
2020

Receivables from contracts with customers
*1

1,183,115

1,126,597

Contract assets
*1

19,147

13,985

Contract liabilities
*2

254,646

271,286


	Yen in millions
	April 1		March 31
	2021		2022
Receivables from contracts with customers *1		1,177,027		1,382,377
Contract assets *2		12,204		16,785
Contract liabilities *3		294,911		366,227


	Yen in millions
	April 1		March 31
	2022		2023
Receivables from contracts with customers *1		1,382,377		1,679,106
Contract assets *2		16,785		19,355
Contract liabilities *3		366,227		508,454

Receivables from contracts with customers are included in the consolidated statements of financial position as “Trade and other receivables, and contract assets” and “Other financial assets,”

non-current.

Contract assets are included in the consolidated ~~balance sheets~~statements of financial position as ~~“Notes~~“Trade and ~~accounts receivable, trade~~other receivables, and contract assets” and ~~“Other”,~~“Other

~~non-current.~~non-current

assets.”

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~~SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES~~

*23

Contract liabilities are included in the consolidated ~~balance sheets~~statements of financial position as ~~“Other”, both~~“Other current liabilities” and “Other

~~non-current.~~non-current

liabilities.”

Contract liabilities principally relate to customer advances received prior to performance. Revenues of ~~204,265~~216,931 million yen, 231,274 million yen and 303,779 million yen were recognized during the fiscal ~~year~~years ended March 31, ~~2020,~~2021, 2022 and 2023, which were included in the balance of contract liabilities atas of

~~March 31~~April

~~, 2019.~~ 1, 2020, 2021 and 2022. Revenues of ~~61,706~~76,405 million yen, 78,149 million yen and 45,645 million yen were recognized during the fiscal ~~year~~years ended March 31, ~~2020~~2021, 2022 and 2023 respectively, from performance obligations satisfied prior to ~~March 31, 2019.~~April 1, 2020, 2021 and 2022 respectively.

(2)	Performance obligations

Remaining (unsatisfied or partially unsatisfied) performance obligations represent future revenues not yet recorded for firm orders that have not yet been performed. Sony applies practical expedients to exclude ~~certain information about the remaining performance obligations, primarily related to~~ contracts with an expected original duration of ~~less than~~ one year ~~and sales-based~~ or ~~usage-based royalty revenue on licenses of intellectual property.~~less. The following table shows the summary of the transaction prices allocated to remaining performance obligations that are unsatisfied atas of March 31, ~~2020,~~2022 and 2023, respectively, of which more than half are expected to be recognized within one year and substantially all within three years.


	~~Yen in millions~~
	~~March 31,~~ The amount of the transaction price related to variable consideration is included only to the extent that it is highly probable that a significant reversal in the amount of cumulative revenue to be recognized will not occur. ~~2020~~
~~Pictures — Motion Pictures and Television Productions~~ *1		~~569,081~~
~~Pictures — Media Networks~~		~~22,333~~
~~Music~~ *2		~~44,971~~
~~Others~~		~~47,126~~


	Yen in millions
	March 31
	2022		2023
Pictures — Motion Pictures and Television Productions *1		705,974		796,690
Pictures — Media Networks		17,568		8,120
Music *2		127,530		140,842
Others		57,948		68,708

For Motion Pictures and Television Productions in the Pictures segment, Sony has included all contracts regardless of duration.

~~Amount~~

The amount included in the Music segment primarily consists of minimum royalty guarantees or fixed fees in contracts related to license revenue for ongoing access to an evolving library of content. These contracts also include the potential for sales-based or usage-based royalties to exceed the minimum guarantees, and these additional royalties are excluded from the amount above, of which substantially all are recognized as revenue within three years.

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(3)	Contract costs

Contract costs are comprised as follows:

Yen in millions

March 31
,
2019

March 31,
2020

Incremental costs of obtaining a contract

6,581

7,464


	Yen in millions
	March 31
	2022		2023
Incremental costs of obtaining a contract		7,336		6,110

Sony applies practical expedients to recognize the incremental costs of obtaining a contract as an expense if the amortization period of the asset that otherwise would have been recognized is one year or less. The amortization of ~~6,420~~7,271 million yen, 6,917 million yen and 4,686 million yen was recognized during the fiscal ~~year~~years ended March 31, ~~2020.~~2021, 2022 and 2023, respectively. The incremental costs of obtaining a contract are primarily recognized in the EPET&S segment for the internet-related service business and amortized to expense over the contract period.

(4)	Disaggregation of revenue

For the breakdown of sales and ~~operating~~financial services revenue by segments, product categories and ~~geographies,~~

eographies, refer to Note ~~29.~~4.

~~20.~~

~~Restructuring charges~~23.

As part of its effort to improve the performance of the various businesses, Sony has undertaken a number of restructuring initiatives. Sony defines restructuring initiatives as activities initiated by Sony, which are designed

~~F-6~~

~~Table of Contents~~

~~SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES~~

to generate a positive impact on future profitability. These activities include exiting a business or product category, implementing a headcount reduction program, realignment of its manufacturing sites to

~~low-cost~~

areas, utilizing the services of third-party original equipment and design manufacturers (OEMs and ODMs), a review of its development and design structure, and the streamlining of its sales and administrative functions. The restructuring activities are generally short term in nature and are generally completed within one year of initiation.

~~The changes in the accrued restructuring charges for the fiscal years ended March 31, 2018, 2019 and 2020 are as follows:~~

Yen in millions

Employee
termination
benefits

Non-cash

write-downs
and disposals,
net
*

Other
associated
costs

Total

Balance at March 31, 2017

11,634

—

9,167

20,801

Restructuring costs

18,999

2,233

1,147

22,379

Non-cash
charges

—

(2,233
)
—

(2,233
)
Cash payments

(9,950
)
—

(6,352
)
(16,302
)
Adjustments

(1,197
)
—

226

(971
)

Balance at March 31, 2018

19,486

—

4,188

23,674

Restructuring costs

24,449

2,731

5,825

33,005

Non-cash
charges

—

(2,731
)
—

(2,731
)
Cash payments

(19,150
)
—

(2,555
)
(21,705
)
Adjustments

955

—

(357
)
598

Balance at March 31, 2019

25,740

—

7,101

32,841

Restructuring costs

22,957

100

1,653

24,710

Non-cash
charges

—

(100
)
—

(100
)
Cash payments

(23,385
)
—

(6,703
)
(30,088
)
Adjustments

(674
)
—

(131
)
(805
)

Balance at March 31, 2020

24,638

—

1,920

26,558

~~Significant asset impairments excluded from restructuring charges are described in Note 13.~~

~~Total costs incurred in connection with these restructuring programs by segment for the fiscal years ended March 31, 2018, 2019 and 2020 are as follows:~~

Yen in millions

Fiscal year ended March 31, 2018

Employee
termination
benefits

Other
associated
costs
*

Total net
restructuring
charges

Depreciation
associated with
restructured
assets

Total

Game & Network Services

—

—

—

—

—

Music

6,358

272

6,630

—

6,630

Pictures

2,922

—

2,922

—

2,922

Electronics Products & Solutions

3,384

118

3,502

0

3,502

Imaging & Sensing Solutions

28

—

28

—

28

Financial Services

—

—

—

—

—

All Other and Corporate

6,307

2,990

9,297

26

9,323

Total

18,999

3,380

22,379

26

22,405

F-

~~Table of Contents~~

~~SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES~~

Yen in millions

Fiscal year ended March 31, 2019

Employee
termination
benefits

Other
associated
costs
*

Total net
restructuring
charges

Depreciation
associated with
restructured
assets

Total

Game & Network Services

—

—

—

—

—

Music

2,991

201

3,192

—

3,192

Pictures

4,795

—

4,795

—

4,795

Electronics Products & Solutions

11,437

4,574

16,011

86

16,097

Imaging & Sensing Solutions

—

—

—

—

—

Financial Services

—

—

—

—

—

All Other and Corporate

5,226

3,781

9,007

—

9,007

Total

24,449

8,556

33,005

86

33,091

Yen in millions

Fiscal year ended March 31, 2020

Employee
termination
benefits

Other
associated
costs
*

Total net
restructuring
charges

Depreciation
associated with
restructured
assets

Total

Game & Network Services

—

—

—

—

—

Music

3,179

6

3,185

—

3,185

Pictures

545

—

545

—

545

Electronics Products & Solutions

14,500

227

14,727

—

14,727

Imaging & Sensing Solutions

—

—

—

—

—

Financial Services

—

—

—

—

—

All Other and Corporate

4,733

1,520

6,253

256

6,509

Total

22,957

1,753

24,710

256

24,966

~~Other associated costs includes~~

~~non-cash~~

~~write-downs and disposals, net~~

Depreciation associated with restructured assets as used in the context of the disclosures regarding restructuring activities refers to the increase in depreciation expense caused by revising the useful life and the salvage value of depreciable fixed assets under an approved restructuring plan. Any impairment of the assets is recognized immediately in the period it is identified.

~~Retirement programs~~

Sony has undergone several headcount reduction programs to further reduce operating costs primarily in an effort to improve the performance of certain segments related to the EP&S segment and reduce cost at the headquarters function. Through measures including the realignment of its manufacturing sites, a review of its development and design structure, and the streamlining of its sales and administrative functions, Sony has continued to implement a company-wide (including headquarters) rationalization. Sony intends to reallocate and optimize its workforce through programs including work reassignments and outplacements. The employee termination benefits costs in the above table are included in selling, general and administrative in the consolidated statements of income.

~~Music~~

In an effort to optimize the organization and improve the performance of the Music segment, Sony has implemented a number of restructuring initiatives targeting operating effectiveness and cost reduction. These activities resulted in restructuring charges primarily consisting of headcount reductions totaling 6,630 million yen, 3,192 million yen and 3,185 million yen for the fiscal years ended March 31, 2018, 2019 and 2020

~~respectively.~~

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~~SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES~~

~~Pictures~~

In an effort to optimize the organization and improve the performance of the Pictures segment, Sony has implemented a number of restructuring initiatives targeting operating effectiveness and cost reduction. These activities resulted in restructuring charges primarily consisting of headcount reductions totaling 4,795 million yen for the fiscal year ended March 31

~~201~~

~~There were no significant charges for the Pictures segment during the fiscal year ended March 31, 2020.~~

~~EP&S~~

In an effort to improve the performance of each business, mainly the smartphone business in the EP&S segment, Sony has implemented a number of restructuring initiatives targeting profitability improvement. These activities resulted in restructuring charges primarily consisting of the closure and consolidation of manufacturing sites as well as sales offices overseas totaling 16,011 million yen and 14,727 million yen for the fiscal year

~~ended March 31, 2019 and 2020~~

~~respectively.~~

~~21.~~

Supplemental consolidated statements of income information

(1)	Other operating (income) expense, net

Sony records transactions in other operating (income)

expense, net due to either the nature of the transaction or in consideration of factors including the relationship to Sony’s core operations.

Other operating (income)

expense, net is comprised of the following:

Yen in millions

March 31

2018

2019

2020

Gain on sale of Sony City Osaki
*1

(4,914
)
—

—

Gain on remeasurement of EMI shares
*2

—

(116,939
)
—

Gain on remeasurement and sale of SRE shares
*3

—

—

(17,266
)
Gain on remeasurement of AEGON Sony Life Insurance Co., Ltd. and SA Reinsurance Ltd. shares
*4

—

—

(1,827
)
(Gain) loss on purchase/sale of interests in subsidiaries and affiliates, net
*5

(29,613
)
(1,557
)
(12,801
)
(Gain) loss on sale, disposal or impairment of assets, net
*6

38,599

46,928

29,778

Other

—

—

(1,495
)

4,072

(71,568
)
(3,611
)


	Yen in millions
	Fiscal year ended March 31
	2021			2022			2023
Gain on transfer of GSN Games shares *1		—			(70,020	)		—
(Gain) loss on purchase/sale of interests in subsidiaries and associates, net		(18,868	)		(4,593	)		(4,318	)
(Gain) loss on sale, disposal or impairment of assets, net *2		32,122			8,316			(417	)
Other		996			803			(7,286	)

		14,250			(65,494	)		(12,021	)

~~A portion of gain on sale and leaseback transactions is deferred and is amortized on a straight-line basis over the lease term.~~

*2	~~Refer to Notes 5 and 25.~~

*3	Refer to Note 5.31.

*4	~~Refer to Notes 5 and 25.~~

*52	~~Refer to Notes 25 and 26.~~

*6	Refer to Notes 9 ~~13, 20~~ and ~~26.~~11.

