SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934
For the month of OCTOBER 2021
Commission File Number: 001-06439
SONY GROUP CORPORATION
(Translation of registrant's name into English)
1-7-1 KONAN, MINATO-KU, TOKYO, 108-0075, JAPAN
(Address of principal executive offices)
The registrant files annual reports under cover of Form 20-F.
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F,
Form 20-F X | Form 40-F __ |
Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934, Yes No X
If "Yes" is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b):82-______
SIGNATURE
Pursuant��to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
SONY GROUP CORPORATION | |
(Registrant) | |
By: /s/ Hiroki Totoki | |
(Signature) | |
Hiroki Totoki | |
Executive Deputy President and | |
Chief Financial Officer |
Date: October 28, 2021
List of materials
Documents attached hereto:
i) Press release: Quarterly Financial Statements for the Second Quarter Ended September 30, 2021 And Outlook for the Fiscal Year Ending March 31, 2022
Quarterly Financial Statements
for the Second Quarter Ended September 30, 2021
And
Outlook for the Fiscal Year Ending March 31, 2022
October 28, 2021
Sony Group Corporation
Quarterly Financial Statements (Unaudited) | F-1 |
Condensed Consolidated Statements of Financial Position | F-1 |
Condensed Consolidated Statements of Income (Three months ended September 30) | F-3 |
Condensed Consolidated Statements of Comprehensive Income (Three months ended September 30) | F-4 |
Condensed Consolidated Statements of Income (Six months ended September 30) | F-5 |
Condensed Consolidated Statements of Comprehensive Income (Six months ended September 30) | F-6 |
Condensed Consolidated Statements of Changes in Stockholders’ Equity (Six months ended September 30) | F-7 |
Condensed Consolidated Statements of Cash Flows (Six months ended September 30) | F-8 |
Notes to Condensed Consolidated Financial Statements | F-10 |
- Business Segment Information | F-10 |
- Going Concern Assumption | F-20 |
- Accounting Policy and Other Information | F-20 |
- First-time Adoption | F-22 |
- Subsequent Event | F-43 |
Outlook for the Fiscal Year Ending March 31, 2022 | 1 |
Cautionary Statement | 4 |
All financial information is presented on the basis of International Financial Reporting Standards (“IFRS”).
Sony Group Corporation and its consolidated subsidiaries are together referred to as “Sony” or “Sony Group”.
(Unaudited)
Condensed Consolidated Financial Statements
Condensed Consolidated Statements of Financial Position
Yen in millions | ||||||||||||||||
April 1, 2020 | March 31, 2021 | September 30, 2021 | Change from March 31, 2021 | |||||||||||||
ASSETS | ||||||||||||||||
Current assets: | ||||||||||||||||
Cash and cash equivalents | 1,512,523 | 1,786,982 | 1,473,783 | (313,199 | ) | |||||||||||
Investments and advances in the Financial Services segment | 327,092 | 411,982 | 371,998 | (39,984 | ) | |||||||||||
Trade and other receivables, and contract assets | 1,194,334 | 1,365,493 | 1,499,999 | 134,506 | ||||||||||||
Inventories | 559,779 | 636,668 | 847,963 | 211,295 | ||||||||||||
Other financial assets | 135,482 | 117,682 | 106,100 | (11,582 | ) | |||||||||||
Other current assets | 441,974 | 396,210 | 419,803 | 23,593 | ||||||||||||
Total current assets | 4,171,184 | 4,715,017 | 4,719,646 | 4,629 | ||||||||||||
Non-current assets: | ||||||||||||||||
Investments accounted for using the equity method | 204,291 | 225,086 | 234,719 | 9,633 | ||||||||||||
Investments and advances in the Financial Services segment | 16,352,285 | 17,296,546 | 18,088,150 | 791,604 | ||||||||||||
Property, plant and equipment | 917,198 | 990,541 | 1,063,538 | 72,997 | ||||||||||||
Right-of-use assets | 373,282 | 358,034 | 377,721 | 19,687 | ||||||||||||
Goodwill | 690,929 | 726,109 | 835,826 | 109,717 | ||||||||||||
Content assets | 992,644 | 1,062,547 | 1,154,058 | 91,511 | ||||||||||||
Other intangible assets | 377,500 | 391,055 | 428,577 | 37,522 | ||||||||||||
Deferred insurance acquisition costs | 187,904 | 623,986 | 646,776 | 22,790 | ||||||||||||
Deferred tax assets | 210,333 | 215,669 | 203,077 | (12,592 | ) | |||||||||||
Other financial assets | 321,721 | 695,764 | 690,470 | (5,294 | ) | |||||||||||
Other non-current assets | 167,795 | 207,489 | 224,308 | 16,819 | ||||||||||||
Total non-current assets | 20,795,882 | 22,792,826 | 23,947,220 | 1,154,394 | ||||||||||||
Total assets | 24,967,066 | 27,507,843 | 28,666,866 | 1,159,023 |
(Continued on the following page.)
F-1
Condensed Consolidated Statements of Financial Position (Continued)
Yen in millions | ||||||||||||||||
April 1, 2020 | March 31, 2021 | September 30, 2021 | Change from March 31, 2021 | |||||||||||||
LIABILITIES | ||||||||||||||||
Current liabilities: | ||||||||||||||||
Short-term borrowings | 824,045 | 1,201,747 | 1,478,915 | 277,168 | ||||||||||||
Current portion of long-term debt | 98,923 | 205,406 | 171,084 | (34,322 | ) | |||||||||||
Trade and other payables | 1,310,536 | 1,596,563 | 1,677,359 | 80,796 | ||||||||||||
Deposits from customers in the banking business | 2,347,387 | 2,682,156 | 2,796,103 | 113,947 | ||||||||||||
Income taxes payables | 85,346 | 84,431 | 105,915 | 21,484 | ||||||||||||
Participation and residual liabilities in the Pictures segment | 163,007 | 161,433 | 174,453 | 13,020 | ||||||||||||
Other financial liabilities | 56,152 | 54,341 | 38,817 | (15,524 | ) | |||||||||||
Other current liabilities | 1,263,944 | 1,367,527 | 1,232,804 | (134,723 | ) | |||||||||||
Total current liabilities | 6,149,340 | 7,353,604 | 7,675,450 | 321,846 | ||||||||||||
Non-current liabilities: | ||||||||||||||||
Long-term debt | 939,030 | 1,053,636 | 995,794 | (57,842 | ) | |||||||||||
Defined benefit liabilities | 329,621 | 267,222 | 260,864 | (6,358 | ) | |||||||||||
Deferred tax liabilities | 1,041,156 | 816,587 | 859,874 | 43,287 | ||||||||||||
Future insurance policy benefits and other | 6,519,577 | 6,614,585 | 6,829,387 | 214,802 | ||||||||||||
Policyholders’ account in the life insurance business | 3,640,010 | 4,328,894 | 4,539,398 | 210,504 | ||||||||||||
Participation and residual liabilities in the Pictures segment | 119,702 | 116,537 | 122,801 | 6,264 | ||||||||||||
Other financial liabilities | 146,834 | 139,417 | 166,553 | 27,136 | ||||||||||||
Other non-current liabilities | 87,320 | 93,022 | 95,257 | 2,235 | ||||||||||||
Total non-current liabilities | 12,823,250 | 13,429,900 | 13,869,928 | 440,028 | ||||||||||||
Total liabilities | 18,972,590 | 20,783,504 | 21,545,378 | 761,874 | ||||||||||||
EQUITY | ||||||||||||||||
Sony Group Corporation’s stockholders’ equity: | ||||||||||||||||
Common stock | 880,214 | 880,214 | 880,214 | - | ||||||||||||
Additional paid-in capital | 1,297,554 | 1,489,597 | 1,473,122 | (16,475 | ) | |||||||||||
Retained earnings | 1,949,697 | 2,914,503 | 3,308,747 | 394,244 | ||||||||||||
Accumulated other comprehensive income | 979,476 | 1,520,257 | 1,539,514 | 19,257 | ||||||||||||
Treasury stock, at cost | (232,503 | ) | (124,228 | ) | (127,591 | ) | (3,363 | ) | ||||||||
Equity attributable to Sony Group Corporation’s stockholders | 4,874,438 | 6,680,343 | 7,074,006 | 393,663 | ||||||||||||
Noncontrolling interests | 1,120,038 | 43,996 | 47,482 | 3,486 | ||||||||||||
Total equity | 5,994,476 | 6,724,339 | 7,121,488 | 397,149 | ||||||||||||
Total liabilities and equity | 24,967,066 | 27,507,843 | 28,666,866 | 1,159,023 |
F-2
Condensed Consolidated Statements of Income
Yen in millions | ||||||||||||
Three months ended September 30 | ||||||||||||
2020 | 2021 | Change | ||||||||||
Sales and financial services revenue: | ||||||||||||
Sales | 1,736,257 | 2,003,203 | 266,946 | |||||||||
Financial services revenue | 368,860 | 366,162 | (2,698 | ) | ||||||||
Total sales and financial services revenue | 2,105,117 | 2,369,365 | 264,248 | |||||||||
Costs and expenses: | ||||||||||||
Cost of sales | 1,138,468 | 1,365,095 | 226,627 | |||||||||
Selling, general and administrative | 327,261 | 369,908 | 42,647 | |||||||||
Financial services expenses | 331,771 | 323,010 | (8,761 | ) | ||||||||
Other operating (income) expense, net | (5,061 | ) | 1,214 | 6,275 | ||||||||
Total costs and expenses | 1,792,439 | 2,059,227 | 266,788 | |||||||||
Share of profit (loss) of investments accounted for using the equity method | 2,546 | 8,321 | 5,775 | |||||||||
Operating income | 315,224 | 318,459 | 3,235 | |||||||||
Financial income | 3,670 | 4,812 | 1,142 | |||||||||
Financial expenses | 15,166 | 40,172 | 25,006 | |||||||||
Income before income taxes | 303,728 | 283,099 | (20,629 | ) | ||||||||
Income taxes | (157,870 | ) | 68,703 | 226,573 | ||||||||
Net income | 461,598 | 214,396 | (247,202 | ) | ||||||||
Net income attributable to | ||||||||||||
Sony Group Corporation’s stockholders | 458,597 | 213,106 | (245,491 | ) | ||||||||
Noncontrolling interests | 3,001 | 1,290 | (1,711 | ) |
Yen | ||||||||||||
Three months ended September 30 | ||||||||||||
2020 | 2021 | Change | ||||||||||
Per share data: | ||||||||||||
Net income attributable to Sony Group Corporation’s stockholders | ||||||||||||
- Basic | 373.50 | 171.85 | (201.65 | ) | ||||||||
- Diluted | 367.08 | 170.26 | (196.82 | ) |
F-3
Condensed Consolidated Statements of Comprehensive Income
Yen in millions | ||||||||||||
Three months ended September 30 | ||||||||||||
2020 | 2021 | Change | ||||||||||
Net income | 461,598 | 214,396 | (247,202 | ) | ||||||||
Other comprehensive income, net of tax - | ||||||||||||
Items that will not be reclassified to profit or loss | ||||||||||||
Changes in equity instruments measured at fair value through other comprehensive income | 1,293 | (56,779 | ) | (58,072 | ) | |||||||
Remeasurement of defined benefit pension plans | (46 | ) | (55 | ) | (9 | ) | ||||||
Share of other comprehensive income of investments accounted for using the equity method | 106 | (40 | ) | (146 | ) | |||||||
Items that may be reclassified subsequently to profit or loss | ||||||||||||
Changes in debt instruments measured at fair value through other comprehensive income | 22,749 | 7,537 | (15,212 | ) | ||||||||
Cash flow hedges | (1,179 | ) | 1,125 | 2,304 | ||||||||
Insurance contract valuation adjustments | 457 | (149 | ) | (606 | ) | |||||||
Exchange differences on translating foreign operations | (11,365 | ) | 7,447 | 18,812 | ||||||||
Share of other comprehensive income of investments accounted for using the equity method | 56 | 48 | (8 | ) | ||||||||
Total other comprehensive income, net of tax | 12,071 | (40,866 | ) | (52,937 | ) | |||||||
Comprehensive income | 473,669 | 173,530 | (300,139 | ) | ||||||||
Comprehensive income attributable to | ||||||||||||
Sony Group Corporation’s stockholders | 471,491 | 172,651 | (298,840 | ) | ||||||||
Noncontrolling interests | 2,178 | 879 | (1,299 | ) |
F-4
Condensed Consolidated Statements of Income
Yen in millions | ||||||||||||
Six months ended September 30 | ||||||||||||
2020 | 2021 | Change | ||||||||||
Sales and financial services revenue: | ||||||||||||
Sales | 3,261,217 | 3,847,916 | 586,699 | |||||||||
Financial services revenue | 806,849 | 778,292 | (28,557 | ) | ||||||||
Total sales and financial services revenue | 4,068,066 | 4,626,208 | 558,142 | |||||||||
Costs and expenses: | ||||||||||||
Cost of sales | 2,187,891 | 2,613,868 | 425,977 | |||||||||
Selling, general and administrative | 627,546 | 715,210 | 87,664 | |||||||||
Financial services expenses | 733,675 | 711,079 | (22,596 | ) | ||||||||
Other operating (income) expense, net | (15,751 | ) | 113 | 15,864 | ||||||||
Total costs and expenses | 3,533,361 | 4,040,270 | 506,909 | |||||||||
Share of profit (loss) of investments accounted for using the equity method | 2,244 | 12,589 | 10,345 | |||||||||
Operating income | 536,949 | 598,527 | 61,578 | |||||||||
Financial income | 55,558 | 10,027 | (45,531 | ) | ||||||||
Financial expenses | 20,217 | 42,245 | 22,028 | |||||||||
Income before income taxes | 572,290 | 566,309 | (5,981 | ) | ||||||||
Income taxes | (93,526 | ) | 138,798 | 232,324 | ||||||||
Net income | 665,816 | 427,511 | (238,305 | ) | ||||||||
Net income attributable to | ||||||||||||
Sony Group Corporation’s stockholders | 652,180 | 424,935 | (227,245 | ) | ||||||||
Noncontrolling interests | 13,636 | 2,576 | (11,060 | ) |
Yen | ||||||||||||
Six months ended September 30 | ||||||||||||
2020 | 2021 | Change | ||||||||||
Per share data: | ||||||||||||
Net income attributable to Sony Group Corporation’s stockholders | ||||||||||||
- Basic | 532.72 | 342.80 | (189.92 | ) | ||||||||
- Diluted | 522.51 | 339.45 | (183.06 | ) |
F-5
Condensed Consolidated Statements of Comprehensive Income
Yen in millions | ||||||||||||
Six months ended September 30 | ||||||||||||
2020 | 2021 | Change | ||||||||||
Net income | 665,816 | 427,511 | (238,305 | ) | ||||||||
Other comprehensive income, net of tax - | ||||||||||||
Items that will not be reclassified to profit or loss | ||||||||||||
Changes in equity instruments measured at fair value through other comprehensive income | 41,391 | (30,409 | ) | (71,800 | ) | |||||||
Remeasurement of defined benefit pension plans | (85 | ) | (1,752 | ) | (1,667 | ) | ||||||
Share of other comprehensive income of investments accounted for using the equity method | 142 | (54 | ) | (196 | ) | |||||||
Items that may be reclassified subsequently to profit or loss | ||||||||||||
Changes in debt instruments measured at fair value through other comprehensive income | (45,109 | ) | 42,531 | 87,640 | ||||||||
Cash flow hedges | �� | (1,439 | ) | 927 | 2,366 | |||||||
Insurance contract valuation adjustments | (1,193 | ) | 136 | 1,329 | ||||||||
Exchange differences on translating foreign operations | (10,572 | ) | 14,631 | 25,203 | ||||||||
Share of other comprehensive income of investments accounted for using the equity method | (11 | ) | 17 | 28 | ||||||||
Total other comprehensive income, net of tax | (16,876 | ) | 26,027 | 42,903 | ||||||||
Comprehensive income | 648,940 | 453,538 | (195,402 | ) | ||||||||
Comprehensive income attributable to | ||||||||||||
Sony Group Corporation’s stockholders | 661,634 | 451,000 | (210,634 | ) | ||||||||
Noncontrolling interests | (12,694 | ) | 2,538 | 15,232 |
F-6
Condensed Consolidated Statements of Changes in Stockholders’ Equity
Yen in millions | ||||||||||||||||||||||||
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 | 652,180 | 652,180 | 13,636 | 665,816 | ||||||||||||||||||||
Other comprehensive income, net of tax | 9,454 | 9,454 | (26,330 | ) | (16,876 | ) | ||||||||||||||||||
Total comprehensive income | 652,180 | 9,454 | 661,634 | (12,694 | ) | 648,940 | ||||||||||||||||||
Transfer to retained earnings | (2,105 | ) | 2,105 | - | - | |||||||||||||||||||
Transactions with stockholders and other: | ||||||||||||||||||||||||
Exercise of stock acquisition rights | (334 | ) | (919 | ) | 8,722 | 7,469 | 7,469 | |||||||||||||||||
Conversion of convertible bonds | (2,716 | ) | (6,120 | ) | 66,402 | 57,566 | 57,566 | |||||||||||||||||
Stock-based compensation | 453 | 453 | 453 | |||||||||||||||||||||
Dividends declared | (30,504 | ) | (30,504 | ) | (12,996 | ) | (43,500 | ) | ||||||||||||||||
Purchase of treasury stock | (106 | ) | (106 | ) | (106 | ) | ||||||||||||||||||
Reissuance of treasury stock | 335 | 1,121 | 1,456 | 1,456 | ||||||||||||||||||||
Transactions with noncontrolling interests shareholders and other | 193,097 | 457,072 | 650,169 | (1,049,065 | ) | (398,896 | ) | |||||||||||||||||
Balance at September 30, 2020 | 880,214 | 1,488,389 | 2,562,229 | 1,448,107 | (156,364 | ) | 6,222,575 | 45,283 | 6,267,858 |
Yen in millions | ||||||||||||||||||||||||
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 | 424,935 | 424,935 | 2,576 | 427,511 | ||||||||||||||||||||
Other comprehensive income, net of tax | 26,065 | 26,065 | (38 | ) | 26,027 | |||||||||||||||||||
Total comprehensive income | 424,935 | 26,065 | 451,000 | 2,538 | 453,538 | |||||||||||||||||||
Transfer to retained earnings | 6,808 | (6,808 | ) | - | - | |||||||||||||||||||
Transactions with stockholders and other: | ||||||||||||||||||||||||
Exercise of stock acquisition rights | (162 | ) | 4,095 | 3,933 | 3,933 | |||||||||||||||||||
Conversion of convertible bonds | (2,037 | ) | (160 | ) | 12,292 | 10,095 | 10,095 | |||||||||||||||||
Stock-based compensation | 2,639 | 2,639 | 2,639 | |||||||||||||||||||||
Dividends declared | (37,177 | ) | (37,177 | ) | (2,632 | ) | (39,809 | ) | ||||||||||||||||
Purchase of treasury stock | (21,496 | ) | (21,496 | ) | (21,496 | ) | ||||||||||||||||||
Reissuance of treasury stock | 1,542 | 1,746 | 3,288 | 3,288 | ||||||||||||||||||||
Transactions with noncontrolling interests shareholders and other | (18,619 | ) | (18,619 | ) | 3,580 | (15,039 | ) | |||||||||||||||||
Balance at September 30, 2021 | 880,214 | 1,473,122 | 3,308,747 | 1,539,514 | (127,591 | ) | 7,074,006 | 47,482 | 7,121,488 |
F-7
Condensed Consolidated Statements of Cash Flows
Yen in millions | ||||||||
Six months ended September 30 | ||||||||
2020 | 2021 | |||||||
Cash flows from operating activities: | ||||||||
Income before income taxes | 572,290 | 566,309 | ||||||
Adjustments to reconcile income before income taxes to net cash provided by operating activities: | ||||||||
Depreciation and amortization, including amortization of contract costs | 322,184 | 383,914 | ||||||
Amortization of deferred insurance acquisition costs | 18,351 | 34,257 | ||||||
Other operating (income) expense, net | (15,751 | ) | 113 | |||||
(Gain) loss on securities investments, net (other than Financial Services segment) | (48,013 | ) | 23,555 | |||||
Share of profit (loss) of investments accounted for using the equity method, net of dividends | 1,404 | (5,283 | ) | |||||
Change in future insurance policy benefits and other | 175,788 | 217,622 | ||||||
Change in policyholders’ account in the life insurance business, less cash impact | 262,006 | 172,201 | ||||||
Net cash impact of policyholders’ account in the life insurance business | 62,849 | 38,146 | ||||||
Changes in assets and liabilities: | ||||||||
Increase in trade receivables and contract assets | (174,685 | ) | (130,057 | ) | ||||
Increase in inventories | (121,313 | ) | (207,104 | ) | ||||
Increase in investments and advances in the Financial Services segment | (909,206 | ) | (689,536 | ) | ||||
Increase in content assets | (89,910 | ) | (246,972 | ) | ||||
Increase in deferred insurance acquisition costs | (44,058 | ) | (54,222 | ) | ||||
Increase in trade payables | 331,795 | 91,232 | ||||||
Increase in deposits from customers in the banking business | 214,621 | 118,707 | ||||||
Increase in borrowings in the life insurance business and the banking business | 210,934 | 257,118 | ||||||
Decrease in other financial assets and other current assets | 1,749 | 9,063 | ||||||
Decrease in other financial liabilities and other current liabilities | (162,945 | ) | (115,800 | ) | ||||
Income taxes paid | (22,632 | ) | (95,371 | ) | ||||
Other | 15,441 | (50,934 | ) | |||||
Net cash provided by operating activities | 600,899 | 316,958 |
(Continued on the following page.)
