Sony (SONY) 6-K Sony Group Corporation 6-K

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.

1

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

	(Billions of yen)
	March 31, 2021 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.

2

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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