Form 20-F

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form

20-F

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

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

For the fiscal year ended March 31, 2025

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

For the transition period from/to

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

Date of event requiring this shell company report:

Commission file number

1-6439

Sony Group Kabushiki Kaisha

(Exact Name of Registrant as specified in its charter)

SONY GROUP CORPORATION

(Translation of Registrant’s name into English)

Japan

(Jurisdiction of incorporation or organization)

7-1,

KONAN

1-CHOME

, MINATO-KU,

TOKYO 108-0075

JAPAN

(Address of principal executive offices)

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

Sony Corporation of America

25 Madison Avenue

, 26

Floor

New York,

New York

10010-8601

Telephone:

212

833-6722

E-mail:

ir@sony.com

(Name, Telephone,

E-mail

and Address of Company Contact Person)

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


Title of Each Class	Trading Symbol(s)	Name of Each Exchange on Which Registered
American Depositary Shares *	SONY	New York Stock Exchange
Common Stock **

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

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

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

None

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

None

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


	Outstanding as of
	March 31, 2025		March 31, 2025
Title of Class	(Tokyo Time)		(New York Time)
Common Stock		6,025,003,795
American Depositary Shares				525,653,415

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

Yes

☑ No ☐

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

☑

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

Yes

☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes

☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer, or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer” and “emerging growth company” in Rule 12b-2 of the Exchange Act.



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

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange Act. ☐

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

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

☑

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

☐

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

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


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

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


Item 17 ☐						Item 18 ☐

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).



Yes ☐						No ☑

Cautionary Statement

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

(i)

Sony’s ability to maintain product quality and customer satisfaction with its products and services;

(ii)

Sony’s ability to continue to design and develop and win acceptance of, as well as achieve sufficient cost reductions for, its products and services, including image sensors, game and network platforms, smartphones and televisions, which are offered in highly competitive markets characterized by severe price competition and continual new product and service introductions, rapid development in technology and subjective and changing customer preferences;

(iii)

Sony’s ability to implement successful hardware, software, and content integration strategies, and to develop and implement successful sales and distribution strategies in light of new technologies and distribution platforms;

(iv)

the effectiveness of Sony’s strategies and their execution, including but not limited to the success of Sony’s acquisitions, joint ventures, investments, capital expenditures, restructurings and other strategic initiatives;

(v)

changes in laws, regulations and government policies in the markets in which Sony and its third-party suppliers, service providers and business partners operate, including those related to taxation, as well as growing consumer focus on corporate social responsibility;

(vi)

Sony’s continued ability to identify the products, services and market trends with significant growth potential, to devote sufficient resources to research and development, to prioritize investments and capital expenditures correctly and to recoup its investments and capital expenditures, including those required for technology development and product capacity;

(vii)

Sony’s reliance on external business partners, including for the procurement of parts, components, software and network services for its products or services, the manufacturing, marketing and distribution of its products, and its other business operations;

(viii)

the global economic and political environment in which Sony operates and the economic and political conditions in Sony’s markets, particularly levels of consumer spending;

(ix)

Sony’s ability to meet operational and liquidity needs as a result of significant volatility and disruption in the global financial markets or a ratings downgrade;

(x)

Sony’s ability to forecast demands, manage timely procurement and control inventories;

(xi)

foreign exchange rates, particularly between the yen and the U.S. dollar, the euro and other currencies in which Sony makes significant sales and incurs production costs, or in which Sony’s assets, liabilities and operating results are denominated;

(xii)

Sony’s ability to recruit, retain and maintain productive relations with highly skilled personnel;

(xiii)

Sony’s ability to prevent unauthorized use or theft of intellectual property rights, to obtain or renew licenses relating to intellectual property rights and to defend itself against claims that its products or services infringe the intellectual property rights owned by others;

(xiv)

the impact of changes in interest rates and unfavorable conditions or developments (including market fluctuations or volatility) in the equity and bond markets on the results of the Financial Services business;

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(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 business;

(xvi)

risks related to catastrophic disasters, geopolitical conflicts, pandemic disease or similar events;

(xvii)

the ability of Sony, its third-party service providers or business partners to anticipate and manage cybersecurity risk, including the risk of unauthorized access to Sony’s business information and the personally identifiable information of its employees and customers, potential business disruptions or financial losses; and

(xviii)

the outcome of pending and/or future legal and/or regulatory proceedings.

Risks and uncertainties also include the impact of any future events with material adverse impact. The continued impact of developments relating to the situations in Ukraine and Russia and in the Middle East, as well as the series of changes in U.S. tariff policy, could heighten many of the risks and uncertainties noted above.

Important information regarding risks and uncertainties is also set forth elsewhere in this annual report, including in “Risk Factors” under “Item 3. Key Information,” “Item 4. Information on the Company,” “Item 5. Operating and Financial Review and Prospects,” “Legal Proceedings” included in “Item 8. Financial Information,” Sony’s consolidated financial statements referenced in “Item 8. Financial Information” and “Item 11. Quantitative and Qualitative Disclosures about Market Risk.”

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

At a meeting of Sony Group Corporation’s Board of Directors held on May 14, 2025, Sony Group Corporation decided on a plan for the execution of a partial spin-off of Sony Financial Group Inc. (“SFGI”), a wholly-owned subsidiary engaged in the Financial Services business, as of October 1, 2025 (the “Partial Spin-off of the Financial Services business”). As a result, the Financial Services business (formerly the Financial Services segment) will be classified as a discontinued operation and presented separately from continuing operations, comprised of Sony’s businesses excluding the Financial Services business, from the first quarter of the fiscal year ending March 31, 2026 (refer to Note 33 of the consolidated financial statements). In this document, when discussing its status in the fiscal year ended March 31, 2025, the Financial Services business is referred to as the Financial Services segment.

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Item 1.

Identity of Directors, Senior Management and Advisers

Not Applicable

Item 2.

Offer Statistics and Expected Timetable

Not Applicable

Item 3.

Key Information

A.	[Reserved]

B.	Capitalization and Indebtedness

Not Applicable

C.	Reasons for the Offer and Use of Proceeds

Not Applicable

D.	Risk Factors

This section contains forward-looking statements that are subject to the Cautionary Statement appearing on page 2 of this annual report. Risks to Sony are also discussed elsewhere in this annual report.

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

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

The competitive factors Sony faces vary depending on the nature of the business. For example, in the electronics area, Sony competes on the basis of various factors including price and function, while in the Game & Network Services (“G&NS”), Music and Pictures segments, Sony competes for talent, such as game creators, artists, songwriters, actors, directors and producers, and for entertainment content that is created, acquired, licensed and/or distributed. Competition on price can lead to lower margins when costs do not fall at a proportional rate, and competition for talent and appealing content can also lead to lower profitability if the higher costs required for such talent and content cannot be recouped through greater sales. In addition, the evolution of innovative technologies such as generative artificial intelligence (“AI”) and the use of them by competitors may disrupt Sony’s existing business models. Moreover, even for those products where Sony believes it has a strong competitive advantage, such as image sensors, it is possible that its competitors’ technological capabilities will accelerate such that Sony would be unable to maintain its advantageous market position. In terms of consumer electronics products, to produce products that appeal to changing and increasingly diverse consumer preferences, including constantly changing consumer interest in minimizing energy consumption and using environmentally friendly materials for both products and packaging, or to overcome the fact that a relatively high percentage of consumers already possess similar products, Sony must develop superior technology, anticipate consumer tastes, and rapidly develop attractive and differentiated products with competitive prices and features. Sony faces increasingly intense pricing pressure from competitors, retailer consolidation, new sales/distribution channels, and shorter product cycles in a variety of consumer product categories. In the G&NS, Music and Pictures segments, operating results can be impacted by worldwide consumer acceptance of their products, which is difficult to predict, and by alternative forms of entertainment and leisure activities available to consumers, as well as by competing products released or sold at or near the same time. For example, in the Pictures segment, as the number of theatrical releases increases with the resumption of production activities that had been paused due to the strikes by the Writers Guild of America (“WGA”) and the Screen Actors Guild - American Federation of Television and Radio Artists (“SAG-AFTRA”) in 2023, the theatrical release calendar of films by major studios became more crowded, increasing competition for available screen space and adversely affecting the operating results of the Pictures segment.

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If Sony is unable to maintain its advantageous market position in the fields in which it has a technological or other competitive advantage, Sony is unable to effectively anticipate and counter the ongoing price erosion that frequently affects its consumer products or the cost pressures affecting its businesses, there is a change in existing business models or consumer preferences, or the average prices of Sony’s products decrease faster than Sony is able to reduce manufacturing costs, Sony’s operating results and financial condition may be adversely impacted.

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

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

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

The successful introductions of, and transitions to, new products and services depend on a number of factors, such as the timely and successful completion of development efforts, market acceptance, planning and executing an effective marketing strategy, managing new product introductions, managing production ramp-up issues, the availability of application software for new products, quality control and the concentration of consumer demand in the year-end holiday season. If Sony cannot achieve the expected results from its investment in R&D, adequately manage frequent introductions of new products and services and obtain consumer acceptance of its new products and services, or if Sony is not successful in implementing its integration strategy, Sony’s reputation, operating results and financial condition may be adversely impacted.

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

Sony actively engages in acquisitions, joint ventures, capital expenditures and other strategic investments to acquire new technologies, efficiently develop new businesses and enhance its business competitiveness. For example, in the fiscal year ended March 31, 2025, Sony acquired additional shares of KADOKAWA Corporation (“KADOKAWA”).

In some cases, the completion of mergers and acquisitions is subject to certain closing conditions, including regulatory approvals. As a result of anti-trust laws and regulations and anti-trust regulatory authorities becoming stricter, regulatory reviews following the signing of a definitive agreement may take longer than expected, or Sony may fail to obtain regulatory approvals. Also, closing conditions for mergers and acquisitions, which are set forth in definitive agreements, may not be satisfied due to unanticipated changes in the strategies or financial

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conditions of the organizations to be merged or acquired, leading to mergers and acquisitions not proceeding as expected, or the definitive agreements being changed or terminated. As a result, Sony may lose business opportunities and may not realize some or all of the initially expected results of mergers and acquisitions.

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

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

Sony invests heavily in production facilities and equipment, including fabrication facilities used to make image sensors for smartphones and other products. Sony may not be able to execute these capital expenditures as planned or recover these capital expenditures in part or full or in the planned timeframe due to the competitive environment, lower-than-expected consumer demand, changes in the financial condition or business decisions of Sony’s major customers, or delays in the procurement of production facilities and equipment. Sony invested 339.6 billion yen and 227.4 billion yen of capital in the fiscal years ended March 31, 2024 and 2025, respectively, mainly for the purpose of increasing image sensor production capacity.

Further, Sony is implementing initiatives for restructuring and transformation to enhance profitability, business autonomy and shareholder value or to clearly position each business within the overall business portfolio. However, the expected benefits of these initiatives, including the expected level of profitability, may not be realized due to internal and external impediments or market conditions worsening beyond expectations. If Sony is not successful in achieving its restructuring and transformation initiatives, Sony’s operating results, financial condition, reputation, competitiveness or profitability may be adversely affected. At a meeting of Sony Group Corporation’s Board of Directors held on May 14, 2025, Sony Group Corporation decided to submit a resolution for the execution of the Partial Spin-off of the Financial Services business to a meeting of the Board of Directors in early September 2025. The execution of the Partial Spin-off of the Financial Services business is expected to be on October 1, 2025, but is subject to approval from the Tokyo Stock Exchange (“TSE”) for the listing of SFGI shares, as well as approvals, certifications and/or permissions by other relevant authorities.

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

Sony is dependent for the distribution of its products on wholesalers, retailers, other resellers and third-party distributors, many of whom also distribute competitors’ products. For example, in some cases, the Pictures segment depends on third parties to theatrically exhibit its motion pictures, and to operate cable, satellite, internet and other distribution systems to distribute its motion pictures and television programming. A decline in the licensing fees received from these third parties may adversely affect the Pictures segment’s sales. The Pictures segment’s various television networks are also distributed on third-party cable, satellite and other distribution systems and the failure to renew, or the renewal on less favorable terms of, television carriage contracts (broadcasting agreements) with these third-party distributors may adversely affect the Pictures segment’s ability to generate advertising and subscription sales through these networks.

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

The operating results and financial condition of many wholesalers, retailers, other resellers and third-party distributors have been adversely impacted by competition, especially from online retailers, and weak economic conditions. If their financial condition continues to weaken, they stop distributing Sony’s products, or uncertainty regarding demand for Sony’s products or other factors cause them to reduce their ordering, marketing, subsidizing, or distributing Sony’s products, Sony’s operating results and financial condition may be adversely impacted.

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As a global company, Sony is subject to a wide range of laws and regulations in many countries and a growing focus on sustainability efforts, including corporate social responsibility from external stakeholders including shareholders, consumers, local communities and non-governmental organizations (“NGOs”). Those laws and regulations, as well as external stakeholder and regulator focus, might change in significant ways, leading to an increase in the costs of Sony’s operations, a curtailment of Sony’s activities, and/or an adverse effect on Sony’s reputation.

As a global company, Sony is subject to the laws and regulations of many countries throughout the world that affect its business operations in a number of areas, including advertising, promotions, consumer protection, import and export requirements, anti-corruption, anti-trust, environmental protection (including decarbonizing regulations in connection with actions against climate change and regulations on the use and/or spillage of hazardous substances such as specific organic fluorine compounds), data privacy and data protection, product security, content and broadcast regulation, development and utilization of AI, intellectual property, labor, occupational health and safety, product liability, taxation (including taxes from certain revenue on digital services), foreign investment, government procurement, foreign exchange controls, and economic sanctions.

Compliance with these laws and regulations may be onerous and expensive. These laws and regulations continue to develop and may be inconsistent from jurisdiction to jurisdiction, further increasing the cost of compliance and doing business. Any such developments could occur frequently and without warning and could make Sony’s products or services less attractive to its customers, delay or prohibit introduction of new products or services in one or more regions or cause Sony to change or limit its business practices. For example, imposition of restrictive trade measures such as tariffs and export controls in the United States and elsewhere, as well as retaliatory actions against such measures, could result in increased customs duties applicable to Sony’s products or increased costs for procuring parts and components, and could limit or prohibit the sales of Sony’s products and services to certain of its current or potential customers, which may adversely affect Sony’s operating results and financial condition. In addition, changes in laws or regulations or the judicial interpretation thereof that Sony relies on or Sony is subject to in conducting its operations, including online operations, as well as Sony’s failure to anticipate such changes, may subject Sony to greater risk of liability, increase the costs of compliance, or limit Sony’s ability to engage in or expand certain operations or lead to discontinuance of certain operations. In addition, regulators in Europe and other countries are moving forward with legislation related to AI. As Sony develops and uses AI, there is a possibility that the cost of complying with these laws and regulations may increase.

Violation of applicable laws or regulations by Sony, its officers or employees, third-party suppliers, business partners or agents may subject Sony to monetary fines, penalties, legal judgments, restrictions on business operations and/or reputational damage. Additionally, there is a growing global focus by regulators and external stakeholders on sustainability efforts, including those relating to climate change and respect for human rights in supply chains, as well as increasing regulatory obligations of public disclosures regarding these matters. For example, there is increased attention on labor practices, including work environments at electronic component and product manufacturers and original equipment manufacturers/original design manufacturers (OEM/ODM) operating in Asia. Increased regulation or public pressure in this area could cause Sony’s compliance costs to increase, particularly since Sony uses many parts, components and materials to manufacture its products and relies on suppliers to provide these parts, components and materials. A finding of non-compliance, or the perception that Sony has not responded appropriately to growing external stakeholder concern for such issues, whether or not Sony is legally required to do so, may adversely affect Sony’s reputation, operating results and financial condition.

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

Sony’s products and services rely on a large volume of third-party suppliers and business partners for parts, components, materials, software and network services, including semiconductors, chipsets for PlayStation^® game consoles and mobile products, liquid crystal display (“LCD”) panels and the Android OS that is used in mobile products, televisions and services. As a result, external suppliers’ and partners’ supply shortages, fluctuations in pricing, quality issues, discontinued support, changes in business terms or prioritization of customers outside the electronics area or of Sony’s competitors can adversely affect Sony’s operating results, brand and reputation. Regarding the global shortage of semiconductors, which became pronounced from the latter half of the fiscal year ended March 31, 2021 through the first half of the fiscal year ended March 31, 2023, although global supply for semiconductors was stable as of the end of the fiscal year ended March 31, 2025, Sony’s operating results and financial condition could be affected if supply becomes restricted again. Reliance on third-party software and

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technologies may make it increasingly difficult for Sony to differentiate its products from competitors’ products. Also, shortages or delayed shipments of critical parts or components may result in a reduction or suspension of production at Sony’s or its business partners’ manufacturing sites, particularly where Sony is substantially reliant on one supplier, where there is limited production capacity for custom parts or components, or where there are initial manufacturing capacity constraints for products, parts or components that use new technologies.

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

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

Sony’s sales and profitability are sensitive to economic trends in its major markets, such as inflation. In the fiscal year ended March 31, 2025, 17.3%, 31.9% and 20.3% of Sony’s sales and financial services revenue were attributable to Japan, the U.S. and Europe, respectively. These markets may be subject to significant economic downturns, resulting in an adverse impact on Sony’s operating results and financial condition. An actual or expected deterioration of economic conditions in any of Sony’s major markets may result in a decline in consumers’ consumption and adverse impacts on the businesses of commercial customers, resulting in reduced demand for Sony’s products and services.

In addition, Sony’s operations are conducted in many countries and regions around the world, and these international operations, particularly in certain emerging markets, can create challenges. For example, in the Entertainment, Technology & Services (“ET&S”), I&SS and G&NS segments, production and procurement of products, parts and components in China and other Asian countries and regions increase the time necessary to supply products to other markets worldwide, which can make it more difficult to meet changing customer demand in a timely manner. Further, in certain countries and regions, Sony may encounter difficulty in planning and managing operations due to unfavorable political or economic factors, such as armed conflicts, deterioration in foreign relations, changes in trade and tariff policies, non-compliance with expected business conduct and a lack of adequate infrastructure. If international or domestic political and military instability disrupts Sony’s business operations or those of its business partners Sony’s operating results and financial condition may be adversely affected. For example, as a response to the worsening of the situation in Ukraine and Russia that began in the fiscal year ended March 31, 2022, as of the date of this report, Sony has suspended its business in Russia. If this situation worsens further in the future, it could create global uncertainty, possibly leading to the worsening of Sony’s businesses in other regions or a deterioration in global economic conditions resulting in an adverse impact on Sony’s operating results and financial condition.

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

Sony’s operating results and financial condition are sensitive to foreign exchange rate fluctuations because many of Sony’s products are sold in countries other than the ones in which they were developed and/or manufactured. For example, within Sony’s electronics area, R&D and headquarters’ overhead costs are incurred mainly in yen, and manufacturing costs, including material costs, costs of procurement of parts and components, and costs of outsourced manufacturing services, are incurred mainly in U.S. dollars and yen. Sales are recorded in yen, U.S. dollars, euros, Chinese renminbi, and local currencies of other areas, including emerging markets. Consequently, foreign exchange rate fluctuations have had and may have an adverse impact on Sony’s operating results, especially when the yen weakens significantly against the U.S. dollar, when the yen strengthens significantly against the euro, or when the U.S. dollar strengthens against emerging market currencies. Sony’s operating results may also be adversely impacted by foreign exchange rate fluctuations since Sony’s consolidated statements of income are prepared by translating the local currency denominated operating results of its subsidiaries around the world into yen. Furthermore, as Sony’s businesses have expanded in China and other areas, including emerging markets, the impact of fluctuations of foreign currency exchange rates in these areas against the U.S. dollar and yen has increased. Mid- to long-term changes in exchange rate levels may interfere with Sony’s global allocation of resources and hinder Sony’s ability to engage in R&D, procurement, production, logistics, and sales activities while maintaining profitability.

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

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

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

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

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

As a result, Sony may seek other sources of financing to fund operations, such as the draw-down of funds from contractually committed lines of credit from financial institutions or the sale of assets, in order to repay CP and mid- to long-term debt as they become due, and to meet other operational and liquidity needs. However, such funding sources may also not be available at acceptable terms or be sufficient to meet Sony’s requirements. As a result, Sony’s operating results, financial condition and liquidity may be adversely affected.

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

In order to continue to create content, develop services, design, manufacture, market, and sell products, in increasingly competitive markets, Sony must attract, retain and maintain productive relations with key personnel, both internally and externally, who possess high levels of expertise and broad experience, including its executive team, other management professionals, creative talent, and hardware and software engineers. However, such key personnel are in high demand. In addition, business divestitures, restructuring or other transformation initiatives may lead to an unintended loss of experienced employees or know-how. Actual or threatened work slowdowns or stoppages related to unionized workers, particularly in the entertainment field, could lead to delayed releases or cost increases. For example, in the Pictures segment, WGA and SAG-AFTRA went on strike from May to September 2023 and from July to November 2023, respectively. These strikes resulted in adverse effects such as an impact on Sony’s ability to produce content which has led to release date changes for some theatrical releases in Motion Pictures and delays in deliveries of television series in Television Productions. Furthermore, in Japan, with a declining workforce due to the falling birthrate and aging population, intensifying competition among companies for specialized talent, and rising labor costs, it may become difficult to secure the necessary talent if Sony’s HR system is inadequate in its design and operations. If these incidents occur or if Sony is unable to attract, retain and maintain productive relations with employees with high levels of expertise and broad experience as well as key management professionals, Sony’s operating results and financial condition may be adversely affected.

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

Sony’s intellectual property might be subject to unauthorized use or theft. For example, digital technology, the availability of digital media, global internet penetration and the proliferation of AI technology, including generative AI, impact Sony’s ability to protect its copyrighted content from unauthorized duplication, digital theft and counterfeiting, putting pressure on legitimate sales of products and services. Sony has incurred and will continue to incur expenses to help protect its intellectual property rights; however, Sony’s various initiatives to prevent such unauthorized use or theft of intellectual property might not achieve their intended result, which could adversely affect Sony’s competitive position and the value of its investment in R&D. Additionally, Sony’s

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intellectual property rights may be challenged or invalidated, or such intellectual property rights may not be sufficient to provide Sony with competitive advantages.

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

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

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

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

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

The prevalence of digital streaming networks and other new media may negatively impact traditional television and in-theater motion picture viewership, which could adversely affect operating results of the Pictures segment.

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

Changes in the regulation and performance of financial markets may adversely affect the operating results and financial condition of the Financial Services business, which will be classified as a discontinued operation.

The Financial Services business operates in industries subject to comprehensive regulation and supervision, including the Japanese insurance and banking industries. Future developments or changes in laws, regulations or policies may lead to increased compliance costs or limitations on operations in the Financial Services business. In addition, lending and borrowing between Sony’s subsidiaries that are part of the Financial Services business and other companies within the Sony Group is strictly limited by guidelines issued by regulatory agencies in Japan.

Changes in interest rates, foreign exchange rates, inflation rate and the value of Japanese government and corporate bonds, U.S. treasury bonds, equities, real estate and other asset classes as well as changes in the implied volatility of interest rates, stock prices and exchange rates may have an adverse effect on the operating results and financial condition of the Financial Services business. For example, the life insurance business has invested most of its general account assets in ultra-long-term Japanese government and corporate bonds, as well as ultra-long-term U.S. treasury bonds, to match the liability characteristics of the long-term maturity insurance policies it has underwritten. The life insurance business has guaranteed yields on outstanding policies while its investment portfolio could be reduced by the market changes discussed above. The banking business has invested

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most of its total loan balance, or over half of its total assets, in its mortgage loans account. An increase in non-performing loans or a decline in prices of the real estate collateral from the market changes discussed above or deterioration of credit quality may have an adverse effect on the operating results and financial condition through an increase in the allowance for credit losses.

The market changes discussed above, Sony’s management of these changes or the occurrence of earthquakes, pandemic disease or other catastrophic events in Japan could expose the life and non-life insurance businesses to increasing costs or adverse impact on their ability to satisfy insurance contract liabilities.

Insurance contract liabilities are calculated based on many actuarial assumptions that are uncertain. Significant changes to these actuarial assumptions and the market changes discussed above may have an adverse effect on the operating results and financial condition of the Financial Services business. The review of assumptions for insurance contract liabilities is required at the end of each reporting period.

As a result of a resolution at the meeting of Sony Group Corporation’s Board of Directors on May 14, 2025 on the plan for the execution of the Partial Spin-off of the Financial Services business, the Financial Services business has been classified as a discontinued operation, in accordance with IFRS 5 “Non-current Assets Held for Sale and Discontinued Operations,” from the first quarter of the fiscal year ending March 31, 2026. Refer to Note 33 of the consolidated financial statements for details.

Sony’s facilities and operations are subject to damage and disruption as a result of catastrophic disasters, outages, pandemic diseases, or similar events that could lead to supply chain, manufacturing and other business disruptions and have an adverse impact on Sony’s operating results.

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

In addition, offices and facilities used by Sony, its suppliers, service providers and business partners, including those used for network, telecommunications and information systems infrastructure, R&D, material procurement, manufacturing, motion picture and television production, logistics, sales, and online and other services are located throughout the world and are subject to possible destruction, temporary stoppage or disruption as a result of unexpected catastrophic events such as natural disasters, pandemic diseases (including COVID-19 and/or other infections), terrorist attacks, armed conflicts, large-scale power outages and large-scale fires. If any of these facilities or offices were to experience a significant loss as a result of any of the above events, it may disrupt Sony’s operations, delay design, development or production, interrupt shipments and postpone the recording of sales, and/or result in large expenses to repair or replace these facilities or offices. For example, if economic activity stagnates due to a future resurgence of pandemic diseases (including COVID-19 and/or other infections), it could adversely affect the procurement of components and raw materials, production, development, sale and distribution of Sony’s products and services, resulting in a negative impact on Sony’s operating results and financial position. In the G&NS segment, the production of hardware could be adversely affected again due to issues in the component supply chain. In the Music segment, in-person concerts and other events could be restricted again, causing related revenues to decrease. In the Pictures segment, if movie theaters are once again forced to close or limit their capacity, Sony’s theatrical revenues may decrease. Additionally, depending on the status of lockdowns or other anti-infection measures, as well as future increases in infections, Sony may be impacted by delays in the production schedules of new motion pictures and television programming, as well as decreased advertising revenue. The ET&S segment could continue to be adversely impacted by factory shutdowns or declines in factory utilization, supply chain issues and the closure of retail stores globally.

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

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

Sony, its third-party service providers, suppliers and other business partners make extensive use of information technology to support business operations, and to provide network and online services to customers. These operations and services, as well as Sony’s business information, may be intentionally or inadvertently compromised by malicious third parties, including state-sponsored organizations, criminal organizations, Sony’s officers or employees, third-party service providers or other business partners. Such organizations or individuals may use a variety and combination of techniques, such as installing malicious software, exploiting vulnerabilities in information technology, using social engineering to mislead officers, employees and business partners into disclosing passwords and sensitive information, coordinating distributed denial-of-service attacks and using generative AI, which can execute more automated, targeted, and coordinated cyberattacks, to render services unavailable. If suppliers and other business partners are subjected to these cyberattacks, they may become unable to supply parts, materials, and services to Sony, which could consequently impact Sony’s businesses. Sony has previously been the subject of cyberattacks. For further details, refer to “Item 16K. Cybersecurity.”

As cyberattacks become increasingly sophisticated and automated, and as tools and resources become more readily available, there can be no guarantee that Sony’s actions, security measures and controls designed to prevent, detect or respond to outside intrusion, limit access to data, prevent loss, destruction, alteration, or exfiltration of business information, or limit the negative impact from such attacks can provide absolute security. In addition, Sony’s officers and employees continue to work both in the office and at home. Although Sony takes measures to ensure that appropriate information security protections are in place for the remote workforce, there can be no guarantee that Sony’s actions, security measures and controls designed to prevent, detect or respond to outside intrusion, limit access to data, prevent loss, destruction, alteration, or exfiltration of business information, or limit the negative impact from such attacks, can provide absolute security. As a result, Sony’s business information, including personally identifiable information, may be lost, destroyed, disclosed, misappropriated, altered, or accessed without consent, and Sony’s information technology systems or operations, or those of its service providers or other business partners, may be disrupted. Malicious adversaries may also use unauthorized access to Sony’s networks as a platform to compromise Sony’s third-party business partners without Sony’s knowledge.

An information security incident could result in significant remediation costs for Sony. In addition, a disruption to Sony’s network and online services, information technology, or other compromise of its information security may have serious consequences to its business and operations, including lost revenues, damage to relationships with business partners and other third parties, disclosure, alteration, destruction or use of proprietary information and the failure to retain or attract customers. Moreover, such disruptions and breaches may result in a diversion of management’s attention and resources. Further, it may result in adverse media coverage, which may harm Sony’s brand image and reputation. Sony may also be subject to legal claims or legal proceedings, including regulatory investigations and actions. Sony’s cyber insurance may not cover all expenses and losses and, accordingly, such breaches or other compromises of Sony’s information security or that of its third-party service providers or business partners may have an adverse impact on Sony’s operating results and financial condition.

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

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

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

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

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Sony’s efforts to adapt to rapid advancements in technologies and increased demand for mobile products and online services, while also maintaining product quality and product security, may not be successful and may increase exposure to product liability. As a result, Sony may incur both reputational damages and expenses in connection with, for example, product recalls and after-sales services. In addition, Sony may not be successful in introducing after-sales upgrades, enhancements or new features to existing products and services, or in enabling existing products and services to continue to conveniently and effectively integrate with other technologies and online services. Moreover, cyberattacks targeting internet-connected products have increased significantly. For example, customer information and Sony or third-party technical information may be misappropriated, the functionality of Sony’s products and services may be impaired, or Sony products may be used in denial-of-service attacks. There can be no guarantee that Sony’s security measures will prevent products from being compromised.

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

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

Sony recognizes a net defined benefit liability or asset for its defined benefit pension plans based on (i) the present value of defined benefit obligations (“DBO”) under each pension plan less (ii) the fair value of plan assets, in accordance with the accounting guidance for defined benefit plans. If the fair value of plan assets is in excess of the present value of DBO, the amount of any asset to be recognized is limited to the present value of any economic benefits available in the form of refunds from the plan or reductions in the future contributions to the plan. Any decrease in the fair value of plan assets or increases in the present value of DBO due to a lower discount rate and changes in certain other actuarial assumptions may increase or decrease the net defined benefit liability or asset and may have an adverse effect on Sony’s financial results and condition.

Also, Sony’s financial results and condition could be adversely affected by future pension funding requirements pursuant to the Japanese Defined Benefit Corporate Pension Plan Act (the “Pension Plan Act”). Under the Pension Plan Act, Sony is required to conduct a periodic actuarial revaluation and to ascertain whether certain financial criteria have been met after the annual accounting closing. In the event that the fair value of plan assets falls below the actuarial reserve required by law and the shortfall may not be recovered within a certain moratorium period permitted by laws and/or special legislative decree, Sony may be required to make an additional contribution to its plans, which may reduce cash flows. Similarly, if Sony is required to make an additional contribution to a foreign plan to meet any funding requirements in accordance with local laws and regulations in each country, Sony’s cash flows might be adversely affected. If Sony is required to increase cash contributions to its pension plans when actuarial assumptions, such as an expected long-term rate of return of the plan assets, are updated for purposes of determining statutory contributions, it may have an adverse impact on Sony’s cash flows.

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

Sony is subject to income taxes in Japan and numerous other jurisdictions, and in the ordinary course of its business there are many situations where the ultimate tax determination can be uncertain, because of the transfer pricing for its intercompany transactions, and because Sony is subject to continuous review by tax authorities of numerous jurisdictions. The calculation of Sony’s tax provision and the carrying value of tax assets, including net operating loss carryforwards and tax credit carryforwards, require significant judgment and the use of estimates, including estimates of future taxable income. At the end of each reporting period, Sony reassesses unrecognized deferred tax assets and determines whether these assets should be recognized. As of March 31, 2025, the unrecognized deferred tax assets amounted to 232.6 billion yen. An increase in unrecognized deferred tax assets may have an adverse impact on Sony’s operating results and financial condition.

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Deferred tax assets are evaluated on a jurisdiction-by-jurisdiction basis. As of March 31, 2025, Sony and/or its subsidiaries had unrecognized deferred tax assets, principally in Japan for local taxes. Additionally, deferred tax assets could expire unused or otherwise not be realizable for a variety of reasons including the lack of sufficient taxable income in the appropriate jurisdiction. Sony’s operating results and financial condition could be adversely affected when the deferred tax assets expire unused.

In some jurisdictions, the use of net operating loss carryforwards or tax credits to reduce taxable income in a subsequent period is limited to a fixed percentage of taxable income or may only be used to offset taxes on income from certain sources. Thus, it is possible that even with significant net operating loss carryforwards or tax credits, Sony could record and pay taxes in a jurisdiction where it has taxable income.

Sony’s future effective tax rates may also be unfavorably affected by changes in both the statutory rates and the mix of earnings in countries with differing statutory rates or by other factors such as changes in tax laws and regulations or their interpretation, including minimum tax requirements and limitations or restrictions on various tax deductions and credits, including deductions for royalties and interest.

In addition to the above, Sony’s businesses may be subject to new forms of gross basis taxation and transactional taxes, including digital service taxes. Although such taxes may not directly impact Sony’s effective tax rate, they may nevertheless have an adverse impact on its operating results and financial condition.

Sony could incur asset impairment losses for goodwill, content assets and other intangible assets or other non-current assets.

Sony has a significant amount of goodwill, content assets, other intangible assets and other non-current assets, including production facilities and equipment. A decline in financial performance, market capitalization, reduced estimates of future cash flows, changes in global economic conditions or changes in estimates and assumptions used in the impairment analysis, which in many cases requires significant judgment, could result in impairment losses against these assets. Events or changes in circumstances which would indicate impairment include unfavorable variances from or adjustments to established business plans, significant changes in forecasted results or volatility inherent to external markets and industries. The increased levels of global competition and the faster pace of technological change to which Sony is exposed can result in greater volatility of these estimates, assumptions and judgments, and increase the likelihood of impairment losses. Any such loss may adversely affect Sony’s operating results and financial condition.

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

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

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

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

Because Sony is engaged in certain businesses designated by the Foreign Exchange and Foreign Trade Act of Japan (the “FEFTA”) and its related cabinet orders and ministerial ordinances (collectively, the “Foreign Exchange Regulations”), if a foreign investor intends to consummate an acquisition of shares of common stock

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of Sony Group Corporation and that acquisition constitutes an “inward direct investment” under the Foreign Exchange Regulations, the foreign investor, subject to certain exemptions, must file a prior notification of such inward direct investment with the Minister of Finance and any other competent Ministers. Under the Foreign Exchange Regulations, an “inward direct investment” includes an acquisition by a foreign investor of shares of common stock of Sony Group Corporation, the consummation of which results in such foreign investor, in combination with any existing shareholding, directly or indirectly holding 1% or more of the total number of issued shares of common stock or the total number of voting rights of Sony Group Corporation, unless certain exemptions apply.

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

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

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

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Item 4.

Information on the Company

A.	History and Development of the Company

Sony Group Corporation was established in Japan in May 1946 as Tokyo Tsushin Kogyo Kabushiki Kaisha, a joint stock company (Kabushiki Kaisha) under Japanese law. It changed its name to Sony Kabushiki Kaisha (“Sony Corporation” in English) in January 1958, and changed its name again to Sony Group Kabushiki Kaisha (“Sony Group Corporation” in English) in April 2021 in order to focus on its role as the headquarters of the Sony Group.

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

In March 1968, Sony Group Corporation established CBS/Sony Records Inc. in Japan, as a 50-50 joint venture company between Sony Group Corporation and CBS Inc. in the U.S. In January 1988, the joint venture became a wholly-owned subsidiary of Sony Group Corporation, and in April 1991, changed its name to Sony Music Entertainment (Japan) Inc. (“SMEJ”). In November 1991, SMEJ was listed on the Second Section of the TSE.

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

In August 1979, Sony Group Corporation established Sony Prudential Life Insurance Co., Ltd. in Japan, as a 50-50 joint venture company between Sony Group Corporation and The Prudential Insurance Company of America. In April 1991, the joint venture changed its name to Sony Life Insurance Co., Ltd. (“Sony Life”). In March 1996, Sony Life became a wholly-owned subsidiary of Sony Group Corporation.

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

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

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

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

In November 1993, Sony Group Corporation established Sony Computer Entertainment Inc. in Japan. Sony Computer Entertainment Inc. changed its name to Sony Interactive Entertainment Inc. in April 2016.

In October 1995, Sony/ATV Music Publishing LLC (“Sony/ATV”) was formed as a 50-50 joint venture company between Sony Group Corporation and Michael Jackson. In September 2016, the joint venture became a wholly-owned subsidiary of Sony Group Corporation. In January 2021, Sony/ATV changed its name to Sony Music Publishing (US) LLC.

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

In October 2001, Sony Ericsson Mobile Communications AB (“Sony Ericsson”), a 50-50 joint venture company between Sony Group Corporation and Telefonaktiebolaget LM Ericsson (“Ericsson”) of Sweden, was established. In February 2012, Sony acquired Ericsson’s 50% equity interest in Sony Ericsson. As a result of the acquisition, Sony Ericsson became a wholly-owned subsidiary of Sony and changed its name to Sony Mobile Communications AB.

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In October 2002, Aiwa Co., Ltd. (“Aiwa”), then a TSE-listed subsidiary, became a wholly-owned subsidiary of Sony Group Corporation. In December 2002, Aiwa was merged into Sony Group Corporation.

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

In April 2004, Sony Group Corporation established Sony Financial Holdings, Inc. (“SFH”), a financial holding company, in Japan. Sony Life, Sony Assurance Inc. (“Sony Assurance”), and Sony Bank Inc. (“Sony Bank”) became subsidiaries of SFH. In October 2007, SFH was listed on the First Section of the TSE in conjunction with the global initial public offering of shares of SFH by Sony Group Corporation and SFH. In September 2020, SFH became a wholly-owned subsidiary of Sony Group Corporation through Sony’s tender offer for the common shares and the related stock acquisition rights of SFH and the subsequent procedures for the purchase of all of SFH’s remaining common shares. In October 2021, SFH changed its company name to SFGI. In May 2023, Sony Group Corporation announced that it had begun an assessment of the Partial Spin-off of the Financial Services business and the listing of the shares of SFGI, and in February 2024, Sony Group Corporation obtained approval from the Minister of Economy, Trade and Industry of Japan regarding its Corporate Restructuring Plan for the Partial Spin-off of the Financial Services business based on the Act on Strengthening Industrial Competitiveness of Japan. In May 2025, Sony Group Corporation decided to submit a resolution for the execution of the Partial Spin-off of the Financial Services business, as of October 1, 2025, to the Board of Directors in early September 2025. After this execution, it is expected that Sony Group Corporation will hold slightly less than 20% of the shares of SFGI and SFGI will no longer be a consolidated subsidiary of Sony, but will become an affiliate of Sony accounted for using the equity method. (Refer to Note 33 of the consolidated financial statements.)

In April 2004, S-LCD Corporation (“S-LCD”), a joint venture between Sony Group Corporation and Samsung Electronics Co., Ltd. of Korea for the manufacture of amorphous thin film transistor LCD panels, was established in Korea. Sony’s stake in S-LCD was 50% minus 1 share. In January 2012, Sony sold all of its shares of S-LCD to Samsung Electronics Co., Ltd.

In August 2004, Sony combined its worldwide recorded music business, excluding its recorded music business in Japan, with the worldwide recorded music business of Bertelsmann AG (“Bertelsmann”), forming a 50-50 joint venture, SONY BMG MUSIC ENTERTAINMENT (“SONY BMG”). In October 2008, Sony acquired Bertelsmann’s 50% equity interest in SONY BMG. As a result of the acquisition, SONY BMG became a wholly-owned subsidiary of Sony. In January 2009, SONY BMG changed its name to Sony Music Entertainment (“SME”).

In December 2005, Sony Communication Network Corporation, a subsidiary of Sony Group Corporation, was listed on the Mother’s market of the TSE, and was later listed on the First Section of the TSE in January 2008. It changed its name to So-net Entertainment Corporation in October 2006, and changed its name again to So-net Corporation (“So-net”) in July 2013. In January 2013, Sony Group Corporation acquired all of the common shares of So-net through a tender offer and subsequent share exchange and, as a result of the acquisition, So-net became a wholly-owned subsidiary of Sony Group Corporation. So-net was renamed Sony Network Communications Inc. (“SNC”) in July 2016.

In June 2012, an investor group including Sony Corporation of America (“SCA”) established DH Publishing, L.P. (“EMI”) to own and manage EMI Music Publishing, which it then acquired. This acquisition resulted in Nile Acquisition LLC (“Nile”), of which SCA owned 74.9% and the Estate of Michael Jackson (the “Estate”) owned 25.1%, acquiring approximately 40% of the equity interest in EMI. In July 2018, Sony completed the acquisition of the Estate’s equity interest in Nile, resulting in Sony owning approximately 40% of the equity interest in EMI. In November 2018, Sony completed the acquisition of the remaining approximately 60% equity interest in EMI, resulting in EMI becoming a wholly-owned subsidiary of Sony. In January 2021, Nile changed its name to Sony Music Publishing LLC (“SMP”). SMP encompasses both the former Sony/ATV and EMI.

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

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

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

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

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

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

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

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

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

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

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

In July 2022, Sony Interactive Entertainment LLC acquired Bungie Inc. (“Bungie”), an independent videogame developer in the United States.

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

Sony Group Corporation’s registered office is located at 7-1, Konan 1-chome, Minato-ku, Tokyo 108-0075, Japan, telephone +81-3-6748-2111. Its website is https://www.sony.com/en/.

The agent in the U.S. for purposes of this Item 4 is Sony Corporation of America, 25 Madison Avenue, 26^th Floor, New York, NY 10010-8601 (Attn: Office of the General Counsel).

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

Principal Capital Investments

In the fiscal years ended March 31, 2024 and 2025, Sony’s capital expenditures were 882.6 billion yen and 867.8 billion yen, respectively. For a breakdown of principal capital expenditures and divestitures (including interests in other companies), refer to “Item 5. Operating and Financial Review and Prospects.” The funding requirements of such various capital expenditures are expected to be financed by cash provided principally by operating and financing activities or the existing balance of cash and cash equivalents.

In the fiscal year ended March 31, 2025, Sony invested approximately 268.7 billion yen in the I&SS segment. This investment included approximately 227.4 billion yen to increase image sensor production capacity.

B.	Business Overview

The G&NS segment includes the production and sales of digital software and add-on content, the network services businesses and the manufacture and sales of home gaming products. The Music segment includes the Recorded Music, Music Publishing and Visual Media and Platform businesses. The Pictures segment includes the Motion Pictures, Television Productions and Media Networks businesses. The ET&S segment includes the Televisions business, the Audio and Video business, the Still and Video Cameras business, the smartphone

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business and the internet-related service business. The I&SS segment includes the image sensors business. The Financial Services segment primarily represents individual life insurance and non-life insurance businesses 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.

Products and Services

Game & Network Services (G&NS)

Sony Interactive Entertainment LLC undertakes product research, development, design, marketing, sales, production, distribution and customer service for PlayStation^® hardware, software, content and network services.

The G&NS segment includes the Digital Software and Add-on Content, Network Services and Hardware and Others categories. Digital Software and Add-on Content includes distribution of software titles and add-on content through the network by Sony Interactive Entertainment; Network Services includes network services relating to game, video and music content; and Hardware and Others includes home gaming consoles, packaged software, game software sold bundled with home gaming consoles, peripheral devices and first-party software for third-party platforms.

Music

Recorded Music:

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

Music Publishing:

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

Visual Media and Platform:

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

Pictures

Motion Pictures:

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

Television Productions:

“Television Productions” includes the worldwide production, acquisition and distribution of programming, including scripted series, unscripted “reality” or “light entertainment,” daytime serials, game shows, animated series, made for television movies and miniseries and other programming.

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Media Networks:

“Media Networks” includes the operation of television networks and direct-to-consumer (“DTC”) streaming services worldwide. SPE’s television networks around the world include Sony Pictures Networks India, which operates television networks in India, and Game Show Network, LLC, which operates a U.S.-based network delivered on cable, satellite and other distribution platforms. Digital networks include Crunchyroll, a streaming service based in North America primarily focused on anime content, and SonyLIV, a general entertainment streaming service in India.

Entertainment, Technology & Services (ET&S)

TV and Audio & Video:

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

Still and Video Cameras:

Sony Corporation undertakes product research, development, design, manufacturing, sales, distribution and customer service for interchangeable lens cameras, compact digital cameras, consumer and professional video cameras.

Mobile Communications:

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

Imaging & Sensing Solutions (I&SS)

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

Financial Services

SFGI conducts insurance, banking and other operations primarily through Sony Life, a Japanese life insurance company, Sony Assurance, a Japanese non-life insurance company, and Sony Bank, a Japanese internet-based bank, which are all wholly owned by SFGI.

In May 2025, Sony Group Corporation decided to submit a resolution for the execution of the Partial Spin-off of the Financial Services business, as of October 1, 2025, to the Board of Directors in early September 2025. After this execution, it is expected that Sony Group Corporation will hold slightly less than 20% of the shares of SFGI and SFGI will no longer be a consolidated subsidiary of Sony, but will become an affiliate of Sony accounted for using the equity method. (Refer to Note 33 of the consolidated financial statements.)

All Other

All Other consists of various operating activities, including the disc manufacturing business outside of Japan, and the recording media and storage media businesses.

Sales and Distribution

G&NS, ET&S and I&SS

In the G&NS segment, PlayStation^® hardware and peripheral devices, software and content and network services are marketed and distributed by Sony Interactive Entertainment LLC, Sony Interactive Entertainment

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

Sony’s products and services in the ET&S and I&SS segments are primarily marketed throughout the world under the trademark “Sony.”

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

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

Japan:

Sony Marketing Inc. markets consumer electronics products mainly through retailers. It also markets professional electronics products and services. For electronic components, Sony sells products directly to wholesalers and manufacturers.

United States:

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

Europe:

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

China:

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

Asia-Pacific:

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

Other Areas:

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

Music

SME and SMEJ develop, produce, market, and distribute recorded music in various commercial formats. SME and its affiliates conduct business globally under “Columbia Records,” “Epic Records,” “RCA Records” and other labels. SMEJ conducts business in Japan under “Sony Music Records,” “Epic Records Japan,” “SME Records,” “Ki/oon Music,” “Sony Music Associated Records” and other labels. In addition, SME produces, markets and distributes products related to its artists mainly through the merchandising company Ceremony of Roses.

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Sony owns and acquires rights to musical compositions, exploits and markets these compositions, receives royalties or fees for their use and conducts its music publishing business in countries other than Japan under the Sony Music Publishing name.

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

Pictures

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

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

Outside the U.S., SPE generally distributes and markets motion pictures through one of its Sony Pictures Releasing International subsidiaries or affiliates. In certain countries, however, SPE has joint distribution or sub-distribution arrangements with other studios, or arrangements with independent local distributors or other entities.

The worldwide home entertainment and television distribution of SPE’s motion pictures and television programming (and product acquired or licensed from others) is handled through SPE’s Sony Pictures Home Entertainment/Television Distribution group. For home entertainment, product is distributed in various home media formats including Digital Distribution. Digital Distribution includes electronic sell-through and video-on-demand distributed on digital platforms, cable networks and direct broadcast satellite (“DBS”) providers. For television, SPE’s library of motion pictures and television programming is licensed to distributors such as broadcast television networks, digital platforms, cable networks and DBS providers. Digital platforms include subscription and advertising supported platforms (including Sony’s PlayStation^™Network (“PSN”), Netflix and Amazon Prime Video).

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

Financial Services

Sony Life conducts its life insurance business in Japan. Sony Life’s core business is providing death protection and other insurance products to individuals, primarily through a consulting-based sales approach utilizing its experienced team of Lifeplanner sales specialists as well as partner independent sales agents. Sony Life provides tailor-made life insurance products that are optimized for each customer. As of March 31, 2025, Sony Life employed 5,795 Lifeplanner sales specialists. Sony Life maintains an extensive service network which mainly consists of the Lifeplanner channel and the independent agent channel in Japan. The Lifeplanner channel is characterized by recruitment of high-caliber sales professionals from industries outside the life insurance industry, quality improvement through education and training, performance-linked compensation and high productivity. Lifeplanner sales specialists offer custom-made packages. Most of the agents in the independent agent channel are corporate and non-exclusive agents, primarily shop-style agents. Shop-style agents are a sub-channel of the independent agent channel, who offer insurance in local stores and provide customers with opportunities to compare various insurers’ products. To enhance Sony Life’s relationship with independent agents, Sony Life’s agency supporters provide independent agents with various support services, including recruiting, training and sales promotion activities. As part of its plan to expand its sales of individual annuity products, Sony Life established AEGON Sony Life Insurance Co., Ltd. (“AEGON Sony Life”) in August 2007 and SA Reinsurance (“SA Re”) in October 2009, both 50-50 joint venture companies with AEGON N.V. AEGON Sony Life and SA Re began operations in Japan in December 2009 and in Bermuda in January 2010,

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respectively. In January 2020, Sony Life acquired from AEGON International B.V. the remaining 50% stakes of AEGON Sony Life and SA Re, resulting in both AEGON Sony Life and SA Re becoming wholly-owned subsidiaries of Sony Life. AEGON Sony Life changed its trade name to Sony Life With Insurance Co., Ltd. (“Sony Life With”) on April 1, 2020. On April 1, 2021, Sony Life undertook an absorption-type merger with Sony Life With, with Sony Life as the surviving company. Furthermore, Sony Life completed the liquidation of SA Re in March 2023.

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

Sony Bank has conducted banking operations in Japan since June 2001. As an internet bank focusing on the asset management and borrowing needs of individual customers, Sony Bank offers an array of products and services including yen and foreign currency deposits, investment trusts and mortgages. By using Sony Bank’s transaction channel, the “MONEYKit” service website, account holders can invest and manage assets over the internet according to their life plans. Additionally, Sony Bank transferred a portion of its shares of Sony Payment Services Inc. (“Sony Payment Services”), a payment service provider and consolidated subsidiary of Sony Bank, during the fiscal year ended March 31, 2024. As a result of the transaction, Sony Payment Services became an affiliate of Sony Bank accounted for using the equity method.

All Other

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

Sales to External Customers by Geographic Area

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


	Fiscal year ended March 31
	2023		2024		2025
	(Yen in millions)
Japan		2,126,508		3,027,526		2,244,356
United States		3,401,402		3,751,239		4,127,795
Europe		2,190,311		2,632,963		2,630,934
China		855,437		1,000,907		1,244,115
Asia-Pacific		1,563,414		1,659,776		1,640,582
Other Areas		837,301		948,357		1,069,282

Total		10,974,373		13,020,768		12,957,064

Sources of Supply

Sony procures parts, components and raw materials used in the production of its products on a global basis on the most favorable terms that it can achieve. These items are purchased from various suppliers around the world. Sony has a general policy of maintaining multiple suppliers for important parts and components.

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

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After-Sales Service

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

In line with industry practices of these businesses, almost all of Sony’s consumer-use products that are sold in Japan carry a warranty, generally for a period of one year from the date of purchase, covering repairs, free of charge, in the case of a malfunction in the course of ordinary use of the product. Warranties outside of Japan generally provide coverage for various periods of time depending on the product and the area in which it is marketed. In the case of broadcast- and professional-use products, Sony maintains support contracts with customers in addition to warranties.

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

Patents and Licenses

Sony has a number of Japanese and foreign patents relating to its products and services. Sony is licensed to use a number of patents owned by others, covering a wide range of products and services. Certain of these licenses are important to Sony’s business. Sony products that employ Blu-ray Disc^™ player functionality, including PlayStation^®4 and PlayStation^®5 (“PS5^™”) hardware, are substantially dependent upon patents that relate to technologies specified in the Blu-ray Disc^™ specifications and are licensed by Via Licensing Alliance LLC. Sony considers its overall license position beneficial to its operations.

Competition

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

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

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

Music

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

Pictures

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

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

Financial Services

In the Financial Services segment, Sony faces strong competition in the financial services markets in Japan.

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

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

Some of the competitors in the life insurance and non-life insurance businesses have advantages over Sony including:

•

greater financial resources and financial strength ratings;

•

greater brand awareness;

•

more extensive marketing and sales networks, including through tie-ups with other types of financial institutions;

•

more competitive pricing;

•

larger customer bases; and

•

a wider range of products and services.

Sony Bank has focused on providing retail asset management and mortgage services for individuals, and faces significant competition in Japan’s retail financial services market. Sony Bank competes with traditional banking institutions, regional banks, trust banks, non-bank companies, and newer financial groups providing online full-services of bank and brokerage in Japan.

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

Government Regulations

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

In Japan, Sony’s insurance businesses are subject to the Insurance Business Act and approvals and oversight from the Financial Services Agency (“FSA”). The primary purpose of the Insurance Business Act and related

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regulations is to protect policyholders, not shareholders. The Insurance Business Act specifies the types of businesses insurance companies may engage in, imposes limits on the types and amounts of investments that can be made and requires insurance companies to maintain specified reserves and a minimum solvency margin ratio. In particular, life insurance companies must maintain a premium reserve (for the portion of their portfolio other than unearned premiums), an unearned premium reserve, a reserve for refunds with respect to certain insurance contracts of life insurance companies specified in the Insurance Business Act’s regulations, and a contingency reserve in amounts not lower than the amount of the “standard policy reserve” as set forth by the regulatory guidelines. The FSA maintains a solvency standard which is used by Japanese regulators to monitor the financial strength of insurance companies. Non-life insurance companies are also required to provide a policy reserve. Sony Bank is also subject to regulation by the FSA under the Banking Act of Japan, including the requirement that it maintain a minimum capital adequacy ratio in accordance with capital adequacy guidelines adopted by the FSA based on the Basel III agreement. The FSA has broad regulatory powers over insurance and banking businesses in Japan, including the authority to grant or revoke operating licenses and to request information and conduct onsite inspections of books and records. Sony’s subsidiaries in the Financial Services segment are subject to the Insurance Business Act and the Banking Act that require insurance and banking business companies to maintain their financial credibility and to secure protection for policyholders and depositors in view of the public importance of insurance and banking services. As such, lending and borrowing between subsidiaries in the Financial Services segment and the other companies within Sony Group is strictly limited.

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

Social Responsibility Regulations Such as Environmental and Human Rights Regulations

Sony monitors, evaluates, and complies with laws and regulations that may affect its global operations and purchasing activities with respect to social responsibility, such as environmental, human rights, labor, and occupational health and safety issues. For example, Sony has taken steps to address upcoming regulations or governmental policies related to (i) climate change including carbon disclosure, greenhouse gas (“GHG”) emission reduction, carbon taxes and product energy efficiency; (ii) reporting on material sustainability matters relevant to Sony’s business activities; and (iii) mandatory human rights and environmental due diligence throughout Sony’s value chain.

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

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

Section 219 of the Iran Threat Reduction and Syria Human Rights Act of 2012 added Section 13(r) to the Securities Exchange Act of 1934 (the “Exchange Act”), as amended. Section 13(r) requires an issuer to disclose in its annual or quarterly reports, as applicable, whether it or any of its affiliates knowingly engaged in certain activities, transactions or dealings relating to Iran or with designated natural persons or entities sanctioned under programs relating to terrorism or the proliferation of weapons of mass destruction. Disclosure is required even where the activities, transactions or dealings are conducted outside the U.S. by non-U.S. affiliates in compliance with applicable law, and whether or not the activities are sanctionable under U.S. law.

Sony is aware that certain transactions during the fiscal year ended March 31, 2025, as described below, may be disclosable pursuant to Section 13(r) of the Exchange Act.

•

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

Sony is not aware of any other activity, transaction or dealing by Sony Group Corporation or any of its affiliates during the fiscal year ended March 31, 2025 that is disclosable in this report under Section 13(r) of the Exchange Act. As of the date of this report, Sony does not anticipate that any activity, transaction or dealing that may be disclosable will be conducted during the fiscal year ending March 31, 2026, except as described above in connection with the wind-down of its representative office in Iran. Nevertheless, Sony continues to monitor developments in this area as sanctions against Iran continue to evolve, and assess whether and to what extent such sanctions may affect Sony’s business activities, which Sony intends to conduct in accordance with applicable laws and regulations.

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

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Sustainability Disclosure

Sony’s Basic Policy for Sustainability Initiatives

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

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

(1) Organizational Structure for Sustainability Initiatives and Efforts

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

The Senior Executive in charge of Sustainability regularly reviews and assesses risks and engages in detection, communication, evaluation and response for the risk of loss related to sustainability. The Sustainability Department reports to the Board of Directors at least once a quarter on sustainability initiatives and their progress. In addition, as part of reporting on each Business Unit’s mid-range plan, the Board of Directors receives reports from each Business Unit on the sustainability challenges and opportunities relevant to their respective business operations and their efforts in those areas.

Also refer to “Risk Factors” in “Item 3. Key Information” for the risks related to sustainability.

<Sony’s sustainability efforts>

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

The Business Units consider sustainability issues and opportunities for their respective businesses, and implement sustainability-related initiatives that align with their respective business characteristics. In addition, the Business Units, consulting with the Sustainability Department, have introduced key performance indicators (“Sustainability KPIs”), which measure the Business Units’ sustainability efforts. The Sustainability KPIs are incorporated into the Business Units’ performance evaluations, and the Sustainability Department evaluates the status of achievement of such Sustainability KPIs. Additionally, achievement of the Group Sustainability Evaluation is incorporated into one of the indicators for Senior Executives’ remuneration linked to business results. The Group Sustainability Evaluation is an evaluation of efforts by Senior Executives to enhance the mid- to long-term corporate value and sustainable growth of the Sony Group as a whole, not limited to their respective businesses and organizations, including management succession and investment in human capital, sustainability initiatives related to social value creation and ESG (Environment, Social, Governance), value creation through collaborations among the businesses of the Sony Group, and engagement indicators based on employee surveys.

In the fiscal year ended March 31, 2025, Sony hosted the Sustainability Small Meeting for its investors as well as the Sustainability Media Briefing in order to foster a deeper dialogue with stakeholders regarding sustainability. In addition, a global sustainability conference was held, where the Senior Executive in charge of

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Sustainability, the Senior Executive in charge of Human Resources, and personnel in charge of sustainability from the Business Units came together to confirm and share sustainability initiatives for the Business Units and their progress on the Sustainability KPIs.

For the fiscal year ended March 31, 2025, the Sustainability KPIs included reducing the power consumption of Sony’s products, reducing GHG emissions in Sony’s manufacturing processes, implementing environmental awareness-raising activities using Sony’s content IP, and improving product and service accessibility.

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

The importance of topics from Sony’s perspective is evaluated from the perspective of positive or negative impact on Sony’s ability to create value over the mid- to long-term, while the importance of topics from the stakeholders’ perspective is evaluated based on information published by NGOs, investors, rating agencies, mass media and other sources.

(2) Sustainability Strategies

As a result of the above materiality analysis, Sony has identified the following important topics that should be prioritized across the Sony Group after review by the Senior Executives in charge of Sony’s headquarters functions and the Board of Directors.

•

Climate Change

Under the “Road to Zero,” a long-term environmental plan established in 2010 that aims to achieve a zero environmental footprint for the entire Sony Group by the year 2050, Sony is promoting environmental impact reduction activities in each of the following four perspectives: climate change, resources, chemical substances, and biodiversity. In May 2022, Sony announced that it had determined to accelerate its environmental impact reduction activities in the climate change area and to push its goal of achieving a net-zero footprint throughout the entire value chain, moving the target year from 2050 to 2040. Sony’s net-zero (*1) target for 2040 was approved as the net-zero target for the Science Based Targets initiative (“SBTi”) (*2) in August 2022. In April 2025, Sony Group Corporation established “Green Management 2030,” the Group’s new medium-term environmental targets (*3) effective from the fiscal year ending March 31, 2027 through the fiscal year ending March 31, 2031.

Sony’s net-zero target follows the SBTi Corporate Net-zero Standard below:

(a)

reducing Scope 1, 2 and 3 emissions to zero or a residual level consistent with reaching net-zero emissions at the global or sector level in eligible 1.5°C scenarios or sector pathways; and

(b)

neutralizing any residual emissions at the net-zero target date – and any GHG emissions released into the atmosphere thereafter.

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

Sony is working toward achieving its long-term environmental plan, the “Road to Zero,” by setting medium-term (five-year) environmental targets. Sony is currently engaged in initiatives focused on reducing environmental impact to achieve the goals set under “Green Management 2025” for the fiscal year ended March 31, 2022 through the fiscal year ending March 31, 2026.

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Sony’s interim goals for the above 2040 net-zero target are as follows:

By 2030, Sony aims to make direct and indirect GHG emissions (Scopes 1 and 2) of its own business operations net-zero. For other emissions originating from stages such as products, supply chains, and logistics (Scope 3), Sony aims to reduce GHG emissions during product use by 45% compared to the fiscal year ended March 31, 2019 by 2035. By 2040, Sony aims to achieve net-zero emissions in all Scopes.

By 2030, Sony aims to achieve 100% renewable electricity used at its own business sites. The percentage of electricity use derived from renewable energy targeted to be achieved as of the end of the fiscal year ending March 31, 2026 has been set at 35%.

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

•

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

•

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

•

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

•

Contribution to carbon removal/fixation (*4): Exploration of investments in start-ups engaged in carbon removal, and development of an index integrating biodiversity and carbon fixation associated with augmented ecosystem businesses, such as Synecoculture^™ (*5) being rolled out by SynecO, Inc.

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

Synecoculture is a trademark of Sony Group Corporation.

•

Diversity

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

•

Respect for Human Rights

Through the “Sony Group Human Rights Policy,” Sony is committed to respecting the internationally recognized human rights of individuals potentially affected by its business activities throughout its value chain. Sony also strives to avoid causing or contributing to adverse human rights impacts that may arise from its operations, products, services and/or business relationships, and is dedicated to taking reasonably necessary actions to help remediate any impacts that may occur.

Sony has established and implemented Group policies for specific areas, such as the “Sony Supply Chain Code of Conduct” which sets forth the code of conduct for Sony’s own manufacturing sites and suppliers of electronics products, with the aim to work towards a responsible supply chain, and the “Sony Group AI Ethics Guidelines,” which guide all Sony officers and employees to utilize AI and/or conduct AI-related R&D in a manner that conforms with Sony’s values and emerging social norms. Sony conducts human rights risk impact assessments in line with the frameworks regarding human rights due diligence set out in the United Nations Guiding Principles on Business and Human Rights (UNGP) issued by the United Nations Human Rights Council and the OECD Guidelines for Multinational Enterprises on Responsible Business Conduct. After identifying potential human rights risks by considering the characteristics of each business operation and the value chains important to each business, the assessments further identified three areas as priority areas for enhancing initiatives throughout the Sony Group: responsible supply chains, respect for diversity and responsible development and use of technologies. For issues where significant adverse human rights impacts are identified or are of concern in these priority areas, Sony promotes initiatives to prevent or mitigate those impacts for each of these areas. In the fiscal year ended March 31, 2025, each Business Unit conducted a human rights risk impact assessment to review the specific human rights risks inherent to each business segment and the current status of initiatives addressing these risks. This assessment aimed to evaluate the need for improvements or new measures and to reassess the human rights issues that each Business Unit should prioritize. The assessments were carried out by each Business Unit, utilizing the evaluation criteria established by the Sustainability Department, and

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incorporating insights from external experts or relevant internal departments. In December 2024, the Sustainability Department received reports from each Business Unit on the key areas of focus, the status of initiatives, and future plans for each Business Unit during an internal global conference.

•

Technology for Sustainability

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

For example, Sony is working to reduce the environmental impact of its products through the development of environmentally-conscious materials and technologies to reduce power consumption. Furthermore, in order to address issues such as the proliferation of fake images and false information due to the rapid development of generative AI models, and to enhance the reliability of image content, Sony Corporation has begun to provide certain media agencies and photojournalists with Camera Authenticity Solutions that verify the authenticity of images in compliance with the Coalition for Content Provenance and Authenticity’s (C2PA) (*6) standard and through the use of Sony’s proprietary in-camera digital signature.

*6	A standards-setting organization that develops open standards and technical specifications for the provenance and authenticity of digital content.

(3) Human Capital Strategies, Metrics and Targets

<Sony’s “Diversity” and People Philosophy>

Starting from its origins in the electronics business in 1946, Sony expanded into semiconductors with the development of Japan’s first transistor. Sony then expanded into new businesses in various ways: the music and the financial services businesses through joint ventures with foreign companies, the motion pictures business through the acquisition of a foreign company, and the gaming business through a joint venture within the Sony Group, while continuing to evolve as a company composed of multiple business units. Half of Sony’s six main business segments are headquartered in the U.S. and supported by a tailored organizational structure for optimal global operations.

The development and growth of the businesses to date have been based on the values that have been passed down since Sony’s founding: an insatiable appetite for new challenges and a respect for diversity. The intersection of employees with diverse backgrounds drives the creation of new businesses, and the diversification of the businesses expands opportunities for active employee involvement. This fosters mutual growth for both employees and Sony. Sony considers the diversity of its businesses and people as drivers for value creation, along with creativity and technology. Sony has approximately 112,000 employees worldwide who have varied backgrounds and experiences. Employee diversity constitutes a driving force behind the growth of each business. In alignment with Sony’s Purpose, Sony’s diverse employees connect and intersect across businesses and regions, fusing technology and creativity to create new value.

Sony’s People Philosophy, “Special You, Diverse Sony,” represents Sony’s approach to employees, and conveys the message that each unique individual and Sony, which embraces diversity, will continue to grow together, centered on its shared Purpose. The group-wide People Strategy based on the People Philosophy is defined as: “Attract talented individuals,” “Develop talented individuals,” and “Engage talented individuals.” Sony aims for the growth of the Sony Group by responding to employees’ desire for a fulfilling work experience and prioritizing measures that inspire them to embrace challenges and pursue personal growth, thereby unlocking their full potential. Regarding specific initiatives, authorized HR executives within each business unit formulate and implement tailored HR measures that align with the characteristics of their respective businesses and regions.

<“Diverse Perspectives” and Key Focus Areas for Achieving the Fifth Mid-Range Plan>

Sony has adopted the key phrase “diverse perspectives,” which signifies the different viewpoints of each individual, as a core principle to put its People Philosophy into practice. Recognizing that a diverse workforce has long been the foundation for creating and supporting a wide range of businesses, Sony has identified the key elements needed to remain an organization that embraces diverse perspectives. These are: Diversity of People—bringing together people of all backgrounds; Diversity of Experience—encouraging collaboration among individuals from different fields, and enabling employees to gain new experiences by working internationally or across business areas; and finally, Leadership and Corporate Culture that Embraces Diverse Perspectives—leaders who draw on the unique strengths of individuals to guide the organization, and a culture that welcomes a variety of perspectives and values. These principles are reflected in the Sony Group’s human resource initiatives.

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Sony’s fifth mid-range plan, launched in the fiscal year ended March 31, 2025, is themed “Beyond the Boundaries: Maximize Synergies across the Group.” As a foundation for advancing efforts to achieve synergy and enhance corporate value, Sony plans to promote an organization that embraces diverse perspectives, designating the following key focus areas to monitor progress and results.

(i) The Evolution of Diversity in People and Experience that Underpins Group Growth

Sony’s management team is composed of members with diverse backgrounds, experiences, and areas of expertise. As part of Sony’s continued commitment to enhancing this diversity, it aims to increase the percentage of women and persons of non-Japanese origin^*7 among executives^*8 at Sony Group Corporation in Japan to more than 30% each, by 2030. As of the end of March 2025, these figures stood at 18.8% and 28.1%, respectively.

*7 Individuals of non-Japanese nationality or who were born outside Japan

*8 Directors, Senior Executives including Corporate Executive Officers, and other officers

The appointment of Robert Lawson, former Chief Communications Officer at SPE’s headquarters, as Sony Group Corporation’s Senior Vice President in charge of Corporate Communications in the fiscal year ended March 31, 2025 also reflects the ongoing evolution in the diversity of experience within Sony Group Corporation’s leadership team.

Approximately half of Sony Group’s entire workforce is based outside Japan, with more than 90% of those employees being hired locally. Sony is actively expanding its recruitment efforts to attract talent across all nationalities who can drive cutting-edge technology development, such as AI, at its global R&D organizations and at Sony Research Inc. (formerly Sony AI Inc.), beyond just its main businesses. Sony’s ongoing efforts focus on bringing in outstanding students and experienced professionals from around the world.

As part of creating a work environment where diverse talent can thrive, Sony is promoting the advancement of women on a global scale. At the end of the fiscal year ended March 31, 2025, women made up 34.2% of the total Sony Group workforce, and the percentage of women in management positions was 31.6%. However, because the percentage of women in management positions at companies in Japan remains lower compared to overseas companies, each of Sony’s major subsidiaries in Japan has set specific goals and is working to increase this percentage.

Sony is committed to complying with the disability-related laws and norms of each country and region. Enabling every employee to thrive follows the philosophy of Masaru Ibuka, one of Sony’s founders, who said “we had a spirit of autonomy and a belief in creating workplaces that do not offer charity, but rather create an environment that makes it possible for individuals with disabilities to manufacture products that exceed those manufactured by individuals without disabilities.” Sony aims to create a work environment that supports career building regardless of disabilities, with the entire Sony Group working to achieve this goal.

Sony is enhancing its internal infrastructure to support diverse employees and aims to provide LGBTQ+ employees worldwide with working environments in which they can feel comfortable being themselves, while respecting national and regional contexts. As a group-wide initiative, since the fiscal year ended March 31, 2023, Sony has introduced a pride logo, featuring a Sony logotype in rainbow colors, to visually express Sony’s respect and support for LGBTQ+ employees and communities, both inside and outside the Sony Group.

From the standpoint of enhancing the diversity of employee experience, for many years, Sony has actively promoted the recruitment of people who have experience working for other companies or in other job types, which is grounded in the principle that the diverse knowledge and perspectives these individuals bring through the experience of working for other companies or in various job types fuels organizational growth. The percentage of new hires with prior experience working for other companies or in other job types to all new hires at Sony Group Corporation and its consolidated subsidiaries in Japan was 48.3% and 50.7% for the fiscal years ended March 31, 2025 and 2024, respectively. Additionally, the majority of Sony’s employees at overseas Group companies have prior experience working for other companies or in other job types. During performance evaluation, Sony does not distinguish between employees with experience working for other companies or in other job types and those who started their careers at Sony.

In addition, more than 9,000 new employees have joined the Sony Group during the period between the fiscal years ended March 31, 2013 and 2025 through mergers, acquisitions and strategic alliances in growth areas such as game title development, contributing to the growth of the business through the diversification of the backgrounds of Sony’s employees.

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Going forward, Sony intends to place greater focus on supporting collaboration among employees with diverse experiences and perspectives and on helping them build careers that cross business and organizational boundaries.

(ii) Providing Opportunities to Foster Diverse Individual Experiences

Sony believes that the growth of each unique and self-driven employee ultimately drives the growth of the company. That is why it is essential for Sony to attract talented individuals with a strong desire to take on new challenges and to continuously support their development. To help employees maximize their potential and take on roles where they can thrive, it offers a range of opportunities, including an internal job posting system, the “Career Plus” program and the “Free Agent (FA)” system, which support career development across business units and organizational boundaries. In Japan, Sony pioneered the internal job posting system in 1966, ahead of most other companies, and has been operating it for nearly 60 years. This system is designed not only to encourage employees to take on new roles, but also to ensure the right people are placed in the right positions and to strengthen key business areas. To date, more than 8,000 internal transfers have taken place through this initiative, establishing it as an essential part of Sony’s HR framework that empowers individual ambition. In 2015, Sony introduced the Career Plus program, which allows employees to dedicate one to two days a week to take part in projects or assignments in other departments across the organization while continuing in their current roles. Sony has also significantly expanded its internal mobility framework by adding new systems to its traditional job posting program. These include the internal FA system, which grants high-performing employees “FA rights” and shares their profiles across the Sony Group to open up new opportunities for growth in different fields. Another is Sony CAREER LINK, a platform where employees can register their profiles and be contacted by hiring teams or HR when their skills and experience match available roles.

These initiatives are not limited to Japan; they are also being implemented globally. For example, an internal job posting system has been introduced across all Group Companies operating businesses in China. Additionally, when forming teams for new cross-Group projects in China, the Career Plus program was utilized to allow participants to dedicate more than 20% of their work time to the project while maintaining their regular duties. This created opportunities for employees to engage in new tasks across businesses and collaborate with colleagues from different areas.

In addition, lectures, workshops, and career counseling services are actively used to foster proactive career awareness. However, supporting each individual’s drive to take on challenges also requires open dialogue in the workplace. Every employee is encouraged to discuss their career with their supervisors and reflect on their skills, helping them to pursue self-directed career development tailored to their unique situation and goals.

(iii) Fostering an Organizational Culture and Leadership that Embraces Diverse Perspectives

At Sony, where diverse talent comes together, leadership styles vary as well. However, one essential quality Sony believes all leaders must share is the ability to embrace diverse perspectives. Beyond cultivating a culture where diverse perspectives are welcomed and open dialogue is encouraged, it is equally important to develop the mindset and skills to actively incorporate those perspectives and translate them into organizational strength.