F-8
Condensed Consolidated Statements of Cash Flows (Continued)
Yen in millions | ||||||||
Six months ended September 30 | ||||||||
2020 | 2021 | |||||||
Cash flows from investing activities: | ||||||||
Payments for property, plant and equipment and other intangible assets | (266,629 | ) | (230,317 | ) | ||||
Proceeds from sales of property, plant and equipment and other intangible assets | 9,859 | 3,007 | ||||||
Payments for investments and advances (other than Financial Services segment) | (82,069 | ) | (37,385 | ) | ||||
Proceeds from sales or return of investments and collections of advances (other than Financial Services segment) | 14,793 | 20,348 | ||||||
Payments for purchase of businesses | (2,119 | ) | (214,726 | ) | ||||
Proceeds from sales of businesses | 1,605 | 6,391 | ||||||
Other | (632 | ) | 5,130 | |||||
Net cash used in investing activities | (325,192 | ) | (447,552 | ) | ||||
Cash flows from financing activities: | ||||||||
Decrease in short-term borrowings, net | (20,280 | ) | (245 | ) | ||||
Proceeds from issuance of long-term debt | 221,133 | 13,306 | ||||||
Payments of long-term debt | (44,773 | ) | (137,402 | ) | ||||
Proceeds from issuance of short-term borrowings in connection with payment for purchase of noncontrolling interest in Sony Financial Group Inc. | 322,500 | - | ||||||
Dividends paid | (30,448 | ) | (37,148 | ) | ||||
Payments for purchase of treasury stock | (106 | ) | (21,496 | ) | ||||
Payment for purchase of noncontrolling interest in Sony Financial Group Inc. | (322,611 | ) | - | |||||
Other | (11,274 | ) | (4,140 | ) | ||||
Net cash provided by (used in) financing activities | 114,141 | (187,125 | ) | |||||
Effect of exchange rate changes on cash and cash equivalents | (17,803 | ) | 4,520 | |||||
Net increase (decrease) in cash and cash equivalents | 372,045 | (313,199 | ) | |||||
Cash and cash equivalents at beginning of the fiscal year | 1,512,523 | 1,786,982 | ||||||
Cash and cash equivalents at end of the period | 1,884,568 | 1,473,783 |
F-9
Notes to Condensed Consolidated Financial Statements
Business Segment Information
(Business Segments)
Segment sales and financial services revenue
Yen in millions | ||||||||||||
Three months ended September 30 | ||||||||||||
2020 | 2021 | Change | ||||||||||
Sales and financial services revenue: | ||||||||||||
Game & Network Services - | ||||||||||||
Customers | 494,544 | 628,536 | 133,992 | |||||||||
Intersegment | 12,094 | 16,903 | 4,809 | |||||||||
Total | 506,638 | 645,439 | 138,801 | |||||||||
Music - | ||||||||||||
Customers | 228,419 | 268,543 | 40,124 | |||||||||
Intersegment | 2,449 | 3,067 | 618 | |||||||||
Total | 230,868 | 271,610 | 40,742 | |||||||||
Pictures - | ||||||||||||
Customers | 186,194 | 260,554 | 74,360 | |||||||||
Intersegment | 358 | 152 | (206 | ) | ||||||||
Total | 186,552 | 260,706 | 74,154 | |||||||||
Electronics Products & Solutions - | ||||||||||||
Customers | 522,350 | 567,905 | 45,555 | |||||||||
Intersegment | 11,069 | 14,014 | 2,945 | |||||||||
Total | 533,419 | 581,919 | 48,500 | |||||||||
Imaging & Sensing Solutions - | ||||||||||||
Customers | 283,960 | 254,159 | (29,801 | ) | ||||||||
Intersegment | 23,130 | 24,104 | 974 | |||||||||
Total | 307,090 | 278,263 | (28,827 | ) | ||||||||
Financial Services - | ||||||||||||
Customers | 368,860 | 366,162 | (2,698 | ) | ||||||||
Intersegment | 2,249 | 2,253 | 4 | |||||||||
Total | 371,109 | 368,415 | (2,694 | ) | ||||||||
All Other - | ||||||||||||
Customers | 19,313 | 21,074 | 1,761 | |||||||||
Intersegment | 3,592 | 3,387 | (205 | ) | ||||||||
Total | 22,905 | 24,461 | 1,556 | |||||||||
Corporate and elimination | (53,464 | ) | (61,448 | ) | (7,984 | ) | ||||||
Consolidated total | 2,105,117 | 2,369,365 | 264,248 |
Game & Network Services (“G&NS”) intersegment amounts primarily consist of transactions with the Electronics Products & Solutions (“EP&S”) segment. EP&S intersegment amounts primarily consist of transactions with the G&NS segment. Imaging & Sensing Solutions (“I&SS”) intersegment amounts primarily consist of transactions with the G&NS segment and the EP&S segment. Corporate and elimination includes certain brand and patent royalty income.
F-10
Segment profit (loss)
Yen in millions | ||||||||||||
Three months ended September 30 | ||||||||||||
2020 | 2021 | Change | ||||||||||
Operating income (loss): | ||||||||||||
Game & Network Services | 105,368 | 82,679 | (22,689 | ) | ||||||||
Music | 54,253 | 50,586 | (3,667 | ) | ||||||||
Pictures | 32,814 | 31,629 | (1,185 | ) | ||||||||
Electronics Products & Solutions | 53,371 | 72,711 | 19,340 | |||||||||
Imaging & Sensing Solutions | 50,767 | 49,725 | (1,042 | ) | ||||||||
Financial Services | 37,035 | 43,053 | 6,018 | |||||||||
All Other | 1,531 | 8,618 | 7,087 | |||||||||
Total | 335,139 | 339,001 | 3,862 | |||||||||
Corporate and elimination | (19,915 | ) | (20,542 | ) | (627 | ) | ||||||
Consolidated operating income | 315,224 | 318,459 | 3,235 |
Operating income (loss) is sales and financial services revenue less costs and expenses, and includes the share of profit (loss) of investments accounted for using the equity method.
The sales and financial services revenue and operating income (loss) for the three months ended September 30, 2020 shown in the table above are presented to reflect the change in the organizational structure for the fiscal year ending March 31, 2022, which is discussed on page F-20.
F-11
(Business Segments)
Segment sales and financial services revenue
Yen in millions | ||||||||||||
Six months ended September 30 | ||||||||||||
2020 | 2021 | Change | ||||||||||
Sales and financial services revenue: | ||||||||||||
Game & Network Services - | ||||||||||||
Customers | 1,093,593 | 1,230,694 | 137,101 | |||||||||
Intersegment | 19,154 | 30,555 | 11,401 | |||||||||
Total | 1,112,747 | 1,261,249 | 148,502 | |||||||||
Music - | ||||||||||||
Customers | 402,154 | 520,765 | 118,611 | |||||||||
Intersegment | 5,829 | 5,718 | (111 | ) | ||||||||
Total | 407,983 | 526,483 | 118,500 | |||||||||
Pictures - | ||||||||||||
Customers | 360,635 | 464,932 | 104,297 | |||||||||
Intersegment | 1,006 | 510 | (496 | ) | ||||||||
Total | 361,641 | 465,442 | 103,801 | |||||||||
Electronics Products & Solutions - | ||||||||||||
Customers | 876,362 | 1,134,424 | 258,062 | |||||||||
Intersegment | 18,434 | 23,763 | 5,329 | |||||||||
Total | 894,796 | 1,158,187 | 263,391 | |||||||||
Imaging & Sensing Solutions - | ||||||||||||
Customers | 482,331 | 452,044 | (30,287 | ) | ||||||||
Intersegment | 30,945 | 44,276 | 13,331 | |||||||||
Total | 513,276 | 496,320 | (16,956 | ) | ||||||||
Financial Services - | ||||||||||||
Customers | 806,849 | 778,292 | (28,557 | ) | ||||||||
Intersegment | 4,504 | 4,508 | 4 | |||||||||
Total | 811,353 | 782,800 | (28,553 | ) | ||||||||
All Other - | ||||||||||||
Customers | 39,758 | 39,291 | (467 | ) | ||||||||
Intersegment | 8,447 | 7,156 | (1,291 | ) | ||||||||
Total | 48,205 | 46,447 | (1,758 | ) | ||||||||
Corporate and elimination | (81,935 | ) | (110,720 | ) | (28,785 | ) | ||||||
Consolidated total | 4,068,066 | 4,626,208 | 558,142 |
G&NS intersegment amounts primarily consist of transactions with the EP&S segment. EP&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 EP&S segment. Corporate and elimination includes certain brand and patent royalty income.
F-12
Segment profit (loss)
Yen in millions | ||||||||||||
Six months ended September 30 | ||||||||||||
2020 | 2021 | Change | ||||||||||
Operating income (loss): | ||||||||||||
Game & Network Services | 229,268 | 165,938 | (63,330 | ) | ||||||||
Music | 89,890 | 105,966 | 16,076 | |||||||||
Pictures | 59,858 | 56,983 | (2,875 | ) | ||||||||
Electronics Products & Solutions | 44,514 | 144,462 | 99,948 | |||||||||
Imaging & Sensing Solutions | 76,976 | 80,204 | 3,228 | |||||||||
Financial Services | 73,024 | 67,066 | (5,958 | ) | ||||||||
All Other | 5,051 | 12,772 | 7,721 | |||||||||
Total | 578,581 | 633,391 | 54,810 | |||||||||
Corporate and elimination | (41,632 | ) | (34,864 | ) | 6,768 | |||||||
Consolidated operating income | 536,949 | 598,527 | 61,578 |
Operating income (loss) is sales and financial services revenue less costs and expenses, and includes the share of profit (loss) of investments accounted for using the equity method.
The sales and financial services revenue and operating income (loss) for the six months ended September 30, 2020 shown in the table above are presented to reflect the change in the organizational structure for the fiscal year ending March 31, 2022, which is discussed on page F-20.
F-13
(Sales to Customers by Product Category)
The following table is a breakdown of sales and financial services revenue to external customers by product category for each segment. Sony management views each segment as a single operating segment.
Yen in millions | ||||||||||||
Three months ended September 30 | ||||||||||||
Sales and financial services revenue: | 2020 | 2021 | Change | |||||||||
Game & Network Services | ||||||||||||
Digital Software and Add-on Content | 297,061 | 314,858 | 17,797 | |||||||||
Network Services | 95,897 | 100,445 | 4,548 | |||||||||
Hardware and Others | 101,586 | 213,233 | 111,647 | |||||||||
Total | 494,544 | 628,536 | 133,992 | |||||||||
Music | ||||||||||||
Recorded Music - Streaming | 78,827 | 113,296 | 34,469 | |||||||||
Recorded Music - Others | 44,497 | 43,004 | (1,493 | ) | ||||||||
Music Publishing | 37,560 | 47,310 | 9,750 | |||||||||
Visual Media and Platform | �� | 67,535 | 64,933 | (2,602 | ) | |||||||
Total | 228,419 | 268,543 | 40,124 | |||||||||
Pictures | ||||||||||||
Motion Pictures | 85,380 | 97,089 | 11,709 | |||||||||
Television Productions | 50,936 | 86,998 | 36,062 | |||||||||
Media Networks | 49,878 | 76,467 | 26,589 | |||||||||
Total | 186,194 | 260,554 | 74,360 | |||||||||
Electronics Products & Solutions | ||||||||||||
Televisions | 204,618 | 207,179 | 2,561 | |||||||||
Audio and Video | 83,887 | 75,267 | (8,620 | ) | ||||||||
Still and Video Cameras | 90,237 | 104,972 | 14,735 | |||||||||
Mobile Communications | 79,140 | 99,102 | 19,962 | |||||||||
Other | 64,468 | 81,385 | 16,917 | |||||||||
Total | 522,350 | 567,905 | 45,555 | |||||||||
Imaging & Sensing Solutions | 283,960 | 254,159 | (29,801 | ) | ||||||||
Financial Services | 368,860 | 366,162 | (2,698 | ) | ||||||||
All Other | 19,313 | 21,074 | 1,761 | |||||||||
Corporate | 1,477 | 2,432 | 955 | |||||||||
Consolidated total | 2,105,117 | 2,369,365 | 264,248 |
F-14
Yen in millions | ||||||||||||
Six months ended September 30 | ||||||||||||
Sales and financial services revenue: | 2020 | 2021 | Change | |||||||||
Game & Network Services | ||||||||||||
Digital Software and Add-on Content | 691,698 | 635,294 | (56,404 | ) | ||||||||
Network Services | 189,192 | 202,431 | 13,239 | |||||||||
Hardware and Others | 212,703 | 392,969 | 180,266 | |||||||||
Total | 1,093,593 | 1,230,694 | 137,101 | |||||||||
Music | ||||||||||||
Recorded Music - Streaming | 147,727 | 222,405 | 74,678 | |||||||||
Recorded Music - Others | 73,683 | 85,784 | 12,101 | |||||||||
Music Publishing | 68,656 | 94,442 | 25,786 | |||||||||
Visual Media and Platform | 112,088 | 118,134 | 6,046 | |||||||||
Total | 402,154 | 520,765 | 118,611 | |||||||||
Pictures | ||||||||||||
Motion Pictures | 150,457 | 176,592 | 26,135 | |||||||||
Television Productions | 115,239 | 148,286 | 33,047 | |||||||||
Media Networks | 94,939 | 140,054 | 45,115 | |||||||||
Total | 360,635 | 464,932 | 104,297 | |||||||||
Electronics Products & Solutions | ||||||||||||
Televisions | 311,186 | 428,200 | 117,014 | |||||||||
Audio and Video | 130,968 | 148,356 | 17,388 | |||||||||
Still and Video Cameras | 136,642 | 221,382 | 84,740 | |||||||||
Mobile Communications | 173,369 | 180,515 | 7,146 | |||||||||
Other | 124,197 | 155,971 | 31,774 | |||||||||
Total | 876,362 | 1,134,424 | 258,062 | |||||||||
Imaging & Sensing Solutions | 482,331 | 452,044 | (30,287 | ) | ||||||||
Financial Services | 806,849 | 778,292 | (28,557 | ) | ||||||||
All Other | 39,758 | 39,291 | (467 | ) | ||||||||
Corporate | 6,384 | 5,766 | (618 | ) | ||||||||
Consolidated total | 4,068,066 | 4,626,208 | 558,142 |
In the G&NS segment, Digital Software and Add-on Content includes distribution of software titles and add-on content through the network by Sony Interactive Entertainment; Network Services includes network services relating to game, video and music content; Hardware and Others includes home gaming consoles, packaged software, peripheral devices and first-party software for third-party platforms. In the Music segment, Recorded Music - Streaming includes the distribution of digital recorded music by streaming; Recorded Music - Others includes the distribution of recorded music by physical media and digital download as well as revenue derived from artists’ live performances; Music Publishing includes the management and licensing of the words and music of songs; Visual Media and Platform includes the production and distribution of animation titles, including game applications based on the animation titles, and various service offerings for music and visual products. In the Pictures segment, Motion Pictures includes the worldwide production, acquisition and distribution of live-action and animated motion pictures; Television Productions includes the production, acquisition and distribution of television programming; Media Networks includes the operation of television and digital networks worldwide. In the EP&S segment, Televisions includes LCD and OLED televisions; Audio and Video includes Blu-ray disc players and recorders, home audio, headphones and memory-based portable audio devices; Still and Video Cameras includes interchangeable lens cameras, compact digital cameras, consumer video cameras and video cameras for broadcast; Mobile Communications includes smartphones and an internet-related service business; Other includes display products such as projectors and medical equipment.