(2)	Research and development ~~costs~~expenditures

Research and development ~~costs charged to cost of sales~~expenditures recognized as an expense for the fiscal years ended March 31, ~~2018, 2019~~2021, 2022 and ~~2020~~2023 were ~~458,518~~545,357 million yen, ~~481,202~~618,368 million yen and ~~499,290~~735,698 million yen, respectively.

(3)	Advertising costs

Advertising costs included in selling, general and administrative expenses for the fiscal years ended March 31, ~~2018, 2019~~2021, 2022 and ~~2020~~2023 were ~~407,106~~261,391 million yen, ~~385,500~~347,709 million yen and ~~359,458~~391,131 million yen, respectively.

~~F-7~~

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~~SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES~~

(4)	Shipping and handling costs

Shipping and handling costs for finished goods included in selling, general and administrative expenses for the fiscal years ended March 31, ~~2018, 2019~~2021, 2022 and ~~2020~~2023 were ~~46,252~~82,708 million yen, ~~51,757~~70,858 million yen and ~~46,196~~95,208 million yen, respectively, which included the internal transportation costs of finished goods.

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~~22.~~

24.

Financial income and expense

Financial income


	Yen in millions
	Fiscal year ended March 31
	2021		2022		2023
Interest income
Financial assets measured at AC		7,610		6,996		22,399
Dividends
Financial assets measured at FVOCI		1,566		2,792		3,488
Gain on revaluation of equity instruments
Financial assets measured at FVPL * 2		61,259		—		—
Other		13,357		9,516		5,171

Total		83,792		19,304		31,058

Financial expenses


	Yen in millions
	Fiscal year ended March 31
	2021		2022		2023
Interest expense
Financial liabilities measured at AC		5,916		6,377		16,016
Other		8,292		8,223		10,382
Foreign exchange loss, net * 1		16,191		1,612		14,489
Loss on revaluation of equity instruments
Financial assets measured at FVPL * 2		—		66,177		4,623
Other		10,683		21,751		13,441

Total		41,082		104,140		58,951

Foreign exchange loss, net includes gains or losses from foreign exchange contracts.

Shares of Spotify Technology S.A. (“Spotify”) held by Sony are classified as equity securities required to be measured at fair value through profit or loss. The revaluation of the Spotify shares, net of costs to be paid to Sony’s artists and distributed labels, owned as of March 31, 2021, March 31, 2022 and March 31, 2023 resulted in an unrealized gain of 51,310 million yen (480 million U.S. dollars), an unrealized loss of 45,017 million yen (395 million U.S. dollars), and an unrealized loss of 7,787 million yen (58 million U.S. dollars), respectively.

25.	Income taxes

~~Domestic and foreign components of income~~

Income (loss) before income taxes and the provision for current and deferred income taxes attributable to such income are ~~summarized~~ as follows:

Yen in millions

Fiscal year ended March 31

2018

2019

2020

Income before income taxes:

Sony Corporation and all subsidiaries in Japan

436,494

310,020

466,253

Foreign subsidiaries

262,555

701,628

333,197

699,049

1,011,648

799,450

Income taxes—Current:

Sony Corporation and all subsidiaries in Japan

69,697

82,081

105,755

Foreign subsidiaries

57,988

84,667

66,636

127,685

166,748

172,391

Income taxes—Deferred:

Sony Corporation and all subsidiaries in Japan

29,640

17,907

9,421

Foreign subsidiaries

(5,555
)
(139,557
)
(4,622
)

24,085

(121,650
)
4,799

Total income tax expense

151,770

45,098

177,190


	Yen in millions
	Fiscal year ended March 31
	2021			2022			2023
Income (loss) before income taxes:		997,965			1,117,503			1,180,313

Income tax expenses
Current		156,592			238,602			302,379
Deferred		(202,523	)		(9,505	)		(65,688	)

Total income tax expense		(45,931	)		229,097			236,691

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A reconciliation of the differences between the Japanese statutory tax rate and the effective tax rate is as follows:

Fiscal year ended March 31

2018

2019

2020

Statutory tax rate

31.5
%
31.5
%
31.5
%
Non-deductible
expenses

0.8

0.7

0.3

Income tax credits

(0.6
)
(1.6
)
(1.7
)
Change in statutory tax rate and law

(1.2
)
(0.3
)
(0.4
)
Change in valuation allowances (other than the 2019 reversal of Sony Americas Holding Inc. (“SAHI”) and its U.S. consolidated tax filing group below)

(5.2
)
2.3

(8.1
)
The 2019 reversal of valuation allowances of SAHI and its U.S. consolidated tax filing group

—

(15.3
)
—

Change in deferred tax liabilities on undistributed earnings of foreign subsidiaries and corporate joint ventures

(0.8
)
(0.1
)
0.2

Lower tax rate applied to life and
non-life
insurance business in Japan

(0.8
)
(0.5
)
(0.6
)
Foreign income tax differential

(2.6
)
(6.4
)
(2.4
)
Adjustments to tax reserves

(0.8
)
(0.3
)
0.9

Effect of equity in net income of affiliated companies

0.0

0.0

0.0

The remeasurement gain for the equity interest in EMI

—

(2.4
)
—

Japan controlled foreign company taxation

—

0.0

5.3

Other

1.4

(3.1
)
(2.8
)

Effective income tax rate

21.7
%
4.5
%
22.2
%


	Fiscal year ended March 31
	2021			2022			2023
Statutory tax rate		31.5	%		31.5	%		31.5	%
Non-deductible expenses		0.2			0.2			0.2
Income tax credits		(1.4	)		(1.9	)		(3.2	)
Change in statutory tax rate		(0.1	)		(0.2	)		(0.1	)
Change in unrecognized tax assets (other than the reversal of a previous write-down of the deferred tax assets below)		(5.5	)		(3.7	)		(1.1	)
Reversal of a previous write-down of the deferred tax assets of the consolidated tax filing group in the United States		(6.6	)		—			—
Reversal of a previous write-down of the deferred tax assets relating to the national tax of Sony Group Corporation and its national tax filing group in Japan		(21.5	)		—			—
Change in deferred tax liabilities on undistributed earnings of foreign subsidiaries and corporate joint ventures		0.7			1.0			1.6
Lower tax rate applied to life and non-life insurance business in Japan		(0.5	)		(0.4	)		(0.6	)
Foreign income tax differential		(4.4	)		(5.5	)		(6.4	)
Recording or reversal of liabilities for uncertain tax positions		(0.4	)		0.8			(0.3	)
Controlled Foreign Company taxation in Japan		3.0			(1.8	)		(2.1	)
Other		0.4			0.5			0.6

Effective income tax rate		-4.6	%		20.5	%		20.1	%

~~F-7~~

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~~SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES~~

On December 22, 2017, the U.S. Tax Reform Act was signed into law, making significant changes to the U.S. tax rules. Changes include, but are not limited to, a corporate tax rate decrease from 35% to 21% effective for tax years beginning January 1, 2018 and the transition of U.S. international taxation from a worldwide tax system to a modified territorial system, with a

~~one-time~~

~~mandatory transition tax on previously deferred foreign earnings of U.S. subsidiaries.~~

In addition to lowering the statutory corporate tax rate from 35% to 21%, the U.S. Tax Reform Act also eliminated certain deductions, included new restrictions on the deduction for interest, introduced a new tax regime called the Base Erosion Anti-Abuse Tax or “BEAT”, and changed how foreign earnings of the U.S. group are subject to tax. The U.S. Tax Reform Act also enhanced and extended the option to claim accelerated depreciation and amortization deductions by allowing full expensing of qualified property, including film costs, through 2022. The U.S. Tax Reform Act also provided for beneficial treatment of certain income derived by a U.S. entity from outside the United States (referred to as Foreign Derived Intangible Income or “FDII”).

The BEAT creates a minimum tax on multinational corporations by requiring companies subject to the BEAT to pay the greater of their regular tax liability (less certain credits, including foreign tax credits) or 10% for taxable years beginning in 2019 (6.25% for

~~the~~

fiscal year ended March 31. 2019) of a modified tax base which adds back certain related party payments. The BEAT comparison to regular tax must be done each year if the taxpayer’s “base erosion” related party payments exceed 3% of total deductions on its U.S. tax return. The U

Treasury Department issued regulations which allow taxpayers to elect to forego deductions in order to stay below the 3% threshold. Sony initially expected to exceed the 3% threshold for the fiscal year ended March 31, 2019, but upon further detailed analysis at the time of the tax return filing, determined that it would be below the 3% threshold and therefore could use foreign tax credits to offset its regular tax liability. Sony believes it will be below the 3% threshold for the fiscal year ended March 31, 2020, and if not, would be able to avail itself of the election in the regulations that allows it to forego deductions to come under the threshold. Accordingly, Sony has provided for its taxes assuming the U

~~regular tax liability~~

~~offset by tax credits. Sony is required to determine if it is subject to the BEAT on an annual basis,~~

~~account for~~

~~BEAT as a period cost and to record deferred taxes at the regular statutory rate. Accordingly, Sony has recorded its U.S. deferred tax assets and liabilities at 21%.~~

Sony ~~provides a valuation allowance for its~~recognizes deferred tax assets, which ~~includes~~include temporary differences, net operating losses ~~temporary differences~~ and tax credits, ~~when~~to the extent that it is ~~more likely than not~~probable that ~~some portion, or all, of its deferred tax~~taxable profit will be available against which the assets ~~will not~~can be ~~realized.~~utilized. The ~~ultimate~~ realization of deferred tax assets is dependent upon the generation of future taxable income in the relevant tax jurisdiction. As of December 31, 2018, SAHI and its U.S. consolidated tax filing group has continued its profitable trend, primarily as a result of the G&NS segment and the Music segment. Based on an assessment of the available positive and negative evidence, in the quarter ended December 31, 2018, Sony reversed the valuation allowances

~~established~~

against a significant portion of the deferred tax assets in the United States, primarily for net operating losses, temporary differences and certain tax credits, and recorded a tax benefit of 154,201 million yen.

~~F-7~~

~~Table of Contents~~

~~SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES~~

~~The significant components of deferred tax assets and liabilities are as follows:~~

Yen in millions

March 31

2019

2020

Deferred tax assets:

Operating loss carryforwards for tax purposes

413,494

348,714

Accrued pension and severance costs

103,652

77,559

Amortization including film costs

86,196

65,349

Lease liability
—
100,720

Warranty reserves and accrued expenses

108,515

116,234

Future insurance policy benefits

36,683

42,056

Inventory

19,716

15,512

Depreciation

34,638

39,085

Tax credit carryforwards

117,471

94,900

Loss on equity securities
—
11,815

Reserve for doubtful accounts

9,136

9,090

Impairment of investments

12,278

6,029

Deferred revenue

19,081

24,420

Other

169,897

122,591

Gross deferred tax assets

1,130,757

1,074,074

Less: Valuation allowance

(723,114
)
(608,243
)

Total deferred tax assets

407,643

465,831

Deferred tax liabilities:

Insurance acquisition costs

(169,244
)
(170,868
)
Future insurance policy benefits

(181,052
)
(193,315
)
Unbilled accounts receivable in the Pictures segment

(44,842
)
(26,214
)
Right-of-use assets
—
(96,970
)
Unrealized gains on securities

(75,573
)
(92,791
)
Gain on equity securities

(33,082
)
—

Intangible assets acquired through stock exchange offerings

(23,949
)
(23,949
)
Intangible assets derived from EMI Music Publishing acquisition

(93,979
)
(89,909
)
Undistributed earnings of foreign subsidiaries and corporate joint ventures

(15,758
)
(25,359
)
Investment in M3

(37,007
)
(38,303
)
Other

(62,092
)
(47,319
)

Gross deferred tax liabilities

(736,578
)
(804,997
)

Net deferred tax liabilities

(328,935
)
(339,166
)

~~Based on the weight of the available positive and negative evidence, for~~During the fiscal year ended March 31, ~~2020,~~2021, Sony ~~continued to maintain valuation allowances against~~assessed the recoverability

deferred tax assets, and reversed a previous write-down of the deferred tax assets atfor general business tax credits and foreign tax credits of the consolidated tax filing group in the United States. The impact of such reversal of a previous write-down of the deferred tax assets resulted in deferred tax benefits.