“Sony University,” a next-generation leadership development program designed to cultivate future leaders for key roles across businesses and functions, brings together a diverse group of participants each year from Group companies around the world, each with different backgrounds and perspectives. Through lectures, group discussions, and dialogue with senior leaders from various business areas, selected participants strengthen their skills and minds such as leadership, strategic thinking, and vision-setting capabilities. By learning and growing alongside one another, participants build cross-organizational networks that foster collaboration and partnership across the Sony Group.

The “Sony Cross-Mentoring Program,” which entered its third year in the fiscal year ended March 31, 2025, is a Sony Group-wide initiative that connects senior leaders and next-generation leadership candidates from different business units in strategic mentor-mentee pairings. The program creates opportunities for mentees to deepen their understanding of areas beyond their own businesses, gain new insights that support their individual development plans, and expand their internal networks. Over the course of approximately six months, mentors and mentees engage in regular conversations on topics such as management and leadership skills, business strategy, and career development. Through the sharing of the mentors’ extensive experience and perspectives, mentees are able to broaden their horizons and elevate their leadership outlook.

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Additionally, in the fiscal year ended March 31, 2025, roundtable discussions were held between Sony Group Corporation’s executives and employees from various businesses and areas of expertise. Centered on the theme “Embracing Diverse Experiences and Perspectives,” participants discussed how changes in business domains, roles, or working environments shape career development, as well as the types of diverse perspectives that will be essential to the Sony Group going forward. Many participants noted that having direct dialogue with executives and colleagues from across the Group was a rare and valuable opportunity. The roundtables have helped deepen understanding of Sony’s culture, businesses, and people, while also fostering new synergies.

As defining and advancing its focus areas, Sony believes the true measure of whether its diverse employees feel a sense of purpose and are empowered to pursue their own forms of “Kando (emotion)” lies in their alignment with the Purpose and overall employee engagement. To assess this, employee surveys are regularly conducted. Employee engagement, in particular, is a critical metric and is included as part of the performance evaluation criteria linked to compensation for the Senior Executives of Sony Group Corporation.

Under its Purpose, Sony remains committed to securing diverse talent and fostering an organizational culture that embraces diverse perspectives, with the aim of achieving sustainable growth and creating value for society.

C.	Organizational Structure

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


Name of company	Country of incorporation /residence	(As of March 31, 2025) Percentage owned
Sony Interactive Entertainment Inc.	Japan		100.0
Sony Music Entertainment (Japan) Inc.	Japan		100.0
Sony Corporation	Japan		100.0
Sony Global Manufacturing & Operations Corporation	Japan		100.0
Sony Network Communications Inc.	Japan		100.0
Sony Marketing Inc.	Japan		100.0
Sony Semiconductor Solutions Corporation	Japan		100.0
Sony Semiconductor Manufacturing Corporation	Japan		100.0
Sony Semiconductor Energy Management Corporation	Japan		100.0
Sony Storage Media Solutions Corporation*¹	Japan		100.0
Sony Global Solutions Inc.	Japan		100.0
Sony Financial Group Inc.	Japan		100.0
Sony Life Insurance Co., Ltd.	Japan		100.0
Sony Bank Inc.	Japan		100.0
Sony Assurance Inc.	Japan		100.0
Sony Corporation of America	U.S.A.		100.0
Sony Interactive Entertainment LLC	U.S.A.		100.0
Sony Music Entertainment	U.S.A.		100.0
Sony Music Publishing LLC	U.S.A.		100.0
Sony Pictures Entertainment Inc.	U.S.A.		100.0
Columbia Pictures Industries, Inc.	U.S.A.		100.0
CPT Holdings, Inc.	U.S.A.		100.0
Sony Electronics Inc.	U.S.A.		100.0
Sony Interactive Entertainment Europe Ltd.	U.K.		100.0
Sony Europe B.V.	U.K.		100.0
Sony Global Treasury Services Plc	U.K.		100.0
Sony Overseas Holding B.V.	Netherlands		100.0
Sony (China) Limited	China		100.0
Sony EMCS (Malaysia) Sdn. Bhd.	Malaysia		100.0
Sony Electronics (Singapore) Pte. Ltd.	Singapore		100.0
Sony Device Technology (Thailand) Co., Ltd.	Thailand		100.0

*1 The storage media business of Sony Storage Media Solutions Corporation was transferred to Sony Storage Media Manufacturing Corporation by way of an absorption-type company split effective on April 1, 2025, and Sony Storage Media Manufacturing Corporation changed its company name to Sony Storage Media Corporation.

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D.	Property, Plant and Equipment

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

The status of major property, plant and equipment as of March 31, 2025 is as follows:


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

Headquarters (Minato-ku, Tokyo)	Corporate	Headquarters facilities		1,298 (18	)		22,364		17,638		—		1,565

Others^*4	Corporate	Headquarters facilities		4,840			32,033		1,802		—		647

In Japan (Subsidiaries):

Sony Interactive Entertainment Inc.^*5 (Minato-ku, Tokyo)	G&NS	Home gaming consoles / cloud-related software		— (—	)		1,541		209,125		13,761		2,200

Sony Corporation (Minato-ku, Tokyo)	ET&S	Research facilities for TVs, audio / video devices, cameras, broadcasting equipment and medical equipment		— (—	)		2,141		46,583		34,342		7,900

Sony Network Communications Inc.^*5 (Shinagawa-ku, Tokyo)	ET&S	Data communication facilities		— (—	)		422		80,053		5,177		1,800

Sony Global Manufacturing & Operations Corporation (Kohda Site, etc.) (Minato-ku, Tokyo)	ET&S, I&SS, All Other	Production facilities for electronic devices, etc.		4,961 (386	)		9,438		13,571		4,990		3,600

Sony Semiconductor Solutions Corporation (Atsugi-shi, Kanagawa)	I&SS	Research facilities for image sensors, etc.		— (—	)		1,323		75,908		22,401		7,500

Sony Semiconductor Manufacturing Corporation (Nagasaki TEC, etc.) (Kikuchi-gun, Kumamoto)	I&SS	Production facilities for image sensors, etc.		21,108 (1,002	)		175,941		605,265		13,516		9,000

Sony Semiconductor Energy Management Corporation (Nagasaki TEC, etc.) (Kikuchi-gun, Kumamoto)	I&SS	Energy supply facilities for the manufacturing of image sensors, etc.		— (—	)		30,921		65,076		40,771		100

Sony Music Entertainment (Japan) Inc.^*5 (Chiyoda-ku, Tokyo)	Music	Music facilities and in-house software		22,548 (320	)		10,834		74,507		13,633		4,600

Sony Financial Group Inc.^*5 (Chiyoda-ku, Tokyo)	Financial Services	In-house software		6,385 (25	)		5,285		77,432		76,291		14,300

Sony Global Solutions Inc. (Minato-ku, Tokyo)	Corporate	In-house software		— (—	)		431		21,891		1,006		500

Outside Japan (Subsidiaries):

Sony Corporation of America^*5 (New York, United States)	ET&S, I&SS	Production facilities for electronic products, etc.		356 (112	)		18,007		8,105		3,853		1,300
	Music	Music catalogs, etc.		90 (4	)		15,583		1,439,105		55,774		6,700
	All Other, Corporate	Office buildings and machinery, etc.		661 (272	)		9,793		15,987		12,701		1,500

Sony Interactive Entertainment LLC^*5 (California, United States)	G&NS	Cloud-related facilities, etc.		— (—	)		15,126		193,969		86,899		5,900

Sony Interactive Entertainment Europe Ltd.^*5 (London, United Kingdom)	G&NS	Cloud-related facilities, etc.		— (—	)		5,444		24,640		18,173		2,800

Sony Europe B.V.^*5 (Surrey, United Kingdom)	ET&S, I&SS, All Other	Office buildings and sales facilities, etc.		2,609 (45	)		4,094		15,822		8,772		3,800

Sony Device Technology (Thailand) Co., Ltd. (Bangkadi, Thailand)	I&SS	Production facilities for electronic products, etc.		539 (132	)		13,481		21,268		7		1,300

Sony EMCS (Malaysia) Sdn. Bhd. (Selangor, Malaysia)	ET&S	Production facilities for electronic devices, etc.		— (—	)		4,591		4,903		201		4,500

Sony Pictures Entertainment Inc. (Delaware, United States)	Pictures	Production facilities for motion pictures, television programming, video software, etc.		12,594 (318	)		87,541		806,305		89,013		11,500

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Item 5.

Operating and Financial Review and Prospects

The following discussion covers the fiscal years ended March 31, 2024 and 2025. For the discussion covering the fiscal year ended March 31, 2023, refer to “Item 5. Operating and Financial Review and Prospects” of Sony’s Form 20-F for the fiscal year ended March 31, 2024 filed with the SEC on June 25, 2024.

A.	Operating Results

Operating Performance


	Fiscal year ended March 31
	2024		2025
Consolidated:	(Yen in billions)
Sales^*1		13,020.8		12,957.1
Operating income		1,208.8		1,407.2
Income before income taxes		1,268.7		1,473.7
Net income attributable to Sony Group Corporation’s stockholders		970.6		1,141.6

	Fiscal year ended March 31
	2024		2025
Sony without Financial Services^*2:	(Yen in billions)
Sales^*1		11,265.0		12,043.9
Operating income		1,035.3		1,276.6
Income before income taxes		1,145.1		1,343.2
Net income attributable to Sony Group Corporation’s stockholders		896.6		1,067.4

*1 “Sales” is used to mean “sales and financial services revenue” in accordance with IFRS^® Accounting Standards as issued by the International Accounting Standards Board (“IFRS Accounting Standards”) (the same applies below).

*2 Figures for Sony without Financial Services are not measures in accordance with IFRS Accounting Standards. However, Sony believes that this disclosure may be useful information to investors. For details about the preparation of the Financial Statements for Sony without Financial Services, please refer to “Information on Operations Separating Out the Financial Services Segment” below (the same applies below).

Consolidated Financial Results

Consolidated results for the fiscal year ended March 31, 2025 are as follows (“(+)” represents positive contributing factors while “(–)” represents negative contributing factors):

Sales: 12 trillion 957.1 billion yen (63.7 billion yen decrease compared to the previous fiscal year (“year-on-year”))

•

(–) Decrease in sales in the Financial Services segment

•

(+) Increases in sales in the G&NS, Music and I&SS segments

A further breakdown of sales figures is presented under “Operating Performance by Business Segment” below.

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

Cost of Sales: 8 trillion 504.8 billion yen (415.5 billion yen increase year-on-year)

The ratio of cost of sales to sales improved year-on-year from 71.8% to 70.7%.

R&D costs (all R&D costs are included within cost of sales): 734.6 billion yen (8.2 billion yen decrease year-on-year)

The ratio of R&D costs to sales was 6.1%, compared to 6.6% in the fiscal year ended March 31, 2024. For further details, refer to “Research and Development” in Item 5.C.

Selling, General and Administrative Expenses: 2 trillion 256.8 billion yen (100.7 billion yen increase year-on-year)

The ratio of SGA expenses to sales improved year-on-year from 19.1% to 18.8%.

- 39 -

Other Operating (Income) Expense, net: Income of 9.2 billion yen (20.2 billion yen decrease year-on-year)

•

(–) The absence of the following factors that occurred in the fiscal year ended March 31, 2024:

•

Remeasurement gain resulting from the consolidation of a company previously accounted for using the equity method: 6.0 billion yen (Music segment)

•

Realized and remeasurement gains resulting from the transfer of a portion of shares of Sony Payment Services: 19.8 billion yen (Financial Services segment)

Refer to Note 23 of the consolidated financial statements.

Share of profit (loss) of investments accounted for using the equity method: Loss of 7.8 billion yen (profit of 10.5 billion yen in the fiscal year ended March 31, 2024)

•

(–) Deterioration in the share of profit or loss of investments accounted for using the equity method in All Other.

Operating Income: 1 trillion 407.2 billion yen (198.3 billion yen increase year-on-year)

•

(+) Increases in operating income in the G&NS, I&SS and Music segments

•

(–) Decrease in operating income in the Financial Services segment

Operating income for the fiscal year ended March 31, 2024 included the above-mentioned factors recorded in other operating (income) expense, net.

Financial Income: 139.0 billion yen (13.4 billion yen increase year-on-year)

Financial Expenses: 72.5 billion yen (6.7 billion yen increase year-on-year)

Financial Income and Expenses, net: Income of 66.6 billion yen (6.7 billion yen increase year-on-year)

•

(+) Increase in interest income, net

Income before Income Taxes: 1 trillion 473.7 billion yen (205.1 billion yen increase year-on-year)

Income Taxes: 313.8 billion yen (25.7 billion yen increase year-on-year)

Effective Tax Rate: 21.3% (22.7% in the fiscal year ended March 31, 2024)

The year-on-year change in the tax rate was mainly due to the impact of the following factors:

•

Decrease in tax expense from the repayment of capital from a subsidiary (48.4 billion yen)

•

Decrease in tax expense from the dissolution of a subsidiary (35.3 billion yen)

•

Increase in tax expense from the revaluation of deferred tax assets and liabilities resulting from an increase in tax rates pursuant to tax reform in Japan

Refer to Note 25 of the consolidated financial statements.

Net Income Attributable to Noncontrolling Interests: 18.3 billion yen (8.4 billion yen increase year-on-year)

Net Income Attributable to Sony Group Corporation’s Stockholders: 1 trillion 141.6 billion yen (171.0 billion yen increase year-on-year)

Basic net income per share attributable to Sony Group Corporation’s stockholders: 188.71 yen (157.66 yen for the fiscal year ended March 31, 2024)

Diluted net income per share attributable to Sony Group Corporation’s stockholders: 187.92 yen (157.14 yen for the fiscal year ended March 31, 2024)

Sony Group Corporation conducted a five-for-one stock split of its common stock effective October 1, 2024, with a record date of September 30, 2024. The above figures for basic net income per share and diluted net income per share are calculated based on the assumption that the stock split was conducted at the beginning of the fiscal year ended March 31, 2024. Refer to Note 26 of the consolidated financial statements.

- 40 -

Operating Performance by Business Segment

The following discussion is based on segment information. Sales in each business segment represents sales recorded before intersegment transactions are eliminated. Operating income (loss) in each business segment represents operating income (loss) reported before intersegment transactions are eliminated and excludes unallocated corporate expenses. Refer to Note 4 of the consolidated financial statements.

Game & Network Services (G&NS)

Key Financial Figures


	Fiscal year ended March 31
	2024		2025
	(Yen in millions)
Sales to external customers by product category
Digital Software and Add-on Content		1,934,586		2,290,498
Network Services		545,537		669,873
Hardware & Others		1,692,871		1,583,200

Sales to external customers		4,172,994		4,543,571
Intersegment sales		94,740		126,473

G&NS segment total sales		4,267,734		4,670,044

G&NS segment operating income		290,184		414,819

The operating performance for the G&NS segment for the fiscal year ended March 31, 2025 is as follows:

Sales: 4 trillion 670.0 billion yen, a 402.3 billion yen increase year-on-year (Impact of foreign exchange rates: +170.0 billion yen)

•

(+) Increase in sales of non-first-party game software titles including add-on content

•

(+) Impact of foreign exchange rates

•

(+) Increase in sales from network services

•

(–) Decrease in sales of hardware due to a decrease in unit sales

•

(–) Decrease in sales of first-party game software titles

Operating income: 414.8 billion yen, a 124.6 billion yen increase year-on-year (Impact of foreign exchange rates: +0.2 billion yen)

•

(+) Impact of increase in sales from network services

•

(+) Impact of increase in sales of non-first-party game software titles

•

(–) Impact of decrease in sales of first-party game software titles

Business Environment and Strategy

The operating performance of the G&NS segment for the fiscal year ended March 31, 2025 reflected steady growth in user engagement amid expansion of the installed base of PS5, benefitting from continued strong sales momentum for game software including add-on content, as well as continuous growth in revenues from network services mainly resulting from users shifting to higher tiers of PlayStation^®Plus (“PS Plus”). In this environment, Sony aims to achieve sustainable and profitable business growth by seeking higher revenue and profits from PS Plus, maximizing average revenue per user on the PlayStation^®Store, expanding sales of first-party game software, in which Sony has been actively strengthening its development capabilities, and strengthening control over business costs and supply chain management. In hardware, Sony will strive to continuously expand the installed base of PS5 while maintaining a balance with profitability, in addition to continuing to promote sales of peripherals such as the PlayStation Portal^™ Remote Player, which provides users with new ways to enjoy games. In Network Services, Sony is focused on driving profitable growth of PS Plus by increasing user engagement and continuously improving the service proposition and content that it provides to users, as well as encouraging users to shift to higher tiers. In non-first-party game software, in addition to maintaining and strengthening relationships with third-party studios in order to continue to benefit from the stable revenue contribution of annual releases of major franchise titles, Sony plans to continue its efforts to support creators in order to promote the development of new hit titles. Regarding Sony’s first-party game software, Sony aims to create a stable base of revenue through consistent, annual releases of single-player games, which have traditionally been its core strength, while also building a portfolio of live service games. Additionally, Sony plans to continue its efforts to deploy its first-party titles to multiple platforms such as PC, and to create films and television shows based on PlayStation game IP through collaborations within the Sony Group, in order to further expand the reach and monetization of its IP.

- 41 -

Music

Key Financial Figures

The Music segment results include the yen-based results of SMEJ and the yen-translated results of SME and SMP, which aggregate the results of their worldwide subsidiaries on a U.S. dollar basis.


	Fiscal year ended March 31
	2024		2025
	(Yen in millions)
Sales to external customers by product category
Recorded Music — Streaming		709,453		788,772
Recorded Music — Others		356,646		407,260
Music Publishing		326,727		379,812
Visual Media & Platform		202,129		244,419

Sales to external customers		1,594,955		1,820,263
Intersegment sales		24,003		22,341

Music segment total sales		1,618,958		1,842,604

Music segment operating income		301,662		357,255

The operating performance for the Music segment for the fiscal year ended March 31, 2025 is as follows:

Sales: 1 trillion 842.6 billion yen, a 223.6 billion yen increase year-on-year (Impact of foreign exchange rates: +73.8 billion yen)

•

(+) Higher revenues from streaming services in Recorded Music and Music Publishing

•

(+) Impact of foreign exchange rates

•

(+) Impact of the consolidation of eplus inc. in Visual Media & Platform

•

(+) Higher revenues from live events, merchandising and licensing in Recorded Music

Operating income: 357.3 billion yen, a 55.6 billion yen increase year-on-year

•

(+) Impact of increase in sales

•

(+) Positive impact of foreign exchange rates

•

(–) Increase in SGA expenses

Business Environment and Strategy

As the music streaming market continued to expand, the operating performance of the Music segment for the fiscal year ended March 31, 2025 reflected steady growth in revenues from streaming services, resulting from Sony’s past proactive efforts to enhance discovery and development of outstanding artists and songwriters, as well as from Sony’s investments in music catalogs. Additionally, growth in revenues from independent label distribution and indie artist services such as The Orchard and AWAL contributed to the growth of the Music segment. In this environment, in the global music business, Sony aims to achieve business growth both in its music business as a whole and in emerging markets with high growth such as Latin America, India and other Asian countries, while maintaining strong relationships with digital streaming platforms. In order to achieve this growth, Sony is striving to explore further strategic investment opportunities in key areas and music catalogs to expand revenue opportunities, discover and develop artists and songwriters, and build and strengthen relationships with local independent labels and artists. Sony is also focusing on expanding businesses aimed at fans of artists and content, such as live events and merchandising. Sony intends to continue working with various partners to explore the use of cutting-edge technologies such as AI in ways that create innovative new music content and realize new ideas, while also protecting the rights of artists. In addition, through collaborations within the Sony Group, Sony aims to expand IP through biopics, documentaries and live events involving Sony Music artists. In the music business in Japan, Sony aims to further expand efforts to bring Japanese artists, such as YOASOBI, to the global market. In Visual Media and Platform, Sony aims to further grow its anime business by strengthening its planning and production capabilities to develop and acquire IP with high potential and by enhancing its ability to expand core IP, including expansion to the global market. For example, in March 2025, Sony established HAYATE Inc. (“HAYATE”) through a joint investment by Aniplex and Crunchyroll to strengthen its capability to plan and produce high-quality anime works with a focus on the global market. Additionally, in its game business, Sony is focusing on creating new hit titles while maximizing the lifetime value of existing titles.

- 42 -

Pictures

Key Financial Figures

The Pictures segment results are the yen-translated results of SPE, which aggregates the results of its worldwide subsidiaries on a U.S. dollar basis. Management analyzes the results of SPE in U.S. dollars, so discussion of certain portions of its results is specified as being on “a U.S. dollar basis.”


	Fiscal year ended March 31
	2024		2025
	(Yen in millions)
Sales to external customers by product category
Motion Pictures		542,044		610,313
Television Productions		551,035		459,281
Media Networks		393,638		428,940

Sales to external customers		1,486,717		1,498,534
Intersegment sales		6,333		7,410

Pictures segment total sales		1,493,050		1,505,944

Pictures segment operating income		117,702		117,284

The operating performance for the Pictures segment for the fiscal year ended March 31, 2025 is as follows (the following analysis is on a U.S. dollar basis):

Sales: 1 trillion 505.9 billion yen, essentially flat year-on-year (U.S. dollar basis: a 416 million decrease year-on-year)

• (–)

Lower series deliveries in Television Productions in part due to production delays related to the strikes by WGA and SAG-AFTRA in the fiscal year ended March 31, 2024

•

(–) Lower linear subscription and advertising revenues in the India business in Media Networks

•

(+) Higher revenues for Crunchyroll mainly due to paid subscriber growth

•

(+) Impact of the acquisition of Alamo Drafthouse Cinema

Operating income: 117.3 billion yen, essentially flat year-on-year (U.S. dollar basis: a 34 million decrease year-on-year)

•

(–) Lower contribution from catalog product in Motion Pictures

•

(–) Impact of decrease in sales

•

(+) Lower marketing costs for theatrical releases

Business Environment and Strategy

Although the operating performance of the Pictures segment for the fiscal year ended March 31, 2025 was impacted by adverse effects of the strikes by WGA and SAG-AFTRA in the fiscal year ended March 31, 2024, impacting Sony’s ability to produce content which mainly led to delays in deliveries of television series in Television Productions, the performance also reflected Sony’s strengths including its strong content IP and its disciplined business operations. Additionally, the DTC anime platform Crunchyroll steadily increased its paid subscribers through its vast content library and an expansion of distribution channels, and expanded its contribution to the operating performance of the Pictures segment. In this environment, Sony aims to continue to maximize the long-term value of its IP by leveraging its strengths as an independent content supplier with the ability to provide content to any distribution platform. In Motion Pictures, in addition to continuously emphasizing the theatrical release of films, Sony aims to strengthen its relationships with talent and creators through its global marketing and theatrical distribution capabilities. Going forward, Sony anticipates the theatrical releases of strong IP lineups, including Spider-Man: Brand New Day in the fiscal year ending March 31, 2027. In Television Productions, Sony will strive to continue to strengthen its production capabilities in a variety of genres and to expand its franchises through the development of spin-offs. In Media Networks, Sony aims to further strengthen its DTC services, including Crunchyroll and SonyLIV. In particular, Crunchyroll is an important growth pillar for the Pictures segment and is striving to reach a broader audience through expanding touchpoints with fans, such as e-commerce for anime merchandise, mobile games, and a manga application, in addition to its streaming service. Additionally, as a hub for synergistic, cross-business collaborations, the Pictures segment aims to contribute to realizing Sony’s “Creative Entertainment Vision.” For example, Sony plans to further expand its films and television shows based on PlayStation game IP as well as cross-business collaborations in anime, such as an anime series adaptation of Ghost of Tsushima to be produced in collaboration with Aniplex, SMEJ and PlayStation Productions. Sony also aims to proactively seek out opportunities for revenue from its existing IP in areas where utilizing IP provides experience value, such as Location-Based Entertainment (“LBE”) and Alamo Drafthouse Cinema, which Sony acquired in June 2024.

- 43 -

Entertainment, Technology & Services (ET&S)

Key Financial Figures


	Fiscal year ended March 31
	2024		2025
	(Yen in millions)
Sales to external customers by product category
TVs		624,264		564,154
Audio & Video		412,067		391,664
Still and Video Cameras		643,429		665,144
Mobile Communications		299,905		279,834
Other		435,281		462,042

Sales to external customers		2,414,946		2,362,838
Intersegment sales		38,772		46,437

ET&S segment total sales		2,453,718		2,409,275

ET&S segment operating income		187,399		190,926

The operating performance for the ET&S segment for the fiscal year ended March 31, 2025 is as follows:

Sales: 2 trillion 409.3 billion yen, a 44.4 billion yen decrease year-on-year (Impact of foreign exchange rates: +78.9 billion yen)

•

(–) Decrease in sales of televisions and smartphones due to a decrease in unit sales

•

(+) Impact of foreign exchange rates

Operating income: 190.9 billion yen, a 3.5 billion yen increase year-on-year (Impact of foreign exchange rates: +12.3 billion yen)

•

(+) Reductions in operating expenses

•

(+) Positive impact of foreign exchange rates

•

(–) Impact of decrease in sales of televisions

•

(–) Increase in restructuring costs

Business Environment and Strategy

In the fiscal year ended March 31, 2025, amid a continuous challenging business environment, although sales decreased due to lower unit sales of televisions as well as lower unit sales of smartphones resulting from a review of the product lineup and intensified competition, the operating performance of the ET&S segment reflected the results of various measures implemented to respond swiftly to changes in the business environment, such as fixed cost reduction initiatives including thorough supply chain optimization and structural reforms, as well as efforts to prioritize profitability in each business and shift to high-value added products. In this environment, Sony is steadily expanding its businesses centered around creation, such as the highly profitable imaging business, and promoting mid-term business transformation with the goals of “enhancing corporate value” and “generating cash flow” under its business direction of “establishing a business structure for maintaining profitability and growth strategy.” In the television and smartphone businesses, Sony intends to promote structural transformations in sales, manufacturing and design, aiming to improve profit levels and reduce volatility in order to control risk. Sony believes that the display and transmission technologies utilized for televisions and smartphones are essential for the expansion of creation, and is aiming for future business transformation by prioritizing the development of creation technology rather than pursuing sales expansion in these businesses. In the imaging and sound businesses, Sony aims to achieve further growth by strengthening its stable revenue base and expanding business areas. In the imaging business, Sony aims to leverage its competitive advantages based on its technological and product capabilities to expand its business domain and build an ecosystem. Similarly, in the sound business, Sony aims to build an end-to-end ecosystem that encompasses sound production and consumer products. In business areas such as solutions in the imaging business and creation in the sound business, Sony will strive to enhance creator expression by adding the value of software based on technologies cultivated in its existing businesses, aiming to expand its operations through the diversification of creation and to broaden the creator base. In areas such as the sports and new content creation businesses, Sony intends to make proactive investments while maintaining discipline to accelerate the evolution of its business models and the expansion of its value chain. In the sports business, Sony aims to evolve its business from officiating support to the creation of new entertainment utilizing data enhancement technology. In the new content creation business, Sony aims to leverage technologies such as spatial capturing and creative tools to foster the emergence of a new creation industry.

- 44 -

Imaging & Sensing Solutions (I&SS)

Key Financial Figures


	Fiscal year ended March 31
	2024		2025
	(Yen in millions)
Sales to external customers		1,503,906		1,712,534
Intersegment sales		98,832		86,471

I&SS segment total sales		1,602,738		1,799,005

I&SS segment operating income		193,541		261,147

The operating performance for the I&SS segment for the fiscal year ended March 31, 2025 is as follows:

Sales: 1 trillion 799.0 billion yen, a 196.3 billion yen increase year-on-year (Impact of foreign exchange rates: +95.9 billion yen)

•

(+) Impact of foreign exchange rates

•

(+) Increase in sales of image sensors for mobile products

•

(+) Improvement in product mix

•

(+) Increase in unit sales

Operating income: 261.1 billion yen, a 67.6 billion yen increase year-on-year (Impact of foreign exchange rates: +63.4 billion yen)

•

(+) Positive impact of foreign exchange rates

•

(+) Impact of increase in sales

•

(+) Decrease in costs associated with the launch of mass production of a new image sensor for mobile products

•

(–) Increase in manufacturing costs

•

(–) Increase in depreciation and amortization expenses

Business Environment and Strategy

The operating performance of the I&SS segment in the fiscal year ended March 31, 2025 reflected the positive impact of foreign exchange rates, the continued trend toward larger size, higher image quality and higher performance image sensors for mobile products, primarily in high-end smartphones, and the resolution of the manufacturing yield issues that began in the fiscal year ended March 31, 2024, which led to both sales and operating income reaching record highs. In this environment, Sony is working to restructure its management foundation for growth with profitability to further strengthen its number one position in image sensors worldwide, despite increasing uncertainties in the business environment. Sony has divided the business of the I&SS segment into three business areas – the growth-driving business area, the profitable business area and the strategic business area – and operates each in accordance with the strategic direction of each business area. In the image sensor business for mobile products, which has been positioned as the growth-driving business area, Sony plans to continue to enhance its technological capabilities and invest in growth to win out over the competition. At present, the smartphone market is experiencing a gradual recovery, and the trend toward larger image sensors continues to advance steadily. Looking ahead, in addition to the trend toward larger size, Sony aims to achieve future business growth by realizing further high-value add in image sensors and contributing to various creations through utilizing video by pursuing technological innovations through higher density. Specifically, Sony aims to increase density in the horizontal plane through process node adaptation, which refers to the development of advanced process technologies, and increase density in the vertical plane through multi-layered stacking technology. In the image sensor businesses for cameras and industrial and social infrastructure, which have been positioned as the profitable business area, Sony aims to maintain high competitiveness and stable revenue contributions. Regarding the strategic business area, which includes the image sensor business for automotive, the system solutions business, the semiconductor laser business and the display device business, Sony plans to operate these businesses with discipline while balancing business expansion and profitability to establish these businesses as pillars for future growth. The image sensor business for automotive has been growing steadily and Sony’s market share by revenue has been expanding as expected. As the market expands, Sony will strive to further enhance its comprehensive strength in sensors and continue to build and strengthen engagement with global OEMs and partners with the aim of increasing revenue. In the semiconductor laser business, Sony expects an increase in demand over the mid- to long-term as demand for storage in the data center market increases with the expansion of generative AI. Under these circumstances, although Sony has not changed its strategy of carefully selecting investments and reducing capital expenditures for the I&SS segment in the fifth mid-range plan compared to the fourth mid-range plan, investment is anticipated to increase compared to the forecast as of May 2024 due to the earlier-than-expected introduction of the above-mentioned advanced processes for the image sensors business for mobile products. At the same time, in addition to exploring various options to alleviate the ongoing investment burden, Sony aims to maintain positive free cash flow as its financial discipline, and plans to fund necessary capital expenditures with the cash flow generated from the I&SS segment.

- 45 -

Financial Services

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

Key Financial Figures


	Fiscal year ended March 31
	2024		2025
	(Yen in millions)
Financial services revenue		1,769,954		931,400
Financial Services segment operating income		173,576		130,528

The operating performance for the Financial Services segment for the fiscal year ended March 31, 2025 is as follows:

Financial Services revenue: 931.4 billion yen, an 838.6 billion yen decrease year-on-year

•

(–) Decrease in revenue at Sony Life (863.8 billion yen decrease, revenue: 660.1 billion yen)

•

(–) Decrease in net gains on investments related to market fluctuations in the separate accounts

Operating income: 130.5 billion yen, a 43.0 billion yen decrease year-on-year

• (–)

Recording of realized and remeasurement gains resulting from the transfer of a portion of shares of Sony Payment Services in the fiscal year ended March 31, 2024 (-19.8 billion yen)

• (–)

Decrease in operating income at Sony Life (13.1 billion yen decrease, Sony Life’s operating income: 113.4 billion yen)

•

(–) Decrease in net gains related to market fluctuations, mainly for minimum guarantees for variable life insurance

Business Environment and Strategy

The operating performance of the Financial Services segment for the fiscal year ended March 31, 2025 reflected conditions in the Japanese economy and bond market. The Japanese economy did not see a robust recovery in personal consumption and encountered several challenges, including sustained high import prices mainly due to the weak yen and prolonged high prices due to increasing food prices. The bond market in Japan was significantly affected by trends in the U.S. and Japanese economy and monetary policies. Until the summer of 2024, the anticipation of the Bank of Japan scaling back its bond purchases resulted in increasing long-term interest rates in Japan above 1%. However, in August, rising unemployment rates and growing recession concerns in the U.S. led to significant instability in the international financial markets, causing long-term interest rates in Japan to fall back below 1%. In the latter half of the fiscal year ended March 31, 2025, as the excessive pessimism surrounding the U.S. economy began to recede, expectations of additional interest rate hikes by the Bank of Japan increased due to the risk of an increase in domestic prices, and long-term interest rates in Japan strengthened their upward trend. In January 2025, the policy interest rate was raised to 0.5%, and in the spring wage negotiations of the same year, wage increases surpassed those of the previous year, leading to long-term interest rates in Japan exceeding 1.5% in March for the first time in approximately 16 years. In this environment, to mitigate the interest rate sensitivity against the result of the Financial Services segment, Sony is taking steps to sell and replace the bonds it currently holds and is reissuing certain existing contract blocks. In addition, Sony plans to execute the Partial Spin-off of the Financial Services business, resulting in SFGI becoming an affiliate of Sony accounted for using the equity method. Even after the execution of the Partial Spin-off of the Financial Services business, Sony aims to strengthen collaboration between the Financial Services business and the Sony Group through Sony’s brand and technology for the further growth of the Financial Services business. Regarding the brand, even after the execution of the Partial Spin-off of the Financial Services business, Sony Financial Group expects to be able to use the Sony brand continuously and aims to further improve the value of the brand of the Financial Services business through business collaboration with the Sony Group. From a technological perspective, Sony Financial Group intends to create a seamless customer experience from non-financial to financial by utilizing the technology, IP, and entertainment resources of the Sony Group in areas such as development of a Borderless Digital Banking service leveraging Web3-related technologies, data analysis and utilization for sales support for Lifeplanner sales specialists, customer support assisted by AI and utilization of game-related technologies and content for use in rehabilitation. Sony Financial Group plans to substantially integrate the core competencies of each of its steadily growing businesses into Sony Life, which it believes has

- 46 -

the greatest potential for added value. Going forward, Sony Financial Group intends to focus on delivering value as a cohesive financial group centered around Sony Life. In addition to profit growth of its existing businesses centered around Sony Life, Sony Financial Group plans to leverage the core competencies of each of its businesses, such as Sony Assurance’s high brand recognition and customer acquisition capabilities and Sony Bank’s foundation for fund circulation, across its business to deliver new added value to customers, aiming for further growth.

Information on Operations Separating Out the Financial Services segment

The following schedules show unaudited condensed statements of income for the Financial Services segment and all other segments excluding the Financial Services segment. These presentations are not in accordance with IFRS Accounting Standards, which is used by Sony to prepare its consolidated financial statements. However, because the Financial Services segment is different in nature from Sony’s other segments, Sony believes that a comparative presentation may be useful in understanding and analyzing Sony’s consolidated financial statements. Transactions between the Financial Services segment and Sony without the Financial Services segment are included in those respective presentations, then eliminated in the consolidated figures shown below.


	Fiscal year ended March 31
Financial Services segment	2024			2025
	(Yen in millions)
Financial services revenue		1,769,954			931,400
Financial services expenses		1,615,594			798,954
Other operating (income) expense, net		(19,271	)		1,982

		1,596,323			800,936

Share of profit (loss) of investments accounted for using the equity method		(55	)		64

Operating income		173,576			130,528
Financial income (expenses), net		—			—

Income before income taxes		173,576			130,528
Income taxes		49,063			56,359

Net income		124,513			74,169
Net income of Financial Services		123,986			74,169

Net income attributable to noncontrolling interests		527			—


	Fiscal year ended March 31
Sony without Financial Services segment	2024			2025
	(Yen in millions)
Sales		11,265,043			12,043,903
Costs of sales		8,101,990			8,514,325
Selling, general and administrative		2,148,472			2,256,294
Other operating (income) expense, net		(10,133	)		(11,224	)

		10,240,329			10,759,395
Share of profit (loss) of investments accounted for using the equity method		10,557			(7,865	)

Operating income		1,035,271			1,276,643
Financial income (expenses), net		109,864			66,530

Income before income taxes		1,145,135			1,343,173
Income taxes		239,105			257,467

Net income		906,030			1,085,706
Net income of Sony without Financial Services		896,636			1,067,419

Net income attributable to noncontrolling interests		9,394			18,287

- 47 -


	Fiscal year ended March 31
Consolidated	2024			2025
	(Yen in millions)
Sales		11,260,037			12,034,917
Financial services revenue		1,760,731			922,147

Total sales and financial services revenue		13,020,768			12,957,064
Costs of sales		8,089,317			8,504,810
Selling, general and administrative		2,156,156			2,256,829
Financial services expenses		1,606,370			789,702
Other operating (income) expenses, net		(29,404	)		(9,241	)

		11,822,439			11,542,100
Share of profit (loss) of investments accounted for using the equity method		10,502			(7,801	)

Operating income		1,208,831			1,407,163
Financial income (expenses), net		59,831			66,563

Income before income taxes		1,268,662			1,473,726
Income taxes		288,168			313,839

Net income		980,494			1,159,887

Net income attributable to Sony Group Corporation’s Stockholders		970,573			1,141,600

Net income attributable to noncontrolling interests		9,921			18,287

All Other

Sales for the fiscal year ended March 31, 2025 increased 7.0 billion yen year-on-year to 96.3 billion yen. An operating loss of 18.0 billion yen was recorded, compared to operating income of 1.6 billion yen in the fiscal year ended March 31, 2024. This deterioration was mainly due to a deterioration in the share of profit or loss of investments accounted for using the equity method, partially offset by the impact of the above-mentioned increase in sales.

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Foreign Exchange Fluctuations and Risk Hedging

During the fiscal year ended March 31, 2025, the average rates of the yen were 152.5 yen against the U.S. dollar and 163.6 yen against the euro, which were 8.1 yen and 7.0 yen weaker, respectively, than the fiscal year ended March 31, 2024.

For the fiscal year ended March 31, 2025, consolidated sales were 12 trillion 957.1 billion yen, essentially flat year-on-year. On a constant currency basis, sales decreased approximately 4% year-on-year. For further details about the impact of foreign exchange rate fluctuations on sales and operating income, refer to “Note: Sales on a Constant Currency Basis and the Impact of Foreign Exchange Rate Fluctuations” below.

The table below indicates the foreign exchange impact on sales and operating results in each of the G&NS, ET&S and I&SS segments. For further details, refer to “Operating Performance by Business Segment” which discusses the impact of foreign exchange rates within segments and categories where foreign exchange rate fluctuations had a significant impact.


		Fiscal year ended March 31				Impact of changes in foreign exchange rates
		2024		2025		2024 to 2025
		(Yen in billions)
G&NS	Sales		4,267.7		4,670.0		+170.0
	Operating income		290.2		414.8		+0.2
ET&S	Sales		2,453.7		2,409.3		+78.9
	Operating income		187.4		190.9		+12.3
I&SS	Sales		1,602.7		1,799.0		+95.9
	Operating income		193.5		261.1		+63.4

During the fiscal year ended March 31, 2025, sales for the Music segment increased 14% year-on-year to 1 trillion 842.6 billion yen, while sales increased approximately 9% year-on-year on a constant currency basis. In the Pictures segment, sales were 1 trillion 505.9 billion yen, essentially flat year-on-year, while sales decreased approximately 4% on a U.S. dollar basis. For a detailed analysis of segment performance, refer to the Music and Pictures segments under “Operating Performance by Business Segment.” Sony’s Financial Services segment consolidates the yen-based results of SFGI. As most of the operations in this segment are based in Japan, Sony management analyzes the performance of the Financial Services segment on a yen basis only.

During the fiscal year ended March 31, 2025, Sony estimated that a one yen appreciation against the U.S. dollar would have decreased sales in the G&NS, ET&S and I&SS segments by approximately 31.8 billion yen, with a corresponding decrease in operating income of approximately 1.3 billion yen. A one yen appreciation against the euro was estimated to decrease sales in these segments by approximately 11.8 billion yen, with a corresponding decrease in operating income of approximately 6.5 billion yen. For more details, refer to “Risk Factors” in “Item 3. Key Information.”

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

In order to reduce the risk caused by foreign exchange rate fluctuations, Sony employs derivatives, including foreign exchange forward contracts and foreign currency option contracts, in accordance with a consistent risk management strategy. Such derivatives are used primarily to mitigate the effect of foreign currency exchange rate fluctuations on cash flows generated or anticipated by Sony’s transactions and accounts receivable and payable denominated in foreign currencies.

Sony Global Treasury Services Plc (“SGTS”) in the U.K. provides integrated treasury services for Sony Group Corporation, its subsidiaries, and affiliated companies. Sony’s policy is that Sony Group Corporation and all subsidiaries with foreign exchange exposures should enter into commitments with SGTS to hedge their

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exposures. Sony Group Corporation and most of its subsidiaries utilize SGTS for this purpose. Sony’s policy of concentrating its foreign exchange exposures means that SGTS and Sony Group Corporation hedge most of the net foreign exchange exposure within the Sony group. Sony has a policy on the use of derivatives whereby, in principle, SGTS should centrally deal with and manage derivatives with financial institutions for risk management purposes. SGTS enters into foreign exchange transactions with creditworthy third-party financial institutions. Most of these transactions are entered into to address projected exposures before the actual export and import transactions take place. In general, SGTS hedges the projected exposures for a period of the current month or one month before the actual transactions take place. Sony enters into foreign exchange transactions with financial institutions primarily for hedging purposes. Sony does not use these derivative financial instruments for trading or speculative purposes except for certain derivatives in the Financial Services segment. In the Financial Services segment, Sony uses derivatives primarily for asset liability management.

Changes in the fair value of derivatives designated as cash flow hedges are initially recorded in accumulated other comprehensive income and reclassified into earnings when the hedged transaction affects earnings. Foreign exchange forward contracts, foreign currency option contracts and other derivatives that do not qualify as hedges are marked-to-market with changes in value recognized in financial income and expenses. The net fair value of all the foreign exchange derivative contracts as of March 31, 2024 and 2025 was an asset of 2.9 billion yen and a liability of 0.5 billion yen, respectively. Refer to Note 15 of the consolidated financial statements.

Note:

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

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

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

The impact of foreign exchange rate fluctuations on sales is calculated by applying the change in the yen’s periodic weighted average exchange rate for the previous fiscal year from the current fiscal year to the major transactional currencies in which the sales are denominated. The impact of foreign exchange rate fluctuations on operating income (loss) is calculated by subtracting from the impact on sales the impact on cost of sales and SGA expenses calculated by applying the same major transactional currencies calculation process to cost of sales and SGA expenses as for the impact on sales. The I&SS segment enters into its own foreign exchange hedging transactions, and the impact of those transactions is included in the impact of foreign exchange rate fluctuations on sales and operating income (loss) for that segment.

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

Assets, Liabilities and Stockholders’ Equity

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

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Condensed Statements of Financial Position


	Yen in millions
	Financial Services				Sony without Financial Services				Consolidated
	March 31, 2024		March 31, 2025		March 31, 2024		March 31, 2025		March 31, 2024		March 31, 2025
ASSETS
Current assets:
Cash and cash equivalents *1	¥	913,815	¥	1,216,277	¥	993,298	¥	1,764,679	¥	1,907,113	¥	2,980,956
Investments and advances in the Financial Services segment *2		398,153		453,677		—		—		398,153		453,677
Trade and other receivables, and contract assets		127,016		126,052		2,033,170		1,820,688		2,158,196		1,943,184
Inventories		—		—		1,518,644		1,310,770		1,518,644		1,310,770
Other financial assets		57,254		117,719		68,111		27,473		125,365		145,192
Other current assets		50,487		25,882		625,539		604,486		669,335		621,209

Total current assets		1,546,725		1,939,607		5,238,762		5,528,096		6,776,806		7,454,988
Non-current assets:
Investments accounted for using the equity method		4,905		3,171		418,839		344,547		423,744		347,718
Investments and advances in the Financial Services segment *2		18,939,794		18,736,298		—		—		18,939,794		18,736,298
Investments in Financial Services, at cost		—		—		550,483		550,483		—		—
Property, plant and equipment		14,162		13,335		1,508,151		1,499,998		1,522,640		1,513,660
Right-of-use assets		76,288		76,291		428,224		446,455		503,395		521,685
Goodwill and intangible assets, including content assets *3		77,323		86,601		3,953,492		4,342,380		4,030,815		4,428,981
Deferred tax assets		—		3,149		520,613		546,501		499,550		559,284
Other financial assets		52,882		60,496		848,599		1,108,426		897,341		1,164,630
Other non-current assets		165,049		153,880		421,258		484,529		513,405		565,929

Total non-current assets		19,330,403		19,133,221		8,649,659		9,323,319		27,330,684		27,838,185

Total assets	¥	20,877,128	¥	21,072,828	¥	13,888,421	¥	14,851,415	¥	34,107,490	¥	35,293,173

LIABILITIES AND EQUITY
Current liabilities:
Short-term borrowings	¥	1,802,337	¥	1,872,486	¥	227,979	¥	258,918	¥	2,030,316	¥	2,131,404
Trade and other payables		61,153		93,010		2,005,112		2,010,444		2,064,905		2,100,144
Deposits from customers in the banking business		3,670,567		3,981,193		—		—		3,670,567		3,981,193
Income taxes payables		10,050		5,902		142,024		83,583		152,074		89,485
Participation and residual liabilities in the Pictures segment		—		—		251,743		236,752		251,743		236,752
Other financial liabilities		77,523		74,680		38,522		36,009		116,044		110,689
Other current liabilities		209,555		225,531		1,704,158		1,822,993		1,906,396		2,039,121

Total current liabilities		5,831,185		6,252,802		4,369,538		4,448,699		10,192,045		10,688,788
Non-current liabilities:
Long-term debt		703,106		690,249		1,355,011		1,376,593		2,058,117		2,066,842
Defined benefit liabilities		39,284		38,806		208,299		198,135		247,583		236,941
Deferred tax liabilities		36,368		8,202		165,877		172,139		166,424		175,228
Insurance contract liabilities		12,931,995		12,689,306		—		—		12,931,995		12,689,306
Participation and residual liabilities in the Pictures segment		—		—		206,081		188,919		206,081		188,919
Other financial liabilities		214,414		313,800		175,263		263,675		386,761		574,351
Other non-current liabilities		7,607		6,751		176,767		177,380		162,379		162,647

Total non-current liabilities		13,932,774		13,747,114		2,287,298		2,376,841		16,159,340		16,094,234

Total liabilities		19,763,959		19,999,916		6,656,836		6,825,540		26,351,385		26,783,022
Equity:
Stockholders’ equity of Financial Services		1,113,169		1,072,912		—		—		—		—
Stockholders’ equity of Sony without Financial Services		—		—		7,062,657		7,695,469		—		—
Sony Group Corporation’s stockholders’ equity		—		—		—		—		7,587,177		8,179,745
Noncontrolling interests		—		—		168,928		330,406		168,928		330,406

Total equity		1,113,169		1,072,912		7,231,585		8,025,875		7,756,105		8,510,151

Total liabilities and equity	¥	20,877,128	¥	21,072,828	¥	13,888,421	¥	14,851,415	¥	34,107,490	¥	35,293,173

*1 Refer to “Cash Flows” below for details regarding the factors affecting Cash and cash equivalents as of March 31, 2025 in Sony without the Financial Services segment.

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*2 Refer to Note 5 of the consolidated financial statements for the fluctuations of Investments and advances in the Financial Services segment as of March 31, 2024 and March 31, 2025, respectively.

*3 Goodwill and intangible assets, including content assets as of March 31, 2025 in Sony without the Financial Services segment increased year-on-year mainly due to an increase in content assets in the Music and Pictures segments.

Cash Flows

Operating Activities: During the fiscal year ended March 31, 2025, there was a net cash inflow of 2 trillion 321.7 billion yen from operating activities, an increase of 948.5 billion yen year-on-year.

For all segments excluding the Financial Services segment, there was a net cash inflow of 1 trillion 972.4 billion yen, an increase of 794.6 billion yen year-on-year. This increase was primarily due to a decrease in trade receivables and contract assets compared to an increase in the previous fiscal year, and a year-on-year increase in income before income taxes after taking into account non-cash adjustments (including depreciation and amortization, including amortization of contract costs, as well as other operating (income) expense, net, and (gain) loss on securities, net), an increase in trade payables compared to a decrease in the previous fiscal year, and a larger decrease in inventories. This increase in net cash inflow was partially offset by the negative impact of a larger increase in content assets.

In the Financial Services segment, there was a 350.3 billion yen net cash inflow, an increase of 103.9 billion yen year-on-year. This increase was mainly due to a smaller increase in mortgage loans at Sony Bank.

Investing Activities: During the fiscal year ended March 31, 2025, Sony used 930.1 billion yen of net cash in investing activities, an increase of 111.2 billion yen year-on-year.

For all segments excluding the Financial Services segment, there was a net cash outflow of 904.4 billion yen, an increase of 110.2 billion yen year-on-year. This increase was mainly due to a year-on-year increase in payments for purchases of businesses and other.

The Financial Services segment used 26.9 billion yen of net cash in investing activities, essentially flat year-on-year.

Financing Activities: During the fiscal year ended March 31, 2025, Sony used 298.2 billion yen of net cash in financing activities, an increase of 87.5 billion yen year-on-year.

For all segments excluding the Financial Services segment, there was a net cash outflow of 277.2 billion yen, an increase of 79.9 billion yen year-on-year. This increase was mainly due to a year-on-year decrease in proceeds from the issuance of long-term debt.

In the Financial Services segment, there was a 20.9 billion yen net cash outflow, a decrease of 42.4 billion yen year-on-year. This decrease was mainly due to the absence of dividend payments.

Accounting for the above factors and the effect of fluctuations in foreign exchange rates, the total outstanding balance of cash and cash equivalents as of March 31, 2025 was 2 trillion 981.0 billion yen. Cash and cash equivalents of all segments excluding the Financial Services segment was 1 trillion 764.7 billion yen as of March 31, 2025, an increase of 771.4 billion yen compared with the balance as of March 31, 2024. Within the Financial Services segment, the outstanding balance of cash and cash equivalents was 1 trillion 216.3 billion yen as of March 31, 2025, an increase of 302.5 billion yen compared with the balance as of March 31, 2024.

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Information on Cash Flows Separating Out the Financial Services Segment

The following schedule shows unaudited condensed statements of cash flows for the Financial Services segment and all other segments excluding the Financial Services segment. These presentations are not in accordance with IFRS Accounting Standards, which is used by Sony to prepare its consolidated financial statements. However, because the Financial Services segment is different in nature from Sony’s other segments, Sony believes that a comparative presentation may be useful in understanding and analyzing Sony’s consolidated financial statements. Transactions between the Financial Services segment and Sony without the Financial Services segment are included in those respective presentations, then eliminated in the consolidated figures shown below.

Condensed Statements of Cash Flows


	Yen in millions
	Fiscal year ended March 31
	Financial Services						Sony without Financial Services						Consolidated
	2024			2025			2024			2025			2024			2025
Cash flows from operating activities:
Income (loss) before income taxes		173,576			130,528			1,145,135			1,343,173			1,268,662			1,473,726
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		27,689			27,399			1,117,292			1,125,588			1,144,981			1,152,987
Other operating (income) expense, net		(19,271	)		1,981			(10,133	)		(11,222	)		(29,404	)		(9,241	)
(Gain) loss on securities, net (other than Financial Services segment)		—			—			(73,166	)		(75,742	)		(73,166	)		(75,742	)
Changes in assets and liabilities:
(Increase) decrease in trade receivables and contract assets		(20,843	)		959			(200,071	)		226,098			(243,646	)		228,623
(Increase) decrease in inventories		—			—			75,641			199,916			75,641			199,916
(Increase) decrease in investments and advances in the Financial Services segment		(1,748,913	)		(824,443	)		—			—			(1,748,913	)		(824,443	)
(Increase) decrease in content assets		—			—			(486,183	)		(683,388	)		(486,183	)		(683,388	)
Increase (decrease) in trade payables		27,116			31,309			(40,882	)		107,601			9,188			136,952
Increase (decrease) in insurance contract liabilities, net of insurance contract assets		1,370,580			573,749			—			—			1,370,580			573,749
Increase (decrease) in deposits from customers in the banking business		536,688			401,014			—			—			536,688			401,014
Increase (decrease) in borrowings in the life insurance business and the banking business		(41,516	)		66,783			—			—			(41,516	)		66,783
Increase (decrease) in taxes payable other than income taxes, net		387			(1,304	)		(22,878	)		(14,157	)		(22,491	)		(15,461	)
Other		(59,081	)		(57,649	)		(326,927	)		(245,428	)		(387,208	)		(303,800	)

Net cash provided by (used in) operating activities		246,412			350,326			1,177,828			1,972,439			1,373,213			2,321,675

Cash flows from investing activities:
Payments for property, plant and equipment and other intangible assets		(18,167	)		(26,542	)		(606,844	)		(622,187	)		(623,946	)		(647,527	)
Payments for investments and advances (other than Financial Services segment)		—			—			(95,506	)		(98,536	)		(95,506	)		(98,536	)
Proceeds from sales or return of investments and collections of advances (other than Financial Services segment)		—			—			92,679			46,540			92,679			46,540
Other		(7,560	)		(382	)		(184,553	)		(230,215	)		(192,113	)		(230,597	)

Net cash provided by (used in) investing activities		(25,727	)		(26,924	)		(794,224	)		(904,398	)		(818,886	)		(930,120	)

Cash flows from financing activities:
Increase (decrease) in borrowings, net		(11,633	)		(21,545	)		90,289			(48,827	)		78,656			(70,372	)
Dividends paid		(50,037	)		—			(98,620	)		(115,253	)		(98,620	)		(115,253	)
Other		(1,693	)		605			(188,977	)		(113,111	)		(190,745	)		(112,618	)

Net cash provided by (used in) financing activities		(63,363	)		(20,940	)		(197,308	)		(277,191	)		(210,709	)		(298,243	)

Effect of exchange rate changes on cash and cash equivalents		—			—			82,595			(19,469	)		82,595			(19,469	)

Net increase (decrease) in cash and cash equivalents		157,322			302,462			268,891			771,381			426,213			1,073,843
Cash and cash equivalents at beginning of the fiscal year		756,493			913,815			724,407			993,298			1,480,900			1,907,113

Cash and cash equivalents at end of the fiscal year		913,815			1,216,277			993,298			1,764,679			1,907,113			2,980,956

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B.	Liquidity and Capital Resources

The description below covers basic financial policy and figures for Sony’s consolidated operations except for the Financial Services segment and certain subsidiaries, which secure liquidity on their own. Furthermore, the Financial Services segment is described separately in this section.

Liquidity Management and Market Access

Funding requirements that arise from maintaining liquidity are principally covered by cash flow from operating and investing activities (including asset sales) and by the available cash balance; however, Sony also raises funds as needed from financial and capital markets through means such as corporate bonds, CP and bank loans.

Sony Group Corporation, SGTS and Sony Capital Corporation (“SCC”), a finance subsidiary in the U.S., maintain CP programs with access to the Japanese, U.S. and European CP markets. The borrowing limits under these CP programs, translated into yen, were 1 trillion 246.8 billion yen in total for Sony Group Corporation, SGTS and SCC as of March 31, 2025. There were no amounts outstanding under the CP programs as of March 31, 2025.

If disruption and volatility occur in financial and capital markets and Sony becomes unable to raise sufficient funds from these sources, Sony may also draw down funds from contractually committed lines of credit from various financial institutions. Sony has a total, translated into yen, of 760.7 billion yen in unused committed lines of credit, as of March 31, 2025. Details of those committed lines of credit are: a 350.0 billion yen committed line of credit contracted with a syndicate of Japanese banks, a 1.7 billion U.S. dollar multi-currency committed line of credit also contracted with a syndicate of Japanese banks and a 1.05 billion U.S. dollar multi-currency committed line of credit contracted with a syndicate of foreign banks. Sony currently believes that it can sustain sufficient liquidity through access to committed lines of credit with financial institutions, together with its available cash balance, even in the event that financial and capital markets become illiquid.

Sony considers one of management’s top priorities to be the maintenance of stable and appropriate credit ratings in order to ensure financial flexibility for liquidity and capital management and continued adequate access to sufficient funding resources in the financial and capital markets. However, in the event of a downgrade in Sony’s credit ratings, there are no financial covenants in any of Sony’s material financial agreements with financial institutions that would cause an acceleration of the obligation. Even though the cost of borrowing for some committed lines of credit could change according to Sony’s credit ratings, there are no financial covenants that would cause any impairment on the ability to draw down on unused facilities.

Cash Management

Sony manages its global cash management activities primarily through Sony Group Corporation in Japan, SCC in the U.S. and SGTS in other regions. The excess or shortage of cash at most of Sony’s subsidiaries is invested or funded by Sony Group Corporation, SGTS and SCC on a net basis, although Sony recognizes that fund transfers are limited in certain countries and geographic areas due to restrictions on capital transactions. In order to pursue more efficient cash management, cash surpluses among Sony’s subsidiaries are deposited with Sony Group Corporation, SGTS and SCC, and cash shortfalls among subsidiaries are covered by loans through Sony Group Corporation, SGTS and SCC, so that Sony can make use of excess cash balances and reduce third-party borrowings. Where local restrictions prevent an efficient intercompany transfer of funds, Sony’s intent is that cash balances remain outside of Sony Group Corporation, SGTS and SCC and that Sony meets its liquidity needs through ongoing cash flows, external borrowings, or both. Sony does not expect restrictions of capital transactions on amounts held outside of Japan to have a material effect on Sony’s overall liquidity, financial condition or results of operations.

Financial Services segment

The management of SFGI, Sony Life, Sony Assurance and Sony Bank recognizes the importance of securing sufficient liquidity to cover the payment of obligations that these companies incur in the ordinary course of business. Sony Life, Sony Assurance and Sony Bank maintain a sufficient cash balance and secure sufficient means to meet their obligations while abiding by laws and regulations such as the Insurance Business Act or the

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Banking Act of Japan, and restrictions imposed by the FSA and other regulatory authorities as well as establishing and operating under company guidelines that comply with these regulations. Sony Life and Sony Assurance establish a sufficient level of liquidity for the smooth payment of insurance claims by investing, primarily in securities, their cash inflows, which come mainly from policyholders’ insurance premiums. Sony Bank maintains a necessary level of liquidity for the smooth settlement of transactions by using its cash inflows, which come mainly from customers’ deposits in local currency, to offer mortgage loans to individuals and to invest mainly in marketable securities. Cash inflows from customers’ deposits in foreign currencies are invested mainly in investment instruments of the same currency.

In addition, Sony’s subsidiaries in the Financial Services segment are subject to the Insurance Business Act and the Banking Act, which require insurance and banking business companies to maintain their financial credibility and to secure protection for policyholders and depositors in view of the public nature of insurance and banking services. As such, lending and borrowing between subsidiaries in the Financial Services segment and the other companies within Sony Group is strictly limited. Sony’s subsidiaries in the Financial Services segment are managed separately from Sony’s cash management activities through Sony Group Corporation, SGTS and SCC as mentioned above.

For further information about Sony’s views regarding utilization of cash flow from operating activities generated within the Sony Group for strategic investments, shareholder returns and as cash on hand, refer to “Issues Facing Sony and Management’s Response to those Issues: Fifth Mid-Range Plan — Financial Targets, Capital Allocation and their Progress” in Item 5.D.

Off-balance Sheet Transactions

Sony has certain off-balance sheet transactions that provide liquidity, capital resources and/or credit risk support. These transactions in which Sony has relinquished control of trade receivables are accounted for as sales. Certain trade receivable sales programs also involve structured entities. Refer to Note 28 of the consolidated financial statements.

Contractual Obligations, Commitments, and Contingent Liabilities

Sony’s contractual obligations, commitments and contingent liabilities are summarized as follows:

Short-term borrowings and long-term debt

Refer to Note 6 and Note 14 of the consolidated financial statements.

Loan commitments, purchase commitments and litigation

Refer to Note 32 of the consolidated financial statements.

Insurance contract liabilities

Refer to Note 13 of the consolidated financial statements.

C.	Research and Development

Under its Purpose to “fill the world with emotion (Kando) through the power of creativity and technology,” Sony has set forth “Creation Shift” as its management direction and “Creative Entertainment Vision” as its long-term vision for where it wants to be in 10 years. Under this direction and this vision, Sony provides technologies and solutions for creators.

The role of Sony’s R&D is to develop technologies that support creators and unleash their creativity. Sony’s R&D direction is “We are here for creators.” Sony defines “creators” broadly, to include artists, engineers, scientists, and everyone who endeavors to build a positive future with Kando.

In line with this R&D direction, by building a technological foundation that enables the development of both new and existing businesses, Sony pursues R&D pertaining to a series of creation technologies. This translates into focusing on three technological areas for Sony’s future—sensing, AI, and digital virtual worlds - and developing technologies that maximize creativity, IP value, and fan engagement. To develop these creation technologies, it is important to respect diversity in three areas: various content fields, culture (which includes language), and the viewpoints of people across different demographics. Sony’s R&D teams must also be diverse, bringing varied expertise and experiences to bear. In an effort to address this social issue, Sony works to support

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diverse, outstanding research talent, which is necessary for technological innovation. As part of this effort, together with the world’s leading science journal Nature, Sony launched the “Sony Women in Technology Award with Nature” in March 2024 to annually recognize three next-generation women researchers whose work is driving positive impact on the planet and society. The first winners of the award were announced in February 2025.

Through technology, Sony will continue to provide diverse creators with the power to unleash their creativity.

Sony’s research and development organizations carry out various R&D activities in collaboration with multiple R&D organizations located both inside and outside of Japan, utilizing the different characteristics and strengths of each area. In addition to aiming to acquire excellent local R&D personnel, Sony will strive to strengthen collaboration with external creators and academia, without limiting itself within its own organization. Sony is already promoting various activities such as joint development with universities around the world, and plans to further expand such activities in the future.

R&D costs for the fiscal year ended March 31, 2025 decreased 8.2 billion yen (1.1%) year-on-year to 734.6 billion yen. The ratio of R&D costs to consolidated sales excluding the Financial Services segment was 6.1%, compared to 6.6% in the previous fiscal year.

The following table shows a breakdown of R&D costs for each business segment in the fiscal years ended March 31, 2024 and 2025.


	Fiscal year ended March 31
	2024		2025
	(Yen in billions)
R&D costs
G&NS		281.6		279.2
ET&S		154.8		138.9
I&SS		219.2		228.4

Note: Due to the reorganization of Sony’s technology-related organizations in the fiscal year ended March 31, 2025, the amount of R&D costs for Sony Group Corporation’s research and development organization (“Corporate R&D”) has become immaterial. Therefore, from the fiscal year ended March 31, 2025, R&D costs for Corporate R&D are not presented separately.

D.	Trend Information

This section contains forward-looking statements about the possible future performance of Sony and should be read in light of the cautionary statement on that subject, which appears on the inside front cover page and applies to this entire document.

Issues Facing Sony and Management’s Response to those Issues

In the fiscal year ended March 31, 2025, although geopolitical risk remained high, the global economy maintained solid growth due to disinflation and associated monetary easing. In particular, the U.S. economy remained steady even under higher interest rates, supported by a recovery in consumer spending owing to the stable employment and income situation. On the other hand, the yen exchange rate continued to fluctuate significantly, as it had in the fiscal year ended March 31, 2024, as a result of the interest rate differential between the U.S. and Japan. In China, despite improvements in consumer spending and real estate sales due to the economic stimulus package by the government, a prolonged slump in the real estate market associated mainly with a decline in real estate investment put downward pressure on the economy. The outlook for the future global economy is rapidly becoming more uncertain due to factors such as the series of changes in U.S. tariff policy and resulting concerns about a global economic slowdown, in addition to increasing uncertainty regarding the situations in Ukraine and Russia and in the Middle East.

Sony has a wide range of businesses globally. These changes in the global economy, in addition to increased geopolitical risk including relations between the U.S. and China, the rise of new technologies such as AI, and responses to global environmental challenges and social division, are causing major changes in the environment surrounding each of Sony’s business segments.

Sony has responded swiftly to changes in the business environment and worked to strengthen the profit structure of each of its businesses, while continuing to prioritize management with a long-term view, with the goal of enhancing the corporate value of the entire Sony Group.

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On May 14, 2025, Sony held its Corporate Strategy and Earnings Announcement Presentation. President and CEO Hiroki Totoki presented Sony’s long-term strategies, management direction and priorities.

Hiroki Totoki highlighted Sony’s years-long directional shift to entertainment as transformational for Sony and leading to strong results and stressed that Sony’s priorities and commitment to growth in these sectors would continue. He stated that building on the momentum and results to date and working with a laser-like focus to realize Sony’s long-term “Creative Entertainment Vision” will be at the core of Sony’s corporate strategies going forward. Hiroki Totoki then provided updates on Sony’s core business segments, their achievements and current priorities, and discussed the role they play in realizing Sony’s “Creative Entertainment Vision.”

As introduced at the Corporate Strategy Meeting held on May 23, 2024, Sony’s “Creative Entertainment Vision” seeks to deliver Kando through creativity and technology, maximize IP value, and “Create Infinite Realities,” together with creators, partners, and employees, and through synergies between Sony’s various businesses. He emphasized that building on Sony’s cross-business collaborations, leveraging Sony’s engagement platform initiative to connect diverse fan communities across various entertainment sectors, and leaning into Sony’s strengths in growth areas such as anime will be key to realizing this vision.

The details of the corporate strategy announced in the Corporate Strategy and Earnings Announcement Presentation held on May 14, 2025 are as follows:

1. Entertainment Businesses Integral to Realizing the “Creative Entertainment Vision”

Sony seeks to realize its long-term “Creative Entertainment Vision” that illustrates how it wants to deliver Kando through creativity and technology, together with creators, partners, and employees, and through synergies among Sony’s various businesses.

(1)	G&NS segment

•

Expect PS5 to drive steady profit, and plan to invest thoughtfully to create the “FUTURE OF PLAY”

•

Expect stable growth in revenue and profit from network businesses, such as higher revenue and profits from PS Plus, due to the increase of monthly active users corresponding with the expansion of the installed base

•

Anticipate further growth in the Studio Business through the expanding user base, driven by new titles such as Ghost of Yōtei and the live service game Marathon, as well as the continuing success of ongoing live service games like HELLDIVERS 2 and Destiny 2

•

Focus on strong and profitable peripherals, such as PlayStation Portal Remote Player with beta cloud streaming capacity

(2)	Music segment

•

In the global music business, focus on strengthening position in the global market, while continuing to improve profitability, and enhancing Sony’s core value proposition which includes repertoire centers in major markets, robust label and artist services, tailored services for independent artists, DIY Distribution, and music publishing

•

In the Japanese music business, continue to further expand bringing Japanese artists such as YOASOBI to the global market, which was a great success in the fiscal year ended March 31, 2025

•

Focus on growing throughout the business and in high-growth markets both organically and through strategic acquisitions, exploring further strategic investment opportunities in key areas and music catalogs, increasing presence, providing services to fans, and expanding IP involving Sony Music artists

•

Continue exploring the use of cutting-edge technologies such as AI to create value, while protecting the rights of artists

(3)	Pictures segment

•

SPE expects to see the release of a strong pipeline including titles such as Spider-Man: Brand New Day, the latest Jumanji film, Spider-Man: Beyond the Spider-Verse and four theater-exclusive biopics about The Beatles

•

Anime is also expected to be a growth driver for the Pictures segment, as the anime-focused streaming service Crunchyroll steadily expands its paid subscribers and services

•

SPE is expected to continue being a hub for synergistic, cross-business collaborations

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2. Cross-Business Collaborations and Synergy

Central to the “Creative Entertainment Vision,” the value and potential of cross-business collaborations have become evident in recent years with successful examples.

(1)

Anime

Anime is a key driver of growth across many parts of the Sony Group’s businesses. Building on the businesses of Aniplex and Crunchyroll, Sony is advancing initiatives to expand its reach in anime and strengthen content development.

•

Anime series adaptation of game IP Ghost of Tsushima: Legends

•

Establishment of anime production company HAYATE

•

Strategic capital and business alliance with KADOKAWA

ii)

Amid the anticipated continued growth of the anime market, Sony plans to further accelerate Crunchyroll’s growth.

•

Broadening services offered to anime fans, which includes e-commerce for anime merchandise, mobile game library services and a manga application

•

Sony is working to further expand Crunchyroll’s paid member base of over 17 million (as of March 31, 2025) by collaborating with PSN, enabling smoother registration to Crunchyroll’s paid services from PS5 in order to leverage the monetization capabilities of PSN to enhance Crunchyroll’s service

(2)	Engagement Platform

•

Sony is building a new engagement platform to connect users and creators by leveraging PSN’s core backend functions such as payment, data infrastructure and security across various network services within the Sony Group. The platform is expected to be utilized across the Sony Group for better monetization, allowing each group company to focus resources on enhancing competitiveness and differentiation for business growth through expanding and deepening customer engagement

(3)

LBE

•

Positioning LBE as an area to maximize the value of IP across various entertainment sectors in the long term, Sony is in the early stages of exploring the potential of LBE

3. Future Growth in Technology-related Areas as Enablers of Entertainment Businesses

(1)	ET&S segment: Shifting focus of products and services towards content creation

•

Building on the success of Alpha^™ and expanding the imaging ecosystem as a growth driver

•

Strengthening sports data-related capabilities, as exemplified by the acquisition of KinaTrax Inc. last year, and leveraging real-time content creation technology to support alternative broadcasts to acquire new fans

•

Pursuing innovation in content creation technology such as “XYN,” real-time VFX, and 360 Virtual Mixing Environment

(2)	I&SS segment

•

In the mobile image sensor business, amid expectations that the trend toward larger sensor sizes will continue, Sony aims to achieve further growth with high value-added and differentiated sensors that meet customer expectations by combining a new generation process with sensors such as the two-layer transistor pixel “TRISTA.”

•

Sony aims to explore options to enhance investment efficiency and control the necessary investments at an appropriate level.

•

Beyond the mobile image sensor business, while continuing to generate stable profit through cameras and sensors for industrial equipment and social infrastructure, Sony also intends to generate mid- to long-term business growth under optimal development costs and frameworks, in businesses with future growth potential, such as automotive sensors, carefully assessing the speed of market growth and business potential.

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4. Achieving Growth through Diverse Businesses and Talent

Sony’s diversity of businesses and people is paramount in realizing its “Creative Entertainment Vision.” Its approximately 112,300 employees create an environment that generates diverse viewpoints and ideas, and the synergies generated from this environment are the source of its unique competitive advantages. Sony expects to continue to evolve, unleash the creativity of creators, and strive for a world of infinite realities, entertainment, and excitement.

Fifth Mid-Range Plan — Financial Targets, Capital Allocation and their Progress

On May 14, 2024, Sony announced the financial targets for the fifth mid-range plan for the three fiscal years started on April 1, 2024 and ending on March 31, 2027.

In the fifth mid-range plan, Sony is placing greater emphasis on profit-based growth, and has set as the key performance indicators for the entire Group the growth rate of consolidated operating income and the operating income margin for Sony without the Financial Services segment^*1. Specifically, Sony is targeting an average annual growth rate of consolidated operating income for the three-year period of 10% or more, and a three-year cumulative consolidated operating income margin of 10% or more.

Regarding the capital allocation plan in the fifth mid-range plan, Sony established a capital expenditure target of 1.7 trillion yen and a strategic investment target of 1.8 trillion yen including growth investments for each business and flexible share repurchases. Three-year cumulative consolidated operating cash flow excluding the Financial Services segment, the main source of capital allocation, is expected to be 4.5 trillion yen, exceeding the results of the fourth mid-range plan for the three fiscal years started on April 1, 2021 and ended on March 31, 2024, due to expected profit growth during the fifth mid-range plan as well as the recovery of working capital that increased during the fourth mid-range plan.

Regarding shareholder returns, Sony plans to place emphasis on its total payout ratio, which it expects to gradually increase throughout the period of the fifth mid-range plan, aiming for approximately 40% in the fiscal year ending March 31, 2027, which is the final fiscal year of the plan.

As a result of the resolution of the Board of Directors of Sony Group Corporation on May 14, 2025 on the plan for the execution of the Partial Spin-off of the Financial Services business, Sony plans to classify the Financial Services business as a discontinued operation from the first quarter of the fiscal year ending March 31, 2026, and present it separately from continuing operations excluding the Financial Services business. Therefore, the key performance indicators for the entire Group after May 14, 2025 are the growth rate of consolidated operating income and the operating income margin for continuing operations.

In the fiscal year ended March 31, 2025, the G&NS and I&SS segments were the main drivers of profit growth, leading to the growth of operating income for Sony without the Financial Services segment^*2 of 23% year-on-year and an operating income margin of 10.6%.

Regarding capital allocation, Sony has revised its forecast for cumulative three-year operating cash flow on a continuing operations basis, which is the main source of capital, from the initial plan of 4.5 trillion yen to 4.8 trillion yen, taking into account the results of the fiscal year ended March 31, 2025. Since Sony has made strengthening shareholder returns a priority for the fifth mid-range plan, Sony intends to use such increase as a source of capital for greater shareholder returns. The strategic investment budget of 1.8 trillion yen and capital expenditure budget of 1.7 trillion yen remain unchanged from the original plan.