F-15
(Condensed Financial Services Financial Statements)
The following schedules show unaudited condensed financial statements for the Financial Services segment and all other segments excluding Financial Services. These presentations are not in accordance with IFRS, which is used by Sony to prepare its condensed consolidated financial statements. However, because the Financial Services segment is different in nature from Sony’s other segments, Sony believes that a comparative presentation may be useful in understanding and analyzing Sony’s condensed consolidated financial statements. Both financial statements include transactions between the Financial Services segment and Sony without the Financial Services segment (including noncontrolling interests). The figures shown in the respective presentations for the Financial Services segment and Sony without the Financial Services segment are prior to the elimination and/or offset of such transactions and deferred tax assets and deferred tax liabilities of each. The condensed consolidated financial statements column is presented net of the elimination and/or offset of such intercompany balances and deferred tax assets and liabilities.
Condensed Statements of Financial Position
Yen in millions | ||||||||||||||||||||||||||||
Financial Services | Sony without Financial Services | Consolidated | ||||||||||||||||||||||||||
April 1, 2020 | March 31, 2021 | September 30, 2021 | April 1, 2020 | March 31, 2021 | September 30, 2021 | April 1, 2020 | March 31, 2021 | September 30, 2021 | ||||||||||||||||||||
ASSETS | ||||||||||||||||||||||||||||
Current assets: | ||||||||||||||||||||||||||||
Cash and cash equivalents | ¥ | 550,039 | ¥ | 497,218 | ¥ | 598,926 | ¥ | 962,484 | ¥ | 1,289,764 | ¥ | 874,857 | ¥ | 1,512,523 | ¥ | 1,786,982 | ¥ | 1,473,783 | ||||||||||
Investments and advances in the Financial Services segment | 327,092 | 411,982 | 371,998 | – | – | – | 327,092 | 411,982 | 371,998 | |||||||||||||||||||
Trade and other receivables, and contract assets | 115,592 | 119,791 | 108,958 | 1,086,457 | 1,261,321 | 1,409,500 | 1,194,334 | 1,365,493 | 1,499,999 | |||||||||||||||||||
Inventories | – | – | – | 559,779 | 636,668 | 847,963 | 559,779 | 636,668 | 847,963 | |||||||||||||||||||
Other financial assets | 79,721 | 73,349 | 50,047 | 55,762 | 44,498 | 56,048 | 135,482 | 117,682 | 106,100 | |||||||||||||||||||
Other current assets | 51,765 | 51,147 | 60,796 | 390,915 | 357,582 | 392,034 | 441,974 | 396,210 | 419,803 | |||||||||||||||||||
Total current assets | 1,124,209 | 1,153,487 | 1,190,725 | 3,055,397 | 3,589,833 | 3,580,402 | 4,171,184 | 4,715,017 | 4,719,646 | |||||||||||||||||||
Non-current assets: | ||||||||||||||||||||||||||||
Investments accounted for using the equity method | – | – | – | 204,291 | 225,086 | 234,719 | 204,291 | 225,086 | 234,719 | |||||||||||||||||||
Investments and advances in the Financial Services segment | 16,352,285 | 17,296,546 | 18,088,150 | – | – | – | 16,352,285 | 17,296,546 | 18,088,150 | |||||||||||||||||||
Investments in Financial Services, at cost | – | – | – | 153,968 | 550,483 | 550,483 | – | – | – | |||||||||||||||||||
Property, plant and equipment | 18,256 | 19,260 | 19,461 | 899,185 | 971,336 | 1,044,123 | 917,198 | 990,541 | 1,063,538 | |||||||||||||||||||
Right-of-use assets | 57,892 | 65,775 | 70,290 | 315,431 | 292,262 | 307,433 | 373,282 | 358,034 | 377,721 | |||||||||||||||||||
Goodwill and intangible assets, including content assets | 62,660 | 66,133 | 66,540 | 1,998,413 | 2,113,578 | 2,351,921 | 2,061,073 | 2,179,711 | 2,418,461 | |||||||||||||||||||
Deferred insurance acquisition costs | 187,904 | 623,986 | 646,776 | – | – | – | 187,904 | 623,986 | 646,776 | |||||||||||||||||||
Deferred tax assets | 8,129 | – | – | 202,217 | 309,341 | 255,348 | 210,333 | 215,669 | 203,077 | |||||||||||||||||||
Other financial assets | 34,319 | 28,043 | 24,471 | 291,373 | 671,683 | 669,982 | 321,721 | 695,764 | 690,470 | |||||||||||||||||||
Other non-current assets | 87,933 | 86,287 | 85,682 | 155,643 | 195,713 | 212,596 | 167,795 | 207,489 | 224,308 | |||||||||||||||||||
Total non-current assets | 16,809,378 | 18,186,030 | 19,001,370 | 4,220,521 | 5,329,482 | 5,626,605 | 20,795,882 | 22,792,826 | 23,947,220 | |||||||||||||||||||
Total assets | ¥ | 17,933,587 | ¥ | 19,339,517 | ¥ | 20,192,095 | ¥ | 7,275,918 | ¥ | 8,919,315 | ¥ | 9,207,007 | ¥ | 24,967,066 | ¥ | 27,507,843 | ¥ | 28,666,866 | ||||||||||
LIABILITIES AND EQUITY | ||||||||||||||||||||||||||||
Current liabilities: | ||||||||||||||||||||||||||||
Short-term borrowings | ¥ | 768,100 | ¥ | 1,160,896 | ¥ | 1,461,199 | ¥ | 154,884 | ¥ | 246,257 | ¥ | 188,801 | ¥ | 922,968 | ¥ | 1,407,153 | ¥ | 1,649,999 | ||||||||||
Trade and other payables | 43,975 | 80,189 | 56,976 | 1,273,946 | 1,531,502 | 1,638,433 | 1,310,536 | 1,596,563 | 1,677,359 | |||||||||||||||||||
Deposits from customers in the banking business | 2,347,387 | 2,682,156 | 2,796,103 | – | – | – | 2,347,387 | 2,682,156 | 2,796,103 | |||||||||||||||||||
Income taxes payables | 22,509 | 5,407 | 5,739 | 62,837 | 79,024 | 100,176 | 85,346 | 84,431 | 105,915 | |||||||||||||||||||
Participation and residual liabilities in the Pictures segment | – | – | – | 163,007 | 161,433 | 174,453 | 163,007 | 161,433 | 174,453 | |||||||||||||||||||
Other financial liabilities | 44,668 | 29,106 | 25,447 | 11,484 | 25,235 | 13,370 | 56,152 | 54,341 | 38,817 | |||||||||||||||||||
Other current liabilities | 179,652 | 192,728 | 206,981 | 1,085,330 | 1,187,975 | 1,059,270 | 1,263,944 | 1,367,527 | 1,232,804 | |||||||||||||||||||
Total current liabilities | 3,406,291 | 4,150,482 | 4,552,445 | 2,751,488 | 3,231,426 | 3,174,503 | 6,149,340 | 7,353,604 | 7,675,450 | |||||||||||||||||||
Non-current liabilities: | ||||||||||||||||||||||||||||
Long-term debt | 276,409 | 361,106 | 322,301 | 662,644 | 692,531 | 673,493 | 939,030 | 1,053,636 | 995,794 | |||||||||||||||||||
Defined benefit liabilities | 34,856 | 35,293 | 35,940 | 294,765 | 231,929 | 224,924 | 329,621 | 267,222 | 260,864 | |||||||||||||||||||
Deferred tax liabilities | 879,683 | 802,830 | 810,150 | 176,839 | 122,489 | 117,054 | 1,041,156 | 816,587 | 859,874 | |||||||||||||||||||
Future insurance policy benefits and other | 6,519,577 | 6,614,585 | 6,829,387 | – | – | – | 6,519,577 | 6,614,585 | 6,829,387 | |||||||||||||||||||
Policyholders’ account in the life insurance business | 3,640,010 | 4,328,894 | 4,539,398 | – | – | – | 3,640,010 | 4,328,894 | 4,539,398 | |||||||||||||||||||
Participation and residual liabilities in the Pictures segment | – | – | – | 119,702 | 116,537 | 122,801 | 119,702 | 116,537 | 122,801 | |||||||||||||||||||
Other financial liabilities | 115,949 | 109,537 | 110,565 | 33,399 | 32,446 | 58,595 | 146,834 | 139,417 | 166,553 | |||||||||||||||||||
Other non-current liabilities | 4,217 | 5,309 | 5,584 | 106,693 | 109,808 | 111,183 | 87,320 | 93,022 | 95,257 | |||||||||||||||||||
Total non-current liabilities | 11,470,701 | 12,257,554 | 12,653,325 | 1,394,042 | 1,305,740 | 1,308,050 | 12,823,250 | 13,429,900 | 13,869,928 | |||||||||||||||||||
Total liabilities | 14,876,992 | 16,408,036 | 17,205,770 | 4,145,530 | 4,537,166 | 4,482,553 | 18,972,590 | 20,783,504 | 21,545,378 | |||||||||||||||||||
Equity: | ||||||||||||||||||||||||||||
Stockholders’ equity of Financial Services | 3,054,361 | 2,928,525 | 2,983,111 | – | – | – | – | – | – | |||||||||||||||||||
Stockholders’ equity of Sony without Financial Services | – | – | – | 3,084,820 | 4,341,109 | 4,680,186 | – | – | – | |||||||||||||||||||
Sony Group Corporation’s stockholders’ equity | – | – | – | – | – | – | 4,874,438 | 6,680,343 | 7,074,006 | |||||||||||||||||||
Noncontrolling interests | 2,234 | 2,956 | 3,214 | 45,568 | 41,040 | 44,268 | 1,120,038 | 43,996 | 47,482 | |||||||||||||||||||
Total equity | 3,056,595 | 2,931,481 | 2,986,325 | 3,130,388 | 4,382,149 | 4,724,454 | 5,994,476 | 6,724,339 | 7,121,488 | |||||||||||||||||||
Total liabilities and equity | ¥ | 17,933,587 | ¥ | 19,339,517 | ¥ | 20,192,095 | ¥ | 7,275,918 | ¥ | 8,919,315 | ¥ | 9,207,007 | ¥ | 24,967,066 | ¥ | 27,507,843 | ¥ | 28,666,866 |
F-16
Condensed Statements of Income
Yen in millions | ||||||||||||||||||||||||
Three months ended September 30 | ||||||||||||||||||||||||
Financial Services | Sony without Financial Services | Consolidated | ||||||||||||||||||||||
2020 | 2021 | 2020 | 2021 | 2020 | 2021 | |||||||||||||||||||
Sales | ¥ | – | ¥ | – | ¥ | 1,737,722 | ¥ | 2,004,651 | ¥ | 1,736,257 | ¥ | 2,003,203 | ||||||||||||
Financial services revenue | 371,109 | 368,415 | – | – | 368,860 | 366,162 | ||||||||||||||||||
Total sales and financial services revenue | 371,109 | 368,415 | 1,737,722 | 2,004,651 | 2,105,117 | 2,369,365 | ||||||||||||||||||
Cost of sales | – | – | 1,141,223 | 1,367,802 | 1,138,468 | 1,365,095 | ||||||||||||||||||
Selling, general and administrative | – | – | 325,976 | 368,649 | 327,261 | 369,908 | ||||||||||||||||||
Financial services expenses | 334,020 | 325,263 | – | – | 331,771 | 323,010 | ||||||||||||||||||
Other operating (income) expense, net | 54 | 99 | (5,115 | ) | 1,115 | (5,061 | ) | 1,214 | ||||||||||||||||
Total costs and expenses | 334,074 | 325,362 | 1,462,084 | 1,737,566 | 1,792,439 | 2,059,227 | ||||||||||||||||||
Share of profit (loss) of investments accounted for using the equity method | – | – | 2,546 | 8,321 | 2,546 | 8,321 | ||||||||||||||||||
Operating income | 37,035 | 43,053 | 278,184 | 275,406 | 315,224 | 318,459 | ||||||||||||||||||
Financial income (expenses), net | – | – | (11,496 | ) | (35,360 | ) | (11,496 | ) | (35,360 | ) | ||||||||||||||
Income before income taxes | 37,035 | 43,053 | 266,688 | 240,046 | 303,728 | 283,099 | ||||||||||||||||||
Income taxes | 7,839 | 12,167 | (165,934 | ) | 56,536 | (157,870 | ) | 68,703 | ||||||||||||||||
Net income | 29,196 | 30,886 | 432,622 | 183,510 | 461,598 | 214,396 | ||||||||||||||||||
Net income of Financial Services | ¥ | 29,014 | ¥ | 30,749 | ¥ | – | ¥ | – | ¥ | – | ¥ | – | ||||||||||||
Net income of Sony without Financial Services | ¥ | – | ¥ | – | ¥ | 432,162 | ¥ | 182,357 | ¥ | – | ¥ | – | ||||||||||||
Net income attributable to Sony Group Corporation’s stockholders | ¥ | – | ¥ | – | ¥ | – | ¥ | – | ¥ | 458,597 | ¥ | 213,106 | ||||||||||||
Net income attributable to noncontrolling interests | ¥ | 182 | ¥ | 137 | ¥ | 460 | ¥ | 1,153 | ¥ | 3,001 | ¥ | 1,290 |
F-17
Condensed Statements of Income
Yen in millions | ||||||||||||||||||||||||
Six months ended September 30 | ||||||||||||||||||||||||
Financial Services | Sony without Financial Services | Consolidated | ||||||||||||||||||||||
2020 | 2021 | 2020 | 2021 | 2020 | 2021 | |||||||||||||||||||
Sales | ¥ | – | ¥ | – | ¥ | 3,264,159 | ¥ | 3,850,436 | ¥ | 3,261,217 | ¥ | 3,847,916 | ||||||||||||
Financial services revenue | 811,353 | 782,800 | – | – | 806,849 | 778,292 | ||||||||||||||||||
Total sales and financial services revenue | 811,353 | 782,800 | 3,264,159 | 3,850,436 | 4,068,066 | 4,626,208 | ||||||||||||||||||
Cost of sales | – | – | 2,193,288 | 2,619,001 | 2,187,891 | 2,613,868 | ||||||||||||||||||
Selling, general and administrative | – | – | 625,102 | 712,597 | 627,546 | 715,210 | ||||||||||||||||||
Financial services expenses | 738,179 | 715,587 | – | – | 733,675 | 711,079 | ||||||||||||||||||
Other operating (income) expense, net | 150 | 147 | (15,901 | ) | (34 | ) | (15,751 | ) | 113 | |||||||||||||||
Total costs and expenses | 738,329 | 715,734 | 2,802,489 | 3,331,564 | 3,533,361 | 4,040,270 | ||||||||||||||||||
Share of profit (loss) of investments accounted for using the equity method | – | – | 2,244 | 12,589 | 2,244 | 12,589 | ||||||||||||||||||
Operating income | 73,024 | 67,066 | 463,914 | 531,461 | 536,949 | 598,527 | ||||||||||||||||||
Financial income (expenses), net | – | – | 55,155 | 6,940 | 35,341 | (32,218 | ) | |||||||||||||||||
Income before income taxes | 73,024 | 67,066 | 519,069 | 538,401 | 572,290 | 566,309 | ||||||||||||||||||
Income taxes | 17,680 | 15,907 | (111,427 | ) | 122,890 | (93,526 | ) | 138,798 | ||||||||||||||||
Net income | 55,344 | 51,159 | 630,496 | 415,511 | 665,816 | 427,511 | ||||||||||||||||||
�� | ||||||||||||||||||||||||
Net income of Financial Services | ¥ | 55,087 | ¥ | 50,901 | ¥ | – | ¥ | – | ¥ | – | ¥ | – | ||||||||||||
Net income of Sony without Financial Services | ¥ | – | ¥ | – | ¥ | 628,586 | ¥ | 413,193 | ¥ | – | ¥ | – | ||||||||||||
Net income attributable to Sony Group Corporation’s stockholders | ¥ | – | ¥ | – | ¥ | – | ¥ | – | ¥ | 652,180 | ¥ | 424,935 | ||||||||||||
Net income attributable to noncontrolling interests | ¥ | 257 | ¥ | 258 | ¥ | 1,910 | ¥ | 2,318 | ¥ | 13,636 | ¥ | 2,576 |
F-18
Condensed Statements of Cash Flows
Yen in millions | ||||||||||||||||||||||||
Six months ended September 30 | ||||||||||||||||||||||||
Financial Services | Sony without Financial Services | Consolidated | ||||||||||||||||||||||
2020 | 2021 | 2020 | 2021 | 2020 | 2021 | |||||||||||||||||||
Cash flows from operating activities: | ||||||||||||||||||||||||
Income (loss) before income taxes | ¥ | 73,024 | ¥ | 67,066 | ¥ | 519,069 | ¥ | 538,401 | ¥ | 572,290 | ¥ | 566,309 | ||||||||||||
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 | 11,747 | 12,546 | 310,437 | 371,368 | 322,184 | 383,914 | ||||||||||||||||||
Amortization of deferred insurance acquisition costs | 18,351 | 34,257 | – | – | 18,351 | 34,257 | ||||||||||||||||||
Other operating (income) expense, net | 150 | 147 | (15,901 | ) | (34 | ) | (15,751 | ) | 113 | |||||||||||||||
(Gain) loss on securities, net (other than Financial Services segment) | – | – | (48,013 | ) | 23,555 | (48,013 | ) | 23,555 | ||||||||||||||||
Change in future insurance policy benefits and other | 175,788 | 217,622 | – | – | 175,788 | 217,622 | ||||||||||||||||||
Change in policyholders’ account in the life insurance business, less cash impact | 262,006 | 172,201 | – | – | 262,006 | 172,201 | ||||||||||||||||||
Net cash impact of policyholders’ account in the life insurance business | 62,849 | 38,146 | – | – | 62,849 | 38,146 | ||||||||||||||||||
Changes in assets and liabilities: | ||||||||||||||||||||||||
(Increase) decrease in trade receivables and contract assets | (1,513 | ) | 7,152 | (182,239 | ) | (140,049 | ) | (174,685 | ) | (130,057 | ) | |||||||||||||
(Increase) decrease in inventories | – | – | (121,313 | ) | (207,104 | ) | (121,313 | ) | (207,104 | ) | ||||||||||||||
(Increase) decrease in investments and advances in the Financial Services segment | (909,206 | ) | (689,536 | ) | – | – | (909,206 | ) | (689,536 | ) | ||||||||||||||
(Increase) decrease in content assets | – | – | (89,910 | ) | (246,972 | ) | (89,910 | ) | (246,972 | ) | ||||||||||||||
(Increase) decrease in deferred insurance acquisition costs | (44,058 | ) | (54,222 | ) | – | – | (44,058 | ) | (54,222 | ) | ||||||||||||||
Increase (decrease) in trade payables | 17,556 | (20,356 | ) | 322,662 | 114,511 | 331,795 | 91,232 | |||||||||||||||||
Increase (decrease) in deposits from customers in the banking business | 214,621 | 118,707 | – | – | 214,621 | 118,707 | ||||||||||||||||||
Increase (decrease) in borrowings in the life insurance business and the banking business | 210,934 | 257,118 | – | – | 210,934 | 257,118 | ||||||||||||||||||
Other | 11,533 | (6,947 | ) | (177,823 | ) | (251,293 | ) | (166,983 | ) | (258,325 | ) | |||||||||||||
Net cash provided by (used in) operating activities | 103,782 | 153,901 | 516,969 | 202,383 | 600,899 | 316,958 | ||||||||||||||||||
Cash flows from investing activities: | ||||||||||||||||||||||||
Payments for property, plant and equipment and other intangible assets | (10,017 | ) | (10,440 | ) | (256,641 | ) | (219,877 | ) | (266,629 | ) | (230,317 | ) | ||||||||||||
Payments for investments and advances (other than Financial Services segment) | – | – | (82,069 | ) | (37,385 | ) | (82,069 | ) | (37,385 | ) | ||||||||||||||
Proceeds from sales or return of investments and collections of advances (other than Financial Services segment) | – | – | 14,793 | 20,348 | 14,793 | 20,348 | ||||||||||||||||||
Other | – | 2,913 | 8,713 | (203,111 | ) | 8,713 | (200,198 | ) | ||||||||||||||||
Net cash provided by (used in) investing activities | (10,017 | ) | (7,527 | ) | (315,204 | ) | (440,025 | ) | (325,192 | ) | (447,552 | ) | ||||||||||||
Cash flows from financing activities: | ||||||||||||||||||||||||
Increase (decrease) in borrowings, net | (4,803 | ) | (5,503 | ) | 483,375 | (118,838 | ) | 478,580 | (124,341 | ) | ||||||||||||||
Dividends paid | (30,454 | ) | (39,159 | ) | (30,448 | ) | (37,148 | ) | (30,448 | ) | (37,148 | ) | ||||||||||||
Other | (21 | ) | (4 | ) | (323,331 | ) | (25,799 | ) | (333,991 | ) | (25,636 | ) | ||||||||||||
Net cash provided by (used in) financing activities | (35,278 | ) | (44,666 | ) | 129,596 | (181,785 | ) | 114,141 | (187,125 | ) | ||||||||||||||
Effect of exchange rate changes on cash and cash equivalents | – | – | (17,803 | ) | 4,520 | (17,803 | ) | 4,520 | ||||||||||||||||
Net increase (decrease) in cash and cash equivalents | 58,487 | 101,708 | 313,558 | (414,907 | ) | 372,045 | (313,199 | ) | ||||||||||||||||
Cash and cash equivalents at beginning of the fiscal year | 550,039 | 497,218 | 962,484 | 1,289,764 | 1,512,523 | 1,786,982 | ||||||||||||||||||