Despite the spread of

COVID-19,

as a result of the acquisition of SFGI in the three months ended September 30, 2020, the taxable income of Sony Group Corporation and its national tax filing group in Japan has increased and is expected to be stable going forward. Based on an assessment of the available evidence, in particular recent profit history and forecasted profitability, in the three months ended September 30, 2020, Sony reversed a previous write-down of a significant portion of the deferred tax assets of the consolidated tax filing group in Japan, primarily for temporary differences and certain net operating losses. As a result, Sony recorded a tax benefit of 214,346 million yen in the three months ended September 30, 2020. Remaining deferred tax assets in Japan, primarily foreign tax credits, are continuously not recognized due to restrictions on the use of such assets and their relatively short remaining carryforward periods.

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The schedules of deferred tax assets and liabilities by major cause of their occurrence are as ~~well as~~follows:


	Yen in millions
	Fiscal year ended March 31, 2022
	Beginning balance			Recognized in profit or loss			Recognized in other comprehensive income			Changes accompanying business combination			Recognized directly in equity			Other*			Ending balance
Deferred tax assets:
Operating loss carryforwards for tax purposes		86,170			(16,573	)		—			—			—			1,490			71,087
Defined benefit liabilities		62,426			20,721			(9,493	)		—			1,640			(2,729	)		72,565
Amortization including content assets		44,251			(20,323	)		—			—			—			2,831			26,759
Lease liabilities		90,818			5,091			—			1,244			—			(1,053	)		96,100
Warranty reserves and accrued expenses		129,649			8,389			—			134			—			3,172			141,344
Inventories		29,714			(547	)		—			—			—			379			29,546
Depreciation		40,231			2,539			—			161			—			258			43,189
Tax credit carryforwards		48,315			(12,007	)		—			—			—			2,576			38,884
Loss allowances		7,165			98			—			2			—			483			7,748
Impairment of investments		6,800			3,418			—			—			—			(402	)		9,816
Deferred revenue		24,502			3,779			—			—			—			2,904			31,185
Other		152,242			(32,131	)		(538	)		13,304			(125	)		7,842			140,594

Total deferred tax assets		722,283			(37,546	)		(10,031	)		14,845			1,515			17,751			708,817

Deferred tax liabilities:
Insurance acquisition costs		(176,745	)		(13,182	)		(1,261	)		—			—			(286	)		(191,474	)
Insurance contract liabilities		(151,061	)		(10,796	)		(5,480	)		—			—			—			(167,337	)
Non-current other receivables in the Pictures segment		(7,894	)		8,009			—			—			—			(115	)		—
Right-of-use assets		(84,728	)		25,955			—			(1,245	)		—			452			(59,566	)
Equity securities measured at FVOCI		(51,011	)		1,841			33,085			—			—			116			(15,969	)
Equity securities measured at FVPL		(87,718	)		36,915			—			—			—			(2,336	)		(53,139	)
Debt securities measured at FVOCI		(505,914	)		9,822			168,937			—			—			(204	)		(327,359	)
Intangible assets acquired through stock exchange offerings		(23,949	)		—			—			—			—			—			(23,949	)
Intangible assets derived from EMI Music Publishing acquisition		(93,481	)		(1,209	)		—			—			—			(6,904	)		(101,594	)
Undistributed earnings of foreign subsidiaries and corporate joint ventures		(39,166	)		(15,031	)		—			—			—			(1,834	)		(56,031	)
Investment in M3		(41,347	)		(1,345	)		—			—			—			—			(42,692	)
Other		(60,187	)		6,072			(292	)		(15,230	)		765			1,262			(67,610	)

Total deferred tax liabilities		(1,323,201	)		47,051			194,989			(16,475	)		765			(9,849	)		(1,106,720	)

*	Other mainly consists of exchange differences on translating foreign operations.

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SOL

IDATED SUBSIDIARIES


	Yen in millions
	Fiscal year ended March 31, 2023
	Beginning balance			Recognized in profit or loss			Recognized in other comprehensive income			Changes accompanying business combination			Recognized directly in equity			Other*			Ending balance
Deferred tax assets:
Operating loss carryforwards for tax purposes		71,087			(5,756	)		—			10,157			—			5,600			81,088
Defined benefit liabilities		72,565			5,826			(8,245	)		(28	)		(1,881	)		(1,102	)		67,135
Amortization including content assets		26,759			(1,675	)		—			(25,695	)		—			2,828			2,217
Lease liabilities		96,100			12,628			—			221			—			4,378			113,327
Warranty reserves and accrued expenses		141,344			4,240			—			1,599			—			2,644			149,827
Inventories		29,546			15,479			—			—			—			(302	)		44,723
Depreciation		43,189			(3,566	)		—			—			—			429			40,052
Debt securities measured at FVOCI		—			—			28,658			—			—			—			28,658
Tax credit carryforwards		38,884			(12,297	)		—			5,792			—			3,845			36,224
Loss allowances		7,748			(1,857	)		—			—			—			259			6,150
Impairment of investments		9,816			(3,709	)		—			—			—			(55	)		6,052
Deferred revenue		31,185			22,076			—			(2,299	)		—			2,478			53,440
Other		140,594			45,871			(2,408	)		21,427			(985	)		6,099			210,598

Total deferred tax assets		708,817			77,260			18,005			11,174			(2,866	)		27,101			839,491

Deferred tax liabilities:
Insurance acquisition costs		(191,474	)		(8,914	)		(5,769	)		—			—			(487	)		(206,644	)
Insurance contract liabilities		(167,337	)		(12,317	)		(1,398	)		—			—			7,220			(173,832	)
Non-current other receivables in the Pictures segment		—			—			—			—			—			—			—
Right-of-use assets		(59,566	)		(24,365	)		—			(208	)		—			(6,328	)		(90,467	)
Equity securities measured at FVOCI		(15,969	)		923			8,846			—			—			1,823			(4,377	)
Equity securities measured at FVPL		(53,139	)		31,952			—			—			—			(3,380	)		(24,567	)
Debt securities measured at FVOCI		(327,359	)		5,024			322,581			—			—			(246	)		—
Intangible assets acquired through stock exchange offerings		(23,949	)		—			—			—			—			—			(23,949	)
Intangible assets derived from EMI Music Publishing acquisition		(101,594	)		2,277			—			—			—			(6,639	)		(105,956	)
Undistributed earnings of foreign subsidiaries and corporate joint ventures		(56,031	)		(15,318	)		—			—			—			1,759			(69,590	)
Investment in M3		(42,692	)		(4,646	)		—			—			—			—			(47,338	)
Other		(67,610	)		13,812			(52	)		(3,120	)		(159	)		(7,127	)		(64,256	)

Total deferred tax liabilities		(1,106,720	)		(11,572	)		324,208			(3,328	)		(159	)		(13,405	)		(810,976	)

*	Other mainly consists of exchange differences on tra nslat in g forei g n operations.

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As of March 31, 2022 and 2023, based on the assessment of recoverability of deferred tax assets, Sony continued not to recognize the deferred tax assets at some entities in Japan, Sony Mobile Communications AB in Sweden, Sony Europe B.V. in the United Kingdom, certain subsidiaries in Brazil, and certain subsidiaries in other tax jurisdictions. ~~Valuation allowances also continue to be established on~~

As of March 31, 2022 and 2023, the ~~remaining U.S.~~deductible temporary differences, operating loss carryforwards and tax credit carryforwards for which no deferred tax ~~assets, primarily foreign tax credits and certain research and development credits. Sony Corporation and its national tax filing group in Japan established~~asset is recognized are as follows:

~~valuation allowance~~


	Yen in millions
	Fiscal year ended March 31
	2022		2023
Deductible temporary differences		154,581		126,406
Operating loss carryforwards		1,437,551		1,384,658
Tax credit carryforwards		19,066		18,853

As of ~~274,761~~

~~million yen relating to national~~

~~tax~~March 31, 2022 and ~~125,465 million~~

~~yen relating to local tax.~~

~~For~~2023, the expected expiration period of the operating loss carryforwards for which no deferred tax ~~assets related to national~~asset is recognized are as follows:


	Yen in millions
	Fiscal year ended March 31
	2022		2023
Within 5 years		599,333		602,799
Over 5 years to 10 years		277,418		250,587
Over 10 years to 15 years		23,974		25,786
Over 15 years		2,930		13,245
No expiration period		533,896		492,241

Total		1,437,551		1,384,658

As of March 31, 2022 and 2023, the expected expiration period of the tax ~~in Sony Corporation and its national~~credit carryforwards for which no deferred tax ~~filing group in Japan, the valuation allowance~~asset is ~~still established~~recognized is mostly within 5 years except for the ~~amounts expected to be offset~~amount with ~~taxable temporary differences~~no expiration period. The amount of tax credit carryforwards with no expiration date as of March 31, ~~2020.~~

Due to the uncertainty of the forecast of future income impacted by the spread of COVID-19 from early 2020, the valuation allowance established against the net deferred tax assets that are attributable to Sony Corporation2022 and ~~its national tax filing group in Japan was not reversed, even partially, in the fiscal year ended~~ March 31, ~~2020 despite several years of profitability.~~

~~The net changes in the total valuation allowance were decreases of 152,129 million yen, 176,721~~2023 was 1,803 million yen and ~~114,871~~1,047 million yen, ~~for the fiscal years ended March 31, 2018, 2019 and 2020,~~ respectively.

The decrease in the valuation allowances during the fiscal year ended March 31, 2018 was primarily due to the use of net operating loss carryforwards and other deferred tax assets for both the national tax filing group in Japan and the consolidated tax filing group in the United States. The U.S. deferred tax assets were also reduced as a result of the reduction in the tax rate under the U.S. Tax Reform Act which had a corresponding reduction of the valuation allowance on those assets. In addition, valuation allowances were reversed in several jurisdictions, including France and Canada, as a result of sustained profitability.

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The decrease in the valuation allowances during the fiscal year ended March 31, 2019 was due to the reversal of the valuation allowances on significant deferred tax assets in SAHI and its U.S. consolidated tax filing group and the use of net operating loss carryforwards and other deferred tax assets in the national tax filing group in Japan and other jurisdictions.

The decrease in the valuation allowances during the fiscal year ended March 31, 2020 was due to the use of net operating loss carryforwards and other deferred tax assets in the national tax filing group in Japan and the use of foreign tax credits and certain research and development credits in the consolidated tax filing group in the United States.

~~At March 31, 2020, 16,312 million yen of deferred~~Deferred income taxes have not been provided on taxable temporary differences for undistributed earnings of certain foreign subsidiaries and corporate joint ventures which are not expected to be remitted in the foreseeable ~~future totaling 1,019,525~~future. As of March 31, 2022 and March 31, 2023, such taxable temporary differences amounted to 365,925 million ~~yen.~~yen and 560,888 million yen, respectively. The tax basis of these undistributed earnings was approximately 5,855 million yen and 8,974 million yen, respectively. In addition, deferred income taxes have not been provided on the ~~gain on the book/tax basis difference~~taxable temporary differences in subsidiaries, including a gain of 61,544 million yen on a subsidiary’s sale of stock arising from the issuance of common stock of Sony Music Entertainment (Japan) Inc. in a public offering to third parties in November 1991 and the remeasurement gain on 116,939 million yen for the

pre-owned

equity interest in EMI ~~(Refer to Note 25).~~Music Publishing acquired in November 2018. Sony does not anticipate any significant tax consequences on the possible future disposition of these investments based on its tax planning strategies.

At March 31, 2020, Sony had net operating loss carryforwards, the tax effect of which totaled 348,714 million yen, which may be available as an offset against future taxable income on tax returns to be filed in various tax jurisdictions. With the exception of 96,890 million yen with no expiration period, substantially all of the total net operating loss carryforwards expire at various dates between the fiscal years ending March 31, 2021 and ~~2024~~.

Tax credit carryforwards at March 31, 2020 amounted to 94,900 million yen. With the exception of 15,059 million yen with no expiration period, substantially all of the total available tax credit carryforwards expire at various dates between the fiscal years ending March 31, 2021 and ~~2030~~.