A total of approximately 514.0 billion yen of strategic investments have been executed or determined already (as of May 14, 2025). Regarding shareholder returns, Sony completed a total of 307.5 billion yen in repurchases of its own shares during the period from April 1, 2024 to April 11, 2025, and the annual dividend for the fiscal year ended March 31, 2025, taking into account the stock split^*3, increased 3 yen year-on-year to 20 yen per share (a total of 120.6 billion yen). For the fiscal year ending March 31, 2026, Sony has established a maximum 250 billion yen share buyback facility for the year from May 15, 2025 to May 14, 2026, and aims to increase the pace of its increase in dividends, raising the annual dividend by 5 yen per share year-on-year taking into account the stock split^*3 to 25 yen per share^*4.

*2	Figures for Sony without Financial Services are not measures in accordance with IFRS Accounting Standards. However, Sony believes that these disclosures may be useful information to investors.

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*3	Sony Group Corporation conducted a five-for-one stock split of its common stock effective October 1, 2024, with a record date of September 30, 2024.

*4	The above figure for the planned dividend does not include dividends in kind of the shares of SFGI from the Partial Spin-off of the Financial Services business.

E.	Critical Accounting Estimates

The preparation of the consolidated financial statements in conformity with IFRS Accounting Standards requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. On an ongoing basis, Sony evaluates its estimates, which are based on historical experience, future projections and various other assumptions that are believed to be reasonable under the circumstances. The results of these evaluations form the basis for making judgments about the carrying values of assets and liabilities and the reported amounts of expenses that are not readily apparent from other sources. Actual results may significantly differ from these estimates. Sony considers an accounting estimate to be critical if it is important to its financial condition and results, and requires significant judgment and estimates on the part of management in its application. Sony believes that the following represents its critical accounting estimates. The critical accounting estimates should be read in conjunction with Notes 2 and 3 of the consolidated financial statements regarding Sony’s material accounting policies.

Financial instruments

Sony recognizes a financial instrument as a financial asset or a financial liability when Sony becomes party to the contractual provisions of the instrument. Financial assets and financial liabilities are initially measured at fair value.

Financial instruments held by Sony are classified according to the measurement method, and for financial instruments measured at fair value, future fluctuations in fair value may have a significant impact on the consolidated financial statements.

The assessment of credit losses for debt securities is often subjective in nature and involves certain assumptions and estimates concerning the credit risk ratings, expected operating results, business plans and future cash flows of the issuer of the security. Accordingly, it is possible that Sony will record an allowance for credit losses for debt securities in the future, where such an allowance for credit losses is not currently recorded based on the assessment of subsequently available information such as a deterioration in the credit risk rating, continued poor operating results, future broad declines in the value of worldwide equity markets and the effect of worldwide interest rate fluctuations. As a result, downward adjustments in income may be recorded in the future due to the recording of such allowance for credit losses.

Impairment of non-financial assets

Sony reviews the recoverability of its non-financial assets, except for inventories, contract costs and deferred tax assets, whenever there is any indication that an asset or a cash-generating unit (“CGU”) may be impaired. In addition, an annual impairment test for goodwill, intangible assets with indefinite useful lives or intangible assets not yet available for use is performed during the fourth quarter of the fiscal year for each CGU or group of CGUs to which the carrying amount of these assets is allocated.

For all CGUs or groups of CGUs with goodwill, the recoverable amount exceeded the carrying amount, and therefore no impairment existed in the fiscal year ended March 31, 2025. Also, the recoverable amount of each CGU or group of CGUs with significant goodwill exceeded their respective carrying values by at least 10.0%. For intangible assets with indefinite useful lives or intangible assets not yet available for use, the recoverable amount exceeded the carrying amount, and therefore no impairment existed.

A discussion of the significant assumptions, other than the mid-range plan, including a sensitivity analysis with respect to their impact, of the recoverable amount of each CGU or group of CGUs for the impairment analysis for goodwill performed for the fiscal year ended March 31, 2025 is included below. Refer to Note 11 of the consolidated financial statements for details.

•

The post-tax discount rates ranged from 3.9% to 14.0%. A hypothetical one percentage point increase in the discount rate, holding all other assumptions constant, would not have resulted in a significant impairment.

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•

The growth rates applied to the terminal values for the CGUs within the G&NS, ET&S, I&SS and Financial Services segments ranged approximately 1.0% to 2.0%. The growth rates beyond the mid-range plan period for the CGUs in the Music segment ranged from 1.0% to 3.0%, and in the Pictures segment ranged from (5.0%) to 17.0%. A hypothetical one percentage point decrease in the growth rate, holding all other assumptions constant, would not have resulted in a significant impairment.

•

The earnings multiple used to calculate the terminal value in the Pictures CGUs was 8.5x to 14.3x and the revenue multiple was 1.4x to 1.8x. A hypothetical reduction in earnings multiple by 1.0x and revenue multiple by 0.25x, respectively, holding all other assumptions constant, would not have resulted in a significant impairment.

Management believes that the assumptions used in the impairment tests are reasonable. However, in the future, changes in estimates resulting in lower recoverable amounts due to unforeseen changes in assumptions could negatively affect the valuations, which may result in Sony recognizing impairment losses for non-financial assets.

Business combinations

Sony recognizes identifiable assets acquired and the liabilities assumed of an acquiree at their fair values at the acquisition date with limited exceptions. Sony recognizes goodwill when the aggregate of the consideration transferred in a business combination, the amount of any non-controlling interests in the acquiree and the fair value of Sony’s previously held equity interest in the acquiree exceeds the net amount of the identifiable assets and liabilities of the acquiree at the acquisition date. If the aggregate above is less than the net amount of identifiable assets and liabilities, the difference is recognized as a gain.

Due to the inherent uncertainties involved in making the estimates and assumptions, the consideration transferred could be valued and allocated to the identifiable assets acquired and liabilities assumed differently. Actual results may differ, or unanticipated events and circumstances may affect such estimates, which could require Sony to record an impairment of an identifiable asset acquired and goodwill, or an increase in the amounts recorded for identifiable liabilities assumed.

Estimation of ultimate revenue in the Pictures segment

An aspect of film accounting that requires the exercise of management’s judgment relates to the process of estimating the total revenues to be received throughout a film’s life cycle. Such estimate of a film’s ultimate revenue is important for the measurement of film costs and participation and residual liabilities in the Pictures segment.

While a film is being produced and the related costs are being capitalized, it is necessary for management to estimate the ultimate revenue, less additional costs to be incurred, including exploitation costs which are expensed as incurred, in order to determine whether the value of a film has been impaired and thus requires an immediate write-off of unrecoverable film costs. In addition, the amount of film costs recognized as cost of sales for a given film as it is exhibited in various markets throughout its life cycle is based on the ratio of current period actual revenues to the estimated remaining total revenues.

Management bases its estimates of ultimate revenue for each film on several factors including the historical performance of similar genre films, the star power of the lead actors, the expected number of theaters at which the film will be released, anticipated performance in the home entertainment, television and other ancillary markets, and agreements for future sales. Management updates such estimates on a regular basis based on the actual results to date and estimated future results for each film. For example, a film with lower-than-expected theatrical revenues in its initial weeks of release would generally have its theatrical, home entertainment and television distribution ultimate revenues adjusted downward; a failure to do so would result in the understatement of amortized film costs for the period. Also, participation and residual liabilities are accrued based on the ratio of current period actual revenues to the estimated remaining total revenues.

Valuation of deferred tax assets

The valuation of deferred tax assets, which is based on currently enacted tax laws and rates as of the end of the reporting period, reflects management’s judgment and best estimate of the likely future tax consequences of

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events that have been recognized in Sony’s financial statements and tax returns, the ability to implement various tax planning strategies and, in certain cases, future forecasts, business plans and other expectations about business outcomes. Changes in existing tax laws or rates in tax jurisdictions in which Sony operates could affect actual tax results, and market or economic deterioration or failure of management to achieve its restructuring objectives could affect future business results, either of which could affect the valuation of deferred tax assets over time. If future results are less than projected, if the results of tax examinations or the negotiations of advance pricing agreements covering transfer pricing of intercompany transactions result in a different allocation of profits and losses than currently anticipated, if tax planning alternatives are no longer viable, or if there is no excess appreciated asset value over the tax basis of the assets contemplated for sale, outstanding deferred tax assets may be required to be written down in the future. On the other hand, a forecasted improvement and consistency in future earnings or other factors, such as business reorganizations, could lead in the future, as a result of a review of all relevant factors, to the reversal of the previous write down of the deferred tax assets which would be recorded as a reduction to tax expense. These possible factors and other changes, that are not anticipated in current estimates, could have a material impact on Sony’s earnings or financial condition in the period or periods in which the impact is recorded or reversed.

Measurement of insurance contract liabilities not measured under the premium allocation approach

The carrying amount of a group of insurance contracts is the sum of the liability for incurred claims and the liability for remaining coverage. The liability for remaining coverage is measured by determining fulfillment cash flows and contractual service margin arising from insurance contracts. The fulfillment cash flows of groups of insurance contracts are measured at the reporting date using current estimates of future cash flows, discount rates, and the risk adjustment for non-financial risk. The mortality rates, morbidity rates, lapse and surrender rates, and discount rates, which are used to measure the estimates of the present value of future cash flows, are significant assumptions for measuring insurance contract liabilities.

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Item 6.

Directors, Senior Management and Employees

A.	Directors and Senior Management

Set forth below are the current members of the Board of Directors and Corporate Executive Officers of Sony Group Corporation (the “Corporation”), their responsibility as a director or officer, date of birth, the number of years they have served as a director or officer, and other principal business activities outside the Corporation as of the date of this report.

Board of Directors


Kenichiro Yoshida
Responsibility as a Director: —
Date of Birth: October 20, 1959
Number of Years Served as a Director: 11 years
Principal Business Activities Outside the Corporation: Outside Director, M3, Inc.
Brief Personal History:
April 1983		Joined the Corporation
July 2000		Joined Sony Communication Network Corporation (currently Sony Network Communications Inc.)
September 2000		Outside Director, So-net M3, Inc. (currently M3, Inc.) (present)
May 2001		Senior Vice President, Sony Communication Network Corporation
April 2005		President and Representative Director, Sony Communication Network Corporation
December 2013		Executive Vice President, Chief Strategy Officer and Deputy Chief Financial Officer, Corporate Executive Officer, the Corporation
April 2014		Executive Vice President and Chief Financial Officer, Representative Corporate Executive Officer, the Corporation
June 2014		Director, the Corporation (present)
April 2015		Executive Deputy President and Chief Financial Officer, Representative Corporate Executive Officer, the Corporation
April 2018		President and Chief Executive Officer, Representative Corporate Executive Officer, the Corporation
June 2020		Chairman, President and Chief Executive Officer, Representative Corporate Executive Officer, the Corporation
April 2023		Chairman and Chief Executive Officer, Representative Corporate Executive Officer, the Corporation
April 2025		Chairman, Representative Corporate Executive Officer, the Corporation (present)

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Hiroki Totoki
Responsibility as a Director: —
Date of Birth: July 17, 1964
Number of Years Served as a Director: 6 years
Principal Business Activities Outside the Corporation: Outside Director, Recruit Holdings Co., Ltd.
Brief Personal History:
April 1987		Joined the Corporation
February 2002		Representative Director, Sony Bank Incorporated
June 2005		Director, Corporate Executive Officer and Senior Managing Director, Sony Communication Network Corporation (currently Sony Network Communications Inc.)
April 2012		Representative Director, Corporate Executive Officer and Senior Managing Director, So-net Entertainment Corporation (currently Sony Network Communications Inc.)
April 2013		Representative Director, Corporate Executive Officer, Deputy President and Chief Financial Officer, So-net Entertainment Corporation
December 2013		Senior Vice President, Corporate Executive, the Corporation
November 2014		President and Chief Executive Officer, Sony Mobile Communications Inc. (currently Sony Corporation)
June 2015		Director, Chairman, So-net Corporation (currently Sony Network Communications Inc.)
April 2016		Executive Vice President, Corporate Executive Officer, the Corporation In charge of New Business Platform (Strategy)
		President and Representative Director, So-net Corporation
June 2017		Executive Vice President, Chief Strategy Officer, Corporate Executive Officer, the Corporation In charge of Mid- to Long-Term Business Strategy, New Business
April 2018		Executive Vice President, Chief Financial Officer, Representative Corporate Executive Officer, the Corporation
June 2018		Senior Executive Vice President, Chief Financial Officer, Representative Corporate Executive Officer, the Corporation Outside Director, Recruit Holdings Co., Ltd. (present)
June 2019		Director, the Corporation (present)
June 2020		Executive Deputy President, Chief Financial Officer, Representative Corporate Executive Officer, the Corporation
April 2023		President, Chief Operating Officer and Chief Financial Officer, Representative Corporate Executive Officer, the Corporation
April 2024		Interim Corporate Executive Officer, Sony Interactive Entertainment
June 2024		Chairman, Sony Interactive Entertainment
April 2025		President and Chief Executive Officer, Representative Corporate Executive Officer, the Corporation (present)

Yoshihiko Hatanaka
Responsibility as a Director: Chair of the Board Chair of the Nominating Committee
Date of Birth: April 20, 1957
Number of Years Served as a Director: 6 years
Brief Personal History and Principal Business Activities Outside the Corporation:
April 1980		Joined Fujisawa Pharmaceutical Co., Ltd. (currently Astellas Pharma Inc.)
June 2005		Corporate Executive, Vice President, Corporate Planning, Corporate Strategy, Astellas Pharma Inc.
April 2006		Corporate Executive of Astellas Pharma Inc. and President & CEO, Astellas US LLC and President & CEO, Astellas Pharma US, Inc.
June 2008		Senior Corporate Executive of Astellas Pharma Inc. and President & CEO, Astellas US LLC and President & CEO, Astellas Pharma US, Inc.
April 2009		Senior Corporate Executive, Chief Strategy Officer and Chief Financial Officer, Astellas Pharma Inc.
June 2011		Representative Director, President & CEO, Astellas Pharma Inc.
April 2018		Representative Director, Chairman of the Board, Astellas Pharma Inc.
June 2019		Director, the Corporation (present)
March 2023		Outside Director, Shiseido Company, Limited (present)
June 2023		Outside Director, SEKISUI CHEMICAL CO., LTD. (present)

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Wendy Becker
Responsibility as a Director: Vice Chair of the Board Chair of the Compensation Committee Member of the Nominating Committee
Date of Birth: November 2, 1965
Number of Years Served as a Director: 6 years
Brief Personal History and Principal Business Activities Outside the Corporation:
September 1987		Brand Manager, Procter & Gamble Company
September 1993		Consultant, McKinsey & Company, Inc.
December 1998		Partner, McKinsey & Company, Inc.
February 2008		Managing Director, Residential, TalkTalk, The Carphone Warehouse Ltd.
		Board member, Member of Remuneration Committee, Whitbread plc
September 2009		Chief Marketing Officer, Vodafone Group plc
September 2012		Chief Operating Officer, Jack Wills Ltd.
October 2013		CEO, Jack Wills Ltd.
February 2017		Board member, Chair of Remuneration Committee, Great Portland Estates plc
September 2017		Board member, Logitech International S.A.
June 2019		Director, the Corporation (present)
September 2019		Non-Executive Director, Chairperson of the Board, Chair of Nominating Committee, Logitech International S.A. (present)
June 2021		Senior Independent Director, Chair of Remuneration Committee, Oxford Nanopore Technologies plc
October 2023		Independent Non-Executive Director, GSK plc
May 2024		Independent Non-Executive Director, Chair of Remuneration Committee, GSK plc (present)

Sakie Akiyama
Responsibility as a Director: Member of the Compensation Committee
Date of Birth: December 1, 1962
Number of Years Served as a Director: 6 years
Brief Personal History and Principal Business Activities Outside the Corporation:
April 1987		Joined Arthur Andersen & Co.
April 1994		Founder and CEO, Saki Corporation
October 2018		Founder, Saki Corporation (present)
June 2019		Director, the Corporation (present) Outside Director, Japan Post Holdings Co., Ltd. Outside Director, ORIX Corporation (present)
June 2020		Outside Director, Mitsubishi Corporation (present)

Keiko Kishigami
Responsibility as a Director: Member of the Audit Committee
Date of Birth: January 28, 1957
Number of Years Served as a Director: 5 years
Brief Personal History and Principal Business Activities Outside the Corporation:
October 1985		Joined Peat Marwick Minato (currently Ernst & Young ShinNihon LLC)
August 1989		Registered as Certified Public Accountant (present)
December 1997		Partner, Century Audit Corporation (currently Ernst & Young ShinNihon LLC)
May 2004		Representative Partner (Senior Partner), Ernst & Young ShinNihon (currently Ernst & Young ShinNihon LLC)
September 2018		Board Member, WWF Japan (present)
June 2019		Outside Auditor, Okamura Corporation (present)
June 2020		Director, the Corporation (present)
June 2021		Outside Director, Sumitomo Seika Chemicals Company, Limited (present)
March 2023		Outside Auditor, DIC Corporation (present)

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Joseph A. Kraft Jr.
Responsibility as a Director: Chair of the Audit Committee Member of the Nominating Committee Director in charge of Information Security
Date of Birth: May 12, 1964
Number of Years Served as a Director: 5 years
Brief Personal History and Principal Business Activities Outside the Corporation:
July 1986		Joined Morgan Stanley Inc.
January 2000		Managing Director, Morgan Stanley Inc.
April 2007		Managing Director, Head of Capital Markets Division, Dresdner Kleinwort Japan
March 2010		Deputy Branch Manager & Managing Director, Bank of America Merrill Lynch Japan
July 2015		CEO, Rorschach Advisory Inc. (present)
June 2020		Director, the Corporation (present)
June 2024		Outside Director, Tokyo Electron Ltd. (present)
November 2024		Vice President, Tokyo International University (present)

Neil Hunt
Responsibility as a Director: Director in charge of Information Security
Date of Birth: January 12, 1962
Number of Years Served as a Director: 2 years
Brief Personal History and Principal Business Activities Outside the Corporation:
June 1989		Founder, CTO, Iconicon
October 1991		Director of Engineering, Pure Atria, Inc.
December 1999		Chief Product Officer, Netflix, Inc.
September 2010		Board member, Member of Compensation Committee, Logitech, Inc.
June 2017		Board member, Member of Compensation Committee, Roku, Inc. (present)
January 2020		Founder and Chief Product Officer, Vibrant Planet, PBC (present)
June 2023		Director, the Corporation (present)

William Morrow
Responsibility as a Director: Member of the Compensation Committee
Date of Birth: July 2, 1959
Number of Years Served as a Director: 2 years
Brief Personal History and Principal Business Activities Outside the Corporation:
September 1980		Director, Pacific Bell Inc.
November 2001		President, Japan Telecom Holdings Co. Ltd
February 2004		CEO, Vodafone UK Limited
April 2005		President, VODAFONE K.K. Limited
May 2006		CEO Europe, Vodafone Limited
August 2006		President & CEO, Pacific Gas and Electric Company
June 2008		Outside Director, Broadcom Inc.
March 2009		CEO, Clearwire Incorporated
March 2012		CEO, Vodafone Hutchison Australia
April 2014		CEO, NBN Co, Limited
December 2018		Outside Director, IkeGPS Group Limited
February 2021		CEO, DIRECTV Entertainment Holdings LLC (present)
June 2023		Director, the Corporation (present)

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Shingo Konomoto
Responsibility as a Director: Member of the Audit Committee
Date of Birth: February 11, 1960
Number of Years Served as a Director: 1 year
Brief Personal History and Principal Business Activities Outside the Corporation:
April 1985		Joined Nomura Research Institute, Ltd.
April 2004		Senior Managing Director, Division Manager of Consulting Division III, Nomura Research Institute, Ltd.
April 2010		Senior Corporate Managing Director, Division Manager of Consulting Division, Nomura Research Institute, Ltd.
April 2015		Senior Executive Managing Director, Supervising of Business Divisions, Head of Consulting, Nomura Research Institute, Ltd.
June 2015		Senior Executive Managing Director, Member of the Board, Representative Director, Supervising of Business Divisions, Head of Consulting, Nomura Research Institute, Ltd.
April 2016		President & CEO, Member of the Board, Representative Director, Nomura Research Institute, Ltd.
June 2019		Chairman and President & CEO, Member of the Board, Representative Director, Nomura Research Institute, Ltd.
April 2024		Chairman, Member of the Board, Representative Director, Nomura Research Institute, Ltd.
June 2024		Director, the Corporation (present) Chairman, Member of the Board, Nomura Research Institute, Ltd. (present)
March 2025		Outside Director, Kirin Holdings Company, Limited (present)

The Corporation has proposed “To elect 11 Directors” as an agenda item for the Ordinary General Meeting of Shareholders to be held on June 24, 2025. If the proposal is approved, the members of the Board of Directors will be Kenichiro Yoshida, Hiroki Totoki, Wendy Becker, Keiko Kishigami, Joseph A. Kraft Jr., Neil Hunt, William Morrow, Shingo Konomoto, Ms. Yoriko Goto, Ms. Nora Denzel and Mr. Masayuki Hyodo. With respect to newly appointed Directors (Ms. Yoriko Goto, Ms. Nora Denzel and Mr. Masayuki Hyodo), their expected responsibility as a director, date of birth and brief personal history and principal business activities outside the Corporation are set forth below. Refer to “Item 6.C., Board Practices” for the planned composition of the Board and the Committees after the resolution of the Board immediately following the closing of the Ordinary General Meeting of Shareholders to be held on June 24, 2025. The Corporation plans to disclose the results of the Ordinary General Meeting of Shareholders in a Form 6-K to be furnished on June 28, 2025.


Yoriko Goto
Responsibility as a Director: Member of the Audit Committee
Date of Birth: November 11, 1958
Brief Personal History and Principal Business Activities Outside the Corporation:
November 1983		Joined Deloitte Haskins & Sells, Tokyo (currently Deloitte Touche Tohmatsu LLC)
March 1987		Registered as Certified Public Accountant, Japan (present)
June 1996		Partner, Tohmatsu & Co. (currently Deloitte Touche Tohmatsu LLC)
November 2010		Member of Management Board, Deloitte Touche Tohmatsu LLC
October 2013		Managing Partner, Financial Services Industry, Deloitte Touche Tohmatsu LLC Member of the Board of Directors, Deloitte Touche Tohmatsu Limited
June 2018		Board Chair, Deloitte Tohmatsu Group and Deloitte Touche Tohmatsu LLC Member of the Board of Directors, Deloitte Touche Tohmatsu Limited
November 2018		Member of the Board of Directors, Deloitte Asia Pacific Limited
October 2022		Representative, Yoriko Goto CPA Office (present) Outside Director, Member of the Audit & Supervisory Committee, Sumitomo Mitsui Banking Corporation (present)
June 2025		Outside Director, Member of the Audit & Supervisory Committee of Shionogi & Co., Ltd (present) Director, the Corporation (expected to be appointed)

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Nora Denzel
Responsibility as a Director: Member of the Compensation Committee Director in charge of Information Security
Date of Birth: August 31, 1962
Brief Personal History and Principal Business Activities Outside the Corporation:
June 1984		Joined International Business Machines Corporation
May 1996		Director, International Business Machines Corporation Storage Software
February 1997		CTO Senior Vice President of Product Operations, Legato Systems, Inc.
March 2000		Senior Vice President, Storage Division, Hewlett-Packard Company (currently Hewlett Packard Enterprise Company)
November 2007		Outside Director, Overland Storage Inc.
February 2011		Senior Vice President of Big Data, Intuit Inc.
September 2011		Outside Director, Saba Software, Inc.
February 2013		Outside Director, Outerwall Inc.
March 2013		Outside Director, Telefonaktiebolaget LM Ericsson
March 2014		Outside Director, Advanced Micro Devices, Inc.
January 2015		Interim CEO, Outerwall Inc.
July 2017		Outside Director, Talend, Inc.
December 2019		Outside Director, NortonLifeLock Inc. (currently Gen Digital Inc.) (present)
May 2021		Outside Director, SUSE S.A.
November 2022		Lead Independent Director, Advanced Micro Devices, Inc. (present)
June 2025		Director, the Corporation (expected to be appointed)


Masayuki Hyodo
Responsibility as a Director: Member of the Nominating Committee Member of the Compensation Committee
Date of Birth: June 26, 1959
Brief Personal History and Principal Business Activities Outside the Corporation:
April 1984		Joined Sumitomo Corporation
March 1996		Sumitomo Corporation (Hong Kong) Ltd. (Hong Kong)
April 2009		Corporate Officer, Deputy General Manager, Power & Social Infrastructure Business Div, Sumitomo Corporation
April 2010		Corporate Officer, Assistant General Manager for Asia, Sumitomo Corporation President and CEO, PT. Sumitomo Indonesia (Jakarta)
April 2012		Executive Officer, General Manager, Global Power Infrastructure Business Div, Sumitomo Corporation
April 2015		Managing Executive Officer, General Manager, Corporate Planning & Coordination Dept, Sumitomo Corporation
June 2016		Representative Director, Managing Executive Officer, General Manager, Environment & Infrastructure Business Unit, Sumitomo Corporation
June 2017		Senior Managing Executive Officer, General Manager, Environment & Infrastructure Business Unit, Sumitomo Corporation
June 2018		Representative Director, President and Chief Executive Officer, Sumitomo Corporation
April 2024		Chairman of the Board of Directors, Sumitomo Corporation (present)
June 2025		Director, the Corporation (expected to be appointed)

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Corporate Executive Officers

In addition to Kenichiro Yoshida and Hiroki Totoki, the four individuals set forth below are the current Corporate Executive Officers of Sony Group Corporation as of the date of this report. Refer to “Board Practices” in Item 6.C.


Toshimoto Mitomo
Responsibility as an Officer: Chief Strategy Officer, Representative Corporate Executive Officer in charge of Legal, Compliance, Privacy, Intellectual Property, Business Strategy, Sustainability, External Relations, Business Incubation Platform, Creative Platform and Mobility Business
Date of Birth: January 6, 1963
Number of Years Served as a Corporate Executive Officer: 3 years
Principal Business Activities Outside Sony: None
Brief Personal History:
April 1985		Joined the Corporation
June 2013		Senior Vice President, Corporate Executive, the Corporation
June 2019		Executive Vice President, the Corporation
April 2022		Senior Executive Vice President, Corporate Executive Officer, the Corporation
April 2023		Executive Deputy President and Chief Strategy Officer, Corporate Executive Officer, the Corporation
April 2025		Chief Strategy Officer, Representative Corporate Executive Officer (present)


Tsuyoshi Kodera
Responsibility as an Officer: Chief Digital Officer, Corporate Executive Officer in charge of Digital & Technology Platform (Digital Transformation Strategy, Information Systems, Information Security and Advanced Technology), R&D, Technology Strategy and Quality Management
Date of Birth: October 8, 1969
Number of Years Served as a Corporate Executive Officer: —
Principal Business Activities Outside Sony: None
Brief Personal History:
April 1992		Joined the Corporation
April 2016		Deputy President, Sony Interactive Entertainment LLC
June 2016		Business Executive, the Corporation
October 2017		President and Chief Executive Officer, Sony Interactive Entertainment LLC Representative Director, President, Sony Interactive Entertainment Inc.
June 2018		Executive Vice President, the Corporation
April 2019		Deputy President, Sony Interactive Entertainment LLC Representative Director, Deputy President, Sony Interactive Entertainment Inc.
April 2021		Executive Vice President and Chief Digital Officer, the Corporation
July 2023		Executive Vice President, Chief Digital Officer and Chief Information Officer, the Corporation
April 2025		Chief Digital Officer, Corporate Executive Officer, the Corporation (present)


Yasuhiro Ito
Responsibility as an Officer: Chief People Officer, Corporate Executive Officer in charge of Human Resources, General Affairs, the Corporate Executive Office and Lead of Group Diversity, Equity & Inclusion
Date of Birth: September 10, 1971
Number of Years Served as a Corporate Executive Officer: —
Principal Business Activities Outside Sony: None
Brief Personal History:
April 1994		Joined the Corporation
April 2018		Executive Vice President, Sony Pictures Entertainment Senior Vice President, Sony Corporation of America
April 2023		Senior Vice President, the Corporation
April 2025		Chief People Officer, Corporate Executive Officer, the Corporation (present)

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Lin Tao
Responsibility as an Officer: Chief Financial Officer, Corporate Executive Officer in charge of Corporate Planning and Control, Corporate Strategy, Accounting, Tax, Finance, IR, Disclosure Controls, Risk Control, Internal Audit and SOX 404
Date of Birth: September 2, 1973
Number of Years Served as a Corporate Executive Officer: —
Principal Business Activities Outside Sony: None
Brief Personal History:
April 2000		Joined the Corporation
April 2021		Director, Deputy President, Sony Interactive Entertainment Inc.
July 2021		Senior Vice President, Finance, Corporate Strategy & Development, Sony Interactive Entertainment LLC
October 2022		Representative Director, Deputy President, Sony Interactive Entertainment Inc.
April 2025		Chief Financial Officer, Corporate Executive Officer, the Corporation (present)

Kenichiro Yoshida, Hiroki Totoki, Toshimoto Mitomo, Tsuyoshi Kodera, Yasuhiro Ito and Lin Tao are engaged on a full-time basis by Sony Group Corporation. There is no family relationship between any of the persons named above. There is no arrangement or understanding with major shareholders, customers, suppliers, or others pursuant to which any person named above was selected as a Director or a Corporate Executive Officer.

B.	Compensation

Under the Financial Instruments and Exchange Act of Japan and related regulations, the Corporation is required to disclose the total remuneration paid by the Corporation to Directors and Corporate Executive Officers, as well as remuneration of any Director or Corporate Executive Officer who receives total aggregate annual remuneration exceeding 100 million yen from the Sony Group in a fiscal year, on an individual basis. The following table and accompanying footnotes show the information on such matters that the Corporation has disclosed in its annual Securities Report for the fiscal year ended March 31, 2025 filed on June 20, 2025 with the Director General of the Kanto Local Finance Bureau of the Ministry of Finance in Japan.

(1) Total amounts of remuneration for Directors and Corporate Executive Officers and the number thereof^*1



	Fixed remuneration		Remuneration linked to business results		Stock acquisition rights (*7)		Restricted stock (*10)		Restricted stock Units (“RSUs”) (*12)		Phantom Restricted Stock Plan (*13)
	Number of persons	Amount (Yen in millions)	Number of persons	Amount (Yen in millions)	Number of persons	Amount (Yen in millions)	Number of persons	Amount (Yen in millions)	Number of persons	Amount (Yen in millions)	Number of persons	Amount (Yen in millions)
Directors	9	234	—	—	—	—	8	66	8	10	—	—
(*2)	(*3)			(*4)		(*8)	(*3)					(*14)
Corporate Executive Officers	6	619	6	803	8	911	7	1,354	6	500	3	1,065
			(*5)	(*6)	(*9)		(*11)
Total	15	853	6	803	8	911	15	1,420	14	509	3	1,065

*1 Due to rounding, individual sums may not total 100%.

*2 The number of persons does not include two Directors who concurrently serve as Corporate Executive Officers, because the Corporation does not pay any additional remuneration for services as a Director to Directors who concurrently serve as Corporate Executive Officers. All Directors above are outside Directors.

*3 The number of persons includes one Director (outside Director) who resigned on the day of the Ordinary General Meeting of Shareholders held on June 25, 2024.

*4 The Corporation does not pay remuneration linked to business results to Directors who do not concurrently serve as Corporate Executive Officers.

*5 The number of persons includes three Corporate Executive Officers who resigned on March 31, 2025.

*6 The final amount of remuneration linked to business results for the fiscal year ended March 31, 2025, which is scheduled to be paid in June 2025.

*7 As to stock acquisition rights, the amount above is that of expenses the Corporation recorded during the fiscal year ended March 31, 2025 applicable to stock acquisition rights granted.

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*8 The Corporation does not grant stock acquisition rights to Directors who do not concurrently serve as Corporate Executive Officers.

*9 The number of persons includes two Corporate Executive Officers who resigned by the end of the fiscal year ended March 31, 2024.

*10 As to restricted stock, the amount above is that of expenses the Corporation recorded during the fiscal year ended March 31, 2025 applicable to restricted stock.

*11 The number of persons includes one Corporate Executive Officer who resigned by the end of the fiscal year ended March 31, 2024.

*12 As to RSUs, the amount above is that of expenses the Corporation recorded during the fiscal year ended March 31, 2025 applicable to RSUs.

*13 As to the phantom restricted stock plan, the amount above is the amount which is to be paid to three Corporate Executive Officers who resigned on March 31, 2025. The Corporation recorded 1,591 million yen in expenses during the fiscal year ended March 31, 2025 applicable to the phantom restricted stock plan for Corporate Executive Officers.

*14 The Corporation does not pay remuneration under the phantom restricted stock plan to Directors who do not concurrently serve as Corporate Executive Officers.

(2) Amounts of remuneration for Directors and Corporate Executive Officers on an individual basis


Name	Position (*1)	Fixed Remuneration (*2) (Yen in millions)	Remuneration linked to business results (2) (3) (Yen in millions)	Phantom restricted stock plan (*2) (Yen in millions)	Total (*2) (Yen in millions)	Granted number of stock acquisition rights (*4) (Ten thousand shares)	Granted number of RSUs (*5) (Ten thousand shares)
Kenichiro Yoshida	Director (6), Chairman, and Representative Corporate Executive Officer (7)	240	396	—	636	85	43.3
Hiroki Totoki	Director (6), President and CEO, and Representative Corporate Executive Officer (7)	140	220	—	360	45	23.0
Toshimoto Mitomo	CSO, and Corporate Executive Officer (*7)	62	55	—	117	11	5.6
Hiroaki Kitano	Former Executive Deputy President, CTO, and Corporate Executive Officer (Until March 31, 2025)	62 (*8)	53 (*8)	99	214 (*8)	11	5.6
Shiro Kambe	Former Senior Executive Vice President, and Corporate Executive Officer (Until March 31, 2025) (*7)	52	45	555	653	7.5	3.9
Kazushi Ambe	Former Senior Executive Vice President, and Corporate Executive Officer (Until March 31, 2025) (*7)	52	45	410	507	7.5	3.9

*1 This chart shows remuneration for Directors and Corporate Executive Officers who received, or who became likely to receive, total remuneration exceeding 100 million yen from the Corporation and its subsidiaries during the fiscal year ended March 31, 2025. Titles are as of the date of submission of this document.

*2 Due to rounding, individual sums may not total 100%.

*3 For the metrics and actual financial results used to determine the amount of remuneration linked to business results, refer to “(5) Corporate Executive Officer remuneration linked to business results for the fiscal year ended March 31, 2025” below.

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*4 Indicates the number of shares of common stock of the Corporation (“Common Stock”) to be delivered based on the assumption that all stock acquisition rights granted in the fiscal year ended March 31, 2025 are exercised. The weighted-average fair value per share as of November 25, 2024, the date of grant of stock acquisition rights granted during the fiscal year ended March 31, 2025, was 875 yen and was estimated using the Black-Scholes model with several assumptions. Refer to Note 21 of the consolidated financial statements for details. The weighted-average fair value per share does not indicate the actual value that would be realized by a Corporate Executive Officer upon the exercise of the above-mentioned stock acquisition rights. The actual value, if any, that is realized by a Corporate Executive Officer upon the exercise of any stock acquisition rights will depend on the extent to which the market value of Common Stock exceeds the exercise price of the stock acquisition rights on the date of exercise, and several other restrictions imposed on the exercise of the stock acquisition rights, including the period when a Corporate Executive Officer could exercise the stock acquisition rights. Accordingly, there is no assurance that the value realized or to be realized by a Corporate Executive Officer upon the exercise of the stock acquisition rights is or will be at or near the weighted-average fair value per share presented above. In addition, the above weighted-average fair value per share was calculated to recognize compensation expense for the fiscal year ended March 31, 2025 for accounting purposes and should not be regarded as any indication or prediction of the Sony Group with respect to its future stock performance.

*5 Indicates the number of shares of Common Stock to be delivered, if all RSUs granted in the fiscal year ended March 31, 2025 are vested. The weighted-average fair value per share of the RSUs as of July 25, 2024, the date of grant during the fiscal year ended March 31, 2025, was 2,644 yen and was based on the closing price per share of Common Stock on the grant date, adjusted to reflect the expected dividends not received during the vesting period. Refer to Note 21 of the consolidated financial statements for details. The above numbers of shares and the weighted-average fair value per share of the RSUs as of July 25, 2024, the date of grant during the fiscal year ended March 31, 2025, are calculated based on the assumption that the stock split effective October 1, 2024 was conducted at the beginning of the fiscal year ended March 31, 2025.

*6 The Corporation does not pay any remuneration for services as a Director to Directors who concurrently serve as Corporate Executive Officers.

*7 Apart from the remuneration contained in the table, the Corporation also provided certain personal benefits and perquisites, including fringe benefits and in some instances amounts to pay income taxes related to perquisites, totaling 1 million yen to Kenichiro Yoshida, 1 million yen to Hiroki Totoki, 19 million yen to Toshimoto Mitomo, 1 million yen to Shiro Kambe, and 1 million yen to Kazushi Ambe during the fiscal year ended March 31, 2025.

*8 Remuneration paid to Hiroaki Kitano includes 6 million yen in fixed remuneration and 5 million yen in remuneration linked to business results from Sony Computer Science Laboratories, Inc. and 6 million yen in fixed remuneration and 5 million yen in remuneration linked to business results from Sony Research Inc.

(3) Basic policy regarding Director and Senior Executive remuneration

The basic policy regarding remuneration for respective Directors and Senior Executives including Corporate Executive Officers determined by the Compensation Committee is as follows:

(a) Basic policy regarding Director remuneration

The primary duty of Directors is to supervise the performance of business operations of the Sony Group as a whole. In order to improve this supervisory function over the business operations of the Sony Group, which is a global company, the following two elements have been established as the basic policy for the determination of remuneration of Directors. No Director remuneration is paid to those Directors who concurrently serve as Corporate Executive Officers.

•

Attracting and retaining an adequate talent pool of Directors possessing the requisite abilities to excel in the global marketplace; and

•

Ensuring the effectiveness of the supervisory function of Directors.

Based on the above, Director remuneration shall consist of the following components. The amount of each component and its percentage of total remuneration shall be at an appropriate level determined in accordance

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with the basic policy above and based on research conducted by a third party regarding remuneration of directors of both Japanese and non-Japanese companies.



Type of remuneration		Description

Fixed remuneration		• The amount of fixed remuneration shall be at an appropriate level determined in accordance with the basic policy above and based on research conducted by a third party regarding remuneration of directors of both Japanese and non-Japanese companies.

Stock-based compensation (restricted stock or RSUs)		• Restricted stock or RSUs are granted to further promote shared values between Directors and shareholders and incentivize Directors to develop and maintain a sound and transparent management system. • Any Director to whom restricted stock is granted may not sell or transfer the granted shares during his/her tenure, and in principle, such restriction is to be released when such Director resigns. • In principle, RSUs held by Directors will be vested when he/she resigns, and the Common Stock will be delivered to the Directors upon vesting.

(b) Basic policy regarding Senior Executive remuneration

Senior Executives are key members of management responsible for executing the operations of the Sony Group as a whole, or respective businesses of the Sony Group. In order to further improve the business results of the Sony Group, the following two elements have been established as the basic policy for the determination of remuneration of Senior Executives.

•

Attracting and retaining an adequate talent pool possessing the requisite abilities to excel in the global marketplace; and

•

Providing effective incentives to improve business results on a short-, medium- and long-term basis.

Based on the above, Senior Executive remuneration shall basically consist of the following components. The amount of each component and its percentage of total remuneration shall be at an appropriate level determined in accordance with the above basic policy and the individual’s level of responsibility and based on research conducted by a third party regarding remuneration of management of both Japanese and non-Japanese companies, with an emphasis on linking Senior Executive remuneration to business results and shareholder value.



Type of remuneration		Description

Fixed remuneration		• The amount of fixed remuneration shall be at an appropriate level determined based on research conducted by a third party regarding remuneration of management of both Japanese and non-Japanese companies, according to his/her responsibility, and in order to maintain competitiveness in recruiting talent.

Remuneration linked to business results		• Structured appropriately and based on appropriate indicators to ensure that such remuneration effectively incentivizes Senior Executives to achieve financial targets for the mid- to long-term and financial targets for the corresponding fiscal year. • Specifically, the amount to be paid to Senior Executives shall be determined based on the level of achievements of the two metrics below, and can fluctuate, in principle, from 0% to 200% of the standard payment amount (“Business Results Linked Standard Payment Amount”) depending on the level of achievement. (1) Certain key performance indicators linked to the consolidated (without the Financial Services segment) or individual business results of the Sony Group during the

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Type of remuneration		Description
		corresponding fiscal year, such as operating income and operating income margin (collectively, the “Financial Performance KPIs”), which are based on the areas for which each Senior Executive is responsible. (2) Achievement of the Group Sustainability Evaluation. • The Group Sustainability Evaluation is an evaluation of efforts by Senior Executives to enhance the mid- to long-term corporate value and sustainable growth of the Sony Group as a whole, not just their respective businesses and organizations, and includes management succession planning and investment in human capital, sustainability initiatives related to social value creation and ESG (environment, social and governance), value creation through collaborations among the businesses of the Sony Group, and engagement indicators based on employee surveys. • The Business Results Linked Standard Payment Amount shall be determined so that such amount is within a certain percentage of the cash compensation (total of the fixed remuneration and the remuneration linked to business results), which percentage shall be determined in accordance with each individual’s level of responsibility. • The Corporation adopted a clawback policy for the recoupment of compensation. (Please see below Reference: Clawback Policy.)

Stock-based compensation (Stock acquisition rights, and restricted stock or restricted stock units)		• Stock acquisition rights, and restricted stock or RSUs are granted to incentivize Senior Executives to increase mid- to long-term shareholder value. • The exercise of the stock acquisition rights is, in principle, restricted during a one-year period from the allotment date, and one-third of the total number of exercisable stock acquisition rights will be vested and be exercisable each year thereafter. (All of the allocated stock acquisition rights will be exercisable on and after three years from the allotment date.) • The Senior Executives to whom restricted stock is granted, in principle, may not sell or transfer the granted stock before the third anniversary date of the Ordinary General Meeting of Shareholders of the fiscal year when the subject restricted stock was granted. • In principle, all RSUs held by the Senior Executives will be vested after three years have passed since the date of grant of the RSUs, and the Common Stock will be delivered to the Senior Executives. • As a general policy, remuneration for a Senior Executive who has greater management responsibility and influence over the Sony Group as a whole has a higher proportion of stock-based compensation, which is directly linked to the corporate value. (Please see below Reference: Executive Compensation Package Designed to Focus on Long-Term Management.) • The amount of stock-based compensation shall be determined so that the amount is within a certain percentage of the total cash compensation (total of the fixed remuneration and the remuneration linked to business results) and stock-based compensation.

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Type of remuneration		Description

Phantom restricted stock plan		• Points determined every year by the Compensation Committee shall be granted to Senior Executives every year during his/her tenure, and at the time of resignation, the remuneration amount shall be calculated by multiplying the Common Stock price (closing price) by the individual’s accumulated points.

(Reference: Executive Compensation Package Designed to Focus on Long-Term Management)

The bar chart below shows the components of remuneration for Corporate Executive Officers for the fiscal year ended March 31, 2025. For this chart, the remuneration linked to business results is based on the Business Results Linked Standard Payment Amount for each Corporate Executive Officer. As to the stock-based compensation, the underlying amount is calculated based on the weighted-average fair value per share of stock acquisition rights and the RSUs at the date of their grant in the fiscal year ended March 31, 2025. Accordingly, the components of remuneration based on the amounts actually paid will be different from the chart below.

LOGO

* Due to rounding, individual sums may not total 100%.

(Reference: Stock-based Compensation)

The Corporation introduced stock acquisition rights, restricted stock and RSUs as forms of stock-based compensation, granted to the Directors and the Senior Executives including Corporate Executive Officers.

The purpose of the stock-based compensation for the outside Directors is to incentivize the outside Directors to develop and maintain a sound and transparent management system by further promoting shared values between the shareholders and the outside Directors. Furthermore, the purpose of the stock-based compensation for the Senior Executives including Corporate Executive Officers is to further reinforce management’s alignment with shareholder value, and to incentivize management to improve mid- to long-term performance and increase shareholder value.

The details of such stock-based compensation, including vesting conditions, recipients and number of grants, are determined or supervised by the Compensation Committee based on research conducted by a third party regarding stock-based compensation of both Japanese and non-Japanese companies. In addition, in determining the number of shares or units to be granted, the impact on dilution of the value of the shares of the Corporation is monitored.

(Reference: Clawback Policy)

In 2022, the SEC adopted rules relating to the mandatory recovery of erroneously awarded incentive-based compensation received by certain current or former executive officers, and the NYSE has, in turn, adopted listing standards in connection with such rules. Accordingly, Sony Group Corporation’s Compensation Committee adopted a clawback policy, with an effective date of October 2, 2023 (the “Clawback Policy”). The Clawback Policy provides for the mandatory recovery of erroneously awarded incentive-based compensation received by each Executive Officer (as defined in the Clawback Policy) during the three-fiscal-year period prior to the date Sony Group Corporation is required to prepare an Accounting Restatement (as defined in the Clawback Policy), in accordance with the above rules and standards. The amount of erroneously awarded incentive compensation that the Executive Officers would be required to repay is the amount of incentive-based compensation paid to the Executive Officer that exceeds the amount the Executive Officer would have received had it been determined based on the restated amounts, computed without regard to any taxes paid. The recovery of such compensation applies regardless of whether an Executive Officer engaged in misconduct or otherwise caused or contributed to the requirement of an accounting restatement. For further details and full text of the Clawback Policy, please refer to Exhibit 97.1 attached to this report.

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(4) Procedures to determine remuneration of Directors and Senior Executives

Based on the policy outlined above, the amount and content of the compensation for each Director and Senior Executive, including Corporate Executive Officers, are determined by the Compensation Committee or otherwise under the supervision of the Compensation Committee.

Specifically, in principle, as for Directors, each year at the meeting of the Compensation Committee held after the Ordinary General Meeting of the Shareholders, the amount of basic remuneration and the content of compensation for the corresponding fiscal year are determined. Thereafter, at the meeting of the Compensation Committee held after the corresponding fiscal year end, the final amount of compensation of each Director is determined. As for the Senior Executives, each year at the meeting of the Compensation Committee held at the end of the previous fiscal year, in principle, the amount of basic remuneration and the content of compensation for the corresponding fiscal year are determined or reviewed. Thereafter, at the meeting of the Compensation Committee held after the corresponding fiscal year end, the final amount of compensation for each Senior Executive is determined or supervised.

For determining the amount of the remuneration linked to business results for each Senior Executive, the Business Results Linked Standard Payment Amount, the targets for the Financial Performance KPIs and targets for the Group Sustainability Evaluation are determined and thereafter, the amount of such remuneration is determined based on the level of achievement of such targets for the Financial Performance KPIs and the individual performance at the meeting of the Compensation Committee held after the corresponding fiscal year end for Corporate Executive Officers or otherwise under supervision by the Compensation Committee for Senior Executives other than Corporate Executive Officers.

The amount of compensation of each Director and Senior Executive including Corporate Executive Officers for the fiscal year ended March 31, 2025 was also determined by the Compensation Committee or otherwise under supervision by the Compensation Committee according to the procedure above. The Compensation Committee concluded that the amount and content of the compensation was in accordance with the policy set forth in section (3) above.

(5) Corporate Executive Officer remuneration linked to business results for the fiscal year ended March 31, 2025

The Business Results Linked Standard Payment Amount for each Corporate Executive Officer for the fiscal year ended March 31, 2025 was determined to be in the range between 60% and 100% of the amount of the fixed remuneration of such Corporate Executive Officer according to his/her responsibility.

The formula to calculate the amount of the remuneration linked to business results to be paid to Corporate Executive Officers is as follows.

LOGO

* Business Results Linked Standard Payment Amount: Determined to be in the range between 60% and 100% of the amount of the fixed remuneration of each Corporate Executive Officer.

** Payment rate of the remuneration linked to business results: Determined in principle, within the range from 0% to 200% based on (i) the achievement of Financial Performance KPIs based on the areas for which each Corporate Executive Officer is responsible and (ii) the achievement of the Group Sustainability Evaluation.

The Financial Performance KPIs and the weighting of such Financial Performance KPIs used for Corporate Executive Officers in the fiscal year ended March 31, 2025 were as follows:



KPI	Weight	Target Range to be achieved for the fiscal year ended March 31, 2025	Result for the fiscal year ended March 31, 2025

Compound Annual Growth Rate (“CAGR”) of Operating Income (Consolidated without Financial Services segment)	70%	9.2% ~ 10.0% (CAGR from the fiscal year ended March 31, 2024 to the fiscal year ended March 31, 2025)	23.3%

Operating Income Margin (Consolidated without Financial Services segment)	30%	9.9% ~ 10.0% (the fiscal year ended March 31, 2025)	10.6%

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CAGR of operating income and operating income margin (consolidated without the Financial Services segment) were determined as the Financial Performance KPIs under the fifth mid-range plan of the Sony Group to place greater emphasis on profit-based growth.

The target range to be achieved for CAGR of operating income for the fiscal year ended March 31, 2025, was set between 9.2%, which is the CAGR calculated based on the consolidated operating income without the Financial Services segment of 1 trillion 35.3 billion yen for the fiscal year ended March 31, 2024, and the forecast for the consolidated operating income without the Financial Services segment of 1 trillion 130 billion yen for the fiscal year ended March 31, 2025, which was disclosed in May 2024, and 10%, which is the target under the fifth mid-range plan. (This range was set as the performance level at which the achievement rate of the KPI is deemed to be 100%.)

The target range to be achieved for operating income margin for the fiscal year ended March 31, 2025, was set between 9.9%, which is the forecast for the consolidated operating income margin without the Financial Services segment for the fiscal year ended March 31, 2025, which was disclosed in May 2024, and 10%, which is the target under the fifth mid-range plan. (This range was set as the performance level at which the achievement rate of the KPI is deemed to be 100%.)

The results for the Financial Performance KPIs for the fiscal year ended March 31, 2025 were as follows: CAGR of operating income: 23.3%, operating income margin: 10.6%, each exceeding the targeted range.

As outlined above under “(3) Basic policy regarding Director and Senior Executive remuneration,” remuneration linked to business results for Senior Executives for the fiscal year ended March 31, 2025 was determined based on the level of achievement of the indicators which were selected based on the areas of responsibility of the relevant Senior Executive and the achievement of the Group Sustainability Evaluation. The amounts to be paid to the Senior Executives were, in principle, determined within the range from 0% to 200% of the Business Results Linked Standard Payment Amount. As a result, the ratio of remuneration linked to business results of Corporate Executive Officers for the fiscal year ended March 31, 2025 varied from 141.3% to 164.9% of the Business Results Linked Standard Payment Amount.

C.	Board Practices

General

Sony Group Corporation continuously strives to strengthen its corporate governance system based on the understanding that corporate governance is an essential basis to promote our management in order to fulfill the company’s corporate social responsibility and increase corporate value over the mid- to long-term. To operate Sony effectively, Sony Group Corporation continues to approach its corporate governance through two basic precepts: (a) the Board of Directors (the “Board”), a majority of which is comprised of independent outside Directors, focuses on effective oversight of management’s operation of the business and maintains a sound and transparent governance framework by utilizing the Nominating Committee, the Audit Committee and the Compensation Committee; and (b) the Board determines Sony’s fundamental management policies and other material matters and delegates to the Senior Executives (including Corporate Executive Officers), who assume important roles for the management of Sony, decision-making authority to conduct Sony’s business operations broadly in line with their respective responsibilities, as defined by the Board, with a view to promoting timely and efficient decision-making within Sony. In furtherance of these efforts, Sony Group Corporation has adopted a “Company with Three Committees” corporate governance system under the Companies Act of Japan (Kaishaho) and related regulations (collectively the “Companies Act”). Under this system, Sony Group Corporation has introduced its own requirements to help improve and maintain the soundness and transparency of its governance by strengthening the separation of the Directors’ function from that of management; maintaining what the company believes is an appropriate Board size, which enables the members of the Board to actively contribute to discussion; and advancing the proper functioning of the statutory committees.

Sony Group Corporation is governed by the Board, the members of which are elected at the Ordinary General Meeting of Shareholders. Under the Companies Act, a “Company with Three Committees” is required to have three committees: a Nominating Committee, an Audit Committee and a Compensation Committee, each consisting of Directors appointed by the Board. The Companies Act also requires the Board to appoint Corporate Executive Officers (Shikko-yaku), who make decisions regarding the execution of Sony’s business activities within the scope of the authority delegated to them by the Board. Sony Group Corporation has appointed its Chief Executive Officer (“CEO”), who is responsible for Sony’s overall management, and other officers who are responsible for important and extensive headquarters functions as Corporate Executive Officers. Sony Group Corporation has also appointed Corporate Executive Officers, including the CEO and other executives, that assume important roles for the management of Sony as Senior Executives. In addition, Sony has designated management team members as Business CEOs, Chief Officers, or Corporate Executives in accordance with their respective roles and responsibilities.

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A summary of the governance system adopted by Sony Group Corporation is set forth below. For an explanation of the significant differences between the NYSE’s corporate governance standards and Sony’s corporate governance practices, refer to “Item 16G. Corporate Governance.”

Board of Directors

(1) Members: 10 Directors including 8 outside Directors (as of the date of this report)



Name		Position

Kenichiro Yoshida		Director

Hiroki Totoki		Director

Yoshihiko Hatanaka		Chair of the Board Outside Director

Wendy Becker		Vice Chair of the Board Outside Director

Sakie Akiyama		Outside Director

Keiko Kishigami		Outside Director

Joseph A. Kraft Jr.		Outside Director

Neil Hunt		Outside Director

William Morrow		Outside Director

Shingo Konomoto		Outside Director

* Sony Group Corporation has proposed “To elect 11 Directors” as an agenda item for the Ordinary General Meeting of Shareholders to be held on June 24, 2025. If the proposal is approved, the Board will consist of the following 11 members. Wendy Becker is expected to be appointed as the Chair of the Board at a meeting of the Board immediately following the closing of the Ordinary General Meeting of Shareholders.

Expected members after the resolution of the Board immediately following the closing of the Ordinary General Meeting of Shareholders to be held on June 24, 2025: 11 Directors including 9 outside Directors



Name		Position

Kenichiro Yoshida		Director

Hiroki Totoki		Director

Wendy Becker		Chair of the Board Outside Director

Keiko Kishigami		Outside Director

Joseph A. Kraft Jr.		Outside Director

Neil Hunt		Outside Director

William Morrow		Outside Director

Shingo Konomoto		Outside Director

Yoriko Goto		Outside Director

Nora Denzel		Outside Director

Masayuki Hyodo		Outside Director

(2) Purpose/Authority

The primary roles of the Board are to: (a) determine Sony’s fundamental management policies; (b) oversee the management of Sony’s business operations as an entity independent from Sony’s management; (c) appoint

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and dismiss the statutory committee members; (d) appoint and dismiss Corporate Executive Officers and oversee the status of appointment/dismissal of Senior Executives other than Corporate Executive Officers; and (e) appoint and dismiss Representative Corporate Executive Officers.

For the matters to be decided by the Board and the matters to be reported to the Board, refer to Appendices 1 and 2 of the Charter of the Board of Directors (the “Board Charter”) attached as Exhibit 1.3 hereto.

(3) Policy Regarding Composition of the Board

With a view toward securing effective input and oversight by the Board, the Nominating Committee reviews and selects candidates for the Board with the aim of assuring that a substantial part of the Board is comprised of qualified outside Directors that satisfy the independence requirements established by Sony and by law. The Nominating Committee selects candidates that it views as well-suited to be Directors in light of the Board’s purpose of enhancing Sony’s corporate value. The Nominating Committee broadly considers various relevant factors, including a candidate’s capabilities (such as the candidate’s work and other experience, achievements and expertise), availability, and independence, as well as diversity, including gender and internationality, in the boardroom, the appropriate size of the Board, and the knowledge, experience and talent needed for the role. Under the Board Charter, Sony Group Corporation also requires that the Board consist of not fewer than 8 Directors and not more than 14 Directors. In addition, since 2005 the majority of the members of the Board have been outside Directors.

(4) Qualifications for Directors and Limitation of Re-election

The qualifications for Directors of Sony Group Corporation under the Board Charter are generally as summarized below. As of the date of this report, all Directors satisfy the qualifications for Directors as set forth below, and all outside Directors satisfy the additional qualifications for outside Directors and are also qualified and designated as Independent Directors under the Securities Listing Regulations of the TSE. It is expected that all Director candidates who will be appointed at the Ordinary General Meeting of Shareholders to be held on June 24, 2025 satisfy the qualifications for Directors as set forth below, and that all outside Director candidates satisfy the additional qualifications for outside Directors and are also qualified and designated as Independent Directors under the Securities Listing Regulations of the TSE.

All Directors must meet the qualifications below:

(a)

He/she shall not be a director, a statutory auditor, a corporate executive officer, a general manager or other employee of any company in competition with Sony in any of Sony’s principal businesses (a “Competing Company”) or own 3% or more of the shares of any Competing Company.

(b)

He/she shall not be or have been a representative partner or partner of Sony’s independent auditor the past three years before being nominated as a Director.

(c)

He/she shall not have any connection with any matter that may cause a material conflict of interest in performing the duties of a Director.

Outside

Directors must meet the additional qualifications below:

(a)

He/she shall not have received directly from Sony, during any consecutive twelve-month period within the last three years, more than an amount equivalent to U.S. $120,000, other than Director and committee fees and pension or other forms of deferred compensation for prior service (provided such compensation is not contingent in any way on continued service).

(b)

He/she shall not be an executive director, corporate executive officer, general manager or other employee of any company whose aggregate amount of transactions with Sony, in any of the last three fiscal years, exceeds the greater of an amount equivalent to U.S. $1,000,000, or 2% of the annual consolidated sales of such company.

For additional requirements for outside Directors under the Companies Act, refer to “Item 16G. Corporate Governance”.

Also, each outside Director may be nominated as a Director candidate for re-election up to five times (six years, in total), and thereafter by resolution of the Nominating Committee and by consent of all of the Directors. Even with the consent of all of the Directors, in no event may any outside Director be re-elected more than eight times (nine years, in total).

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(5) Matters related to Outside Directors

Sony Group Corporation expects that each outside Director plays an important role in ensuring proper business decisions by Sony and effective input and oversight by the Board through actively exchanging opinions and having discussions about Sony’s business based on his or her various and broad experience, knowledge and expertise. Considering these expectations, the policy and procedures on the election of Director candidates, including independent outside Director candidates, are set forth as described above. As of the date of this report, the Board has 10 Directors, eight of whom are outside Directors. The Chair and Vice Chair of the Board, as well as all members of the Nominating Committee, the Compensation Committee and the Audit Committee are outside Directors. After the closing of the Ordinary General Meeting of Shareholders to be held on June 24, 2025, it is expected that the Board will have 11 Directors, nine of whom will be outside Directors, that the Chair of the Board will be an outside Director; and that all members of the Nominating Committee, the Compensation Committee and the Audit Committee will be outside Directors.

Pursuant to the Articles of Incorporation, Sony Group Corporation has entered into a liability limitation agreement with all outside Directors. A summary of such liability limitation agreement is as follows:

(i)

In a case where an outside Director is liable to the company after the execution of the liability limitation agreement for damages pursuant to Article 423, Paragraph 1 of the Companies Act, such liabilities shall be limited to the greater of either 30 million yen or an amount equal to the aggregate sum of the amounts prescribed in each item of Article 425, Paragraph 1 of the Companies Act, only where the outside Director acted in good faith without any gross negligence in performing his/her duties as a Director of the company.

(ii)

In a case where an outside Director is re-elected as an outside Director of the company and re-assumes his/her office as such on the expiration of the term of his/her office as an outside Director of the company, the liability limitation agreement shall continue to be effective after the re-election and re-assumption without any action or formality.

In addition, Sony Group Corporation has a directors and officers liability insurance policy covering all Directors as insured parties. For an outline of the directors and officers liability insurance policy, refer to “Outline of the Terms of Executives Liability Insurance Policy”.

(6) Policy and Procedure for Selection and Dismissal of Senior Executives

Sony Group Corporation appoints Corporate Executive Officers including the CEO and other officers that assume important roles for the management of Sony as “Senior Executives.”

The Board has the authority to appoint and dismiss and assign the roles and responsibilities of, or to request a report regarding such matters for Senior Executives, including the CEO, and exercises such authority as necessary. In making decisions on the appointment of Corporate Executive Officers, including the CEO, the Board considers whether candidates for CEO meet certain qualifications for the CEO position which are set by the Nominating Committee and whether candidates for other Corporate Executive Officer positions have the necessary skills, capabilities, experiences and achievements that correspond to such Corporate Executive Officers’ expected roles and responsibilities. The Board also receives a report on the status of appointment and dismissal of Senior Executives other than Corporate Executive Officers.

The term of office of Senior Executives, including the CEO, is one year. The Board discusses, determines and/or oversees their re-appointment upon the expiration of each term considering the factors described above as well as their latest performance. The Board dismisses a Corporate Executive Officer, as necessary, in the event that the Board recognizes such Corporate Executive Officer is disqualified after discussions amongst the members of the Board or the Nominating Committee, even in the middle of the term for such Corporate Executive Officer.

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Nominating Committee

(1)	Members: 3 outside Directors (as of the date of this report)



Name		Position

Yoshihiko Hatanaka		Chair of the Nominating Committee (Outside Director)

Wendy Becker		Nominating Committee Member (Outside Director)

Joseph A. Kraft Jr.		Nominating Committee Member (Outside Director)

* It is expected that members of the Nominating Committee will be appointed as follows at a meeting of the Board immediately following the closing of the Ordinary General Meeting of Shareholders to be held on June 24, 2025.

Members after the resolution of the Board immediately following the closing of the Ordinary General Meeting of Shareholders to be held on June 24, 2025: 3 outside Directors



Name		Position

Wendy Becker		Chair of the Nominating Committee (Outside Director)

Joseph A. Kraft Jr.		Nominating Committee Member (Outside Director)

Masayuki Hyodo		Nominating Committee Member (Outside Director)

(2) Purpose/Authority

The primary roles of the Nominating Committee are to: (a) determine the content of proposals regarding the appointment/dismissal of Directors to be submitted for approval at a General Meeting of Shareholders and (b) evaluate management succession plans, which the CEO develops, for the CEO and other executives designated by the Nominating Committee.

The Nominating Committee determines the content of proposals regarding the appointment and dismissal of Directors, considering the policy on composition of the Board, the qualifications for Directors and the limitation of re-election of Directors described above.

(3) Policy Regarding Composition of the Nominating Committee

Under the Companies Act, the Nominating Committee shall consist of at least three Directors, the majority of whom shall be outside Directors. Also, under the Board Charter, the chair is to be selected from among the outside Directors. In determining whether to appoint or remove a member of the Nominating Committee, continuity of the Nominating Committee shall be duly taken into account. After the resolution of the Board immediately following the closing of the Ordinary General Meeting of Shareholders to be held on June 24, 2025, the Nominating Committee is expected to consist of three outside Directors.

(4) Management Succession Plans

The Nominating Committee evaluates the succession plans, and the implementation of such plans, for the CEO and other executives designated by the Nominating Committee, and reports the results of its evaluation to the Board, as appropriate.

Evaluations are conducted by having the CEO periodically submit draft succession plans to the Nominating Committee, which it reviews. As a part of such review, the Nominating Committee considers the development or promotion of the next generation of management and evaluates whether the succession plans have been prepared in a reasonable manner in light of Sony’s purpose to create sustainable social value and to enhance corporate value over the mid- to long-term.

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Audit Committee

(1) Members: 3 outside Directors (as of the date of this report)



Name		Position

Joseph A. Kraft Jr.		Chair of the Audit Committee (Outside Director)

Keiko Kishigami		Audit Committee Member (Outside Director)

Shingo Konomoto		Audit Committee Member (Outside Director)

* It is expected that members of the Audit Committee will be appointed as follows at a meeting of the Board immediately following the closing of the Ordinary General Meeting of Shareholders to be held on June 24, 2025.

Members after the resolution of the Board immediately following the closing of the Ordinary General Meeting of Shareholders to be held on June 24, 2025: 4 outside Directors



Name		Position

Joseph A. Kraft Jr.		Chair of the Audit Committee (Outside Director)

Keiko Kishigami		Audit Committee Member (Outside Director)

Shingo Konomoto		Audit Committee Member (Outside Director)

Yoriko Goto		Audit Committee Member (Outside Director)

(2) Purpose/Authority

The primary roles of the Audit Committee are to: (a) monitor the performance of duties by Directors and Corporate Executive Officers and (b) oversee and evaluate the independent auditor.

(3) Policy Regarding Composition of the Audit Committee

Under the Companies Act, the Audit Committee shall consist of at least three Directors, the majority of whom shall be outside Directors. In addition, under the Board Charter, each member of the Audit Committee (“Audit Committee Member”) shall satisfy all of the following qualifications: (a) he/she shall not be a Director engaged in the business operations of Sony Group Corporation or any of its subsidiaries, a Corporate Executive Officer, an accounting counselor, a general manager or other employee of Sony and (b) he/she shall meet the independence requirements or such other equivalent requirements of the U.S. securities laws and regulations as may from time to time be applicable to Sony Group Corporation. The chair is to be selected from among the outside Directors. The Audit Committee Members shall be selected from among the persons who possess appropriate experience and talent as well as the necessary finance, accounting and legal knowledge to serve on the Audit Committee. In determining whether to appoint or remove the Audit Committee Member, continuity of the Audit Committee shall be duly taken into account.

Moreover, at least one Audit Committee Member shall meet the audit committee financial expert requirements or such other equivalent requirements of the U.S. securities laws and regulations as may from time to time be applicable to Sony Group Corporation. The Board makes a determination on whether or not such Audit Committee Members meet these requirements. As of the date of this report, Keiko Kishigami is an “audit committee financial expert” within the meaning of Item 16A of Form 20-F under the Exchange Act, as

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amended. After the resolution of the Board immediately following the closing of the Ordinary General Meeting of Shareholders to be held on June 24, 2025, the Audit Committee is expected to consist of four outside Directors, two of whom (Keiko Kishigami and Ms. Yoriko Goto) are expected to be “audit committee financial experts.” Both Kishigami Keiko and Ms. Yoriko Goto have auditing experience across various companies in Japan and overseas, as well as expertise on internal controls and considerable knowledge of finance and accounting.

(4) Policy on Selection of Independent Auditor Candidates and Independence of the Independent Auditor

With respect to the candidates for independent auditor nominated by the CEO and other Corporate Executive Officers, the Audit Committee evaluates the nomination, prior to making a decision on the candidates. The Audit Committee continues to evaluate the independence, the qualification and the reasonableness as well as the performance of the independent auditor so appointed.

Compensation Committee

(1) Members: 3 outside Directors (as of the date of this report)



Name		Position

Wendy Becker		Chair of the Compensation Committee (Outside Director)

Sakie Akiyama		Compensation Committee Member (Outside Director)

William Morrow		Compensation Committee Member (Outside Director)

* It is expected that members of the Compensation Committee will be appointed as follows at a meeting of the Board immediately following the closing of the Ordinary General Meeting of Shareholders to be held on June 24, 2025.

Members after the resolution of the Board immediately following the closing of the Ordinary General Meeting of Shareholders to be held on June 24, 2025: 3 outside Directors



Name		Position

William Morrow		Chair of the Compensation Committee (Outside Director)

Nora Denzel		Compensation Committee Member (Outside Director)

Masayuki Hyodo		Compensation Committee Member (Outside Director)

(2) Purpose/Authority

The primary roles of the Compensation Committee are to: (a) set policy on the content of individual compensation for Directors, Corporate Executive Officers and other officers and (b) determine the amount and content of individual compensation of Directors and Corporate Executive Officers in accordance with the policy, and oversee the determination regarding the amount and content of individual compensation of Senior Executives other than Corporate Executive Officers.

For the basic policy regarding remuneration for Directors and Corporate Executive Officers, refer to “Compensation” in Item 6.B.

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(3) Policy Regarding Composition of the Compensation Committee

Under the Companies Act, the Compensation Committee shall consist of at least three Directors, the majority of whom shall be outside Directors. In addition, under the Board Charter, a Director who is a CEO, a Chief Operating Officer (“COO”) or a Chief Financial Officer (“CFO”) of Sony Group Corporation or who holds any equivalent position shall not be a member of the Compensation Committee. In determining whether to appoint or remove a member of the Compensation Committee, continuity of the Compensation Committee shall be duly taken into account. After the resolution of the Board immediately following the closing of the Ordinary General Meeting of Shareholders to be held on June 24, 2025, the Compensation Committee is expected to be comprised of three outside Directors.

Senior Executives (Corporate Executive Officer and Business CEO)

(1) Total number of Senior Executives: 15 (including 6 Corporate Executive Officers) (as of the date of this report)

(2) Purpose/Authority

The primary roles of Senior Executives are to determine and execute Sony’s business activities in accordance with their roles and responsibilities determined by the Board.

(3) Delegation of Authority from the Board

The Board determines the fundamental management policies and other material matters related to the operation of Sony’s business. The Board assigns the duties of Corporate Executive Officers, including the CEO, by determining the areas over which each Corporate Executive Officer is in charge and by determining the scope of Senior Executives. Then, it delegates its decision-making authority to the CEO with a view to promoting timely and efficient decision-making within Sony. The CEO further subdelegates a part of such authority to other Senior Executives.

Other Officers (Corporate Executives)

(1) Total number of other officers: 8 (as of the date of this report)

(2) Purpose/Authority

The primary roles of other officers are to carry out their assignments within designated areas, such as headquarters functions and/or R&D, in accordance with the fundamental policies determined by the Board and Senior Executives.

Outline of the Terms of Executives Liability Insurance Policy

Sony Group Corporation has, at its expense in respect of insurance premiums, entered into a directors and officers liability insurance policy for all Directors, Corporate Executive Officers, corporate auditors, and persons in equivalent positions (the “Executives”) of itself and its subsidiaries over which Sony Group Corporation has a direct or indirect ownership more than 50%. The outline of the terms of such liability insurance policy is as follows:

(i)

The insurance policy covers compensation for damages, litigation costs (including attorney’s fees) and other costs that may be incurred by the Executives as a result of assuming responsibility for the execution of their duties or receiving claims related to such responsibility.

(ii)

As a measure to ensure the appropriateness of the execution of duties by the Executives, there are certain exemptions, such as in the case of an act committed by the Executives with the knowledge that it constitutes a violation of laws or regulations.

Support for Activities of Directors, the Board and the Committees

Sony Group Corporation engages in various activities to enhance the oversight function of the Board over management’s operation of Sony’s business as follows:

(1) Outside Director Initiatives

The Chair of the Board, who is an outside Director, leads the Board’s activities and secures the appropriate cooperation, communication and arrangement among outside Directors and Senior Executives. As an example of

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such initiatives, outside Directors’ meetings have been held, generally on the same day as each Board Meeting, for the purpose of exchanging information and sharing information with respect to recognized issues among outside Directors. The Board also conducted Directors’ strategic workshops with management, business site visits by Directors, and meetings with the Chair of the Board and the CEO. All of these activities were aimed at securing better understanding by outside Directors of Sony’s business and management’s challenges and encouraging strategic discussions among Directors. At a workshop held over two days in December 2024, through direct dialogue with the management team of Sony Group Corporation including the CEOs of each business segment, the Directors exchanged opinions about the business environment and challenges surrounding each business, as well as strategies to address them. At the workshop, Directors also intensively discussed Sony Group’s mid- to long-term strategies and challenges, including the development of new businesses. In March 2025, the outside Directors visited the offices of SMEJ, CloverWorks Inc., an animation production subsidiary of SMEJ, and the Ginza Sony Park to observe creative production sites and exhibition spaces, and exchanged opinions with the management of the Music and animation businesses.

(2) Secretariat Offices for the Board and each Committee

The company has established secretariat offices of the Board and each Committee to support the activities of the members and encourage constructive and proactive discussion at the meetings of the Board and each Committee. Each secretariat office endeavors to distribute necessary materials for the meetings in advance and to provide other information such as accounting information, organizational charts, press releases, external analyst reports and credit rating reports, as appropriate. Each secretariat office explains the meeting agenda to the members and provides them with presentation materials in advance of each meeting date and facilitates deliberation in separate meetings or briefing sessions depending on the nature of matters to be discussed. Each secretariat office also provides the absent members with a follow up briefing, as appropriate. In addition, under supervision by the Chairs of the Board and each Committee, each secretariat office shares the annual schedule of the meetings and anticipated agenda items in advance with the members in order to appropriately set the frequency of meetings and the number of agenda items to be deliberated at each meeting.

(3) Provision of Necessary Information

When the company is requested to provide additional information, each secretariat office endeavors to provide the members such information promptly. Also, each secretariat office verifies appropriately whether requested information is provided smoothly. In the event that the members consult with external specialists, participate in various seminars and so on to perform their duties, the costs and expenses in connection with such activities are borne by the company in accordance with applicable internal rules.