Cash and cash equivalents at end of the period | ¥ | 608,526 | ¥ | 598,926 | ¥ | 1,276,042 | ¥ | 874,857 | ¥ | 1,884,568 | ¥ | 1,473,783 |
F-19
Going Concern Assumption
Not Applicable
Accounting Policy and Other Information
(Net Income Attributable to Sony Group Corporation’s Stockholders and Weighted-average Number of Outstanding Shares Used for the Computation of EPS of Common Stock)
Yen in millions | ||||||||
Three months ended September 30 | ||||||||
2020 | 2021 | |||||||
Net income attributable to Sony Group Corporation’s stockholders | 458,597 | 213,106 | ||||||
Adjustment amount to net income attributable to Sony Group Corporation’s stockholders for diluted EPS computation: | ||||||||
Zero coupon convertible bonds | 111 | 42 | ||||||
Net income attributable to Sony Group Corporation’s stockholders for diluted EPS computation | 458,708 | 213,148 | ||||||
Thousands of shares | ||||||||
Weighted-average shares outstanding for basic EPS computation | 1,227,845 | 1,240,050 | ||||||
Effect of dilutive securities: | ||||||||
Stock acquisition rights | 3,982 | 5,125 | ||||||
Zero coupon convertible bonds | 17,802 | 6,752 | ||||||
Weighted-average shares for diluted EPS computation | 1,249,629 | 1,251,927 |
Yen in millions | ||||||||
Six months ended September 30 | ||||||||
2020 | 2021 | |||||||
Net income attributable to Sony Group Corporation’s stockholders | 652,180 | 424,935 | ||||||
Adjustment amount to net income attributable to Sony Group Corporation’s stockholders for diluted EPS computation: | ||||||||
Zero coupon convertible bonds | 260 | 93 | ||||||
Net income attributable to Sony Group Corporation’s stockholders for diluted EPS computation | 652,440 | 425,028 | ||||||
Thousands of shares | ||||||||
Weighted-average shares outstanding for basic EPS computation | 1,224,237 | 1,239,606 | ||||||
Effect of dilutive securities: | ||||||||
Stock acquisition rights | 3,623 | 5,092 | ||||||
Zero coupon convertible bonds | 20,811 | 7,399 | ||||||
Weighted-average shares for diluted EPS computation | 1,248,671 | 1,252,097 |
(Segmentation)
Due to organizational changes as of April 1, 2021, from the first quarter of the fiscal year ending March 31, 2022, Sony transferred some of the businesses and functions previously included within All Other and Corporate and elimination to the EP&S segment. In connection with these organizational changes, sales and financial services revenue and operating income (loss) of each segment for the fiscal year ended March 31, 2021 are presented to conform to the organizational structure for the fiscal year ending March 31, 2022.
The G&NS segment includes network services businesses, the manufacture and sales of home gaming products and the production and sales of software. The Music segment includes the Recorded Music, Music Publishing and Visual Media and Platform businesses. The Pictures segment includes the Motion Pictures, Television Productions and Media Networks businesses. The EP&S segment includes the Televisions business, the Audio and Video business, the Still and Video Cameras business, the smartphone business and internet-related service business. The I&SS segment includes the image sensors business. The Financial Services segment primarily represents individual life insurance and non-life insurance businesses in the Japanese market and the banking business in Japan. All Other consists of various operating activities, including the disc manufacturing and recording media businesses. Sony’s products and services are generally unique to a single operating segment.
F-20
(Ellation Holdings, Inc. Acquisition)
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 135,575 million yen (1,234 million U.S. dollars) was paid in cash. As a result of the acquisition, Ellation has become a wholly-owned subsidiary of Sony.
Crunchyroll is a direct-to-consumer 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 brings together two animation distribution brands, Funimation and Crunchyroll, allowing Sony to expand fan-centric offerings.
As a result of the acquisition, Sony consolidated Ellation by using the acquisition method of accounting and recorded the fair value of the identifiable assets acquired, liabilities assumed and residual goodwill of Ellation. The following table summarizes the fair values assigned to the assets and liabilities of Ellation that were recorded in the Pictures segment. The purchase price allocation as of the date of the acquisition is preliminary and is subject to change as of September 30, 2021. The primary areas of the purchase price allocation that are not yet finalized are related to deferred tax liabilities, content assets, other intangible assets and goodwill.
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 | 80,366 | |||
Content assets | 37,261 | |||
Other intangible assets | 35,697 | |||
Other | 2,512 | |||
Total assets | 176,186 | |||
Trade and other payables | 11,008 | |||
Participation and residual liabilities in the Pictures segment (current) | 6,357 | |||
Other current liabilities | 7,723 | |||
Long-term debt | 4,386 | |||
Deferred tax liabilities | 9,869 | |||
Other | 659 | |||
Total liabilities | 40,002 |
Content assets and other intangible assets mainly consist of 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 the acquisition is included in the Pictures segment.
Revenue and net income attributable to Ellation since the date of acquisition included in Sony’s consolidated statements of income and pro forma results of operations have not been presented because the effect of the acquisition was not material.
F-21
First-Time Adoption
Sony has disclosed its condensed consolidated financial statements under IFRS from the first quarter of the fiscal year ending March 31, 2022. The latest consolidated financial statements under generally accepted accounting principles in the United States (“U.S. GAAP”) were prepared for the fiscal year ended March 31, 2021, and the date of transition to IFRS was April 1, 2020.
(1) Exemption under IFRS 1 “First-Time Adoption of International Financial Reporting Standards” (“IFRS 1”)
IFRS 1 requires that a company adopting IFRS for the first-time (“first-time adopters”) shall apply IFRS retrospectively. However, IFRS 1 provides certain exemptions that allow first-time adopters to choose not to apply certain standards retrospectively. Sony has adopted the following exemptions:
Business combinations
First-time adopters may choose not to apply IFRS 3 “Business Combinations” (“IFRS 3”) retrospectively to business combinations that occurred before the date of transition to IFRS. Sony has applied this exemption and chosen not to apply IFRS 3 retrospectively to business combinations that occurred before the date of transition to IFRS. Therefore, the carrying amounts of goodwill generated in business combinations that occurred prior to the date of transition to IFRS were based on the carrying amounts determined under U.S. GAAP at the date of transition to IFRS.
Sony performed an impairment test on goodwill at the date of transition to IFRS regardless of whether there were any indications that the goodwill may be impaired.
Exchange differences on translating foreign operations
First-time adopters may choose to deem the cumulative exchange differences on translating foreign operations as zero at the date of transition to IFRS. Sony has chosen to apply this exemption and deemed all cumulative exchange differences on translating foreign operations as zero at the date of transition to IFRS.
Designation of financial instruments recognized before the date of transition to IFRS
First-time adopters may designate an investment in an equity instrument as an investment recognized at fair value through other comprehensive income in accordance with IFRS 9 “Financial Instruments” based on the facts and circumstances that existed at the date of transition to IFRS. Sony has applied this exemption and designated some equity instruments at fair value in other comprehensive income at the date of transition to IFRS.
Recognition of right-of-use assets and lease liabilities
When first-time adopters recognize right-of-use assets and lease liabilities as a lessee, they are permitted to measure right-of-use assets and lease liabilities at the date of transition to IFRS. Sony measured all lease liabilities at the date of transition to IFRS at the present value of the remaining lease payments, discounted using Sony’s incremental borrowing rate at the date of transition to IFRS. Sony recognized right-of-use assets equal to the amount of lease liabilities at the date of transition to IFRS.
(2) Mandatory exception under IFRS 1
IFRS 1 prohibits the retrospective application of IFRS concerning “estimates”, “non-controlling interests”, “classification and measurement of financial instruments” and other items. Sony applied these items prospectively from the date of transition to IFRS.
(3) Reconciliation
The reconciliations required to be disclosed in the first IFRS financial statements are described in the reconciliations as below. “Reclassification” includes items that do not affect retained earnings and comprehensive income, while “Recognition and measurement differences” includes items that affect retained earnings and comprehensive income.
F-22
Reconciliation of equity at the date of transition to IFRS (April 1, 2020)
Yen in millions | |||||||||||||||||||||
Accounts under U.S. GAAP | U.S. GAAP* | Reclassification | Recognition and measurement differences | IFRS | Note | Accounts under IFRS | |||||||||||||||
ASSETS | ASSETS | ||||||||||||||||||||
Current assets: | Current assets: | ||||||||||||||||||||
Cash and cash equivalents | 1,512,357 | – | 166 | 1,512,523 | Cash and cash equivalents | ||||||||||||||||
Marketable securities | 1,847,772 | (1,847,772 | ) | – | – | a | |||||||||||||||
– | 327,092 | – | 327,092 | a,f | Investments and advances in the Financial Services segment | ||||||||||||||||
Notes and accounts receivable, trade and contract assets | 1,028,793 | (1,028,793 | ) | – | – | b | |||||||||||||||
– | 1,195,228 | (894 | ) | 1,194,334 | b,c | Trade and other receivables, and contract assets | |||||||||||||||
Allowance for credit losses | (26,153 | ) | 26,153 | – | – | b | |||||||||||||||
Inventories | 558,452 | – | 1,327 | 559,779 | Inventories | ||||||||||||||||
Other receivables | 188,076 | (188,076 | ) | – | – | c | |||||||||||||||
– | 135,265 | 217 | 135,482 | d | Other financial assets | ||||||||||||||||
Prepaid expenses and other current assets | 594,009 | (153,473 | ) | 1,438 | 441,974 | d | Other current assets | ||||||||||||||
Total current assets | 5,703,306 | (1,534,376 | ) | 2,254 | 4,171,184 | Total current assets | |||||||||||||||
Non-current assets: | |||||||||||||||||||||
Film costs | 458,853 | (458,853 | ) | – | – | e | |||||||||||||||
Investments and advances: | |||||||||||||||||||||
Affiliated companies | 207,922 | (608 | ) | (3,023 | ) | 204,291 | Investments accounted for using the equity method | ||||||||||||||
Securities investments and other | 12,526,990 | (12,526,990 | ) | – | – | f | |||||||||||||||
Allowance for credit losses | (6,341 | ) | 6,341 | – | – | ||||||||||||||||
– | 13,906,535 | 2,445,750 | 16,352,285 | a,f,D | Investments and advances in the Financial Services segment | ||||||||||||||||
Property, plant and equipment: | |||||||||||||||||||||
Land | 81,482 | (81,482 | ) | – | – | ||||||||||||||||
Buildings | 659,556 | (659,556 | ) | – | – | ||||||||||||||||
Machinery and equipment | 1,725,720 | (1,725,720 | ) | – | – | ||||||||||||||||
Construction in progress | 76,391 | (76,391 | ) | – | – | ||||||||||||||||
Less - Accumulated depreciation | 1,634,505 | (1,634,505 | ) | – | – | ||||||||||||||||
– | 921,513 | (4,315 | ) | 917,198 | Property, plant and equipment | ||||||||||||||||
Other assets: | |||||||||||||||||||||
Operating lease right-of-use assets | 359,510 | (359,510 | ) | – | – | g | |||||||||||||||
Finance lease right-of-use assets | 33,100 | (33,100 | ) | – | – | g | |||||||||||||||
– | 376,998 | (3,716 | ) | 373,282 | g | Right-of-use assets | |||||||||||||||
Intangibles, net | 906,310 | (906,310 | ) | – | – | e | |||||||||||||||
Goodwill | 783,888 | – | (92,959 | ) | 690,929 | C | Goodwill | ||||||||||||||
– | 991,611 | 1,033 | 992,644 | e | Content assets | ||||||||||||||||
– | 373,552 | 3,948 | 377,500 | e | Other intangible assets | ||||||||||||||||
Deferred insurance acquisition costs | 600,901 | – | (412,997 | ) | 187,904 | E | Deferred insurance acquisition costs | ||||||||||||||
Deferred income taxes | 210,417 | 87 | (171 | ) | 210,333 | Deferred tax assets | |||||||||||||||
– | 298,469 | 23,252 | 321,721 | f,h,D | Other financial assets | ||||||||||||||||
Other | 339,284 | (154,853 | ) | (16,636 | ) | 167,795 | h,B | Other non-current assets | |||||||||||||
17,329,478 | 1,526,238 | 1,940,166 | 20,795,882 | Total non-current assets | |||||||||||||||||
Total assets | 23,032,784 | (8,138 | ) | 1,942,420 | 24,967,066 | Total assets |
F-23
Yen in millions | |||||||||||||||||||||
Accounts under U.S. GAAP | U.S. GAAP* | Reclassification | Recognition and measurement differences | IFRS | Note | Accounts under IFRS | |||||||||||||||
LIABILITIES | LIABILITIES | ||||||||||||||||||||
Current liabilities: | Current liabilities: | ||||||||||||||||||||
Short-term borrowings | 810,176 | 13,869 | – | 824,045 | Short-term borrowings | ||||||||||||||||
Current portion of long-term debt | 29,807 | 69,116 | – | 98,923 | i | Current portion of long-term debt | |||||||||||||||
Current portion of long-term operating lease liabilities | 68,942 | (68,942 | ) | – | – | i | |||||||||||||||
Notes and accounts payable, trade | 380,810 | (380,810 | ) | – | – | j | |||||||||||||||
– | 1,340,573 | (30,037 | ) | 1,310,536 | j,k,m | Trade and other payables | |||||||||||||||
Accounts payable, other and accrued expenses | 1,630,197 | (1,630,197 | ) | – | – | k | |||||||||||||||
Deposits from customers in the banking business | 2,440,783 | (93,396 | ) | – | 2,347,387 | l | Deposits from customers in the banking business | ||||||||||||||
Accrued income and other taxes | 145,996 | (60,650 | ) | – | 85,346 | Income taxes payables | |||||||||||||||
– | 163,007 | – | 163,007 | k | Participation and residual liabilities in the Pictures segment | ||||||||||||||||
– | 56,152 | – | 56,152 | k,m | Other financial liabilities | ||||||||||||||||
Other | 733,732 | 527,859 | 2,353 | 1,263,944 | k,m | Other current liabilities | |||||||||||||||
Total current liabilities | 6,240,443 | (63,419 | ) | (27,684 | ) | 6,149,340 | Total current liabilities | ||||||||||||||
Non-current liabilities: | |||||||||||||||||||||
Long-term debt | 634,966 | 305,871 | (1,807 | ) | 939,030 | i | Long-term debt | ||||||||||||||
Long-term operating lease liabilities | 314,836 | (314,836 | ) | – | – | i | |||||||||||||||
Accrued pension and severance costs | 324,655 | 4,355 | 611 | 329,621 | B | Defined benefit liabilities | |||||||||||||||
Deferred income taxes | 548,034 | 87 | 493,035 | 1,041,156 | F | Deferred tax liabilities | |||||||||||||||
Future insurance policy benefits and other | 6,246,047 | – | 273,530 | 6,519,577 | E | Future insurance policy benefits and other | |||||||||||||||
Policyholders’ account in the life insurance business | 3,642,271 | – | (2,261 | ) | 3,640,010 | E | Policyholders’ account in the life insurance business | ||||||||||||||
– | 122,706 | (3,004 | ) | 119,702 | n | Participation and residual liabilities in the Pictures segment | |||||||||||||||
– | 146,834 | – | 146,834 | l,n,o | Other financial liabilities | ||||||||||||||||
Other | 289,285 | (201,969 | ) | 4 | 87,320 | n | Other non-current liabilities | ||||||||||||||
12,000,094 | 63,048 | 760,108 | 12,823,250 | Total non-current liabilities | |||||||||||||||||
Total liabilities | 18,240,537 | (371 | ) | 732,424 | 18,972,590 | Total liabilities | |||||||||||||||
Redeemable noncontrolling interest | 7,767 | (7,767 | ) | – | – | o | |||||||||||||||
EQUITY | EQUITY | ||||||||||||||||||||
Sony Group Corporation’s stockholders’ equity: | Sony Group Corporation’s stockholders’ equity: | ||||||||||||||||||||
Common stock | 880,214 | – | – | 880,214 | Common stock | ||||||||||||||||
Additional paid-in capital | 1,289,719 | – | 7,835 | 1,297,554 | Additional paid-in capital | ||||||||||||||||
Retained earnings | 2,765,187 | – | (815,490 | ) | 1,949,697 | G | Retained earnings | ||||||||||||||
Accumulated other comprehensive income | (580,980 | ) | – | 1,560,456 | 979,476 | A,B,D E,F | Accumulated other comprehensive income | ||||||||||||||
Treasury stock, at cost | (232,503 | ) | – | – | (232,503 | ) | Treasury stock, at cost | ||||||||||||||
4,121,637 | – | 752,801 | 4,874,438 | Equity attributable to Sony Group Corporation’s stockholders | |||||||||||||||||
Noncontrolling interests | 662,843 | – | 457,195 | 1,120,038 | F | Noncontrolling interests | |||||||||||||||
Total equity | 4,784,480 | – | 1,209,996 | 5,994,476 | Total equity | ||||||||||||||||
Total liabilities and equity | 23,032,784 | (8,138 | ) | 1,942,420 | 24,967,066 | Total liabilities and equity |
* “U.S. GAAP” represents the consolidated financial statements under U.S. GAAP for the year ended March 31, 2020, adjusted for the adoption of the Accounting Standards Updates issued by the Financial Accounting Standards Board effective as of April 1, 2020.