~~A reconciliation of the beginning and ending gross amounts of unrecognized tax benefits is as follows:~~

Yen in millions

March 31

2018

2019

2020

Balance at beginning of the fiscal year

119,529

95,425

50,577

Reductions for tax positions of prior years

(8,809
)
(31,396
)
(331
)
Additions for tax positions of prior years

4,681

3,094

162

Additions based on tax positions related to the current year

5,740

2,594

8,074

Settlements

(21,893
)
(4,235
)
(13,240
)
Lapse in statute of limitations

(3,469
)
(14,824
)
(1,251
)
Foreign currency translation adjustments

(354
)
(81
)
(2,723
)

Balance at end of the fiscal year

95,425

50,577

41,268

Total net amount of unrecognized tax benefits that, if recognized, would affect the effective tax rate

39,308

35,004

29,539

The major changes in the total gross amount of unrecognized tax benefit balances relate to transfer pricing adjustments, including as a result of the Bilateral Advance Pricing Agreements (“APAs”) and competent authority requests filed for certain subsidiaries in the G&NS, EP&S and I&SS segments and All Other, with respect to the intercompany cross-border transactions. The APAs include agreements between Sony and two taxing authorities under the authority of the mutual agreement procedure specified in income tax treaties. Sony reviews its estimated tax expense based on the progress made in these procedures, and the progress of transfer pricing audits generally, and makes adjustments to its estimates as necessary. In addition, the ~~APAs~~deductible temporary differences arising from the translation adjustments for the foreign operations for which deferred tax assets are ~~government to government negotiations, and therefore it is possible that the final outcomes~~not recognized as of ~~the agreements may differ from Sony’s current assessment of the~~

~~more-likely-than-not~~

~~outcomes of such agreements.~~

~~During the fiscal year ended~~ March 31, ~~2018, Sony recorded 1,053 million yen of interest expense~~2022 and ~~876 million yen of penalties. At~~ March 31, ~~2018, Sony had recorded liabilities of 10,788~~2023 amounted to 92,252 million yen and ~~4,637~~181,037 million yen, respectively. The taxable temporary differences arising from the translation adjustments for the ~~payments~~foreign operations for which deferred tax liabilities are not recognized as of ~~interest~~March 31, 2022 and ~~penalties,~~March 31, 2023 amounted to 429,930 million yen and 694,240 million

en, respectively.

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During the fiscal year ended March 31, 2019, Sony reversed 1,479 million yen of interest expense and recorded 218 million yen of penalties. At March 31, 2019, Sony had recorded liabilities of 9,309 million yen and 4,855 million yen for the payments of interest and penalties, respectively.

~~During the fiscal year ended March 31, 2020, Sony re~~

~~versed~~

~~1,276 million yen of interest expense and re~~

~~corded~~

~~117 million yen of penalties. At March 31, 2020, Sony had recorded liabilities of 8,033 million yen and 4,971 million yen for the payments of interest and penalties, respectively.~~

Sony operates in multiple jurisdictions throughout the world, and its tax returns are periodically audited by Japanese and foreign taxing authorities. As a result of audit settlements, the conclusion of current examinations, the expiration of the statute of limitations in several jurisdictions and other reevaluations of Sony’s tax positions, it is expected that the amount of unrecognized tax benefits will change in the next twelve months. Accordingly, Sony believes it is reasonably possible that its existing unrecognized tax benefits may be reduced by an amount up to 1,791 million yen within the next twelve months.

~~Sony remains subject to examinations by Japanese taxing authorities for tax years from 2010 through 2019, and by the U.S. tax authorities for tax years from~~

~~2016 through 2019 and other material foreign taxing authorities for tax years from 2006 through 2019.~~

~~23.~~

26. Reconciliation of the differences between basic and diluted EPS

Reconciliation of the differences between basic and diluted EPS for the fiscal years ended March 31, ~~2018, 2019~~2021, 2022 and ~~2020~~2023 is as follows:

Yen in millions

Fiscal year ended March 31

2018

2019

2020

Net income attributable to Sony Corporation’s stockholders for basic and diluted EPS computation

490,794

916,271

582,191

Thousands of shares

Weighted-average shares outstanding

1,263,895

1,266,592

1,234,408

Effect of dilutive securities:

Stock acquisition rights

4,565

4,088

3,853

Zero coupon convertible bonds

23,960

23,966

23,994

Weighted-average shares for diluted EPS computation

1,292,420

1,294,646

1,262,255

Yen

Basic EPS

388.32

723.41

471.64

Diluted EPS

379.75

707.74

461.23


	Yen in millions
	Fiscal year ended March 31
	2021		2022		2023
Net income attributable to Sony Group Corporation’s stockholders		1,029,610		882,178		937,126
Adjustment amount to net income attributable to Sony Group Corporation’s stockholders for diluted EPS computation:
Zero coupon convertible bonds		385		163		51

Net income attributable to Sony Group Corporation’s stockholders for diluted EPS computation		1,029,995		882,341		937,177


	Thousands of shares
	Fiscal year ended March 31
	2021		2022		2023
Weighted-average shares outstanding for basic EPS computation		1,230,480		1,239,299		1,235,701
Effect of dilutive securities:
Stock acquisition rights and other		4,474		5,470		3,646
Zero coupon convertible bonds		15,392		6,491		2,030

Weighted-average shares for diluted EPS computation		1,250,346		1,251,260		1,241,377


	Yen
	Fiscal year ended March 31
	2021		2022		2023
Basic EPS		836.75		711.84		758.38

Diluted EPS		823.77		705.16		754.95

Potential shares of common stock which were excluded from the computation of diluted EPS for the fiscal years ended March 31, ~~2018, 2019~~2021, 2022 and ~~2020~~2023 were ~~2,921~~4,475 thousand shares, ~~5,731~~4,790 thousand shares and ~~3,212~~11,223 thousand shares, ~~respectively. Potential shares related to~~ respectively,

which primarily consisted of

stock ~~acquisition rights were excluded~~options.

27.	Supplemental cash flow information

(1)	Classification of cash flows in Financial Services segment

Sony classifies the cash flows from changes in assets and liabilities associated with the insurance business and banking business, such as ~~anti-dilutive~~investments and advances, deposits from customers, policyholders’ account and borrowings/debt, as cash flows from operating activities in the consolidated statements of cash flows.

(2)	Classification of cash flows of content assets

Sony 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 because the additions and disposals of content assets are derived from the principal revenue-producing activities of Sony.

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(3)	Interest and dividends


	Yen in millions
	Fiscal year ended March 31
	2021		2022		2023
Interest received
Financial services revenue		198,310		208,170		224,137
Financial income		8,409		6,988		20,872
Dividends received
Financial services revenue		19,299		27,075		23,409
Financial income		1,559		2,800		3,488
Interest paid
Financial services expenses		9,659		6,607		27,352
Financial expenses		8,172		8,843		11,663

The above are items presented in the consolidated statements of income, which include cash flows for interest and dividends.

Sony classifies the cash flows from interest and dividends of the above as cash flows from operating activities in the consolidated statements of cash flows.

(4)	Non-cash investing and financing activities

There was an increase in ROU assets as a result of entering into lease contracts and the conversion of convertible bonds during the fiscal years ended March 31, ~~2018, 2019~~2021, 2022 and ~~2020 when~~2023. Refer to (5) Reconciliation of liabilities arising from financing activities for more details.

In addition, during the ~~exercise price for those shares~~fiscal year ended March 31, 2022, a portion of the consideration received as a result of the transfer of certain operations of Game Show Network, LLC was in ~~excess~~the form of ~~the average market value of Sony’s common stock~~stock. Refer to Note 31 for ~~those fiscal years. The zero coupon convertible bonds issued in July 2015 were included in the diluted EPS calculation under the~~

~~if-converted~~more details.

~~method beginning upon issuance.~~

~~24.~~

~~Variable interest entities~~

~~Sony has entered into various arrangements with VIEs.~~

(1 )	~~Consolidated VIEs~~

Sony’s U.S. subsidiary that is engaged in the recorded music business has entered into several joint ventures with companies involved in the production and creation of recorded music. Sony has reviewed these joint

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(5)	Reconciliation of liabilities arising from financing activities

~~ventures~~


	Yen in millions
	Short-term borrowings			Long-term debt
Balance as of April 1, 2020		66,631			817,919

Net cash flows from financing activities		(18,334	)		147,017
Acquisitions through business combinations		—			59
Non-cash items:
Conversion of convertible bonds		—			(78,342	)
Obtaining assets by entering into lease contracts		—			56,247
Translation adjustment		106			15,514
Other		4,134			10,630

Total changes		(14,094	)		151,125

Balance as of March 31, 2021		52,537			969,044

Net cash flows from financing activities		408			(163,104	)
Acquisitions through business combinations		—			8,346
Non-cash items:
Conversion of convertible bonds		—			(14,597	)
Obtaining assets by entering into lease contracts		—			121,937
Translation adjustment		1,659			35,652
Other		1,487			(6,045	)

Total changes		3,554			(17,811	)

Balance as of March 31, 2022		56,091			951,233

Net cash flows from financing activities		32,391			229,578
Acquisitions through business combinations		—			32,009
Non-cash items:
Conversion of convertible bonds		—			(26,563	)
Obtaining assets by entering into lease contracts		—			127,322
Translation adjustment		4,533			22,684
Other		(369	)		(13,936	)

Total changes		36,555			371,094

Balance as of March 31, 2023		92,646			1,322,327

The amount of short-term borrowings and ~~determined~~long-term debt associated with the insurance business and banking business operations, which are classified as cash flows from operating activities in the consolidated statements of cash flows, is excluded from the amount above.

(6)	Components of cash and cash equivalents


	Yen in millions
	March 31
	2021		2022		2023
Cash and demand deposits		902,036		1,824,912		1,227,541
Time deposits with original maturities of three months or less		635,848		72,270		76,452
Money market funds		249,098		71,554		116,607
Call loans		—		80,900		60,300

Total		1,786,982		2,049,636		1,480,900

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Cash and demand deposits, time deposits with original maturities of three months or less and call loans are classified as financial assets required to be measured at amortized cost, whose carrying amounts approximate their fair values mainly due to their short-term nature. Money market funds are short-term and highly liquid investments with insignificant risk of changes in value. Money market funds are classified as financial assets required to be measured at fair value through profit or loss and classified within Level 1 of the fair value hierarchy.

28.	Structured entities

Sony has, from time to time, entered into various arrangements with structured entities.

(1)	Consolidated structured entities

Sony consolidates investment funds as structured entities in the Financial Services segment. The investment funds are designed so that ~~they~~voting or similar rights are ~~VIEs. Based on a qualitative assessment,~~not the dominant factor in deciding who controls these entities, but it ~~was~~is determined that Sony has control over these structured entities. Sony has not provided and does not intend to provide any significant financial or other support to any of the ~~power~~consolidated structured entities without contractual obligations to ~~direct~~ the ~~activities~~investment funds. The assets and liabilities of structured entities that most significantly impact the VIEs’ economic performance, as well as the obligation to absorb the losses of these VIEs as Sony is responsible for providing funding to these VIEs, and in most cases absorbs all losses until the VIEs become profitable. As a result, it has been determined that Sony is the primary beneficiary and, accordingly, these VIEs are consolidated in the Financial Services segment are limited in their intended use by ~~Sony. The assets of Sony are not available to settle the obligations of these VIEs.~~contractual arrangements. As of March 31, ~~2020,~~2022 and 2023, the total assets of these structured entities are 628,297 million yen and 2,486,836 million yen, respectively.

The increase in the fiscal year ended March 31, 2023 is primarily

due to the transfer of equity securities which were previously directly held into investment funds.

Sony

also consolidates several structured entities in the Music and Pictures segment. Sony has not provided and does not intend to provide any significant financial or other support to these structured entities without contractual obligation. The total assets and liabilities for these ~~VIEs, on an aggregate basis,~~structured entities were ~~46,154 million yen and 25,100 million yen, respectively.~~insignificant to Sony’s financial position.

(2)	Unconsolidated ~~VIEs~~structured entities

~~As described in Note 6, certain accounts~~Certain trade receivable sales programs also involve ~~VIEs.~~structured entities. These ~~VIEs~~structured entities are all special purpose entities associated with the sponsor banks. Based on a qualitative assessment, Sony ~~is not the primary beneficiary and therefore~~ does not consolidate these entities as Sony does not have the power to direct the activities, an obligation to absorb losses, or the right to receive the residual returns of these ~~VIEs.~~structured entities. Sony’s maximum exposure to losses from these ~~VIEs~~structured entities is considered insignificant.

In the Financial Services segment, Sony ~~has variable interests~~enters into securitization transactions for certain housing loans, involving unconsolidated structured entities. Sony derecognizes a financial asset when the contractual right to receive the cash flows from the financial asset is transferred, or when Sony retains the contractual right to receive the cash flows from the financial asset, but assumes a contractual obligation to pay the cash flows without reinvestment or material delay to other recipients in ~~VIEs where~~an arrangement, and substantially all the risks and rewards of ownership of the financial asset are transferred to another entity. Since the above securitization transactions do not meet the requirements for derecognition of financial assets, such transferred assets are not derecognized. Sony recorded 182,417 million yen and 168,173

million yen of transferred assets that do not meet the requirement for derecognition of financial assets included in investments and advances in the Financial Services segment as of March 31, 2022 and 2023, respectively. As of March 31, 2022 and 2023, the liabilities recorded from these securitization transactions were

183,886 million yen and 169,500 million yen, respectively, which are included in the current portion of long-term debt and long-term debt. The liabilities will be settled when the payment for the transferred assets is executed and until this time, Sony is ~~not~~unable to utilize the ~~primary beneficiary.~~transferred assets. The transferee of the transferred assets has recourse only to the transferred asset, and as of March 31, 2022 and 2023, the fair value of the transferred assets are 187,555 million yen and 170,695 million yen, respectively and the associated liabilities are 186,702 million yen and 169,931 million yen, respectively.