(4) Audit Committee Aide

With the approval of the Board and with the Audit Committee’s consent, the company has established the Audit Committee Aide to support the activities of the Audit Committee. The Audit Committee Aide does not concurrently hold positions related to the business operations of Sony and, upon instruction by each Audit Committee member, conducts investigations into and analyzes auditing matters and engages in physical inspections or visiting audits either by him/herself or by cooperating with relevant departments in order to support the Audit Committee.

(5) Policy on Director Training

Newly appointed Directors receive briefings by Senior Executives and outside experts regarding their expected roles and responsibilities, including their legal duties as a Director or as a member of the Committees, as well as briefings about the business, financial status, organization and governance structure of Sony. Also, throughout their tenure, each Director receives compliance-related training in accordance with internal protocols and briefings on matters relevant to each Director’s fulfillment of his/her roles and responsibilities including the current status of Sony’s business.

Evaluation of the Board and the Committees’ Effectiveness

(1) Policy for Evaluation

Sony Group Corporation believes that it is important to endeavor to improve the effectiveness of the Board and each Committee in order to support Sony’s business operations and enhance the corporate value of Sony. To achieve this goal, Sony Group Corporation conducts evaluations of the effectiveness of the Board and of each Committee (the “Evaluation”) annually, as a general rule.

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(2) Recent Evaluation

From February through May 2025, under the leadership of the Chair and Vice Chair of the Board, the Board conducted the Evaluation mainly in respect of Board and Committee activities in the fiscal year ended March 31, 2025 after confirming that actions proposed in response to the results of the previous Evaluation were appropriately taken. The recent Evaluation was conducted with the support of a third-party outside counsel with expertise in Japanese and global corporate governance practices (the “Outside Counsel”) in order to ensure transparency and objectivity and to obtain professional advice.

(3) Procedure of the Recent Evaluation

First, the Board confirmed that the actions proposed to be taken in response to the results of the previous Evaluation were taken, and it discussed and confirmed the proposed procedures for the Evaluation for the fiscal year ended March 31, 2025. Thereafter, the third-party evaluation was conducted by the Outside Counsel in accordance with the following steps:

•

Reviewed relevant material, such as the minutes of Board meetings, and attended a Board meeting;

•

Confirmed with the Board secretariat office and each Committee’s secretariat office how meetings of the Board and Committees were conducted;

•

Gathered responses to a questionnaire from each Director (including the Peer Review*) about the current status and practices of the Board and each Committee, such as the composition of the Board, operation of the Board, commitments of each Director, activities of each Committee and procedures of the previous Evaluation;

•

Interviewed the Chair of the Board, the Vice Chair of the Board and the Chair of each Committee, newly appointed Directors (including the Peer Review*), and some of the Corporate Executive Officers; and

•

Researched other global companies’ practices in Japan and the U.S., and compared them with the company’s practices.

Peer Review: A mutual evaluation among Directors. In the fiscal year ended March 31, 2025, it was conducted through a questionnaire and interview of all Directors.

The Board then received, reviewed and discussed the Outside Counsel’s report on the results of its evaluation. The Board confirmed the effectiveness of the Board and the Committees.

(4) Summary of the Results of the Recent Evaluation

Based on the following findings, the Outside Counsel reported that, as assessed in the previous Evaluation, the Board is established and operated in a manner sufficient to be highly evaluated:

•

The results of the questionnaire and interviews show that all Directors rate the effectiveness of the Board, including each Committee, highly.

•

The changeover of the CEO went smoothly, and the process of the changeover was highly evaluated.

•

With the addition of the newly appointed Director, there has been an increase within the Board of market-focused members with top management experience at listed companies.

•

Initiatives to improve effectiveness of the Board continue to be implemented.

•

In terms of the Board’s composition and other various aspects, the Board has characteristics that are highly evaluated in many respects in comparison with the boards of listed companies in the U.S. as well as in Japan.

Following discussion and analysis based on the Outside Counsel’s report, the Board re-affirmed that the Board and each Committee were functioning effectively as of May 2025.

The Outside Counsel also suggested several ideas on possible options for the Board and Committees to further improve their own effectiveness.

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(5) Actions in Response to the Results of the Evaluation

In order to increase the corporate value of Sony, Sony Group Corporation will take appropriate actions to further enhance functions of the Board and the Committees in response to the results of the Evaluation, as well as various comments and opinions given by Directors and the Outside Counsel during the Evaluation process.

•

Monitored the progress of the fifth mid-range plan and long-term growth strategy;

•

Discussed the growth through IP value maximization and the technology platform supporting IP value maximization;

•

Continuously supervised risks related to cybersecurity, economic security and geopolitics; and

•

Continued engagement with external investors.

Internal Control and Governance Framework

At a Board meeting held on April 26, 2006, the Board reaffirmed the internal control and governance framework in effect as of the date of determination and determined to continue to evaluate and improve such framework going forward, as appropriate. At Board meetings held on May 13, 2009 and April 30, 2015, the Board amended and updated the internal control and governance framework, and as of May 15, 2025, the Board reaffirmed that such framework was in effect and determined to continue to evaluate and improve such framework going forward, as appropriate. These determinations were required by and met the requirements of the Companies Act.

A summary of the principal framework of the internal control and governance framework based on the Board determination above is as follows:

(1) Disclosure Control Framework

The securities of Sony Group Corporation are listed for trading on exchanges in Japan and the U.S. As a result, Sony is obligated to make various disclosures to the public in accordance with applicable securities laws, regulations and rules in those countries and listing standards of the stock exchanges on which Sony Group Corporation’s shares are listed. Sony is committed to full compliance with all requirements applicable to its public disclosures. Sony Group Corporation’s policy on investor relations activities is to aim to disclose accurate information in a timely and fair manner, as well as to endeavor to promote constructive dialogue with shareholders and investors, with a view to maximizing the corporate value by building a relationship of trust with shareholders and investors. Sony Group Corporation has established disclosure controls and procedures as an approach to implement this policy. All personnel responsible for the preparation of submissions to and filings with the TSE, the SEC and other regulatory entities, or for other public communications made on behalf of Sony, or who provide information as part of that process, have a responsibility to ensure that such disclosures and information are full, fair, accurate, timely and understandable, and in compliance with the established disclosure controls and procedures.

Sony Group Corporation has established “Disclosure Controls and Procedures” outlining the process through which potentially material information is reported from important business units, subsidiaries, affiliated companies and corporate divisions and is reviewed and considered for disclosure in light of its materiality to Sony. As a body to assist the CEO and the CFO of Sony Group Corporation in designing, implementing and evaluating the Disclosure Controls and Procedures, Sony Group Corporation has established the “Disclosure Committee,” which is comprised of members of senior management who are in charge of a part of Sony’s headquarters functions. In order to assure appropriate and timely disclosure, the Disclosure Committee shall evaluate events that are reported from the important business units, subsidiaries, affiliated companies and corporate divisions in accordance with Sony’s internal rules in light of their materiality to Sony. Based on such evaluation, the Disclosure Committee shall review the necessity of disclosure in accordance with applicable securities laws, regulations and rules, as well as the listing standards of the relevant stock exchanges, and report to the CEO and CFO for their determination.

(2) Risk Management Framework

Each business unit, subsidiary/affiliated company and corporate division of Sony periodically reviews and assesses risks and establishes and maintains necessary risk management systems (such as detection, communication, evaluation and response) for the area for which they are responsible. In addition, Senior Executives, including the Corporate Executive Officers, of Sony Group Corporation have established and

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currently maintain a system to identify and control risks that may cause losses to Sony regarding the areas for which they are responsible. The Corporate Executive Officer in charge of group risk control shall comprehensively promote and manage the establishment and maintenance of the systems as stated above.

Details of Actions Taken by the Board and the Committees

(1) Details of Actions Taken by the Board

During the fiscal year ended March 31, 2025, the Board convened 9 times. The attendance records of respective Directors are as follows.



Name	Meeting Records ^*1	Attendance Records ^*1

Kenichiro Yoshida	9 Times	9 Times (100%)

Hiroki Totoki	9 Times	9 Times (100%)

Yoshihiko Hatanaka	9 Times	9 Times (100%)

Wendy Becker	9 Times	9 Times (100%)

Sakie Akiyama	9 Times	9 Times (100%)

Keiko Kishigami	9 Times	9 Times (100%)

Joseph A. Kraft Jr.	9 Times	9 Times (100%)

Neil Hunt	9 Times	9 Times (100%)

William Morrow	9 Times	9 Times (100%)

Shingo Konomoto^*2	8 Times	8 Times (100%)

*1 The numbers of the Meeting Records and the Attendance Records are those applicable to the fiscal year ended March 31, 2025.

*2 Because Shingo Konomoto was newly appointed as a Director at the Ordinary General Meeting of Shareholders on June 25, 2024, the numbers of his Meeting Records and Attendance Records differ from those of other outside Directors.

Note: Ms. Toshiko Oka, who retired as a Director in June 2024, attended the one Board meeting held prior to her retirement.

During the fiscal year ended March 31, 2025, the Board discussed a variety of matters, such as a review of Sony’s business performance on a quarterly basis, Sony’s business portfolio including the Partial Spin-off of the Financial Services business, progress and reviews of the results of the fifth mid-range plan, formation of a business plan for the fiscal year ending March 31, 2026, strategically important M&A, the transition to a new management structure, initiatives to maximize IP value across entertainment categories, effectiveness of internal controls (including the ethics and compliance program) and risk management (including cybersecurity risks and geopolitical risks), as well as Sony’s initiatives and strategies related to social changes (including sustainability).

(2) Details of Actions Taken by the Nominating Committee

During the fiscal year ended March 31, 2025, the Nominating Committee convened 7 times. The attendance records of respective Directors are as follows.



Name	Meeting Records ^*1	Attendance Records ^*1

Yoshihiko Hatanaka	7 Times	7 Times (100%)

Wendy Becker	7 Times	7 Times (100%)

Joseph A. Kraft Jr.	7 Times	7 Times (100%)

*1 The numbers of the Meeting Records and the Attendance Records are those applicable to the fiscal year ended March 31, 2025.

Note: Ms. Toshiko Oka, who retired as a member of the Nominating Committee in June 2024, attended the one Nominating Committee meeting held prior to her retirement.

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During the fiscal year ended March 31, 2025, the matters given consideration by the Nominating Committee included policies on selecting outside Director candidates, exploring Director prospects, and CEO succession. In addition, the Nominating Committee assessed succession plans for Senior Executives with key management responsibilities for individual business units and headquarters functions, based on management, including CEO, reports. With respect to the selection of candidates for outside Directors, as a priority item for the current fiscal year, the Nominating Committee confirmed the policy that candidates for outside Directors should be selected from persons who have experience as CEOs or as business unit leaders or equivalent positions at global companies, and persons who have considerable expertise and professional experience in finance and accounting, and the Nominating Committee held discussions based on such policy. As a result, three new outside Director candidates were appointed based on this policy. Regarding the appointment of Senior Executives, Kenichiro Yoshida, Representative Corporate Executive Officer, Chairman and CEO (at the time), proposed to the Nominating Committee that Hiroki Totoki, Representative Corporate Executive Officer, President, COO and CFO (at the time), would assume the position of President and CEO, and the Nominating Committee conducted a multifaceted review about the proposal and then concluded that the proposal would contribute to the mid- to long-term enhancement of the Sony Group’s corporate value and agreed to submit it to the Board. In addition, in connection with the CEO transition, the Nominating Committee reviewed and assessed succession plans for Senior Executives with key management responsibilities under the new CEO, Hiroki Totoki.

(3) Details of Actions Taken by the Audit Committee

During the fiscal year ended March 31, 2025, the Audit Committee convened 6 times. The attendance records of respective Directors are as follows.



Name	Meeting Records^*1	Attendance Records^*1

Joseph A. Kraft Jr.	6 Times	6 Times (100%)

Keiko Kishigami	6 Times	6 Times (100%)

Shingo Konomoto^*2	4 Times	4 Times (100%)

*1 The numbers of the Meeting Records and the Attendance Records are those applicable to the fiscal year ended March 31, 2025.

*2 Because Shingo Konomoto was newly appointed as a member of the Audit Committee pursuant to the resolution at the Board held on June 25, 2024, the numbers of his Meeting Records and Attendance Records differ from those of other members of the Audit Committee.

Note: Ms. Toshiko Oka, who retired as a member of the Audit Committee in June 2024, attended the two Audit Committee meetings held prior to her retirement.

Specific considerations by the Audit Committee include review of audit plans in three-way audits, identification and audit of priority audit items for each fiscal year, review of financial results and disclosure documents related to financial results, review of development and operation of internal control systems, audit of financial reports and SOX 404-related activities, audit of internal audit activities, review of the content and process for determining the compensation of the independent auditors, audit of the appropriateness of audit by the independent auditors and evaluation of the independent auditors. In addition to these, the Audit Committee held interviews with Senior Executives and other officers to receive reports on matters such as the recognition of issues and the status of risk management in the respective areas of responsibility of each business and headquarter function, and engaged in dialogue.

The priority audit items for the fiscal year ended March 31, 2025 were disclosure of non-financial information, risk management, and subsidiary management. Through audit activities conducted in cooperation with the internal audit division and the divisions of the Sony Group responsible for internal control, the following audit activities were conducted.

Disclosure of non-financial information

The Audit Committee received reports regarding the latest updates in Japan and other countries regarding the disclosure and assurance of non-financial information, such as climate change, from the internal control department, and confirmed that the steps regarding sustainability issues were steadily taken amid changing environments. The Audit Committee also discussed with the independent auditors relevant disclosure and assurance standard trends.

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ii)

Risk management

In addition to confirming during the above-mentioned interviews with Senior Executives and other officers regarding Sony’s overall risk management, including Sony’s internal structure and challenges related to information security and anti-fraud, the Audit Committee received the reports from the internal control department and discussed ways to enhance continuous responsiveness.

iii)

Subsidiary management

The Audit Committee received the reports regarding the audit activities of certain subsidiaries from the heads of the internal audit departments of each business segment and held discussions on them. Specifically, the Committee discussed with them the audit status and challenges of recently acquired subsidiaries. The Committee also had discussions with SFGI regarding preparations for the Partial Spin-off of the Financial Services business, the strengthening of its governance system and mid- to long-term business challenges. The Committee received the reports from the independent auditor on its audit plan, progress, and the results of the audit of Sony’s consolidated subsidiaries.

(4) Details of Actions Taken by the Compensation Committee

During the fiscal year ended March 31, 2025, the Compensation Committee convened 5 times. The attendance records of respective Directors are as follows.



Name	Meeting Records^*1	Attendance Records^*1

Wendy Becker	5 Times	5 Times (100%)

Sakie Akiyama	5 Times	5 Times (100%)

William Morrow	5 Times	5 Times (100%)

*1 The numbers of the Meeting Records and the Attendance Records are those applicable to the fiscal year ended March 31, 2025.

The specific matters given consideration by the Compensation Committee included the Corporation’s policy regarding the determination of individual remuneration for Directors and Senior Executives, including Corporate Executive Officers, for each fiscal year, and the amount and content of such remuneration. The Committee also considered the total number of stock acquisition rights to be issued for the purpose of granting stock options to Corporate Executive Officers and employees of the Corporation and directors, other officers and employees of the Corporation’s subsidiaries, and other stock-based compensation utilizing shares of the Corporation’s stock such as restricted stock units. In the fiscal year ended March 31, 2025, the Compensation Committee revised the evaluation metrics for remuneration linked to business results in accordance with the financial targets for the fifth mid-range plan. The Committee also discussed and determined the compensation structure and levels under the new management structure effective April 1, 2025. For the fiscal year ending March 31, 2026 and beyond, the Committee conducted a comprehensive review of and discussion on its policy regarding future use of stock-based compensation with consideration of other companies’ trends in Japan and other countries.

Employees

As of March 31, 2025, Sony had approximately 112,300 employees, a decrease of approximately 700 employees from March 31, 2024. During the fiscal year ended March 31, 2025, although there was an increase of employees in the Pictures segment (outside of Japan) due to the expansion of the business, including through mergers and acquisitions, as well as in the Financial Services segment, there was a decrease of employees in the ET&S and G&NS (outside of Japan) segments and All Other (in Japan) mainly due to restructuring, and in the I&SS segment (outside of Japan) mainly due to the closure of a manufacturing site in China. Approximately 7% of the total number of employees were members of labor unions.

As of March 31, 2024, Sony had approximately 113,000 employees, essentially unchanged from March 31, 2023. During the fiscal year ended March 31, 2024, although there was a decrease of employees mainly at manufacturing sites in China in the I&SS segment, there was an increase of employees primarily in the Pictures segment (outside of Japan). Approximately 8% of the total number of employees were members of labor unions.

As of March 31, 2023, Sony had approximately 113,000 employees, an increase of approximately 4,100 employees from March 31, 2022. During the fiscal year ended March 31, 2023, although there was a decrease of employees mainly in the ET&S segment (outside of Japan) due to closure of manufacturing sites in Malaysia,

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employees in the G&NS, I&SS, and Pictures (outside of Japan) segments increased due to the expansion of these businesses, including through mergers and acquisitions. Approximately 9% of the total number of employees were members of labor unions.

The following table shows the number of employees of Sony by segment and region as of March 31, 2023, 2024 and 2025.

Number of Employees by Segment and Region


	March 31
	2023		2024		2025
By segment:
G&NS		12,700		12,700		12,100
Music		11,100		11,300		11,300
Pictures		9,100		9,500		11,500
ET&S		38,400		38,700		36,700
I&SS		20,300		19,700		19,200
Financial Services		13,500		13,600		14,300
All Other		2,100		2,000		1,700
Unallocated — Corporate employees		5,800		5,500		5,500
By region:
Japan		56,400		57,200		57,500
Outside of Japan		56,600		55,800		54,800

Total		113,000		113,000		112,300

In addition, the average number of employees for the fiscal years ended March 31, 2023, 2024 and 2025, calculated by averaging the total number of employees at the end of each quarter, was approximately 112,300,113,900 and 113,300 respectively.

Sony generally considers its labor relations to be good.

In Japan, Sony Group Corporation and several subsidiaries have labor unions.

In the G&NS, ET&S and I&SS segments, Sony owns many manufacturing sites, particularly in Asia, where a few sites have labor unions that have union contracts. In China, most employees are members of labor unions. Sony has generally maintained good relationships with these labor unions. In Europe, Sony also maintains good labor relations with the European Works Council and the local Unions and Works Councils.

In the Music segment, Sony has a labor union and generally considers its labor relations to be good.

In the Pictures segment, Sony also generally considers its labor relations to be good. A number of Pictures’ subsidiaries are signatories to union contracts. During the fiscal year ended March 31, 2025, negotiations were completed with the International Alliance of Theatrical and Stage Employees (“IATSE”) for three-year terms on the Basic Agreement, the Videotape and Electronic Supplement Agreement, the Art Directors Agreement, its Local Agreements in Los Angeles, its Area Standards Agreement, and its agreement with IATSE Local 52 in New York. Negotiations were also completed with IATSE Local 839 for a three-year agreement covering animators. Negotiations were also completed with the Teamsters for three-year agreements for drivers and Location Managers in Los Angeles and New York, Casting Directors in New York and drivers in Miami. Agreements for three-year terms were reached with the International Brotherhood of Electrical Workers, Local 40, the Southern California District Council of Laborers and its affiliate, Studio Utility Employees, Local 724, the Operative Plasterers and Cement Masons International Association of the United States and Canada, Local 755, and the United Association of Journeymen and Apprentices of the Plumbing and Pipe Fitting Industry of the United States and Canada, Local 78. Negotiations were concluded for three-year agreements with the British Columbia Council of Film, the Alliance of Canadian Cinema, Television and Radio Artists and the Director’s Guild of Canada. Negotiations were completed with Communications Workers of America, AFL-CIO (“CWA”) for parking production assistants and parking Coordinators in New York for new four-year agreements. Negotiations are being scheduled with SAG-AFTRA for the Network Code agreement and with IATSE for agreements covering The Animation Guild. Alamo Drafthouse Cinema is in negotiations for collective bargaining agreements with the United Automobile, Aerospace and Agricultural Implementation Workers of America, Local 2,179 covering employees at two theaters in New York and with the CWA covering employees at one theater in Colorado.

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Sony continuously strives to provide competitive wages and benefits and good working conditions for all of its employees.

E.	Share Ownership

The total number of shares of Common Stock beneficially owned by Directors and Corporate Executive Officers listed in “Compensation” in “Item 6. Directors, Senior Management and Employees.” (out of whom 14 people own shares) was approximately 0.057% of the total shares outstanding as of March 31, 2025.

During the fiscal year ended March 31, 2025, Sony Group Corporation granted stock acquisition rights, which represent rights to subscribe for shares of Common Stock, to Corporate Executive Officers and employees of Sony Group Corporation as well as directors, officers and employees of its subsidiaries. The stock acquisition rights cannot be exercised for one year from the date of grant and generally vest ratably up to three years from the date of grant and are generally exercisable up to ten years from the date of grant. The following table shows the portion of those stock acquisition rights which were granted by Sony Group Corporation to Directors and Corporate Executive Officers as of March 31, 2025 and which were outstanding as of the same date.


Year granted (Fiscal year ended March 31)	Total number of shares subject to stock acquisition rights^*		Exercise price per share
	(in thousands)
2025		1,670		2,948 yen
2024		1,650		2,589 yen
2023		1,417		2,278 yen
2022		1,400		2,870 yen
2021		1,250		1,848 yen
2020		600		1,341 yen
2019		920		1,288 yen
2018		130		1,047 yen
2017		195		673 yen
2016		0		681 yen

* Total numbers of shares subject to stock acquisition rights and the exercise prices per share of stock acquisition rights granted from the fiscal year ended March 31, 2016 to the fiscal year March 31, 2024 are figures taking into account the five-for-one stock split effective October 1, 2024.

Regarding the above compensation plans, refer to Note 21 of the consolidated financial statements.

F.	Disclosure of a Registrant’s Action to Recover Erroneously Awarded Compensation

Not applicable

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Item 7.

Major Shareholders and Related Party Transactions

A.	Major Shareholders

As of March 31, 2025, there were 6,149,810,645 shares of Common Stock outstanding, including 124,808,350 shares of treasury stock. Out of the total outstanding shares, 525,653,415 shares were in the form of ADRs and 1,170,784,178 shares were held of record in the form of Common Stock by residents in the U.S. As of March 31, 2025, the number of registered ADR holders was 4,399 and the number of registered holders of Common Stock in the U.S. was 420.

The Financial Instruments and Exchange Act of Japan requires any person who solely or jointly owns more than 5% of total issued voting shares of a company listed on any Japanese stock exchange to file with the Kanto Local Finance Bureau (the “Bureau”) a Bulk Shareholding Report. The following table summarizes the Bulk Shareholding Reports related to Sony (each a “Report”) submitted to the Bureau, where it is reported that ownership percentage by the reported entity exceeds 5% in the most recent updated Report. The Reports do not specify whether reported ownership is direct or beneficial.


Date of Report*	Reported entities	Reported number of direct or indirect owned and deemed owned shares**		Reported percentage of direct or indirect owned and deemed owned shares**
October 6, 2020	Nomura Asset Management Co., Ltd. and 3 Joint Holders		63,156,882		5.01
September 5, 2024	Sumitomo Mitsui Trust Asset Management Co., Ltd. and 1 Joint Holder		74,698,324		5.98
December 5, 2024	BlackRock Japan Co., Ltd. and 11 Joint Holders		532,553,589		8.53

* The table above contains information from the most recent updated Reports.

** Shares issuable or transferable upon exchange of exchangeable securities, conversion of convertible securities or exercise of warrants or stock acquisition rights (including those incorporated in bonds with stock acquisition rights) are taken into account in determining both the size of the reported entity’s holding and Sony’s total issued share capital.

To the knowledge of Sony Group Corporation, it is not directly or indirectly owned or controlled by any other corporation, by any foreign government or by any other natural or legal person either severally or jointly. As far as is known to Sony Group Corporation, there are no arrangements the operation of which may, at a subsequent date, result in a change in control of Sony Group Corporation.

To the knowledge of Sony Group Corporation, there were no significant changes in the percentage ownership held by any other major beneficial shareholders during the past three fiscal years. Major shareholders of Sony Group Corporation do not have different voting rights from other shareholders.

B.	Related Party Transactions

In the ordinary course of business, Sony purchases materials, supplies, and services from numerous suppliers throughout the world, including firms with which certain members of the Board of Directors are affiliated.

Refer to Note 31 of the consolidated financial statements for account balances and transactions with associates and joint ventures accounted for under the equity method.

C.	Interests of Experts and Counsel

Not Applicable

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Item 8.

Financial Information

A.	Consolidated Statements and Other Financial Information

Refer to the consolidated financial statements and the notes of the consolidated financial statements.

Legal Proceedings

Sony Group Corporation and certain of its subsidiaries are defendants or otherwise involved in pending legal and regulatory proceedings. However, based upon the information currently available, Sony believes that the outcome from such legal and regulatory proceedings would not have a material impact on Sony’s results of operations and financial position.

Dividend Policy

Sony believes that continuously increasing corporate value and providing dividends are essential to rewarding shareholders. It is Sony’s policy to utilize retained earnings, after ensuring the perpetuation of stable dividends, to carry out various investments that contribute to an increase in corporate value, such as those that ensure future growth and strengthen competitiveness. Going forward, Sony will determine the amount of dividends based on an overall consideration of Sony’s consolidated operating results, financial condition and future business expectations.

A fiscal year-end dividend of 10 yen per share of Common Stock was approved at the Board of Directors meeting held on May 14, 2025 and the payment of such dividend started on June 2, 2025. Sony Group Corporation has already paid an interim dividend for Common Stock of 10 yen per share to each shareholder; accordingly, the total annual dividend per share of Common Stock for the fiscal year ended March 31, 2025 is 20 yen.

Sony Group Corporation conducted a five-for-one stock split of Common Stock effective October 1, 2024, with a record date of September 30, 2024. The above figures for dividend per share are based on a number of shares taking into account the stock split.

B.	Significant Changes

Not applicable

Item 9.

The Offer and Listing

A.	Offer and Listing Details

Trading Markets

The principal trading markets for Sony Group Corporation’s ordinary shares are the TSE in the form of Common Stock and the NYSE in the form of ADSs evidenced by ADRs. Each ADS represents one share of Common Stock.

Sony Group Corporation’s Common Stock, with no par value per share, has been listed on the TSE since 1958 under the stock code “6758.”

Sony Group Corporation’s ADRs have been traded in the U.S. since 1961 and have been listed on the NYSE since 1970. As of April 1, 2021, the ticker symbol changed from “SNE” to “SONY.” Sony Group Corporation’s ADRs were issued and exchanged by Citibank, N.A., as the Depositary until March 31, 2025. From April 1, 2025, Sony Group Corporation’s ADRs are issued and exchanged by JPMorgan Chase Bank, N.A..

B.	Plan of Distribution

Not Applicable

Markets

Refer to “Offer and Listing Details” in Item 9.A.

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D.	Selling Shareholders

Not Applicable

Dilution

Not Applicable

F.	Expenses of the Issue

Not Applicable

Item 10.

Additional Information

A.	Share Capital

Sony Group Corporation conducted a five-for-one stock split of Common Stock effective October 1, 2024, with a record date of September 30, 2024. Sony Group Corporation conducted the stock split and lowered the amount per an investment unit for the purpose of making it easier for investors to invest and expanding the investor base.

Sony Group Corporation amended its Articles of Incorporation to increase the total number of shares authorized to be issued by Sony Group Corporation from 3.6 billion to 18.0 billion, in accordance with Article 184, Paragraph 2 of the Companies Act of Japan, effective on October 1, 2024, which was the effective date of the stock split.

B.	Memorandum and Articles of Association

Organization

Sony Group Corporation is a joint stock corporation (Kabushiki Kaisha) incorporated in Japan under the Companies Act (Kaishaho) of Japan. It is registered in the Commercial Register (Shogyo Tokibo) maintained by the Minato Branch Office of the Tokyo Legal Affairs Bureau.

Objects and purposes

The Articles of Incorporation of Sony Group Corporation provide that its purpose is to engage in the following business activities:

(i)

manufacture and sale of electronic and electrical machines and equipment, medical instruments, optical instruments and other equipment, machines and instruments;

(ii)

planning, production and sale of audio-visual software and computer software programs;

(iii)

manufacture and sale of metal industrial products, chemical industrial products and ceramic industrial products, textile products, paper products and wood-crafted articles, daily necessities, foodstuffs and toys, transportation machines and equipment, and petroleum and coal products;

(iv)

real estate activities, construction business, transportation business and warehousing business;

(v)

publishing business and printing business;

(vi)

advertising agency business, insurance agency business, broadcasting enterprise, recreation business such as travel, management of sporting facilities, etc. and other service enterprises;

(vii)

financial business;

(viii)

Type I and Type II telecommunications business under the Telecommunications Business Law;

(ix)

investing in stocks and bonds, etc.;

(x)

manufacture, sale, export and import of products which are incidental to or related to those mentioned above;

(xi)

rendering of services related to those mentioned above;

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(xii)

investment in businesses mentioned above operated by other companies or persons; and

(xiii)

all businesses which are incidental to or related to those mentioned above.

Directors

Under the Companies Act, because Sony Group Corporation has adopted the “Company with Three Committees” system, Directors have no power to execute the business of Sony Group Corporation except in limited circumstances as permitted by law. If a Director also serves concurrently as a Corporate Executive Officer, then he or she can execute the business of Sony Group Corporation in the capacity of Corporate Executive Officer. Under the Companies Act, Directors must refrain from engaging in any business competing with Sony Group Corporation unless approved by the Board of Directors, and any Director who has a material interest in the subject matter of a resolution to be taken by the Board of Directors cannot vote on such resolution. The amount of remuneration to each Director is determined by the Compensation Committee, which consists of Directors, the majority of whom are outside Directors (Refer to “Board Practices” in “Item 6. Directors, Senior Management and Employees”). No member of the Compensation Committee may vote on a resolution with respect to his or her own compensation as a Director or a Corporate Executive Officer.

Neither the Companies Act nor Sony Group Corporation’s Articles of Incorporation make a special provision as to the borrowing powers exercisable by Directors (subject to requisite internal authorizations as required by the Companies Act), their retirement age, or a requirement to hold any shares of capital stock of Sony Group Corporation.

For more information on Directors, refer to “Board Practices” in “Item 6. Directors, Senior Management and Employees.”

Capital stock

(General)

Unless indicated otherwise, set forth below is information relating to Sony Group Corporation’s capital stock, including brief summaries of the relevant provisions of Sony Group Corporation’s Articles of Incorporation and Share Handling Regulations, currently in effect, and of the Companies Act and related regulations.

The central book-entry transfer system for shares of Japanese listed companies under the Act Concerning Book-entry Transfer of Corporate Bonds, Shares, etc. (including regulations promulgated thereunder, “Book-entry Transfer Act”) is applied to the shares of Common Stock of Sony Group Corporation. Under this system, shares of all Japanese companies listed on any Japanese stock exchange are dematerialized, and shareholders must have accounts at account management institutions to hold their shares unless such shareholder has an account at Japan Securities Depository Center, Inc. (“JASDEC”). “Account management institutions” are financial instruments traders (i.e., securities companies), banks, trust companies and certain other financial institutions that meet the requirements prescribed by the Book-entry Transfer Act. Transfer of the shares of Common Stock of Sony Group Corporation is effected exclusively through entry in the records maintained by JASDEC and the account management institutions, and title to the shares passes to the transferee at the time when the transfer of the shares is recorded at the transferee’s account at an account management institution. The holder of an account at an account management institution is presumed to be the legal holder of the shares recorded in such account.

Under the Companies Act and the Book-entry Transfer Act, in order to assert shareholders’ rights against Sony Group Corporation, a shareholder of shares must have its name and address registered in Sony Group Corporation’s register of shareholders. Under the central book-entry transfer system operated by JASDEC, shareholders shall notify the relevant account management institutions of certain information prescribed under the Book-entry Transfer Act or Sony Group Corporation’s Share Handling Regulations, including their names and addresses, and the registration on Sony Group Corporation’s register of shareholders is updated upon receipt by Sony Group Corporation of necessary information from JASDEC (as described in “(Record date)”). On the other hand, in order to assert, against Sony Group Corporation, shareholders’ rights to which shareholders are entitled, regardless of whether such shareholder held shares on the requisite record date, such as minority shareholders’ rights, including the right to propose a matter to be considered at a General Meeting of Shareholders, except for shareholders’ rights to request that Sony Group Corporation purchase or sell shares constituting less than a full unit (as described in “(Unit share system)”), JASDEC shall, upon the shareholder’s request, issue a notice of certain information, including the name and address of such shareholder, to Sony Group Corporation.

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Thereafter, such shareholder shall provide Sony Group Corporation with written notice that he or she exercises such shareholder’s right in accordance with the Sony Group Corporation’s Share Handling Regulations. Under the Book-entry Transfer Act, the shareholder shall exercise such shareholders’ right within four weeks after the notice above has been given to Sony Group Corporation.

Mitsubishi UFJ Trust and Banking Corporation is the transfer agent for Sony Group Corporation’s capital stock. As such, it keeps Sony Group Corporation’s register of shareholders in its office at 4-5, Marunouchi 1-chome, Chiyoda-ku, Tokyo.

Non-resident shareholders are required to appoint a standing proxy in Japan or file notice of a mailing address in Japan. Notices from Sony Group Corporation to non-resident shareholders are delivered to such standing proxies or mailing address. Japanese securities companies and commercial banks customarily act as standing proxies and provide related services for standard fees. The recorded holder of deposited shares underlying the ADSs is the depositary for the ADSs. Accordingly, holders of ADSs will not be able to directly assert shareholders’ rights against Sony Group Corporation.

(Authorized capital)

Under the Articles of Incorporation of Sony Group Corporation, Sony Group Corporation may only issue shares of Common Stock. Sony Group Corporation’s Articles of Incorporation provide that the total number of shares authorized to be issued by Sony Group Corporation is 18 billion shares.

All shares of capital stock of Sony Group Corporation have no par value. All issued shares are fully-paid and non-assessable.

(Distribution of Surplus)

Distribution of Surplus — General

Under the Companies Act, distributions of cash or other assets by joint stock corporations to their shareholders, so called “dividends,” are referred to as “distributions of Surplus” (“Surplus” is defined in “— Restriction on distribution of Surplus”). Sony Group Corporation may make distributions of Surplus to shareholders any number of times per business year, subject to certain limitations described in “— Restriction on distribution of Surplus.” Distributions of Surplus are required in principle to be authorized by a resolution of a General Meeting of Shareholders, but Sony Group Corporation may authorize distributions of Surplus by a resolution of the Board of Directors as long as its non-consolidated annual financial statements and certain documents for the last business year present fairly its assets and profit or loss, as required by ordinances of the Ministry of Justice.

Distributions of Surplus may be made in cash or in kind in proportion to the number of shares of Common Stock held by each shareholder. A resolution of the Board of Directors or a General Meeting of Shareholders authorizing a distribution of Surplus must specify the kind and aggregate book value of the assets to be distributed, the manner of allocation of such assets to shareholders, and the effective date of the distribution. If a distribution of Surplus is to be made in kind, Sony Group Corporation may, pursuant to a resolution of the Board of Directors or (as the case may be) a General Meeting of Shareholders, grant a right to the shareholders to require Sony Group Corporation to make such distribution in cash instead of in kind. If no such right is granted to shareholders, the relevant distribution of Surplus must be approved by a special resolution of a General Meeting of Shareholders, subject to certain exceptions under special laws and regulations (refer to “(Voting rights)” with respect to a “special resolution”).

Under the Articles of Incorporation of Sony Group Corporation, year-end dividends and interim dividends may be distributed in cash to shareholders appearing in Sony Group Corporation’s register of shareholders as of March 31 and September 30 each year, respectively, in proportion to the number of shares of Common Stock held by each shareholder following approval by the Board of Directors or (as the case may be) the General Meeting of Shareholders. Sony Group Corporation is not obliged to pay any dividends in cash unclaimed for a period of five years after the date on which they first became payable.

In Japan, the ex-dividend date and the record date for dividends precede the date of determination of the amount of the dividends to be paid. The price of the shares of Common Stock generally goes ex-dividend on the business day immediately prior to the record date (or if the record date is not a business day, the second business day prior thereto).

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Distribution of Surplus — Restriction on distribution of Surplus

In making a distribution of Surplus, Sony Group Corporation must, until the sum of its additional paid-in capital and legal reserve reaches one quarter of its stated capital, set aside in its additional paid-in capital and/or legal reserve an amount equal to one-tenth of the amount of Surplus so distributed.

The amount of Surplus at any given time must be calculated in accordance with the following formula:

A + B + C + D – (E + F + G)

In the above formula:


“A” =				the total amount of other capital surplus and other retained earnings, each such amount being that appearing on the non-consolidated balance sheet as of the end of the last business year

“B” =				(if Sony Group Corporation has disposed of its treasury stock after the end of the last business year) the amount of the consideration for such treasury stock received by Sony Group Corporation less the book value thereof

“C” =				(if Sony Group Corporation has reduced its stated capital after the end of the last business year) the amount of such reduction less the portion thereof that has been transferred to additional paid-in capital or legal reserve (if any)

“D” =				(if Sony Group Corporation has reduced its additional paid-in capital or legal reserve after the end of the last business year) the amount of such reduction less the portion thereof that has been transferred to stated capital (if any)

“E” =				(if Sony Group Corporation has cancelled its treasury stock after the end of the last business year) the book value of such treasury stock

“F” =				(if Sony Group Corporation has distributed Surplus to its shareholders after the end of the last business year) the total book value of the Surplus so distributed

“G” =				certain other amounts set forth in ordinances of the Ministry of Justice, including (if Sony Group Corporation has reduced Surplus and increased its stated capital, additional paid-in capital or legal reserve after the end of the last business year) the amount of such reduction and (if Sony Group Corporation has distributed Surplus to the shareholders after the end of the last business year) the amount set aside in additional paid-in capital or legal reserve (if any) as required by ordinances of the Ministry of Justice

The aggregate book value of Surplus distributed by Sony Group Corporation may not exceed a prescribed distributable amount (the “Distributable Amount”), as calculated on the effective date of such distribution. The Distributable Amount at any given time shall be equal to the amount of Surplus less the aggregate of the following:

(a)

the book value of its treasury stock;

(b)

the amount of consideration for any of treasury stock disposed of by Sony Group Corporation after the end of the last business year; and

(c)

certain other amounts set forth in ordinances of the Ministry of Justice, including (if the sum of one-half of goodwill and the deferred assets exceeds the total of stated capital, additional paid-in capital and legal reserve, each such amount being that appearing on the non-consolidated balance sheet as of the end of the last business year) all or certain part of such exceeding amount as calculated in accordance with ordinances of the Ministry of Justice.

As Sony Group Corporation has become a company with respect to which consolidated balance sheets should also be considered in the calculation of the Distributable Amount (renketsu haito kisei tekiyo kaisha), Sony Group Corporation must further deduct from the amount of Surplus the excess amount, if any, of (x) the total amount of stockholders’ equity appearing on the non-consolidated balance sheet as of the end of the last business year and certain other amounts set forth by an ordinance of the Ministry of Justice over (y) the total amount of stockholders’ equity and certain other amounts set forth by an ordinance of the Ministry of Justice appearing on the consolidated balance sheet as of the end of the last business year.

If Sony Group Corporation has prepared interim financial statements as described below, and if such interim financial statements have been approved by the Board of Directors or (if so required by the Companies Act) by a

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General Meeting of Shareholders, then the Distributable Amount must be adjusted to take into account the amount of profit or loss, and the amount of consideration for any of the treasury stock disposed of by Sony Group Corporation, during the period in respect of which such interim financial statements have been prepared. Sony Group Corporation may prepare non-consolidated interim financial statements consisting of a balance sheet as of any date subsequent to the end of the last business year and an income statement for the period from the first day of the current business year to the date of such balance sheet. Interim financial statements so prepared by Sony Group Corporation must be audited by the Audit Committee and the independent auditor, as required by the Companies Act and in accordance with the details prescribed by ordinances of the Ministry of Justice.

(Capital and reserves)

Sony Group Corporation may generally reduce its additional paid-in capital or legal reserve by resolution of a General Meeting of Shareholders and, if so decided by the same resolution, may account for the whole or any part of the amount of such reduction as stated capital. On the other hand, Sony Group Corporation may generally reduce its stated capital by a special shareholders’ resolution (as defined in “(Voting rights)”) and, if so decided by the same resolution, may account for the whole or any part of the amount of such reduction as additional paid-in capital. In addition, Sony Group Corporation may reduce its Surplus and increase either (i) stated capital or (ii) additional paid-in capital and/or legal reserve by the same amount, in either case by resolution of a General Meeting of Shareholders.

(Stock splits)

Sony Group Corporation may at any time split shares in issue into a greater number of shares at the determination of the CEO, and may amend its Articles of Incorporation to increase the number of the authorized shares to be issued to allow such stock split pursuant to a resolution of the Board of Directors or a determination by a Corporate Executive Officer to whom the authority to make such determination has been delegated by a resolution of the Board of Directors, rather than relying on a special shareholders’ resolution, which is otherwise required for amending the Articles of Incorporation.

When a stock split is to be made, Sony Group Corporation must give public notice of the stock split, specifying the record date thereof, at least two weeks prior to such record date. Under the central book-entry transfer system operated by JASDEC, Sony Group Corporation must also give notice to JASDEC regarding a stock split at least two weeks prior to the relevant effective date of the stock split. On the effective date of the stock split, the numbers of shares recorded in all accounts held by Sony Group Corporation’s shareholders at account managing institutions or JASDEC will be increased in accordance with the applicable ratio.

(Consolidation of shares)

Sony Group Corporation may at any time consolidate issued shares into a smaller number of shares by a special shareholders’ resolution. When a consolidation of shares is to be made, Sony Group Corporation must give public notice or notice to each shareholder at least two weeks prior to the effective date of the consolidation of shares. Under the central book-entry transfer system operated by JASDEC, Sony Group Corporation must also give notice to JASDEC regarding a consolidation of shares at least two weeks prior to the effective date of the consolidation of shares. On the effective date of the consolidation of shares, the numbers of shares recorded in all accounts held by Sony Group Corporation’s shareholders at account managing institutions or JASDEC will be decreased in accordance with the applicable ratio. Sony Group Corporation must disclose the reason for the consolidation of shares at a General Meeting of Shareholders.

(General Meeting of Shareholders)

The Ordinary General Meeting of Shareholders of Sony Group Corporation for each business year is normally held in June of each year in Tokyo, Japan. In addition, Sony Group Corporation may hold an Extraordinary General Meeting of Shareholders whenever necessary by giving notice thereof at least two weeks prior to the date set for the meeting.

Notice of a shareholders’ meeting setting forth the place, time and purpose thereof must be mailed to each shareholder having voting rights (or, in the case of a non-resident shareholder, to such shareholder’s resident proxy or mailing address in Japan) at least two weeks prior to the date set for the meeting. Under the Companies Act, such notice may be given to shareholders by electronic means, subject to obtaining the consent of the relevant shareholders. The record date for voting rights at an Ordinary General Meeting of Shareholders is March 31 of each year.

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Under the Companies Act and the Articles of Incorporation, Sony Group Corporation shall take measures to electronically provide to its shareholders (“Electronic Provision”) the contents of reference materials for a General Meeting of Shareholders, etc.

Notice of a shareholders meeting must set forth the contents of reference materials for a General Meeting of Shareholders, etc. to be provided by way of Electronic Provision and the URL of the website used for Electronic Provision, in addition to the place, time and purpose of the meeting. The contents of reference materials for a General Meeting of Shareholders, etc. must be posted on the website from the earlier of the date three weeks prior to the date set for the meeting or the date on which the notice of the shareholders meeting is dispatched until the date on which three months have elapsed from the meeting. Any shareholder (other than those shareholders consenting to receipt of notice of shareholders’ meeting by electronic means) is entitled to request printed paper copies of the contents of reference materials for a General Meeting of Shareholders, etc. by the record date for voting rights at the relevant General Meeting of Shareholders.

Any shareholder or group of shareholders holding at least 3% of the total number of voting rights for a period of six months or more may require the convocation of a General Meeting of Shareholders for a particular purpose. Unless such a shareholders’ meeting is convened promptly or a convocation notice of a meeting that is to be held no later than eight weeks from the day of such request is dispatched, the shareholder requesting the holding of the meeting may, upon obtaining a court’s approval, convene such a shareholders’ meeting.

Any shareholder or group of shareholders holding at least 300 voting rights or 1% of the total number of voting rights for a period of six months or more may propose a matter to be considered at a General Meeting of Shareholders by submitting a written request to Sony Group Corporation at least eight weeks prior to the date set for such meeting, provided that Sony Group Corporation may limit the number of such matters requested by each shareholder to 10.

If the Articles of Incorporation so provide, any of the minimum voting rights or percentages, time periods and number of voting rights necessary for exercising the minority shareholder rights described above may be decreased or shortened. Sony Group Corporation’s Articles of Incorporation currently do not include any such provisions.

(Voting rights)

So long as Sony Group Corporation maintains the unit share system, a holder of shares constituting one or more units is entitled to one vote for each such unit of stock (refer to “(Unit share system)” below; currently 100 shares constitute one unit), except that no voting rights with respect to shares of capital stock of Sony Group Corporation are afforded to Sony Group Corporation or any corporate or certain other entities more than one-quarter of the total voting rights of which are directly or indirectly held by Sony Group Corporation. If Sony Group Corporation eliminates from its Articles of Incorporation the provisions relating to units of stock, holders of capital stock will have one vote for each share they hold. Except as otherwise provided by law or by the Articles of Incorporation of Sony Group Corporation, a resolution can be adopted at a General Meeting of Shareholders by a majority of the number of voting rights of all the shareholders represented at the meeting. The Companies Act and Sony Group Corporation’s Articles of Incorporation provide, however, that the quorum for the election of Directors shall be one-third of the total number of voting rights of all the shareholders. Sony Group Corporation’s shareholders are not entitled to cumulative voting in the election of Directors. Shareholders may cast their votes in writing and may also exercise their voting rights through proxies, provided that the proxies are also shareholders holding voting rights. Shareholders may also exercise their voting rights by electronic means pursuant to the method designated by Sony Group Corporation.

The Companies Act and the Articles of Incorporation of Sony Group Corporation provide that in order to amend the Articles of Incorporation and in certain other instances, including:

(1)

acquisition of its own shares from a specific party other than its subsidiaries;

(2)

consolidation of shares;

(3)

any offering of new shares or existing shares held by Sony Group Corporation as treasury stock at a “specially favorable” price (or any offering of stock acquisition rights to acquire shares of capital stock, or bonds with stock acquisition rights on “specially favorable” conditions) to any persons other than shareholders;

(4)

the exemption of liability of a Director, Corporate Executive Officer or independent auditor with certain exceptions;

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(5)

a reduction of stated capital with certain exceptions;

(6)

a distribution of in-kind dividends which meets certain requirements;

(7)

dissolution, merger, consolidation, or corporate split with certain exceptions;

(8)

the transfer of the whole or a material part of the business;

(9)

the transfer of the whole or a part of the shares or equity interests in a subsidiary which meets certain requirements;

(10)

the taking over of the whole of the business of any other corporation with certain exceptions;

(11)

share exchange or share transfer for the purpose of establishing 100% parent-subsidiary relationships with certain exceptions; or

(12)

partial share exchange for the purpose of establishing parent-subsidiary relationships with certain exceptions,

the quorum shall be one-third of the total number of voting rights of all the shareholders, and the approval by at least two-thirds of the number of voting rights of all the shareholders represented at the meeting is required (the “special shareholders’ resolutions”).

(Issue of additional shares and pre-emptive rights)

Holders of Sony Group Corporation’s shares of capital stock have no pre-emptive rights under its Articles of Incorporation. Authorized but unissued shares may be issued, or existing shares held by Sony Group Corporation as treasury stock may be transferred, at such times and upon such terms as the Board of Directors or the CEO determines, subject to the limitations as to the offering of new shares or transfer of existing shares held by Sony Group Corporation as treasury stock at a “specially favorable” price mentioned under “(Voting rights)” above.

In the case of an issuance of shares (including a transfer of existing shares held by Sony Group Corporation as treasury stock) or stock acquisition rights whereby any subscriber will hold more than 50% of the voting rights of all shareholders, generally Sony Group Corporation shall give public notice at least two weeks prior to the payment date for such issuance, and if shareholders who hold one-tenth or more of the voting rights of all shareholders dissent from the issuance of shares or stock acquisition rights, the approval by a resolution of a General Meeting of Shareholders is generally required before the payment date pursuant to the Companies Act. In addition, in the case of an issuance of shares (including a transfer of existing shares held by Sony Group Corporation as treasury stock) or stock acquisition rights by way of an allotment to a third party which would dilute the outstanding voting shares by 25% or more or change the controlling shareholder, in addition to a resolution of the Board of Directors or a determination by the CEO, the approval of the shareholders or an affirmative vote from a person independent of the management is generally required pursuant to the rules of the TSE. The Board of Directors or the CEO may, however, determine that shareholders shall be given subscription rights regarding a particular issue of new shares, in which case such rights must be given on uniform terms to all shareholders as of a record date of which not less than two weeks’ prior public notice is given. Each of the shareholders to whom such rights are given must also be given notice of the expiry thereof at least two weeks prior to the date on which such rights expire.

Subject to certain conditions, Sony Group Corporation may issue stock acquisition rights by a resolution of the Board of Directors or a determination by the CEO. Holders of stock acquisition rights may exercise their rights to acquire a certain number of shares within the exercise period as prescribed in the terms of their stock acquisition rights. Upon exercise of stock acquisition rights, Sony Group Corporation will be obliged to issue the relevant number of new shares or alternatively to transfer the necessary number of treasury stock held by it.

In cases where a particular issue of new shares or stock acquisition rights (i) violates laws and regulations or Sony Group Corporation’s Articles of Incorporation, or (ii) will be performed in a materially unfair manner, and shareholders may suffer disadvantages therefrom, such shareholders may file an injunction to enjoin such issue with a court.

(Liquidation rights)

In the event of a liquidation of Sony Group Corporation, the assets remaining after payment of all debts, liquidation expenses and taxes will be distributed among the holders of shares of Common Stock in proportion to the respective numbers of shares of Common Stock held.

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(Record date)

March 31 is the record date for Sony Group Corporation’s year-end dividends, if declared. So long as Sony Group Corporation maintains the unit share system, shareholders who are registered as the holders of one or more unit of stock in Sony Group Corporation’s register of shareholders at the end of each March 31 are also entitled to exercise shareholders’ rights at the Ordinary General Meeting of Shareholders with respect to the business year ending on such March 31. September 30 is the record date for interim dividends, if declared. In addition, Sony Group Corporation may set a record date for determining the shareholders entitled to other rights and for other purposes by giving at least two weeks’ prior public notice.

JASDEC is required to promptly give Sony Group Corporation notice of the names and addresses of Sony Group Corporation’s shareholders, the numbers of shares of Common Stock held by them and other relevant information as of such respective record dates.

The price of shares generally goes ex-dividends or ex-rights on Japanese stock exchanges on the business day immediately prior to a record date (or if the record date is not a business day, the second business day prior thereto), for the purpose of dividends or rights offerings.

(Acquisition by Sony Group Corporation of its capital stock)

Under the Companies Act and the Articles of Incorporation of Sony Group Corporation, Sony Group Corporation may acquire shares of Common Stock (i) from a specific shareholder other than any of its subsidiaries (pursuant to the special shareholders’ resolution), (ii) from any of its subsidiaries (pursuant to a resolution of the Board of Directors), or (iii) by way of purchase on any Japanese stock exchange on which Sony Group Corporation’s shares of Common Stock are listed or by way of tender offer (pursuant to a resolution of the Board of Directors, as long as its non-consolidated annual financial statements and certain documents for the last business year present fairly its assets and profit or loss, as required by ordinances of the Ministry of Justice).

In the case of (i) above, any other shareholder may make a request to Sony Group Corporation that such other shareholder be included as a seller in the proposed purchase, provided that no such right will be available if the purchase price or any other consideration to be received by the relevant specific shareholder will not exceed the last trading price of the shares on the relevant stock exchange on the day immediately preceding the date on which the resolution mentioned in (i) above was adopted (or, if there is no trading in the shares on the stock exchange or if the stock exchange is not open on such day, the price at which the shares are first traded on such stock exchange thereafter).

The total amount of the purchase price of shares of Common Stock may not exceed the Distributable Amount, as described in “(Distribution of Surplus) — Distributions of Surplus — Restriction on distribution of Surplus.”

Shares acquired by Sony Group Corporation may be held for any period or may be retired at the determination of the CEO. Sony Group Corporation may also transfer (by public or private sale or otherwise) to any person the treasury stock held by it, at such times and upon such terms as the Board of Directors or the CEO determines, and subject also to other requirements similar to those applicable to the issuance of new shares, as described in “(Issue of additional shares and pre-emptive rights)” above. Sony Group Corporation may also utilize its treasury stock for the purpose of transfer to any person upon exercise of stock acquisition rights or for the purpose of acquiring another company by way of merger, share exchange, partial share exchange or corporate split through exchange of treasury stock for shares or assets of the acquired company.

(Unit share system)

The Articles of Incorporation of Sony Group Corporation provide that 100 shares constitute one “unit” of shares of stock. The Board of Directors or the Corporate Executive Officer to whom the authority to make such a determination has been delegated by a resolution of the Board of Directors is permitted to amend the Articles of Incorporation to reduce the number of shares that constitute a unit or to abolish the unit share system entirely. Under the Companies Act, the number of shares constituting one unit cannot exceed 1,000 shares nor 0.5% of the total number of issued shares.

Under the unit share system, shareholders have one voting right for each unit of stock that they hold. Any number of shares less than one full unit have neither voting rights nor rights related to voting rights. Holders of shares constituting less than one unit will have no other shareholder rights if Sony Group Corporation’s Articles of Incorporation so provide, except that such holders may not be deprived of certain rights specified in the Companies Act or an ordinance of the Ministry of Justice, including the right to receive distribution of Surplus.

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A holder of shares constituting less than one full unit may require Sony Group Corporation to purchase such shares at their market value in accordance with the provisions of the Share Handling Regulations of Sony Group Corporation. In addition, the Articles of Incorporation of Sony Group Corporation provide that a holder of shares constituting less than one full unit may request Sony Group Corporation to sell to such holder such amount of shares which will, when added together with the shares constituting less than one full unit, constitute one full unit of stock. Such request by a holder and the sale by Sony Group Corporation must be made in accordance with the provisions of the Share Handling Regulations of Sony Group Corporation. As prescribed in the Share Handling Regulations, such requests shall be made through an account management institution and JASDEC pursuant to the rules set by JASDEC, without going through the notification procedure required for the exercise of the shareholders’ rights to which shareholders are entitled, regardless of whether such shareholder held shares on the requisite record date, as described in “(General).” Shares constituting less than a full unit are transferable, under the central book-entry transfer system described in “(General).” Under the rules of the Japanese stock exchanges, however, shares constituting less than a full unit do not comprise a trading unit, except in limited circumstances, and accordingly may not be sold on the Japanese stock exchanges.

(Sale by Sony Group Corporation of shares held by shareholders whose location is unknown)

Sony Group Corporation is not required to send a notice to a shareholder if a notice to such shareholder fails to arrive at the registered address of the shareholder in Sony Group Corporation’s register of shareholders or at the address otherwise notified to Sony Group Corporation continuously for five years or more.

In addition, Sony Group Corporation may sell or otherwise dispose of shares of capital stock for which the location of the shareholder is unknown. Generally, if (i) notices to a shareholder fail to arrive continuously for five years or more at the shareholder’s registered address in Sony Group Corporation’s register of shareholders or at the address otherwise notified to Sony Group Corporation, and (ii) the shareholder fails to receive distributions of Surplus on the shares continuously for five years or more at the address registered in Sony Group Corporation’s register of shareholders or at the address otherwise notified to Sony Group Corporation, Sony Group Corporation may sell or otherwise dispose of such shareholder’s shares at the then market price of the shares by a determination of a Corporate Executive Officer and after giving at least three months’ prior public and individual notice, and hold or deposit the proceeds of such sale or disposal of shares for such shareholder.

Reporting of substantial shareholdings

The Financial Instruments and Exchange Act of Japan and its related regulations require any person, regardless of residence, who has become, beneficially and solely or jointly, a holder of more than 5% of the total issued shares of capital stock of a company listed on any Japanese stock exchange or whose shares are traded on the over-the-counter market in Japan to file with the Director General of the competent Local Finance Bureau of the Ministry of Finance within five business days a report concerning such shareholdings. A similar report must also be filed in respect of any subsequent change of 1% or more in any such holding, or any change in material matters set out in reports previously filed, with certain exceptions. For this purpose, shares issuable to such persons upon conversion of convertible securities or exercise of share subscription warrants or stock acquisition rights are taken into account in determining both the number of shares held by such holders and the issuer’s total issued share capital. Any such report shall be filed with the Director General of the relevant Local Finance Bureau of the Ministry of Finance through the Electronic Disclosure for Investors’ Network (EDINET) system.

Ownership restrictions

Except for the general limitation under Japanese anti-trust and anti-monopoly regulations against holding of shares of capital stock of a Japanese corporation which leads or may lead to a restraint of trade or monopoly, except for the limitations under the Foreign Exchange Regulations as described in “Exchange Controls” below, and except for general limitations under the Companies Act or Sony Group Corporation’s Articles of Incorporation on the rights of shareholders applicable regardless of residence or nationality, there is no limitation under Japanese laws and regulations applicable to Sony Group Corporation or under its Articles of Incorporation on the rights of non-residents or foreign shareholders to hold or exercise voting rights on the shares of capital stock of Sony Group Corporation.

There is no provision in Sony Group Corporation’s Articles of Incorporation or internal regulations that would have an effect of delaying, deferring or preventing a change in control of Sony Group Corporation and that would operate only with respect to a merger, acquisition or corporate restructuring involving Sony Group Corporation.

C.	Material Contracts

None

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D.	Exchange Controls

Japanese Foreign Exchange Controls Regulations

The following is a general summary of major Japanese foreign exchange controls regulations applicable to holders of shares of capital stock or voting rights of Sony Group Corporation or holders of ADSs who are “exchange non-residents” or “foreign investors,” as described below. The statements regarding Japanese foreign exchange control regulations set forth below are based on the laws and regulations in force and as interpreted by the Japanese authorities as of the date of this annual report and are subject to subsequent changes in the applicable Japanese laws or interpretations thereof. This summary is not exhaustive of all possible foreign exchange controls considerations that may apply to a particular investor, and potential investors are advised to satisfy themselves as to the overall foreign exchange controls consequences of the acquisition, ownership and disposition of shares of capital stock or voting rights of Sony Group Corporation or ADSs by consulting their own advisors.

The FEFTA and its related cabinet orders and ministerial ordinances (collectively, the “Foreign Exchange Regulations”) govern certain aspects relating to the acquisition and holding of shares of capital stock and voting rights of Sony Group Corporation by “exchange non-residents” and by “foreign investors” (as these terms are defined below). The Foreign Exchange Regulations also apply to the acquisition and holding of ADSs and the exercise of voting rights by holders of ADSs who are “foreign investors” that constitute an “inward direct investment” (as defined below).

Capital Transaction

Except as described below with respect to an “inward direct investment” by a “foreign investor,” the Foreign Exchange Regulations currently in effect do not affect transactions between exchange non-residents to purchase or sell shares of a Japanese listed corporation outside Japan using currencies other than Japanese yen.

In general, the acquisition of shares of a Japanese corporation (such as the shares of capital stock of Sony Group Corporation) by an exchange non-resident from an exchange resident requires post facto reporting by the exchange resident to the Minister of Finance. No such reporting requirement is imposed, however, if:

(i)

the aggregate purchase price of the relevant shares is 100 million yen or less;

(ii)

the acquisition is effected through any bank, financial instruments business operator or other entity prescribed by the Foreign Exchange Regulations acting as an agent or intermediary; or

(iii)

the acquisition constitutes an “inward direct investment” described below (in which case a prior notification requirement may apply).

Exchange residents are defined in the Foreign Exchange Regulations as:

(i)

individuals who reside within Japan; or

(ii)

corporations whose principal offices are located within Japan.

Exchange non-residents are defined in the Foreign Exchange Regulations as:

(i)

individuals who do not reside in Japan; or

(ii)

corporations whose principal offices are located outside Japan.

Generally, branches and other offices of non-resident corporations that are located within Japan are regarded as exchange residents. Conversely, branches and other offices of Japanese corporations located outside Japan are regarded as exchange non-residents.

Inward Direct Investment in Shares of Listed Corporations

Definition of Foreign Investor

Foreign investors are defined in the Foreign Exchange Regulations as:

(i)

individuals who are exchange non-residents;

(ii)

corporations or other entities that are organized under the laws of foreign countries or whose principal offices are located outside Japan;

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(iii)

corporations of which 50% or more of the total voting rights are held, directly or indirectly, by individuals and/or corporations falling within (i) and/or (ii) above;

(iv)

partnerships under the Civil Code of Japan established to invest in corporations, limited partnerships for investment under the Limited Partnership Act for Investment of Japan or any other similar partnerships under foreign law of which (a) 50% or more of the total contributions are made by individuals and/or corporations falling within (i), (ii), (iii) above and/or (v) below or any other persons prescribed under the Foreign Exchange Regulations or (b) a majority of the general partners are individuals and/or corporations falling within (i), (ii), (iii) above and/or (v) below or any other persons prescribed under the Foreign Exchange Regulations; or

(v)

corporations or other entities, a majority of whose directors or other officers (or directors or other officers having the power of representation) are individuals who are exchange non-residents.

Definition of Inward Direct Investment

If a foreign investor acquires shares or voting rights of a Japanese corporation that is listed on a Japanese stock exchange (such as the shares of capital stock of Sony Group Corporation) or that is traded on an over-the-counter market in Japan and, as a result of the acquisition, the foreign investor, in combination with any existing holdings, directly or indirectly holds 1% or more of the total number of issued shares or the total number of voting rights of the relevant corporation, such acquisition constitutes an “inward direct investment.” In addition, the acquisition of the authority to exercise, either directly or through instructions, voting rights held by other shareholders that results in the foreign investor, in combination with any existing shareholding, directly or indirectly holding 1% or more of the total number of voting rights of the relevant corporation constitutes an “inward direct investment.”

In addition to the acquisitions of shares or voting rights described above, if a foreign investor (i) is granted the authority to exercise voting rights on behalf of other shareholders of a Japanese listed corporation regarding certain matters which may give such foreign investor the power to control, or may have a material influence on the management of such corporation, such as the election or removal of directors, or (ii) obtains consent from another foreign investor holding the voting rights of the relevant corporation to exercise the voting rights of such corporation held by such other foreign investor jointly, and, in each case, as a result of these arrangements, the number of the voting rights directly or indirectly held by the foreign investor, including the total number of the voting rights subject to such authorization to exercise, or the sum of the number of the voting rights directly or indirectly held by the foreign investor and such other foreign investor subject to such joint voting agreement, as the case may be, is 10% or more of the total number of voting rights of the relevant corporation, each such arrangement regarding voting rights (hereinafter referred to as a “voting arrangement”) also constitutes an “inward direct investment”.

Additionally, if a foreign investor directly or indirectly holds 1% or more of the total voting rights of a Japanese listed corporation and, at a general meeting of shareholders, consents to certain proposals having a material influence on the management of such corporation such as the (i) election of such foreign investor or any of its related persons (as defined in the Foreign Exchange Regulations) as a director or corporate auditor of the relevant corporation or (ii) transfer or discontinuation of its business, such consent also constitutes an “inward direct investment.”

Prior Notification Requirements regarding Inward Direct Investment

If a foreign investor intends to consummate an acquisition of shares or voting rights of a Japanese listed corporation or the authority to exercise, either directly or through instructions, voting rights held by other shareholders that constitutes an “inward direct investment” as described above, unless certain exemptions apply (such as where the foreign investor is in a country that is listed on an exemption schedule in the Foreign Exchange Regulations and where that Japanese corporation is not engaged in certain businesses (the “Designated Businesses”) designated by the Foreign Exchange Regulations), a prior notification of the relevant inward direct investment is required to be filed with the Minister of Finance and any other competent Ministers.

However, if a foreign investor is seeking to acquire shares or voting rights of a Japanese listed corporation or the authority to exercise, either directly or through instructions, voting rights held by other shareholders and such acquisition would constitute an “inward direct investment,” such foreign investor may be eligible for the exemptions if certain conditions are met. In the case of an acquisition of shares or voting rights or the authority to exercise, either directly or through instructions, voting rights of a Japanese listed corporation that is engaged in a Designated Business other than certain Designated Business designated by the Foreign Exchange Regulations as

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a core sector business (the “Core Sector Designated Businesses”), the foreign investor may be exempted from the prior notification requirement if such foreign investor complies with the following conditions (the “Exemption Conditions”):

(i)

the foreign investor or its related persons will not become directors or corporate auditors of the relevant corporation;

(ii)

the foreign investor will not make certain proposals (as prescribed in the Foreign Exchange Regulations) at the general meeting of shareholders, including transfer or discontinuation of the Designated Businesses of the relevant corporation; and

(iii)

the foreign investor will not access non-public technical information in relation to the Designated Businesses of the relevant corporation, or take certain other actions that may lead to the leak of such non-public technical information (as prescribed in the Foreign Exchange Regulations).

In addition, in the case of an acquisition of shares or voting rights or the authority to exercise, directly or through instructions, voting rights of a Japanese listed corporation that is engaged in the Core Sector Designated Businesses, the foreign investor may be exempted from the prior notification requirement, if, as a result of such acquisition, the foreign investor, in combination with any existing holdings, directly or indirectly holds less than 10% of the total number of issued shares or voting rights of the relevant corporation and such foreign investor complies with the Exemption Conditions and the following additional conditions:

(i)

the foreign investor will not attend, or not cause any persons designated by it to attend, meetings of the relevant corporation’s board of directors, or meetings of committees having authority to make important decisions, in respect of the Core Sector Designated Businesses of the relevant corporation; and

(ii)

the foreign investor will not make, or not cause any persons designated by it to make, proposals to such board or committees or their members in writing or electronic form requesting any response or actions by certain deadlines in respect of the Core Sector Designated Businesses of the relevant corporation.

Notwithstanding the above, if a foreign investor falls under a category of disqualified investors designated by the Foreign Exchange Regulations (including (a) investors who have been sanctioned during the previous five years due to violations of the FEFTA, (b) foreign governments, etc. (as prescribed in the Foreign Exchange Regulations) and (c) certain investors that are owned by, or have a certain other relationship with, foreign governments, etc. that are not otherwise accredited by the Minister of Finance), in no event may such foreign investor be eligible for the exemptions described above. On the other hand, if a foreign investor, excluding the disqualified investors described in the foregoing sentence, falls under a category of certain foreign financial institutions (as prescribed in the Foreign Exchange Regulations) and complies with the Exemption Conditions, such foreign investor may be eligible for the exemptions described above, even if the acquisition results in such foreign investor directly or indirectly holding 10% or more of the total number of issued shares or voting rights of the corporation engaged in the Core Sector Designated Businesses.

Pursuant to the amendments to the Foreign Exchange Regulations with taking into effect in May 2025, the scope of the above-mentioned disqualified investors, who are not eligible for the exemptions described above, was expanded to include (a) certain foreign investors who have obligations to cooperate with foreign governments, etc. in collecting information pursuant to agreements with foreign governments, etc. or foreign laws and regulations and (b) certain investors who are owned by, or who have a certain other relationship with, the foreign investors set forth in (a) (collectively, the “Specified Foreign Investors”) that are not otherwise accredited by the Minister of Finance. In addition, the exemption from the prior notification requirement was amended not to be applicable to the case where a foreign investor equivalent to the Specified Foreign Investor (the “Quasi-Specified Foreign Investors”) (as prescribed in the Foreign Exchange Regulations), which includes a foreign investor (i) whose managerial decisions are made substantially by the foreign investors set forth in (a), (ii) whose managerial decisions are made in a country other than the country of incorporation and affected by laws and regulations, etc. imposing obligations to cooperate with foreign governments, etc. in collecting information or (iii) who has obligations to disclose information to cooperate with foreign governments, etc. pursuant to agreements with the Specified Foreign Investors or the foreign investor set forth in this (iii), and that seeks to acquire shares or voting rights, including authority to exercise, either directly or through instructions, voting rights owned by others, of a listed corporation (the “Designated Core Business Entity”) which is engaged in the Core Sector Designated Businesses and also falls under the “Specified Essential Infrastructure Service Providers” as defined in the Economic Security Promotion Act, even if the foreign investor, (x) as a result of an acquisition of such shares or voting rights, including the authority to exercise, either directly or through

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instructions, voting rights owned by others, of such listed corporation, together with parties that have a special relationship with that foreign investor, holds or has authority to exercise less than 10% of the total issued shares or voting rights of such listed corporation, or (y) falls under a category of certain foreign financial institutions (as prescribed in the Foreign Exchange Regulations) set forth in the preceding paragraph. Further, the Exemption Conditions, which must be complied with for a foreign investor to be exempted from the prior notification requirement, were amended to include the following two additional conditions set forth in items (i) and (ii) below, when they apply to the case of an acquisition by a Quasi-Specified Foreign Investor of shares or voting rights, including authority to exercise, either directly or through instructions, voting rights owned by others, of a listed corporation which is engaged in the Core Sector Designated Businesses but is not the Designated Core Business Entity, as a result of which acquisition, together with parties that have a special relationship with that Quasi-Specified Foreign Investor, such Quasi-Specified Foreign Investor holds or has authority to exercise less than 10% of the total issued shares or voting rights of the above mentioned corporation:

(i)

the foreign investor will not access non-public information in relation to the Core Sector Designated Businesses of such corporation, or take certain other actions that may lead to the leak of such non-public information (as prescribed in the Foreign Exchange Regulations); and

(ii)

the foreign investor will not work, or cause its closely-related persons (prescribed in the Foreign Exchange Regulations) to work in relation to the Core Sector Designated Businesses of such corporation, as an employee for such corporation and will not solicit any officers or employees of such corporation to work for the foreign investor or any third party.

For reference purposes only, the Minister of Finance publishes, and may update from time to time, a list that classifies Japanese listed corporations into the following categories: (i) corporations engaged only in businesses other than the Designated Businesses, (ii) corporations engaged in Designated Businesses other than Core Sector Designated Businesses, (iii) corporations engaged in the Core Sector Designated Businesses and (iv) corporations falling into the Designated Core Business Entity. According to the list most recently published by the Minister of Finance, as of June 20, 2025, Sony Group Corporation is classified as category (iii) above.

In addition, if a foreign investor intends to make a voting arrangement with respect to a Japanese listed corporation engaged in the Designated Businesses or consents to a proposal at the general meeting of shareholders of such corporation, in each case, that constitutes an “inward direct investment” as described in “Definition of Inward Direct Investment” above, in certain circumstances, prior notification of the relevant inward direct investment must be filed with the Minister of Finance and any other competent Ministers. In such cases, the exemptions from the prior notification requirements may not be available, except for cases where the relevant voting arrangement is a joint voting agreement with other foreign investors to exercise voting rights regarding matters other than certain matters which may give such foreign investor the power to control, or may have a material influence on the management of the relevant corporation, such as the election or removal of directors.

Acquisitions of shares by foreign investors by way of stock split are not subject to the foregoing notification requirements.

Procedures for Prior Notification regarding Inward Direct Investment

If such prior notification is filed, the proposed inward direct investment may not be consummated until 30 days after the date of filing during which time the Ministers will review the proposed inward direct investment, although this screening period may be shortened by such Ministers if they no longer deem it necessary to review the proposed inward direct investment, or may be shortened to five business days, if the proposed inward direct investment is determined not to raise concerns from the perspective of national security or certain other factors. The Ministers may extend the screening period up to five months if they deem it necessary to continue to review the proposed inward direct investment, and may recommend any modification or abandonment of the proposed inward direct investment and, if the foreign investor does not accept such recommendation, the Ministers may order the modification or abandonment of such inward direct investment. In addition, if the Ministers consider the proposed inward direct investment to be an inward direct investment that is likely to cause damage to the national security of Japan, to interfere with the maintenance of public order or to pose an obstacle to the preservation of public safety, and, if a foreign investor (i) consummates such inward direct investment without filing the prior notification described above; (ii) consummates such inward direct investment before the expiration of the screening period described above; (iii) in connection with such inward direct investment, makes false statements in the prior notification described above; or (iv) does not follow the recommendation or order issued by the Ministers to modify or abandon such inward direct investment, the Ministers may order such foreign investor to divest all or part of the shares acquired or take other measures.