F-24
Reconciliation of equity as of September 30, 2020
Yen in millions | |||||||||||||||||||||
Accounts under U.S. GAAP | U.S. GAAP | Reclassification | Recognition and measurement differences | IFRS | Note | Accounts under IFRS | |||||||||||||||
ASSETS | ASSETS | ||||||||||||||||||||
Current assets: | Current assets: | ||||||||||||||||||||
Cash and cash equivalents | 1,884,368 | – | 200 | 1,884,568 | Cash and cash equivalents | ||||||||||||||||
Marketable securities | 2,540,460 | (2,540,460 | ) | – | – | a,p | |||||||||||||||
– | 395,088 | 29 | 395,117 | a,f | Investments and advances in the Financial Services segment | ||||||||||||||||
Notes and accounts receivable, trade and contract assets | 1,046,907 | (1,046,907 | ) | – | – | b | |||||||||||||||
– | 1,357,719 | (1,194 | ) | 1,356,525 | b,c | Trade and other receivables, and contract assets | |||||||||||||||
Allowance for credit losses | (25,011 | ) | 25,011 | – | – | b | |||||||||||||||
Inventories | 681,685 | – | (276 | ) | 681,409 | Inventories | |||||||||||||||
Other receivables | 315,989 | (315,989 | ) | – | – | c | |||||||||||||||
– | 98,692 | 216 | 98,908 | d | Other financial assets | ||||||||||||||||
Prepaid expenses and other current assets | 538,298 | (131,081 | ) | (1,949 | ) | 405,268 | d | Other current assets | |||||||||||||
Total current assets | 6,982,696 | (2,157,927 | ) | (2,974 | ) | 4,821,795 | Total current assets | ||||||||||||||
Non-current assets: | |||||||||||||||||||||
Film costs | 401,499 | (401,499 | ) | – | – | e | |||||||||||||||
Investments and advances: | |||||||||||||||||||||
Affiliated companies | 214,217 | (693 | ) | �� | (2,903 | ) | 210,621 | Investments accounted for using the equity method | |||||||||||||
Securities investments and other | 13,176,045 | (13,176,045 | ) | – | – | f | |||||||||||||||
Allowance for credit losses | (8,124 | ) | 8,124 | – | – | ||||||||||||||||
– | 14,684,999 | 2,074,316 | 16,759,315 | a,f,D | Investments and advances in the Financial Services segment | ||||||||||||||||
Property, plant and equipment: | |||||||||||||||||||||
Land | 79,341 | (79,341 | ) | – | – | ||||||||||||||||
Buildings | 655,991 | (655,991 | ) | – | – | ||||||||||||||||
Machinery and equipment | 1,656,886 | (1,656,886 | ) | – | – | ||||||||||||||||
Construction in progress | 102,084 | (102,084 | ) | – | – | ||||||||||||||||
Less - Accumulated depreciation | 1,551,922 | (1,551,922 | ) | – | – | ||||||||||||||||
– | 953,694 | (3,990 | ) | 949,704 | Property, plant and equipment | ||||||||||||||||
Other assets: | |||||||||||||||||||||
Operating lease right-of-use assets | 348,177 | (348,177 | ) | – | – | g | |||||||||||||||
Finance lease right-of-use assets | 43,253 | (43,253 | ) | – | – | g | |||||||||||||||
– | 378,325 | (5,451 | ) | 372,874 | g | Right-of-use assets | |||||||||||||||
Intangibles, net | 899,281 | (899,281 | ) | – | – | e | |||||||||||||||
Goodwill | 778,297 | (483 | ) | (91,054 | ) | 686,760 | C | Goodwill | |||||||||||||
– | 928,067 | 1,920 | 929,987 | e | Content assets | ||||||||||||||||
– | 372,713 | 1,748 | 374,461 | e | Other intangible assets | ||||||||||||||||
Deferred insurance acquisition costs | 627,893 | – | (339,175 | ) | 288,718 | E | Deferred insurance acquisition costs | ||||||||||||||
Deferred income taxes | 197,279 | 1,471 | (5,918 | ) | 192,832 | Deferred tax assets | |||||||||||||||
– | 476,515 | 35,007 | 511,522 | f,h,D | Other financial assets | ||||||||||||||||
Other | 348,920 | (150,249 | ) | (11,474 | ) | 187,197 | h,B | Other non-current assets | |||||||||||||
17,969,117 | 1,841,848 | 1,653,026 | 21,463,991 | Total non-current assets | |||||||||||||||||
Total assets | 24,951,813 | (316,079 | ) | 1,650,052 | 26,285,786 | Total assets |
F-25
Yen in millions | |||||||||||||||||||||
Accounts under U.S. GAAP | U.S. GAAP | Reclassification | Recognition and measurement differences | IFRS | Note | Accounts under IFRS | |||||||||||||||
LIABILITIES | LIABILITIES | ||||||||||||||||||||
Current liabilities: | Current liabilities: | ||||||||||||||||||||
Short-term borrowings | 1,294,800 | 14,418 | – | 1,309,218 | Short-term borrowings | ||||||||||||||||
Current portion of long-term debt | 118,832 | 73,760 | – | 192,592 | i | Current portion of long-term debt | |||||||||||||||
Current portion of long-term operating lease liabilities | 73,585 | (73,585 | ) | – | – | i | |||||||||||||||
Notes and accounts payable, trade | 669,611 | (669,611 | ) | – | – | j | |||||||||||||||
– | 1,592,205 | (30,725 | ) | 1,561,480 | j,k,m | Trade and other payables | |||||||||||||||
Accounts payable, other and accrued expenses | 1,533,438 | (1,533,438 | ) | – | – | k | |||||||||||||||
Deposits from customers in the banking business | 2,655,330 | (80,812 | ) | – | 2,574,518 | l | Deposits from customers in the banking business | ||||||||||||||
Accrued income and other taxes | 162,066 | (44,870 | ) | (2,576 | ) | 114,620 | Income taxes payables | ||||||||||||||
– | 154,993 | (2,601 | ) | 152,392 | k | Participation and residual liabilities in the Pictures segment | |||||||||||||||
– | 38,458 | – | 38,458 | k,m,o | Other financial liabilities | ||||||||||||||||
Other | 1,007,147 | 170,364 | (5,734 | ) | 1,171,777 | k,m,p | Other current liabilities | ||||||||||||||
Total current liabilities | 7,514,809 | (358,118 | ) | (41,636 | ) | 7,115,055 | Total current liabilities | ||||||||||||||
Non-current liabilities: | |||||||||||||||||||||
Long-term debt | 745,581 | 291,098 | (650 | ) | 1,036,029 | i | Long-term debt | ||||||||||||||
Long-term operating lease liabilities | 299,834 | (299,834 | ) | – | – | i | |||||||||||||||
Accrued pension and severance costs | 316,457 | 3,600 | 5,394 | 325,451 | B | Defined benefit liabilities | |||||||||||||||
Deferred income taxes | 325,939 | 1,471 | 493,723 | 821,133 | F | Deferred tax liabilities | |||||||||||||||
Future insurance policy benefits and other | 6,420,438 | – | 2,675 | 6,423,113 | E | Future insurance policy benefits and other | |||||||||||||||
Policyholders’ account in the life insurance business | 3,967,126 | – | (2,287 | ) | 3,964,839 | E | Policyholders’ account in the life insurance business | ||||||||||||||
– | 121,033 | (2,931 | ) | 118,102 | n | Participation and residual liabilities in the Pictures segment | |||||||||||||||
– | 125,700 | – | 125,700 | l,n,o | Other financial liabilities | ||||||||||||||||
Other | 281,117 | (192,868 | ) | 257 | 88,506 | n | Other non-current liabilities | ||||||||||||||
12,356,492 | 50,200 | 496,181 | 12,902,873 | Total non-current liabilities | |||||||||||||||||
Total liabilities | 19,871,301 | (307,918 | ) | 454,545 | 20,017,928 | Total liabilities | |||||||||||||||
Redeemable noncontrolling interest | 7,674 | (7,674 | ) | – | – | o | |||||||||||||||
EQUITY | EQUITY | ||||||||||||||||||||
Sony Group Corporation’s stockholders’ equity: | Sony Group Corporation’s stockholders’ equity: | ||||||||||||||||||||
Common stock | 880,214 | – | – | 880,214 | Common stock | ||||||||||||||||
Additional paid-in capital | 1,485,728 | – | 2,661 | 1,488,389 | Additional paid-in capital | ||||||||||||||||
Retained earnings | 3,418,107 | – | (855,878 | ) | 2,562,229 | Retained earnings | |||||||||||||||
Accumulated other comprehensive income | (597,184 | ) | – | 2,045,291 | 1,448,107 | A,B,C,D,E,F | Accumulated other comprehensive income | ||||||||||||||
Treasury stock, at cost | (156,364 | ) | – | – | (156,364 | ) | Treasury stock, at cost | ||||||||||||||
5,030,501 | – | 1,192,074 | 6,222,575 | Equity attributable to Sony Group Corporation’s stockholders | |||||||||||||||||
Noncontrolling interests | 42,337 | (487 | ) | 3,433 | 45,283 | Noncontrolling interests | |||||||||||||||
Total equity | 5,072,838 | (487 | ) | 1,195,507 | 6,267,858 | Total equity | |||||||||||||||
Total liabilities and equity | 24,951,813 | (316,079 | ) | 1,650,052 | 26,285,786 | Total liabilities and equity |
F-26
Reconciliation of equity as of March 31, 2021
Yen in millions | |||||||||||||||||||||
Accounts under U.S. GAAP | U.S. GAAP | Reclassification | Recognition and measurement differences | IFRS | Note | Accounts under IFRS | |||||||||||||||
ASSETS | ASSETS | ||||||||||||||||||||
Current assets: | Current assets: | ||||||||||||||||||||
Cash and cash equivalents | 1,786,982 | – | – | 1,786,982 | Cash and cash equivalents | ||||||||||||||||
Marketable securities | 2,902,438 | (2,902,438 | ) | – | – | a,p | |||||||||||||||
– | 412,016 | (34 | ) | 411,982 | a,f | Investments and advances in the Financial Services segment | |||||||||||||||
Notes and accounts receivable, trade and contract assets | 1,099,300 | (1,099,300 | ) | – | – | b | |||||||||||||||
– | 1,366,991 | (1,498 | ) | 1,365,493 | b,c | Trade and other receivables, and contract assets | |||||||||||||||
Allowance for credit losses | (29,406 | ) | 29,406 | – | – | b | |||||||||||||||
Inventories | 637,391 | – | (723 | ) | 636,668 | Inventories | |||||||||||||||
Other receivables | 283,499 | (283,499 | ) | – | – | c | |||||||||||||||
– | 117,522 | 160 | 117,682 | d | Other financial assets | ||||||||||||||||
Prepaid expenses and other current assets | 538,540 | (141,517 | ) | (813 | ) | 396,210 | d | Other current assets | |||||||||||||
Total current assets | 7,218,744 | (2,500,819 | ) | (2,908 | ) | 4,715,017 | Total current assets | ||||||||||||||
Non-current assets: | |||||||||||||||||||||
Film costs | 459,426 | (459,426 | ) | – | – | e | |||||||||||||||
Investments and advances: | |||||||||||||||||||||
Affiliated companies | 226,218 | (1,132 | ) | – | 225,086 | Investments accounted for using the equity method | |||||||||||||||
Securities investments and other | 14,046,196 | (14,046,196 | ) | – | – | f | |||||||||||||||
Allowance for credit losses | (8,419 | ) | 8,419 | – | – | ||||||||||||||||
– | 15,639,456 | 1,657,090 | 17,296,546 | a,f,D | Investments and advances in the Financial Services segment | ||||||||||||||||
Property, plant and equipment: | |||||||||||||||||||||
Land | 79,557 | (79,557 | ) | – | – | ||||||||||||||||
Buildings | 683,249 | (683,249 | ) | – | – | ||||||||||||||||
Machinery and equipment | 1,748,961 | (1,748,961 | ) | – | – | ||||||||||||||||
Construction in progress | 100,728 | (100,728 | ) | – | – | ||||||||||||||||
Less - Accumulated depreciation | 1,627,061 | (1,627,061 | ) | – | – | ||||||||||||||||
– | 994,676 | (4,135 | ) | 990,541 | Property, plant and equipment | ||||||||||||||||
Other assets: | |||||||||||||||||||||
Operating lease right-of-use assets | 337,322 | (337,322 | ) | – | – | g | |||||||||||||||
Finance lease right-of-use assets | 39,772 | (39,772 | ) | – | – | g | |||||||||||||||
– | 365,641 | (7,607 | ) | 358,034 | g | Right-of-use assets | |||||||||||||||
Intangibles, net | 996,305 | (996,305 | ) | – | – | e | |||||||||||||||
Goodwill | 827,149 | (398 | ) | (100,642 | ) | 726,109 | C | Goodwill | |||||||||||||
– | 1,062,865 | (318 | ) | 1,062,547 | e | Content assets | |||||||||||||||
– | 392,862 | (1,807 | ) | 391,055 | e | Other intangible assets | |||||||||||||||
Deferred insurance acquisition costs | 657,420 | – | (33,434 | ) | 623,986 | E | Deferred insurance acquisition costs | ||||||||||||||
Deferred income taxes | 207,470 | (2,649 | ) | 10,848 | 215,669 | Deferred tax assets | |||||||||||||||
– | 663,105 | 32,659 | 695,764 | f,h,D | Other financial assets | ||||||||||||||||
Other | 361,803 | (137,916 | ) | (16,398 | ) | 207,489 | h,B | Other non-current assets | |||||||||||||
19,136,096 | 2,120,474 | 1,536,256 | 22,792,826 | Total non-current assets | |||||||||||||||||
Total assets | 26,354,840 | (380,345 | ) | 1,533,348 | 27,507,843 | Total assets |
F-27
Yen in millions | |||||||||||||||||||||
Accounts under U.S. GAAP | U.S. GAAP | Reclassification | Recognition and measurement differences | IFRS | Note | Accounts under IFRS | |||||||||||||||
LIABILITIES | LIABILITIES | ||||||||||||||||||||
Current liabilities: | Current liabilities: | ||||||||||||||||||||
Short-term borrowings | 1,187,868 | 13,879 | – | 1,201,747 | Short-term borrowings | ||||||||||||||||
Current portion of long-term debt | 131,699 | 73,582 | 125 | 205,406 | i | Current portion of long-term debt | |||||||||||||||
Current portion of long-term operating lease liabilities | 73,362 | (73,362 | ) | – | – | i | |||||||||||||||
Notes and accounts payable, trade | 599,569 | (599,569 | ) | – | – | j | |||||||||||||||
– | 1,632,952 | (36,389 | ) | 1,596,563 | j,k,m | Trade and other payables | |||||||||||||||
Accounts payable, other and accrued expenses | 1,756,833 | (1,756,833 | ) | – | – | k | |||||||||||||||
Deposits from customers in the banking business | 2,773,885 | (91,729 | ) | – | 2,682,156 | l | Deposits from customers in the banking business | ||||||||||||||
Accrued income and other taxes | 165,406 | (82,594 | ) | 1,619 | 84,431 | Income taxes payables | |||||||||||||||
– | 164,005 | (2,572 | ) | 161,433 | k | Participation and residual liabilities in the Pictures segment | |||||||||||||||
– | 54,341 | – | 54,341 | k,m,o | Other financial liabilities | ||||||||||||||||
Other | 1,126,802 | 234,441 | 6,284 | 1,367,527 | k,m,p | Other current liabilities | |||||||||||||||
Total current liabilities | 7,815,424 | (430,887 | ) | (30,933 | ) | 7,353,604 | Total current liabilities | ||||||||||||||
Non-current liabilities: | |||||||||||||||||||||
Long-term debt | 773,294 | 281,086 | (744 | ) | 1,053,636 | i | Long-term debt | ||||||||||||||
Long-term operating lease liabilities | 290,259 | (290,259 | ) | – | – | i | |||||||||||||||
Accrued pension and severance costs | 254,103 | 12,364 | 755 | 267,222 | B | Defined benefit liabilities | |||||||||||||||
Deferred income taxes | 366,761 | (2,649 | ) | 452,475 | 816,587 | F | Deferred tax liabilities | ||||||||||||||
Future insurance policy benefits and other | 6,599,977 | – | 14,608 | 6,614,585 | E | Future insurance policy benefits and other | |||||||||||||||
Policyholders’ account in the life insurance business | 4,331,065 | – | (2,171 | ) | 4,328,894 | E | Policyholders’ account in the life insurance business | ||||||||||||||
– | 120,712 | (4,175 | ) | 116,537 | n | Participation and residual liabilities in the Pictures segment | |||||||||||||||
– | 139,417 | – | 139,417 | l,n,o | Other financial liabilities | ||||||||||||||||
Other | 294,302 | (201,551 | ) | 271 | 93,022 | n | Other non-current liabilities | ||||||||||||||
12,909,761 | 59,120 | 461,019 | 13,429,900 | Total non-current liabilities | |||||||||||||||||
Total liabilities | 20,725,185 | (371,767 | ) | 430,086 | 20,783,504 | Total liabilities | |||||||||||||||
Redeemable noncontrolling interest | 8,179 | (8,179 | ) | – | – | o | |||||||||||||||
EQUITY | EQUITY | ||||||||||||||||||||
Sony Group Corporation’s stockholders’ equity: | Sony Group Corporation’s stockholders’ equity: | ||||||||||||||||||||
Common stock | 880,214 | – | – | 880,214 | Common stock | ||||||||||||||||
Additional paid-in capital | 1,486,721 | – | 2,876 | 1,489,597 | Additional paid-in capital | ||||||||||||||||
Retained earnings | 3,857,152 | – | (942,649 | ) | 2,914,503 | G | Retained earnings | ||||||||||||||
Accumulated other comprehensive income | (524,020 | ) | – | 2,044,277 | 1,520,257 | A,B,C,D,E,F | Accumulated other comprehensive income | ||||||||||||||
Treasury stock, at cost | (124,228 | ) | – | – | (124,228 | ) | Treasury stock, at cost | ||||||||||||||
5,575,839 | – | 1,104,504 | 6,680,343 | Equity attributable to Sony Group Corporation’s stockholders | |||||||||||||||||
Noncontrolling interests | 45,637 | (399 | ) | (1,242 | ) | 43,996 | Noncontrolling interests | ||||||||||||||
Total equity | 5,621,476 | (399 | ) | 1,103,262 | 6,724,339 | Total equity | |||||||||||||||
Total liabilities and equity | 26,354,840 | (380,345 | ) | 1,533,348 | 27,507,843 | Total liabilities and equity |
F-28
Reconciliation of profit or loss for six months ended September 30, 2020
Yen in millions | ||||||||||||||||||||
Accounts under U.S. GAAP | U.S. GAAP | Reclassification | Recognition and measurement differences | IFRS | Note | Accounts under IFRS | ||||||||||||||
Sales and operating revenue: | Sales and financial services revenue: | |||||||||||||||||||
Net sales | 3,228,445 | 31,156 | 1,616 | 3,261,217 | q | Sales | ||||||||||||||
Financial services revenue | 817,023 | 7,487 | (17,661 | ) | 806,849 | r,D | Financial services revenue | |||||||||||||
Other operating revenue | 36,937 | (36,937 | ) | – | – | q | ||||||||||||||
4,082,405 | 1,706 | (16,045 | ) | 4,068,066 | Total sales and financial services revenue | |||||||||||||||
Costs and expenses: | Costs and expenses: | |||||||||||||||||||
Cost of sales | 2,198,661 | (5,003 | ) | (5,767 | ) | 2,187,891 | Cost of sales | |||||||||||||
Selling, general and administrative | 630,473 | 53 | (2,980 | ) | 627,546 | B | Selling, general and administrative | |||||||||||||
Financial services expenses | 726,044 | 7,568 | 63 | 733,675 | r,D | Financial services expenses | ||||||||||||||
Other operating income, net | (16,786 | ) | (783 | ) | 1,818 | (15,751 | ) | C | Other operating (income) expense, net | |||||||||||
3,538,392 | 1,835 | (6,866 | ) | 3,533,361 | Total costs and expenses | |||||||||||||||
Equity in net income of affiliated companies | 2,146 | – | 98 | 2,244 | D | Share of profit (loss) of investments accounted for using the equity method | ||||||||||||||
Operating income | 546,159 | (129 | ) | (9,081 | ) | 536,949 | Operating income | |||||||||||||
Other income: | ||||||||||||||||||||
Interest and dividends | 5,356 | (5,356 | ) | – | – | |||||||||||||||
Gain on equity securities, net | 85,493 | (85,493 | ) | – | – | |||||||||||||||
Other | 2,797 | (2,797 | ) | – | – | |||||||||||||||
– | 92,998 | (37,440 | ) | 55,558 | s,D | Financial income | ||||||||||||||
Other expenses: | ||||||||||||||||||||
Interest expenses | 4,509 | (4,509 | ) | – | – | |||||||||||||||
Foreign exchange loss, net | 8,744 | (8,744 | ) | – | – | |||||||||||||||
Other | 7,029 | (7,029 | ) | – | – | |||||||||||||||
– | 19,505 | 712 | 20,217 | s,B | Financial expenses | |||||||||||||||
Income before income taxes | 619,523 | – | (47,233 | ) | 572,290 | H | Income before income taxes | |||||||||||||
Income taxes | (91,020 | ) | – | (2,506 | ) | (93,526 | ) | I | Income taxes | |||||||||||
Net income | 710,543 | – | (44,727 | ) | 665,816 | Net income | ||||||||||||||
Net income attributable to | ||||||||||||||||||||
Net income attributable to Sony Group Corporation’s stockholders | 692,885 | – | (40,705 | ) | 652,180 | Sony Group Corporation’s stockholders | ||||||||||||||
Net income attributable to noncontrolling interests | 17,658 | – | (4,022 | ) | 13,636 | Noncontrolling interests |