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In addition to the above, in the Financial Services segment, Sony makes investments in structured entities. Sony’s ~~variable interests~~investments in such ~~VIEs~~structured entities include ~~equity securities,~~ securitized products, foreign corporate bonds and other investments.

The following tables present the carrying ~~value~~amount of the ~~variable interests~~investments of unconsolidated ~~VIEs,~~structured entities, the presentation in the consolidated ~~balance sheet,~~statements of financial position, and the maximum exposure to loss associated with these ~~variable interests~~investments as of March 31, ~~2019~~2022 and ~~2020.~~2023. Maximum exposure to loss does not reflect Sony’s estimate of the actual losses that could result from adverse changes, nor does it reflect the economic hedges Sony enters into to reduce its exposure. The risks associated with ~~VIEs~~structured entities in which Sony is involved are limited to the amount recorded in the consolidated ~~balance sheets~~statements of financial position and the amount of commitments.

Yen in millions

March 31, 2019

Presentation in the consolidated balance
sheets

Maximum
exposure to loss

Marketable
securities

Securities
investments
and other

Prepaid
expenses and
other current
assets

Equity securities
*1

135,552

8,485

—

146,031

Securitized products

—

191,049

—

195,190

Foreign corporate bonds
*2

29,889

65,503

—

95,392

Other investments

—

4,688

21,000

25,688

Total

165,441

269,725

21,000

462,301


	Yen in millions
	March 31, 2022
	Presentation in the consolidated statements of financial position						Maximum exposure to loss
	Investments and advances in the Financial Services segment (Current assets)		Investments and advances in the Financial Services segment (Non-current assets)		Other financial assets (Current assets)		Maximum exposure to loss
Securitized products		—		356,862		—		356,862
Foreign corporate bonds *1		28,412		168,167		—		196,579
Other investments *2		2		247,394		24,697		286,662

Total		28,414		772,423		24,697		840,103


	Yen in millions
	March 31, 2023
	Presentation in the consolidated statements of financial position						Maximum exposure to loss
	Investments and advances in the Financial Services segment (Current assets)		Investments and advances in the Financial Services segment (Non-current assets)		Other financial assets (Current assets)		Maximum exposure to loss
Securitized products		—		401,642		—		401,642
Foreign corporate bonds *1		20,806		186,878		—		207,684
Other investments *2		—		286,066		25,464		332,076

Total		20,806		874,586		25,464		941,402

Yen in millions

March 31, 2020

Presentation in the consolidated balance
sheets

Maximum
exposure to loss

Marketable
securities

Securities
investments
and other

Prepaid
expenses and
other current
assets

Equity securities
*1

579,773

6,229

—

587,602

Securitized products

—

210,641

—

210,641

Foreign corporate bonds
*2

41,452

41,036

—

82,488

Other investments

—

16,253

21,000

43,719

Total

621,225

274,159

21,000

924,450

*1	~~Equity securities~~ Foreign corporate bonds primarily include ~~Investment funds.~~repackaged bonds.

*2	~~Foreign corporate bonds~~ Other investments primarily include ~~repackaged bonds.~~investment funds.

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29.	Subsidiaries

The following table sets forth the major consolidated subsidiaries owned, directly or indirectly, by Sony Group Corporation.


Name of company	Country of incorporation /residence	(As of March 31, 2023) Percentage owned
Sony Interactive Entertainment Inc.	Japan	100.0
Sony Music Entertainment (Japan) Inc.	Japan	100.0
Sony Corporation	Japan	100.0
Sony Global Manufacturing & Operations Corporation	Japan	100.0
Sony Semiconductor Solutions Corporation	Japan	100.0
Sony Semiconductor Manufacturing Corporation	Japan	100.0
Sony Network Communications Inc.	Japan	100.0
Sony Marketing Inc.	Japan	100.0
Sony Storage Media Solutions Corporation	Japan	100.0
Sony Financial Group Inc.	Japan	100.0
Sony Life Insurance Co., Ltd.	Japan	100.0
Sony Bank Inc.	Japan	100.0
Sony Assurance Inc.	Japan	100.0
Sony Corporation of America	U.S.A.	100.0
Sony Interactive Entertainment LLC	U.S.A.	100.0
Sony Music Entertainment	U.S.A.	100.0
Sony Music Publishing LLC	U.S.A.	100.0
Sony Pictures Entertainment Inc.	U.S.A.	100.0
Sony Electronics Inc.	U.S.A.	100.0
Sony Europe B.V.	U.K.	100.0
Sony Interactive Entertainment Europe Ltd.	U.K.	100.0
Sony Global Treasury Services Plc	U.K.	100.0
Sony Overseas Holding B.V.	Netherlands	100.0
Sony (China) Limited	China	100.0
Sony EMCS (Malaysia) Sdn. Bhd.	Malaysia	100.0
Sony Electronics (Singapore) Pte. Ltd.	Singapore	100.0

30.	Acquisitions

(1)	Fiscal year ended March 31, 2022

Acquisition of Ellation Holdings, Inc.

On August 9, 2021, Sony Pictures Entertainment Inc. (“SPE”), a wholly-owned subsidiary of Sony, through Funimation Global Group, LLC (“Funimation”), acquired 100% of the equity interest in Ellation Holdings, Inc. (“Ellation”), a subsidiary of AT&T Inc., which operates the anime business “Crunchyroll.” Funimation is a joint venture between SPE and Aniplex Inc., a subsidiary of Sony Music Entertainment (Japan) Inc. The consideration for the acquisition of 135,938 million yen (1,237 million U.S. dollars) was paid in cash. As a result of the acquisition, Ellation has become a wholly-owned subsidiary of Sony. On February 24, 2022, Funimation changed its company name to Crunchyroll, LLC.

Crunchyroll is a DTC service, connecting anime and manga fans across more than 200 countries and territories. Crunchyroll provides services including subscription

video-on-demand,

advertising-based

video-on-demand,

mobile games, manga, events, merchandise and distribution. The acquisition has brought together two animation distribution brands, Funimation and Crunchyroll, allowing Sony to expand

fan-centric

offerings. The global unification and integration of the two brands and services under the Crunchyroll brand started in March 2022.

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~~25.~~

~~Acquisitions~~

~~(1)~~

~~EMI Music Publishing acquisition~~

On November 14, 2018, Sony Corporation of America, Sony’s wholly-owned subsidiary, completed the acquisition of the entirety of the approximately 60% equity interest held by the investor consortium led by the Mubadala Investment Company in DH Publishing, L.P. (“EMI”), which owned and managed EMI Music Publishing, for the equity purchase price of 257,168 million yen (2,269 million U.S. dollars), which includes payments related to warrants and management equity plans. Sony paid all the consideration in cash upon the acquisition. As a result of this acquisition, EMI has become a wholly-owned subsidiary of Sony. This acquisition allows Sony to build upon its music publishing library by providing the Company with full ownership of the EMI Music Publishing catalog which was being administered by Sony’s wholly-owned music publishing subsidiary, Sony/ATV Music Publishing. Sony’s consolidated income statements for the fiscal year ended March 31, 2019 include revenue and operating income of 28,871 million yen (260 million U.S. dollars) and 6,432 million yen (58 million U.S. dollars), respectively, attributable to EMI since the date of acquisition. Sony’s consolidated income statements for the three months ended March 31, 2019 include revenue and operating income of 18,420 million yen (167 million U.S. dollars) and 4,522 million yen (41 million U.S. dollars), respectively, attributable to EMI.

~~Prior to~~ the acquisition, ~~Sony’s interest in EMI was accounted for under the equity method of accounting. As a result of Sony obtaining a controlling interest in EMI,~~ Sony consolidated ~~EMI~~Ellation by using the acquisition method of accounting and recorded the fair value of the identifiable assets acquired, liabilities assumed and residual goodwill of EMI. Sony remeasured the approximately 40% equity interest in EMI that Sony already owned prior to the acquisition at a fair value of 141,141 million yen (1,245 million U.S. dollars) which resulted in the recognition of a

~~non-cash~~

gain of 116,939 million yen (1,032 million U.S. dollars) recorded in other operating income, net for the three months ended December 31, 2018. Sony did not record any tax expense or deferred tax liability corresponding to this gain. Sony also assumed EMI’s existing interest-bearing debt of 148,621 million yen (1,311 million U.S. dollars) as a result of this acquisition, of which 108,942 million yen (961 million U.S. dollars) was repaid immediately from Sony’s existing cash.

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Ellation. The following table summarizes the ~~preliminary and~~ final fair values assigned to the assets and liabilities of ~~EMI~~Ellation that were recorded in the ~~Music~~Pictures segment. ~~Certain areas of the purchase price allocation were not yet finalized as of the fiscal year ended March 31, 2019, including the valuation of income taxes and residual goodwill.~~

Yen in millions

Acquired assets
and liabilities
recorded at fair
value as of
acquisition date
(Preliminary)

Measurement
period
adjustments

Acquired assets
and liabilities
recorded at fair
value as of
acquisition date
(Final)

Cash and cash equivalents

12,971

12,971

Notes and accounts receivable, trade and contract assets

32,287

32,287

Prepaid expenses and other current assets

10,220

(98
)
10,122

Securities investments and other

1,476

1,476

Intangibles, net

420,534

420,534

Goodwill

237,271

(1,206
)
236,065

Other

10,023

10,023

Total assets

724,782

(1,304
)
723,478

Notes and accounts payable, trade

1,731

1,731

Accounts payable, other and accrued expenses

70,675

70,675

Accrued income and other taxes

3,082

(69
)
3,013

Long-term debt

148,621

148,621

Accrued pension and severance costs

1,947

1,947

Deferred income taxes

94,849

(1,235
)
93,614

Other

5,564

5,564

Total liabilities

326,469

(1,304
)
325,165


	Yen in millions
Cash and cash equivalents		8,379
Trade and other receivables, and contract assets		3,714
Inventories		3,295
Right-of-use assets		4,962
Goodwill		81,250
Content assets		36,266
Other intangible assets		35,697
Other		2,512

Total assets		176,075

Trade and other payables		17,365
Other current liabilities		7,723
Long-term debt		4,386
Deferred tax liabilities		9,408
Other		659

Total liabilities		39,541

~~Intangibles~~Content assets and other intangible assets mainly ~~consists~~consist of ~~music publishing catalogs with weighted average amortization periods of 43 years.~~license agreements and customer relationships. Goodwill represents unidentifiable intangible assets, such as future growth from new revenue streams and synergies with existing Sony assets and businesses, and is calculated as the excess of the purchase price over the estimated fair value of the tangible and intangible assets acquired and is not deductible for tax purposes. The goodwill recorded in connection with ~~this~~the acquisition is included in the ~~Music~~Pictures segment.

~~The following unaudited supplemental pro forma financial information presents~~Revenue and net income attributable to Ellation since the ~~combined results~~date of ~~operations~~acquisition included in Sony’s consolidated statements of ~~Sony and EMI as though the acquisition had occurred as of the beginning of~~income for the fiscal year ended March 31, ~~2018:~~

Yen in millions,
Yen per share amounts

Fiscal year ended March 31

2018

2019

Net sales

8,612,280

8,738,209

Operating income

854,786

801,973

Net income attributable to Sony Corporation’s stockholders

584,019

817,629

Per share data:

— Basic EPS

462.08

645.53

— Diluted EPS

451.88

631.55

~~The unaudited supplemental~~2022 and pro forma financial information is based on estimates and assumptions, which Sony believes are reasonable, and is not intended to represent or be indicative of what Sony’s consolidated net income attributable to Sony Corporation’s stockholders would have been had the acquisition been completed at the beginning of the fiscal year ended March 31, 2018 and should not be taken as indicative of Sony’s future

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~~SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES~~

consolidated net income attributable to Sony Corporation’s stockholders. The unaudited supplemental pro forma financial information includes the elimination of equity in net income and consolidation of EMI, the adjustment of the gain from the remeasurement of the previously owned equity interest, incremental intangible asset amortization, net of the related tax effects and the adjustments of expenses incurred in relation to warrants and management equity plans.