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Post Facto Reporting Requirements regarding Inward Direct Investment

A foreign investor who consummates an inward direct investment as described above through an acquisition of shares or voting rights or the authority to exercise, directly or through instructions, voting rights of a Japanese listed corporation that is engaged in the Designated Businesses, but is not subject to the prior notification requirements described above due to the exemptions from such prior notification requirements, in general, must file a post facto report of the relevant inward direct investment with the Minister of Finance and any other competent Ministers having jurisdiction over such Japanese corporation within 45 days of the date when, as a result of such acquisition, the foreign investor, in combination with any existing holdings, directly or indirectly holds (i) 1% or more but less than 3% of the total number of issued shares or voting rights, for the first time, (ii) 3% or more but less than 10% of the total number of issued shares or voting rights, for the first time, or (iii) 10% or more of the total number of issued shares or voting rights (excluding, in the cases of (i) and (ii) above, a foreign investor who falls under a category of certain foreign financial institutions (as prescribed in the Foreign Exchange Regulations)). In addition, if a foreign investor consummates the inward direct investment described above through the acquisition of shares or voting rights or the authority to exercise, directly or through instructions, voting rights of a Japanese listed corporation that is not engaged in the Designated Businesses (which is, in general, not subject to the prior notification requirements described above) and, as a result of such inward direct investment, such foreign investor, in combination with any existing holdings, directly or indirectly holds 10% or more of shares or voting rights of the total number of issued shares or voting rights of the relevant corporation, such foreign investor, in general, must file a post facto report of the relevant inward direct investment with the Minister of Finance and any other competent Ministers having jurisdiction over such Japanese corporation within 45 days of such inward direct investment.

In addition, if a foreign investor consummates the inward direct investment described above through a voting arrangement with respect to a Japanese listed corporation that is not engaged in the Designated Businesses (which is, in general, not subject to the prior notification requirements described above), such foreign investor, in general, must file a post facto report of the relevant inward direct investment with the Minister of Finance and any other competent Ministers having jurisdiction over such Japanese corporation within 45 days of such inward direct investment.

Acquisitions of shares by foreign investors by way of stock split are not subject to the foregoing reporting requirements.

Dividends and Proceeds of Sale

Under the Foreign Exchange Regulations, dividends paid on and the proceeds from sales in Japan of shares of capital stock of Sony Group Corporation held by exchange non-residents may generally be converted into any foreign currency and repatriated abroad.

Taxation

The following is a summary of the major Japanese national tax and U.S. federal income tax consequences of the ownership, acquisition and disposition of shares of Common Stock of Sony Group Corporation and of ADRs evidencing ADSs representing shares of Common Stock of Sony Group Corporation by a non-resident of Japan or a non-Japanese corporation without a permanent establishment in Japan. The summary does not purport to be a comprehensive description of all of the tax considerations that may be relevant to any particular investor, and does not take into account any specific individual circumstances of any particular investor. Accordingly, holders of shares of Common Stock or ADSs of Sony Group Corporation are encouraged to consult their tax advisors regarding the application of the considerations discussed below to their particular circumstances.

This summary is based upon the representations of the depositary and the assumption that each obligation in the deposit agreement in relation to the ADSs dated as of April 1, 2025, and in any related agreement, will be performed in accordance with its terms.

For purposes of the income tax convention between Japan and the United States (the “Treaty”) and the U.S. Internal Revenue Code of 1986, as amended (the “Code”), U.S. holders of ADSs generally will be treated as owning shares of Common Stock of Sony Group Corporation underlying the ADSs evidenced by the ADRs. For the purposes of the following discussion, a “U.S. holder” is a beneficial owner of shares of Common Stock of Sony Group Corporation or ADRs evidencing ADSs representing shares of Common Stock of Sony Group Corporation that:

(i)

is a resident of the U.S. for purposes of the Treaty;

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(ii)

does not maintain a permanent establishment in Japan (a) with which shares of Common Stock or ADSs of Sony Group Corporation are effectively connected and through which the U.S. holder carries on or has carried on business or (b) of which shares of Common Stock or ADSs of Sony Group Corporation form part of the business property; and

(iii)

is eligible for benefits under the Treaty with respect to income and gain derived in connection with shares of Common Stock or ADSs of Sony Group Corporation.

Japanese Tax Considerations with respect to shares of Common Stock and ADSs

The following is a summary of the principal Japanese tax consequences (limited to national taxes) to non-residents of Japan or non-Japanese corporations without a permanent establishment in Japan (“non-resident Holders”) who are holders of shares of Common Stock of Sony Group Corporation or of ADRs evidencing ADSs representing shares of Common Stock of Sony Group Corporation. The information given below regarding Japanese taxation is based on the tax laws and tax treaties in force and their interpretations by the Japanese tax authorities as of June 20, 2025. Tax laws and tax treaties as well as their interpretations may change at any time, possibly with retroactive effect. Sony Group Corporation will not update this summary for any changes in the tax laws or tax treaties or their interpretation that occurs after such date.

Generally, non-resident Holders are subject to Japanese withholding tax on dividends paid by Japanese corporations. Such taxes are withheld prior to payment of dividends as required by Japanese law. Stock splits are, in general, not a taxable event.

In the absence of an applicable tax treaty, convention or agreement reducing the maximum rate of Japanese withholding tax or allowing exemption from Japanese withholding tax, the rate of Japanese withholding tax applicable to dividends paid by Japanese corporations to non-resident Holders is generally 20.42%, provided, with respect to dividends paid on listed shares issued by a Japanese corporation (such as the shares of Common Stock or ADSs of Sony Group Corporation) to non-resident Holders other than any non-resident Holder who is an individual holding 3% or more of the total shares issued by the relevant Japanese corporation, the aforementioned 20.42% withholding tax rate is reduced to 15.315% for dividends due and payable on or before December 31, 2037. Due to the imposition of a special additional withholding tax (2.1% of the original withholding tax amount) to secure funds for reconstruction from the Great East Japan Earthquake, the original withholding tax rates of 15% and 20% as applicable, have been effectively increased to 15.315% and 20.42%, respectively, until December 31, 2037.

As of the date of this document, Japan has income tax treaties, conventions or agreements in force, whereby the above-mentioned withholding tax rate is reduced, in most cases to 15%, 10% or 5% for portfolio investors (15% under the income tax treaties with, among other countries, Canada, Denmark, Finland, Germany, Iceland, Ireland, Italy, Luxembourg, New Zealand, Norway and Singapore, 10% under the income tax treaties with, among other countries, Australia, Austria, Belgium, France, Hong Kong, the Netherlands, Portugal, Sweden, Switzerland, the U.K. and the United States, and 5% under the income tax treaties with, among other countries, Spain). Under the Treaty, the maximum rate of Japanese withholding tax that may be imposed on dividends paid by a Japanese corporation to a U.S. holder that does not own directly or indirectly at least 10% of the voting stock of the Japanese corporation is generally reduced to 10% of the gross amount actually distributed, and dividends paid by a Japanese corporation to a U.S. holder that is a pension fund are exempt from Japanese income taxation by way of withholding or otherwise unless such dividends are derived from the carrying on of a business, directly or indirectly, by such pension fund.

If the maximum tax rate provided for in the income tax treaty applicable to dividends paid by Sony Group Corporation to any particular non-resident Holder is lower than the withholding tax rate otherwise applicable under Japanese tax law, or if any particular non-resident Holder is exempt from Japanese income tax with respect to such dividends under the income tax treaty applicable to such particular non-resident Holder, such non-resident Holder who is entitled to a reduced rate of or exemption from Japanese withholding tax on payment of dividends on shares of Common Stock by Sony Group Corporation is, in principle, required to submit an Application Form for Income Tax Convention Regarding Relief from Japanese Income Tax and Special Income Tax for Reconstruction on Dividends (together with any other required forms and documents) in advance through the withholding agent to the relevant tax authority before the payment of dividends. A standing proxy for non-resident Holders of a Japanese corporation may provide this application service. In this regard, a certain simplified special filing procedure is available for non-resident Holders to claim treaty benefits of exemption from or reduction of Japanese withholding tax, by submitting a Special Application Form for Income Tax Convention Regarding Relief from Japanese Tax and Special Income Tax for Reconstruction on Dividends of Listed Stock (together with any other required forms and documents). With respect to ADSs, this reduced rate or

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exemption is applicable if the depositary or its agent submits two Application Forms (one before payment of dividends and the other within eight months after the record date concerning such payment of dividends). To claim this reduced rate or exemption, a non-resident Holder of ADSs will be required to file a proof of taxpayer status, residence and beneficial ownership (as applicable) and to provide other information or documents as may be required by the depositary. A non-resident Holder who is entitled, under an applicable income tax treaty, to a reduced rate which is lower than the withholding tax rate otherwise applicable under Japanese tax law or an exemption from the withholding tax, but failed to submit the required application in advance will be entitled to claim the refund of taxes withheld in excess of the rate under an applicable tax treaty (if such non-resident Holder is entitled to a reduced treaty rate under the applicable income tax treaty) or the full amount of tax withheld (if such non-resident Holder is entitled to an exemption under the applicable income tax treaty) from the relevant Japanese tax authority, by complying with a certain subsequent filing procedure. Sony Group Corporation does not assume any responsibility to ensure withholding at the reduced treaty rate or to ensure the absence of withholding for shareholders who would be so eligible under any applicable income tax treaty but where the required procedures as stated above are not followed.

Gains derived from the sale of shares of Common Stock or ADSs of Sony Group Corporation outside Japan by a non-resident Holder holding such shares or ADSs as portfolio investors are, in general, not subject to Japanese income tax or corporation tax under Japanese tax law. U.S. holders are not subject to Japanese income or corporation tax with respect to such gains under the Treaty.

Japanese inheritance tax and gift tax at progressive rates may be payable by an individual who has acquired from another individual shares of Common Stock or ADSs of Sony Group Corporation as a legatee, heir or donee even though neither the acquiring individual nor the deceased nor donor is a Japanese resident.

Holders of shares of Common Stock or ADSs of Sony Group Corporation should consult their tax advisors regarding the effect of these taxes and, in the case of U.S. holders, the possible application of the Estate and Gift Tax Treaty between the U.S. and Japan.

United States Taxation with respect to shares of Common Stock and ADSs

The U.S. dollar amount of dividends received (prior to deduction of Japanese taxes) by a U.S. holder of ADSs or Common Stock of Sony Group Corporation will be included in income as ordinary income for U.S. federal income tax purposes to the extent paid out of current or accumulated earnings and profits of Sony Group Corporation as determined for U.S. federal income tax purposes. The U.S. dollar amount of dividends received by a non-corporate U.S. holder with respect to the ADSs or Common Stock will be subject to taxation at a reduced rate if the dividends are “qualified dividends.” Subject to certain exceptions for short-term and hedged positions, dividends paid on the ADSs or Common Stock will be treated as qualified dividends if Sony Group Corporation was not, in the year prior to the year in which the dividend was paid, and is not, in the year in which the dividend is paid a passive foreign investment company (“PFIC”). Based on Sony Group Corporation’s audited financial statements and relevant market and shareholder data, Sony Group Corporation believes that it was not treated as a PFIC for U.S. federal income tax purposes with respect to its taxable year ended March 31, 2025. In addition, based on Sony Group Corporation’s audited financial statements and Sony Group Corporation’s current expectations regarding the value and nature of its assets, the sources and nature of its income, and relevant market and shareholder data, Sony Group Corporation does not anticipate becoming a PFIC for the taxable year ending March 31, 2026. Holders of ADSs and Common Stock of Sony Group Corporation should consult their own tax advisors regarding the availability of the reduced dividend tax rate in light of the considerations discussed above and their own particular circumstances. Dividends paid by Sony Group Corporation to U.S. corporate holders of ADSs or Common Stock of Sony Group Corporation will not be eligible for the dividends-received deduction.

Subject to generally applicable limitations and special considerations discussed below, a U.S. holder of ADSs or Common Stock of Sony Group Corporation may be entitled to a credit for Japanese tax withheld in accordance with the Treaty from dividends paid by Sony Group Corporation. The applicable limitations include requirements adopted by the U.S. Internal Revenue Service (“IRS”) in regulations promulgated in December 2021 and any Japanese tax will need to satisfy these requirements in order to be eligible to be a creditable tax for a U.S. holder. In the case of a U.S. holder that either (i) properly elects the benefits of the Treaty, or (ii) consistently elects to apply a modified version of these rules under temporary guidance and complies with specific requirements set forth in such guidance, the Japanese tax on dividends will be treated as meeting the requirements and therefore as a creditable tax. In the case of all other U.S. holders, the application of these requirements to the Japanese tax on dividends is uncertain and Sony Group Corporation has not determined whether these requirements have been met. Foreign tax credits will not be allowed for withholding taxes imposed

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in respect of certain short-term or hedged positions and may not be allowed in respect of arrangements in which economic profit, after non-U.S. taxes, is insubstantial. If the Japanese dividend tax is not a creditable tax for a U.S. holder or the U.S. holder does not elect to claim a foreign tax credit for any foreign income taxes paid or accrued in the same taxable year, the U.S. holder may be able to deduct the Japanese tax in computing such U.S. holder’s taxable income for U.S. federal income tax purposes. For purposes of the foreign tax credit limitation, dividends will be foreign source income, and will generally constitute “passive” income. The availability and calculation of foreign tax credits and deductions for foreign taxes depend on a U.S. holder’s particular circumstances and involve the application of complex rules to those circumstances. The temporary guidance discussed above also indicates that the U.S. Department of the Treasury and the IRS are considering proposing amendments to the December 2021 regulations and that the temporary guidance can be relied upon until additional guidance is issued that withdraws the temporary guidance. U.S. holders should consult their own tax advisors regarding the application of these rules to their particular situations.

In general, a U.S. holder will recognize capital gain or loss upon the sale or other disposition of ADSs or Common Stock of Sony Group Corporation equal to the difference between the amount realized on the sale or disposition and the U.S. holder’s tax basis in the ADSs or Common Stock. Such capital gain or loss will be long-term capital gain or loss if the ADSs or Common Stock have been held for more than one year on the date of the sale or disposition. The net amount of long-term capital gain recognized by an individual holder is subject to lower rates of federal income taxation than ordinary income or short-term capital gain rates.

Under the Code, a U.S. holder of ADSs or Common Stock of Sony Group Corporation may be subject, under certain circumstances, to information reporting and possibly backup withholding with respect to dividends and proceeds from the sale or other disposition of ADSs or Common Stock, unless the U.S. holder provides proof of an applicable exemption or correct taxpayer identification number and otherwise complies with applicable requirements of the backup withholding rules. Any amount withheld under the backup withholding rules is not an additional tax and may be refunded or credited against the U.S. holder’s federal income tax liability, so long as the required information is furnished to the IRS.

F.	Dividends and Paying Agents

Not Applicable

G.	Statement by Experts

Not Applicable

H.	Documents on Display

It is possible to read and copy documents referred to in this annual report on Form 20-F that have been filed with the SEC at the SEC’s public reference room located at 100 F Street, N.E., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the public reference rooms and their copy charges. You can also access the documents at the SEC’s home page (https://www.sec.gov).

I.	Subsidiary Information

Not Applicable

J.	Annual Report to Security Holders

Not Applicable

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Item 11.

Quantitative and Qualitative Disclosures about Market Risk

Sony’s business is continuously exposed to market fluctuation, such as fluctuations in currency exchange rates, interest rates or stock prices. For risk management policies and exposures for each risk, refer to Note 6 of the consolidated financial statements. For risk inherent in the insurance business, which is included in the Financial Services segment, refer to Note 13 of the consolidated financial statements. For derivative instruments and hedging activities utilized by Sony to reduce such risk, refer to Note 15 of the consolidated financial statements. For credit risk exposure for financial assets of debt instruments designated to be measured at fair value through profit or loss, refer to Note 6 of the consolidated financial statements.

Item 12.

Description of Securities Other Than Equity Securities

A.	Debt Securities

Not Applicable

B.	Warrants and Rights

Not Applicable

C.	Other Securities

Not Applicable

D.	American Depositary Shares

From April 1, 2025, JPMorgan Chase Bank, N.A. (the “Depositary”) succeeded Citibank, N.A. (the “Prior Depositary”), as the depositary for Sony Group Corporation’s ADSs pursuant to a deposit agreement between Sony Group Corporation, the Depositary, and the holders and beneficial owners of ADSs issued thereunder from time to time (the “Deposit Agreement”) (attached as Exhibit 2.1 to this report). ADS holders (“Holders”) may be required to pay various fees to the Depositary and the Depositary may refuse to provide any service for which a fee is assessed until the applicable fee has been paid. The following fees may at any time and from time to time be changed by agreement between Sony Group Corporation and the Depositary.

The Depositary may charge, and collect from (i) each person to whom ADSs are issued, including, without limitation, issuances against deposits of Sony Group Corporation’s Common Stock, issuances in respect of share distributions, rights and other distributions, issuances pursuant to a stock dividend or stock split declared by Sony Group Corporation, or issuances pursuant to a merger, exchange of securities or any other transaction or event affecting the ADSs or the deposited property, and (ii) each person surrendering ADSs for withdrawal of Sony Group Corporation’s Common Stock or other deposited property or whose ADSs are cancelled or reduced for any other reason, a fee of up to U.S. $5.00 for each 100 ADSs (or portion thereof) issued, delivered, reduced, cancelled or surrendered, or upon which a share distribution or elective distribution is made or offered (as the case may be). The Depositary may sell (by public or private sale) sufficient securities and property received in respect of share distributions, rights and other distributions prior to such deposit to pay such charge.

(a) Additional Fees, Charges and Expenses by the Depositary. The following additional fees, charges and expenses shall also be incurred by the Holders, by beneficial owners of ADSs, by any party depositing or withdrawing Sony Group Corporation’s Common Stock or by any party surrendering ADSs and/or to whom ADSs are issued (including, without limitation, issuances pursuant to a stock dividend or stock split declared by Sony Group Corporation or an exchange of stock regarding the ADSs or the Sony Group Corporation Common Stock or other deposited property or a distribution of ADSs, whichever is applicable):

(i)

a fee of up to U.S. $0.05 per ADS held for any cash distribution made, or for any elective cash/stock dividend offered, pursuant to the Deposit Agreement,

(ii)

a fee of up to U.S. $0.05 per ADS held for the direct or indirect distribution of securities (other than ADSs or rights to purchase additional ADSs) or the net cash proceeds from the public or private sale of any such securities, regardless of whether any such distribution and/or sale is made by, for, or received from, or (in each case) on behalf of, the Depositary, Sony Group Corporation and/or any third party (which fee may be assessed against Holders as of a record date set by the Depositary),

(iii)

an aggregate fee of up to U.S. $0.05 per ADS per calendar year (or portion thereof) for services performed by the Depositary in administering the ADRs (which fee may be charged on a periodic basis

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during each calendar year and shall be assessed against Holders as of the record date or record dates set by the Depositary during each calendar year and shall be payable at the sole discretion of the Depositary by billing such Holders or by deducting such charge from one or more cash dividends or other cash distributions), and

(iv)

an amount for the reimbursement of such charges and expenses as are incurred by the Depositary and/or any of its agents (including, without limitation, the Custodian (as defined in the Deposit Agreement), as well as charges and expenses incurred on behalf of Holders in connection with compliance with foreign exchange control regulations or any law or regulation relating to foreign investment) in connection with the servicing of the Sony Group Corporation Common Stock or other deposited property, the sale of securities (including, without limitation, deposited property), the delivery of Sony Group Corporation Common Stock or other deposited property or otherwise in connection with the Depositary’s or its Custodian’s compliance with applicable law, rule or regulation (which charges and expenses may be assessed on a proportionate basis against Holders as of the record date or dates set by the Depositary and shall be payable at the sole discretion of the Depositary by billing such Holders or by deducting such charge or expense from one or more cash dividends or other cash distributions).

(b) Other Obligations, Fees, Charges and Expenses. Sony Group Corporation will pay all other fees, charges and expenses of the Depositary and any agent of the Depositary (except the Custodian) pursuant to agreements from time to time between Sony Group Corporation and the Depositary, except:

(i)

stock transfer or other taxes and other governmental charges (which are payable by Holders or persons depositing Shares);

(ii)

a transaction fee per cancellation request (including any cancellation request made through SWIFT (Society for Worldwide Interbank Financial Telecommunications), facsimile transmission or any other method of communication) as disclosed on the “Disclosures” page (or successor page) of www.adr.com (as updated by the Depositary from time to time, “ADR.com”) and any applicable delivery expenses (which are payable by such persons or Holders); and

(iii)

transfer or registration expenses for the registration or transfer of Sony Group Corporation Common Stock and other deposited property on any applicable register in connection with the deposit or withdrawal of Sony Group Corporation Common Stock and other deposited property (which are payable by persons depositing Sony Group Corporation Common Stock or Holders withdrawing Sony Group Corporation Common Stock or other deposited property).

(c) The right of the Depositary to charge and receive payment of fees, charges and expenses as provided above shall survive the termination of the Deposit Agreement. Upon the resignation or removal of the Depositary, such right shall extend for those fees, charges and expenses incurred prior to the effectiveness of such resignation or removal.

In the case of ADSs issued by the Depositary into the Depository Trust Company or presented to the Depositary via the Depository Trust Company, the ADS issuance and cancellation fees and charges will be payable by the Depository Trust Company participant(s) receiving the ADSs from the Depositary or the Depository Trust Company participant(s) surrendering the ADSs to the Depositary for cancellation, as the case may be, on behalf of the beneficial owner(s) and will be charged by the Depository Trust Company participant(s) to the account(s) of the applicable beneficial owner(s) in accordance with the procedures and practices of the Depository Trust Company participant(s) as in effect at the time. ADS fees and charges in respect of distributions and the ADS service fee are payable by Holders as of the applicable ADS record date established by the Depositary. In the case of distributions of cash, the amount of the applicable ADS fees and charges is deducted from the funds being distributed. In the case of (i) distributions other than cash and (ii) the ADS service fee, the applicable Holders as of the ADS record date established by the Depositary will be invoiced for the amount of the ADS fees and charges. For ADSs held through the Depository Trust Company, the ADS fees and charges for distributions other than cash and the ADS service fee are charged to the Depository Trust Company participants in accordance with the procedures and practices prescribed by the Depository Trust Company from time to time and the Depository Trust Company participants in turn charge the amount of such ADS fees and charges to the beneficial owners for whom they hold ADSs.

In the event of refusal by a Holder to pay the Depositary fees, the Depositary may, under the terms of the Deposit Agreement, refuse the requested service until payment is received or may set off the amount of the Depositary fees from any distribution to be made to the Holder. Note that the fees and charges Holders may be required to pay may vary over time and may be changed by Sony Group Corporation and by the Depositary.

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Holders will receive prior notice of such changes. The Depositary may reimburse Sony Group Corporation for certain expenses incurred by it that are related to the establishment and maintenance of the ADR program upon such terms and conditions as Sony Group Corporation and the Depositary may agree from time to time.

The Depositary may agree to reduce or waive certain fees, charges and expenses to Holders that would normally be charged on ADSs issued to or at the direction of, or otherwise held by, Sony Group Corporation and/or certain Holders and beneficial owners of ADSs and holders and beneficial owners of Sony Group Corporation’s Common Stock.

The Depositary reserves the right to utilize a division, branch or affiliate of the Depositary to direct, manage and/or execute any public and/or private sale of securities hereunder. Such division, branch and/or affiliate may charge the Depositary a fee in connection with such sales, which fee is considered an expense of the Depositary contemplated under the Deposit Agreement.

Direct and Indirect Payments by the Depositary to Sony

The Depositary may make available to Sony Group Corporation a set amount or a portion of the Depositary fees charged in respect of the ADR program or otherwise upon such terms and conditions as Sony Group Corporation and the Depositary may agree from time to time.

The Prior Depositary reimbursed Sony for certain expenses Sony incurred in connection with its ADR program, subject to certain ceilings. These reimbursable expenses included, but were not limited to, legal and accounting fees, investor relations expenses and fees payable to service providers for the distribution of material to ADR holders. For the fiscal year ended March 31, 2025, such amounts paid by the Prior Depositary to Sony Group Corporation totaled 7,328,184.78 U.S. dollars.

In addition, as part of its service to Sony, the Prior Depositary waived fees in connection with its ADR program, subject to a ceiling. These waived expenses included, but were not limited to, standard costs associated with the administration of the ADR program, associated operating expenses, investor relations advice and access to an internet-based tool used in Sony’s investor relations activities. For the fiscal year ended March 31, 2025, the amount of such indirect payments was estimated to total 5,000 U.S. dollars.

Item 13.

Defaults, Dividend Arrearages and Delinquencies

None

Item 14.

Material Modifications to the Rights of Security Holders and Use of Proceeds

None

Item 15.

Controls and Procedures

Item 15(a). Disclosure Controls and Procedures

Sony has carried out an evaluation under the supervision and with the participation of Sony’s management, including the CEO and CFO, of the effectiveness of the design and operation of Sony’s disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, as of March 31, 2025. Disclosure controls and procedures require that information to be disclosed in the reports Sony Group Corporation files or submits under the Securities and Exchange Act of 1934 is recorded, processed, summarized and reported as and when required, within the time periods specified in the applicable rules and forms, and that such information is accumulated and communicated to Sony’s management, including the CEO and CFO, as appropriate to allow timely decisions regarding required disclosure. There are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures. Accordingly, even effective disclosure controls

and procedures can only provide reasonable assurance of achieving their control objectives. Based upon Sony’s evaluation, the CEO and CFO have concluded that, as of March 31, 2025, the disclosure controls and procedures were effective at the reasonable assurance level.

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Item 15(b). Management’s Annual Report on Internal Control over Financial Reporting

Sony’s management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Sony’s internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with IFRS Accounting Standards. Sony’s internal control over financial reporting includes those policies and procedures that:

(i)

pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of Sony;

(ii)

provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of Sony are being made only in accordance with authorizations of management and directors; and

(iii)

provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of Sony’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Sony’s management evaluated the effectiveness of Sony’s internal control over financial reporting as of March 31, 2025 based on the criteria established in “Internal Control — Integrated Framework (2013)” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on the evaluation, management has concluded that Sony maintained effective internal control over financial reporting as of March 31, 2025.

Sony’s independent registered public accounting firm, PricewaterhouseCoopers Japan LLC, has issued an audit report on the effectiveness of Sony’s internal control over financial reporting as of March 31, 2025, presented on page (F-2).

Item 15(c). Attestation Report of the Registered Public Accounting Firm

Refer to the Report of Independent Registered Public Accounting Firm on page (F-2).

Item 15(d). Changes in Internal Control over Financial Reporting

There has been no change in Sony’s internal control over financial reporting during the fiscal year ended March 31, 2025 that has materially affected, or is reasonably likely to materially affect, Sony’s internal control over financial reporting.

Item 16.

[Reserved]

Item 16A.

Audit Committee Financial Expert

Sony Group Corporation’s Board of Directors has determined on June 25, 2024 that Keiko Kishigami qualifies as an “audit committee financial expert” as defined in Item 16A of Form 20-F under the Exchange Act, as amended. In addition, she is determined to be independent as defined under the NYSE Corporate Governance Standards. As of the date of this report, it is planned that Keiko Kishigami and Ms. Yoriko Goto will each be determined to qualify as “audit committee financial experts” as defined in Item 16A of Form 20-F under the Exchange Act, as amended, and to be independent, under the NYSE Corporate Governance Standards, at the meeting of the Board of Directors immediately following the closing of the Ordinary General Meeting of Shareholders.

Item 16B.

Code of Ethics

Sony has adopted a code of ethics, as defined in Item 16B of Form 20-F under the Exchange Act, as amended. The code of ethics applies to all directors, officers and employees of Sony. The code of ethics is available at:

https://www.sony.com/en/SonyInfo/csr_report/compliance/code_of_conduct_En.pdf

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Item 16C. Principal Accountant Fees and Services

Audit and Non-Audit Fees

The following table presents fees for audit and other services rendered by PricewaterhouseCoopers for the fiscal years ended March 31, 2024 and 2025.


	Fiscal year ended March 31
	2024		2025
	Yen in millions
Audit Fees (1)		5,693		6,265
Audit-Related Fees (2)		254		583
Tax Fees (3)		19		—
All Other Fees (4)		47		93

		6,013		6,941

(1)	Audit Fees consist of fees for the annual audit services engagement and other audit services, which are those services that only the external auditor can provide.

(2)	Audit-Related Fees consist of fees billed for assurance and related services, and audit services relating to benefit plans, business acquisitions and dispositions.

(3)	Tax fees primarily consist of fees for tax advice.

(4)	All Other Fees consist of fees primarily for services rendered with respect to advisory services.

Audit Committee’s Pre-Approval Policies and Procedures

Consistent with the SEC rules regarding auditor independence, Sony Group Corporation’s Audit Committee is responsible for appointing, reviewing and setting compensation, retaining, and overseeing the work of Sony’s independent auditor, so that the auditor’s independence will not be impaired. The Audit Committee established a formal policy requiring pre-approval of all audit and permissible non-audit services provided by the independent auditor to Sony Group Corporation or any of its subsidiaries. The Audit Committee periodically reviews this policy with due regard for compliance with laws and regulations of host countries where Sony Group Corporation is listed.

Prior to the engagement of the independent auditor for the following fiscal year’s audit, management in charge of accounting or other relevant areas (“Accounting Management”) submits an application form to the Audit Committee for comprehensive pre-approval of all recurring services expected to be rendered during that year, other than services that are classified as “Tax” related services (“Tax Services”). In order to obtain comprehensive pre-approval, Accounting Management must designate in which of two categories (Audit and Non-Audit) the services will be classified as well as fees expected, both for each category in the aggregate and for each individual service, and detailed back-up information regarding each service to the extent possible to ensure that the Audit Committee knows precisely what particular service and the expected fees it is being asked to pre-approve and that the scope of any service or the expected fees approved is unambiguous. Any additional services not within the scope of comprehensive pre-approval and Tax Services require the Audit Committee’s separate pre-approval on an individual basis. The Audit Committee approves, if necessary, any changes in terms, conditions and fees resulting from changes in the scope of services to be provided or from other circumstances, with respect to both services that are subject to comprehensive and individual pre-approval. The Audit Committee or its designee establishes procedures to assure that the independent auditor is aware in a timely manner of the services that have been pre-approved.

Item 16D.

Exemptions from the Listing Standards for Audit Committees

Not Applicable

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Item 16E.

Purchases of Equity Securities by the Issuer and Affiliated Purchasers

The following table sets out information concerning purchases made by Sony Group Corporation during the fiscal year ended March 31, 2025.


Period	(a) Total number of shares purchased^*1		(b) Average price paid per share (yen)^*1		(c) Total number of shares purchased as part of publicly announced plans or programs^*1,2,3,4,5,6		(d) Maximum number of shares that may yet be purchased under the plans or programs^*1,2,3,4,5,6
April 1 — 30, 2024		2,871,655		2,609.14		2,862,000		N/A
May 1 — 31, 2024		1,621,795		2,506.31		1,614,000		146,629,000
June 1 — 30, 2024		15,164,675		2,617.77		15,160,500		133,225,500
July 1 — 31, 2024		17,311,295		2,862.90		17,297,000		114,419,500
August 1 — 31, 2024		24,183,555		2,536.50		24,175,500		90,671,500
September 1 — 30, 2024		15,105,140		2,644.79		15,101,000		76,652,000
October 1 — 31, 2024		13,886,265		2,764.49		13,884,400		61,243,600
November 1 — 30, 2024		6,055,705		2,825.18		6,054,900		N/A
December 1 — 31, 2024		1,686		3,279.63		N/A		N/A
January 1 — 31, 2025		924		3,275.26		N/A		N/A
February 1 — 28, 2025		1,265,270		3,783.09		1,264,500		28,251,000
March 1 — 31, 2025		6,452,060		3,587.88		6,451,300		22,284,200

Total		103,920,025		2,941.08		103,865,100		N/A

Column (a) represents the combined total number of shares purchased during the fiscal year ended March 31, 2025, including both fractional shares purchased from fractional shareholders in accordance with the Companies Act, and shares purchased in accordance with publicly announced plans, as shown in column (c).

Under the Companies Act, a holder of shares constituting less than one full unit may require Sony Group Corporation to purchase such shares at their market value (Refer to “Memorandum and Articles of Association — Capital stock — (Unit share system)” in “Item 10. Additional Information”). During the fiscal year ended March 31, 2025, Sony Group Corporation purchased 54,925 shares of Common Stock^*1 for a total purchase price of 150,432,987 yen upon such requests from holders of shares constituting less than one full unit.

*1 Sony conducted a five-for-one stock split of Common Stock effective October 1, 2024, with a record date of September 30, 2024. The above figures for total number of shares purchased, average price paid per share, and maximum number of shares that may yet be purchased under the plans or programs are calculated based on the assumption that the stock split was conducted at the beginning of the fiscal year ended March 31, 2024.

*2 Sony approved on May 14, 2024 by resolution of the Board of Directors the establishment of the following facility for the repurchase of Common Stock pursuant to the Companies Act and Sony Group Corporation’s Articles of Incorporation.

•

Total number of shares for repurchase: 150 million shares (maximum) (2.46% of total number of shares issued and outstanding (excluding treasury stock))

•

Total purchase price for repurchase of shares: 250 billion yen (maximum)

•

Period of repurchase: From May 15, 2024 to May 14, 2025

*3 The repurchase of shares of Common Stock based on the approval at the Board of Directors set forth in Note 2 above was completed. The details are as follows.

•

Total number of shares repurchased: 93,287,300 shares

•

Total purchase price for repurchased shares: 249,999,954,148 yen

•

Period of repurchase: May 15, 2024 to November 25, 2024

*4 Sony approved on February 13, 2025 by resolution of the Board of Directors the establishment of the following facility for the repurchase of Common Stock pursuant to the Companies Act and Sony Group Corporation’s Articles of Incorporation.

•

Total number of shares for repurchase: 30 million shares (maximum) (0.50% of total number of shares issued and outstanding (excluding treasury stock))

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Item 16G.

Corporate Governance

The table below discloses the significant ways in which Sony’s corporate governance practices differ from those required for U.S. companies under the listing standards of the NYSE. As a foreign private issuer listed on the NYSE, Sony Group Corporation is exempt from most of the exchange’s corporate governance standards requirements. For further information on Sony’s corporate governance practices and history, refer to “Board Practices” in “Item 6. Directors, Senior Management and Employees.”


NYSE Standards		Sony’s Corporate Governance Practices
Board Independence. A majority of board directors must be independent.		Sony Group Corporation has adopted the “Company with Three Committees” corporate governance system under the Companies Act. Sony Group Corporation’s Board Charter requires its board to consist of between 8 to 14 directors. The Companies Act does not require Sony Group Corporation to have a majority of “independent” (in the meaning given by the NYSE Corporate Governance Standards) directors on its board; rather, it requires Sony Group Corporation to have a majority of “outside” directors (the definition of the term “outside” director is summarized below) on each of three statutory committees (the Nominating Committee, the Audit Committee and the Compensation Committee).

Director Independence. A director is not independent if such director is (i) a person who the board determines has a material direct or indirect relationship with the company, its parent or a consolidated subsidiary; (ii) a person who, within the last three years, has been an employee of the company or has an immediate family member of an executive officer of the company, its parent or a consolidated subsidiary; (iii) a person who had received, or whose immediate family member had received, during any 12-month period within the last three years, more than 120,000 U.S. dollars per year in direct compensation from the company, its parent or a consolidated subsidiary, other than director and committee fees or deferred compensation for prior services (provided such compensation is not contingent in any way on continued service); (iv) (A) a person who is, or whose immediate family member is, a current partner or employee of a firm that is the company’s internal or external auditor; (B) a person whose immediate family member is a partner of such a firm; (C) a person who has an immediate family member who is a current employee of such a firm and who personally participates in the firm’s audit, assurance or tax compliance (but not tax planning) practice; or (D) a person who was, or has an immediate family member who was, within the last three years, a partner or employee of such a firm and personally worked on the listed company’s audit within that time; (v) a person who is, or whose immediate family member is, or has been within the last three years, employed as		“Outside” director is defined in the Companies Act as a person who satisfies all of the requirements (i) through (v) below: (i) a person who is not a Director of Sony Group Corporation or any of its subsidiaries engaged in the business operations of Sony Group Corporation or such subsidiaries, as the case may be, or a Corporate Executive Officer or general manager or other employee (“Group Executive Director, etc.”) of Sony Group Corporation or any of its subsidiaries and who has not been a Group Executive Director, etc. of Sony Group Corporation or any of its subsidiaries for ten years prior to assuming his/her office; (ii) if a person who has been a director, accounting counselor (if the accounting counselor is a juridical person, a member who is in charge of the affairs), or corporate auditor of Sony Group Corporation or any of its subsidiaries (excluding a person who has been a Group Executive Director, etc.) at the time within ten years prior to assuming his/her office, a person who has not been a Group Executive Director, etc. of Sony Group Corporation or any of its subsidiaries for ten years prior to assuming his/her office as a director, an accounting counselor, or a corporate auditor; (iii) a person who is not a director or a Corporate Executive Officer or general manager or other employee of a parent company or any entity which controls the management of Sony Group Corporation; (iv) a person who is not a Group Executive Director, etc. of a direct/indirect subsidiary of Sony Group Corporation or any entity the management of which is directly or indirectly controlled by Sony Group Corporation; and (v) a person who is not a spouse or relative within the second degree of kinship of a Director or a Corporate

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NYSE Standards		Sony’s Corporate Governance Practices
an executive officer of another company where any of the listed company’s present executive officers at the same time serves or served on that company’s compensation committee; or (vi) an executive officer or employee of a company, or has an immediate family member of an executive officer of a company, that makes payments to, or receives payments from, the listed company, its parent or a consolidated subsidiary for property or services in an amount which, in any of the last three fiscal years, exceeds the greater of 1 million U.S. dollars or 2% of such other company’s consolidated gross revenues		Executive Officer or general manager or other employee of Sony Group Corporation. Under the Companies Act, a director’s status as an “outside” director is unaffected by the director’s compensation, his or her affiliation with business partners, or the board’s affirmative determination of independence. On the other hand, under the Companies Act, a director who has had a career as a management director, corporate executive officer, or other employee of the company, its subsidiaries or other group companies is by definition not an “outside” director. Sony Group Corporation’s Board Charter includes a provision requiring that each “outside” director: (i) Shall not have received directly from Sony Group, during any consecutive 12-month period within the last three years, more than an amount equivalent to 120,000 U.S. dollars, other than Director and committee fees and pension or other forms of deferred compensation for prior service (provided such compensation is not contingent in any way on continued service); and (ii) Shall not be an executive director, a corporate executive officer, a general manager or other employee of any company whose aggregate amount of transactions with Sony Group, in any of the last three fiscal years, exceeds the greater of an amount equivalent to 1,000,000 U.S. dollars, or 2% of the annual consolidated sales of such company.
		In addition, the Securities Listing Regulations of the TSE require Sony Group Corporation to make efforts to have at least one “Independent Director” on the Board of Directors. “Independent Director” is defined in the Securities Listing Regulations of the TSE as an “outside” director who is unlikely to have conflicts of interest with shareholders. According to the guidelines of the TSE, if a person falls in any of the categories listed below, such person, in principle, will be considered to have a conflict of interest with shareholders of the listed company. (1) A person for which the listed company is a major client or a person who executes business of a person for which the listed company is a major client; (2) A major client of the listed company or a person who executes business of a major client of the listed company; (3) A consultant, accounting professional, or legal professional (or, if such consultant, accounting professional, or legal professional is a juridical person, a member of such juridical person) of the listed company who receives a large amount of money or other consideration other than remuneration for directorship/auditorship from such listed company;

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NYSE Standards		Sony’s Corporate Governance Practices
		(4) A person who has fallen in any of categories (1) through (3) listed above until recently; (5) A person who has fallen in any of categories (a) or (b) listed below for ten years prior to assuming his/her office: (a) A person who executes business of a parent company of the listed company or a director who does not execute business of a parent company of the listed company; or (b) A person who executes business of a fellow subsidiary of the listed company.
		(6) A close relative of a person who falls in any of categories (a) through (f) listed below (only if such person is significant): (a) A person who falls in any of (1) through (5) listed above; (b) A person who executes business of a subsidiary of the listed company; (c) A director who does not execute business of a subsidiary of the listed company; (d) A person who executes business of a parent company of the listed company or a director who does not execute business of a parent company of the listed company; (e) A person who executes business of a fellow subsidiary of the listed company; or (f) A person who has fallen in any of categories (b) or (c) listed above or a person who has executed business of the listed company until recently.

		As of the date of this report, 8 of the 10 members of Sony Group Corporation’s Board of Directors are qualified as “outside” directors. In addition, all 8 “outside” directors are qualified and designated as “Independent Directors” under the Securities Listing Regulations of the TSE. It is expected that 9 of the 11 members of new director candidates who will be appointed at the Ordinary General Meeting of Shareholders to be held on June 24, 2025 will each be qualified as “outside” directors, and will also be qualified and designated as “Independent Directors” under the Securities Listing Regulations of the TSE.

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NYSE Standards		Sony’s Corporate Governance Practices

Executive Sessions. Non-management directors must meet in regularly scheduled executive sessions without management. Independent directors should meet alone in an executive session at least once a year.		An “outside” director, as defined under the Companies Act, is equivalent to a “non-management director” under the NYSE rules because an “outside” director does not engage in the execution of business operations of the company. The outside/non-management Directors generally meet several times a year without management, though neither the Companies Act nor Sony Group Corporation’s Board Charter requires non-management Directors to meet regularly without management and there is no requirement for the outside Directors to meet alone in an executive session at least once a year.


Nominating/Corporate Governance Committee. A nominating/corporate governance committee of independent directors is required. The committee must have a charter that addresses the purpose, responsibilities (including development of corporate governance guidelines) and annual performance evaluation of the committee.		Sony Group Corporation’s Nominating Committee shall consist of at least three Directors. Under the Companies Act, the Committee is responsible for determining the contents of proposals regarding the appointment and dismissal of Directors to be submitted for approval to the shareholders’ meeting. Unlike listed U.S. companies under NYSE rules, it is not responsible for developing governance guidelines or overseeing the evaluation of the board and management. Under the Companies Act, a majority of its members shall be “outside” directors, as defined under the Companies Act.


Compensation Committee. A compensation committee of independent directors is required. The committee must have a charter that addresses the purpose, responsibilities and annual performance evaluation of the committee. In addition, in accordance with the SEC rules adopted pursuant to Section 952 of the Dodd-Frank Act, NYSE listing standards expanded the factors relevant in determining whether a committee member has a relationship to the company that will materially affect that member’s duties to the compensation committee and provided compensation committees the authority to engage compensation advisers. Additionally, the committee may obtain or retain the advice of a compensation adviser only after taking into consideration all factors relevant to determining that adviser’s independence from management, unless the adviser’s role is (i) limited to consulting on a generally applicable broad-based plan or (ii) is providing information that is not customized for the issuer or is not customized by the adviser and about which the adviser does not provide advice.		Sony Group Corporation’s Compensation Committee shall consist of at least three Directors. Under the Companies Act, a majority of its members shall be “outside” directors, as defined under the Companies Act. Sony Group Corporation’s Board Charter prohibits the CEO, the COO and/or the CFO (or a person at any equivalent position) from serving on the Compensation Committee. Under the Companies Act, the Committee is responsible for, among others, determining the compensation of each director and Corporate Executive Officer.

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NYSE Standards		Sony’s Corporate Governance Practices

Audit Committee. An audit committee satisfying the independence and other requirements of Rule 10A-3 under the Exchange Act is required. The committee must have at least three members. All members must be independent. The committee must have a charter addressing the committee’s purpose, an annual performance evaluation of the committee and the duties and responsibilities of the committee.		Sony Group Corporation’s Audit Committee shall consist of at least three Directors. Under the Companies Act, a majority of its members shall be “outside” Directors, as defined under the Companies Act. In addition, pursuant to the Companies Act, no member of the Committee shall be a Director of the company or any of its subsidiaries who is engaged in the business operations of the company or such subsidiary, as the case may be, or a corporate executive officer of the company or any of its subsidiaries, or an accounting counselor, general manager or other employee of any of such subsidiaries. Sony Group Corporation’s Board Charter also requires each member of the Audit Committee to meet the independence requirements of the applicable U.S. securities laws and regulations, and requires at least one member to meet the audit committee financial expert requirements. As of the date of this report, all the members of Sony Group Corporation’s Audit Committee are also “independent” as defined in the NYSE Corporate Governance Standards, and one member of the Committee is qualified as an audit committee financial expert. It is expected that all the members of the Audit Committee will be determined to be “independent” as defined in the NYSE Corporate Governance Standards, and two members of the Committee will be determined to qualify as audit committee financial experts, at the meeting of the Board of Directors immediately following the closing of the Ordinary General Meeting of Shareholders on June 24, 2025.


Equity Compensation Plans. Equity compensation plans require shareholder approval, subject to limited exemptions.		Under the Companies Act, if Sony Group Corporation wishes to adopt an equity compensation plan under which stock acquisition rights or shares of common stock are granted on specially favorable conditions, except where all of its shareholders are granted rights to subscribe for such stock acquisition rights/shares of common stock or such stock acquisition rights/shares of common stock are gratuitously allocated to all of its shareholders, each on a pro rata basis, then Sony Group Corporation must obtain shareholder approval by a “special resolution” at a General Meeting of Shareholders, where the quorum is one-third of the total number of voting rights of all of its shareholders and the approval by at least two-thirds of the number of voting rights of all the shareholders represented at the meeting is required under Sony Group Corporation’s Articles of Incorporation. On the other hand, under the Companies Act, if Sony Group Corporation wishes to adopt an equity compensation plan under which stock acquisition rights or shares of common stock are granted against fair value thereof, such plan can be adopted by the resolution of Sony Group Corporation’s Compensation Committee, and grants of stock acquisition rights or shares pursuant to such plan may be decided by a resolution of the Board of Directors or a determination by a Corporate Executive Officer to whom the authority to make such determination has been delegated, and no shareholder approval is required.

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Item 16J.

Insider Trading Policies

Sony has adopted insider trading policies and procedures governing the purchase, sale, and other dispositions of its securities by directors, senior management, and employees that are reasonably designed to promote compliance with applicable insider trading laws, rules and regulations, and any listing standards applicable to Sony Group Corporation.

Item 16K.

Cybersecurity

Sony recognizes the importance of cybersecurity, both in achieving financial success for the company and in maintaining the trust of its stakeholders, which include shareholders, customers, employees, suppliers, and business partners.

Risk Management & Strategy

As part of Sony’s risk management framework, Sony maintains and continuously strives to enhance its information security program. This program covers the entire Sony Group and is implemented in accordance with policies and standards, which include cybersecurity risk management and governance frameworks, and guidance, developed by Sony and based on globally recognized industry best practices and standards. The policies define information security responsibilities within Sony and outline certain actions and procedures that officers and employees are required to follow, including with respect to the assessment and management of cybersecurity risks to Sony, including its systems and information. The policies, standards, and guidance are structured to help Sony respond effectively to the dynamically changing environment of cybersecurity threats, cybersecurity risks, technologies, laws, and regulations. Sony modifies its policies, standards, and guidance as needed to adjust to this changing environment.

If Sony’s cybersecurity risk management controls are overcome by a cyber attacker, Sony follows an incident response plan and escalation process as defined in the information security program. The response process includes an assessment of whether an incident may be material, and this assessment is adjusted as necessary as additional facts become known during the incident response. Any incident that is assessed as potentially material is escalated to Sony’s senior management and is reported to the two outside Directors in charge of information security on Sony Group Corporation’s Board of Directors (the “Board”).

In the fiscal year ended March 31, 2025, Sony was the victim of several cyberattacks. None of these incidents was assessed to be material, nor did they materially affect Sony’s business strategy, the results of its operations, or its financial condition. However, there can be no guarantee that this will be the case with a future incident. For more information about risks Sony faces from cyberattacks, please refer to “Sony’s brand image, reputation and business may be harmed and Sony may be subject to legal claims if there is a breach or other compromise of Sony’s information security or that of its third-party service providers or business partners.” included in “Risk Factors” in “Item 3.

Key Information

.”

Sony has also established policies and processes to help identify and manage cybersecurity risks associated with third parties, including companies that provide services and products to Sony, and companies that hold Sony information or have electronic access to Sony systems or information. The policies and processes include assessment of the cybersecurity and privacy programs at certain third parties, the use of this risk information when making contracting decisions, and the use of contract language that includes cybersecurity and privacy requirements.

Most of the information security program is implemented by Sony employees. Sony also engages the services of external providers to enhance and support its information security program, including leading cyber response specialists as may be needed, and consultants to evaluate and help improve organization, policies, and other aspects of the program.

- 12

Structure and Governance of Sony’s Information Security Program

Sony’s information security program is under the responsibility of a Senior Executive, specifically, the Sony Group Chief Digital Officer (“CDO”), and the Sony Group Global Information Security Officer (“GISO”), who reports to the CDO.

Under the leadership of the CDO and the GISO, and supported by a global information security team that works across the entire Sony Group, Sony implements the cybersecurity risk management and governance frameworks that are described in its policies and standards. Each business segment of Sony has a senior information security leader, called an Executive Information Security Officer (“EISO”), who reports both to the GISO and to the senior management of the particular business unit. The EISOs and their associated teams are responsible for ensuring implementation and operation of the information security program in a way that is tailored to each specific business unit, including as it relates to the assessment and management of cybersecurity risks. The GISO coordinates with the EISOs to monitor the implementation of Sony’s cybersecurity policies and standards.

The current CDO has experience in launching and overseeing the development, technical operation, and business operations of large-scale network products and services at Sony, including overseeing implementation and operation of the information security program. The current GISO has more than 40 years of experience in cybersecurity. Before joining Sony, the GISO served as Deputy Chief Information Officer for Cybersecurity of the U.S. Department of Defense (the Department’s equivalent of a Chief Information Security Officer) and before that, as the Chief Information Assurance Executive at the Defense Information Systems Agency (DISA), an agency of the U.S. Department of Defense.

The Sony Group CEO receives regular reports from the CDO and/or the GISO, additional reports as needed during the response to a cyber incident, and briefings from the CDO and GISO at various times during the year. The head of each Sony business segment also receives regular briefings from the CDO and the GISO, as well as reports and briefings from the business segment EISO.

The Board oversees Sony’s information security risks, significant incidents, policies and key initiatives, including in the following ways. The full Board receives reports from the outside Directors in charge of information security as well as briefings several times a year from the CDO and the GISO, and also engages in discussion of these matters.

•

As of the date of this report, the following two outside Directors oversee Sony’s information security efforts, via monthly meetings and

ad-hoc

incident response communications with the CDO and GISO.(*)

Joseph A. Kraft Jr., outside Director, serves simultaneously as the Chair of the Audit Committee.

Neil Hunt, outside Director, has extensive experience in the development of large-scale information systems, including experience with the management of cybersecurity risks.

* Sony Group Corporation has proposed “To elect 11 Directors” as an agenda item for the Ordinary General Meeting of Shareholders to be held on June 24, 2025. If the proposal is approved, three (3) outside Directors in charge of information security (the current outside Directors Joseph A. Kraft Jr. and Neil Hunt, and a new outside Director, Ms. Nora Denzel) will be appointed at the Board of Directors meeting to be held after the Ordinary General Meeting of Shareholders.

Ms. Nora Denzel has wide experience in information technology cultivated at several Silicon Valley-based companies, including experience with the management of cybersecurity risks.

Item 17.

Financial Statements

Not Applicable

Item 18.

Financial Statements

Refer to the consolidated financial statements.

- 126 -

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

SONY GROUP CORPORATION AND CONSOLIDATED SUBSIDIARIES


	Page

Report of Independent Registered Public Accounting Firm (PCAOB ID 2743)		F-2
Consolidated Statements of Financial Position		F- 5
Consolidated Statements of Income		F- 7
Consolidated Statements of Comprehensive Income		F- 8
Consolidated Statements of Changes in Stockholders’ Equity		F- 9
Consolidated Statements of Cash Flows		F- 10
Index to Notes to Consolidated Financial Statements		F- 12
Notes to Consolidated Financial Statements		F- 13

All other schedules are omitted because they are not applicable or the required information is shown in the financial statements or the notes thereto.

F-1

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders of Sony Group Corporation (Sony Group Kabushiki Kaisha)

Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying consolidated statements of financial position of Sony Group Corporation and its subsidiaries (the “Company”) as of March 31, 2025 and 2024, and the related consolidated statements of income, comprehensive income, changes in stockholders’ equity and cash flows for each of the three years in the period ended March 31, 2025, including the related notes (collectively referred to as the “consolidated financial statements”). We also have audited the Company’s internal control over financial reporting as of March 31, 2025, based on criteria established in

Internal Control - Integrated Framework

(2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of March 31, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended March 31, 2025 in conformity with IFRS Accounting Standards as issued by the International Accounting Standards Board. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of March 31, 2025, based on criteria established in

Internal Control - Integrated Framework

(2013) issued by the COSO.

Change in Accounting Principle

As discussed in Note 13 to the consolidated financial statements, the Company changed the manner in which it accounts for insurance contracts as of April 1, 2023.

Basis for Opinions

The Company’s management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Annual Report on Internal Control over Financial Reporting appearing under Item 15(b). Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company’s internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

Subsequent Event

As discussed in Note 33 to the consolidated financial statements, on May 14, 2025, the Company decided to submit a resolution for the execution of a partial spin-off of Sony Financial Group Inc., a wholly-owned subsidiary of the Company, as of October 1, 2025, to the Board in early September 2025.

F-2

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Critical Audit Matters

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Significant assumptions used in the valuation

of insurance contract liabilities not measured under the premium allocation approach (“PAA”)

As described in Notes 3 and 13 to the consolidated financial statements, insurance contracts that the Company underwrites in the insurance business included in the Financial Services segment, mainly consist of whole life, term life, disease and health insurance, variable life insurance, and individual variable annuity contracts. The insurance contract liabilities related to insurance contracts are recognized in the consolidated statements of financial position. The carrying amount of a group of insurance contracts at each reporting date is the sum of the liability for incurred claims and the liability for remaining coverage. For insurance contracts not measured under the PAA, the liability for remaining coverage comprises fulfillment cash flows and contractual service margin (“CSM”). The fulfillment cash flows are measured at the reporting date using current estimates of future cash flows, discount rates, and risk adjustment for non-financial risk. The mortality rates, morbidity rates, lapse and surrender rates, and discount rates, which are used to measure the estimates of the present value of future cash flows, are significant assumptions for measuring insurance contract liabilities not measured under the PAA. As of March 31, 2025, the insurance contract liabilities not measured under the PAA were 12,745,304 million yen, of which estimates of present value of future cash flows represent 10,413,511 million yen.

The principal considerations for our determination that performing procedures relating to the significant assumptions used in the valuation of the insurance contract liabilities not measured under the PAA is a critical audit matter are (i) management’s significant judgment involved in developing the aforementioned significant assumptions, (ii) which in turn led to a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating audit evidence related to management’s significant assumptions, and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to the valuation of the insurance contract liabilities not measured under the PAA, including controls over the determination of significant assumptions of mortality rates, morbidity rates, lapse and surrender rates, and discount rates, and controls over the completeness and accuracy of data used by management to develop the significant assumptions, such as past claims, lapses and surrenders, and discount rates. These procedures also included, among others, testing the completeness and accuracy of data used by management to develop the significant assumptions. Professionals with specialized skill and knowledge were used to assist in evaluating the reasonableness of the methodology used by management to determine their significant

F-3

assumptions and the reasonableness of the aforementioned significant assumptions used in the valuation of the insurance contract liabilities not measured under the PAA based on industry knowledge and the Company’s historical experience.

/s/

PricewaterhouseCoopers Japan LLC

Tokyo, Japan

June 20, 2025

We have served as the Company’s auditor since 2006.

F-

SONY GROUP CORPORATION AND CONSOLIDATED SUBSIDIARIES

Consolidated Statements of Changes in Stockholders’ Equity


			Yen in millions
	Note		Common stock		Additional paid-in capital			Retained earnings			Accumulated other comprehensive income			Treasury stock, at cost			Sony Group Corporation’s stockholders’ equity			Noncontrolling interests			Total equity
Balance at April 1, 2022				880,365		1,461,053			4,170,417			(677,989	)		(180,042	)		5,653,804			52,778			5,706,582
Comprehensive income:
Net income									1,005,277									1,005,277			6,496			1,011,773
Other comprehensive income, net of tax		20										82,012						82,012			2,750			84,762
Total comprehensive income									1,005,277			82,012						1,087,289			9,246			1,096,535
Transfer to retained earnings									18,593			(18,593	)					-						-
Transactions with stockholders and other:
Exercise of stock acquisition rights						(14	)		(1,352	)					10,364			8,998						8,998
Conversion of convertible bonds						(2,588	)		(13,858	)					42,993			26,547						26,547
Compensation expenses related to stock-based compensation transactions						11,064												11,064						11,064
Dividends declared (70.00 yen per share)									(86,635	)								(86,635	)		(5,980	)		(92,615	)
Purchase of treasury stock		20													(99,248	)		(99,248	)					(99,248	)
Reissuance of treasury stock						1,242									2,426			3,668						3,668
Transactions with noncontrolling interests shareholders and other						(6,950	)											(6,950	)		2,569			(4,381	)
Balance at March 31, 2023				880,365		1,463,807			5,092,442			(614,570	)		(223,507	)		6,598,537			58,613			6,657,150

			Yen in millions
	Note		Common stock		Additional paid-in capital			Retained earnings			Accumulated other comprehensive income			Treasury stock, at cost			Sony Group Corporation’s stockholders’ equity			Noncontrolling interests			Total equity
Balance at April 1, 2023				880,365		1,463,807			5,092,442			(614,570	)		(223,507	)		6,598,537			58,613			6,657,150
Comprehensive income:
Net income									970,573									970,573			9,921			980,494
Other comprehensive income, net of tax		20										276,728						276,728			2,916			279,644
Total comprehensive income									970,573			276,728						1,247,301			12,837			1,260,138
Transfer to retained earnings									38,221			(38,221	)					-						-
Transactions with stockholders and other:
Stock issued under stock-based compensation transactions				992		(1,939	)		(144	)					19,257			18,166						18,166
Compensation expenses related to stock-based compensation transactions						13,956												13,956						13,956
Dividends declared (80.00 yen per share)									(98,685	)								(98,685	)		(5,786	)		(104,471	)
Purchase of treasury stock		20													(202,974	)		(202,974	)					(202,974	)
Reissuance of treasury stock						1,786									3,290			5,076						5,076
Transactions with noncontrolling interests shareholders and other		27				5,800												5,800			103,264			109,064
Balance at March 31, 2024				881,357		1,483,410			6,002,407			(376,063	)		(403,934	)		7,587,177			168,928			7,756,105

			Yen in millions
	Note		Common stock		Additional paid-in capital			Retained earnings			Accumulated other comprehensive income			Treasury stock, at cost			Sony Group Corporation’s stockholders’ equity			Noncontrolling interests			Total equity
Balance at April 1, 2024				881,357		1,483,410			6,002,407			(376,063	)		(403,934	)		7,587,177			168,928			7,756,105
Comprehensive income:
Net income									1,141,600									1,141,600			18,287			1,159,887
Other comprehensive income, net of tax		20										(200,570	)					(200,570	)		(87	)		(200,657	)
Total comprehensive income									1,141,600			(200,570	)					941,030			18,200			959,230
Transfer to retained earnings									(10,186	)		10,186						-						-
Transactions with stockholders and other:
Stock issued under stock-based compensation transactions						3,008			(1,179	)					49,608			51,437						51,437
Compensation expenses related to stock-based compensation transactions						8,575												8,575						8,575
Dividends declared (95.00 yen per share)									(115,312	)								(115,312	)		(7,704	)		(123,016	)
Purchase of treasury stock		20													(285,548	)		(285,548	)					(285,548	)
Reissuance of treasury stock						1									4			5						5
Cancellation of treasury stock		20				(3,848	)		(339,162	)					343,010			-						-
Transactions with noncontrolling interests shareholders and other		27				(7,619	)											(7,619	)		150,982			143,363
Balance at March 31, 2025				881,357		1,483,527			6,678,168			(566,447	)		(296,860	)		8,179,745			330,406			8,510,151

The accompanying notes are an integral part of these statements.

F-

SONY GROUP CORPORATION AND CONSOLIDATED SUBSIDIARIES

Notes to Consolidated Financial Statements

Sony Group Corporation and Consolidated Subsidiaries

1.	Reporting entity

Sony Group Corporation is a public company domiciled in Japan. Sony Group Corporation and its consolidated subsidiaries (hereinafter collectively referred to as “Sony” or “Sony Group”) are engaged in the development, design, production, manufacture, offer and sale of various kinds of electronic equipment, instruments, and devices for consumer, professional and industrial markets such as network services, home gaming consoles and software, televisions, audio and video recorders and players, still and video cameras, smartphones, and image sensors. Sony’s primary manufacturing facilities are located in Asia including Japan. Sony also utilizes third-party contract manufacturers for certain products. Sony’s products and services are marketed throughout the world by sales subsidiaries and unaffiliated distributors as well as direct sales and offers via the internet. Sony is engaged in the development, production, manufacture, and distribution of recorded music, artists’ live performance and merchandising, the management and licensing of the words and music of songs, and the production and distribution of animation titles and game applications. Sony is also engaged in the production, acquisition and distribution of motion pictures and television programming and the operation of television networks and

direct-to-consumer

(“DTC”) streaming services. Further, Sony is also engaged in various financial services businesses, including life and

non-life

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

2.	Basis of preparation

Compliance with International Financial Reporting Standards

The consolidated financial statements of Sony have been prepared in accordance with IFRS

Accounting Standards as issued by the International Accounting Standards Board (“IFRS Accounting Standards”). The term IFRS Accounting Standards also includes IAS

Standards, SIC

Interpretations and IFRIC

Interpretations.

Approval of consolidated financial statements

The consolidated financial statements were approved by Hiroki Totoki, President and Chief Executive Officer and Representative Corporate Executive Officer, and Lin Tao, Chief Financial Officer and Corporate Executive Officer, on June 20, 2025.

Functional currency and presentation currency

The consolidated financial statements have been presented in Japanese yen, which is the functional currency of Sony Group Corporation. All financial information presented in Japanese yen has been rounded to the nearest million Japanese yen.

Use of estimates and judgments

The preparation of the consolidated financial statements in accordance with IFRS Accounting Standards requires management to make judgments, estimates and assumptions that affect the application of accounting policies, the reported amounts of assets, liabilities, revenues and expenses, and disclosure of contingent assets and liabilities. Actual results could differ from these estimates and assumptions. These estimates and assumptions are reviewed on a continuous basis. Changes in these accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected.

Information about judgments that have been made in the process of applying accounting policies that have significant effects on the amounts reported in the consolidated financial statements is as follows:

•

Classification of financial instruments (Note 3 I. Material accounting policies (5))

•

Measurement of insurance contract liabilities (Note 3 I. Material accounting policies (11) and Note 13)

Information about accounting estimates and assumptions that have significant effects on the amounts reported in the consolidated financial statements is as follows:

•

Fair value of financial instruments (Note 3 I. Material accounting policies (5) and (15) and Note 5)

•

Impairment of

non-financial

assets (Note 3 I. Material accounting policies (10) and Note 12)

•

Measurement of insurance contract liabilities (Note 3 I. Material accounting policies (11) and Note 13)

•

Measurement of film costs and participation and residual liabilities in the Pictures segment (Note 3 I. Material accounting policies (9) and (12), Note 11, and Note 18)

•

Recoverability of deferred tax assets (Note 3 I. Material accounting policies (24) and Note 25)

•

Measurement of fair value of assets acquired and liabilities assumed in business combinations (Note 3 I. Material accounting policies (2) and Note 30)

F-1

SONY GROUP CORPORATION AND CONSOLIDATED SUBSIDIARIES

Change in accounting policies

Sony adopted the following accounting standards from the fiscal year ended March 31, 2025:

Amendments to IAS 1 “Presentation of Financial Statements”

In January 2020, the International Accounting Standards Board (“IASB”) issued “Classification of Liabilities as Current or

Non-current

(Amendments to IAS 1).” The amendments clarify the right of a company to defer settlement of a liability, which is one of the existing requirements when classifying a liability to current or

non-current.

In addition, in October 2022, the IASB issued “A

Non-current

Liability with Covenants (Amendments to IAS 1).” The amendments require companies to disclose information about covenants in order for investors to understand the risk that such

non-current

debt with covenants could become repayable within twelve months. Both of these amendments were effective for Sony as of April 1, 2024. The adoption of these amendments has no material impact on Sony’s results of operations and financial position.

Amendments to IAS 7 “Statement of Cash Flows” and IFRS 7 “Financial Instruments: Disclosures”

In May 2023, the IASB issued “Supplier Finance Arrangements (Amendments to IAS 7 and IFRS 7).” These amendments require companies to disclose information about supplier finance arrangements and were effective for Sony as of April 1, 2024. Since the adoption of these amendments only affects disclosures, they have no impact on Sony’s results of operations and financial position.

Change in presentation

Consolidated Statements of Change in Stockholders’ Equity

The presentation of “Exercise of stock acquisition rights and other” and “Stock-based compensation” has been changed to “Stock issued under stock-based compensation transactions” and “Compensation expenses related to stock-based compensation transactions,” respectively, from the fiscal year ended March 31, 2025.

F-14

SONY GROUP CORPORATION AND CONSOLIDATED SUBSIDIARIES

3.	Summary of material accounting policies

I.	Material accounting policies

(1)	Basis of consolidation -

Subsidiaries

A subsidiary is an entity controlled by Sony Group Corporation. Control is obtained when Sony Group Corporation is exposed, or has rights to variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity.

The financial statements of subsidiaries are included in the consolidated financial statements of Sony from the date on which control is obtained until the date on which control is lost.

All intercompany transactions and balances are eliminated in the preparation of the consolidated financial statements.

If any accounting policies applied by a subsidiary differ from those applied by Sony, adjustments are made to the financial statements of the subsidiary as necessary.

Any changes in ownership interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions. The difference between the amount by which the

non-controlling

interests are adjusted and the fair value of the consideration is directly recognized in equity and attributed to the owners of Sony. When control over a subsidiary is lost, the investment retained in the former subsidiary is remeasured at fair value as of the date when control is lost, and any gain or loss resulting from the loss of control is recognized in profit or loss.

ii)

Associates and joint ventures

An associate is an entity over which Sony has significant influence, but does not have control or joint control, in terms of financial and operating policies.

A joint venture is an investee whereby two or more parties including Sony have the rights to the net assets of the investee in accordance with the terms of the joint arrangement. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require the unanimous consent of the parties sharing control.

Investments in associates and joint ventures are accounted for using the equity method from the date on which significant influence or joint control is obtained until the date on which significant influence or joint control is lost. Under the equity method, investments in associates and joint ventures are recognized at cost, adjusted for Sony’s share of the profit or loss and other comprehensive income of the associates and joint ventures from the date on which Sony obtains significant influence or joint control to the date on which Sony loses such significant influence or joint control. Sony recognizes its share of profit or loss of the investees, net of income taxes after the elimination of unrealized intercompany profits, in the consolidated operating income (loss) to the extent of Sony’s interest in these entities.

For investments accounted for using the equity method, the carrying amount of each investment is tested for impairment as a single asset, when there is objective evidence that the investments may be impaired.

If any accounting policies applied by an associate or a joint venture differ from those applied by Sony, adjustments are made to the financial statements of the associate or the joint venture as necessary.

When an investment ceases to be an associate or a joint venture and the use of the equity method is discontinued, any gain or loss arising from discontinuation of the equity method is recognized in profit or loss.

iii)

Joint operations

A joint operation is a joint arrangement whereby two or more parties including Sony have the rights to the assets, and obligations for the liabilities, relating to the investee in accordance with the terms of the joint arrangement.

Sony recognizes its share of the assets, liabilities, revenue and expenses related to joint operations.

iv)

Structured entities

A structured entity is an entity designed so that voting or similar rights are not the dominant factor in deciding who controls the entity.

Sony has control and, therefore, consolidates a structured entity when Sony has exposure or rights to variable returns and has the ability to use its power over the structured entity to affect returns.

F-15

SONY GROUP CORPORATION AND CONSOLIDATED SUBSIDIARIES

(2)	Business combinations -

Sony recognizes identifiable assets acquired and the liabilities assumed of an acquiree at their fair values at the acquisition date with limited exceptions.

Sony recognizes goodwill when the aggregate of the consideration transferred in a business combination, the amount of any

non-controlling

interests in the acquiree and the fair value of Sony’s previously held equity interest in the acquiree exceeds the net amount of the identifiable assets and liabilities of the acquiree at the acquisition date. If the aggregate above is less than the net amount of identifiable assets and liabilities, the difference is recognized as a gain. The consideration transferred is calculated as the sum of the fair values of the assets transferred, liabilities assumed and equity interest issued.

Non-controlling

interests are measured either at fair value or based on the

non-controlling

interests’ proportionate share of the acquiree’s net identifiable assets for each business combination transaction.

Acquisition-related costs are recognized as expenses in the period they are incurred.

(3)	Foreign currency translation -

Foreign currency transactions

Foreign currency transactions are translated at the exchange rates prevailing at the transaction date or rates that approximate such rates. Monetary assets and liabilities denominated in foreign currencies are translated into the functional currency using the exchange rate at the end of the period. Foreign exchange gains and losses resulting from translation and settlement are generally recognized in profit or loss. They are deferred in other comprehensive income if they relate to qualifying cash flow hedges.

ii)

Foreign operations

Assets and liabilities of foreign operations such as overseas subsidiaries and associates are translated using the exchange rates at the end of the period, and revenue and expense items are translated using the average exchange rates for the period unless the exchange rates fluctuate significantly. Exchange differences arising from the translation are recognized in other comprehensive income.

On the disposal of a foreign operation, the cumulative amount of exchange differences relating to that foreign operation is reclassified to profit or loss.

(4)	Cash and cash equivalents -

Cash and cash equivalents include all highly liquid investments, with original maturities of three months or less, that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

(5)	Financial instruments -

Sony recognizes a financial instrument as a financial asset or a financial liability when Sony becomes party to the contractual provisions of the instrument.

Financial assets and financial liabilities are initially measured at fair value. Except for financial assets and financial liabilities measured at fair value through profit or loss, transaction costs that are directly attributable to the acquisition or issuance of the financial asset or financial liability are added to the fair value of financial assets or subtracted from the fair value of financial liabilities at initial recognition.

F-1

SONY GROUP CORPORATION AND CONSOLIDATED SUBSIDIARIES

Non-derivative

financial assets

Classification and measurement

Non-derivative

financial assets held by Sony are classified as either financial assets measured at amortized cost, debt instruments measured at fair value through other comprehensive income, equity instruments measured at fair value through other comprehensive income or financial assets measured at fair value through profit or loss.

Financial assets measured at amortized cost

Sony classifies a financial asset as measured at amortized cost if the financial asset is held within a business model whose objective is to collect contractual cash flows and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. The financial asset is measured at amortized cost by using the effective interest method after initial recognition. On derecognition of a financial asset measured at amortized cost, the difference between the carrying amount and the consideration received or receivable is recognized in profit or loss.

Debt instruments measured at fair value through other comprehensive income

A debt instrument is classified as a financial asset measured at fair value through other comprehensive income if the debt instrument is held within a business model whose objective is achieved by both collecting contractual cash flows and selling the financial asset and the contractual terms of the financial asset 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 asset after initial recognition, except for impairment gains or losses and foreign exchange gains or losses, are recognized in other comprehensive income. Interest income from these financial assets is recognized in profit or loss using the effective interest method. On derecognition of a debt instrument measured at fair value through other comprehensive income, the cumulative amount previously recognized in other comprehensive income is reclassified to profit or loss.

In the life insurance business, the financial assets are held mainly from the perspective of asset-liability management (“ALM”). The objective of holding financial assets in the life insurance business is to match the interest rate sensitivity (duration) of financial assets and insurance contract liabilities as much as possible, in order to ensure sufficient cash flows are available to settle insurance claims when they come due.

Sony manages these assets as one portfolio, based on the overall objective of managing duration and liquidity needs in a capital-efficient manner. While some assets within the portfolio may be held for a longer period of time, Sony considers, because of its overall objective for these assets, that all the financial assets are held within one business model whose objective is achieved by both collecting cash flows and selling financial assets.

Equity instruments measured at fair value through other comprehensive income

For investments in equity instruments which are not held for trading, Sony may make an irrevocable election at initial recognition to present subsequent changes in fair value of the investments in other comprehensive income.

These financial assets are measured at fair value and subsequent changes in the fair value are recognized in other comprehensive income. Dividends from financial assets are recognized in profit or loss, and the cumulative amount recognized in other comprehensive income is transferred to retained earnings upon derecognition.

Financial assets measured at fair value through profit or loss

Financial assets other than those measured at amortized cost or fair value through other comprehensive income are classified as financial assets measured at fair value through profit or loss. Financial assets measured at fair value through profit or loss include financial assets held for trading.

In the life insurance business, investments held for variable life insurance and individual variable annuity contracts mainly consist of equity securities, debt securities and investment funds, which are measured at fair value through profit or loss.

For certain financial assets that would not normally be measured at fair value through profit or loss, Sony may, at initial recognition, choose the irrevocable option to measure such financial assets at fair value through profit or loss in order to eliminate or significantly reduce an accounting mismatch.

In the life insurance business, Sony mitigates accounting mismatches by designating certain debt securities to be measured at fair value through profit or loss, consistent with insurance finance income or expenses incurred from certain variable life insurance and individual variable annuity contracts after applying IFRS 17 “Insurance Contracts” (“IFRS 17”).

In the banking business, in relation to some fixed-rate debt securities, Sony utilizes derivatives to hedge the risk arising from the changes in the fair value of the debt securities due to unfavorable fluctuations of interest rates, and mitigates accounting mismatches by designating the debt securities to be measured at fair value through profit or loss.