F-29
Reconciliation of comprehensive income for six months ended September 30, 2020
Yen in millions | |||||||||||||||||
Accounts under U.S. GAAP | U.S. GAAP | Reclassification | Recognition and measurement differences | IFRS | Note | Accounts under IFRS | |||||||||||
Net income | 710,543 | – | (44,727 | ) | 665,816 | Net income | |||||||||||
Other comprehensive income, net of tax - | Other comprehensive income, net of tax - | ||||||||||||||||
Items that will not be reclassified to profit or loss | |||||||||||||||||
– | – | 41,391 | 41,391 | D | Changes in equity instruments measured at fair value through other comprehensive income | ||||||||||||
Pension liability adjustment | 4,459 | – | (4,544 | ) | (85 | ) | Remeasurement of defined benefit pension plans | ||||||||||
– | – | 142 | 142 | Share of other comprehensive income of investments accounted for using the equity method | |||||||||||||
Items that may be reclassified subsequently to profit or loss | |||||||||||||||||
Unrealized losses on securities | (37,882 | ) | – | (7,227 | ) | (45,109 | ) | D,E,F | Changes in debt instruments measured at fair value through other comprehensive income | ||||||||
Unrealized losses on derivative instruments | (871 | ) | – | (568 | ) | (1,439 | ) | Cash flow hedges | |||||||||
Debt valuation adjustments | (1,193 | ) | – | – | (1,193 | ) | Insurance contract valuation adjustments | ||||||||||
Foreign currency translation adjustments | (23,470 | ) | 11 | 12,887 | (10,572 | ) | Exchange differences on translating foreign operations | ||||||||||
– | (11 | ) | – | (11 | ) | Share of other comprehensive income of investments accounted for using the equity method | |||||||||||
(58,957 | ) | – | 42,081 | (16,876 | ) | Total other comprehensive income, net of tax | |||||||||||
Total comprehensive income | 651,586 | – | (2,646 | ) | 648,940 | Comprehensive income | |||||||||||
Comprehensive income attributable to | |||||||||||||||||
Comprehensive income attributable to Sony Group Corporation’s stockholders | 646,478 | – | 15,156 | 661,634 | Sony Group Corporation’s stockholders | ||||||||||||
Comprehensive income attributable to noncontrolling interests | 5,108 | – | (17,802 | ) | (12,694 | ) | Noncontrolling interests |
F-30
Reconciliation of profit or loss for three months ended September 30, 2020
Yen in millions | ||||||||||||||||||||
Accounts under U.S. GAAP | U.S. GAAP | Reclassification | Recognition and measurement differences | IFRS | Note | Accounts under IFRS | ||||||||||||||
Sales and operating revenue: | Sales and financial services revenue: | |||||||||||||||||||
Net sales | 1,723,575 | 12,024 | 658 | 1,736,257 | q | Sales | ||||||||||||||
Financial services revenue | 372,107 | 4,039 | (7,286 | ) | 368,860 | r,D | Financial services revenue | |||||||||||||
Other operating revenue | 17,804 | (17,804 | ) | – | – | q | ||||||||||||||
2,113,486 | (1,741 | ) | (6,628 | ) | 2,105,117 | Total sales and financial services revenue | ||||||||||||||
Costs and expenses: | Costs and expenses: | |||||||||||||||||||
Cost of sales | 1,145,988 | (4,995 | ) | (2,525 | ) | 1,138,468 | Cost of sales | |||||||||||||
Selling, general and administrative | 329,307 | (105 | ) | (1,941 | ) | 327,261 | B | Selling, general and administrative | ||||||||||||
Financial services expenses | 328,385 | 4,107 | (721 | ) | 331,771 | r,D | Financial services expenses | |||||||||||||
Other operating income, net | (5,538 | ) | (783 | ) | 1,260 | (5,061 | ) | C | Other operating (income) expense, net | |||||||||||
1,798,142 | (1,776 | ) | (3,927 | ) | 1,792,439 | Total costs and expenses | ||||||||||||||
Equity in net income of affiliated companies | 2,420 | – | 126 | 2,546 | D | Share of profit (loss) of investments accounted for using the equity method | ||||||||||||||
Operating income | 317,764 | 35 | (2,575 | ) | 315,224 | Operating income | ||||||||||||||
Other income: | ||||||||||||||||||||
Interest and dividends | 2,520 | (2,520 | ) | – | – | |||||||||||||||
Other | 1,524 | (1,524 | ) | – | – | |||||||||||||||
– | (2,902 | ) | 6,572 | 3,670 | s,D | Financial income | ||||||||||||||
Other expenses: | ||||||||||||||||||||
Interest expenses | 2,704 | (2,704 | ) | – | – | |||||||||||||||
Loss on equity securities, net | 11,407 | (11,407 | ) | – | – | |||||||||||||||
Foreign exchange loss, net | 3,690 | (3,690 | ) | – | – | |||||||||||||||
Other | 4,403 | (4,403 | ) | – | – | |||||||||||||||
– | 15,293 | (127 | ) | 15,166 | s,B | Financial expenses | ||||||||||||||
Income before income taxes | 299,604 | – | 4,124 | 303,728 | H | Income before income taxes | ||||||||||||||
Income taxes | (163,898 | ) | – | 6,028 | (157,870 | ) | I | Income taxes | ||||||||||||
Net income | 463,502 | – | (1,904 | ) | 461,598 | Net income | ||||||||||||||
Net income attributable to | ||||||||||||||||||||
Net income attributable to Sony Group Corporation’s stockholders | 459,634 | – | (1,037 | ) | 458,597 | Sony Group Corporation’s stockholders | ||||||||||||||
Net income attributable to noncontrolling interests | 3,868 | – | (867 | ) | 3,001 | Noncontrolling interests |
F-31
Reconciliation of comprehensive income for three months ended September 30, 2020
Yen in millions | |||||||||||||||||
Accounts under U.S. GAAP | U.S. GAAP | Reclassification | Recognition and measurement differences | IFRS | Note | Accounts under IFRS | |||||||||||
Net income | 463,502 | – | (1,904 | ) | 461,598 | Net income | |||||||||||
Other comprehensive income, net of tax - | Other comprehensive income, net of tax - | ||||||||||||||||
Items that will not be reclassified to profit or loss | |||||||||||||||||
– | – | 1,293 | 1,293 | D | Changes in equity instruments measured atfair value through other comprehensive income | ||||||||||||
Pension liability adjustment | 3,893 | – | (3,939 | ) | (46 | ) | Remeasurement of defined benefit pension plans | ||||||||||
– | – | 106 | 106 | Share of other comprehensive income of investments accounted for using the equity method | |||||||||||||
Items that may be reclassified subsequently to profit or loss | |||||||||||||||||
Unrealized losses on securities | (5,771 | ) | – | 28,520 | 22,749 | D,E,F | Changes in debt instruments measured at fair value through other comprehensive income | ||||||||||
Unrealized losses on derivative instruments | (611 | ) | – | (568 | ) | (1,179 | ) | Cash flow hedges | |||||||||
Debt valuation adjustments | 457 | – | – | 457 | Insurance contract valuation adjustments | ||||||||||||
Foreign currency translation adjustments | (11,987 | ) | (56 | ) | 678 | (11,365 | ) | Exchange differences on translating foreign operations | |||||||||
– | 56 | – | 56 | Share of other comprehensive income of investments accounted for using the equity method | |||||||||||||
(14,019 | ) | – | 26,090 | 12,071 | Total other comprehensive income, net of tax | ||||||||||||
Total comprehensive income | 449,483 | – | 24,186 | 473,669 | Comprehensive income | ||||||||||||
Comprehensive income attributable to | |||||||||||||||||
Comprehensive income attributable to Sony Group Corporation’s stockholders | 444,895 | – | 26,596 | 471,491 | Sony Group Corporation’s stockholders | ||||||||||||
Comprehensive income attributable to noncontrolling interests | 4,588 | – | (2,410 | ) | 2,178 | Noncontrolling interests |
F-32
Reconciliation of profit or loss for the fiscal year ended March 31, 2021
Yen in millions | ||||||||||||||||||||
Accounts under U.S. GAAP | U.S. GAAP | Reclassification | Recognition and measurement differences | IFRS | Note | Accounts under IFRS | ||||||||||||||
Sales and operating revenue: | Sales and financial services revenue: | |||||||||||||||||||
Net sales | 7,252,766 | 79,293 | 1,611 | 7,333,670 | q | Sales | ||||||||||||||
Financial services revenue | 1,661,520 | 13,512 | (10,041 | ) | 1,664,991 | r,D | Financial services revenue | |||||||||||||
Other operating revenue | 85,074 | (85,074 | ) | – | – | q | ||||||||||||||
8,999,360 | 7,731 | (8,430 | ) | 8,998,661 | Total sales and financial services revenue | |||||||||||||||
Costs and expenses: | Costs and expenses: | |||||||||||||||||||
Cost of sales | 5,072,596 | (3,850 | ) | (2,867 | ) | 5,065,879 | B | Cost of sales | ||||||||||||
Selling, general and administrative | 1,469,955 | 61 | 3,138 | 1,473,154 | B | Selling, general and administrative | ||||||||||||||
Financial services expenses | 1,488,963 | 12,503 | 208 | 1,501,674 | r, | Financial services expenses | ||||||||||||||
Other operating expense, net | 7,468 | (720 | ) | 7,502 | 14,250 | C | Other operating (income) expense, net | |||||||||||||
8,038,982 | 7,994 | 7,981 | 8,054,957 | Total costs and expenses | ||||||||||||||||
Equity in net income of affiliated companies | 11,487 | – | 64 | 11,551 | D | Share of profit (loss) of investments accounted for using the equity method | ||||||||||||||
Operating income | 971,865 | (263 | ) | (16,347 | ) | 955,255 | Operating income | |||||||||||||
Other income: | ||||||||||||||||||||
Interest and dividends | 10,457 | (10,457 | ) | – | – | |||||||||||||||
Gain on equity securities, net | 247,026 | (247,026 | ) | – | – | |||||||||||||||
Other | 6,752 | (6,752 | ) | – | – | |||||||||||||||
– | 264,692 | (180,900 | ) | 83,792 | s,D | Financial income | ||||||||||||||
Other expenses: | ||||||||||||||||||||
Interest expenses | 12,185 | (12,185 | ) | – | – | |||||||||||||||
Foreign exchange loss, net | 16,056 | (16,056 | ) | – | – | |||||||||||||||
Net periodic benefit costs other than service cost | 8,811 | (8,811 | ) | – | – | |||||||||||||||
Other | 6,678 | (6,678 | ) | – | – | |||||||||||||||
– | 43,924 | (2,842 | ) | 41,082 | s,B | Financial expenses | ||||||||||||||
Income before income taxes | 1,192,370 | – | (194,405 | ) | 997,965 | H | Income before income taxes | |||||||||||||
Income taxes | 995 | – | (46,926 | ) | (45,931 | ) | I | Income taxes | ||||||||||||
Net income | 1,191,375 | – | (147,479 | ) | 1,043,896 | Net income | ||||||||||||||
Net income attributable to | ||||||||||||||||||||
Net income attributable to Sony Group Corporation’s stockholders | 1,171,776 | – | (142,166 | ) | 1,029,610 | Sony Group Corporation’s stockholders | ||||||||||||||
Net income attributable to noncontrolling interests | 19,599 | – | (5,313 | ) | 14,286 | Noncontrolling interests |
F-33
Reconciliation of comprehensive income for the fiscal year ended March 31, 2021
Yen in millions | |||||||||||||||||
Accounts under U.S. GAAP | U.S. GAAP | Reclassification | Recognition and measurement differences | IFRS | Note | Accounts under IFRS | |||||||||||
Net income | 1,191,375 | – | (147,479 | ) | 1,043,896 | Net income | |||||||||||
Other comprehensive income, net of tax - | Other comprehensive income, net of tax - | ||||||||||||||||
Items that will not be reclassified to profit or loss | |||||||||||||||||
– | – | 144,740 | 144,740 | D | Changes in equity instruments measured at fair value through other comprehensive income | ||||||||||||
Pension liability adjustment | 12,965 | – | (1,410 | ) | 11,555 | Remeasurement of defined benefit pension plans | |||||||||||
– | – | 87 | 87 | Share of other comprehensive income of investments accounted for using the equity method | |||||||||||||
Items that may be reclassified subsequently to profit or loss | |||||||||||||||||
Unrealized losses on securities | (102,492 | ) | – | (103,057 | ) | (205,549 | ) | D,E,F | Changes in debt instruments measured at fair value through other comprehensive income | ||||||||
Unrealized gains on derivative instruments | 1,513 | – | (1,462 | ) | 51 | Cash flow hedges | |||||||||||
Debt valuation adjustments | (3,120 | ) | – | - | (3,120 | ) | Insurance contract valuation adjustments | ||||||||||
Foreign currency translation adjustments | 106,826 | (798 | ) | 9,293 | 115,321 | Exchange differences on translating foreign operations | |||||||||||
– | 798 | – | 798 | Share of other comprehensive income of investments accounted for using the equity method | |||||||||||||
15,692 | – | 48,191 | 63,883 | Total other comprehensive income, net of tax | |||||||||||||
Total comprehensive income | 1,207,067 | – | (99,288 | ) | 1,107,779 | Comprehensive income | |||||||||||
Comprehensive income attributable to | |||||||||||||||||
Comprehensive income attributable to Sony Group Corporation’s stockholders | 1,198,836 | – | (80,208 | ) | 1,118,628 | Sony Group Corporation’s stockholders | |||||||||||
Comprehensive income attributable to noncontrolling interests | 8,231 | – | (19,080 | ) | (10,849 | ) | Noncontrolling interests |
F-34
(4) Notes to reconciliation
Reclassifications
a. | “Marketable securities”, which were separately presented under U.S. GAAP, have been reclassified into “Investments and advances in the Financial Services segment” as current assets under IFRS. Investments held for variable annuities and variable life insurance contracts in the life insurance business, which were included in “Marketable securities” under U.S. GAAP, have been reclassified into “Investments and advances in the Financial Services segment” as current assets or non-current assets under IFRS, after considering the current/non-current distinction based on the purpose of the investments related to the insurance liabilities in accordance with paragraph 66 of IAS 1 “Presentation of Financial Statements” (“IAS 1”). |
b. | “Notes and accounts receivable, trade and contract assets” and “Allowance for credit losses”, which were separately presented under U.S. GAAP, have been reclassified into “Trade and other receivables, and contract assets” under IFRS. |
c. | “Other receivables”, which were separately presented under U.S. GAAP, have been reclassified into “Trade and other receivables, and contract assets” under IFRS. |
d. | “Other financial assets”, which were included in “Prepaid expenses and other current assets” under U.S. GAAP, are separately presented under IFRS. |
e. | “Film costs”, which were presented separately, and music catalogs, artist contracts, music distribution rights and other content assets, which were included in “Intangibles, net” under U.S. GAAP are collectively reclassified and presented as “Content assets” under IFRS. “Intangibles, net” other than those reclassified and presented as “Content assets” have been reclassified into “Other intangible assets” under IFRS. |
f. | “Securities investments and other”, which were separately presented under U.S. GAAP, have been reclassified into “Investments and advances in the Financial Services segment” as non-current assets for the amounts related to the Financial Services segment and “Other financial assets” as non-current assets for the amounts related to all segments excluding the Financial Services segment under IFRS. Housing loans in the banking business, which were included in “Securities investments and other” under U.S. GAAP, have been reclassified into “Investments and advances in the Financial Services segment” as current assets or non-current assets under IFRS after considering the current/non-current distinction based on the terms of the contract in accordance with paragraph 66 of IAS 1. |
g. | “Operating lease right-of-use assets” and “Finance lease right-of-use assets”, which were separately presented under U.S. GAAP, have been reclassified into “Right-of-use assets” under IFRS. |
h. | “Other financial assets”, which were included in “Other” in other assets under U.S. GAAP, are separately presented under IFRS. |
i. | “Current portion of long-term operating lease liabilities” and “Long-term operating lease liabilities”, which were separately presented under U.S. GAAP, have been reclassified into “Current portion of long-term debt” and “Long-term debt”, respectively under IFRS. |
j. | “Notes and accounts payable, trade”, which were separately presented under U.S. GAAP, have been reclassified into “Trade and other payables” under IFRS. |
k. | “Accounts payable, other and accrued expenses”, which were separately presented under U.S. GAAP, have been reclassified into either “Trade and other payables”, “Participation and residual liabilities in the Pictures segment”, “Other financial liabilities” or “Other current liabilities” under IFRS. |
l. | “Deposits from customers in the banking business”, which were separately presented under U.S. GAAP, have been reclassified into “Other financial liabilities” of non-current liabilities under IFRS, after considering the current/non-current distinction based on the terms of the contract in accordance with paragraph 69 of IAS 1. |
m. | “Trade and other payables” and “Other financial liabilities”, which were included in current liabilities “Other” under U.S. GAAP, are separately presented under IFRS. |
n. | “Participation and residual liabilities in the Pictures segment” and “Other financial liabilities”, which were included in “Other” in other than current liabilities under U.S. GAAP, are separately presented under IFRS. |
o. | “Redeemable noncontrolling interest”, which was separately presented under U.S. GAAP, has been reclassified into “Other financial liabilities” under IFRS. |
p. | Under U.S. GAAP, securities received as collateral other than cash in lending transactions are accounted for as “Marketable securities” and also as “Other current liabilities” representing Sony’s obligation to return the collateral, which was 313,025 million yen and 373,274 million yen as of September 30, 2020 and March 31, 2021, respectively. Under IFRS, the securities received as collateral other than cash shall be recognized in the consolidated statements of financial position if they are sold or the transferor defaults. None of the securities was recognized in the consolidated statements of financial position as of September 30, 2020 and March 31, 2021. |
q. | “Other operating revenue”, which was separately presented under U.S. GAAP, has been reclassified into “Sales” under IFRS. |
r. | Under IFRS, “Financial services revenue” and “Financial services expenses” have increased by the same amount due to the gross up of revenue and expenses related to service transactions, based on the presentation requirements. |
s. | Under IFRS, “Financial income” and “Financial expenses” have been presented separately, based on the presentation requirements. |
F-35
Recognition and measurement differences
A. Exchange differences on translating foreign operations
Under IFRS 1, first-time adopters may choose to deem the cumulative exchange differences on translating foreign operations as zero at the date of transition to IFRS. Sony has chosen to apply this exemption and transferred all cumulative exchange differences on translating foreign operations into retained earnings at the date of transition to IFRS.