~~(2)~~

~~Insomniac Games, Inc. acquisition~~

On November 15, 2019, Sony Interactive Entertainment LLC, a wholly-owned subsidiary in the G&NS segment of Sony, completed the acquisition of Insomniac Games, Inc. (“Insomniac Games”), a game developer. The consideration for this acquisition of 24,895 million yen (229 million U.S. dollars) was mainly paid in cash. As a result of this acquisition, Insomniac Games has become a wholly-owned subsidiary of Sony.

As a result of this acquisition, Sony recorded 17,945 million yen (164 million U.S. dollars) of goodwill and 6,794 million yen (62 million U.S. dollars) of intangible assets. The cash consideration paid in this transaction, net of cash received, is included within Other in the investing activities section of the consolidated statements of cash flows. Pro forma results of operations have not been presented because the effect of the acquisition was not material.

~~(3)~~

(2)

~~Silvergate Media acquisition~~

Fiscal year ended March 31, 2023

Acquisition of Bungie, Inc.

On ~~December 9, 2019,~~July 15, 2022, Sony ~~through~~Interactive Entertainment LLC (“SIE”), a wholly-owned subsidiary of Sony, completed the acquisition of 100% of the shares of Bungie, Inc. (“Bungie”), an independent videogame developer in the Pictures segment, acquired Silvergate Media Group (“Silvergate”), a company focused on developing, producing and licensing children’s animation. The consideration for this acquisition of 21,017 million yen (192 million U.S. dollars) was paid in cash.United States. As a result of this acquisition, ~~Sony owns (1) 100%~~Bungie has become a wholly-owned subsidiary of ~~Silvergate Topco Limited,~~Sony. This acquisition gives SIE access to Bungie’s approach to live game services and technology expertise.

The total consideration of this acquisition, which ~~holds all assets of Silvergate~~was determined after customary working capital and other than certain rights held by Silvergate BP Bidco Limited, and (2) 31% of Silvergate BP Bidco Limited, the entity through which Silvergate produces its Peter Rabbit television series, and Sony recorded 11,431adjustments, was 510,459 million yen ~~(106~~(3,701 million U.S. dollars), inclusive of the purchase price and committed employee incentives. Of the total consideration, 347,768 million yen (2,522 million U.S. dollars) was allocated to the purchase consideration of ~~goodwill~~this acquisition, and ~~3,387~~the remaining 162,691 million yen ~~(32~~(1,179 million U.S. dollars) was mainly allocated to deferred payments to employee shareholders that are conditional upon their continuous employment, and other retention incentives. The deferred payments and other retention incentives will be expensed over the required post-acquisition service periods.

The fair value of ~~intangible assets. The~~the purchase consideration of this acquisition as of the acquisition date was 333,859 million yen (2,421 million U.S. dollars) which consisted of upfront cash consideration ~~paid~~of 207,511 million yen (1,505 million U.S. dollars), deferred consideration of 84,410 million yen (612 million U.S. dollars), and contingent consideration of 41,938 million yen (304 million U.S. dollars) that is subject to employee shareholders’ continuous employment and represents the vested portion of the total vesting term of replacement awards that existed as of the acquisition date. Deferred consideration and contingent consideration are included in ~~this transaction, net of cash received, is included within Other~~ other financial liabilities (current and

non-current)

in ~~the investing activities section of~~ the consolidated statements of ~~cash flows. Pro forma results~~financial position.

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Sony’s consolidated statements of income for the fiscal year ended March 31, 2023 include net loss after income taxes of 47,420 million yen (338 million U.S. dollars), attributable to Bungie since the acquisition date, including the deferred payments and other retention incentives arising out of this acquisition and amortization of intangible assets recognized as of the acquisition date. Revenue after elimination of intercompany transactions attributable to Bungie since the acquisition date for the fiscal year ended March 31, 2023 has not been presented because the ~~effect of the acquisition~~revenue was not material.

~~(4)~~

~~Acquisition of equity interests in joint ventures in the life insurance business~~

On January 29, 2020, Sony Life, Sony’s consolidated subsidiary, acquired 50% of the shares of AEGON Sony Life Insurance Co., Ltd. and SA Reinsurance Ltd. (collectively, the “JVs”) from AEGON International B.V. The purchase price for the acquisition was 18,750 million yen and Sony Life paid all the consideration in cash upon the acquisition. As a result of this acquisition, Sony Life owns 100% of the shares of the JVs and the JVs have become consolidated subsidiaries of Sony. Sony Life will endeavor to make use of the strength and

~~know-how~~

of the variable annuity business accumulated by AEGON Sony Life Insurance Co., Ltd, strengthen the initiatives for the senior market, and improve earnings in an early stage by enhancing efficiency through integrated operation and organizational management. AEGON Sony Life Insurance Co., Ltd. has changed its name to “Sony Life With Insurance Co., Ltd.,”

~~as of~~

~~April 1, 2020.~~

~~Prior to the acquisition, Sony’s interest in the JVs was accounted for under the equity method of accounting. As a result of Sony obtaining a controlling interest in the JVs,~~ Sony consolidated ~~the JVs~~Bungie by using the acquisition method of accounting and recorded the fair value of the identifiable assets acquired, liabilities assumed and residual goodwill of ~~the JVs. Sony remeasured~~

~~the 50%~~

~~equity interest in the JVs that Sony already owned prior to the acquisition at a fair value~~

~~of 13,932~~

~~million yen which resulted in the recognition of a~~

~~non-cash~~

~~gain~~

~~of 1,827~~

~~million yen recorded in other operating income, net. Sony did not record any tax expense or deferred tax liability corresponding to this gain.~~

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Bungie. The following table summarizes the final fair values assigned to the assets and liabilities of ~~the JVs~~Bungie that were recorded in the ~~Financial Services~~G&NS segment.

The measurement period adjustments were not material.



	Yen in millions
Cash and cash equivalents		~~27,380~~ 37,800
~~Marketable securities~~Trade and other receivables, and contract assets		~~530,851~~ 5,093
~~Prepaid expenses and other~~Other current assets		~~21,933~~ 3,412
~~Securities investments~~Property, plant and ~~other~~equipment		7,481
~~15,329~~ Right-of-use assets		15,540
Goodwill		193,801
~~3,609~~Content assets		45,512
Other intangible assets		66,257
Deferred tax assets		7,297
Other		~~406~~ 3,564

Total assets		~~599,508~~ 385,757

~~Future insurance policy benefits~~Trade and other payables		~~66,599~~ 3,060
~~Policyholders’ account in the life insurance business~~Other current liabilities		12,195
~~495,248~~Long-term debt		30,944
Other		~~4,979~~ 5,699

Total liabilities		~~566,826~~ 51,898

~~Goodwill represents the expected improvement of profitability due to business integration with Sony Life~~Content assets and ~~operational efficiency, and is calculated as the excess of the purchase price over the estimated fair value of the tangible and~~other intangible assets ~~acquired~~mainly consist of license agreements and software. Goodwill mainly represents future growth from new revenue streams and synergies with existing Sony businesses and is not deductible for tax purposes. ~~The goodwill~~Goodwill recorded in connection with ~~this~~the acquisition is included in the ~~Financial Services~~G&NS segment.

Pro forma results of operations have not been presented because the effect of the acquisition ~~was~~is not material.

~~(5)~~(3)

Other acquisitions

During the fiscal year ended March 31, ~~2018,~~2021, Sony completed other acquisitions for

total consideration of ~~27,459~~18,258 million yen which ~~were~~was paid for primarily in cash and there was no material contingent consideration subject to future change. As a result of these acquisitions, Sony recorded ~~20,013~~15,679 million yen of goodwill and ~~4,980~~6,061 million yen of intangible assets.

During the fiscal year ended March 31, ~~2019,~~2022, Sony completed other acquisitions for

total consideration of ~~7,743~~175,878 million yen which ~~were~~was paid for primarily in cash and there was no material contingent consideration subject to future change. As a result of these acquisitions, Sony recorded ~~5,773~~116,394 million yen of goodwill and ~~4,422~~64,348 million yen of intangible assets.

During the fiscal year ended March 31, ~~2020,~~2023, Sony completed other acquisitions for

total consideration of ~~6,853~~92,743 million yen which ~~were~~was paid for primarily in cash and there was no material contingent consideration subject to future change. As a result of these acquisitions, Sony recorded ~~6,778~~80,698 million yen of goodwill and ~~2,301~~29,154 million yen of intangible assets.

No significant amounts ~~have been~~

were

allocated to

in-process

research and development and all of the entities described above have been consolidated into Sony’s results of operations since their respective acquisition dates. ~~Pro~~Other information including pro forma results of operations ~~have~~has not been presented because the ~~effects~~ eff

ects

of other acquisitions, individually and in aggregate, were ~~not~~

t material.

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~~26.~~

31.

~~Divestitures~~Divestiture

~~Sale of equity interest in Sony Electronics Huanan Co., Ltd.~~Fiscal year ended March 31, 2022

Transfer of certain operations of Game Show Network, LLC

On ~~April 1, 2017,~~December 6, 2021, Sony ~~transferred all~~completed the transfer of ~~the equity interest in Sony Electronics Huanan Co., Ltd. (“SEH”),~~GSN Games, a division of Game Show Network, LLC, a wholly-owned subsidiary in the ~~I&SS~~Pictures segment, ~~that manufactures camera modules,~~ to ~~Shen Zhen~~

~~O-Film~~

~~Tech Co., Ltd.~~Scopely, Inc. (“Scopely”). The consideration for the ~~transfer is approximately 234~~transaction was 115,054 million yen (1,011 million U.S. ~~dollars, including the assumption~~dollars), of ~~SEH’s debt and the sales price of approximately 95~~which Sony received 58,131 million yen (511 million U.S. ~~dollars.~~dollars) in cash and 56,923 million yen (500 million U.S. dollars) in preferred stock of Scopely.

This preferred stock is measured at fair value as an equity instrument and subsequent changes in the fair value will be recognized in other comprehensive income. As ~~the~~a result of the completion of this transfer, Sony recognized a gain ~~on transfer totaling 28,262~~of 70,020 million yen in(615 million U.S. dollars) within other operating (income) expense, net in the consolidated ~~statement~~statements of income for the fiscal year ended March 31, ~~2018.~~2022.

32.	Related party transactions

(1)	Account balances and transactions with associates and joint ventures accounted for under the equity method

~~F-8~~

Primary account balances and transactions with associates and joint ventures accounted for under the equity method are as follows:


	Yen in millions
	March 31
	2022		2023
Trade and other accounts receivable
Associates		9,587		7,779
Joint ventures		5,143		6,326

Total		14,730		14,105

Other current assets
Associates		7,042		7,747
Joint ventures		—		—

Total		7,042		7,747

Accounts payable, trade
Associates		1,219		1,425
Joint ventures		157		228

Total		1,376		1,653

Short-term borrowings
Associates		2,131		3,124
Joint ventures		20,132		25,218

Total		22,263		28,342

Lease liabilities and other
Associates		64,552		74,955
Joint ventures		—		—

Total		64,552		74,955

Accounts payable for property, plant and equipment
Associates		7,189		12,050
Joint ventures		—		—

Total		7,189		12,050

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	Yen in millions
	Fiscal year ended March 31
	2021		2022		2023
Sales
Associates		15,087		20,385		15,040
Joint ventures		17,985		27,374		30,220

Total		33,072		47,759		45,260

Purchases
Associates		3,083		3,271		4,450
Joint ventures		1		785		649

Total		3,084		4,056		5,099

Lease payments and other
Associates		8,028		11,180		13,720
Joint ventures		—		—		—

Total		8,028		11,180		13,720

Payments for property, plant and equipment
Associates		1,272		12,052		20,553
Joint ventures		—		—		—

Total		1,272		12,052		20,553

Sony has agreements with shareholders of associates to make cash investments in the associates in the future. The investment commitments as of March 31, 2022 and 2023, amounted to 39,231 million yen and 39,047 million yen, respectively.