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SONY GROUP CORPORATION AND CONSOLIDATED SUBSIDIARIES

Derecognition

Sony derecognizes a financial asset when the contractual rights to the cash flows from the financial asset expire, or when Sony transfers the contractual rights to receive the cash flows of the financial asset and transfers substantially all of the risks and rewards of the financial asset.

Impairment

Sony estimates expected credit losses and recognizes loss allowances for financial assets measured at amortized cost and debt instruments measured at fair value through other comprehensive income. At each reporting date, Sony measures the loss allowance for a financial instrument at an amount equal to the lifetime expected credit losses if the credit risk on that financial instrument has increased significantly since initial recognition. If, at the reporting date, the credit risk on a financial instrument has not increased significantly since initial recognition, Sony measures the loss allowance for that financial instrument at an amount equal to

12-month

expected credit losses. In assessing whether the credit risk has increased significantly or not, Sony uses the change in the risk of a default occurring over the expected life of the financial instrument and estimates expected credit losses by using the method which reflects the past loss rate and other reasonable and supportable forward-looking information on macroeconomic factors affecting the ability of the customers to settle the receivables.

Sony measures the expected credit losses of a financial asset in a way that reflects an unbiased and probability-weighted amount incorporating the time value of money and reasonable and supportable information that is available at the reporting date about past events, current conditions and forecasts of future economic conditions.

However, for trade and other receivables, and contract assets including

non-current

other receivables in the Pictures segment, the loss allowance is measured at an amount equal to lifetime expected credit losses irrespective of the change of credit risk on a collective basis or an individual basis incorporating factors such as the

past-due

status and the attributes of the counterparties.

Sony determines a financial asset is credit-impaired when one or more events that have a detrimental impact on the estimated future cash flows of that financial asset have occurred. The criteria that Sony uses to determine that a financial asset is credit-impaired include a default or delinquency of more than 90 days past due in interest or principal payments.

Sony writes off the gross carrying amount of a financial asset when it cannot reasonably expect to recover all or part of the asset.

Debt securities and housing loans in the Financial Services segment

The expected credit losses for debt securities and housing loans in the Financial Services segment are the product of the probability of default (“PD”), loss given default (“LGD”) and exposure at default (“EAD”), by leveraging the Basel III regulatory framework or based on the external information published by major credit rating agencies. Forward-looking economic information is also included in determining the PD.

Assessments on significant increases in credit risk are performed at the reporting date by comparing the risk of default occurring with that at initial recognition. Sony recognizes and measures the expected credit losses on a collective basis or an individual basis using reasonable and supportable information that is available without undue cost or effort, such as asset type, credit ratings, collateral collectability,

past-due

status and other relevant characteristics of financial instruments.

In addition, Sony has applied the low credit risk exemption for certain debt securities rated “investment grade” by major credit rating agencies at the reporting date. For such instruments, Sony assumes that the credit risk has not increased significantly since initial recognition.

If contractual terms of a loan have been modified, it is necessary to recalculate the gross carrying amount of that loan by using the original effective interest rate and recognize a modification gain or loss in profit or loss.

ii)

Non-derivative

financial liabilities

Sony classifies

non-derivative

financial liabilities as either financial liabilities subsequently measured at amortized cost by using the effective interest method or financial liabilities subsequently measured at fair value through profit or loss.

Sony derecognizes a financial liability when it is extinguished, meaning when the obligation specified in the contract is discharged, cancelled or expired.

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SONY GROUP CORPORATION AND CONSOLIDATED SUBSIDIARIES

iii)

Derivative financial instruments and hedge accounting

All derivatives are recognized as either assets or liabilities in the consolidated statements of financial position at fair value. Changes in the fair value of derivative financial instruments are either recognized periodically through profit or loss or other comprehensive income, depending on whether the derivative financial instrument qualifies as a hedge and the derivative is being used to hedge changes in fair value or cash flows.

Derivative financial instruments held by Sony are accounted for as described below.

Cash flow hedges

Changes in the fair value of derivatives that are designated and determined to be effective as cash flow hedges for forecasted transactions or exposures associated with recognized assets or liabilities are initially recorded in other comprehensive income and reclassified to profit or loss when the hedged transaction affects profit or loss. Changes in the fair value of the ineffective portion are immediately recognized in profit or loss.

Fair value hedges

Changes in the fair value of derivatives that are designated as hedges of the changes in the fair value risk related to the debt securities are recognized in profit or loss. Changes in the fair value of the hedged item attributable to the hedged risk are recorded in profit or loss.

Derivatives not designated as hedges

Changes in the fair value of derivatives not designated as hedges are immediately recognized in profit or loss.

Assessment of hedge effectiveness

When applying hedge accounting, Sony formally documents all hedging relationships between the derivatives designated as hedges and the hedged items, as well as its risk management objectives and strategies for undertaking various hedging activities. Sony links all hedges that are designated as cash flow hedges or fair value hedges to specific assets or liabilities in the consolidated statements of financial position or to the specific forecasted transactions. Sony also assesses, both at the inception of the hedge and on an ongoing basis, whether the derivatives that are designated as hedges have an economic relationship with the hedged item in offsetting changes in fair value or cash flows of hedged items. The effect of credit risk does not dominate the value changes that result from the underlying economic relationship. In addition, the hedge ratio of the hedging relationship is designed to be the same as that resulting from the quantity of the hedged item that Sony actually hedges and the quantity of the hedging instrument that Sony actually uses to hedge that quantity of the hedged item. When it is determined that a derivative no longer has an economic relationship with the hedged item, Sony discontinues hedge accounting.

iv)

Offsetting a financial asset and a financial liability

Sony offsets a financial asset and a financial liability and presents the net amount in the consolidated statements of financial position when Sony currently has a legally enforceable right to set off the recognized amounts and intends either to settle on a net basis or to realize the asset and settle the liability simultaneously.

(6)	Inventories -

Inventories are measured at the lower of cost or net realizable value. The cost of inventories is determined on the “weighted average cost” basis. Net realizable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale.

(7)	Property, plant and equipment and depreciation -

Sony has adopted the cost model for the measurement of property, plant and equipment and presents an item of property, plant and equipment at its cost less any accumulated depreciation and any accumulated impairment losses. The cost of an item of property, plant and equipment includes any costs directly attributable to the acquisition of the asset as well as costs of its dismantlement, removal or restoration. Property, plant and equipment are depreciated on a straight-line basis over their useful lives (depreciation period ranging from 2 to 50 years for buildings and from 2 to 10 years for machinery and equipment). Sony reviews the residual values and the useful lives at each fiscal

year-end,

or sooner if circumstances require.

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SONY GROUP CORPORATION AND CONSOLIDATED SUBSIDIARIES

(8)

Leases

When entering into a contract, Sony determines whether an arrangement contains a lease at its inception. An arrangement contains a lease if it conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Assets and liabilities recognized from leases are included in

right-of-use

(“ROU”) assets, the current portion of long-term debt, and long-term debt in Sony’s consolidated statements of financial position.

ROU assets represent Sony’s right to use an underlying asset for the lease term and lease liabilities represent Sony’s obligation to make lease payments arising from the lease. ROU assets and lease liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. ROU assets also include any lease payments and initial direct costs incurred on or before the commencement date and exclude lease incentives. In determining the present value of lease payments, Sony generally uses its incremental borrowing rate, as the implicit rate is not available for most of its leases. Sony determines its incremental borrowing rate based on the estimated rate of interest for collateralized borrowings, taking into account the lease term and the economic conditions of each country or region at commencement date. The lease terms may include options to extend or terminate the lease when it is reasonably certain that Sony will exercise that option. If the lease transfers ownership of the underlying asset to the lessee by the end of the lease term or the purchase option is reasonably certain to be exercised, Sony depreciates the ROU assets from the commencement date to the end of the useful life of the underlying assets. Otherwise, Sony depreciates the ROU assets from the commencement date to the earlier of the end of the useful life of the ROU assets or the end of the lease term. Sony accounts for the lease and

non-lease

components as a single lease component. Sony has applied the short-term lease exception for leases with a term of one year or less, where ROU assets and lease liabilities are not recognized and the expense is recognized on a straight-line basis.

(9)	Intangible assets and amortization, including content assets -

Intangible assets are measured using the cost model and stated at cost less accumulated amortization and impairment losses. Intangible assets acquired separately are initially recognized at cost.

Intangible assets with finite useful lives mainly consist of patent rights,

know-how,

license agreements, customer relationships, trademarks, software, television carriage contracts (broadcasting agreements), film costs, broadcasting rights, music catalogs, artist contracts, music distribution rights and game content. Patent rights,

know-how,

license agreements, trademarks and software are generally amortized on a straight-line basis over 3 to 10 years. Customer relationships, television carriage contracts (broadcasting agreements), artist contracts, music distribution rights and game content are generally amortized on a straight-line basis, over 2 to 15 years. Music catalogs are generally amortized on a straight-line basis, over 5 to 44 years. Film costs are amortized using an ultimate revenue method based on the ratio of current period actual revenues to the estimated remaining total revenues. Sony considers that amortization pursuant to the ultimate revenue method reflects the rate at which it plans to consume the future economic benefits related to the asset, and there is a high correlation between revenue and the consumption of the economic benefits embodied in the intangible assets. Broadcasting rights are generally amortized based on estimated usage or on a straight-line basis over the useful life.

Amortization of intangible assets is included in cost of sales and selling, general and administrative expenses in the consolidated statements of income. Certain intangible assets are assessed to have indefinite lives because there is no foreseeable limit to the period over which such assets are expected to generate net cash flows for Sony.

Film costs, broadcasting rights, music catalogs, artist contracts, music distribution rights and game content are collectively classified and presented as content assets in the consolidated statements of financial position. Film costs include direct production costs, production overhead, and costs for acquisition and distribution rights for both motion picture and television productions. Broadcasting rights, consisting of acquired programming to be aired on Sony’s television networks and DTC streaming services, are recognized when the license period begins and the program is available for use. Music catalogs are exclusive rights to the recorded music master or music copyrights, which consist of melodies and lyrics of songs, that can be exploited and marketed in various markets. Artist contracts are contracts with recorded music artists or songwriters that provide Sony with exclusive rights to musical works. Music distribution rights are agreements to distribute music content owned by third parties. Game content includes internally developed content, content developed through a third-party arrangement where Sony owns the rights to the content, content acquired externally through contracts with third parties, and agreements to distribute game content owned by third parties.

(10)	Impairment of non-financial assets -

Sony reviews the recoverability of its

non-financial

assets, except for inventories, contract costs and deferred tax assets, whenever there is any indication that an asset or a cash-generating unit (“CGU”) may be impaired. In addition, an annual impairment test for goodwill, intangible assets with indefinite useful lives or intangible assets not yet available for use is performed during the fourth quarter of the fiscal year for each CGU or group of CGUs to which the carrying amount of these assets is allocated.

A CGU is the smallest identifiable group of assets that generates cash inflows that are largely independent of the cash inflows from other assets or group of assets. Goodwill is allocated to each CGU or group of CGUs that is expected to benefit from the synergies of a business combination. A CGU or group of CGUs to which goodwill is allocated is not larger than an operating segment.

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SONY GROUP CORPORATION AND CONSOLIDATED SUBSIDIARIES

The recoverable amount of an asset, a CGU or group of CGUs is the higher of its value in use and fair value less costs of disposal. In assessing value in use, the estimated future cash flows are discounted to their present value using a

pre-tax

discount rate that reflects current market assessments of the time value of money and the risks specific to the assets. This approach uses significant estimates and assumptions, including estimated future cash flows, the timing of such cash flows, discount rates reflecting the risk inherent in future cash flows, perpetual growth rates, earnings or revenue multiples, the determination of appropriate comparable entities and the determination of whether a premium or discount should be applied to comparables. The assumptions used for estimated future cash flows and the timing of such cash flows for each CGU are generally based on the three-year

mid-range

plan (“MRP”) and take into account such factors as historical experience, market and industry information, and current and forecasted economic conditions. Perpetual growth rates are generally utilized to determine a terminal value and are generally set after the three-year forecasted period for the MRP.

If the recoverable amount is determined to be less than the carrying amount of a CGU or group of CGUs, an impairment loss would be recognized equal to the amount by which the carrying amount exceeds the recoverable amount. Such impairment losses are recognized by first reducing the carrying amount of any allocated goodwill and then are allocated to the other assets of the CGU on a pro rata basis of the carrying amount of each asset in the CGU. Impairment losses except for content assets are included in other operating (income) expense, net, and impairment losses for content assets are included in cost of sales in the consolidated statements of income.

Assets other than goodwill are reviewed to assess whether there is any indication that an impairment loss recognized in prior periods may no longer exist or may have decreased. If any such indication exists, the recoverable amount of the asset is determined and a reversal of an impairment loss is recognized when the recoverable amount of the asset exceeds the carrying amount. Any increase in the carrying amount of an asset attributable to the reversal of an impairment loss does not exceed the carrying amount of the asset, net of depreciation and amortization, which would have been determined if an impairment loss had never been recognized for the asset in prior periods.

(11)	Insurance contract liabilities -

Definition and classification of insurance contracts

Sony defines insurance contracts as the contracts under which Sony accepts significant insurance risk by agreeing to compensate the policyholder if a specified uncertain future event adversely affects the policyholder. In making this assessment, all substantive rights and obligations, including those arising from laws and regulations, are considered on a

contract-by-contract

basis. Sony uses judgment in assessing whether there is a scenario with commercial substance in which there is the possibility of a loss on a present value basis and whether the accepted insurance risk is significant. Contracts that have a legal form of an insurance contract but do not transfer significant insurance risk to Sony are classified as investment contracts and the investment contract liabilities are accounted for as financial liabilities and included in other financial liabilities.

Insurance contracts that Sony underwrites in the life insurance business, which is included in the Financial Services segment, mainly consist of whole life, term life, disease and health insurance, variable life insurance, and individual variable annuity contracts. Sony classifies certain variable life insurance and individual variable annuity contracts as insurance contracts with direct participation features, if they meet all of the following conditions on initial recognition:

the contractual terms specify that the policyholder participates in a share of a clearly identified pool of underlying items;

Sony expects to pay to the policyholder an amount equal to a substantial share of the fair value returns on the underlying items; and

Sony expects a substantial proportion of any change in the amounts to be paid to the policyholder to vary with the change in the fair value of the underlying items.

All other insurance contracts are classified as insurance contracts without direct participation features.

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SONY GROUP CORPORATION AND CONSOLIDATED SUBSIDIARIES

ii)

Aggregation of insurance contracts

In measuring insurance contracts, Sony aggregates the insurance contracts into groups. Each group of insurance contracts is determined by identifying portfolios of insurance contracts. Each portfolio is comprised of contracts that are subject to similar risks and are managed together, and Sony mainly divides each portfolio by the quarter to which the issue date of the insurance contracts belongs. The portfolios are then classified into one of the following three groups based on the profitability of contracts:

any contracts that are onerous on initial recognition;

any contracts that, on initial recognition, have no significant possibility of becoming onerous subsequently; and

any remaining contracts.

iii)

Recognition

and derecognition of insurance contracts

A group of insurance contracts issued by Sony is recognized from the earliest of:

the beginning of the coverage period of the group of insurance contracts;

when the first payment from the policyholder in the group of insurance contracts becomes due; and

when facts and circumstances indicate that the group of insurance contracts is onerous.

If there is no contractual due date, the due date is considered as the day when the first payment is received from the policyholder.

In addition, only contracts that individually meet the recognition criteria by the end of the reporting period are included in the groups. When contracts individually meet the recognition criteria after the end of the reporting period, they are added to the groups in the reporting period in which they meet the recognition criteria. Composition of the groups is not reassessed in subsequent periods.

Insurance acquisition cash flows are allocated to groups of insurance contracts using a systematic and rational method and considering, in an unbiased way, all reasonable and supportable information that is available without undue cost or effort. If insurance acquisition cash flows are directly attributable to a group of insurance contracts, they are allocated to that group. If insurance acquisition cash flows are directly attributable to a portfolio but not to a group of insurance contracts, then they are allocated to the groups in that portfolio using a systematic and rational method.

Sony derecognizes an insurance contract when it is extinguished, i.e., when the obligation specified in the insurance contract expires or is discharged or canceled. When an insurance contract is derecognized, Sony:

adjusts the fulfillment cash flows allocated to the group of insurance contracts to eliminate those relating to the derecognized rights and obligations;

adjusts the contractual service margin (“CSM”) of the group of insurance contracts for the change in the fulfillment cash flows; and

adjusts the number of coverage units expected for the remaining insurance contract services to reflect the number of coverage units derecognized from the group of insurance contracts.

iv)

Contract boundaries

In measuring groups of insurance contracts, Sony includes all of the future cash flows within the boundary of each contract in the group. Cash flows are within the contract boundary if they arise from substantive rights and obligations that exist during the reporting period in which the policyholder is obliged to pay premiums or Sony has a substantive obligation to provide services (including insurance coverage and any investment services).

A substantive obligation to provide services ends when Sony:

(a)

has the practical ability to reassess the risks of the particular policyholder and can set a price or level of benefits that fully reflects those reassessed risks; or

(b)

has the practical ability to reassess the risks of the portfolio that contains the contract and can set a price or level of benefits that fully reflects the risks of that portfolio, and the pricing of the premiums up to the reassessment date does not take into account risks that relate to periods after the reassessment date.

For cash flows arising during the period after the renewal of the insurance contract with automatic renewal clauses, Sony assesses the contract boundaries and determines that they are within the existing contract boundaries when Sony does not have the above practical ability to reassess the risks.

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SONY GROUP CORPORATION AND CONSOLIDATED SUBSIDIARIES

Initial measurement of insurance contracts not measured under the premium allocation approach (“PAA”)

On initial recognition, Sony measures a group of insurance contracts as the total of the following:

(a)

Fulfillment cash flows

The fulfillment cash flows of the groups of insurance contracts consist of estimates of the future cash flows and risk adjustments for

non-financial

risk. The estimates of the future cash flows are adjusted to reflect the time value of money and the associated financial risks, and do not reflect Sony’s

non-performance

risk. The discount rates reflect the characteristics of the cash flows arising from the groups of insurance contracts, including timing, currency and liquidity of cash flows. The determination of the discount rate that reflects the characteristics of the cash flows and liquidity characteristics of the insurance contracts involves significant estimation. The risk adjustment for

non-financial

risk, determined separately from the other estimates, is designed to reflect the compensation required for bearing uncertainty about the amount and timing of the cash flows that arise from

non-financial

risk.

(b)

CSM

The CSM of a group of insurance contracts represents the unearned profit that Sony will recognize as it provides insurance contract services under those contracts.

vi)

Subsequent measurement of insurance contracts not measured under the PAA

The carrying amount of a group of insurance contracts at each reporting date is the sum of the liability for incurred claims and the liability for remaining coverage. The liability for incurred claims comprises the fulfillment cash flows for incurred claims and expenses that have not yet been paid, including claims that have been incurred but not yet reported. The liability for remaining coverage comprises the items described below.

(a)

Fulfillment cash flows

The fulfillment cash flows of groups of insurance contracts are measured at the reporting date using current estimates of future cash flows, discount rates, and risk adjustment for

non-financial

risk. The mortality rates, morbidity rates, lapse and surrender rates, and discount rates, which are used to measure the estimates of the present value of future cash flows, are significant assumptions for measuring insurance contract liabilities not measured under the PAA.

(b)

CSM

The carrying amount of the CSM of contracts without direct participation features at each reporting date is the carrying amount at the beginning of the fiscal year, adjusted for the following items (items (2), (3)1, (3)2, and (3)4 below are measured using the discount rate determined at initial recognition

(locked-in

discount rate)):

(1)

the effect of any new contracts that are added to the group during the current period;

(2)

the interest accreted on the carrying amount of the CSM during the current period;

(3)

the changes in fulfillment cash flows relating to future service including the following items:

experience adjustments arising from premiums received in the current period that relate to future services (including those for related cash flows such as insurance acquisition cash flows and premium-based taxes);

changes in estimates of the present value of future cash flows in the liability for remaining coverage (excluding the effect of the time value of money, financial risk and changes therein);

differences between any investment component expected to become payable in the current period and the actual investment component that becomes payable in the current period; and

changes in the risk adjustment for

non-financial

risk that relate to future services;

(4)

the effect of any currency exchange differences; and

(5)

the amount recognized as insurance revenue for insurance contract services provided during the current period, which is determined after all other adjustments above.

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SONY GROUP CORPORATION AND CONSOLIDATED SUBSIDIARIES

The carrying amount of the CSM of contracts with direct participation features at each reporting date is the carrying amount at the beginning of the fiscal year, adjusted for the following items (items (3)2, (3)3, (3)4, and (3)5 below are measured using the current discount rate):

(1)

the effect of any new contracts that are added to the group during the current period;

(2)

the changes in Sony’s share of the fair value of the underlying items;

(3)

the changes in the fulfillment cash flows that do not vary based on the returns of underlying items including the following items:

changes in the effect of the time value of money and financial risks including the effect of financial guarantees;

changes in estimates of the present value of future cash flows in the liability for remaining coverage (excluding the effect of the time value of money, financial risk and changes therein);

differences between any investment component expected to become payable in the current period and the actual investment component that becomes payable in the current period; and

changes in the risk adjustment for

non-financial

risk that relate to future services;

(4)

the effect of any currency exchange differences; and

(5)

the amount recognized as insurance revenue for insurance contract services provided during the current period, which is determined after all other adjustments above.

Sony has selected an accounting policy to update accounting estimates related to insurance contracts made in the previous interim consolidated financial statements in the subsequent annual and interim consolidated financial statements and to measure the annual results using the

year-to-date

approach.

Changes in the fulfillment cash flows that relate to current or past services are recognized as profit or loss. Changes in the fulfillment cash flows that relate to future services are adjusted as the CSM or loss component as follows:

when an increase in the fulfillment cash flows exceeds the carrying amount of the CSM, the CSM is reduced to zero and the excess is recognized as insurance service expenses and such excess is recorded as a loss component of the liability for the remaining coverage;

when the CSM is zero, changes in the fulfillment cash flows adjust the loss component within the liability for remaining coverage with correspondence to insurance service expenses; and

the excess of any decrease in the fulfillment cash flows over the loss component reduces the loss component to zero and reinstates the CSM.

When a loss component exists, Sony allocates the following items between the loss component and the remaining component of the liability for the remaining coverage for the respective group of insurance contracts, based on the ratio of the loss component to the fulfillment cash flows relating to the expected future cash outflows:

(1)

expected incurred claims and other directly attributable expenses for the period;

(2)

changes in the risk adjustment for

non-financial

risk for the risk expired; and

(3)

finance income (expenses) from insurance contracts issued.

The amounts of loss component allocation in (1) and (2) above reduce the respective components of insurance revenue and are reflected in insurance service expenses.

vii)

Measurement of insurance contracts measured under the PAA

For certain insurance contracts with a coverage period of one year or less at initial recognition, Sony uses the PAA to simplify the measurement of the group of insurance contracts.

Under the PAA, on initial recognition of each group of insurance contracts, the carrying amount of the liability for remaining coverage is measured at the premiums received on initial recognition, minus any insurance acquisition cash flows allocated to the group at the date of the receipt of the premiums. Sony amortizes insurance acquisition cash flows over the coverage period of the group of insurance contracts.

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SONY GROUP CORPORATION AND CONSOLIDATED SUBSIDIARIES

Subsequently, the carrying amount of the liability for remaining coverage is increased by any premiums received and the amortization of insurance acquisition cash flows recognized as expenses, and decreased by the amount recognized as insurance revenue for services provided and any additional insurance acquisition cash flows allocated after initial recognition.

viii)

Presentation

Portfolios of insurance contracts that are assets and those that are liabilities are presented separately in the consolidated statements of financial position. If no insured event has occurred and the surrender option has not been exercised as of the reporting date, the insurance contract liabilities are classified as

non-current

liabilities. However, if an insured event occurs or the surrender option is exercised, Sony loses its rights to postpone the payment of these liabilities. In this case, the insurance contract liabilities are classified as current liabilities, as they are due to be settled within 12 months after the end of the reporting period.

Sony disaggregates amounts recognized in the consolidated statements of income and the consolidated statements of comprehensive income into insurance revenue and insurance service expenses (collectively referred to as the “insurance service result”), and insurance finance income or expenses. Sony does not disaggregate changes in the risk adjustment for

non-financial

risk between the insurance service result and insurance finance income or expenses and includes them in the insurance service result.

(a)

Insurance revenue

Insurance revenue excludes any investment components and is recognized as follows:

(1)

Contracts not measured under the PAA

Sony recognizes insurance revenue as it provides insurance contract services. For contracts not measured under the PAA, the insurance revenue relating to services provided for each period represents the total of the changes in the liability for remaining coverage that relate to services for which Sony expects to receive consideration, and primarily comprises the following items:

a release of the CSM, measured based on coverage units provided during the current period;

changes in the risk adjustment for

non-financial

risk relating to current services;

claims and other insurance service expenses incurred during the current period, measured at the amounts expected at the beginning of the current period; and

allocation of the amount of insurance acquisition cash flows in a systematic way based on the passage of time.

The release amount of the CSM of a group of insurance contracts that is recognized as insurance revenue in each period is determined by identifying the coverage units in the group and recognizing in profit or loss the amount of the CSM allocated to the coverage units provided during the current period. The number of coverage units is the quantity of services provided based on the insurance contracts in the group, determined by considering the quantity of benefits to be provided by each insurance contract in the group and the expected coverage period.

Services provided based on insurance contracts include insurance coverage and, for all direct participating contracts, investment related services for managing underlying items on behalf of policyholders. Insurance contracts other than direct participating contracts include investment return services for generating an investment return for the policyholder.

(2)

Contracts measured under the PAA

For contracts measured under the PAA, the insurance revenue for each period is the amount of expected premium receipts for providing services during the period. Sony allocates the expected premium receipts to each period based mainly on the passage of time.

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SONY GROUP CORPORATION AND CONSOLIDATED SUBSIDIARIES

(b)

Insurance service expenses

Insurance service expenses comprise the following items:

(1)

incurred claims and benefits excluding investment components and reduced by the loss component allocation;

(2)

other incurred and directly attributable insurance service expenses (reduced by the loss component allocation);

(3)

amortization of insurance acquisition cash flows;

(4)

changes that relate to past services (e.g., changes in the fulfillment cash flows relating to the liability for incurred claims); and

(5)

changes that relate to future services (e.g., losses on onerous insurance contracts and reversal of those losses arising from changes in the loss components).

For contracts not measured under the PAA, amortization of insurance acquisition cash flows is reflected in insurance service expenses in the same amount as insurance acquisition cash flows recovery reflected within insurance revenue as described above.

(c)

Insurance finance income or expenses

Insurance finance income or expenses comprise changes in the carrying amounts of groups of insurance contracts arising from the effects of the time value of money, financial risk and changes therein. Sony has chosen to disaggregate insurance finance income or expenses between profit or loss and other comprehensive income for contracts without direct participation features, excluding certain variable life insurance and individual variable annuity contracts. The amount included in profit or loss is determined by a systematic allocation of the expected total insurance finance income or expenses over the duration of the group of insurance contracts. The amount of systematic allocation is determined using the discount rates determined on initial recognition of the group of insurance contracts. As a result of this systematic allocation, the total amounts recognized in other comprehensive income is equal to zero over the duration of the group of insurance contracts. In addition, the cumulative amount recognized in other comprehensive income at any point in time is the difference between the carrying amount of the group of insurance contracts and the amount measured by this systematic allocation.

For contracts with direct participation features, the insurance finance income or expenses include changes in the value of underlying items (excluding additional premium payments and withdrawals), all of which are recognized in profit or loss.

(12) Provisions -

Provisions are recognized when Sony has present legal or constructive obligations as a result of past events, it is probable that outflows of resources embodying economic benefits will be required to settle the obligations, and reliable estimates can be made of the amount of obligations.

Provisions mainly consist of participation and residual liabilities in the Pictures segment and product warranties. Product warranties are included in other current liabilities in the consolidated statements of financial position.

Participation and residual liabilities in the Pictures segment

Parties involved in the production or exploitation of film and television content may be compensated in part by contingent payments based on the financial results of a film or television show pursuant to contractual formulas (participations) and by contingent amounts due under provisions of collective bargaining agreements (residuals). Such parties are collectively referred to as participants, and such costs are collectively referred to as participation and residual costs. Participation and residual costs may be given to creative talent, such as actors or writers, investors or to entities from whom distribution rights are licensed.

Participation and residual liabilities are accrued based on the ratio of current period actual revenues to the estimated remaining total revenues. The participation and residual liabilities are expected to be relieved when the contingent payments are fixed and paid. The majority of the

non-current

portion of participation and residual liabilities is expected to be paid within the next 10 years.

Sony also enters into arrangements with other studios to jointly produce and distribute films, under which each partner is responsible for the distribution of the film in specific territories or distribution windows. The partners’ shares in the profits and losses of the films under these arrangements are included within participation and residual costs.

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SONY GROUP CORPORATION AND CONSOLIDATED SUBSIDIARIES

(14)	Stock-based compensation -

Stock option plan

Sony estimates the cost of stock options at their fair value on the grant date and recognizes the expense over the vesting period with a corresponding increase in equity. The fair value of options granted is calculated using the Black-Scholes model with consideration for terms and conditions of the stock options.

ii)

Restricted stock unit plan

Sony estimates the cost of restricted stock units by the fair value of the units granted on the grant date and recognizes the expense over the vesting period with a corresponding increase in equity.

(15)	Fair value measurement -

Sony measures fair value as an exit price, or the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants as of the measurement date.

Sony determines a hierarchy of inputs to valuation techniques based on the extent to which inputs used in measuring fair value are observable in the market. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect assumptions which Sony developed using the information that market participants would use in pricing the asset or liability. Observable market data is used if such data is available without undue cost and effort. Each fair value measurement is reported in one of three levels which is determined by the lowest level input that is significant to the fair value measurement in its entirety.

These levels are:


Level 1	-	Inputs are unadjusted quoted prices for identical assets and liabilities in active markets.

Level 2	-	Inputs are based on observable inputs other than Level 1 prices, such as quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active and model-derived valuations, in which all significant inputs are observable in active markets.

Level 3	-	One or more significant inputs are unobservable.

When available, Sony uses unadjusted quoted market prices in active markets to measure fair value and classifies such items within Level 1. If quoted market prices are not available, fair value is based upon internally developed valuation techniques that use, where possible, current market-based or independently sourced market parameters, such as interest rates, currency rates and option volatilities. Items valued using internally generated models are classified according to the lowest level input that is significant to the valuation. For certain financial assets and liabilities, Sony determines fair value using third-party information such as indicative quotes from dealers and quantitative input from investment advisors following Sony’s established valuation procedures including validation against internally developed prices. Additionally, Sony considers both counterparty credit risk and Sony’s own creditworthiness in determining fair value. Sony attempts to mitigate credit risk to third parties by entering into netting agreements and actively monitoring the creditworthiness of counterparties and its exposure to credit risk through the use of credit limits and by selecting major international banks and financial institutions as counterparties.

Transfers between levels are deemed to have occurred at the beginning of each reporting period in which the transfers occur.

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SONY GROUP CORPORATION AND CONSOLIDATED SUBSIDIARIES

(16)	Revenue recognition -

Sony recognizes revenue in an amount that reflects the consideration Sony expects in exchange for satisfying performance obligations to transfer the goods or services promised in contracts with customers. This is in accordance with the following steps:

Step 1: Identify the contract(s) with a customer.

Step 2: Identify the performance obligations in the contract.

Step 3: Determine the transaction price.

Step 4: Allocate the transaction price to the performance obligations in the contract.

Step 5: Recognize revenue when (or as) Sony satisfies a performance obligation.

Sony owns a variety of intellectual property throughout its segments and recognizes revenue through the licensing of such intellectual property. Sony licenses rights to use its intellectual property and rights to access its intellectual property. When Sony grants a customer the right to use Sony’s intellectual property, Sony satisfies its performance obligation at the point in time when the customer obtains control and is entitled to benefit from the license. When Sony grants a customer the right to access Sony’s intellectual property, Sony satisfies its performance obligation over the license period.

Incremental costs of obtaining a contract and costs to fulfill a contract are recognized as assets when Sony expects to recover these costs. The incremental costs of obtaining a contract are those costs that would not have been incurred if the contract had not been obtained. Costs to fulfill a contract are those costs that are directly related to a contract or to an anticipated contract and that generate or enhance resources for Sony to satisfy its performance obligations. Sony applies a practical expedient and recognizes the incremental costs of obtaining a contract as an expense when incurred if the amortization period of the asset that would have been recognized is one year or less.

Performance

obligations in contracts for the Entertainment, Technology & Services (“ET&S”) and Imaging & Sensing Solutions (“I&SS”) segments are primarily to deliver various kinds of electronic equipment, instruments and devices to customers. Revenues from these performance obligations are generally recognized when a promised good is delivered to a customer. However, if the sales contract contains a customer acceptance provision, then revenues are recognized when the customer accepts the promised good or when a deemed acceptance occurs by the lapse of time. Revenues are also recognized over time, primarily from the provision of internet broadband network services to subscribers over the subscription period. Revenues are recognized net of anticipated returns and sales incentives.

Within the Game & Network Services (“G&NS”) segment, revenues from hardware, peripherals and software discs are recognized when performance obligations are satisfied by transferring control to the retailer/distributor, net of anticipated returns, sales incentives and cooperative advertising obligations. Revenues from platform licensing to publishers are recognized when physical software discs are delivered. Revenues from digital game content, which is a right to use Sony’s intellectual property, are recognized when the digital content is made available for use by the licensee via an online platform, net of anticipated sales incentives and credit card chargebacks. Revenues from digital game content involving multiple performance obligations, such as obligations to make content available on future dates, are allocated to each performance obligation based on the relative standalone selling prices that are observable in the market or Sony’s best estimate. Revenues from subscription fees for digital subscription services are recognized over the subscription period.

Within the Music segment, Sony licenses intellectual property that transfer to a customer either a right to use Sony’s intellectual property, or a right to access Sony’s intellectual property. Revenues are recognized when the customer has the right to use or access the intellectual property and obtains control of the use or access of that license. Digital revenues include revenues from contracts with digital streaming services typically recognized as a single performance obligation, which is ongoing access to intellectual property in an evolving library of content over the contract term, predicated on: (1) the business practice and contractual ability to remove specific content without a requirement to replace the content and without impact to minimum royalty guarantees and (2) the contracts not containing a specific listing of content subject to the license. For these contracts, revenues are recognized based on sales and usage royalties, except where there is a minimum royalty guarantee that is not expected to be recouped, or a fixed fee, which is recognized on a straight-line basis over the term of the contract. Revenues from the sale of physical products such as CDs, net of anticipated returns and sales incentives, are recognized when delivery has occurred and the product is available for sale to the public.

Within the Pictures segment, revenues from the theatrical exhibition of motion pictures are recognized as the customer exhibits the film. Revenues from the licensing of motion picture and television programming for pay and free television exhibition and other markets are recognized when the product is available for use by the licensee. Revenues for motion picture and television program licensing arrangements involving multiple performance obligations, for example a fee for multiple titles, territories or availability dates, are allocated based on the relative standalone selling price of each performance obligation using Sony’s best estimate based on available information such as market conditions and internal pricing guidelines. Each individual motion picture or television programming product delivered generally represents a separate performance obligation. Licensing revenue associated with renewals or extensions of existing agreements for motion pictures and television programming is recognized when the licensee can use and benefit from the content under the renewal or extension. Licensing revenue associated with minimum guarantees for a right to access Sony’s intellectual property is recognized ratably over the license term. Revenues from electronic sell-through and

video-on-demand

are recognized when the product is made available for viewing via digital distribution platforms. Revenues from the sale of broadcast advertising are recognized when the advertisement is aired, and the performance obligation in these arrangements is the delivery of

F-29

SONY GROUP CORPORATION AND CONSOLIDATED SUBSIDIARIES

advertising spots and may include a guaranteed amount of impressions. When a guarantee for a number of impressions is not achieved, revenues are not recognized until additional advertising spots are delivered to provide the guaranteed impressions. Revenues from subscription fees received by television networks and DTC streaming services are recognized when the service is provided. The performance obligation under network subscription arrangements is a right to use Sony’s intellectual property that is satisfied as programming is provided over the term of the arrangement.

Revenue is generally recognized net of any taxes collected from customers and subsequently remitted to governmental authorities.

(17)	Financial services revenue -

Financial services revenue consists of insurance revenue and other financial services revenue (refer to Note 3 I. Material accounting policies (11) regarding insurance revenue). Other financial services revenue includes items such as interest, dividends and the impact of foreign exchange rate fluctuations incurred from financial instruments held in the Financial Services segment.

(18)	Cost of sales -

Costs classified as cost of sales relate to the producing and manufacturing of products and include items such as material cost, subcontractor cost, depreciation of property, plant and equipment, amortization of intangible assets including content assets, employee benefits expenses and research and development costs.

(19)	Research and development expenditures -

Research and development expenditures include items such as employee benefits expenses and other direct and indirect expenses associated with research and product development. Development expenditures are capitalized only when technical feasibility is achieved, Sony has the intention, ability and sufficient resources to use or sell the outcome of the development, it is probable that the outcome will generate a future economic benefit, and the cost can be reliably measured. Capitalized development costs are measured as the sum of total expenditures for development upon achieving the foregoing conditions for capitalization until development is completed. Research expenditures and other development expenditures that do not meet the foregoing conditions are expensed as incurred and included in the cost of sales in the consolidated statements of income.

(20)	Selling, general and administrative -

Costs classified as selling expenses relate to promoting and selling products and include items such as advertising, promotion, shipping and warranty expenses. General and administrative expenses include operating items such as employee benefits expenses, depreciation of property, plant and equipment, office rental for sales, marketing and administrative divisions, loss allowance for trade receivables and amortization of intangible assets.

(21)	Advertising costs -

Advertising costs are expensed as incurred.

(22)	Shipping and handling costs -

The majority of shipping and handling, warehousing and internal transfer costs for finished goods are included in selling, general and administrative expenses. However, in the Pictures segment, certain costs are charged to cost of sales as they are an integral part of producing and distributing motion pictures and television programming. All other costs related to Sony’s distribution network are included in cost of sales, including inbound freight charges, purchasing and receiving costs, inspection costs and warehousing costs for raw materials and

in-process

inventory. Shipping and handling activities that occur after control of the related good transfers are treated as separate performance obligations. Amounts paid by customers for shipping and handling costs are included in sales.

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SONY GROUP CORPORATION AND CONSOLIDATED SUBSIDIARIES

(23)	Financial services expenses -

Financial services expenses consist of insurance service expenses, insurance finance income or expenses, and other financial services expenses (refer to Note 3 I. Material accounting policies (11) regarding insurance service expenses, and insurance finance income or expenses). Other financial services expenses include items such as interest expenses in the banking business.

(24)	Income taxes -

Income taxes consist of current and deferred taxes. Current and deferred taxes are recognized in profit or loss, except to the extent that the tax arises from a business combination, or a transaction or event which is recognized, in the same or a different period, outside profit or loss, either in other comprehensive income or directly in equity.

Current taxes are computed based on taxable profit or loss for the year, using the tax rates enacted or substantively enacted at the end of the reporting period.

Deferred tax assets and liabilities are recognized for temporary differences between the tax bases of assets and liabilities and their carrying amounts at the end of the reporting period. Deferred tax liabilities include the liabilities being recognized for undistributed profits of subsidiaries and associates accounted for under the equity method that are expected to be remitted in the foreseeable future. Deferred income taxes are determined using tax rates and laws that have been enacted or substantively enacted by the end of the reporting period and are expected to apply when the related deferred income tax asset is realized or the deferred income tax liability is settled. Deferred tax assets and liabilities are not recognized in respect of temporary differences that arise from the initial recognition of an asset or liability in a transaction which is not a business combination and which, at the time of the transaction, affects neither accounting profit nor taxable profit (tax loss).

Deferred tax assets are recognized to the extent that it is probable that taxable profit will be available against which the assets can be utilized. Accordingly, the valuation of the deferred tax assets is assessed periodically with available evidence related to the recoverability of the deferred tax assets. Management’s judgment related to this assessment considers the nature, frequency and severity of current and cumulative losses on an individual tax jurisdiction basis, forecasts of future profitability after consideration of uncertain tax positions, excess of appreciated asset value over the tax basis of net assets, the duration of statutory carryforward periods, the past utilization of net operating loss carryforwards prior to expiration, as well as prudent and feasible tax planning strategies which would be employed by Sony to prevent net operating loss and tax credit carryforwards from expiring unutilized.

Sony records assets and liabilities resulting from uncertain tax positions taken or expected to be taken in a tax return. The amount of income taxes Sony pays is subject to ongoing audits by various taxing authorities, which may result in proposed assessments. In addition, several significant items related to intercompany transfer pricing are currently the subject of negotiations between taxing authorities in different jurisdictions as a result of pending advance pricing agreement applications and competent authority requests. Sony’s estimate for the potential outcome for any uncertain tax issues is judgmental and requires significant estimates. Sony assesses its income tax positions and records tax benefits and expenses for all years subject to examinations based upon the evaluation of the facts, circumstances and information available at that reporting date.

(25)	Net income (loss) attributable to Sony Group Corporation’s stockholders per share (“EPS”) -

Basic EPS is computed based on the weighted-average number of shares of common stock outstanding during each period. The computation of diluted EPS reflects the maximum possible dilution from conversion, exercise, or contingent issuance of securities. All potentially dilutive securities are excluded from the calculation in a situation where there is a net loss attributable to Sony Group Corporation’s stockholders.

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SONY GROUP CORPORATION AND CONSOLIDATED SUBSIDIARIES

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
	Fiscal year ended March 31
	2023		2024		2025
Sales and financial services revenue:
Game & Network Services
Digital Software and Add-on Content		1,523,045		1,934,586		2,290,498
Network Services		464,676		545,537		669,873
Hardware and Others		1,550,812		1,692,871		1,583,200

Total		3,538,533		4,172,994		4,543,571
Music
Recorded Music – Streaming		598,868		709,453		788,772
Recorded Music – Others		286,270		356,646		407,260
Music Publishing		276,665		326,727		379,812
Visual Media and Platform		203,012		202,129		244,419

Total		1,364,815		1,594,955		1,820,263
Pictures
Motion Pictures		464,043		542,044		610,313
Television Productions		536,250		551,035		459,281
Media Networks		364,594		393,638		428,940

Total		1,364,887		1,486,717		1,498,534
Entertainment, Technology & Services
Televisions		733,251		624,264		564,154
Audio and Video		391,608		412,067		391,664
Still and Video Cameras		565,018		643,429		665,144
Mobile Communications		356,771		299,905		279,834
Other		390,091		435,281		462,042

Total		2,436,739		2,414,946		2,362,838
Imaging & Sensing Solutions		1,301,481		1,503,906		1,712,534
Financial Services		878,532		1,760,731		922,147
All Other		72,338		75,784		82,477
Corporate		17,048		10,735		14,700

Consolidated total		10,974,373		13,020,768		12,957,064

In the G&NS segment, Digital Software and

Add-on

Content includes distribution of software titles and

add-on

content through the network; Network Services includes network services relating to game, video and music content; Hardware and Others includes home gaming consoles, packaged software, game software sold bundled with home gaming consoles, peripheral devices and first-party software for third-party platforms. In the 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 and merchandising; 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 and game applications, 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 networks and DTC streaming services worldwide. In the ET&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.

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SONY GROUP CORPORATION AND CONSOLIDATED SUBSIDIARIES

5.	Financial instruments

(1)	Financial instruments by measurement method

The carrying amount of Sony’s assets and liabilities by measurement method as of March 31, 2024 and 2025 are as follows:


	Yen in millions
	March 31
	2024		2025
Assets:
Financial assets required to be measured at amortized cost (“AC”)
Investments and advances in the Financial Services segment
Debt securities		396,481		521,054
Housing loans in the banking business		3,574,468		3,763,261
Other loans		16,892		21,950
Trade and other receivables*
Trade receivables		2,140,220		1,923,433
Other receivables		5,971		12,364
Other financial assets
Time deposit		48,416		6,179
Security deposit		107,316		150,950
Non-current other receivables in the Pictures segment		155,525		104,943
Other		47,849		70,514
Financial assets required to be measured at fair value through profit or loss (“FVPL”)
Investments and advances in the Financial Services segment
Debt securities		1,295,877		1,394,539
Equity securities		3,210,296		3,740,189
Other financial assets
Debt securities		22,388		20,555
Equity securities		258,939		487,454
Derivative assets		72,423		86,141
Financial assets designated to be measured at FVPL
Investments and advances in the Financial Services segment
Debt securities		1,243,109		893,972
Financial assets required to be measured at fair value through other comprehensive income (“FVOCI”)
Investments and advances in the Financial Services segment
Debt securities		9,593,519		8,849,130
Other financial assets
Debt securities		140		139
Financial assets designated to be measured at FVOCI
Investments and advances in the Financial Services segment
Equity securities		7,305		5,880
Other financial assets
Equity securities		309,710		382,947

Total assets		22,506,844		22,435,594

Current assets		2,669,709		2,534,666
Non-current assets		19,837,135		19,900,928

*	The amounts of trade and other receivables exclude contract assets within trade and other receivables, and contract assets in the consolidated statements of financial position.

Cash and cash equivalents are excluded from the table above. Refer to Note 27.

F-3

SONY GROUP CORPORATION AND CONSOLIDATED SUBSIDIARIES


	Yen in millions
	March 31
	2024		2025
Liabilities:
Financial liabilities required to be measured at AC
Short-term borrowings		1,812,605		1,843,959
Current portion of long-term debt		217,711		287,445
Trade and other payables
Trade payables		1,803,920		1,927,633
Other payables		221,542		123,454
Deposits from customers in the banking business *1		3,845,607		4,243,962
Long-term debt		2,058,117		2,066,842
Deferred consideration *2		107,368		95,942
Investment contract liabilities		60,392		62,772
Other financial liabilities		65,790		79,340
Financial liabilities required to be measured at FVPL
Other financial liabilities
Derivative liabilities		29,287		154,526
Contingent consideration		50,343		25,785
Financial liabilities designated to be measured at FVPL
Other financial liabilities
Redeemable noncontrolling interests		54,028		52,963

Total liabilities		10,326,710		10,964,623

Current liabilities		7,881,832		8,323,430
Non-current liabilities		2,444,878		2,641,193

*1	Deposits from customers in the banking business include the non-current portion that is recorded within other financial liabilities in the consolidated statements of financial position.

*2	Deferred consideration is recorded within other financial liabilities or trade and other payables in the consolidated statements of financial position.

F-3

SONY GROUP CORPORATION AND CONSOLIDATED SUBSIDIARIES

(2)	Financial instruments measured at fair value on a recurring basis

The following section describes the valuation techniques used by Sony to measure different financial instruments at fair value, including an indication of the level in the fair value hierarchy in which each instrument is generally classified.

Debt instruments and equity instruments

Where quoted prices of financial instruments are available in an active market, these instruments are classified in Level 1 of the fair value hierarchy. Level 1 financial instruments include exchange-traded equity instruments. If quoted market prices are not available for the specific financial instruments or the market is inactive, then fair values are estimated by using pricing models, quoted prices of financial instruments with similar characteristics or discounted cash flow method and mainly classified in Level 2 of the fair value hierarchy. Level 2 financial instruments include debt instruments with quoted prices that are not traded as actively as exchange-traded instruments, such as the majority of government bonds and corporate bonds. In certain cases where there is limited activity or less transparency around inputs to the valuation, these instruments are classified within Level 3 of the fair value hierarchy. Level 3 financial instruments primarily include certain private equity investments, investment funds, securitized products which are not classified within Level 1 or Level 2 and domestic and foreign corporate bonds for which quoted prices are not available in a market and where there is less transparency around inputs. Sony estimates the fair value for private equity investments primarily by using comparable company analysis and discounted cash flow method. The price book-value ratio and price earnings ratio of comparable companies, as well as cost of capital and EBITDA multiples for the terminal value used in discounted cash flow method, are primarily used as significant unobservable inputs in the fair value measurement of equity securities classified as Level 3. The fair value increases (decreases) as the price book-value ratio and price earnings ratio of comparable companies rise (decline). In addition, the fair value increases (decreases), as the cost of capital declines (rises) and EBITDA multiples rise (decline), both of which are used in discounted cash flow method. Sony estimates the fair value for certain investment funds by using the net asset value. Sony estimates the fair value for securitized products and domestic and foreign corporate bonds for which quoted prices are not available in a market and where there is less transparency around inputs by using third-party information such as indicative quotes from dealers without adjustment or discounted cash flow method. For validating the fair values of Level 3 financial instruments, Sony primarily uses internal models which include management judgment or estimation of assumptions that market participants would use in pricing the asset.

Derivatives

Exchange-traded derivatives valued using quoted prices are classified within Level 1 of the fair value hierarchy. However, few classes of derivative contracts are listed on an exchange; thus, the majority of Sony’s derivative positions are valued using internally developed models that use as their basis readily observable market parameters, meaning parameters that are actively quoted and can be validated to external sources, including pricing services. Depending on the types and contractual terms of derivatives, fair value can be modeled using a series of techniques, such as the Black-Scholes model, which are consistently applied. For derivative products that have been established for some time, Sony uses models that are widely accepted in the financial services industry. These models reflect the contractual terms of the derivatives, including the period to maturity, and market-based parameters such as interest rates, volatility, and the credit rating of the counterparty. Further, many of these models do not contain a high level of subjectivity as the techniques used in the models do not require significant judgment, and inputs to the model are readily observable from actively quoted markets. Such instruments are generally classified within Level 2 of the fair value hierarchy. If significant unobservable inputs are used in the models, such instruments are classified within Level 3.

In determining the fair value of Sony’s interest rate swap derivatives, Sony uses the present value of expected cash flows based on market observable interest rate yield curves commensurate with the term of each instrument. For foreign currency derivatives, Sony’s approach is to use forward contract valuation models employing market observable inputs, such as spot currency rates and time value. These derivatives are classified within Level 2 since Sony primarily uses observable inputs in its valuation of its derivative assets and liabilities.

F-4

SONY GROUP CORPORATION AND CONSOLIDATED SUBSIDIARIES

The fair value of Sony’s assets and liabilities that are measured at fair value on a recurring basis as of March 31, 2024 and 2025 is as follows:


	Yen in millions
	March 31, 2024
									Presentation in the consolidated statements of financial position
	Level 1		Level 2		Level 3		Total		Investments and advances in the Financial Services segment (Current)		Other financial assets (Current)		Investments and advances in the Financial Services segment (Non-current)		Other financial assets (Non-current)
Assets:
Financial assets required to be measured at FVPL
Debt securities
Japanese national government bonds		-		423,129		-		423,129		-		-		423,129		-
Japanese local government bonds		-		1,846		-		1,846		-		-		1,846		-
Japanese corporate bonds		-		27,296		20		27,316		-		-		27,296		20
Foreign government bonds		39,363		192,325		-		231,688		-		-		231,688		-
Foreign corporate bonds		-		11,981		2,933		14,914		-		-		11,981		2,933
Investment funds		-		552,017		67,355		619,372		-		-		599,937		19,435
Equity securities		3,451,655		8,146		9,434		3,469,235		-		-		3,210,296		258,939
Derivative assets
Interest rate contracts		-		49,619		-		49,619		-		1,009		-		48,610
Foreign exchange contracts		-		20,425		-		20,425		-		18,774		-		1,651
Equity contracts		-		-		2,379		2,379		-		2,379		-		-
Financial assets designated to be measured at FVPL
Debt securities
Japanese national government bonds		-		1,021,309		-		1,021,309		4,302		-		1,017,007		-
Japanese local government bonds		-		13,945		-		13,945		5,310		-		8,635		-
Japanese corporate bonds		-		3,302		-		3,302		3,302		-		-		-
Foreign government bonds		-		39,472		-		39,472		7,390		-		32,082		-
Foreign corporate bonds		-		159,158		5,923		165,081		49,578		-		115,503		-
Financial assets required to be measured at FVOCI
Debt securities
Japanese national government bonds		-		7,057,395		-		7,057,395		300		-		7,057,095		-
Japanese local government bonds		-		48,712		-		48,712		550		-		48,162		-
Japanese corporate bonds		-		743,804		138,848		882,652		11,414		-		871,238		-
Foreign government bonds		-		1,221,208		-		1,221,208		-		-		1,221,068		140
Foreign corporate bonds		-		266,362		34,757		301,119		28,363		-		272,756		-
Securitized products		-		60,565		22,008		82,573		-		-		82,573		-
Financial assets designated to be measured at FVOCI
Equity securities		67,834		-		249,181		317,015		-		-		7,305		309,710

Total assets		3,558,852		11,922,016		532,838		16,013,706		110,509		22,162		15,239,597		641,438


									Presentation in the consolidated statements of financial position
	Level 1		Level 2		Level 3		Total		Other financial liabilities (Current)		Other financial liabilities (Non-current)
Liabilities:
Financial liabilities required to be measured at FVPL
Derivative liabilities
Interest rate contracts		-		6,450		-		6,450		406		6,044
Foreign exchange contracts		-		17,493		-		17,493		16,297		1,196
Equity contracts		3,428		1,916		-		5,344		5,344		-
Contingent consideration		-		-		50,343		50,343		26,193		24,150
Financial liabilities designated to be measured at FVPL
Redeemable noncontrolling interests		-		-		54,028		54,028		-		54,028

Total liabilities		3,428		25,859		104,371		133,658		48,240		85,418

F-

SONY GROUP CORPORATION AND CONSOLIDATED SUBSIDIARIES


	Yen in millions
	March 31, 2025
									Presentation in the consolidated statements of financial position
	Level 1		Level 2		Level 3		Total		Investments and advances in the Financial Services segment (Current)		Other financial assets (Current)		Investments and advances in the Financial Services segment (Non-current)		Other financial assets (Non-current)
Assets:
Financial assets required to be measured at FVPL
Debt securities
Japanese national government bonds		-		411,764		-		411,764		-		-		411,764		-
Japanese local government bonds		-		1,225		-		1,225		-		-		1,225		-
Japanese corporate bonds		-		19,828		33		19,861		-		-		19,828		33
Foreign government bonds		41,867		179,346		-		221,213		-		-		221,213		-
Foreign corporate bonds		-		24,657		2,849		27,506		-		-		24,657		2,849
Investment funds		-		666,662		66,863		733,525		-		-		715,852		17,673
Equity securities		4,210,845		7,120		9,678		4,227,643		-		-		3,740,189		487,454
Derivative assets
Interest rate contracts		-		65,433		-		65,433		-		493		-		64,940
Foreign exchange contracts		-		15,255		-		15,255		-		13,821		-		1,434
Equity contracts		910		911		2,346		4,167		-		4,167		-		-
Bond contracts		1,286		-		-		1,286		-		1,286		-		-
Financial assets designated to be measured at FVPL
Debt securities
Japanese national government bonds		-		757,357		-		757,357		3,494		-		753,863		-
Japanese local government bonds		-		8,596		-		8,596		8,596		-		-		-
Foreign government bonds		-		50,569		-		50,569		5,639		-		44,930		-
Foreign corporate bonds		-		71,408		6,042		77,450		25,659		-		51,791		-
Financial assets required to be measured at FVOCI
Debt securities
Japanese national government bonds		-		6,134,141		-		6,134,141		35,000		-		6,099,141		-
Japanese local government bonds		-		71,752		-		71,752		11,055		-		60,697		-
Japanese corporate bonds		-		693,016		111,792		804,808		11,087		-		793,721		-
Foreign government bonds		-		1,315,058		-		1,315,058		4,612		-		1,310,307		139
Foreign corporate bonds		-		353,862		61,068		414,930		29,447		-		385,483		-
Securitized products		-		59,702		48,878		108,580		-		-		108,580		-
Financial assets designated to be measured at FVOCI
Equity securities		86,339		-		302,488		388,827		-		-		5,880		382,947

Total assets		4,341,247		10,907,662		612,037		15,860,946		134,589		19,767		14,749,121		957,469


									Presentation in the consolidated statements of financial position
	Level 1		Level 2		Level 3		Total		Other financial liabilities (Current)		Other financial liabilities (Non-current)
Liabilities:
Financial liabilities required to be measured at FVPL
Derivative liabilities
Interest rate contracts		-		15,835		-		15,835		1,016		14,819
Foreign exchange contracts		-		15,778		-		15,778		15,778		-
Equity contracts		514		-		118,606		119,120		514		118,606
Bond contracts		3,793		-		-		3,793		3,793		-
Contingent consideration		-		-		25,785		25,785		11,594		14,191
Financial liabilities designated to be measured at FVPL
Redeemable noncontrolling interests		-		-		52,963		52,963		10,912		42,051

Total liabilities		4,307		31,613		197,354		233,274		43,607		189,667

Cash and cash equivalents are excluded from the tables above. Refer to Note 27.

Transfers of debt securities from Level 2 to Level 1 were 2,384 million yen and 2,557 million yen for the fiscal years ended March 31, 2024 and 2025, respectively, as quoted prices in active markets for certain debt securities became available. Transfers of debt securities from Level 1 to Level 2 were 830 million yen and 2,081 million yen for the fiscal years ended March 31, 2024 and 2025, respectively, as quoted prices in active markets for certain debt securities became unavailable.

Transfers of equity securities from Level 2 to Level 1 were 1,480 million yen for the fiscal year ended March 31, 2025, as quoted prices in active markets for certain equity securities became available. There were no transfers of equity securities from Level 2 to Level 1 for the fiscal year ended March 31, 2024.

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SONY GROUP CORPORATION AND CONSOLIDATED SUBSIDIARIES

Previously, the amount of transfers was calculated by assuming that transfers between levels occurred at the beginning of each quarterly consolidated accounting period. However, beginning in the fiscal year ended March 31, 2025, the calculation of the amount of transfers has been changed to assume that transfers between levels occurred as of April 1 if transfers between levels occur during the interim consolidated accounting period or as of October 1 if they occur after October 1. The amount of transfers between levels for the fiscal year ended March 31, 2024 is calculated in the same way.

The valuation techniques used to measure the fair value of assets and liabilities classified as Level 3, significant unobservable inputs, and their range are as follows:

Valuation

technique(s)

Significant
unobservable
inputs

Range

March 31, 2024

March 31, 2025

Financial assets required to be measured at FVOCI

Debt securities

Japanese corporate bonds

Discounted cash flow

Credit spread

27bp-72bp

53bp-71bp

Securitized products

90bp-170bp

80bp-140bp

Financial liabilities required to be measured at FVPL

Derivative liabilities

Equity contracts

Option pricing

(Black-Scholes)

Volatility

47.7%-57.0%

* bp = basis point

The decrease (increase) in fair value is the result of rise (decline) of credit spreads.

For the above assets classified as Level 3, the fair value would not change significantly, if one or more of the significant unobservable inputs were changed to reflect reasonably possible alternative assumptions.

The

changes

in fair value of Level 3 assets and liabilities for the fiscal years ended March 31, 2024 and 2025 are as follows:


	Yen in millions
	Fiscal year ended March 31, 2024
			Total gains (losses) *1
	Beginning balance		Net income *2			Other comprehensive income * 3			Purchases		Sales and settlements			Transfers to Level 3 *4		Transfers out of Level 3 45			Other			Ending balance
Assets:
Financial assets required to be measured at FVPL
Debt securities
Japanese corporate bonds		38		-			-			20		(18	)		-		-			(20	)		20
Foreign corporate bonds		3,377		171			-			317		-			-		-			(932	)		2,933
Investment funds		60,796		3,781			736			8,677		(6,635	)		-		-			-			67,355
Equity securities		6,789		595			1			1,951		(152	)		-		-			250			9,434
Derivative assets
Equity contracts		4,692		(2,816	)		503			-		-			-		-			-			2,379
Financial assets designated to be measured at FVPL
Debt securities
Foreign corporate bonds		3,541		642			-			1,740		-			-		-			-			5,923
Financial assets required to be measured at FVOCI
Debt securities
Japanese corporate bonds		171,622		8			(32,782	)		-		-			-		-			-			138,848
Foreign corporate bonds		24,672		1,315			255			29,150		(19,148	)		-		(1,487	)		-			34,757
Securitized products		40,591		1,483			34			7,905		(24,437	)		-		(3,568	)		-			22,008
Financial assets designated to be measured at FVOCI
Equity securities		324,028		-			(6,987	)		6,342		(73,874	)		-		(1,175	)		847			249,181
Liabilities:
Financial liabilities required to be measured at FVPL
Contingent consideration		51,512		182			6,614			4,363		(12,328	)		-		-			-			50,343
Financial liabilities designated to be measured at FVPL
Redeemable noncontrolling interests		47,326		(3,396	)		5,345			5,294		(541	)		-		-			-			54,028

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SONY GROUP CORPORATION AND CONSOLIDATED SUBSIDIARIES


	Yen in millions
	Fiscal year ended March 31, 2025
			Total gains (losses) *1
	Beginning balance		Net income *2			Other comprehensive income * 3			Purchases		Sales and settlements			Transfers to Level 3 *4		Transfers out of Level 3 45			Other *6			Ending balance
Assets:
Financial assets required to be measured at FVPL
Debt securities
Japanese corporate bonds		20		-			-			33		-			-		-			(20	)		33
Foreign corporate bonds		2,933		(53	)		-			-		(31	)		-		-			-			2,849
Investment funds		67,355		2,580			(94	)		35,176		(37,968	)		-		-			(186	)		66,863
Equity securities		9,434		(1,725	)		(1	)		2,391		(421	)		-		-			-			9,678
Derivative assets
Equity contracts		2,379		-			(33	)		-		-			-		-			-			2,346
Financial assets designated to be measured at FVPL
Debt securities
Foreign corporate bonds		5,923		119			-			-		-			-		-			-			6,042
Financial assets required to be measured at FVOCI
Debt securities
Japanese corporate bonds		138,848		9			(27,065	)		-		-			-		-			-			111,792
Foreign corporate bonds		34,757		(939	)		(452	)		48,023		(17,628	)		-		(2,693	)		-			61,068
Securitized products		22,008		(1,605	)		37			40,906		(12,468	)		-		-			-			48,878
Financial assets designated to be measured at FVOCI
Equity securities		249,181		-			(16,430	)		7,200		(2,185	)		-		(1,699	)		66,421			302,488
Liabilities:
Financial liabilities required to be measured at FVPL
Derivative liabilities
Equity contracts		-		121,082			(2,476	)		-		-			-		-			-			118,606
Contingent consideration		50,343		(3,013	)		(260	)		3,101		(24,221	)		-		-			(165	)		25,785
Financial liabilities designated to be measured at FVPL
Redeemable noncontrolling interests		54,028		(610	)		(348	)		6,199		(6,306	)		-		-			-			52,963

*1	For liability items, gains are presented as negative and losses are presented as positive.

*2	Gains (losses) recognized in net income are included in financial services revenue, other operating (income) expense, net, financial income and financial expenses in the consolidated statements of income.

Gains (losses) recognized in other comprehensive income are included in changes in equity instruments measured at fair value through other comprehensive income, changes in debt instruments measured at fair value through other comprehensive income and exchange differences on translating foreign operations in the consolidated statements of comprehensive income.

Previously, the amount of transfers was calculated by assuming that transfers between levels occurred at the beginning of each quarterly consolidated accounting period. However, from the fiscal year ended March 31, 2025, the calculation of the amount of transfers has been changed to assume that transfers between levels occurred as of April 1 if transfers between levels occur during the interim consolidated accounting period or as of October 1 if they occur after October 1. The amount of transfers between levels for the fiscal year ended March 31, 2024 is calculated in the same way.

*5	Certain financial assets were transferred from Level 3 because observable market data became available.

*6	The increase in equity securities designated to be measured at fair value through other comprehensive income is mainly due to a change in the scope of consolidation.

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SONY GROUP CORPORATION AND CONSOLIDATED SUBSIDIARIES

The

changes

in unrealized gains (losses) recognized in net income for Level 3 assets and liabilities held as of March 31, 2024 and 2025 are as follows:


	Yen in millions
	Fiscal year ended March 31
	2024			2025
Assets:
Financial assets required to be measured at FVPL
Debt securities
Foreign corporate bonds		171			(39	)
Investment funds		3,887			(1,801	)
Equity securities		495			(840	)
Derivative assets
Equity contracts		(2,816	)		-
Financial assets designated to be measured at FVPL
Debt securities
Foreign corporate bonds		646			119
Financial assets required to be measured at FVOCI
Debt securities
Japanese corporate bonds		8			9
Foreign corporate bonds		1,315			(939	)
Securitized products		1,509			(1,610	)
Liabilities:
Financial liabilities required to be measured at FVPL
Derivative liabilities
Equity contracts		-			(121,082	)
Contingent consideration		(1,488	)		(1,223	)
Financial liabilities designated to be measured at FVPL
Redeemable noncontrolling interests		3,270			600

Gains (losses) recognized in net income are included in financial services revenue, other operating (income) expense, net, financial income and financial expenses in the consolidated statements of income.

Sony generally elects to designate investments in equity instruments held to promote its businesses and to maintain and enhance the business relationship as financial assets measured at fair value through other comprehensive income based on the purposes of holding the investments.

Equity instruments measured at fair value through other comprehensive income as of March 31, 2024 and 2025 comprise the following:


	Yen in millions
	March 31
	2024		2025
Marketable equity instruments		67,834		86,339
Non-marketable equity instruments		249,181		302,488

Total		317,015		388,827

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SONY GROUP CORPORATION AND CONSOLIDATED SUBSIDIARIES

Significant marketable equity instruments measured at fair value through other comprehensive income as of March 31, 2024 and 2025 are as follows:


	Yen in millions
	March 31
	2024		2025
KADOKAWA Corporation		7,545		52,951
ANYCOLOR Inc.		8,568		10,815
Bilibili Inc.		29,410		-

The balances of the

non-marketable

instruments measured at fair value through other comprehensive income by major sector categories as of March 31, 2024 and 2025 are as follows:


	Yen in millions
	March 31
	2024		2025
Entertainment *1		187,294		181,000
Manufacturing *2		34,610		91,099
Information technology, Communication and Service *3		24,348		27,987

*1	Major investments included Epic Games, Inc.

*2	Major investments included Nichia Corporation as of March 31, 2024.

Major investments included Japan Advanced Semiconductor Manufacturing, Inc. and Nichia Corporation as of March 31, 2025.

*3	Major investments included Semiconductor Energy Laboratory Co., Ltd.

In order to enhance the efficiency of using assets held effectively, Sony derecognizes equity instruments measured at fair value through other comprehensive income upon the sale of the investment. Information relating to investments derecognized during the fiscal years ended March 31, 2024 and 2025 is as follows:


	Yen in millions
	Fiscal year ended March 31
	2024		2025
Fair value at derecognition		86,265		32,275
Cumulative amount recognized in other comprehensive income, net of tax*		12,326		(29,508	)
Dividend received		122		-

*	The cumulative amount recognized in other comprehensive income, net of tax, was transferred to retained earnings upon derecognition of the equity instruments.

F-46

SONY GROUP CORPORATION AND CONSOLIDATED SUBSIDIARIES

(3)	Financial instruments measured at amortized cost

The fair values by fair value hierarchy level of certain financial instruments that are measured at amortized cost as of March 31, 2024 and 2025 are summarized as follows:


	Yen in millions
	March 31, 2024
	Fair value								Carrying amount
	Level 1		Level 2		Level 3		Total		Total
Assets:
Debt securities
Japanese corporate bonds		-		9,957		-		9,957		9,950
Foreign corporate bonds		-		3,413		-		3,413		3,386
Securitized products		-		-		378,389		378,389		378,736
Other		-		41		4,368		4,409		4,409
Housing loans in the banking business		-		-		3,634,011		3,634,011		3,574,468

Total assets		-		13,411		4,016,768		4,030,179		3,970,949

Liabilities:
Long-term debt including the current portion		-		1,606,340		78,935		1,685,275		1,704,102
Investment contract liabilities		-		59,578		-		59,578		60,392

Total liabilities		-		1,665,918		78,935		1,744,853		1,764,494


	Yen in millions
	March 31, 2025
	Fair value								Carrying amount
	Level 1		Level 2		Level 3		Total		Total
Assets:
Debt securities
Japanese local government bonds		-		11,696		-		11,696		11,626
Japanese corporate bonds		-		24,273		-		24,273		24,916
Foreign corporate bonds		-		937		-		937		935
Securitized products		-		-		439,132		439,132		439,281
Other		-		29,820		14,364		44,184		44,296
Housing loans in the banking business		-		-		3,709,148		3,709,148		3,763,261

Total assets		-		66,726		4,162,644		4,229,370		4,284,315

Liabilities:
Long-term debt including the current portion		-		1,621,264		101,632		1,722,896		1,754,817
Investment contract liabilities		-		60,558		-		60,558		62,772

Total liabilities		-		1,681,822		101,632		1,783,454		1,817,589

The table above does not include financial instruments measured at amortized cost whose carrying amounts approximate their fair values mainly due to their short-term nature.

The fair values of long-term debt, including the current portion classified as Level 2, were estimated mainly based on discounted future cash flows using Sony’s current rates for similar liabilities.

The fair values of investment contract liabilities classified as Level 2 were determined by using the present value of expected cash flows based on risk-free interest rate yield curves adjusted for items such as credit risk.

Financial instruments classified as Level 3 mainly include housing loans in the banking business, securitized products and certain bonds issued by Sony. In determining the fair value of such financial instruments, Sony uses the present value of expected cash flows based on risk-free interest rate yield curves adjusted for items such as credit risk.

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SONY GROUP CORPORATION AND CONSOLIDATED SUBSIDIARIES

(4)	Income and expenses related to financial instruments in the Financial Services segment

Income and expenses related to financial instruments in the Financial Services segment are recorded in other financial services revenue and other financial services expenses in the consolidated statements of income. Income and expenses related to financial instruments in all segments other than Financial Services segment are recorded in financial income and financial expenses in the consolidated statements of income. Refer to Note 24 for the details of financial income and financial expenses.

The breakdown of income and expenses related to financial instruments in the Financial Services segment for the fiscal years ended March 31, 2023, 2024 and 2025 is as follows:


	Yen in millions
	March 31, 2023
	Financial instruments required to be measured at FVPL		Financial instruments designated to be measured at FVPL			Financial assets measured at AC		Financial liabilities measured at AC			Debt instruments measured at FVOCI		Equity instruments measured at FVOCI		Total
Income* 1
Net gains (losses) recognized in profit or loss		56,150		(109,480	)		14,242		(58,484	)		141,189		-		43,617
Total interest income		-		-			38,787		-			184,519		-		223,306
Dividend income		-		-			-		-			-		195		195
Expenses
Total interest expenses		-		-			-		29,867			-		-		29,867
Impairment losses (gains) on financial assets		-		-			144		-			8		-		152



	Yen in millions
	March 31, 2024
	Financial instruments required to be measured at FVPL		Financial instruments designated to be measured at FVPL			Financial assets measured at AC			Financial liabilities measured at AC			Debt instruments measured at FVOCI			Equity instruments measured at FVOCI		Total
Income* 1
Net gains (losses) recognized in profit or loss		857,653		(120,317	)		5,279			(105,974	)		257,902			-		894,543
Total interest income		-		-			52,060			-			191,209			-		243,269
Dividend income		-		-			-			-			-			459		459
Expenses
Total interest expenses		-		-			-			72,488			-			-		72,488
Impairment losses (gains) on financial assets		-		-			(42	)		-			(3	)		-		(45	)

F-48

SONY GROUP CORPORATION AND CONSOLIDATED SUBSIDIARIES


	Yen in millions
	March 31, 2025
	Financial instruments required to be measured at FVPL* 2		Financial instruments designated to be measured at FVPL			Financial assets measured at AC			Financial liabilities measured at AC		Debt instruments measured at FVOCI			Equity instruments measured at FVOCI		Total
Income* 1
Net gains (losses) recognized in profit or loss		149,946		(123,876	)		12,969			14,830		(48,650	)		-		5,219
Total interest income		-		-			59,507			-		203,044			-		262,551
Dividend income		-		-			-			-		-			186		186
Expenses
Total interest expenses		-		-			-			79,366		-			-		79,366
Impairment losses (gains) on financial assets		-		-			(91	)		-		17			-		(74	)

*1	Income includes investment returns which occurred in the insurance business. Refer to Note 13.

*2	Financial instruments required to be measured at FVPL include the fair value changes attributable to the hedged risks of debt instruments measured at fair value through other comprehensive income designated as the hedged items in fair value hedges.

6.	Financial risk management

(1)	Capital risk

Sony uses Return on Equity (“ROE”) as an indicator for capital risk management.


	March 31
	2024			2025
ROE*		13.7	%		14.5	%

* ROE is calculated using equity attributable to Sony Group Corporation’s stockholders.

Sony manages capital separately for the Financial Services segment and the Sony Group without the Financial Services segment because certain subsidiaries in the Financial Services segment are subject to the below restrictions. Sony also refers to the ratio of stockholders’ equity to total assets of the Sony Group without the Financial Services segment to ensure financial soundness.

In the Financial Services segment, Sony is required to maintain the soundness indicators at a certain level or higher based on the Insurance Business Act and the Banking Act of Japan. Material requirements which Sony is subject to are as follows:

Insurance business: Solvency margin ratio

The life insurance subsidiary and the

non-life

insurance subsidiary have maintained a solvency margin ratio required by the Japanese domestic criteria.