The impact of this change is as follows:
Yen in millions | ||||||||||||
April 1, 2020 | September 30, 2020 | March 31, 2021 | ||||||||||
(Consolidated Statements of Financial Position) | ||||||||||||
Accumulated other comprehensive income | (509,872 | ) | (509,139 | ) | (510,091 | ) | ||||||
Adjustment to retained earnings | (509,872 | ) | (509,139 | ) | (510,091 | ) |
B. Post-employment benefits
Under U.S. GAAP, past service costs and actuarial gains and losses are deferred in accumulated other comprehensive income, and subsequently reclassified to profit or loss over a certain period of time in the future.
Under IFRS, past service costs are expensed as incurred. Adjustments due to remeasurements of the net defined benefit liabilities or assets, such as actuarial gains and losses, are recognized in other comprehensive income when incurred and immediately transferred to retained earnings and are not reclassified to profit or loss in a subsequent period.
In addition, if the fair value of plan assets is in excess of the present value of defined benefit obligations, the amount of any asset to be recognized is limited to the present value of any economic benefits available in the form of refunds from the plan or reductions in the future contributions to the plan.
The impact of this change before considering the tax effect is as follows:
Yen in millions | ||||||||||||
April 1, 2020 | September 30, 2020 | March 31, 2021 | ||||||||||
(Consolidated Statements of Financial Position) | ||||||||||||
Other non-current assets | (16,829 | ) | (12,068 | ) | (17,083 | ) | ||||||
Defined benefit liabilities | 30 | (4,728 | ) | (62 | ) | |||||||
Accumulated other comprehensive income | (300,385 | ) | (297,151 | ) | (277,379 | ) | ||||||
Adjustment to retained earnings | (317,184 | ) | (313,947 | ) | (294,524 | ) |
Yen in millions | ||||||||||||
Six months ended September 30, 2020 | Three months ended September 30, 2020 | Fiscal year ended March 31, 2021 | ||||||||||
(Consolidated Statements of Income) | ||||||||||||
Cost of sales | – | – | (2,193 | ) | ||||||||
Selling, general and administrative | (519 | ) | (122 | ) | (244 | ) | ||||||
Financial expenses | 4,412 | 2,124 | 9,476 | |||||||||
Increase (decrease) in adjustment to pre-tax income | 3,893 | 2,002 | 7,039 |
F-36
C. Impairment of goodwill
The level at which goodwill is tested for impairment differs between U.S. GAAP and IFRS. Under U.S. GAAP, goodwill is tested for impairment at the reporting unit level. Reporting units are Sony’s operating segments or one level below the operating segments. The identification of reporting units is dependent on the level at which discrete financial information is available and regularly reviewed by the segment manager. Under IFRS, goodwill is tested for impairment at the level of the cash-generating unit (“CGU”) or group of CGUs, which represent the lowest level at which goodwill is monitored for internal management purposes, which may be a lower level of grouping than a reporting unit under U.S. GAAP. A CGU is the smallest identifiable group of assets that generates cash inflows that are largely independent of the cash inflows from other assets or group of assets.
Upon the transition to IFRS, Sony assessed its reporting units to determine if such reporting units should be further divided into several CGUs under IFRS. As a result, Sony determined that certain CGUs should be grouped at a lower level than a reporting unit under U.S. GAAP. In addition, Sony performed an impairment test for goodwill at the date of transition to IFRS regardless of whether there were any indications that the goodwill may be impaired based on conditions at the date of transition to IFRS. In performing the impairment test, Sony used the goodwill balance under U.S. GAAP attributed to each CGU or group of CGUs based on the history of acquisitions of the businesses. Under U.S. GAAP, when a business within a reporting unit was disposed of (including when classified as held for sale), goodwill was allocated to the remaining business and the disposed business based on relative fair value, and only the goodwill allocated to the disposed business was written off. Under IFRS, since certain disposed businesses represented individual CGUs or a group of CGUs, at the time of disposition, all the goodwill that was recognized for such businesses would have been written off. The assessment resulted in impairments related to CGUs or groups of CGUs of the businesses that Sony disposed of prior to the date of transition to IFRS. In addition, the assessment resulted in impairments related to CGUs or groups of CGUs of the businesses that existed at the date of transition to IFRS where the recoverable amount was lower than the carrying amount.
As a result, at the date of transition to IFRS, goodwill decreased by 96,817 million yen, and retained earnings decreased by the same amount. The impact of this change was primarily in the I&SS and Pictures segments and is discussed below.
In the I&SS segment, at the date of transition to IFRS, Sony recognized 43,376 million yen of impairment losses in retained earnings, which includes the impairment loss related to the goodwill allocated to CGUs or groups of CGUs of the businesses that Sony disposed of prior to the date of transition to IFRS as well as the Internet of Things (“IoT”)-related business which existed at the date of transition to IFRS. The recoverable amount of the IoT-related business was determined by the value in use and a pre-tax discount rate of 9.8% was used in the measurement.
In the Pictures segment, at the date of transition to IFRS, Sony recognized 48,749 million yen of impairment losses in retained earnings, which includes the impairment loss related to the goodwill allocated to CGUs or groups of CGUs of the businesses that Sony disposed of prior to the date of transition to IFRS as well as the United States television network CGU which existed at the date of transition to IFRS. The recoverable amount of the United States television network CGU was determined by the value in use and a pre-tax discount rate of 15.9% was used in the measurement.
The impact of this change is as follows:
Yen in millions | ||||||||||||
April 1, 2020 | September 30, 2020 | March 31, 2021 | ||||||||||
(Consolidated Statements of Financial Position) | ||||||||||||
Goodwill | (96,817 | ) | (95,031 | ) | (100,727 | ) | ||||||
Accumulated other comprehensive income | – | (1,541 | ) | 2,942 | ||||||||
Adjustment to retained earnings | (96,817 | ) | (96,572 | ) | (97,785 | ) |
Yen in millions | ||||||||||||
Six months ended September 30, 2020 | Three months ended September 30, 2020 | Fiscal year ended March 31, 2021 | ||||||||||
(Consolidated Statements of Income) | ||||||||||||
Other operating (income) expense, net | 245 | 245 | (968 | ) | ||||||||
Increase (decrease) in adjustment to pre-tax income | 245 | 245 | (968 | ) |
F-37
The carrying amount of goodwill by segment is as follows:
Yen in millions | ||||||||
April 1, 2020 | March 31, 2021 | |||||||
Game & Network Services *1 | 170,974 | 172,360 | ||||||
Music *2 | 391,325 | 408,424 | ||||||
Pictures *3 | 103,626 | 120,083 | ||||||
Electronics Products & Solutions | 11,354 | 11,533 | ||||||
Imaging & Sensing Solutions | 2,816 | 2,875 | ||||||
Financial Services | 10,834 | 10,834 | ||||||
Total | 690,929 | 726,109 |
*1 Game & Network Services (“G&NS”)
All of the goodwill shown in the G&NS line of the table above relates to the PlayStation® business. Goodwill related to the CGU has a carrying amount of 170,974 million yen and 172,360 million yen, as of April 1, 2020 and March 31, 2021, respectively. Intangible assets with indefinite useful lives related to the PlayStation® business have a carrying amount of 57,397 million yen and 57,449 million yen, as of April 1, 2020 and March 31, 2021, respectively, which are included in “Other intangible assets”. Intangible assets with indefinite useful lives include the trademark for PlayStation®, which is assessed to have an indefinite useful life as the trademark for PlayStation® is utilized as the core trademark for Sony’s products and services throughout the G&NS segment and Sony expects to continue using the trademark in the future as well. The recoverable amount of the CGU is determined by the value in use. The value in use is calculated by discounting the estimated future cash flows including a terminal value. The estimated future cash flows are prepared based on a three-year forecasted period derived from the mid-range plan (“MRP”). A perpetual growth rate is utilized to determine a terminal cash flow value and is set after the final year of the forecasted period. The growth rate and the pre-tax discount rate are 1.5% and 9.8% as of April 1, 2020 and 1.5% and 8.7% as of March 31, 2021, respectively.
*2 Music
Goodwill shown in the Music line of the table above is primarily allocated to the worldwide recorded music and music publishing CGUs excluding operations in Japan.
Goodwill related to the worldwide recorded music CGU has a carrying amount of 128,918 million yen and 136,572 million yen, as of April 1, 2020 and March 31, 2021, respectively. The recoverable amount of the CGU is determined by the value in use. The value in use is calculated by discounting the estimated future cash flows including a terminal value. The estimated future cash flows are prepared based on a three-year forecasted period derived from the MRP. A perpetual growth rate is utilized to determine a terminal cash flow value and is set after the final year of the forecasted period. The growth rate and the pre-tax discount rate are 1.0% and 9.2% as of April 1, 2020 and 1.0% and 9.3% as of March 31, 2021, respectively.
Goodwill related to the music publishing CGU has a carrying amount of 238,684 million yen and 248,130 million yen, as of April 1, 2020 and March 31, 2021, respectively. The recoverable amount of the CGU is determined by the value in use. The value in use is calculated by discounting the estimated future cash flows including a terminal value. The estimated future cash flows are prepared based on a three-year forecasted period derived from the MRP. A perpetual growth rate is utilized to determine a terminal cash flow value and is set after the final year of the forecasted period. The growth rate and the pre-tax discount rate are 2.5% and 8.4% as of April 1, 2020 and 2.5% and 8.2% as of March 31, 2021, respectively.
*3 Pictures
Goodwill shown in the Pictures line of the table above is primarily allocated to the United States television network CGU. Goodwill related to the CGU is recognized with the carrying amounts of 54,156 million yen and 55,092 million yen, as of April 1, 2020 and March 31, 2021, respectively. The recoverable amount of the CGU is determined by the value in use. The value in use is calculated by discounting the estimated future cash flows including a terminal value. The estimated future cash flows are prepared based on a three-year forecasted period derived from the MRP. The terminal value is based on an earnings multiple applied to the final year of the forecasted earnings. The growth rate beyond the MRP period and the pre-tax discount rate are 1.0% and 15.9% as of April 1, 2020 and 1.0% and 14.7% as of March 31, 2021, respectively.
F-38
The value in use calculation uses key assumptions such as the pre-tax discount rate, perpetual growth rate, competitive and regulatory environment, and technology trends. For each assumption, historical experience, external information, competitors and industry trends are taken into account. Sony does not expect the recoverable amounts to be lower than the carrying amounts even when the growth rate and pre-tax discount rate that are used in the evaluation of the recoverable amounts change within a reasonably predictable range.
D. Equity instruments and debt instruments
Under U.S. GAAP, equity securities are recognized at fair value and subsequent changes in fair value are recognized in profit or loss. Equity securities that do not have readily determinable fair values are measured at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer.
Additionally, under U.S. GAAP, debt securities that are held-to-maturity, primarily in the life insurance business, are carried at amortized cost.
Under IFRS, equity instruments are recognized at fair value and subsequent changes in fair value are recognized in profit or loss. However, for investments in equity instruments which are not held for trading, Sony may make an irrevocable election at initial recognition to present subsequent changes in fair value of the investments in other comprehensive income. Such financial assets are measured at fair value and subsequent changes in the fair value are recognized in other comprehensive income.
Additionally, under IFRS, debt instruments, which are primarily in the life insurance business, are classified as financial assets measured at fair value through other comprehensive income if the debt instruments are held within a business model whose objective is achieved by both collecting contractual cash flows and selling the financial assets and the contractual terms of the financial assets give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. Changes in the fair value of the financial assets after initial recognition, except for impairment gains or losses and foreign exchange gains or losses, are recognized in other comprehensive income.
The impact of this change before considering the tax effect is as follows:
Yen in millions | ||||||||||||
April 1, 2020 | September 30, 2020 | March 31, 2021 | ||||||||||
(Consolidated Statements of Financial Position) | ||||||||||||
Other financial assets (non-current) | 22,110 | 33,928 | 31,627 | |||||||||
Investments and advances in the Financial Services segment (non-current) | 2,439,946 | 2,066,907 | 1,649,660 | |||||||||
Accumulated other comprehensive income | (2,424,510 | ) | (2,124,643 | ) | (1,840,980 | ) | ||||||
Adjustment to retained earnings | 37,546 | (23,808 | ) | (159,693 | ) |
Yen in millions | ||||||||||||
Six months ended September 30, 2020 | Three months ended September 30, 2020 | Fiscal year ended March 31, 2021 | ||||||||||
(Consolidated Statements of Income) | ||||||||||||
Financial services revenue | (21,498 | ) | (7,940 | ) | (12,547 | ) | ||||||
Financial services expenses | (346 | ) | (346 | ) | (854 | ) | ||||||
Share of profit (loss) of investments accounted for using the equity method | 4 | 1 | (30 | ) | ||||||||
Financial income | (37,240 | ) | 6,338 | (178,677 | ) | |||||||
Increase (decrease) in adjustment to pre-tax income | (59,080 | ) | (1,947 | ) | (192,108 | ) |
F-39
E. Insurance-related accounts
In accordance with Sony’s first-time adoption of IFRS 4 “Insurance Contracts” at the date of transition to IFRS, insurance contracts are recognized and measured based on the same accounting principles previously applied under U.S. GAAP. Under IFRS, the amount of insurance-related accounts was affected by shadow accounting in the life insurance business as a result of the increase in financial instruments to be measured at fair value through other comprehensive income. This change is mainly because the shadow liability adequacy test indicated that the insurance liabilities were not recorded at a sufficient level at the date of transition to IFRS and as of September 30, 2020.