~~27.~~(2)

~~Collaborative arrangements~~

Compensation for key management personnel

Sony’s collaborative arrangements primarily relate to arrangements entered into, through subsidiaries in the Pictures segment, with one or more active participants to jointly finance, produce and/or distribute motion pictures or television programming under which both the subsidiaries and the other active participants share in the risks and rewards of ownership. These arrangements are referred to as

~~co-production~~

~~and distribution arrangements.~~

~~Sony typically records an asset~~Compensation for only the portion of the motion pictures or television programming it owns and finances. Sony and the other participants typically distribute the product in different media or markets. Revenues earned and expenses incurredkey management personnel for the media or markets in which Sony distributes the product are typically recorded on a gross basis. Sony typically does not record revenues earned and expenses incurred when the other participants distribute the product. Sony and the other participants typically share in the profits from the distribution of the product in all media or markets. For motion pictures, if Sony is a net receiver of (1) Sony’s share of the profits from the media or markets distributed by the other participants less (2) the other participants’ share of the profits from the media or markets distributed by Sony then the net amount is recorded as net sales. If Sony is a net payer then the net amount is recorded in cost of sales. For television programming, Sony records its share of the profits from the media or markets distributed by the other participants as sales, and the other participants’ share of the profits from the media or markets distributed by Sony as cost of sales.

~~For~~ the fiscal years ended March 31, ~~2018, 2019~~2021, 2022 and ~~2020, 49,547 million yen, 42,343 million yen~~2023 is presented as follows:


	Yen in millions
	Fiscal year ended March 31
	2021		2022		2023
Short-term employee benefits		1,202		1,480		1,831
Stock-based compensation		2,329		1,597		1,928

Total		3,531		3,077		3,759

Compensation for key management personnel is the remuneration for Directors (including outside Directors) and 33,921 million yen, respectively, were recorded as net sales for amounts due from the other participants and 24,280 million yen, 22,702 million yen and 21,052 million yen, respectively, were recorded as costCorporate executive officers of ~~sales for amounts owed to the other participants in these collaborative arrangements.~~Sony Group Corporation.

~~28.~~

33.

~~Commitments,~~Purchase commitments, contingent liabilities and other

(1)	Loan commitments

Subsidiaries in the Financial Services segment have ~~entered into~~lines of credit in accordance with loan agreements with their ~~customers in accordance with the condition of the contracts.~~customers. As of March 31, ~~2020,~~2022 and 2023, the total unused portion of the lines of credit extended under these contracts was ~~34,306~~33,587 million ~~yen. Based upon the information currently available, it is not possible to estimate the aggregate amounts of future~~

~~year-by-year~~yen and 35,831 million yen, respectively.

~~payments for these loan commitments.~~

(2)	Purchase commitments ~~and other~~

Purchase commitments ~~and other outstanding~~ as of March 31, ~~2020~~2022 and 2023 amounted to ~~684,911~~1,000,833 million ~~yen.~~yen and 1,084,774 million yen, respectively. The amount of these purchase commitments covers the purchase consideration for property, plant and equipment, intangible assets, other goods and other services. The major components of these commitments are as follows:

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Certain subsidiaries in the Pictures segment have entered into agreements with creative talent for the development and production of motion pictures and television programming as well as agreements with third parties to acquire completed motion pictures, or certain rights therein, and to acquire the rights to broadcast certain live action sporting events. These agreements cover various periods, mainly within ~~three years.~~four years from the end of each period. As of March 31, ~~2020,~~2022 and 2023, these subsidiaries were committed to make payments under such contracts of ~~126,917~~101,284 million ~~yen.~~yen and 125,098 million yen, respectively.

Certain subsidiaries in the Music segment have entered into contracts with recording artists, songwriters and companies for the future production, distribution and/or licensing of music ~~product.~~products. These contracts cover various periods, mainly within five ~~years.~~years from the end of each period. As of March 31, ~~2020,~~2022 and 2023, these subsidiaries were committed to make payments of ~~128,678~~153,920 million yen and 193,576 million yen, respectively, under such contracts.

Certain subsidiaries in the G&NS segment have entered into long-term contracts for the development, distribution and publishing of game software. These contracts cover various periods, mainly within ~~eight years.~~six years from the end of each period. As of March 31, ~~2020,~~2022 and 2023, these subsidiaries were committed to make payments of ~~29,243~~34,842 million yen and 31,298 million yen, respectively, under such contracts.

In addition to the above, Sony has entered into purchase contracts for ~~fixed~~property, plant and equipment and intangible assets. As of March 31, ~~2020,~~2022 and 2023, Sony has committed to make payments of ~~199,145~~246,263 million yen and 292,608 million yen, respectively, under such contracts.

Sony has entered into purchase contracts for materials. As of March 31, ~~2020,~~2022 and 2023, Sony has committed to make payments of ~~115,670~~265,518 million yen and 288,260 million yen, respectively, under such contracts.

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~~SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES~~

(3)	Litigation

Sony has entered into sponsorship contracts related to advertising and promotional rights. These contracts cover various periods mainly within one year. As of March 31, 2020, Sony has committed to make payments of 5,162 million yen under such contracts.

~~The schedule of the aggregate amounts of~~

~~year-by-year~~

~~payment of purchase commitments during the next five fiscal years and thereafter is as follows:~~

Fiscal year ending March 31

Yen in millions

2021

378,319

2022

103,033

2023

76,541

2024

49,549

2025

36,936

Later fiscal years

40,533

Total

684,911

~~(3)~~

~~Litigation~~

Beginning in 2009, the U.S. Department of Justice (“DOJ”), the European Commission and certain other governmental agencies outside the United States have conducted investigations relating to competition in the optical disk drives market. Sony Corporation and/or certain of its subsidiaries have been subject to these investigations. Sony

~~Corporation~~

understands that these investigations have ended. However, proceedings initiated by the European Commission as a result of its investigation continue. In October 2015, the European Commission adopted a decision in which it fined Sony Corporation and certain of its subsidiaries 31 million euros; however, Sony

~~Corporation~~

~~filed an appeal against the decision with the European Union’s General Court. In July 2019, the General Court upheld the European Commission’s decision. Sony~~

~~Corporation~~

reviewed the judgment carefully and filed an appeal with the Court of Justice of the European Union in September 2019. A number of direct and indirect purchaser lawsuits, including class actions, have been filed in certain jurisdictions in which the plaintiffs allege that Sony Corporation and certain of its subsidiaries violated antitrust laws and seek recovery of damages and other remedies. All of these lawsuits have been settled, including the class actions brought by the direct and indirect purchasers in the United States, except one lawsuit which is still pending. Sony believes that final resolution of the pending proceedings will not have a material impact on Sony’s results of operations and financial position.

~~Since 2011, in relation to the secondary batteries business that was operated by Sony~~

~~Corporation~~

and certain of its subsidiaries, a number of direct and indirect purchaser lawsuits, including class actions, have been filed in certain jurisdictions in which the plaintiffs allege that Sony Corporation and certain of its subsidiaries violated antitrust laws and seek recovery of damages and other remedies. All of these lawsuits have been settled, including the class actions brought by the direct and indirect purchasers in the United States, except one lawsuit which is still pending. Sony believes that final resolution of the pending proceeding will not have a material impact on Sony’s results of operations and financial position.

(4)	Guarantees

Sony has issued guarantees that contingently require payments to guaranteed parties if certain specified events or conditions occur. The maximum potential amount of future payments under these guarantees as of March 31, ~~2020~~2022 and 2023 amounted to ~~2,214 million yen.~~

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In addition to the above, Sony also issues contractual product warranties under which it generally guarantees the performance of products delivered and services rendered for a certain period or term. The changes in the product warranty liability for the fiscal years ended

~~March 31, 2018, 2019 and 2020 are as follows:~~

Yen in millions

Fiscal year ended March 31

2018

2019

2020

Balance at beginning of the fiscal year

57,694

44,717

33,005

Additional liabilities for warranties

32,179

23,041

21,448

Settlements (in cash or in kind)

(30,570
)
(26,326
)
(21,491
)
Changes in estimate for
pre-existing
warranty reserve

(16,802
)
(7,370
)
(562
)
Translation adjustments

2,216

(1,057
)
(593
)

Balance at end of the fiscal year

44,717

33,005

31,807

~~The consideration received for extended warranty service, which is not a significant portion of the warranty activities provided by Sony, is excluded from the amounts in the table above.~~

~~29.~~

~~Business segment information~~

The reportable segments presented below are the segments of Sony for which separate financial information is available and for which operating profit or loss amounts are evaluated regularly by the chief operating decision maker (“CODM”) in deciding how to allocate resources and in assessing performance. The CODM does not evaluate segments using discrete asset information. Sony’s CODM is its Chief Executive Officer and President.

Sony realigned its business segments from the first quarter of the fiscal year ended March 31, 2020 to reflect modifications to the organizational structure of certain segments and a change in the Senior Executives in charge of certain segments as of April 1, 2019. In connection with this decision, the former Home Entertainment & Sound, Imaging Products & Solutions and Mobile Communications segments have been realigned as the EP&S segment. In connection with this realignment, the sales and operating revenue and operating income (loss) of each segment for the comparative periods have been reclassified to conform to the current presentation. In addition, the former Semiconductors segment has been renamed the I&SS segment effective from the first quarter of the fiscal year ended March 31, 20

~~20.~~

The G&NS segment includes network services businesses, the manufacture and sales of home gaming products and 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 a bank 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-8~~

~~Table of Contents~~

~~SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES~~

~~Segment sales and operating revenue:~~

Yen in millions

Fiscal year ended March 31

2018

2019

2020

Sales and operating revenue:

Game & Network Services —

Customers

1,848,298

2,224,622

1,919,760

Intersegment

95,514

86,250

57,791

Total

1,943,812

2,310,872

1,977,551

Music —

Customers

784,792

795,025

838,592

Intersegment

15,203

12,464

11,317

Total

799,995

807,489

849,909

Pictures —

Customers

1,010,173

985,270

1,010,714

Intersegment

894

1,603

1,140

Total

1,011,067

986,873

1,011,854

Electronics Products & Solutions —

Customers

2,582,813

2,303,167

1,969,880

Intersegment

17,542

17,461

21,388

Total

2,600,355

2,320,628

1,991,268

Imaging & Sensing Solutions —

Customers

726,892

770,622

985,259

Intersegment

123,118

108,708

85,317

Total

850,010

879,330

1,070,576

Financial Services —

Customers

1,221,235

1,274,708

1,299,847

Intersegment

7,142

7,831

7,901

Total

1,228,377

1,282,539

1,307,748

All Other —

Customers

351,527

299,806

214,999

Intersegment

55,647

45,931

36,421

Total

407,174

345,737

251,420

Corporate and elimination

(296,808
)
(267,781
)
(200,441
)

Consolidated total

8,543,982

8,665,687

8,259,885

G&NS intersegment amounts primarily consist of transactions with All Other. I&SS intersegment amounts primarily consist of transactions with the G&NS segment and the EP&S segment. All Other intersegment amounts primarily consist of transactions with the G&NS segment, the Music segment and the Pictures segment. Corporate and elimination includes certain brand and patent royalty income.

~~F-8~~

~~Table of Contents~~

~~SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES~~

~~Segment profit or loss:~~

Yen in millions

Fiscal year ended March 31

2018

2019

2020

Operating income (loss):

Game & Network Services

177,478

311,092

238,400

Music

127,786

232,487

142,345

Pictures

41,110

54,599

68,157

Electronics Products & Solutions

133,129

76,508

87,276

Imaging & Sensing Solutions

164,023

143,874

235,584

Financial Services

178,947

161,477

129,597

All Other

(23,530
)
(11,127
)
16,288

Total

798,943

968,910

917,647

Corporate and elimination

(64,083
)
(74,675
)
(72,188
)

Consolidated operating income

734,860

894,235

845,459

Other income

23,728

144,735

21,949

Other expenses

(59,539
)
(27,322
)
(67,958
)

Consolidated income before income taxes

699,049

1,011,648

799,450

~~Operating income (loss) is sales and operating revenue less costs and expenses, and includes equity in net income (loss) of affiliated companies.~~

Corporate and elimination includes headquarters restructuring costs and certain other corporate expenses, including the amortization of certain intellectual property assets such as the cross-licensing of intangible assets acquired from Ericsson at the time of the Sony Mobile Communications acquisition, which are not allocated to segments.