Banking business: Capital adequacy ratio

The banking subsidiary has maintained a capital adequacy ratio required by the Japanese domestic criteria.

Accordingly, lending and borrowing between subsidiaries in the Financial Services segment and the other companies within Sony Group is strictly limited. The carrying amounts of total assets of Sony Financial Group Inc. (“SFGI”) as of March 31, 2024 and 2025 are 20,877,128 million yen and 21,072,828 million yen, respectively. The carrying amounts of total liabilities of SFGI as of March 31, 2024 and 2025 are 19,763,959 million yen and 19,999,916 million yen, respectively.

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SONY GROUP CORPORATION AND CONSOLIDATED SUBSIDIARIES

(2)	Interest rate risk

For interest rate risk inherent in the insurance business, which is included in the Financial Services segment, refer to Note 13. For interest rate risk inherent in the banking business, which is included in the Financial Services segment, refer to (7) Market risks for the banking business.

Risk management policy and exposure

Interest rate risk is the risk the fair value of a financial instrument or future cash flows of the financial instrument will fluctuate because of changes in market interest rates.

Sony without the Financial Services segment is exposed to interest rate risk that is mainly related to its liabilities such as short-term borrowings and long-term debt as well as bonds. The amount of interest will be affected by changes in market interest rates; therefore, Sony is exposed to the interest rate risk that the future cash outflows for interest payments will fluctuate.

Sony raises funds by issuing fixed-rate bonds in order to avoid an increase in future interest payments that is mainly resulting from an increase in interest rates.

Also, Sony utilizes interest rate swap agreements to reduce funding costs, to diversify sources of funding, and to hedge the downside risk on borrowings and debt securities resulting from unfavorable fluctuations of interest rates and currency exchange rates, and from changes in the fair value of financial instruments. Therefore, the interest rate risk associated with cash flows of Sony without the Financial Services segment is not significant.

(3)	Price risk

For price risk inherent in the insurance business, which is included in the Financial Services segment, refer to Note 13. For price risk inherent in the banking business, which is included in the Financial Services segment, refer to (7) Market risks for the banking business.

Risk management policy and exposure

Sony is exposed to securities price risk inherent in holding of equities in other entities in Japan and overseas countries. Sony periodically assesses fair values of equity instruments and the financial conditions of the issuers of such equity instruments, and reviews its portfolio on a regular basis.

Price sensitivity analysis

The table below shows the effects on income before income taxes and other comprehensive income (before considering the tax effects) as of March 31, 2024 and 2025 if market prices of marketable equity instruments (e.g., stocks) had decreased by 10%.


	Yen in millions
	March 31
	2024			2025
Income before income taxes		(24,621	)		(47,269	)
Other comprehensive income (before considering the tax effects)		(6,116	)		(8,114	)

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SONY GROUP CORPORATION AND CONSOLIDATED SUBSIDIARIES

(4)	Liquidity risk

For liquidity risk inherent in the insurance business, which is included in the Financial Services segment, refer to Note 13. This section does not include information regarding the insurance business other than maturity analysis for financial liabilities.

Risk management policy

The description below covers basic financial policy and figures for Sony’s consolidated operations except for the Financial Services segment and certain subsidiaries, which secure liquidity on their own. Furthermore, the banking business in the Financial Services segment is described separately at the end of this section.

Liquidity Management and Market Access

An important financial objective of Sony is to maintain the strength of its financial condition, while securing adequate liquidity for business activities. Sony defines its liquidity sources as the amount of cash and cash equivalents (“cash balance”) (excluding restrictions on capital transfers mainly due to national regulations) and the unused amount of committed lines of credit. Funding requirements that arise from maintaining liquidity are principally covered by cash flow from operating and investing activities (including asset sales) and by the available cash balance; however, Sony also raises funds as needed from financial and capital markets through means such as corporate bonds, commercial paper (“CP”) and bank loans. Sony Group Corporation, Sony Global Treasury Services Plc (“SGTS”), a finance subsidiary in the U.K. and Sony Capital Corporation (“SCC”), a finance subsidiary in the U.S., maintain CP programs with access to the Japanese, U.S. and European CP markets. The borrowing limits under these CP programs, translated into yen, were 1,246.8 billion yen in total for Sony Group Corporation, SGTS and SCC as of March 31, 2025. There were no amounts outstanding under the CP programs as of March 31, 2025. If disruption and volatility occur in financial and capital markets and Sony becomes unable to raise sufficient funds from these sources, Sony may also draw down funds from contractually committed lines of credit from various financial institutions. Sony has a total, translated into yen, of 760.7 billion yen in unused committed lines of credit, as of March 31, 2025. Details of those committed lines of credit are: a 350.0 billion yen committed line of credit contracted with a syndicate of Japanese banks, a 1.7 billion U.S. dollar multi-currency committed line of credit also contracted with a syndicate of Japanese banks and a 1.05 billion U.S. dollar multi-currency committed line of credit contracted with a syndicate of foreign banks. Sony currently believes that it can sustain sufficient liquidity through access to committed lines of credit with financial institutions, together with its available cash balance, even in the event that financial and capital markets become illiquid. Sony considers one of management’s top priorities to be the maintenance of stable and appropriate credit ratings in order to ensure financial flexibility for liquidity and capital management and continued adequate access to sufficient funding resources in the financial and capital markets. However, in the event of a downgrade in Sony’s credit ratings, there are no financial covenants in any of Sony’s material financial agreements with financial institutions that would cause an acceleration of the obligation. Even though the cost of borrowing for some committed lines of credit could change according to Sony’s credit ratings, there are no financial covenants that would cause any impairment on the ability to draw down on unused facilities.

Cash Management

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SONY GROUP CORPORATION AND CONSOLIDATED SUBSIDIARIES

Banking business in the Financial Services segment

In the banking business in the Financial Services segment, by formulating and conforming with liquidity risk management policies, Sony manages its liquidity risks. Sony defines liquidity risk as cash flow risk and market liquidity risk. Cash flow risk is the risk associated with losses due to Sony’s inability to make cash payments because of a failure to maintain sufficient cash reserves at settlement, as well as risks associated with losses if Sony is forced to raise funds under unfavorable conditions in order to fulfill cash payment obligations. The levels of cash flow risks are classified into phases based on the degree of pressure, and methods of risk management and reporting are set out for each phase, while guidelines are formulated and reviewed as necessary. Market liquidity risk is the risk associated with losses due to Sony’s inability to conduct market transactions, in particular due to an inability to unwind its market position at a given time, or due to Sony being forced to complete transactions under unfavorable market conditions, due to market turmoil or other factors. To manage market liquidity risk, Sony works to understand market liquidity conditions that pertain to the types of products it handles. Sony formulates and revises guidelines on a

product-by-product

basis, as necessary. The aforementioned liquidity risk management is carried out by the risk management division. The division periodically reports risk management conditions to the banking subsidiary’s Board of Directors and Executive Committee. In addition, the banking subsidiary’s internal audit division conducts audits of the risk management conditions.

Maturity analysis

The following table summarizes Sony’s financial liabilities as of March 31, 2024 and 2025.


	Yen in millions
	March 31, 2024
	Carrying amount		Total		Within 1 year		1 year to 2 years		2 years to 3 years		3 years to 4 years		4 years to 5 years		5+ years
Deposits from customers in the banking business *1		3,845,607		3,870,349		3,687,051		22,043		11,422		2,728		3,069		144,036
Bonds		544,078		554,986		42,236		112,112		126,786		101,302		80,974		91,576
Borrowings		2,972,629		3,013,803		1,909,097		84,525		259,511		231,829		156,945		371,896
Loan commitments		-		50,965		50,965		-		-		-		-		-
Derivative liabilities *2		29,287		29,557		23,465		1,179		1,178		1,145		953		1,637
Guarantee deposits received		44,864		44,864		31,479		135		9		24		10		13,207
Redeemable noncontrolling interests		54,028		54,389		-		14,794		25,740		99		5,292		8,464


	Yen in millions
	March 31, 2024
	Carrying amount	Total		Within 1 year		1 year to 2 years		2 years to 3 years		3 years to 4 years		4 years to 5 years
Lease liabilities	571,726		671,899		106,505		96,090		85,917		68,624		57,850

		5 years to 6 years		6 years to 7 years		7 years to 8 years		8 years to 9 years		9 years to 10 years		10+ years
			51,240		47,630		37,279		29,390		21,954		69,420

*1	Demand deposits are included in the “Within 1 year” category.

*2	Breakdown of net settlements and gross settlements in the derivative liabilities are presented below.

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SONY GROUP CORPORATION AND CONSOLIDATED SUBSIDIARIES


	Yen in millions
	March 31, 2024
	Total		Within 1 year		1 year to 2 years		2 years to 3 years		3 years to 4 years		4 years to 5 years		5+ years
Derivative contracts
-Net settled
Paid		28,220		22,128		1,179		1,178		1,145		953		1,637
Derivative contracts
-Gross settled
Received		49,187		49,187		-		-		-		-		-
Paid		50,524		50,524		-		-		-		-		-


	Yen in millions
	March 31, 2025
	Carrying amount		Total		Within 1 year		1 year to 2 years		2 years to 3 years		3 years to 4 years		4 years to 5 years		5+ years
Deposits from customers in the banking business *1		4,243,962		4,281,915		4,006,600		96,834		11,141		2,692		10,596		154,052
Bonds		664,390		688,245		114,299		128,972		103,488		93,160		162,927		85,399
Borrowings		2,934,386		2,971,250		1,934,886		264,847		233,755		157,629		21,521		358,612
Loan commitments		-		27,564		27,564		-		-		-		-		-
Derivative liabilities *2		154,526		155,095		21,479		121,611		3,173		2,693		2,340		3,799
Guarantee deposits received		45,017		45,017		31,866		100		21		7		6		13,017
Redeemable noncontrolling interests		52,963		53,750		10,912		21,588		4,447		3,405		2,287		11,111

SONY GROUP CORPORATION AND CONSOLIDATED SUBSIDIARIES

Supplier Finance Arrangements

Sony has entered into supplier finance arrangements with third-party financial institutions for certain transactions with suppliers. Under these arrangements, Sony has obligations to make payments to third-party financial institutions for the same amount as payables based on such transactions with suppliers. Suppliers may receive funds from the third-party financial institutions earlier than the payment due dates. There are no supplier finance arrangements that have a significant impact on liquidity risk.

(5)	Foreign exchange risk

For foreign exchange risk inherent in the insurance business, which is included in the Financial Services segment, refer to Note 13. For foreign exchange risk inherent in the banking business, which is included in the Financial Services segment, refer to (7) Market risks for the banking business.

Risk management policy and exposure

Costs and prices of products and services in transactions denominated in foreign currencies are affected by currency exchange rate fluctuation, which may have adverse impacts on Sony’s business, operating results, and financial condition. Sony seeks to reduce its exposure to foreign exchange risk mainly by using derivatives such as currency forward contracts or investing in securities denominated in the same currency.

The net amount of Sony’s exposure to foreign exchange risk mainly includes the following. Foreign exchange risk exposures that are mitigated by the use of derivatives are excluded.


	Yen in millions
	March 31
	2024		2025
U.S. dollar		81,000		143,720
Euro		282		(2,903	)

*	Net exposures resulting in a liability are presented as negative and net exposures resulting in an asset are presented as positive.

Sensitivity analysis

The table below shows the effects on the income before income taxes regarding the financial instruments denominated in foreign currencies held by Sony as of March 31, 2024 and 2025 if the Japanese yen had strengthened by 10% against the U.S. dollar or euro. If the Japanese yen had weakened by 10% against the U.S. dollar or euro, there would be an opposite impact on income before income taxes in the same amount. This analysis was performed based on the assumption that all other variables stay the same.


	Yen in millions
	March 31
	2024			2025
U.S. dollar		(8,100	)		(14,372	)
Euro		(28	)		290

(6)	Credit risk

Risk management policy and exposure

Sony is exposed to credit risk in relation to its customers with outstanding trade receivables and the financial institutions who are the counterparties of derivative instruments that Sony holds to hedge the foreign exchange risk related to such trade receivables.

In order to manage risks inherent in trade receivables, Sony assesses management conditions and creditworthiness of prospective customers and sets credit limits before commencement of business in accordance with Sony’s internal rules regarding credit management. After commencement of business, in accordance with Sony’s internal rules regarding receivable management, Sony seeks to promptly identify and mitigate the risk of uncollectible receivables due to deterioration in the financial conditions of customers by managing payment due dates and outstanding balances by customer, consistently reviewing the status of transactions, payment history, and trends in the outstanding balance of customers, and actively monitoring their management and business conditions. Sony makes judgments about the creditworthiness of customers based on past collection experience, the current conditions, forecasts of future economic conditions and ongoing credit risk evaluations when calculating the loss allowances for the expected credit losses from trade receivables.

F-54

Risk exposure analysis

(a)	Changes in the loss allowances

Trade and other receivables, and contract assets including

non-current

other receivables in the Pictures segment


	Yen in millions
	Lifetime expected credit losses
	Fiscal year ended March 31
	2024			2025
Balance at beginning of the fiscal year		27,534			33,066

Changes due to financial assets recognized at beginning of the fiscal year:

- Financial assets that have been derecognized		(2,018	)		(1,843	)
New financial assets originated or purchased		9,464			9,408
Write-offs		(5,990	)		(11,936	)
Changes in models/risk parameters		643			(1,400	)
Foreign exchange and other movements		3,433			(448	)

Balance at end of the fiscal year		33,066			26,847

Debt Securities


	Yen in millions
	12-month expected credit losses *
	Fiscal year ended March 31
	2024			2025
Balance at beginning of the fiscal year		61			58

Changes due to financial assets recognized at beginning of the fiscal year:
- Financial assets that have been derecognized		(10	)		(3	)
New financial assets originated or purchased		8			9
Changes in models/risk parameters		(1	)		(3	)
Foreign exchange and other movements		-			-

Balance at end of the fiscal year		58			61

*	For all debt securities, Sony considers that the credit risk has not increased significantly since initial recognition, and therefore the loss allowance is measured at an amount equal to 12-months of expected credit losses.

The loss allowances for debt securities are for debt securities measured at fair value through other comprehensive income as of March 31, 2024 and 2025.

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SONY GROUP CORPORATION AND CONSOLIDATED SUBSIDIARIES

Loans


	Yen in millions
	12-month expected credit losses			Lifetime expected credit losses			Total
Balance as of April 1, 2023		313			824			1,137

Changes due to financial assets recognized as of April 1, 2023:
- Transfer to lifetime expected credit losses		(1	)		1			-
- Transfer to 12-month expected credit losses		106			(106	)		-
- Financial assets that have been derecognized		(24	)		(227	)		(251	)
New financial assets originated or purchased		45			823			869
Changes in models/risk parameters		(162	)		187			24
Foreign exchange and other movements		-			-			-

Balance as of March 31, 2024		277			1,502			1,779

Changes due to financial assets recognized as of March 31, 2024:
- Transfer to lifetime expected credit losses		(2	)		2			-
- Transfer to 12-month expected credit losses		166			(166	)		-
- Financial assets that have been derecognized		(23	)		(156	)		(179	)
New financial assets originated or purchased		32			16			48
Changes in models/risk parameters		(217	)		189			(28	)
Foreign exchange and other movements		-			-			-

Balance as of March 31, 2025		233			1,387			1,620

Loans that are credit-impaired as of March 31, 2024 and 2025 were not significant.

(b)	Description of collateral held as security and other credit enhancements

Sony assesses creditworthiness of each customer on an individual project basis. When it is determined to extend credit to a customer, the amount of collateral to be obtained will be based on the credit assessment for the customer by management. Collateral held as security includes, but is not limited to the following:

•

Floating charges on all assets and businesses of the customer

•

Specific or related guarantees

•

Debt guarantees from customers and loan agreements with favorable and unfavorable covenant terms

The carrying amount of the financial assets, without taking into account any collateral held or credit enhancements, represents Sony’s maximum exposure to credit risk on these assets. For maximum exposure to credit risk of securities to which impairment requirements in IFRS 9 “Financial Instrument” (“IFRS 9”) are not applied without taking into account any collateral held or other credit enhancements, refer to Note 5.

In the Financial Services segment, housing loans have sufficient collateral, which results in no significant loss allowance being recognized. As of March 31, 2024 and 2025, there were

securities received as collateral for short-term lending transactions which were permitted to be sold or repledged.

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SONY GROUP CORPORATION AND CONSOLIDATED SUBSIDIARIES

(c)	Credit risk exposure by risk rating grades

Credit risk exposure by risk rating grades as of March 31, 2024 and 2025, is as follows:

Trade and other receivables, and contract assets including

non-current

other receivables in the Pictures segment


	Yen in millions
	March 31
	2024		2025
Outstanding receivables by overview period of overdue (Gross carrying amount)
Not past due or due within 30 days		2,224,058		1,972,150
Due over 30 to 90 days		47,942		46,897
Due over 90 days		75,740		56,512

Total		2,347,740		2,075,559

Debt securities

Debt securities held in the Financial Services segment are substantially all composed of investment grade debt securities, and, as a financial instrument subject to IFRS 9 impairment requirements,

12-month

expected losses are recorded.

The following table shows an analysis of the gross carrying amount for debt securities measured at amortized cost or at fair value through other comprehensive income based on a credit rating system in the Financial Services segment, which is primarily a composite of external credit ratings as of March 31, 2024 and 2025.


	Yen in millions
	March 31
	2024		2025
Debt securities by credit ratings (Gross carrying amount)
AAA		659,016		895,392
AA		3,122,639		3,245,007
A		7,111,836		7,052,650
BBB		15,668		27,660
Other		3,004		45,849

Total		10,912,163		11,266,558

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SONY GROUP CORPORATION AND CONSOLIDATED SUBSIDIARIES

Loans

Loans held in the banking business in the Financial Services segment are regularly reassessed by the credit ratings of debtors, and as a financial instrument subject to IFRS 9 impairment requirements,

12-month

or lifetime expected credit losses are recorded depending on whether or not the credit risk has increased significantly since initial recognition or not.

The following table shows an analysis of the gross carrying amount for loans measured at amortized cost based on credit ratings by debtors in the banking business in the Financial Services segment as of March 31, 2024 and 2025.


	Yen in millions
	March 31, 2024
	Normal*						Other than Normal						Total
	12-month expected credit losses		Lifetime expected credit losses		Sub total		12-month expected credit losses		Lifetime expected credit losses		Sub total		Total
Loans
Housing loans		3,570,142		247		3,570,389		1,998		2,706		4,704		3,575,093
Other		15,755		378		16,133		5		96		101		16,234

Total		3,585,897		625		3,586,522		2,003		2,802		4,805		3,591,327


	Yen in millions
	March 31, 2025
	Normal*						Other than Normal						Total
	12-month expected credit losses		Lifetime expected credit losses		Sub total		12-month expected credit losses		Lifetime expected credit losses		Sub total		Total
Loans
Housing loans		3,758,168		525		3,758,693		2,393		2,661		5,054		3,763,747
Other		20,861		322		21,183		7		84		91		21,274

Total		3,779,029		847		3,779,876		2,400		2,745		5,145		3,785,021

*	Normal is defined as borrowers who have strong results and no particular problems with their financial position.

(d)	Credit risk for debt securities designated to be measured at fair value through profit or loss

The credit risk exposures for debt securities designated to be measured at fair value through profit or loss were 1,243,109 million yen, and 893,972 million yen as of March 31, 2024 and 2025, respectively. The changes in the fair value attributable to the changes in credit risk were a decrease of 969

million yen and

208

million yen for the fiscal years ended March 31, 2024 and 2025, respectively. The cumulative changes were an increase of

1,566

million yen and

1,357

million yen as of March 31, 2024 and 2025, respectively.

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SONY GROUP CORPORATION AND CONSOLIDATED SUBSIDIARIES

(7)	Market risks for the banking business

In the banking business, by formulating and conforming with market risk management policies, Sony manages the risk of loss for when the value of assets and liabilities (including

off-balance-sheet

items), and income from assets and liabilities could be adversely affected by changes in various market risk factors, such as interest rates, exchange rates and stock prices. Market risk management policies specify details such as risk management methods and procedures. Based on ALM and risk management policies determined by the banking subsidiary’s Board of Directors, an ALM committee and a risk management committee typically meet once each month to understand and confirm actual conditions and deliberate future measures and risk conditions. On a daily basis, the risk management division maintains an overall understanding of interest, exchange rates and durations of financial assets and liabilities, and monitors Value at Risk (“VaR”), which quantifies the maximum expected loss which could occur during a given holding period and at a given probability, and interest rate sensitivity analysis, and confirms regulatory compliance. Sony also conducts interest rate swaps and other derivative transactions to hedge against interest and exchange rate fluctuation risks. VaR is calculated by the historical method (time period: 250 days, confidence level: 99.0%) and is used for quantitative analysis in managing interest and exchange rate fluctuation risks. The total market risk volume as of March 31, 2024 and 2025 was 18,046 million yen and 32,076 million yen, respectively. VaR is based on the assumption that risk parameters other than interest rates and exchange rates are fixed. In the event that fluctuations exceed the rational forecast band for interest and exchange rates, the risk impact may exceed the amount calculated. The aforementioned market risk management is carried out primarily by the risk management division. The division periodically reports risk management conditions to the banking subsidiary’s Board of Directors and Executive Committee. In addition, the banking subsidiary’s internal audit division conducts audits of the risk management conditions.

7.	Inventories

Inventories are comprised of the following:


	Yen in millions
	March 31
	2024		2025
Finished products		1,028,359		837,759
Work in process		314,020		314,011
Raw materials, purchased components and supplies		176,265		159,000

Inventories		1,518,644		1,310,770

For the fiscal years ended March 31, 2023, 2024 and 2025 the write-downs of inventories were 110,901 million yen, 117,633 million yen and 107,164 million yen, respectively.

For the fiscal years ended March 31, 2023, 2024 and 2025 the amounts of inventories expensed and included in cost of sales were 3,317,553 million yen, 3,635,969 million yen and 3,630,110 million yen, respectively. Included within these amounts for the fiscal years ended March 31, 2023, 2024 and 2025 were employee benefits expenses of 238,133 million yen, 307,041 million yen and 309,934 million yen, respectively, and depreciation and amortization expenses of 189,230 million yen, 287,798 million yen and 335,829 million yen, respectively. Other cost of sales mainly consists of material costs, subcontractor costs and other professional service fees.

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SONY GROUP CORPORATION AND CONSOLIDATED SUBSIDIARIES

8.	Investments in associates and joint ventures

There are no associates or joint ventures that are individually material to Sony.

The carrying amounts of investments in associates and joint ventures that are not individually material to Sony, as of March 31, 2024 and 2025 are as follows:


	Yen in millions
	March 31
	2024		2025
Investments accounted for using the equity method
Associates		363,611		303,321
Joint ventures		60,133		44,397

Total		423,744		347,718

Sony’s share of comprehensive income, profit or loss and other comprehensive income, of associates and joint ventures that are not individually material to Sony for the fiscal years ended March 31, 2023, 2024 and 2025 are as follows:


	Yen in millions
	Fiscal year ended March 31
	2023		2024			2025
Share of profit or loss
Associates		22,637		19,727			19,746
Joint ventures		1,812		(9,225	)		(27,547	)

Total		24,449		10,502			(7,801	)

Share of other comprehensive income
Associates		3,659		5,311			(1,268	)
Joint ventures		40		37			20

Total		3,699		5,348			(1,248	)

Share of comprehensive income
Associates		26,296		25,038			18,478
Joint ventures		1,852		(9,188	)		(27,527	)

Total		28,148		15,850			(9,049	)

On January 31, 2024, Sony Bank Inc. (“Sony Bank”), a wholly-owned subsidiary of Sony, transferred a portion of its shares of Sony Payment Services Inc. (“Sony Payment Services”), which was a consolidated subsidiary of Sony Bank, to a special purpose company established by private equity funds which are managed by Blackstone Inc. and its affiliates. Upon the transfer, Sony Payment Services became an affiliate of Sony accounted for using the equity method and Sony has recorded a total of 19,763 million yen in other operating (income) expense, net for the fiscal year ended March 31, 2024, reflecting both a realized gain on the shares transferred and a remeasurement gain based on the fair value of the shares Sony will continue to hold after the transfer. The amounts of assets and liabilities of Sony Payment Services that were derecognized as a result of the transfer were not material.

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SONY GROUP CORPORATION AND CONSOLIDATED SUBSIDIARIES

9.	Property, plant and equipment

The changes in property, plant and equipment for the fiscal years ended March 31, 2024 and 2025 are as follows:


	Yen in millions
	Land			Buildings			Machinery and equipment			Construction in progress			Total
Balance as of April 1, 2023:
Cost		79,291			921,156			2,202,010			201,299			3,403,756
Accumulated depreciation and impairment losses		(37	)		(541,853	)		(1,515,838	)		(1,164	)		(2,058,892	)

Carrying amount		79,254			379,303			686,172			200,135			1,344,864

Changes in carrying amount:
Additions		6,068			14,886			100,199			374,735			495,888
Acquisitions through business combinations		-			912			472			12			1,396
Reclassifications		616			76,731			314,967			(394,995	)		(2,681	)
Disposals or classified as held for sale *1		(2,077	)		(2,361	)		(3,416	)		(1,414	)		(9,268	)
Depreciation *2		-			(39,781	)		(281,807	)		-			(321,588	)
Impairment losses		-			(76	)		(258	)		(11	)		(345	)
Translation adjustment		2,085			15,913			7,366			5,729			31,093
Other		-			(1,744	)		(15,032	)		57			(16,719	)

Total changes		6,692			64,480			122,491			(15,887	)		177,776

Balance as of March 31, 2024:
Cost		85,983			1,033,758			2,551,174			185,287			3,856,202
Accumulated depreciation and impairment losses		(37	)		(589,975	)		(1,742,511	)		(1,039	)		(2,333,562	)

Carrying amount		85,946			443,783			808,663			184,248			1,522,640

Changes in carrying amount:
Additions		2,815			19,701			76,224			248,163			346,903
Acquisitions through business combinations		258			12,511			3,964			1,221			17,954
Reclassifications		371			56,556			213,401			(273,978	)		(3,650	)
Disposals or classified as held for sale *1		(657	)		(1,957	)		(5,762	)		(984	)		(9,360	)
Depreciation *2		-			(45,722	)		(301,344	)		-			(347,066	)
Impairment losses		-			(1,154	)		(645	)		(203	)		(2,002	)
Translation adjustment		(162	)		(2,051	)		901			497			(815	)
Other		54			(212	)		(10,904	)		118			(10,944	)

Total changes		2,679			37,672			(24,165	)		(25,166	)		(8,980	)

Balance as of March 31, 2025:
Cost		88,662			1,093,460			2,719,283			159,963			4,061,368
Accumulated depreciation and impairment losses		(37	)		(612,005	)		(1,934,785	)		(881	)		(2,547,708	)

Carrying amount		88,625			481,455			784,498			159,082			1,513,660

*1	An asset or disposal group for which the cash flows are expected to arise principally from sale rather than continuing use is classified to current asset as an asset held for sale.

Depreciation expenses are allocated to the cost of inventory and are recognized in cost of sales as inventory is sold, or are directly recognized in selling, general and administrative expenses and research and development expenditures in the consolidated statements of income, depending on the use of the asset.

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SONY GROUP CORPORATION AND CONSOLIDATED SUBSIDIARIES

10.

Leases

Sony leases communication and commercial equipment, plant, office space, warehouses, employees’ residential facilities and other assets.

(1)	Right-of-use assets as a lessee

The changes in ROU assets for the fiscal years ended March 31, 2024 and 2025 are as follows:


	Yen in millions
	Land			Buildings			Machinery and equipment			Total
Balance as of April 1, 2023:
Carrying amount		15,238			413,063			49,762			478,063

Changes in the carrying amount
Increase due to new lease agreements and remeasurement of lease liabilities		177			73,038			25,179			98,394
Decrease due to termination of lease agreements and remeasurement of lease liabilities		(74	)		(10,396	)		(467	)		(10,937	)
Depreciation		(1,169	)		(82,576	)		(11,097	)		(94,842	)
Other		643			31,379			695			32,717

Total changes		(423	)		11,445			14,310			25,332

Balance as of March 31, 2024:
Carrying amount		14,815			424,508			64,072			503,395

Changes in the carrying amount
Increase due to new lease agreements and remeasurement of lease liabilities		6,104			102,348			6,366			114,818
Decrease due to termination of lease agreements and remeasurement of lease liabilities		(4	)		(13,615	)		(1,334	)		(14,953	)
Depreciation		(1,342	)		(87,916	)		(12,774	)		(102,032	)
Other		(288	)		20,928			(183	)		20,457

Total changes		4,470			21,745			(7,925	)		18,290

Balance as of March 31, 2025:
Carrying amount		19,285			446,253			56,147			521,685

(2)	Income, expenses, and cash flows (except for depreciation) arising from lease contracts as a lessee and lessor are as follows:


	Yen in millions
	Fiscal year ended March 31
	2023			2024			2025
Interest expenses on lease liabilities		10,382			12,833			15,401
Expenses related to short-term leases accounted for applying an exemption		36,807			20,798			35,767
Income from subleases		(1,784	)		(1,589	)		(1,202	)
Net cash outflows for leases		89,681			100,438			109,673

Refer to Note 6 for the maturity analysis of Sony’s financial liabilities including lease liabilities.

F-

SONY GROUP CORPORATION AND CONSOLIDATED SUBSIDIARIES

11.	Goodwill and intangible assets

(1)

Goodwill

The changes in goodwill for the fiscal years ended March 31, 2024 and 2025 are as follows:


	Yen in millions
	Fiscal year ended March 31
	2024			2025
Balance at beginning of the fiscal year
Cost		1,649,041			1,884,627
Accumulated impairments		(373,929	)		(397,527	)

Carrying amount		1,275,112			1,487,100

Increase (decrease) due to:
Acquisitions		70,791			44,424
Disposals or classified as held for sale		(14,491	)		-
Impairments		-			-
Translation adjustments		155,688			(22,803	)

Total changes		211,988			21,621

Balance at end of the fiscal year
Cost		1,884,627			1,903,617
Accumulated impairments		(397,527	)		(394,896	)

Carrying amount		1,487,100			1,508,721

The carrying amounts of goodwill by segment as of March 31, 2024 and 2025 are as follows:


	Yen in millions
	March 31
	2024		2025
Game & Network Services *1		465,647		460,621
Music *2		710,888		729,593
Pictures *3		279,949		283,201
Entertainment, Technology & Services		15,829		20,636
Imaging & Sensing Solutions		3,953		3,836
Financial Services		10,834		10,834
All Other		-		-

Total		1,487,100		1,508,721

*1	Game & Network Services

All of the goodwill shown in the G&NS line of the table above is allocated to a group of CGUs which comprise the entire G&NS segment.

Intangible assets with indefinite useful lives related to the G&NS business have carrying amounts of 57,438 million yen and 57,434 million yen, as of March 31, 2024 and 2025, respectively, which are included in “Other intangible assets.” Intangible assets with indefinite useful lives include the trademark for PlayStation

, which is assessed to have an indefinite useful life as the trademark for PlayStation

is utilized as the core trademark for Sony’s products and services throughout the G&NS segment and Sony expects to continue using the trademark in the foreseeable future as well.

The recoverable amount of the group of CGUs is determined by the value in use. The value in use is calculated by discounting the estimated future cash flows including a terminal value. The estimated future cash flows are prepared based on the MRP. A terminal value after the final year of the total forecasted period is determined by utilizing a perpetual growth rate. The growth rate and the

pre-tax

discount rate were 1.5% and 9.6% as of March 31, 2024, and 2.0% and 10.9% as of March 31, 2025, respectively.

F-63

SONY GROUP CORPORATION AND CONSOLIDATED SUBSIDIARIES

Music

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

Goodwill related to the worldwide recorded music CGU has carrying amounts of 342,653 million yen and 355,985 million yen, as of March 31, 2024 and 2025, respectively. The recoverable amount of the CGU is determined by the value in use. The value in use is calculated by discounting the estimated future cash flows including a terminal value. The estimated future cash flows are prepared based on the MRP. A terminal value after the final year of the total forecasted period is determined by utilizing a perpetual growth rate. The growth rate and the

pre-tax

discount rate were 1.0% and 12.5% as of March 31, 2024, and 1.0% and 12.2% as of March 31, 2025, respectively.

Goodwill related to the music publishing CGU has carrying amounts of 330,240 million yen and 325,590 million yen, as of March 31, 2024 and 2025, respectively. The recoverable amount of the CGU is determined by the value in use. The value in use is calculated by discounting the estimated future cash flows including a terminal value. The estimated future cash flows are prepared based on the MRP. A terminal value after the final year of the total forecasted period is determined by utilizing a perpetual growth rate. The growth rate and the

pre-tax

discount rate were 3.0% and 11.4% as of March 31, 2024, and 3.0% and 11.1% as of March 31, 2025, respectively.

Pictures

Goodwill shown in the Pictures line of the table above is primarily allocated to the animation distribution CGU.

Goodwill related to the animation distribution CGU has carrying amounts of 141,155 million yen and 139,236 million yen, as of March 31, 2024 and 2025, respectively. The recoverable amount of the CGU is determined by the value in use. The value in use is calculated by discounting the estimated future cash flows including a terminal value. The estimated future cash flows are prepared based on the MRP, with revenues in years beyond the MRP based on declining growth rates. A terminal value is based on a revenue multiple applied to the final year of the total forecasted period. The growth rates beyond the MRP period were 5.0% to 12.0% and 5.0% to 12.0%, and the

pre-tax

discount rates were 15.9% and 16.4% as of March 31, 2024 and 2025, respectively.

The value in use calculation uses key assumptions such as the

pre-tax

discount rate, perpetual growth rate, competitive and regulatory environment, and technology trends. For each assumption, historical experience, external information, competitors and industry trends are taken into account. Sony does not expect the recoverable amounts to be lower than the carrying amounts even when the growth rate and

pre-tax

discount rate that are used in the evaluation of the recoverable amounts change within a reasonably possible range.

F-6

SONY GROUP CORPORATION AND CONSOLIDATED SUBSIDIARIES

(2)	Content assets

The changes in content assets for the fiscal years ended March 31, 2024 and 2025 are as follows:


	Yen in millions
	Film costs			Broadcasting rights			Music catalogs			Artist contracts			Music distribution rights			Game content			Content assets Total
Balance as of April 1, 2023:
Cost		4,320,022			419,025			1,008,942			32,484			45,988			97,386			5,923,847
Accumulated amortization and impairment losses		(3,747,092	)		(306,468	)		(256,648	)		(16,498	)		(12,539	)		(22,720	)		(4,361,965	)

Carrying amount		572,930			112,557			752,294			15,986			33,449			74,666			1,561,882

Changes in carrying amount:
Additions *1		329,104			97,028			20,842			3,061			146			83,757			533,938
Acquisitions through business combinations and other *2		-			-			229,884			15,075			2,627			-			247,586
Disposals or classified as held for sale		(35,927	)		(7,371	)		-			(224	)		-			(227	)		(43,749	)
Amortization		(397,855	)		(93,240	)		(43,779	)		(1,394	)		(3,146	)		(31,594	)		(571,008	)
Impairment losses		(13,454	)		(883	)		-			(16	)		-			(1,064	)		(15,417	)
Translation adjustment		76,678			16,150			106,777			3,168			2,045			10,063			214,881

Total changes		(41,454	)		11,684			313,724			19,670			1,672			60,935			366,231

Balance as of March 31, 2024:
Cost		5,216,247			528,970			1,401,970			54,131			52,498			170,058			7,423,874
Accumulated amortization and impairment losses		(4,684,771	)		(404,729	)		(335,952	)		(18,475	)		(17,377	)		(34,457	)		(5,495,761	)

Carrying amount		531,476			124,241			1,066,018			35,656			35,121			135,601			1,928,113

Changes in carrying amount:
Additions *1		425,914			112,579			141,927			4,941			17			56,013			741,391
Acquisitions through business combinations and other *2		1,868			-			202,660			3,273			5,784			-			213,585
Disposals or classified as held for sale		(43,614	)		(97	)		-			(564	)		-			-			(44,275	)
Amortization		(328,167	)		(110,057	)		(51,825	)		(2,760	)		(3,639	)		(39,381	)		(535,829	)
Impairment losses		(14,449	)		(88	)		-			-			(13	)		(545	)		(15,095	)
Translation adjustment		(9,886	)		(2,894	)		(23,970	)		(651	)		(132	)		(1,309	)		(38,842	)

Total changes		31,666			(557	)		268,792			4,239			2,017			14,778			320,935

Balance as of March 31, 2025:
Cost		5,522,693			555,679			1,716,674			61,012			57,952			221,406			8,135,416
Accumulated amortization and impairment losses		(4,959,551	)		(431,995	)		(381,864	)		(21,117	)		(20,814	)		(71,027	)		(5,886,368	)

Carrying amount		563,142			123,684			1,334,810			39,895			37,138			150,379			2,249,048

The additions in Film costs include the cost of films internally produced and acquired from third party projects. Film costs acquired from third party projects are not a significant portion of Film costs recorded by Sony. The additions in Broadcasting rights, Music catalogs, Artist contracts and Music distribution rights mainly represent acquisitions through contracts with third parties. The additions in Game content primarily include approximately equal amounts of internally developed game content and externally acquired game content for the fiscal year ended March 31, 2024, and include only internally developed game content for the fiscal year ended March 31, 2025.

*2	Refer to Notes 27 (7) and 30 (2).

F-

SONY GROUP CORPORATION AND CONSOLIDATED SUBSIDIARIES

(3)	Other intangible assets

The changes in other intangible assets for the fiscal years ended March 31, 2024 and 2025 are as follows:


	Yen in millions
	Patent rights, know-how and license agreements			Customer relationships			Trademarks			Software			Television carriage contracts			Other			Total
Balance as of April 1, 2023:
Cost		201,243			66,593			51,747			1,045,743			66,583			199,311			1,631,220
Accumulated amortization and impairment losses		(182,221	)		(44,272	)		(12,534	)		(698,671	)		(40,303	)		(89,377	)		(1,067,378	)

Carrying amount		19,022			22,321			39,213			347,072			26,280			109,934			563,842

Changes in carrying amount:
Additions		8,854			-			20			145,515			-			6,038			160,427
Acquisitions through business combinations		371			2,003			1,887			13			-			123			4,397
Internal development		-			-			-			20,096			-			-			20,096
Disposals or classified as held for sale		(16	)		(1,697	)		(616	)		(5,576	)		(33	)		(244	)		(8,182	)
Amortization		(8,838	)		(10,166	)		(5,874	)		(110,296	)		(4,129	)		(14,587	)		(153,890	)
Impairment losses		(16	)		-			-			(8	)		-			(571	)		(595	)
Translation adjustment		444			2,472			5,094			10,981			3,329			4,963			27,283
Other		97			-			(104	)		2,193			-			38			2,224

Total changes		896			(7,388	)		407			62,918			(833	)		(4,240	)		51,760

Balance as of March 31, 2024:
Cost		212,000			70,560			59,377			1,196,266			75,716			211,848			1,825,767
Accumulated amortization and impairment losses		(192,082	)		(55,627	)		(19,757	)		(786,276	)		(50,269	)		(106,154	)		(1,210,165	)

Carrying amount		19,918			14,933			39,620			409,990			25,447			105,694			615,602

Changes in carrying amount:
Additions		4,121			230			825			169,476			-			5,356			180,008
Acquisitions through business combinations		8,433			4,338			6,288			4,698			-			18,031			41,788
Internal development		-			-			-			23,128			-			-			23,128
Disposals or classified as held for sale		(8	)		(414	)		(1	)		(3,897	)		-			(397	)		(4,717	)
Amortization		(6,734	)		(6,485	)		(5,547	)		(127,401	)		(4,324	)		(15,556	)		(166,047	)
Impairment losses		(10	)		-			-			(10,337	)		-			(3	)		(10,350	)
Translation adjustment		(406	)		(74	)		(478	)		(1,567	)		(358	)		(703	)		(3,586	)
Other		56			-			23			(6,372	)		26			1,653			(4,614	)

Total changes		5,452			(2,405	)		1,110			47,728			(4,656	)		8,381			55,610

Balance as of March 31, 2025:
Cost		216,960			73,654			65,643			1,353,946			73,958			233,542			2,017,703
Accumulated amortization and impairment losses		(191,590	)		(61,126	)		(24,913	)		(896,228	)		(53,167	)		(119,467	)		(1,346,491	)

Carrying amount		25,370			12,528			40,730			457,718			20,791			114,075			671,212

12.	Impairment of non-financial assets

There were

material impairment losses for the fiscal years ended March 31, 2023, 2024 and 2025.

F-66

SONY GROUP CORPORATION AND CONSOLIDATED SUBSIDIARIES

13.	Insurance contracts in the Financial Services segment

(1)	Significant judgments and estimates for insurance contracts

i)	Measurement methods and inputs for insurance contracts

The methods and main inputs used to measure insurance contracts are as follows:


	Weighted average (%)
	March 31
	2024			2025
Mortality rates		1.02	%		1.03	%
Lapse and surrender rates		3.57	%		3.80	%

Sony estimates the mortality and morbidity rates based on the historical and most recent actual outcomes and analyzes the historical experience and trends in data using statistical methods. When estimating the mortality and morbidity rates for each group of insurance contracts, Sony takes into account the characteristics of policyholders including gender, health conditions and smoking habits and the characteristics of the group of insurance contracts such as the selective effects over time. The estimates are revised in a timely manner to reflect changes in lifestyle, as well as changes in social conditions such as improvement of mortality and morbidity rates in the future.

Sony estimates the lapse and surrender rates based on the historical and most recent actual outcomes and determines the probability-weighted lapse and surrender rates for each group of insurance contracts by analyzing historical experience and trends in data using statistical methods. Lapse and surrender rates are estimated, taking into account both ordinary and dynamic lapses, and reflect the tendency to higher surrender rates when the yield on contracts increases or exceeds the guaranteed minimum for certain insurance contracts. In determining the lapse and surrender rates, historical actual data is considered. If there is no or little historical actual data, the actual results of similar products as well as domestic and overseas practical trends are used as reference.

Sony projects estimates of future expenses based on the current expense levels. The expenses comprise expenses directly attributable to the group of insurance contracts, including the allocation of fixed and variable overhead expenses. In addition, Sony applies inflation adjustments to the estimated expenses in future.

ii)	Discretionary participation features of future cash flows

For certain participating insurance contracts other than direct participating contracts, the effect of discretionary changes on the fulfillment cash flows is adjusted in the CSM. Although Sony has discretionary participation features related to the investment policy for these contracts, the investment policy is established based on the market conditions. Therefore, the effect of changes in assumptions that relate to financial risk on the investment policy is included in insurance finance income or expenses. In addition, since the dividend policy can be changed at Sony’s discretion, the effect of changes in the dividend policy on the fulfillment cash flows is adjusted in the CSM.

iii)	Risk adjustments for non-financial risk

Risk adjustments for

non-financial

risk are determined to reflect the compensation that each insurance subsidiary would require for bearing

non-financial

risk, and are allocated to groups of insurance contracts based on an analysis of the risk profiles of the groups. Risk adjustments for

non-financial

risk reflect the diversification benefits, in a way that is consistent with the compensation that the insurance company would require and that reflects its degree of risk aversion.

The risk adjustments for

non-financial

risk are determined mainly using a cost of capital technique. In applying a cost of capital technique, Sony determines the risk adjustment for

non-financial

risk by applying a

cost-of-capital

rate to the amount of capital required for each future reporting date and discounting the result using risk-free rates adjusted for illiquidity. The required capital is determined by estimating the probability distribution of the present value of future cash flows from insurance contracts at each future reporting date and calculating the capital that Sony would require to meet its contractual obligations to pay claims and expenses at a 99.5% confidence level for one year. The

cost-of-capital

rate represents the additional reward that investors require for exposure to the

non-financial

risk. The weighted average

cost-of-capital

rates of Sony for the fiscal years ended March 31, 2024 and 2025 were 3.0% and 3.0%, respectively.

In addition, the risk adjustments determined by applying a cost of capital technique for the fiscal years ended March 31, 2024 and 2025 correspond to the confidence levels of 84.1% and 81.3% (time horizon: the life of the insurance contracts), respectively.

F-67

SONY GROUP CORPORATION AND CONSOLIDATED SUBSIDIARIES

iv)	Discount rates

All cash flows are discounted using risk-free yield curves adjusted to reflect the characteristics of the cash flows and the liquidity of the insurance contracts. Sony determines the risk-free yield curves using the yields on government bonds. The yield curve is determined by incorporating long-term real interest rate and inflation expectations. Regarding extrapolation for the periods in which market data is not available, a method using an ultimate forward rate is applied. Specifically, Sony uses an ultimate forward rate of 3.5% and starts extrapolation in the 40th year (or the 30th year for U.S. dollar). The forward rates for the 41st year (or the 31st year for U.S. dollar) and onwards are extrapolated so that they will converge to the level of the ultimate forward rate in 30 years, using the Smith-Wilson method. To reflect the liquidity characteristics of the insurance contracts, the risk-free yield curves are adjusted by an illiquidity premium. Illiquidity premiums are determined by setting up a reference portfolio of Sony’s assets.

The table below sets out the yield curves used to discount the cash flows of insurance contracts for major currencies (converted at the spot rate).


	Yield curve (%)
	March 31
	2024						2025
Term	JPY			USD			JPY			USD
1 year		0.06	%		5.11	%		0.65	%		4.09	%
5 years		0.38	%		4.25	%		1.13	%		4.01	%
10 years		0.77	%		4.25	%		1.54	%		4.31	%
20 years		1.58	%		4.63	%		2.34	%		4.83	%
30 years		1.95	%		4.37	%		2.69	%		4.68	%
40 years		2.14	%		4.07	%		3.02	%		4.29	%

v)	Investment components

Sony identifies the investment component of an insurance contract by determining the amount that it is required to repay to the policyholder in all circumstances, regardless of whether an insured event occurs or not. These include circumstances in which an insured event occurs, or the contract matures or is terminated without an insured event occurring. Investment components are excluded from insurance revenue and insurance service expenses.

vi)	Determination of coverage units

The amount of the CSM of a group of insurance contracts that is recognized as insurance revenue in each period is determined by identifying the coverage units in the group and recognizing in profit or loss the amount of the CSM allocated to the coverage units provided during the current period. The number of coverage units is determined by considering for each contract the quantity of benefits provided and its expected coverage period. Specifically, Sony determines the quantity of benefits based on:

the death benefit amount in the case of contracts for which the death benefit amount increases or decreases based on the period (e.g., whole life, term life and variable life insurance contracts);

the premium amount proportionate to the insurance period in the case of contracts whose host contract and riders have different coverage types (e.g., disease and health insurance contracts); and

the cash surrender value (or the premium reserve during the annuity payment period) in the case of annuity contracts with investment-related services (e.g., individual variable annuity contracts).

Sony considers the characteristics of insurance contracts and aggregates the quantities of benefits related to insurance coverage, investment-return services and investment-related services when determining the relative weighting of the benefits provided to the policyholder by these services.

vii)	Claim development

Given that the actual amounts of claims do not materially differ from the undiscounted amounts of the claims previously estimated, information about claim development has not been disclosed for the fiscal years ended March 31, 2024 and 2025.

F-6

SONY GROUP CORPORATION AND CONSOLIDATED SUBSIDIARIES

(2)	Reconciliation of insurance contract liabilities

The tables below show the changes in insurance contract liabilities for the fiscal years ended March 31, 2024 and 2025.

(a)	Changes in liabilities for remaining coverage and liabilities for incurred claims


	Yen in millions
	Liability for remaining coverage						Liability for incurred claims *4			Total
	Excluding loss component			Loss component			Liability for incurred claims *4			Total
Balance as of April 1, 2023
Insurance contract assets *1		(93,283	)		-			32,532			(60,751	)
Insurance contract liabilities 23		12,331,738			51,840			126,452			12,510,030

Net amounts		12,238,455			51,840			158,984			12,449,279
Insurance revenue		(586,115	)		-			-			(586,115	)
Insurance service expenses
Incurred claims and other insurance service expenses		-			(3,721	)		276,809			273,088
Amortization of insurance acquisition cash flows		124,518			-			-			124,518
Changes in liabilities for incurred claims		-			-			5,008			5,008
Losses and reversals of losses on onerous contracts		-			4,592			-			4,592

Total insurance service expenses		124,518			871			281,817			407,206

Insurance service result		(461,597	)		871			281,817			(178,909	)
Insurance finance expenses (income)		244,793			2,663			(251	)		247,205

Total amounts recognized in comprehensive income		(216,804	)		3,534			281,566			68,296
Investment component excluded from insurance revenue and insurance service expenses		(944,520	)		-			944,520			-
Cash flows
Premiums received		1,886,124			-			-			1,886,124
Insurance acquisition cash flows		(153,410	)		-			-			(153,410	)
Claims and other insurance service expenses paid		-			-			(1,212,518	)		(1,212,518	)

Total cash flows		1,732,714			-			(1,212,518	)		520,196
Other		(199	)		(41	)		(167	)		(407	)

Balance as of March 31, 2024
Insurance contract assets *1		(90,377	)		-			33,402			(56,975	)
Insurance contract liabilities 23		12,900,023			55,333			138,983			13,094,339

Net amounts		12,809,646			55,333			172,385			13,037,364
Insurance revenue		(622,959	)		-			-			(622,959	)
Insurance service expenses
Incurred claims and other insurance service expenses		-			(5,882	)		304,059			298,177
Amortization of insurance acquisition cash flows		134,818			-			-			134,818
Changes in liabilities for incurred claims		-			-			5,661			5,661
Losses and reversals of losses on onerous contracts		-			14,276			-			14,276

Total insurance service expenses		134,818			8,394			309,720			452,932

Insurance service result		(488,141	)		8,394			309,720			(170,027	)
Insurance finance expenses (income)		(631,892	)		(498	)		(2,415	)		(634,805	)

Total amounts recognized in comprehensive income		(1,120,033	)		7,896			307,305			(804,832	)
Investment component excluded from insurance revenue and insurance service expenses		(992,966	)		-			992,966			-
Cash flows
Premiums received		2,056,493			-			-			2,056,493
Insurance acquisition cash flows		(167,299	)		-			-			(167,299	)
Claims and other insurance service expenses paid		-			-			(1,298,150	)		(1,298,150	)

Total cash flows		1,889,194			-			(1,298,150	)		591,044
Other		(68	)		(46	)		(539	)		(653	)

Balance as of March 31, 2025
Insurance contract assets *1		(81,537	)		2			33,820			(47,715	)
Insurance contract liabilities 23		12,667,310			63,181			140,147			12,870,638

Net amounts		12,585,773			63,183			173,967			12,822,923

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SONY GROUP CORPORATION AND CONSOLIDATED SUBSIDIARIES

(b)	Changes in insurance contract liabilities from insurance contracts not measured under the PAA by measurement component


	Yen in millions
	Estimates of present value of future cash flows			Risk adjustment for non-financial risk			CSM			Total
Balance as of April 1, 2023
Insurance contract assets		(341,096	)		39,067			241,278			(60,751	)
Insurance contract liabilities		10,217,895			381,950			1,811,339			12,411,184

Net amounts		9,876,799			421,017			2,052,617			12,350,433
Changes that relate to future service
Changes in estimates that adjust the CSM		233,415			(18,328	)		(215,087	)		-
Changes in estimates that do not adjust the CSM		6,008			(3,532	)		-			2,476
Effect of contracts initially recognized during the period		(403,124	)		40,912			364,328			2,116

Total changes that relate to future service		(163,701	)		19,052			149,241			4,592
Changes that relate to current service
CSM recognized in profit or loss for the services provided		-			-			(151,841	)		(151,841	)
Change in risk adjustment for non-financial risk due to release of risk		-			(26,899	)		-			(26,899	)
Experience adjustments		5,076			-			-			5,076

Total changes that relate to current service		5,076			(26,899	)		(151,841	)		(173,664	)
Changes that relate to past service		255			(2	)		-			253

Insurance service result		(158,370	)		(7,849	)		(2,600	)		(168,819	)
Insurance finance expenses (income)		185,948			3,262			57,995			247,205

Total amounts recognized in comprehensive income		27,578			(4,587	)		55,395			78,386
Cash flows
Premiums received		1,748,139			-			-			1,748,139
Insurance acquisition cash flows		(138,544	)		-			-			(138,544	)
Claims and other insurance service expenses paid		(1,107,850	)		-			-			(1,107,850	)

Total cash flows		501,745			-			-			501,745
Other		(834	)		52			76			(706	)

Balance as of March 31, 2024
Insurance contract assets		(291,878	)		27,824			207,079			(56,975	)
Insurance contract liabilities		10,697,166			388,658			1,901,009			12,986,833

Net amounts		10,405,288			416,482			2,108,088			12,929,858
Changes that relate to future service
Changes in estimates that adjust the CSM		276,707			10,662			(287,369	)		-
Changes in estimates that do not adjust the CSM		11,762			746			-			12,508
Effect of contracts initially recognized during the period		(431,801	)		44,335			389,234			1,768

Total changes that relate to future service		(143,332	)		55,743			101,865			14,276
Changes that relate to current service
CSM recognized in profit or loss for the services provided		-			-			(151,025	)		(151,025	)
Change in risk adjustment for non-financial risk due to release of risk		-			(28,681	)		-			(28,681	)
Experience adjustments		656			-			-			656

Total changes that relate to current service		656			(28,681	)		(151,025	)		(179,050	)
Changes that relate to past service		6			(6	)		-			-

Insurance service result		(142,670	)		27,056			(49,160	)		(164,774	)
Insurance finance expenses (income)		(661,734	)		(2,250	)		30,155			(633,829	)

Total amounts recognized in comprehensive income		(804,404	)		24,806			(19,005	)		(798,603	)
Cash flows
Premiums received		1,894,792			-			-			1,894,792
Insurance acquisition cash flows		(151,614	)		-			-			(151,614	)
Claims and other insurance service expenses paid		(1,179,036	)		-			-			(1,179,036	)

Total cash flows		564,142			-			-			564,142
Other		2,883			643			(1,334	)		2,192

Balance as of March 31, 2025
Insurance contract assets		(245,602	)		24,501			173,386			(47,715	)
Insurance contract liabilities		10,413,511			417,430			1,914,363			12,745,304

Net amounts		10,167,909			441,931			2,087,749			12,697,589

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SONY GROUP CORPORATION AND CONSOLIDATED SUBSIDIARIES

(3)	Effect of contracts initially recognized in the year

The table below shows the effect of contracts initially recognized during the fiscal years ended March 31, 2024 and 2025 on measurement components of insurance contracts not measured under the PAA.


	Yen in millions
	Fiscal year ended March 31
	2024									2025
	Profitable contracts issued			Onerous contracts issued			Total			Profitable contracts issued			Onerous contracts issued			Total
Estimates of the present value of future cash outflows
Claims and other insurance service expenses		2,117,351			4,844			2,122,195			2,227,649			6,376			2,234,025
Insurance acquisition cash flows		143,674			2,203			145,877			155,135			2,735			157,870

Total estimates of the present value of future cash outflows		2,261,025			7,047			2,268,072			2,382,784			9,111			2,391,895
Estimates of the present value of future cash inflows		(2,666,256	)		(4,940	)		(2,671,196	)		(2,816,078	)		(7,618	)		(2,823,696	)

Total estimates of the present value of future cash flows		(405,231	)		2,107			(403,124	)		(433,294	)		1,493			(431,801	)
Risk adjustment for non-financial risk		40,903			9			40,912			44,060			275			44,335
CSM		364,328			-			364,328			389,234			-			389,234

Total effect on measurement components		-			2,116			2,116			-			1,768			1,768

(4)	Insurance revenue

The table below shows the breakdown of insurance revenue for the fiscal years ended March 31, 2023, 2024 and 2025.


	Yen in millions
	Fiscal year ended March 31
	2023		2024		2025
Insurance contracts not measured under the PAA
Amounts relating to the changes in the liability for remaining coverage
Expected incurred claims and insurance service expenses		152,732		163,182		178,224
Changes in risk adjustments for non-financial risk due to release of risk		23,466		26,899		28,681
CSM recognized in profit or loss for services provided		151,483		151,841		151,025

Total amounts relating to the changes in the liability for remaining coverage		327,681		341,922		357,930
Recovery of insurance acquisition cash flows		98,234		109,824		119,490

Total insurance revenue for the insurance contracts not measured under the PAA		425,915		451,746		477,420
Insurance contracts measured under the PAA		128,655		134,369		145,539

Total insurance revenue		554,570		586,115		622,959

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SONY GROUP CORPORATION AND CONSOLIDATED SUBSIDIARIES

(5)	Timing of when the CSM is expected to be recognized in profit or loss

The table below shows when Sony expects to recognize the CSM in profit or loss for insurance contracts not measured under the PAA as of March 31, 2024 and 2025.


	CSM
	Yen in millions
	Within 1 year		1 year to 2 years		2 years to 3 years		3 years to 4 years		4 years to 5 years		5 years to 10 years		More than 10 years		Total
As of March 31, 2024		125,233		117,663		109,776		100,912		92,671		376,011		1,185,822		2,108,088
As of March 31, 2025		122,591		114,961		107,412		97,307		89,960		362,794		1,192,724		2,087,749

(6)	Information of net investment returns and insurance finance income or expenses

The table below shows the information related to net investment returns on assets and insurance finance expenses (income) recognized in profit or loss and other comprehensive income for the fiscal years ended March 31, 2023, 2024 and 2025.


	Yen in millions
	Fiscal year ended March 31
	2023			2024			2025
Amounts recognized in profit or loss
Net investment returns *1
Financial assets measured at FVPL		(59,193	)		715,388			10,104
Interest income from debt instruments required to be measured at FVOCI		179,207			180,822			182,436
Currency exchange differences		93,858			156,970			(16,412	)
Other		(12,374	)		(35,463	)		(36,466	)

Total net investment returns		201,498			1,017,717			139,662

Insurance finance expenses (income) *2
Effect of changes in the value of underlying items of variable life insurance and individual variable annuity contracts and changes in interest rates and other financial risks		(176,328	)		685,726			(5,684	)
Interest accreted		174,107			183,188			193,523
Currency exchange differences		103,391			173,230			(20,958	)
Other		(15,771	)		(12,444	)		(13,320	)

Total insurance finance expenses (income)		85,399			1,029,700			153,561

Amounts recognized in profit or loss		116,099			(11,983	)		(13,899	)


Amounts recognized in other comprehensive income
Net investment returns
Underlying assets		(1,131,508	)		(969,774	)		(969,331	)

Total net investment returns		(1,131,508	)		(969,774	)		(969,331	)

Insurance finance expenses (income) *2
Effect of changes in interest rates and other financial risks		(1,010,761	)		(782,495	)		(788,366	)
Other		44			-			-

Total insurance finance expenses (income)		(1,010,717	)		(782,495	)		(788,366	)

Amounts recognized in other comprehensive income		(120,791	)		(187,279	)		(180,965	)


Total net investment returns and insurance finance income or expenses		(4,692	)		(199,262	)		(194,864	)

*1	Included in other financial services revenue in the consolidated statements of income.

*2	Expenses are presented as positive and income is presented as negative.

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SONY GROUP CORPORATION AND CONSOLIDATED SUBSIDIARIES

(7)	Underlying items of insurance contracts measured under the variable fee approach

The table below shows the underlying items of insurance contracts measured under the variable fee approach and their fair values as of March 31, 2024 and 2025.


	Yen in millions
	March 31
	2024		2025
Cash and cash equivalents		19,411		35,235
Debt securities
Japanese national/local government bonds and corporate bonds		42,349		34,936
Foreign national/local government bonds and corporate bonds		312,919		478,751
Equity securities		1,855,432		2,375,201
Other		2,390		2,057

Total fair values of the underlying items of insurance contracts measured under the variable fee approach		2,232,501		2,926,180

(8)	Disclosure of transition to IFRS 17

IFRS 17 was effective for Sony as of April 1, 2023. As a result, the effect of adopting IFRS 17 on Sony’s total equity as of April 1, 2022, the transition date for IFRS 17, was a decrease of 1,490,667 million yen, which consisted of an increase of 409,654 million yen of retained earnings and a decrease of 1,900,321

million yen of accumulated other comprehensive income, mainly due to the effect of the changes in the discount rate used in measuring insurance contract liabilities and other measurement method differences between IFRS 4 “Insurance Contracts” and IFRS 17. Upon transition to IFRS 17 as of April 1, 2022, Sony determined that it would be impracticable to apply the full retrospective approach to certain groups of insurance contracts, as the necessary information was unavailable due to restrictions of contract data and systems in the past or it was impossible to recreate past estimation without the use of hindsight. Sony has applied alternative transition methods (the modified retrospective approach or the fair value approach) to groups of insurance contracts for which the full retrospective approach is impracticable as of the date of the transition.

Sony has applied the following approaches on transition to IFRS 17:


Year of issue (fiscal year)		Transition approach
2015 and thereafter		For all groups of insurance contracts: Full retrospective approach
1993 – 2014		For groups of insurance contracts with direct participation features and certain groups of insurance contracts without direct participation features: Fair value approach
1993 – 2014		For other groups of insurance contracts: Modified retrospective approach
In and before 1992		For all groups of insurance contracts: Fair value approach

F-74

SONY GROUP CORPORATION AND CONSOLIDATED SUBSIDIARIES

Modified retrospective approach

The objective of the modified retrospective approach was to achieve the closest outcome to retrospective application possible using reasonable and supportable information available without undue cost or effort. Sony has applied each of the following modifications only to the extent that it did not have reasonable and supportable information to apply IFRS 17 retrospectively.

Sony has applied the following modifications to certain groups of insurance contracts:

for groups of contracts issued, initiated or acquired from April 1, 1993 to March 31, 2015, the future cash flows on initial recognition were estimated by adjusting the amount as of April 1, 2015, which can be determined retrospectively, for the cash flows that were known to have occurred before that date;

for groups of contracts issued, initiated or acquired from April 1, 1993 to March 31, 2013, the illiquidity premiums applied to the observable risk-free yield curves on initial recognition were estimated by determining an average spread between the observable risk-free yield curves and the discount rates, which can be determined retrospectively, for the period from April 1, 2013 to March 31, 2022. The amount of insurance finance income or expenses recognized in accumulated other comprehensive income as of April 1, 2022 was calculated by using this discount rate; and

the risk adjustment for

non-financial

risk on initial recognition was determined by adjusting the amount as of April 1, 2022 for the expected release of risk before that date.

After applying such modifications to fulfillment cash flows, the CSM (or the loss component) on initial recognition was determined as follows:

the amount of the CSM recognized as profit or loss before April 1, 2022 was determined by comparing the remaining coverage units as of April 1, 2022 and the coverage units provided based on groups of insurance contracts before that date; and

the amount allocated to the loss component before April 1, 2022 was determined using the proportion of the loss component relative to the total estimate of the present value of the future cash outflows plus the risk adjustment for

non-financial

risk on initial recognition.

Fair value approach

Under the fair value approach, the CSM (or the loss component) as of April 1, 2022 was determined as the difference between the fair value of a group of insurance contracts and the fulfillment cash flows at that date.

For all insurance contracts measured under the fair value approach, Sony used reasonable and supportable information available as of April 1, 2022 to determine the following matters:

how to identify groups of contracts;

whether a contract meets the definition of an insurance contract with direct participation features; and

how to identify discretionary cash flows for contracts without direct participation features.

For groups of contracts measured under the fair value approach, the discount rates on initial recognition were determined as of April 1, 2022 rather than at the date of initial recognition.

For all insurance contracts measured under the fair value approach, the amount of insurance finance income or expenses recognized in accumulated in other comprehensive income as of April 1, 2022 was determined to be zero.

The effects of transition to IFRS 17 on Sony’s consolidated financial statements are as follows:

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SONY GROUP CORPORATION AND CONSOLIDATED SUBSIDIARIES

i)	Insurance revenue and the CSM by transition approach

Upon transition to IFRS 17, Sony applied either the modified retrospective approach or the fair value approach for groups of insurance contracts where it was impracticable to fully apply IFRS 17 retrospectively. The table below shows insurance revenues by transition approach for the fiscal years ended March 31, 2023, 2024 and 2025, as well as the balances of the CSM by transition approach as of March 31, 2024 and 2025.


	Yen in millions
	Fiscal year ended March 31
	Contracts measured under the modified retrospective approach at transition		Contracts measured under the fair value approach at transition		New contracts and contracts measured under the full retrospective approach at transition		Total
Insurance revenue
2023		190,199		26,988		337,383		554,570
2024		185,731		27,079		373,305		586,115
2025		172,003		29,206		421,750		622,959


	Yen in millions
	Fiscal year ended March 31
	2024												2025
	Contracts measured under the modified retrospective approach at transition			Contracts measured under the fair value approach at transition			New contracts and contracts measured under the full retrospective approach at transition			Total			Contracts measured under the modified retrospective approach at transition			Contracts measured under the fair value approach at transition			New contracts and contracts measured under the full retrospective approach at transition			Total
CSM
Beginning balance of the fiscal year		864,530			58,008			1,130,079			2,052,617			763,669			86,271			1,258,148			2,108,088

Changes that relate to future service		(61,165	)		32,341			178,065			149,241			(89,828	)		556			191,137			101,865
Changes that relate to current service		(66,827	)		(5,834	)		(79,180	)		(151,841	)		(55,642	)		(7,020	)		(88,363	)		(151,025	)
Insurance finance expense (income)		26,954			1,673			29,368			57,995			23,501			781			5,873			30,155
Other		177			83			(184	)		76			(1,090	)		-			(244	)		(1,334	)

Ending balance of the fiscal year		763,669			86,271			1,258,148			2,108,088			640,610			80,588			1,366,551			2,087,749

F-

SONY GROUP CORPORATION AND CONSOLIDATED SUBSIDIARIES

ii)	Changes in accumulated other comprehensive income for financial assets measured at fair value through other comprehensive income due to the application of IFRS 17.

The table below shows the changes in accumulated other comprehensive income during the fiscal years ended March 31, 2024 and 2025 for financial assets measured at fair value through other comprehensive income, among investment assets related to groups of insurance contracts to which Sony applied the modified retrospective approach or the fair value approach as of the date of the transition.


	Yen in millions
	Fiscal year ended March 31
	2024			2025
Beginning balance of the fiscal year		(448,390	)		9,445

Net change in fair value		618,978			778,509
Net amount reclassified to profit or loss		16,903			1,142
Related income tax		(178,046	)		(225,613	)

Ending balance of the fiscal year		9,445			563,483

(9)	Insurance and market risks

Risk management policy and exposure

In the life insurance business, Sony manages various market-related risks in the following manner:

(a)	Insurance risk management

Insurance risk

With respect to insurance underwriting risk, based on the level of policy reserves and capital levels, the life insurance subsidiary manages the insurance portfolio appropriately, such as setting policy limits for each type of insurance as necessary. In addition, underwriting standards and standards for revising and abolishing each product are clearly defined as internal rules and are regularly reviewed.

Concentration of insurance risk

The insurance contract portfolio does not have an excessively concentrated insurance risk.

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SONY GROUP CORPORATION AND CONSOLIDATED SUBSIDIARIES

(b)	Market risk management

Interest rate risk management

Interest rate risk is managed by the risk management division of the life insurance subsidiary based on the policies for interest rate risk management that specify details such as risk management methods and procedures. Based on ALM policies that are determined through such methods as deliberation by the life insurance subsidiary’s Executive Committee, the subsidiary determines and confirms actual risk conditions with its Board of Directors. The division maintains an overall understanding of the interest rates and durations of financial instruments, monitors them based on the analysis of the quantity of risk using VaR, and periodically reports the status of each risk to the life insurance subsidiary’s Board of Directors and Executive Committee.

As part of the ALM management, the life insurance subsidiary invests in financial assets that match the characteristics of the insurance contract obligations, and thereby reduces interest rate risk as much as possible. Through the purchase and sale of financial assets included in their portfolio, the interest rate sensitivity (duration) of financial assets and insurance contract obligations is matched as much as possible so that they ensure sufficient cash flow to settle insurance claims as they come due.

Exchange rate risk management

Exchange rate risk is managed by the risk management division of the life insurance subsidiary based on the policies for exchange rate risk management that specify details such as risk management methods and procedures. The division periodically reports the status of each risk to the life insurance subsidiary’s Board of Directors and Executive Committee.

Equity market price fluctuation risk management

Equity market price fluctuation risk is managed by the risk management division of the life insurance subsidiary based on the policies for equity market price fluctuation risk management that specify details such as risk management methods and procedures. The division periodically reports the status of each risk to the life insurance subsidiary’s Board of Directors and Executive Committee.

Derivative transactions risk management

Derivative transactions are managed by the risk management division of the life insurance subsidiary based on the policies for derivative transactions that specify details such as risk management methods and procedures. The division periodically reports the status of each risk to the life insurance subsidiary’s Board of Directors and Executive Committee.

F-78

SONY GROUP CORPORATION AND CONSOLIDATED SUBSIDIARIES

Sensitivity analysis

Market risk

The table below shows the effects on income before income taxes and equity as of March 31, 2024 and 2025 if the underlying assumptions of the insurance contracts and financial instruments which Sony has in the life insurance business had changed.


		March 31, 2024
		Yen in millions
		Insurance contracts						Financial instruments						Total
Assumption	Changes in assumptions, etc.	Income before income taxes			Equity			Income before income taxes			Equity			Income before income taxes			Equity

Interest rates	50bp decrease		(152,232	)		(653,432	)		165,181			806,432			12,949			153,000
	50bp increase		112,418			548,289			(143,050	)		(705,029	)		(30,632	)		(156,740	)
Fair value of stocks	10% decrease		339,421			244,383			(341,783	)		(246,544	)		(2,362	)		(2,161	)
	10% increase		(344,921	)		(248,343	)		341,783			246,544			(3,138	)		(1,799	)
Foreign exchange rates	10% appreciation of the Yen		468,851			315,357			(470,452	)		(287,872	)		(1,601	)		27,485
	10% depreciation of the Yen		(475,489	)		(320,136	)		470,452			287,872			(5,037	)		(32,264	)
Maintenance expenses rates	10% increase		(4,780	)		(8,024	)		-			-			(4,780	)		(8,024	)
Lapse and surrender rates	10% increase		(13,351	)		(13,140	)		-			-			(13,351	)		(13,140	)
Mortality rates (death protection)	5% increase		(4,892	)		(5,501	)		-			-			(4,892	)		(5,501	)
Mortality rates (third sector / annuity products)	5% increase		1,382			2,054			-			-			1,382			2,054
Morbidity rates	5% increase		(8,239	)		(11,700	)		-			-			(8,239	)		(11,700	)

		March 31, 2025
		Yen in millions
		Insurance contracts						Financial instruments						Total
Assumption	Changes in assumptions, etc.	Income before income taxes			Equity			Income before income taxes			Equity			Income before income taxes			Equity
Interest rates	50bp decrease		(96,388	)		(489,064	)		98,806			620,061			2,418			130,997
	50bp increase		69,393			413,835			(87,517	)		(546,554	)		(18,124	)		(132,719	)
Fair value of stocks	10% decrease		404,020			290,894			(412,232	)		(297,160	)		(8,212	)		(6,266	)
	10% increase		(407,812	)		(293,625	)		412,232			297,160			4,420			3,535
Foreign exchange rates	10% appreciation of the Yen		539,518			366,832			(546,899	)		(339,178	)		(7,381	)		27,654
	10% depreciation of the Yen		(543,155	)		(369,450	)		546,899			339,178			3,744			(30,272	)
Maintenance expenses rates	10% increase		(4,313	)		(5,390	)		-			-			(4,313	)		(5,390	)
Lapse and surrender rates	10% increase		(23,254	)		(34,971	)		-			-			(23,254	)		(34,971	)
Mortality rates (death protection)	5% increase		(4,838	)		(4,710	)		-			-			(4,838	)		(4,710	)
Mortality rates (third sector / annuity products)	5% increase		960			(467	)		-			-			960			(467	)
Morbidity rates	5% increase		(7,191	)		(4,639	)		-			-			(7,191	)		(4,639	)

* bp = basis point

F-

SONY GROUP CORPORATION AND CONSOLIDATED SUBSIDIARIES

Liquidity risk

(a)	Risk management policy and exposure

In line with liquidity risk management policies, the accounting division of each insurance subsidiary prepares and updates cash flow plans in a timely manner based on the reports from departments and manages cash flows, and the risk management division of each insurance subsidiary manages the liquidity risk. The accounting division and risk management division periodically or as needed report such information to each insurance subsidiary’s Board of Directors and Executive Committee.

(b)	Maturity analysis

The following table summarizes the estimated timing of the remaining undiscounted net cash outflows from insurance contract liabilities and investment contract liabilities and the contractual timing of the remaining undiscounted cash inflows arising from securities held in the insurance business as of March 31, 2024 and 2025. The cash flows of insurance contract liabilities are based on assumptions regarding morbidity rates, mortality rates, and lapse rates, which are consistent with the estimates used for the carrying

amounts.