The impact of this change before considering the tax effect is as follows:
Yen in millions | ||||||||||||
April 1, 2020 | September 30, 2020 | March 31, 2021 | ||||||||||
(Consolidated Statements of Financial Position) | ||||||||||||
Deferred insurance acquisition costs | (412,997 | ) | (339,175 | ) | (33,434 | ) | ||||||
Future insurance policy benefits and other | (273,530 | ) | (2,675 | ) | (14,609 | ) | ||||||
Policyholders’ account in the life insurance business | 2,261 | 2,287 | 2,170 | |||||||||
Accumulated other comprehensive income | 684,266 | 339,563 | 45,873 |
F. Impact of changes in the measurement method of debt instruments in the life insurance business on deferred tax liabilities and noncontrolling interests
In connection with “D. Equity instruments and debt instruments” and “E. Insurance-related accounts”, accumulated other comprehensive income is affected due to the change in the measurement method of debt instruments in the life insurance business and the change in the amount of insurance-related accounts as a result of the application of shadow accounting.
The impact of this change on deferred tax liabilities and noncontrolling interests is as follows:
Yen in millions | ||||||||||||
April 1, 2020 | September 30, 2020 | March 31, 2021 | ||||||||||
(Consolidated Statements of Financial Position) | ||||||||||||
Deferred tax liabilities | (489,839 | ) | (485,591 | ) | (452,189 | ) | ||||||
Noncontrolling interests | (440,099 | ) | – | – | ||||||||
Accumulated other comprehensive income | 929,938 | 485,591 | 452,189 |
G. Retained earnings
Main items of the differences on retained earnings are as follows:
Yen in millions | ||||||||||||
April 1, 2020 | September 30, 2020 | March 31, 2021 | ||||||||||
Retained earnings under U.S. GAAP | 2,765,187 | 3,418,107 | 3,857,152 | |||||||||
1 Exchange differences on translating foreign operations *A | (509,872 | ) | (509,139 | ) | (510,091 | ) | ||||||
2 Post-employment benefits *B | (317,184 | ) | (313,947 | ) | (294,524 | ) | ||||||
3 Impairment of goodwill *C | (96,817 | ) | (96,572 | ) | (97,785 | ) | ||||||
4 Equity instruments and debt instruments *D | 37,546 | (23,808 | ) | (159,693 | ) | |||||||
5 Other | 6,616 | 16,527 | 13,249 | |||||||||
Tax effect of adjustments | 64,221 | 71,061 | 106,195 | |||||||||
Total | (815,490 | ) | (855,878 | ) | (942,649 | ) | ||||||
Retained earnings under IFRS | 1,949,697 | 2,562,229 | 2,914,503 |
F-40
H. Income before income taxes
Main items of the differences on income before income taxes are as follows:
Yen in millions | ||||||||||||
Six months ended September 30, 2020 | Three months ended September 30, 2020 | Fiscal year ended March 31, 2021 | ||||||||||
Income before income taxes under U.S. GAAP | 619,523 | 299,604 | 1,192,370 | |||||||||
1 Post-employment benefits *B | 3,893 | 2,002 | 7,039 | |||||||||
2 Impairment of goodwill *C | 245 | 245 | (968 | ) | ||||||||
3 Equity instruments and debt instruments *D | (59,080 | ) | (1,947 | ) | (192,108 | ) | ||||||
4 Other | 7,709 | 3,824 | (8,368 | ) | ||||||||
Total | (47,233 | ) | 4,124 | (194,405 | ) | |||||||
Income before income taxes under IFRS | 572,290 | 303,728 | 997,965 |
I. Income taxes
Due to the adoption of IFRS, income taxes have been adjusted by recording the tax effects on various IFRS adjustments recognized and measured, and other IFRS tax effects.
(5) Reconciliation of consolidated statements of cash flows
Main items of the differences on consolidated statements of cash flows are as follows:
Yen in millions | ||||||||||||
Six months ended September 30, 2020 | ||||||||||||
Cash flows from operating activities | Cash flows from investing activities | Cash flows from financing activities | ||||||||||
Consolidated statements of cash flows under U.S. GAAP | 633,481 | (882,598 | ) | 636,812 | ||||||||
1. Principal payments for operating lease liabilities*1 | 35,291 | – | (35,291 | ) | ||||||||
2. Additions and disposals of content assets*2 | (8,104 | ) | 8,104 | – | ||||||||
3. Changes in assets and liabilities in the Financial Services segment*3 | ||||||||||||
(1) Investments and advances in the Financial Services segment | (548,726 | ) | 548,726 | – | ||||||||
(2) Deposits from customers in the banking business | 214,505 | – | (214,505 | ) | ||||||||
(3) Borrowings in the life insurance business and the banking business | 210,367 | – | (210,367 | ) | ||||||||
(4) Future insurance policy benefits and other and policyholders’ account in the life insurance business | 62,849 | – | (62,849 | ) | ||||||||
4. Other | 1,236 | 576 | 341 | |||||||||
Total | (32,582 | ) | 557,406 | (522,671 | ) | |||||||
Consolidated statements of cash flows under IFRS | 600,899 | (325,192 | ) | 114,141 |
F-41
Yen in millions | ||||||||||||
Fiscal year ended March 31, 2021 | ||||||||||||
Cash flows from operating activities | Cash flows from investing activities | Cash flows from financing activities | ||||||||||
Consolidated statements of cash flows under U.S. GAAP | 1,350,150 | (1,781,516 | ) | 666,967 | ||||||||
1. Principal payments for operating lease liabilities*1 | 72,098 | – | (72,098 | ) | ||||||||
2. Additions and disposals of content assets*2 | (34,751 | ) | 34,751 | – | ||||||||
3. Changes in assets and liabilities in the Financial Services segment*3 | ||||||||||||
(1) Investments and advances in the Financial Services segment | (1,181,744 | ) | 1,181,744 | – | ||||||||
(2) Deposits from customers in the banking business | 332,987 | – | (332,987 | ) | ||||||||
(3) Borrowings in the life insurance business and the banking business | 463,783 | – | (463,783 | ) | ||||||||
(4) Future insurance policy benefits and other and policyholders’ account in the life insurance business | 134,299 | - | (134,299 | ) | ||||||||
4. Other | 3,395 | 1,111 | (2,333 | ) | ||||||||
Total | (209,933 | ) | 1,217,606 | (1,005,500 | ) | |||||||
Consolidated statements of cash flows under IFRS | 1,140,217 | (563,910 | ) | (338,533 | ) |
*1 The principal payments for operating lease liabilities
Under U.S. GAAP, lessees classify leases as either operating leases or finance leases, and the principal payments for the operating lease liabilities are classified as cash flows from operating activities in the consolidated statements of cash flows. Under IFRS, the distinction between operating leases and finance leases no longer exists for lessees, and all of the principal payments for lease liabilities are classified as cash flows from financing activities in the consolidated statements of cash flows.
*2 The additions and disposals of content assets
Under U.S. GAAP, Sony classified the cash flows from the additions and disposals of film costs as cash flows from operating activities, and classified the cash flows from the additions and disposals of music catalogs, artist contracts, music distribution rights and other content assets as cash flows from investing activities in the consolidated statements of cash flows based on the nature of such transactions as additions and disposals of intangible assets. Under IFRS, Sony defines these intangible assets as content assets, and classifies the cash flows from the additions and disposals of content assets as cash flows from operating activities in the consolidated statements of cash flows except for additions and disposals of content assets from business combinations or business divestitures, because the additions and disposals of content assets are derived from the principal revenue-producing activities of Sony.
*3 Changes in assets and liabilities in the Financial Services segment
Under U.S. GAAP, Sony classified cash flows from changes in investments and advances in the Financial Services segment and repurchase agreements in the Financial Services segment, deposits from customers in the banking business and policyholders’ account in the life insurance business according to the nature of these transactions in the consolidated statements of cash flows. Under IFRS, Sony classifies cash flows from these transactions as cash flows from operating activities in the consolidated statements of cash flows as these transactions are viewed as integral to the principal revenue-producing activities of Sony.
F-42
Subsequent Event
Transfer of certain operations of Game Show Network, LLC
On October 16, 2021, Sony agreed to transfer GSN Games, a division of Game Show Network, LLC, a wholly-owned subsidiary in the Pictures segment, to Scopely, Inc. (“Scopely”). This transaction is subject to customary closing conditions, including regulatory approvals. The consideration for the transaction is approximately 1 billion U.S. dollars, of which Sony will receive 500 million U.S. dollars in cash and the remainder in preferred stock of Scopely. The consideration is subject to customary working capital and other adjustments.
This preferred stock will be measured at fair value as an equity instrument and subsequent changes in the fair value will be recognized in other comprehensive income. Sony expects to recognize a gain from this transfer as operating income after its completion and is currently evaluating the amount of such gain to be recognized.
F-43
Outlook for the Fiscal Year Ending March 31, 2022
The forecast for consolidated results for the fiscal year ending March 31, 2022, as announced on August 4, 2021, has been revised as follows:
(Billions of yen) | |||||||||||||||||
March 31, 2021 Results | August Forecast | October Forecast | Change from August Forecast | ||||||||||||||
Sales *1 | ¥ | 8,998.7 | ¥ | 9,700 | ¥ | 9,900 | + ¥200 bil | + 2.1 | % | ||||||||
Operating income | 955.3 | 980 | 1,040 | + 60 bil | + 6.1 | % | |||||||||||
Income before income taxes | 998.0 | 955 | 990 | + 35 bil | + 3.7 | % | |||||||||||
Net income attributable to Sony Group Corporation’s stockholders | 1,029.6 | 700 | 730 | + 30 bil | +4.3 | % | |||||||||||
For all segments excluding the Financial Services segment *2 | March 31, 2021 Results | August Forecast | October Forecast | Change from August Forecast | |||||||||||||
Net cash provided by operating activities | ¥ | 1,150.3 | ¥ | 890 | ¥ | 890 | – | – |
*1 “Sales and Financial Services revenue” are shown as “Sales” (the same applies below).
*2 Cash flow for all segments excluding the Financial Services segment is not a measure in accordance with IFRS. However, Sony believes that this disclosure may be useful information to investors. Please refer to page F-16 for details about the preparation of the Condensed Statements of Cash Flows.
Assumed foreign exchange rates are the following:
Assumed foreign currency exchange rates for the second half of the fiscal year ending March 31, 2022 | (For your reference) Assumed foreign currency exchange rates for the fiscal year ending March 31, 2022 at the time of the August forecast | |
1 U.S. dollar | approximately 111 yen | approximately 110 yen |
1 Euro | approximately 130 yen | approximately 131 yen |
Sales for the fiscal year ending March 31, 2022 are expected to be higher than the August forecast due to higher-than-expected sales in the Financial Services, Pictures and Music segments, partially offset by lower-than-expected sales in the Electronics Products & Solutions (“EP&S”) segment.
Operating income is expected to be higher than the August forecast due to expected increases in operating income in the EP&S, Pictures, Music and Imaging & Sensing Solutions (“I&SS”) segments, as well as an expected decrease in operating loss in All Other, Corporate and elimination.
Income before income taxes is expected to be 990 billion yen, which is higher than the August forecast. This expected increase is primarily due to the above-mentioned expected increase in operating income.
Net income attributable to Sony Group Corporation’s stockholders is expected to be higher than the August forecast mainly due to the above-mentioned expected increase in income before income taxes.
Regarding the transfer of certain Game Show Network, LLC operations as described in the Note “Subsequent Event” on page F-43, Sony expects to record a gain resulting from the transfer as operating income after its completion. However, such gain and other expected impacts resulting from this transaction have not been included in the above forecast as the timing of the completion cannot presently be determined.
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The forecast for each business segment for the fiscal year ending March 31, 2022 has been revised as follows:
(Billions of yen) | ||||||||||||
March 31, 2021 Results | August Forecast | October Forecast | ||||||||||
Game & Network Services (G&NS) | ||||||||||||
Sales | ¥ | 2,656.3 | ¥ | 2,900 | ¥ | 2,900 | ||||||
Operating income | 341.7 | 325 | 325 | |||||||||
Music | ||||||||||||
Sales | 939.9 | 1,040 | 1,070 | |||||||||
Operating income | 184.8 | 190 | 200 | |||||||||
Pictures | ||||||||||||
Sales | 753.0 | 1,120 | 1,180 | |||||||||
Operating income | 79.9 | 90 | 108 | |||||||||
Electronics Products & Solutions (EP&S) * | ||||||||||||
Sales | 2,068.1 | 2,320 | 2,280 | |||||||||
Operating income | 127.9 | 170 | 190 | |||||||||
Imaging & Sensing Solutions (I&SS) | ||||||||||||
Sales | 1,012.5 | 1,100 | 1,100 | |||||||||
Operating income | 145.9 | 140 | 150 | |||||||||
Financial Services | ||||||||||||
Financial services revenue | 1,674.0 | 1,400 | 1,490 | |||||||||
Operating income | 154.8 | 153 | 153 | |||||||||
All Other, Corporate and elimination * | ||||||||||||
Operating loss | (79.6 | ) | (88 | ) | (86 | ) | ||||||
Consolidated | ||||||||||||
Sales | 8,998.7 | 9,700 | 9,900 | |||||||||
Operating income | 955.3 | 980 | 1,040 |
* Due to organizational changes as of April 1, 2021, from the first quarter of the fiscal year ending March 31, 2022, Sony transferred some of the businesses and functions previously included within All Other and Corporate and elimination to the EP&S segment. Sales and operating income (loss) of each segment for the fiscal year ended March 31, 2021 in the above chart are presented to conform to the organizational structure for the fiscal year ending March 31, 2022.
Game & Network Services (G&NS)
Sales and operating income are expected to remain unchanged from the August forecast.
Music
Sales are expected to be higher than the August forecast due to stronger-than-expected sales from game applications for mobile devices and license revenue in the anime business in Visual Media and Platform, as well as stronger-than-expected sales primarily from streaming services in Music Publishing. Operating income is expected to be higher than the August forecast primarily due to the impact of the above-mentioned expected increase in sales.
Pictures
Sales are expected to be higher than the August forecast due to an expected increase in sales resulting from the acquisition of Crunchyroll in Media Networks, and higher television licensing and home entertainment revenues for catalog product in Motion Pictures. Operating income is expected to be higher than the August forecast due to the impact of the above-mentioned expected increase in sales in Motion Pictures.
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Electronics Products & Solutions (EP&S)
Sales are expected to be lower than the August forecast due to an expected decrease in unit sales mainly of digital cameras, primarily due to shortages in the supply of components, especially semiconductors. Operating income is expected to be higher than the August forecast due to the impact of an improvement in the product mix of digital cameras, an increase in unit sales of televisions and a decrease in operating expenses, partially offset by the impact of lower unit sales of digital cameras.
Imaging & Sensing Solutions (I&SS)
Sales are expected to remain unchanged from the August forecast due to higher-than-expected sales of image sensors for digital cameras and for industrial equipment, substantially offset by lower-than-expected sales in businesses other than image sensors. Operating income is expected to be higher than the August forecast primarily due to the impact of the above-mentioned expected increase in sales of image sensors for digital cameras and for industrial equipment.
Financial Services
Financial services revenue is expected to be higher than the August forecast primarily due to an increase in net gains on investments in the separate accounts at Sony Life Insurance Co., Ltd. (“Sony Life”). Operating income is expected to remain unchanged from the August forecast.
The effects of future gains and losses on investments held by the Financial Services segment due to market fluctuations have not been incorporated within the above forecast as it is difficult for Sony to predict market trends in the future. Accordingly, future market fluctuations could further impact the above forecast.
The above forecast is based on management’s current expectations and is subject to uncertainties and changes in circumstances. Actual results may differ materially from those included in this forecast due to a variety of factors. See “Cautionary Statement” below.
Notes about Financial Performance of the Music, Pictures and Financial Services segments
The Music segment results include the yen-based results of Sony Music Entertainment (Japan) Inc. and the yen-translated results of Sony Music Entertainment and Sony Music Publishing LLC, which aggregate the results of their worldwide subsidiaries on a U.S. dollar basis.
The Pictures segment results are the yen-translated results of Sony Pictures Entertainment Inc., which aggregates the results of its worldwide subsidiaries on a U.S. dollar basis.
The Financial Services segment results include Sony Financial Group Inc. (“SFGI”) and SFGI’s consolidated subsidiaries such as Sony Life, Sony Assurance Inc. and Sony Bank Inc. The results discussed in the Financial Services segment differ from the results that SFGI discloses separately on a Japanese statutory basis. On October 1, 2021, SFGI changed its company name from Sony Financial Holdings Inc.
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Cautionary Statement
Statements made in this release with respect to Sony’s current plans, estimates, strategies and beliefs and other statements that are not historical facts are forward-looking statements about the future performance of Sony. Forward-looking statements include, but are not limited to, those statements using words such as “believe,” “expect,” “plans,” “strategy,” “prospects,” “forecast,” “estimate,” “project,” “anticipate,” “aim,” “intend,” “seek,” “may,” “might,” “could” or “should,” and words of similar meaning in connection with a discussion of future operations, financial performance, events or conditions. From time to time, oral or written forward-looking statements may also be included in other materials released to the public. These statements are based on management’s assumptions, judgments and beliefs in light of the information currently available to it. Sony cautions investors that a number of important risks and uncertainties could cause actual results to differ materially from those discussed in the forward-looking statements, and therefore investors should not place undue reliance on them. Please note that Sony has disclosed the consolidated financial statements and its forecast for consolidated results for the fiscal year ending March 31, 2022 based on International Financial Reporting Standards (IFRS). Investors also should not rely on any obligation of Sony to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Sony disclaims any such obligation. Risks and uncertainties that might affect Sony include, but are not limited to:
(i) | Sony’s ability to maintain product quality and customer satisfaction with its products and services; |
(ii) | Sony’s ability to continue to design and develop and win acceptance of, as well as achieve sufficient cost reductions for, its products and services, including image sensors, game and 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; |
(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; |
(xv) | shifts in customer demand for financial services such as life insurance and Sony’s ability to conduct successful asset liability management in the Financial Services segment; |
(xvi) | risks related to catastrophic disasters, pandemic disease or similar events; |
(xvii) | the ability of Sony, its third-party service providers or business partners to anticipate and manage cybersecurity risk, including the risk of unauthorized access to Sony’s business information and the personally identifiable information of its employees and customers, potential business disruptions or financial losses; and |
(xviii) | the outcome of pending and/or future legal and/or regulatory proceedings. |
Risks and uncertainties also include the impact of any future events with material adverse impact. The continued impact of COVID-19 could heighten many of the risks and uncertainties noted above. Important information regarding risks and uncertainties is also set forth in Sony’s most recent Form 20-F, which is on file with the U.S. Securities and Exchange Commission.
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