~~Other significant items:~~

Yen in millions

Fiscal year ended March 31

2018

2019

2020

Equity in net income (loss) of affiliated companies:

Game & Network Services

—

—

—

Music

4,483

(6,915
)
4,239

Pictures

(129
)
106

(629
)
Electronics Products & Solutions

(102
)
(38
)
136

Imaging & Sensing Solutions

—

—

0

Financial Services

(61
)
(682
)
(104
)
All Other

4,378

4,530

5,995

Consolidated total

8,569

(2,999
)
9,637

Depreciation and amortization:

Game & Network Services

29,091

29,023

29,135

Music

18,230

21,259

29,137

Pictures

24,458

24,081

21,665

Electronics Products & Solutions

64,279

61,749

63,291

Imaging & Sensing Solutions

99,258

110,746

134,035

Financial Services, including deferred insurance acquisition costs

79,843

91,179

106,667

All Other

5,910

4,940

5,095

Total

321,069

342,977

389,025

Corporate

40,375

31,049

27,617

Consolidated total

361,444

374,026

416,642

~~F-8~~

~~Table of Contents~~

~~SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES~~

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

Yen in millions

Fiscal year ended March 31

2018

2019

2020

Sales and operating revenue:

Game & Network Services

Digital Software and
Add-on
Content

762,220

1,102,231

1,010,296

Network Services

270,972

326,524

337,265

Hardware and Others

815,106

795,867

572,199

Total

1,848,298

2,224,622

1,919,760

Music

Recorded Music — Streaming

197,439

227,513

276,039

Recorded Music — Others

249,521

199,413

191,114

Music Publishing

74,360

106,666

157,478

Visual Media and Platform

263,472

261,433

213,961

Total

784,792

795,025

838,592

Pictures

Motion Pictures

448,945

436,017

475,061

Television Productions

289,024

288,816

301,224

Media Networks

272,204

260,437

234,429

Total

1,010,173

985,270

1,010,714

Electronics Products & Solutions

Televisions

861,763

788,423

646,513

Audio and Video

357,194

362,580

346,060

Still and Video Cameras

415,318

421,506

384,142

Mobile Communications

713,916

487,330

362,144

Other

234,622

243,328

231,021

Total

2,582,813

2,303,167

1,969,880

Imaging & Sensing Solutions

726,892

770,622

985,259

Financial Services

1,221,235

1,274,708

1,299,847

All Other

351,527

299,806

214,999

Corporate

18,252

12,467

20,834

Consolidated total

8,543,982

8,665,687

8,259,885

Sony has realigned its product category configuration in regard to the new EP&S segment from the first quarter of the fiscal year ended March 31, 2020. Sony has also realigned its product category configuration in the Music segment with more detailed breakdown in Recorded Music from the fourth quarter of the fiscal year ended March 31, 2020. In connection with these realignments, all prior period sales amounts by product category in the table above have been reclassified to conform to the current presentation.

~~In the G&NS segment, Digital Software and~~

~~Add-on~~

~~Content includes distribution of software titles and~~

~~add-on~~

contents through network by Sony Interactive Entertainment; Network Services includes network services relating to game, video and music content; Hardware and Others includes home and portable game consoles, packaged software and peripheral devices. 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~~

~~F-8~~

~~Table of Contents~~

~~SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES~~

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.

~~Within the EP&S segment, the operating loss of Mobile Communications for the fiscal years ended March 31, 2018, 2019 and 2020 was (27,636) million yen, (97,136)~~501 million yen and ~~(21,057)~~458 million yen, respectively.

~~Geographic Information:~~

Sales and operating revenue attributed to countries and areas based on location of external customers for the fiscal years ended March 31, 2018, 2019 and 2020 and property, plant and equipment, net and right-of-use assets as of March 31, 2019 and 2020 are as follows:

Yen in millions

Fiscal year ended March 31

2018

2019

2020

Sales and operating revenue:

Japan

2,625,619

2,591,784

2,472,479

United States

1,835,705

1,982,135

1,864,390

Europe

1,841,457

1,862,166

1,697,791

China

674,718

770,416

845,235

Asia-Pacific

1,024,179

912,193

892,026

Other Areas

542,304

546,993

487,964

Total

8,543,982

8,665,687

8,259,885

Yen in millions

March 31

2019

2020

Property, plant and equipment, net and right-of-use assets*:

Japan

590,694

946,922

United States

113,581

214,226

Europe

22,622

67,799

China

11,694

17,996

Asia-Pacific

34,273

46,932

Other Areas

4,189

7,379

Total

777,053

1,301,254

~~As of March 31, 2020, the amounts include operating lease right-of-use assets, which were recognized from April 1, 2019 onward as a result of the adoption of ASU 2016-02.~~

~~Major countries and areas in each geographic segment excluding Japan, United States and China are as follows:~~


~~(1) Europe:~~		~~United Kingdom, France, Germany, Russia, Spain and Sweden~~
~~(2) Asia-Pacific:~~		~~India, South Korea, Oceania, Thailand and Malaysia~~
~~(3) Other Areas:~~		~~The Middle East/Africa, Brazil, Mexico and Canada~~

~~There are no individually material countries with respect to sales and operating revenue or property, plant and equipment, net and right-of-use assets included in Europe, Asia-Pacific and Other Areas.~~

~~Transfers between reportable business segments or geographic areas are made at individually negotiated prices that are intended to reflect a market-based transfer price.~~

~~There were no sales and operating revenue with any single major external customer for the fiscal years ended March 31, 2018, 2019 and 2020.~~

~~F-8~~

~~Table of Contents~~

~~SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES~~

~~30.~~34.

Subsequent ~~events~~

event

~~Tender Offer~~Setting of parameters for ~~Common Shares and Stock Acquisition Rights~~repurchase of ~~Sony Financial Holdings Inc.~~

shares of its own common stock

~~In order to achieve further growth and strengthen governance within its financial services business with~~

Sony Group Corporation approved the ~~goal of enhancing the corporate value~~setting of the ~~overall~~following parameters for repu

rchas

e of its own common stock pursuant to the Companies Act of Japan and Sony Group ~~Sony Corporation resolved, at~~Corporation’s Articles of Incorporation by the ~~meeting~~resolution of its Board of Directors held on May 19, 2020, to offer to acquire the common shares of Sony Financial Holdings Inc. (“SFH”), a consolidated subsidiary of Sony Corporation, and the related stock acquisition rights through a tender offer (“Tender Offer”), with the aim of making SFH a wholly-owned subsidiary of Sony Corporation, and Sony Corporation commenced the Tender Offer on May 20, 2020. Asas of May ~~19, 2020, Sony Corporation held 283,050,000 (Share Holding Ratio: approximately 65%) of SFH’s common shares.~~17, 2023:

If all the SFH shareholders, excluding Sony Corporation, and all the holders of the stock acquisition rights tender their shares and stock acquisition rights to Sony Corporation in the Tender Offer, the total purchase price to be paid by Sony Corporation will be approximately 395,538 million yen.

~~<Overview of Tender Offer>~~

1.	Shares and Stock Acquisition Rights to be purchased: Common shares (excluding SFH’s common shares owned by Sony Corporation and the treasury shares owned by SFH) and the related stock acquisition rights

2.	~~Period: From May 20, 2020 through July 13, 2020~~

3.	~~Price: 2,600 yen per common share~~

~~259,900 yen per unit of stock acquisition right~~

4.	~~Number of Shares to be purchased (including the number of shares subject to stock acquisition rights):~~

~~152,130,036 shares~~

Under the terms of the Tender Offer, the minimum number of shares to be purchased is 7,070,000 shares. If the aggregate number of shares (including shares subject to stock acquisition rights) tendered to Sony Corporation in the Tender Offer is less than the minimum number of shares to be purchased (7,070,000 shares), Sony Corporation will not purchase any of the tendered common shares

~~stock acquisition rights.~~

F-

~~Table of Contents~~

Total number of shares for repurchase: 25 million shares (maximum)

Total purchase price for repurchase of shares: 200 billion yen (maximum)

~~SCHEDULE II~~

Period of repurchase: May 18, 2023 to May 17, 2024

F-11

~~VALUATION AND QUALIFYING ACCOUNTS~~

~~SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES~~6

Yen in millions

Balance
at beginning
of period

Beginning
adjustment
(Note 3)

Additions
charged to
costs and
expenses

Deductions
(Note 1)

Other
(Note 2)

Balance
at end
of period

Fiscal year ended March 31, 2018:

Allowance for doubtful accounts and sales returns

53,150

—

45,515

(51,302
)
1,300

48,663

Fiscal year ended March 31, 2019:

Allowance for doubtful accounts

48,663

(25,114
)
7,112

(5,532
)
311

25,440

Fiscal year ended March 31, 2020:

Allowance for doubtful accounts

25,440

—

9,006

(6,908
)
(1,665
)
25,873

~~Notes:~~

1.	~~Reversal including amounts written off.~~

2.	~~Translation adjustments.~~

Sony adopted ASU 2014-09 from April 1, 2018, and as a result, sales returns are presented as a liability instead of as a contra-asset allowance. Accordingly, Sony changed the presentation from “Allowance for doubtful accounts and sales returns” to “Allowance for doubtful accounts” for the fiscal years ended March 31, 2019 and 2020.

Yen in millions

Balance
at beginning
of period

Additions

Deductions

Other
(Note 1)

Balance
at end
of period

Fiscal year ended March 31, 2018:

Valuation allowance — Deferred tax assets

1,051,964

70,797

(123,597
)
(99,329
)
899,835

Fiscal year ended March 31, 2019:

Valuation allowance — Deferred tax assets

899,835

116,938

(309,226
)
15,567

723,114

Fiscal year ended March 31, 2020:

Valuation allowance — Deferred tax assets

723,114

53,245

(161,547
)
(6,569
)
608,243

~~Note:~~

1.	~~Translation adjustments and the effect of change in statutory tax rate.~~

~~F-91~~


		Fiscal year ended March 31				Impact of changes in foreign exchange rates
		2019		2020		2019 to 2020
		(Yen in billions)
G&NS	Sales		2,310.9		1,977.6		(65.4)
	Operating income		311.1		238.4		(12.2)
EP&S	Sales		2,320.6		1,991.3		(59.8)
	Operating income		76.5		87.3		(23.0)
I&SS	Sales		879.3		1,070.6		(22.2)
	Operating income		143.9		235.6		(18.2)


	March 31, 2020
	Cost		Gross unrealized gains		Gross unrealized losses			Fair value
	(Yen in millions)
Financial Services Business:
Available-for-sale securities
Sony Life		1,815,487		309,294		(484	)		2,124,297
Sony Bank		702,462		3,601		(2,065	)		703,998
Other		83,833		137		(822	)		83,148
Held-to-maturity securities
Sony Life		7,334,780		2,439,769		(6,078	)		9,768,471
Sony Bank		5,418		—		(421	)		4,997
Other		78,314		22,927		(73	)		101,168
Total Financial Services		10,020,294		2,775,728		(9,943	)		12,786,079
Non-Financial Services:
Available-for-sale securities		1,370		—		—			1,370
Held-to-maturity securities		—		—		—			—
Total Non-Financial Services		1,370		—		—			1,370
Consolidated		10,021,664		2,775,728		(9,943	)		12,787,449


	Total		Less than 1 year		1 to 3 years		3 to 5 years		More than 5 years
	(Yen in millions)
Contractual obligations and commitments:
Short-term debt (Note 11)		810,176		810,176		—		—		—
Long-term debt (Notes 8 and 11)
Finance lease obligations and other		56,350		14,216		15,593		10,011		16,530
Other long-term debt		608,423		15,591		373,126		114,953		104,753
Interest on other long-term debt		4,409		1,489		1,075		729		1,116
Operating lease obligations, including imputed interest (Note 8)		424,965		76,469		125,254		70,967		152,275
Purchase commitments (Note 28)
Contracts for the production or purchase of motion pictures, television programming or certain rights and rights to broadcast certain live action sporting events		126,917		56,385		52,372		17,480		680
Contracts with recording artists, songwriters and companies		128,678		56,662		33,360		16,576		22,080
Sponsorship contracts related to advertising and promotional rights		5,162		4,602		560		—		—
Long-term contracts for development, distribution and publishing of game software		29,243		5,083		4,571		5,115		14,474
Purchase commitments for fixed assets, materials, and other		394,911		255,587		88,711		47,314		3,299
Future insurance policy benefits and other and policyholders’ account in the life insurance business* (Note 10)		26,457,407		594,903		1,299,026		1,370,756		23,192,722
Gross unrecognized tax benefits** (Note 22)		41,268		—		—		—		—
Total		29,087,909		1,891,163		1,993,648		1,653,901		23,507,929


	Fixed remuneration		Remuneration linked to business results				Phantom restricted stock plan
	Number of persons	Amount (Yen in millions)	Number of persons		Amount (Yen in millions)		Number of persons	Amount (Yen in millions)
Directors	14	210		—		—	3		111
	(1) (2)				(*3)
(Outside Directors)	(12)	(174)		(—)		(—)	(3)		(111)
Corporate Executive Officers	5	360		5		446	—		—
	(*2)					(*4)
Total (*6)	19	570		5		446	3		111
									(*5)

Title of Each Class

Trading Symbol(s)

Name of Each Exchange on Which Registered

American Depositary Shares
*

~~SNE~~
SONY

New York Stock Exchange

Common Stock
**