	Yen in millions
	March 31, 2024
	Total		Indefinite Terms		Within 1 year		1 year to 2 years		2 years to 3 years		3 years to 4 years		4 years to 5 years		More than 5 years
Insurance contract liabilities and investment contract liabilities		19,173,131		-		60,673		86,008		127,079		175,412		248,021		18,475,938
Securities held in the insurance business		20,808,629		3,687,375		780,798		341,277		355,062		374,354		305,612		14,964,151

	Yen in millions
	March 31, 2025
	Total		Indefinite Terms		Within 1 year		1 year to 2 years		2 years to 3 years		3 years to 4 years		4 years to 5 years		More than 5 years
Insurance contract liabilities and investment contract liabilities		22,740,658		-		64,000		95,151		157,008		246,745		288,630		21,889,124
Securities held in the insurance business		20,876,179		4,372,358		699,185		358,761		398,222		314,310		283,300		14,450,043

Since the total of the above estimated amounts is the amount before discounting, it exceeds the amount of insurance contract liabilities and securities which is included in investments and advances in the Financial Services segment shown in the consolidated statements of financial position.

(c)	Amounts payable on demand

The table below shows the amounts payable on demand from insurance contracts issued by Sony and the carrying amounts of the related insurance contract portfolios. The amounts payable on demand represent the amount of the cash surrender value to be paid if the insurance contracts are surrendered as of March 31, 2024 and 2025.


	Yen in millions
	March 31
	2024		2025
Amounts payable on demand		12,580,674		13,214,887
Carrying amount		12,870,195		12,642,981

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SONY GROUP CORPORATION AND CONSOLIDATED SUBSIDIARIES

Furthermore, in the Financial Services segment, Sony pledged securities as collateral for cash settlements, variation margins of futures markets and certain other purposes and the pledged securities are as follows:


	Yen in millions
	March 31
	2024		2025
Securities		77,524		140,212

In March 2025, Sony Group Corporation issued unsecured straight bonds in the total principal amount of 110,000 million yen. Sony plans to use 30,000

million yen of the proceeds of the issued bonds for the repayment of debt due on August 29, 2025 and the remaining amount for a portion of the redemption of the thirty-seventh series of unsecured bonds to be redeemed on December 8, 2025.

There are no significant adverse debt covenants or cross-default provisions related to the other short-term borrowings and long-term debt.

15.	Derivative instruments and hedging activities

Sony has certain financial instruments including financial assets and liabilities acquired in the normal course of business. Such financial instruments are exposed to market risk arising from the changes in foreign currency exchange rates, interest rates and stock prices. In applying a consistent risk management strategy for the purpose of reducing such risk, Sony uses derivative financial instruments, which include foreign exchange forward contracts, swap agreements, option contracts, and interest rate swap agreements (including interest rate and currency swap agreements). Certain other derivative financial instruments are entered into in the Financial Services segment for ALM purposes. These instruments are executed with creditworthy financial institutions, and virtually all foreign currency contracts are denominated in U.S. dollars, euros and other currencies of major countries. Other than derivatives utilized in the Financial Services segment for ALM, Sony does not use derivative financial instruments for trading or speculative purposes. These derivative transactions utilized for ALM in the Financial Services segment are executed within certain limits in accordance with an internal risk management policy.

A description of the purpose and classification of the derivative financial instruments held by Sony is as follows:

Foreign exchange forward contracts, swap agreements and currency option contracts

Foreign exchange forward contracts, swap agreements and purchased and written foreign currency option contracts are utilized primarily to limit the exposure affected by changes in foreign currency exchange rates on cash flows generated or anticipated by Sony’s transactions and accounts receivable and payable denominated in foreign currencies. The majority of written foreign currency option contracts expire in the same month as the corresponding purchased foreign currency option contracts.

Sony also entered into foreign exchange forward contracts and foreign currency option contracts which effectively fixed the cash flows from certain forecasted purchase and sale transactions denominated in foreign currencies for the fiscal years ended March 31, 2023, 2024 and 2025. The ineffective portions of the hedging relationships were not significant. Accordingly, these derivatives have been designated as cash flow hedges.

Foreign exchange forward contracts and foreign currency option contracts that do not qualify as hedges are measured at fair value with changes in value recognized in financial income and financial expenses.

Foreign exchange forward contracts, foreign currency option contracts and swap agreements held by certain subsidiaries in the Financial Services segment are measured at fair value with changes in value recognized in financial services revenue.

Interest rate swap agreements (including interest rate and currency swap agreements)

Interest rate swap agreements are utilized primarily to lower funding costs, to diversify sources of funding and to limit Sony’s exposure associated with underlying borrowings and debt securities resulting from adverse fluctuations in interest rates, foreign currency exchange rates and changes in fair values. Interest rate swap agreements entered into in the Financial Services segment are used for reducing the risk arising from the changes in the fair value of fixed rate bonds. In addition, these interest rate swap agreements are used as hedging instruments such as cash flow hedges and fair value hedges. The ineffectiveness of the hedging relationship was not significant for the fiscal years ended March 31, 2023, 2024 and 2025.

F-82

The estimated fair values of Sony’s outstanding derivative instruments are summarized as follows:


	Yen in millions
	March 31, 2024				March 31, 2025
	Asset derivatives		Liability derivatives		Asset derivatives		Liability derivatives

Interest rate contracts
Interest rate swap agreements		49,347		3,876		65,075		12,674
Interest rate swaptions agreements		272		2,574		358		3,161

Foreign exchange contracts
Foreign exchange forward contracts		6,951		11,088		4,173		10,542
Swap agreements		7,442		4,066		5,743		3,117
Currency option contracts purchased		74		791		782		671
Currency option contracts written		-		4		-		3
Other currency contracts		5,958		1,544		4,557		1,445

Equity contracts
Equity future contracts		-		3,428		910		514
Equity swap agreements		-		1,916		911		-
Option contracts		2,379		-		2,346		118,606
Bond contracts
Bond forward contracts written		-		-		1,286		3,793

Total derivatives		72,423		29,287		86,141		154,526

F-83

SONY GROUP CORPORATION AND CONSOLIDATED SUBSIDIARIES

The estimated fair values and maturity analysis for notional amounts of Sony’s outstanding derivative instruments which are designated as hedging instruments are summarized as follows:


	Yen in millions
	March 31, 2024
	Notional amounts							Fair Value
	Within 1 Year		Over 1 Year			Total		Asset derivatives		Liability derivatives		Presentation in the consolidated statements of financial position
Cash flow hedging relationships
Foreign exchange forward contracts		92,973		-			92,973		-		1,580		Current liabilities: Other financial liabilities
Average rate (JPY/USD)		145.7		-
Currency option bought contracts		17,224		-			17,224		70		-		Current assets: Other financial assets
Average rate (JPY/USD)		140.0		-
Currency option sold contracts		17,554		-			17,554		-		791		Current liabilities: Other financial liabilities
Average rate (JPY/USD)		142.7		-
Interest rate swap agreements		-		181,704			181,704		33,098		-		Non-current assets: Other financial assets
Average rate		-		1.5	%


	Yen in millions
	March 31, 2025
	Notional amounts							Fair Value
	Within 1 Year		Over 1 Year			Total		Asset derivatives		Liability derivatives		Presentation in the consolidated statements of financial position
Cash flow hedging relationships
Foreign exchange forward contracts		14,292		-			14,292		178		-		Current assets: Other financial assets
Average rate (JPY/USD)		150.4		-
Currency option bought contracts		43,144		-			43,144		777		-		Current assets: Other financial assets
Average rate (JPY/USD)		145.8		-
Currency option sold contracts		44,365		-			44,365		-		671		Current liabilities: Other financial liabilities
Average rate (JPY/USD)		149.9		-
Interest rate swap agreements		-		179,232			179,232		25,139		-		Non-current assets: Other financial assets
Average rate		-		1.5	%

F-84

SONY GROUP CORPORATION AND CONSOLIDATED SUBSIDIARIES


	Yen in millions
	March 31, 2025
	Notional amounts							Fair Value
	Within 1 Year		Over 1 Year			Total		Asset derivatives		Liability derivatives		Presentation in the consolidated statements of financial position
Fair value hedging relationships
Bond futures contracts written		124,401		-			124,401		-		2,509		Current liabilities: Other financial liabilities
Average unit price		119.8		-
Interest rate swap agreements		-		411,204			411,204		15,029		1,567		Non-current assets: Other financial assets / Non-current liabilities: Other financial liabilities
Average rate		-		3.0	%

Changes in the fair value of hedging instruments related to cash flow hedges recorded in accumulated other comprehensive income for the fiscal years ended March 31, 2024 and 2025 are summarized as follows:


	Yen in millions
	Foreign exchange contracts			Interest rate contracts			Total

Balance as of April 1, 2023		(36	)		18,449			18,413

Changes in fair value of hedging instruments recognized in other comprehensive income		(28,288	)		13,256			(15,032	)
Reclassification adjustments to profit (loss) for the year 12		25,862			(8,880	)		16,982
Deferred tax		742			(1,340	)		(598	)

Balance as of March 31, 2024		(1,720	)		21,485			19,765

Changes in fair value of hedging instruments recognized in other comprehensive income		(6,238	)		854			(5,384	)
Reclassification adjustments to profit (loss) for the year 12		8,824			(8,391	)		433
Deferred tax		(791	)		1,447			656

Balance as of March 31, 2025		75			15,395			15,470

*1	In the consolidated statements of income, the amount reclassified to profit (loss) is included in sales for hedges of foreign exchange contracts and in financial expenses for hedges of interest rate contracts.

*2	For the fiscal years ended March 31, 2024 and 2025, hedge ineffectiveness recognized in profit or loss was not material.

The carrying amounts of hedged items classified as fair value hedges and the accumulative fair value hedge adjustments during the fiscal year ended March 31, 2025 are as follows:

Yen in millions

March 31, 2025

Carrying amount of hedged
items

Accumulative fair value hedge
adjustments

Presentation in the
consolidated statements of
financial position

Asset

Liability

Asset

Liability

Fixed rate bonds

485,960

(3,330

)

Investments and advances
in the Financial Services
segment (Non-current)

F-85

SONY GROUP CORPORATION AND CONSOLIDATED SUBSIDIARIES

16.	Offsetting of financial assets and financial liabilities

Tables below show the gross amounts of financial assets and liabilities, amounts offset, and net amounts presented in the consolidated statements of financial position, as well as the financial assets and liabilities that are subject to enforceable master netting agreements or similar agreements, as of March 31, 2024 and 2025.


	Yen in millions
	March 31, 2024
	Gross amounts recognized financial assets and financial liabilities		Amounts offset in the consolidated statements of financial position		Net amounts presented in the consolidated statements of financial position		Gross amounts not offset in the consolidated statements of financial position
							Financial instruments		Cash collateral		Net amounts
Derivative assets *1		33,661		-		33,661		12,098		17,878		3,685
Trade receivables *2		48,925		47,550		1,375		-		-		1,375

Total assets		82,586		47,550		35,036		12,098		17,878		5,060

Derivative liabilities *1		28,107		-		28,107		13,153		6,522		8,432
Trade payables *2		69,436		47,550		21,886		-		-		21,886
Short-term borrowings *3		1,504,893		-		1,504,893		1,503,455		-		1,438

Total liabilities		1,602,436		47,550		1,554,886		1,516,608		6,522		31,756


	Yen in millions
	March 31, 2025
	Gross amounts recognized financial assets and financial liabilities		Amounts offset in the consolidated statements of financial position		Net amounts presented in the consolidated statements of financial position		Gross amounts not offset in the consolidated statements of financial position
							Financial instruments		Cash collateral		Net amounts
Derivative assets *1		52,388		-		52,388		22,228		12,402		17,758
Trade receivables *2		62,525		61,367		1,158		-		-		1,158

Total assets		114,913		61,367		53,546		22,228		12,402		18,916

Derivative liabilities *1		35,554		-		35,554		22,228		3,547		9,779
Trade payables *2		122,408		61,367		61,041		-		-		61,041
Short-term borrowings *3		1,521,040		-		1,521,040		1,514,271		-		6,769

Total liabilities		1,679,002		61,367		1,617,635		1,536,499		3,547		77,589

Certain subsidiaries have entered into master netting agreements or other similar agreements, which are mainly International Swaps and Derivatives Association (“ISDA”) Master Agreements. An ISDA Master Agreement is an agreement between two counterparties that may have multiple derivative contracts with each other, and such ISDA Master Agreement may provide for the net settlement of all or a specified group of these derivative contracts, through a single payment, in a single currency, in the event of a default on or affecting any one derivative contract, or a termination event affecting all or a specified group of derivative contracts. Master netting agreements create a right of set off, but the master netting agreements do not automatically provide for such set off.

*2	Amounts offset in the consolidated statements of financial position are related to repurchase agreements of products.

*3	Short-term borrowings relate to bond lending transactions and repurchase agreements (repos).

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SONY GROUP CORPORATION AND CONSOLIDATED SUBSIDIARIES

17.	Employee benefits

(1)	Defined benefit and severance plans

Upon terminating employment, employees of Sony Group Corporation and its subsidiaries in Japan are entitled, under most circumstances, to

lump-sum

indemnities or pension payments as described below. Sony Group Corporation and certain of its subsidiaries’ pension plans utilize a point-based plan under which a point is added every year reflecting the individual employee’s performance over that year. Under the point-based plan, the amount of payment is determined based on the sum of cumulative points from past services and interest points earned on the cumulative points regardless of whether or not the employee is voluntarily retiring.

Under the plans, in general, the defined benefits cover 65% of the indemnities under existing regulations to employees. The remaining indemnities are covered by severance payments by the companies. The pension benefits are payable at the option of the retiring employee either in a

lump-sum

amount or monthly pension payments. Contributions to the plans are funded through several financial institutions in accordance with the applicable laws and regulations.

From April 1, 2012, Sony Group Corporation and substantially all of its subsidiaries in Japan have modified existing defined benefit pension plans such that life annuities will no longer accrue additional service benefits, with those participants instead accruing fixed-term annuities. The defined benefit pension plans were closed to new participants and a defined contribution plan was also introduced.

From October 1, 2019, Sony Group Corporation and substantially all of its subsidiaries in Japan have amended their defined benefit pension plans and have implemented defined contribution plans for all employees other than those employees that had retired before the amendments.

In addition, several of Sony’s foreign subsidiaries have defined benefit pension plans or severance indemnity plans, which cover substantially all of their employees. Under such plans, the related cost of benefits is currently funded or accrued. Benefits awarded under these plans are based primarily on the current rate of pay and length of service.

Net defined benefit liability (asset) recognized in the consolidated statements of financial position

Amounts recognized in the consolidated statements of financial position are as follows:


	Yen in millions
	Japanese plans						Foreign plans
	March 31						March 31
	2024			2025			2024			2025

Present value of defined benefit obligations		543,292			488,818			126,987			130,259
Fair value of plan assets		(464,376	)		(439,943	)		(47,893	)		(49,648	)
The impact of minimum funding requirement and asset ceiling		9,837			10,147			3,457			3,225

Net amount		88,753			59,022			82,551			83,836

Amount recognized in the consolidated statements of financial position
Net defined benefit asset		(69,208	)		(84,009	)		(2,328	)		(2,905	)
Net defined benefit liability		157,961			143,031			84,879			86,741

Net amount		88,753			59,022			82,551			83,836

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SONY GROUP CORPORATION AND CONSOLIDATED SUBSIDIARIES

Present value of defined benefit obligations

The changes in the defined benefit obligations for the fiscal years ended March 31, 2024 and 2025 are as follows:


	Yen in millions
	Japanese plans						Foreign plans
	Fiscal year ended March 31						Fiscal year ended March 31
	2024			2025			2024			2025
Beginning balance of the fiscal year		573,143			543,292			124,702			126,987

Current service cost		12,078			11,561			1,783			2,049
Past service cost		11			-			142			216
Interest cost		6,534			7,861			5,349			5,155
Remeasurements:
Change in demographic assumptions		4,399			2,005			(385	)		14
Change in financial assumptions		(16,568	)		(32,255	)		1,170			(3,707	)
Other		1,677			1,514			632			8,894
Translation adjustments		-			-			16,068			(1,382	)
Plan participants’ contributions		-			-			565			231
Benefits paid		(37,787	)		(45,135	)		(11,198	)		(8,198	)
Curtailments and settlements*		-			-			(11,841	)		-
Other		(195	)		(25	)		-			-

Ending balance of the fiscal year		543,292			488,818			126,987			130,259

*	Curtailments and settlements of the foreign plans for the fiscal year ended March 31, 2024 relate mainly to the termination of the defined benefit pension plan at certain U.S. subsidiaries.

The weighted average duration of defined benefit obligations as of March 31, 2024 and 2025 is as follows:

Japanese plans

Foreign plans

March 31

2024

2025

2024

2025

Weighted average duration of defined benefit obligations

10.9 years

10.6 years

12.5 years

11.9 years

The significant actuarial assumptions used to determine the present value of defined benefit obligations as of March 31, 2024 and 2025 are as follows:


	Japanese plans						Foreign plans
	March 31						March 31
	2024			2025			2024			2025
Discount rate		1.4	%		2.1	%		4.1	%		4.1	%

F-88

SONY GROUP CORPORATION AND CONSOLIDATED SUBSIDIARIES

The sensitivities of the defined benefit obligations to changes in the significant weighted-average actuarial assumptions are as follows:


	Yen in millions
	Japanese plans						Foreign plans
	March 31						March 31
Change in assumptions	2024			2025			2024			2025
Discount rate
0.25% decrease		14,362			11,336			3,657			3,628
0.25% increase		(12,077	)		(10,878	)		(3,493	)		(3,437	)

The sensitivity analyses are calculated using the same method used to determine the defined benefit liability recognized in the consolidated statements of financial position while holding all other assumptions consistent.

Fair value of plan assets

Sony’s pension investment policy recognizes the expected growth and the variability risk associated with the long-term nature of pension liabilities, the returns and risks of diversification across asset classes, and the correlation among assets. The asset allocations are designed to maximize returns consistent with levels of liquidity and investment risk that are considered prudent and reasonable. While the pension investment policy gives appropriate consideration to recent market performance and historical returns, the investment assumptions utilized by Sony are designed to achieve a long-term return consistent with the long-term nature of the corresponding pension liabilities.

The investment objectives of Sony’s plan assets are designed to generate returns that will enable the plans to meet their future obligations. The precise amount for which these obligations will be settled depends on future events, including the retirement dates and life expectancy of the plans’ participants. The obligations are estimated using actuarial assumptions, based on current economic conditions and other pertinent factors. Sony’s investment strategy balances the requirement to generate returns, using potentially higher yielding assets such as equity securities, with the need to control risk in the portfolio with less volatile assets, such as fixed-income securities. Risks include, among others, inflation, volatility in equity values and changes in interest rates that could negatively impact the funding level of the plans, thereby increasing their dependence on contributions from Sony. To mitigate any potential concentration risk of plan assets, thorough consideration is given to balancing the portfolio among industry sectors and geographies, taking into account interest rate sensitivity, dependence on economic growth, currency and other factors that affect investment returns. The target allocations as of March 31, 2025, are, as a result of Sony’s asset liability management, 14

% (as of March 31,

2024: 18%) of equity securities, 57

% (as of March 31,

2024: 51%) of fixed income securities and 29

% (as of March 31,

2024: 31%) of other investments for the pension plans of Sony Group Corporation and most of its subsidiaries in Japan, and, on a weighted average basis, 2

% (as of March 31,

2024: 2%) of equity securities, 10

% (as of March 31,

2024: 13%) of fixed income securities and 88

% (as of March 31,

2024: 85%) of other investments for the pension plans of foreign subsidiaries.

F-89

SONY GROUP CORPORATION AND CONSOLIDATED SUBSIDIARIES

The changes in the plan assets for the fiscal years ended March 31, 2024 and 2025 are as follows:


	Yen in millions
	Japanese plans						Foreign plans
	Fiscal year ended March 31						Fiscal year ended March 31
	2024			2025			2024			2025

Beginning balance of the fiscal year		447,747			464,376			56,987			47,893

Interest income		5,424			7,047			2,592			2,202
Remeasurements:
Return on plan assets excluding interest income		32,764			(9,997	)		(2,485	)		1,330
Translation adjustments		-			-			7,521			(462	)
Employer contribution		2,316			2,362			5,381			5,645
Plan participants’ contributions		-			-			585			359
Benefits paid		(23,875	)		(23,845	)		(10,603	)		(7,319	)
Curtailments and settlements*		-			-			(12,085	)		-

Ending balance of the fiscal year		464,376			439,943			47,893			49,648

*	Curtailments and settlements of the foreign plans for the fiscal year ended March 31, 2024 relate mainly to the termination of the defined benefit pension plan at certain U.S. subsidiaries.

Sony makes contributions to its defined benefit pension plans as deemed appropriate by management after considering the fair value of plan assets, expected return on plan assets and the present value of defined benefit obligations. Sony expects to contribute approximately 2 billion yen to the Japanese plans and approximately 6 billion yen to the foreign plans during the fiscal year ending March 31, 2026.

The fair values of the assets held by Japanese and foreign plans are as follows:


	Yen in millions
	Japanese plans
	March 31 2024		Market price in active market
Asset class	March 31 2024		Quoted		Unquoted
Cash and cash equivalents		8,390		8,390		-
Equity securities *1		56,122		50,656		5,466
Fixed income:
Government bonds *2		11,211		1		11,210
Corporate bonds *3		5,403		-		5,403
Commingled funds *4		297,828		-		297,828
Private equity		40,017		-		40,017
Hedge funds		45,405		-		45,405

Total		464,376		59,047		405,329

F-90

SONY GROUP CORPORATION AND CONSOLIDATED SUBSIDIARIES


	Yen in millions
	Japanese plans
	March 31 2025	Market price in active market
Asset class	March 31 2025	Quoted	Unquoted

Cash and cash equivalents	12,192	12,192	-
Equity securities *1	54,103	48,624	5,479
Fixed income:
Government bonds *2	11,565	382	11,183
Corporate bonds *3	5,241	18	5,223
Commingled funds *4	278,892	-	278,892
Private equity	35,115	-	35,115
Hedge funds	42,835	-	42,835

Total	439,943	61,216	378,727

*1	Represents primarily Japanese equity securities.

*2	Includes approximately 84% and 84% of debt securities issued by Japanese national and local governments, and 16% and 16% of debt securities issued by foreign national and local governments as of the fiscal years ended March 31, 2024 and 2025, respectively.

*3	Includes debt securities issued by Japanese and foreign corporations and government related agencies.

*4	Commingled funds represent pooled institutional investments, including primarily investment trusts.


	Yen in millions
	Foreign plans
	March 31 2024		Market price in active market
Asset class	March 31 2024		Quoted		Unquoted
Cash and cash equivalents		4,692		4,692		-
Equity securities *1		84		84		-
Fixed income:
Government bonds *2		1,152		-		1,152
Corporate bonds *3		160		-		160
Asset-backed securities		36		-		36
Insurance contracts *4		21,736		359		21,377
Commingled funds *5		16,682		-		16,682
Real estate and other		3,351		10		3,341

Total		47,893		5,145		42,748


	Yen in millions
	Foreign plans
	March 31 2025	Market price in active market
Asset class	March 31 2025	Quoted	Unquoted
Cash and cash equivalents	4,599	4,599	-
Equity securities *1	101	101	-
Fixed income:
Government bonds *2	1,207	-	1,207
Corporate bonds *3	175	-	175
Asset-backed securities	43	-	43
Insurance contracts *4	23,057	334	22,723
Commingled funds *5	16,929	-	16,929
Real estate and other	3,537	-	3,537

Total	49,648	5,034	44,614

*1	Represents primarily foreign equity securities.

*2	Includes primarily foreign government debt securities.

*3	Includes primarily foreign corporate debt securities.

*4	Represents annuity contracts with or without profit sharing and bulk insurance contracts.

*5	Commingled funds represent pooled institutional investments, including primarily investment trusts.

F-91

SONY GROUP CORPORATION AND CONSOLIDATED SUBSIDIARIES

The impact of minimum funding requirement and asset ceiling

The impact of minimum funding requirement and asset ceiling for the fiscal years ended March 31, 2024 and 2025 is as follows:


	Yen in millions
	Japanese plans				Foreign plans
	Fiscal year ended March 31				Fiscal year ended March 31
	2024		2025		2024			2025
Beginning balance of the fiscal year		6,897		9,837		3,455			3,457

Interest income		83		139		186			174
Remeasurements:
Change in asset ceiling excluding interest income		2,857		171		(728	)		(436	)
Translation adjustments		-		-		544			30

Ending balance of the fiscal year		9,837		10,147		3,457			3,225

(2)	Defined contribution plans

Total defined contribution expenses for the fiscal years ended March 31, 2023, 2024 and 2025 are as follows:


	Yen in millions
	Fiscal year ended March 31
	2023		2024		2025
Japanese plans		11,461		11,662		11,849
Foreign plans		17,271		16,137		17,209

(3)	Employee benefits expenses

Employee benefits expenses included in cost of sales, selling, general and administrative, and financial services expenses in the consolidated statements of income for the fiscal years ended March 31, 2023, 2024 and 2025 are as follows:


	Yen in millions
	Fiscal year ended March 31
	2023		2024		2025
Total employee benefits expenses		1,539,965		1,743,936		1,840,803

Sony Group Corporation may purchase its own shares at any time by a resolution of the Board of Directors up to the retained earnings available for dividends to shareholders, in accordance with the Companies Act of Japan.

Sony Group Corporation’s Board of Directors resolved and approved the setting of parameters for the repurchase of shares of its own common stock pursuant to the Companies Act of Japan and Sony Group Corporation’s Articles of Incorporation at the meeting of the Board of Directors held on May 10, 2022. Under the above resolution, Sony Group Corporation repurchased 8,545,600 shares of its common stock for an amount of 89,118 million yen during the fiscal year ended March 31, 2023, and repurchased 798,000 shares of its common stock for an amount of 10,000 million yen during the fiscal year ended March 31, 2024.

Sony Group Corporation approved on May 17, 2023 by resolution of the Board of Directors the setting of parameters for the repurchase of shares of its own common stock pursuant to the Companies Act of Japan and Sony Group Corporation’s Articles of Incorporation. Under the above resolution, Sony Group Corporation repurchased 14,869,300 shares of its common stock for an amount of 192,532 million yen during the fiscal year ended March 31, 2024, and repurchased 572,400 shares (before the stock split) of its common stock for an amount of 7,468 million yen during the fiscal year ended March 31, 2025.

Sony Group Corporation approved on May 14, 2024 by resolution of the Board of Directors the establishment of a facility for the repurchase of shares of its own common stock pursuant to the Companies Act of Japan and Sony Group Corporation’s Articles of Incorporation. Under the above resolution, Sony Group Corporation repurchased 93,287,300 shares (after the stock split) of its common stock for an amount of 250,000 million yen during the fiscal year ended March 31, 2025.

Sony Group Corporation’s Board of Directors resolved and approved the establishment of a facility for the repurchase of shares of its own common stock pursuant to the Companies Act

of Japan and Sony Group Corporation’s Articles of Incorporation at the meeting of the Board of Directors held on February 13

2025. Under the above resolution, Sony Group Corporation repurchased 7,715,800 shares of its common stock for an amount of 27,930 million yen during the fiscal year ended March 31, 2025.

(2)	Additional paid-in capital

Additional

paid-in

capital consists of surplus that is derived from equity transactions and not recorded in common stock, and its primary component is capital reserves. The Companies Act of Japan provides that no less than 50% of the

paid-in

amount or proceeds of issuance of shares shall be incorporated in common stock, and that the remaining shall be incorporated in capital reserves. Capital reserves may be incorporated in common stock upon approval of the General Meeting of Shareholders.

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SONY GROUP CORPORATION AND CONSOLIDATED SUBSIDIARIES

(3)	Retained earnings

Retained earnings consist of legal reserves and accumulated earnings. The Companies Act of Japan provides that earnings in an amount equal to 10% of cash dividends from retained earnings shall be appropriated as a capital reserve or a legal reserve on the date of distribution of retained earnings until an aggregated amount of capital reserve and legal reserve equals 25% of common stock. Legal reserves may be used upon approval of the General Meeting of Shareholders.

Dividends whose record date falls in the fiscal years ended March 31, 2024 and 2025, and whose effective date falls in the subsequent period are as follows:

(Resolution)

Type of

Total amount of

dividends

(Yen in millions)

Source of

dividends

Dividends

per share (Yen)

Record date

Effective
date

Board of Directors
May 14, 2024

Common stock

54,965

Retained earnings

45.00

March 31, 2024

June 10, 2024

Board of Directors
May 14, 2025

Common stock

60,250

Retained earnings

10.00

March 31, 2025

June 2, 2025

As of October 1, 2024, Sony Group Corporation conducted a five-for-one stock split of its common stock.

*1 The amount prior to the stock split.

*2 The amount after the stock split.

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SONY GROUP CORPORATION AND CONSOLIDATED SUBSIDIARIES

(4)	Other comprehensive income

Changes in accumulated other comprehensive income, net of tax, by component for the fiscal years ended March 31, 2023, 2024 and 2025 are as follows:


	Yen in millions
	Balance at April 1, 2022			Other comprehensive income attributable to Sony Group Corporation’s stockholders			Transfer to retained earnings			Balance at March 31, 2023
Changes in equity instruments measured at fair value through other comprehensive income		27,412			(36,862	)		298			(9,152	)
Changes in debt instruments measured at fair value through other comprehensive income		859,037			(819,192	)		-			39,845
Cash flow hedges		6,034			12,379			-			18,413
Remeasurement of defined benefit pension plans		-			18,891			(18,891	)		-
Exchange differences on translating foreign operations		337,678			175,525			-			513,203
Insurance finance income (expenses)		(1,911,350	)		727,716			-			(1,183,634	)
Share of other comprehensive income of investments accounted for using the equity method		2,864			3,699			-			6,563
Other		336			(144	)		-			192

Total		(677,989	)		82,012			(18,593	)		(614,570	)


	Yen in millions
	Balance at April 1, 2023			Other comprehensive income attributable to Sony Group Corporation’s stockholders			Transfer to retained earnings			Balance at March 31, 2024
Changes in equity instruments measured at fair value through other comprehensive income		(9,152	)		(53,814	)		(12,326	)		(75,292	)
Changes in debt instruments measured at fair value through other comprehensive income		39,845			(704,636	)		-			(664,791	)
Cash flow hedges		18,413			1,352			-			19,765
Remeasurement of defined benefit pension plans		-			25,875			(25,875	)		-
Exchange differences on translating foreign operations		513,203			439,490			-			952,693
Insurance finance income (expenses)		(1,183,634	)		563,396			-			(620,238	)
Share of other comprehensive income of investments accounted for using the equity method		6,563			5,348			(20	)		11,891
Other		192			(283	)		-			(91	)

Total		(614,570	)		276,728			(38,221	)		(376,063	)

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SONY GROUP CORPORATION AND CONSOLIDATED SUBSIDIARIES


	Yen in millions
	Balance at April 1, 2024			Other comprehensive income attributable to Sony Group Corporation’s stockholders			Transfer to retained earnings			Balance at March 31, 2025
Changes in equity instruments measured at fair value through other comprehensive income		(75,292	)		(12,531	)		29,508			(58,315	)

Changes in debt instruments measured at fair value through other comprehensive income		(664,791	)		(681,515	)		-			(1,346,306	)

Cash flow hedges		19,765			(4,295	)		-			15,470

Remeasurement of defined benefit pension plans		-			10,583			(10,583	)		-

Exchange differences on translating foreign operations		952,693			(79,179	)		-			873,514

Insurance finance income (expenses)		(620,238	)		568,291			(8,738	)		(60,685	)

Share of other comprehensive income of investments accounted for using the equity method		11,891			(1,248	)		(1	)		10,642

Other		(91	)		(676	)		-			(767	)

Total		(376,063	)		(200,570	)		10,186			(566,447	)

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SONY GROUP CORPORATION AND CONSOLIDATED SUBSIDIARIES

Each component of other comprehensive income and the related tax effect including noncontrolling interests for the fiscal years ended March 31, 2023, 2024 and 2025 are as follows:


	Yen in millions
	Fiscal year ended March 31
Comprehensive income components	2023			2024			2025
Items that will not be reclassified to profit or loss

Changes in equity instruments measured at fair value through other comprehensive income

Amount incurred during the year		(45,708	)		(70,838	)		(16,607	)

Total before tax		(45,708	)		(70,838	)		(16,607	)

Tax expense or (benefit)		8,846			17,024			4,076

Net of tax		(36,862	)		(53,814	)		(12,531	)

Remeasurement of defined benefit pension plans
Amount incurred during the year		27,136			37,225			15,133

Total before tax		27,136			37,225			15,133

Tax expense or (benefit)		(8,245	)		(11,350	)		(4,550	)

Net of tax		18,891			25,875			10,583

Share of other comprehensive income of investments accounted for using the equity method

Amount incurred during the year		197			704			(1,287	)

Total before tax		197			704			(1,287	)

Tax expense or (benefit)		(52	)		(91	)		376

Net of tax		145			613			(911	)

Total		(17,826	)		(27,326	)		(2,859	)

Items that may be reclassified subsequently to profit or loss

Changes in debt instruments measured at fair value through other comprehensive income

Amount incurred during the year		(1,132,497	)		(973,877	)		(975,677	)

Reclassification to profit or loss		(5,300	)		(4,713	)		4,537

Total before tax		(1,137,797	)		(978,590	)		(971,140	)

Tax expense or (benefit)		318,605			273,954			289,625

Net of tax		(819,192	)		(704,636	)		(681,515	)

Cash flow hedges
Amount incurred during the year		(12,975	)		(15,032	)		(5,384	)

Reclassification to profit or loss		30,813			16,982			433

Total before tax		17,838			1,950			(4,951	)

Tax expense or (benefit)		(5,459	)		(598	)		656

Net of tax		12,379			1,352			(4,295	)

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SONY GROUP CORPORATION AND CONSOLIDATED SUBSIDIARIES


	Yen in millions
	Fiscal year ended March 31
Comprehensive income components	2023			2024			2025

Insurance finance income (expenses)
Amount incurred during the year		1,010,717			782,495			788,366
Reclassification to profit or loss		-			-			-

Total before tax		1,010,717			782,495			788,366

Tax expense or (benefit)		(283,001	)		(219,099	)		(220,075	)

Net of tax		727,716			563,396			568,291

Exchange differences on translating foreign operations
Amount incurred during the year		177,645			441,943			(78,193	)

Reclassification to profit or loss		630			463			(1,073	)

Total before tax		178,275			442,406			(79,266	)

Tax expense or (benefit)		-			-			-

Net of tax		178,275			442,406			(79,266	)
Share of other comprehensive income of investments accounted for using the equity method
Amount incurred during the year		3,554			4,735			(337	)

Reclassification to profit or loss		-			-			-

Total before tax		3,554			4,735			(337	)
Tax expense or (benefit)		-			-			-

Net of tax		3,554			4,735			(337	)
Other
Amount incurred during the year		(200	)		(393	)		(953	)

Reclassification to profit or loss		-			-			-

Total before tax		(200	)		(393	)		(953	)

Tax expense or (benefit)		56			110			277

Net of tax		(144	)		(283	)		(676	)

Total		102,588			306,970			(197,798	)

Total other comprehensive income		84,762			279,644			(200,657	)

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SONY GROUP CORPORATION AND CONSOLIDATED SUBSIDIARIES

21.	Stock-based compensation plans

The stock-based compensation expense for the fiscal years ended March 31, 2023, 2024 and 2025 was 15,781 million yen, 21,657 million yen and 29,416 million yen, respectively.

Sony Group Corporation has stock-based compensation plans primarily in the form of a stock option plan for Corporate Executive Officers and employees of Sony Group Corporation, and the directors, other officers and employees of its subsidiaries, and a restricted stock unit plan (the “RSU Plan”) for Directors, Senior Executives, other officers and employees of Sony Group Corporation, and the directors, other officers and employees of its subsidiaries.

(1) Stock option plan

The stock acquisition rights granted under the stock option plan primarily have a three-year vesting schedule and are exercisable up to 10 years from the date of grant. Sony Group Corporation either issues new shares of common stock or reissues existing treasury stock upon the exercise of these rights.

As of October 1, 2024, Sony Group Corporation conducted a five-for-one

stock split of its common stock. The following weighted-average fair value per share at the date of grant of stock acquisition rights, the number of shares, the weighted-average exercise price, the weighted-average stock price at the time when the stock acquisition rights were exercised, the exercise price and the balance of unexercised stock acquisition rights at the end of the fiscal year are calculated assuming that the stock split was implemented at the beginning of the fiscal year ended March 31, 2023.

The fair value of stock acquisition rights on the date of grant and used to recognize compensation expense for the fiscal years ended March 31, 2023, 2024 and 2025 was estimated using the Black-Scholes model, and the weighted-average fair value per share

right

at the date of grant of stock acquisition rights granted during the fiscal years ended March 31, 2023, 2024 and 2025 was 625 yen, 733 yen and 875 yen, respectively. A summary of the activities regarding the stock option plan during the fiscal years ended March 31, 2023, 2024 and 2025 is as follows:


	Fiscal year ended March 31
	2023				2024				2025
	Number of shares		Weighted- average exercise price		Number of shares		Weighted- average exercise price		Number of shares		Weighted- average exercise price
	Number of shares		Yen		Number of shares		Yen		Number of shares		Yen
Outstanding at beginning of the fiscal year		82,721,500		1,879		98,457,500		2,062		97,809,500		2,330

Granted		23,721,500		2,196		12,190,500		2,533		4,302,800		2,927

Exercised		6,304,000		1,113		10,608,500		1,359		18,930,500		1,843

Forfeited or expired		1,681,500		2,531		2,230,000		2,660		2,012,500		2,796

Outstanding at end of the fiscal year		98,457,500		2,062		97,809,500		2,330		81,169,300		2,442

Exercisable at end of the fiscal year		48,415,000		1,607		59,409,500		2,166		59,515,500		2,403

The weighted-average stock price at the time when the stock acquisition rights were exercised during the fiscal years ended March 31, 2023, 2024 and 2025 was 2,281 yen, 2,629 yen and 3,238 yen, respectively.

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SONY GROUP CORPORATION AND CONSOLIDATED SUBSIDIARIES

A summary of unexercised stock acquisition rights as of March 31, 2023, 2024 and 2025 is as follows:


Series	Date of grant	Exercise term	Exercise price		Outstanding at end of the fiscal year (shares)
Series	Date of grant	Exercise term	Exercise price		2023		2024		2025
26 th	November 20, 2013	November 20, 2014 to November 19, 2023	¥	402		72,000		-		-
27 th	November 20, 2013	November 20, 2014 to November 19, 2023	$	4.01		553,500		-		-
28 th	November 20, 2014	November 20, 2015 to November 19, 2024	¥	483		662,500		417,500		-
29 th	November 20, 2014	November 20, 2015 to November 19, 2024	$	4.14		677,500		613,500		-
30 th	November 19, 2015	November 19, 2016 to November 18, 2025	¥	681		934,500		445,000		230,500
31 st	November 19, 2015	November 19, 2016 to November 18, 2025	$	5.51		741,000		656,500		337,000
32 nd	November 22, 2016	November 22, 2017 to November 21, 2026	¥	673		1,952,000		1,157,000		755,500
33 rd	November 22, 2016	November 22, 2017 to November 21, 2026	$	6.22		1,652,500		1,430,500		983,000
34 th	November 21, 2017	November 21, 2018 to November 20, 2027	¥	1,047		2,171,000		1,401,000		944,500
35 th	November 21, 2017	November 21, 2018 to November 20, 2027	$	9.15		3,102,500		2,528,500		1,486,500
36 th	February 28, 2018	February 28, 2019 to February 27, 2028	¥	1,089		19,500		7,500		4,500
38 th	November 20, 2018	November 20, 2019 to November 19, 2028	¥	1,288		4,199,500		2,983,500		2,308,500
39 th	November 20, 2018	November 20, 2019 to November 19, 2028	$	11.25		3,802,500		3,271,500		1,926,500
40 th	November 20, 2019	November 20, 2020 to November 19, 2029	¥	1,341		6,050,500		4,373,000		2,799,000
41 st	November 20, 2019	November 20, 2020 to November 19, 2029	$	12.20		5,381,500		4,582,000		2,736,000
42 nd	April 17, 2020	April 17, 2021 to April 16, 2030	$	12.75		66,500		-		-
43 rd	November 18, 2020	November 18, 2021 to November 17, 2030	¥	1,848		10,302,000		8,270,000		6,386,000
44 th	November 18, 2020	November 18, 2021 to November 17, 2030	$	17.50		9,310,500		8,573,000		5,641,000
45 th	November 18, 2021	November 18, 2022 to November 17, 2031	¥	2,870		11,837,500		11,656,000		10,635,000
46 th	November 18, 2021	November 18, 2022 to November 17, 2031	$	24.98		11,385,500		10,689,000		10,119,500
47 th	November 16, 2022	November 16, 2023 to November 15, 2032	¥	2,278		12,135,500		12,006,000		10,686,500
48 th	November 16, 2022	November 16, 2023 to November 15, 2032	$	15.58		11,447,500		10,620,000		7,836,500
49 th	November 27, 2023	November 27, 2024 to November 26, 2033	¥	2,589		-		6,471,000		6,392,000
50 th	November 27, 2023	November 27, 2024 to November 26, 2033	$	17.10		-		5,657,500		4,658,500
51 st	November 25, 2024	November 25, 2025 to November 24, 2034	¥	2,948		-		-		2,867,000
52 nd	November 25, 2024	November 25, 2025 to November 24, 2034	$	18.93		-		-		1,435,800

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SONY GROUP CORPORATION AND CONSOLIDATED SUBSIDIARIES

(2) Restricted stock unit plan

The restricted stock units granted under the RSU Plan primarily have a three-year vesting schedule. Upon vesting, Sony Group Corporation promptly delivers shares of common stock, the number of which is equal to the number of units vested. Sony Group Corporation either issues new shares of common stock or reissues existing treasury stock upon delivering shares of common stock.

As of October 1, 2024, Sony Group Corporation conducted a five-for-one

stock split of its common stock. The following number of units of the restricted stock units and the weighted-average fair value per share on the grant date are calculated assuming that the stock split was implemented at the beginning of the fiscal year ended March 31, 2023.

A summary of the activities regarding the restricted stock unit plan during the fiscal years ended March 31, 2023, 2024 and 2025 is as follows:


	Fiscal year ended March 31
	2023		2024		2025
	Number of units		Number of units		Number of units
Outstanding at beginning of the fiscal year		-		2,443,150		8,255,925

Granted		2,499,210		6,913,640		10,215,944

Vesting		-		757,040		2,746,775

Forfeited		56,060		343,825		635,243

Outstanding at end of the fiscal year		2,443,150		8,255,925		15,089,851

The fair value of restricted stock units on the date of grant and used to recognize compensation expense for the fiscal years ended March 31, 2023, 2024 and 2025 was based on the closing price per share of common stock on the grant date, adjusted to reflect the expected dividends not received during the vesting period. The weighted-average fair value per share on the grant date of the restricted stock units during the fiscal years ended March 31, 2023, 2024 and 2025 is as follows:


	Fiscal year ended March 31
	2023		2024				2025
Date of grant	November 25, 2022		July 25, 2023		November 27, 2023		July 25, 2024		November 25, 2024
The weighted-average fair value (Yen)		2,295		2,587		2,532		2,644		2,944

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SONY GROUP CORPORATION AND CONSOLIDATED SUBSIDIARIES

22.

Revenue

(1)	Contract balances

Receivables from contracts with customers, contract assets and contract liabilities are comprised of the following:


	Yen in millions
	April 1		March 31
	2023		2024		2025
Receivables from contracts with customers *1		1,679,106		1,931,631		1,736,079
Contract assets *2		19,355		17,820		7,973
Contract liabilities *3		508,454		534,432		632,912

*1	Receivables from contracts with customers are included in the consolidated statements of financial position as “Trade and other receivables, and contract assets” and “Other financial assets,” non-current.

*2	Contract assets are included in the consolidated statements of financial position as “Trade and other receivables, and contract assets” and “Other non-current assets.”

*3	Contract liabilities are included in the consolidated statements of financial position as “Other current liabilities” and “Other non-current liabilities.”

Contract liabilities principally relate to customer advances received prior to performance. Revenues of 303,779 million yen, 444,964 million yen and 461,340 million

yen were recognized during the fiscal years ended March 31, 2023, 2024 and 2025, respectively, which were included in the balance of contract liabilities as of April 1, 2022, 2023 and 2024, respectively. The amount of revenue recognized from performance obligations satisfied or partially satisfied in the previous periods is not significant.

(2)	Performance obligations

Remaining (unsatisfied or partially unsatisfied) performance obligations represent future revenues not yet recorded for firm orders that have not yet been performed. Sony applies practical expedients to exclude contracts with an expected original duration of

one year

or less. The following table shows the summary of the transaction prices allocated to remaining performance obligations that are unsatisfied as of March 31, 2024 and 2025, respectively, of which more than half are expected to be recognized within one year and substantially all within three years. The amount of the transaction price related to variable consideration is included only to the extent that it is highly probable that a significant reversal in the amount of cumulative revenue to be recognized will not occur.


	Yen in millions
	March 31
	2024		2025
Pictures - Motion Pictures and Television Productions *1		813,790		748,517
Pictures - Media Networks		10,027		9,094
Music *2		112,609		116,184
Others		58,717		69,587

*1	For Motion Pictures and Television Productions in the Pictures segment, Sony has included all contracts regardless of duration.

*2	The amount included in the Music segment primarily consists of minimum royalty guarantees or fixed fees in contracts related to license revenue for ongoing access to an evolving library of content.

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SONY GROUP CORPORATION AND CONSOLIDATED SUBSIDIARIES

(3)	Contract costs

Contract costs are comprised as follows:


	Yen in millions
	March 31
	2024		2025

Incremental costs of obtaining a contract		6,882		12,901

Sony applies practical expedients to recognize the incremental costs of obtaining a contract as an expense if the amortization period of the asset that otherwise would have been recognized is one year or less. The amortization of 4,686 million yen, 4,562 million yen and 2,380 million yen was recognized during the fiscal years ended March 31, 2023, 2024 and 2025, respectively. The incremental costs of obtaining a contract are primarily recognized in the ET&S segment for the internet-related service business and amortized to expense over the customer’s usage

period for such service.

(4)	Disaggregation of revenue

For the breakdown of sales and financial services revenue by segments, product categories and geographies, refer to Note 4.

23.	Supplemental consolidated statements of income information

(1)	Other operating (income) expense, net

Sony records transactions in other operating (income) expense, net due to either the nature of the transaction or in consideration of factors including the relationship to Sony’s core operations.

Other operating (income) expense, net is comprised of the following:


	Yen in millions
	Fiscal year ended March 31
	2023			2024			2025
Gain on transfer of a portion of shares of Sony Payment Services *1		-			(19,763	)		-
(Gain) loss on purchase/sale of interests in subsidiaries and associates, net		(4,318	)		(6,905	)		(18,426	)
(Gain) loss on sale, disposal or impairment of assets, net *2		(417	)		(4,675	)		16,102
Other		(7,286	)		1,939			(6,917	)

		(12,021	)		(29,404	)		(9,241	)

*1	Refer to Note 8.

*2	Refer to Notes 9 and 11.

(2)	Research and development expenditures

Research and development expenditures recognized as an expense for the fiscal years ended March 31, 2023, 2024 and 2025 were 735,698 million yen, 742,772 million yen and 734,578 million yen, respectively.

(3)	Advertising costs

Advertising costs included in selling, general and administrative expenses for the fiscal years ended March 31, 2023, 2024 and 2025 were 391,131 million yen, 422,655 million yen and 413,795 million yen, respectively.

(4)	Shipping and handling costs

Shipping and handling costs for finished goods included in selling, general and administrative expenses for the fiscal years ended March 31, 2023, 2024 and 2025 were 95,208 million yen, 85,108 million yen and 86,762 million yen, respectively, which included the internal transportation costs of finished goods.

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SONY GROUP CORPORATION AND CONSOLIDATED SUBSIDIARIES

25.	Income taxes

Income (loss) before income taxes and the provision for current and deferred income taxes attributable to such income are as follows:


	Yen in millions
	Fiscal year ended March 31
	2023			2024		2025
Income (loss) before income taxes:		1,274,496			1,268,662		1,473,726

Income tax expenses

Current		304,881			271,045		292,287

Deferred		(42,158	)		17,123		21,552

Total income tax expense		262,723			288,168		313,839

For the fiscal year ended March 31, 2023, 2024 and 2025 the domestic components of the amount of income tax expenses were 157,745 million yen, 169,821 million yen and 120,578 million yen, respectively, and the foreign components of the amount of income tax expenses were 104,978 million yen, 118,347 million yen and 193,261 million yen, respectively.

Income tax expenses for the fiscal year ended March 31, 2025 included the impact of decreases in tax expense from the repayment of capital from a subsidiary and the dissolution of a subsidiary. The amounts of decreases

were 48,373 million yen and 35,278 million yen, respectively.

A reconciliation of the differences between the Japanese statutory tax rate and the effective tax rate is as follows:


	Fiscal year ended March 31
	2023			2024			2025

Statutory tax rate		31.5	%		31.5	%		31.5	%

Non-deductible expenses		0.2			0.3			0.3

Income tax credits		(3.0	)		(3.3	)		(1.4	)

Change in statutory tax rate		(0.1	)		0.1			1.3

Change in unrecognized deferred tax assets		(1.0	)		(2.1	)		(5.2	)

Change in deferred tax liabilities on undistributed earnings of foreign subsidiaries and affiliates		1.5			0.9			0.4

Lower tax rate applied to life and non-life insurance business in Japan		(0.9	)		(0.4	)		(0.3	)

Foreign income tax differential		(6.0	)		(4.9	)		(5.9	)

Recording or reversal of liabilities for uncertain tax positions		(0.3	)		0.1			0.1

Controlled Foreign Company taxation in Japan		(2.0	)		0.0			0.1

Other		0.7			0.5			0.4

Effective income tax rate		20.6	%		22.7	%		21.3	%

Sony recognizes deferred tax assets, which include temporary differences, net operating losses and tax credits, to the extent that it is probable that taxable profit will be available against which the assets can be utilized. The realization of deferred tax assets is dependent upon the generation of future taxable income in the relevant tax jurisdiction.

In Japan, the Act for Partial Amendment of Income Tax Act, etc. (Act No. 13 of 2025) was promulgated on March 31, 2025, according to which the corporate tax rate will increase from the fiscal year beginning on or after April 1, 2026. As a result, the statutory tax rate from the fiscal year ending March 31, 2027 and thereafter will be approximately

32.3%.

F-

107

SONY GROUP CORPORATION AND CONSOLIDATED SUBSIDIARIES

As of March 31, 2024 and 2025, based on the assessment of recoverability of deferred tax assets, Sony continued not to recognize the deferred tax assets at some entities in Japan, Sony Mobile Communications AB in Sweden, Sony Europe B.V. in the United Kingdom, certain subsidiaries in Brazil, and certain subsidiaries in other tax jurisdictions.

As of March 31, 2024 and 2025, the deductible temporary differences, operating loss carryforwards and tax credit carryforwards for which no deferred tax asset is recognized are as follows:


	Yen in millions
	Fiscal year ended March 31
	2024		2025
Deductible temporary differences		134,602		131,442
Operating loss carryforwards		1,424,553		1,465,002
Tax credit carryforwards		16,869		12,139

As of March 31, 2024 and 2025, the expected expiration period of the operating loss carryforwards for which no deferred tax asset is recognized are as follows:


	Yen in millions
	Fiscal year ended March 31
	2024		2025
Within 5 years		494,989		362,529
Over 5 years to 10 years		274,044		459,335
Over 10 years to 15 years		28,601		31,198
Over 15 years		15,592		16,575
No expiration period		611,327		595,365

Total		1,424,553		1,465,002

As of March 31, 2024 and 2025, the expected expiration period of the tax credit carryforwards for which no deferred tax asset is recognized was mostly within 5 years.

Deferred tax liabilities are not recognized on the taxable temporary differences for undistributed earnings of certain foreign subsidiaries and corporate joint ventures which are not expected to be remitted in the foreseeable future. As of March 31, 2024 and 2025, such taxable temporary differences amounted to 1,122,164 million yen and 1,117,684 million yen, respectively. The tax basis of these undistributed earnings was approximately 17,955 million yen and 17,883 million yen, respectively. In addition, deferred tax liabilities are not recognized on the taxable temporary differences in subsidiaries, including a gain of 61,544 million yen on a subsidiary’s sale of stock arising from the issuance of common stock of Sony Music Entertainment (Japan) Inc. in a public offering to third parties in November 1991 and the remeasurement gain on 116,939 million yen for the

pre-owned

equity interest in EMI Music Publishing acquired in November 2018. Sony does not anticipate any significant tax consequences on the possible future disposition of these investments based on its tax planning strategies.

In addition, the deductible temporary differences arising from the translation adjustments for the foreign operations for which deferred tax assets are not recognized as of March 31, 2024 and 2025 amounted to 275,810 million yen and 173,711 million yen, respectively. The taxable temporary differences arising from the translation adjustments for the foreign operations for which deferred tax liabilities are not recognized as of March 31, 2024 and 2025 amounted to 1,228,503 million yen and 1,047,225 million yen, respectively.

F-110

SONY GROUP CORPORATION AND CONSOLIDATED SUBSIDIARIES

Sony applies the “International Tax Reform - Pillar Two Model Rules (Amendments to IAS 12)” that the IASB issued in May 2023. Sony does not recognize or disclose deferred tax assets and deferred tax liabilities related to taxes arising from the taxation associated with the Pillar Two Model Rules, applying the temporary exemption provisions stipulated by the Amendments to IAS 12.

In Japan, the Act for Partial Amendment of Income Tax Act, etc. (Act No. 3 of 2023) to implement the global minimum tax in accordance with the Pillar Two Model Rules, was enacted on March 28, 2023. This new tax reform statute applies to Sony from the fiscal year ended March 31, 2025. Sony estimated and recognized corporate income tax expense arising from this global minimum tax based on the financial information available at the reporting date. The impact on the consolidated financial statements was not material.

26.	Reconciliation of the differences between basic and diluted EPS

Reconciliation of the differences between basic and diluted EPS for the fiscal years ended March 31, 2023, 2024 and 2025 is as follows:


	Yen in millions
	Fiscal year ended March 31
	2023		2024		2025
Net income attributable to Sony Group Corporation’s stockholders		1,005,277		970,573		1,141,600

Adjustment amount to net income attributable to Sony Group Corporation’s stockholders for diluted EPS computation:

Zero coupon convertible bonds		51		-		-


Net income attributable to Sony Group Corporation’s stockholders for diluted EPS computation		1,005,328		970,573		1,141,600


	Thousands of shares
	Fiscal year ended March 31
	2023		2024		2025
Weighted-average shares outstanding for basic EPS computation		6,178,504		6,156,210		6,049,652

Effect of dilutive securities:

Stock options		18,085		18,398		18,862

Restricted stock units		152		2,047		6,550

Zero coupon convertible bonds		10,148		-		-

Weighted-average shares for diluted EPS computation		6,206,889		6,176,655		6,075,064


	Yen
	Fiscal year ended March 31
	2023		2024		2025
Basic EPS		162.71		157.66		188.71

Diluted EPS		161.97		157.14		187.92

Notes:

Potential shares of common stock which were excluded from the computation of diluted EPS for the fiscal years ended March 31, 2023, 2024 and 2025 were 56,117 thousand shares, 34,474 thousand shares and 14,422 thousand shares, respectively, which consisted of stock options.

As of October 1, 2024, Sony Group Corporation conducted a five-for-one stock split of its common stock. Basic and diluted EPS are calculated assuming that the stock split was implemented at the beginning of the fiscal year ended March 31, 2023.

F-111

SONY GROUP CORPORATION AND CONSOLIDATED SUBSIDIARIES

27.	Supplemental cash flow information

(1)	Classification of cash flows in Financial Services segment

Sony classifies the cash flows from changes in assets and liabilities associated with the insurance business and banking business, such as investments and advances, deposits from customers, insurance contract liabilities and borrowings/debt, as cash flows from operating activities in the consolidated statements of cash flows because the changes are derived from the principal revenue-producing activities of Sony.

(2)	Classification of cash flows of content assets

Sony classifies the cash flows from the additions, except for additions from purchases of businesses and other, and disposals of content assets as cash flows from operating activities in the consolidated statements of cash flows because the additions and disposals of content assets are derived from the principal revenue-producing activities of Sony.

SONY GROUP CORPORATION AND CONSOLIDATED SUBSIDIARIES

(5)	Reconciliation of liabilities arising from financing activities


	Yen in millions
	Short-term borrowings			Long-term debt

Balance as of April 1, 2022		56,091			951,233

Net cash flows from financing activities		32,391			229,578
Acquisitions through business combinations		-			32,009
Non-cash items:
Conversion of convertible bonds		-			(26,563	)
Obtaining assets by entering into lease contracts		-			127,322
Translation adjustment		4,533			22,684
Other		(369	)		(13,936	)

Total changes		36,555			371,094

Balance as of March 31, 2023		92,646			1,322,327

Net cash flows from financing activities		(18,370	)		97,026
Acquisitions through business combinations		796			853
Non-cash items:
Obtaining assets by entering into lease contracts		-			101,039
Translation adjustment		12,097			76,168
Other		1,133			(11,400	)

Total changes		(4,344	)		263,686

Balance as of March 31, 2024		88,302			1,586,013

Net cash flows from financing activities		(28,585	)		(41,787	)
Acquisitions through business combinations		-			32,801
Non-cash items:
Obtaining assets by entering into lease contracts		-			115,087
Translation adjustment		(1,040	)		(9,408	)
Other		(8,036	)		3,977

Total changes		(37,661	)		100,670

Balance as of March 31, 2025		50,641			1,686,683

The amount of short-term borrowings and long-term debt associated with the insurance business and banking business operations, which are classified as cash flows from operating activities in the consolidated statements of cash flows, is excluded from the amount above.

(6)	Components of cash and cash equivalents


	Yen in millions
	March 31
	2023		2024		2025
Cash and demand deposits		1,227,541		1,535,476		1,885,112
Time deposits with original maturities of three months or less		76,452		63,169		126,375
Money market funds		116,607		219,559		709,460
Call loans		60,300		88,909		260,009

Total		1,480,900		1,907,113		2,980,956

Cash and demand deposits, time deposits with original maturities of three months or less and call loans are classified as financial assets required to be measured at amortized cost, whose carrying amounts approximate their fair values mainly due to their short-term nature. Money market funds are short-term and highly liquid investments with insignificant risk of changes in value. Money market funds are classified as financial assets required to be measured at fair value through profit or loss and classified within Level 1 of the fair value hierarchy.

F-113

SONY GROUP CORPORATION AND CONSOLIDATED SUBSIDIARIES

(7)	Acquisition of a group of assets that does not constitute a business

During the fiscal year ended March 31, 2024, Sony newly obtained an interest in a company which owns certain music assets in the Music segment for consideration of 90,968 million yen, which is reflected in cash flows from investing activities as “Payments for purchases of businesses and other.” This transaction is accounted for as an acquisition of a group of assets that does not constitute a business.

As a result of the transaction, Sony consolidated the company and recognized 182,689 million yen of content assets (music catalogs) as well as 90,968 million yen of noncontrolling interests.

During the fiscal year ended March 31, 2025, Sony established a new joint venture in the Music segment with a third party partner, which acquired interests in companies that own certain music and other assets (the “target companies”) as well as music assets directly from other rights holders. Sony consolidated the joint venture through Sony’s majority interest and reflected the consideration of 133,064 million yen for the acquisition of the interests in the target companies in cash flows from investing activities as “Payments for purchases of businesses and other.” Sony primarily recognized 116,289 million yen of content assets (music catalogs) and 11,501 million yen of other intangible assets from the acquisition of the interests in the target companies. The acquisition of the interests in the target companies is accounted for as an acquisition of a group of assets that does not constitute a business. The consideration for the content assets (music catalogs) directly acquired from other rights holders was 84,382 million yen, which was recorded in cash flows from operating activities as “Increase in content assets.”

28.	Structured entities

Sony has, from time to time, entered into various arrangements with structured entities.

(1)	Consolidated structured entities

Sony consolidates investment funds as structured entities in the Financial Services segment. The investment funds are designed so that voting or similar rights are not the dominant factor in deciding who controls these entities, but it is determined that Sony has control over these structured entities. Sony has not provided and does not intend to provide any significant financial or other support to any of the consolidated structured entities without contractual obligations to the investment funds. The assets and liabilities of structured entities that are consolidated in the Financial Services segment are limited in their intended use by contractual arrangements. As of March 31, 2024 and 2025, the total assets of these structured entities are 3,653,520 million yen and 4,439,856 million yen, respectively.

Sony also consolidates several structured entities in the Music and Pictures segment. Sony has not provided and does not intend to provide any significant financial or other support to these structured entities without contractual obligation.

SONY GROUP CORPORATION AND CONSOLIDATED SUBSIDIARIES

(2)	Other acquisitions

During the fiscal year ended March 31, 2023, Sony completed other acquisitions for a total consideration of 92,743 million yen which was paid for primarily in cash and there was no material contingent consideration subject to future change. As a result of these acquisitions, Sony recorded 80,698 million yen of goodwill and 29,154 million yen of intangible assets.

During the fiscal year ended March 31, 2024, Sony completed certain acquisitions for a total consideration of 111,669 million yen which was paid for primarily in cash and there was no material contingent consideration subject to future change. As a result of these acquisitions, Sony recorded 70,791 million yen of goodwill and 69,294 million yen of intangible assets.

During the fiscal year ended March 31, 2025, Sony completed certain acquisitions for a total consideration of 74,009 million yen which was paid for primarily in cash and there was no material contingent consideration subject to future change. As a result of these acquisitions, Sony recorded 44,424 million yen of goodwill and 44,652 million yen of intangible assets.

No significant amounts were allocated to

in-process

research and development and all of the entities described above have been consolidated into Sony’s results of operations since their respective acquisition dates. Other information including pro forma results of operations has not been presented because the effects of other acquisitions, individually and in aggregate, were not material.

In addition, the effects of acquisitions of a group of assets that does not constitute a business are not included in this Note 30. For such effects, refer to Note 27(7).

31.	Related party transactions

(1)	Account balances and transactions with associates and joint ventures accounted for under the equity method

Primary account balances and transactions with associates and joint ventures accounted for under the equity method are as follows:


	Yen in millions
	March 31
	2024		2025
Trade and other accounts receivable
Associates		19,357		20,990
Joint ventures		3,913		3,854

Total		23,270		24,844

Other current assets
Associates		8,195		8,192
Joint ventures		-		-

Total		8,195		8,192

Accounts payable, trade
Associates		997		1,102
Joint ventures		265		55

Total		1,262		1,157

Short-term borrowings
Associates		3,070		5,401
Joint ventures		26,384		17,641

Total		29,454		23,042

Lease liabilities and other
Associates		78,102		79,987
Joint ventures		-		-

Total		78,102		79,987

Accounts payable for property, plant and equipment
Associates		16		49
Joint ventures		-		-

Total		16		49

F-1

SONY GROUP CORPORATION AND CONSOLIDATED SUBSIDIARIES

32.	Purchase commitments, contingent liabilities and other

(1)	Loan commitments

Subsidiaries in the Financial Services segment have lines of credit in accordance with loan agreements with their customers. As of March 31, 2024 and 2025, the total unused portion of the lines of credit extended under these contracts was 50,965 million yen and 27,564 million yen, respectively.

(2)	Purchase commitments

Purchase commitments for property, plant and equipment and intangible assets (excluding content assets) as of March 31, 2024 and 2025 amounted to 160,919 million yen and 205,881 million yen, respectively.

In addition to the above, Sony has purchase commitments for goods and services. There are no purchase commitments that are individually material to Sony, except for the following.

Purchase commitments in the Pictures segment as of March 31, 2024 and 2025, amounted to 188,592 million yen and 197,999 million yen, respectively. The major components of these are agreements with creative talent for the development and production of motion pictures and television programming as well as agreements with third parties to acquire completed motion pictures, or certain rights therein, and to acquire the rights to broadcast certain live action sporting events. These agreements cover various periods mainly within four years from the end of each period.

Purchase commitments in the Music segment as of March 31, 2024 and 2025 amounted to 272,297 million yen and 283,211 million yen, respectively. The major components of these are contracts with recording artists, songwriters and production and sales companies of music software and videos for the future production, distribution and/or licensing of music products. These contracts cover various periods mainly within four years from the end of each period.

Purchase commitments in the G&NS segment as of March 31, 2024 and 2025 amounted to 33,436 million yen and 43,202 million yen, respectively. The major components of these are long-term contracts for the development, distribution and publishing of game software. These contracts cover various periods mainly within four years from the end of each period.

Sony has entered into purchase contracts for materials. As of March 31, 2024 and 2025, Sony has committed to make payments of 211,930 million yen and 152,356 million yen, respectively, under such contracts.

Sony has entered into long-term contracts for the use of certain IT services. As of March 31, 2025, Sony has committed to make payments of 251,478 million yen under such contracts.

(3)	Litigation

(4)	Guarantees

Sony has issued guarantees that contingently require payments to guaranteed parties if certain specified events or conditions occur. The maximum potential amount of future payments under these guarantees as of March 31, 2024 and 2025 amounted to 410 million yen and 4,161 million yen, respectively.

F-120

SONY GROUP CORPORATION AND CONSOLIDATED SUBSIDIARIES

33.	Subsequent events

(Determination of plan regarding the execution of a partial spin-off of Sony Financial Group Inc.)

At a meeting of Sony Group Corporation’s Board of Directors (the “Board”) held on May 14, 2025, Sony Group Corporation decided to submit a resolution for the execution of a partial spin-off (the “Partial Spin-off of the Financial Services business”) of Sony Financial Group Inc. (“SFGI”), a wholly-owned subsidiary engaged in the Financial Services business, as of October 1, 2025, to the Board in early September 2025. In the Partial Spin-off of the Financial Services business, Sony Group Corporation plans to distribute slightly more

than 80% of

the shares of common stock of SFGI (“SFGI share(s)”) to shareholders of Sony Group Corporation through dividends in kind. As a result of the Board resolution on May 14, 2025 on the plan for the execution of the Partial Spin-off of the Financial Services business, the Financial Services business will be classified as a discontinued operation, in accordance with IFRS 5 “Non-current Assets Held for Sale and Discontinued Operations,” from the first quarter of the fiscal year ending March 31, 2026. As a result, in the consolidated statements of income, consolidated statements of comprehensive income and consolidated statements of cash flows, revenue, expenses, other comprehensive income and cash flows of the Financial Services business, among other items, will be separated from continuing operations, comprised of Sony’s businesses excluding the Financial Services business, and presented as net income or loss from discontinued operations, other comprehensive income from discontinued operations, and net cash from discontinued operations, respectively. Additionally, in the consolidated statements of financial position, assets and liabilities of the Financial Services business will be classified as a disposal group held for distribution to owners. Accumulated other comprehensive income directly related to the disposal group will also be classified as held for distribution to owners.

The disposal group classified as held for distribution to owners will be valued at the lower of its carrying amount, or its fair value less the incremental costs directly attributable to the distribution of the disposal group, excluding finance costs and income tax expense. If the fair value after deducting such incremental costs is less than the carrying amount, the difference will be recorded as a loss within net income or loss from discontinued operations.

Upon the resolution of the Board for the distribution of dividends in kind, in accordance with IFRIC

Interpretation 17 “Distributions of Non-cash Assets to Owners,” Sony Group Corporation will reduce its equity by an amount equal to the fair value of the SFGI shares to be distributed as dividends in kind and record such reduction in equity as a liability.

In addition, upon the execution of the Partial Spin-off of the Financial Services business, Sony Group Corporation will account for the loss of control of the Financial Services business (“deconsolidation”) in accordance with IFRS 10 “Consolidated Financial Statements.” In addition to the derecognition of assets and liabilities of the Financial Services business which had been classified as the disposal group, such deconsolidation mainly includes the following treatments: (1) reducing the amount of the liability corresponding to the fair value of the SFGI shares to be distributed as dividends in kind, and recording the difference between the fair value of such SFGI shares and the carrying amount of the portion of the disposal group corresponding to the equity interest in SFGI to be distributed as dividends in kind in net income or loss from discontinued operations; (2) reclassifying the Financial Services business’s accumulated other comprehensive income balance at the time of deconsolidation, which is mainly related to debt instruments and insurance contract liabilities, to net income or loss from discontinued operations (For reference, the total accumulated other comprehensive income recorded in the Financial

Services business as of the end of March 2025 was a loss of

approximately 1.4 trillion

yen. This accounting treatment is a reclassification between items within equity and does not affect the amount of total equity in the consolidated statements of financial position.); and (3) remeasuring the SFGI shares that Sony Group Corporation retains after the Partial Spin-off of the Financial Services business at fair value, and recording any difference between the carrying amount of the disposal group corresponding to the equity interest in SFGI which Sony Group Corporation retains and such fair value in net income or loss from discontinued operations.

After the execution of the Partial Spin-off of the Financial Services business, it is expected that Sony Group Corporation will hold slightly less

than 20% of

SFGI shares and SFGI will no longer be a consolidated subsidiary of Sony Group Corporation, but will become an affiliate of Sony Group Corporation accounted for using the equity method.

(Establishment of a facility for the repurchase of shares of its own common stock)

Sony Group Corporation approved the establishment of the following facility for the repurchase of its own common stock pursuant to the Companies Act of Japan and Sony Group Corporation’s Articles of Incorporation at the meeting of its Board of Directors held on May 14, 2025.

Total number of shares for repurchase: 100 million shares (maximum)

Total purchase price for repurchase of shares: 250 billion yen (maximum)

Period of repurchase: May 15, 2025 to May 14, 2026

F-1


Item 1. Identity of Directors, Senior Management and Advisers			6
Item 2. Offer Statistics and Expected Timetable			6
Item 3. Key Information			6
A. [Reserved]			6
B. Capitalization and Indebtedness			6
C. Reasons for the Offer and Use of Proceeds			6
D. Risk Factors			6
Item 4. Information on the Company			18
A. History and Development of the Company			18
B. Business Overview			20
C. Organizational Structure			36
D. Property, Plant and Equipment			37
Item 4A. Unresolved Staff Comments			38
Item 5. Operating and Financial Review and Prospects			39
A. Operating Results			39
B. Liquidity and Capital Resources			54
C. Research and Development			55
D. Trend Information			56
E. Critical Accounting Estimates			60
Item 6. Directors, Senior Management and Employees			63
A. Directors and Senior Management			63
B. Compensation			70
C. Board Practices			77
D. Employees			90
E. Share Ownership			92
F. Disclosure of a Registrant’s Action to Recover Erroneously Awarded Compensation			92
Item 7. Major Shareholders and Related Party Transactions			93
A. Major Shareholders			93
B. Related Party Transactions			93
C. Interests of Experts and Counsel			93
Item 8. Financial Information			94
A. Consolidated Statements and Other Financial Information			94
Legal Proceedings			94
Dividend Policy			94
B. Significant Changes			94
Item 9. The Offer and Listing			94
A. Offer and Listing Details			94
B. Plan of Distribution			94
C. Markets			94
D. Selling Shareholders			95
E. Dilution			95
F. Expenses of the Issue			95
Item 10. Additional Information			95
A. Share Capital			95
B. Memorandum and Articles of Association			95
C. Material Contracts			103
D. Exchange Controls			104
E. Taxation			108
F. Dividends and Paying Agents			111
G. Statement by Experts			111
H. Documents on Display			111
I. Subsidiary Information			111
J. Annual Report to Security Holders			111
Item 11. Quantitative and Qualitative Disclosures about Market Risk			112


Item 12. Description of Securities Other Than Equity Securities			112
A. Debt Securities			112
B. Warrants and Rights			112
C. Other Securities			112
D. American Depositary Shares			112
Item 13. Defaults, Dividend Arrearages and Delinquencies			114
Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds			114
Item 15. Controls and Procedures			114
Item 16. [Reserved]			115
Item 16A. Audit Committee Financial Expert			115
Item 16B. Code of Ethics			115
Item 16C. Principal Accountant Fees and Services			116
Audit and Non-Audit Fees			116
Audit Committee’s Pre-Approval Policies and Procedures			116
Item 16D. Exemptions from the Listing Standards for Audit Committees			116
Item 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers			117
Item 16F. Change in Registrant’s Certifying Accountant			118
Item 16G. Corporate Governance			119
Item 16H. Mine Safety Disclosure			124
Item 16I. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections			124
Item 16J. Insider Trading Policies			125
Item 16K. Cybersecurity			125
Item 17. Financial Statements			126
Item 18. Financial Statements			126
Item 19. Exhibits			127
Signatures			128


NYSE Standards		Sony’s Corporate Governance Practices

Corporate Governance Guidelines. Corporate governance guidelines must be adopted and disclosed.		Sony Group Corporation is required to disclose the status of its corporate governance under the Companies Act, Financial Instruments and Exchange Act and its related regulations, and the Securities Listing Regulations of the TSE; however, Sony Group Corporation does not have corporate governance guidelines that cover all the requirements described in the NYSE Corporate Governance Standards, as many of the provisions do not apply to Sony Group Corporation. Refer to “Board Practices” in “Item 6. Directors, Senior Management and Employees.”


Code of Ethics. A code of business conduct and ethics for directors, officers and employees must be adopted and disclosed, along with any waivers of the code for directors or executive officers.		Although this provision of the NYSE Corporate Governance Standards does not apply to Sony Group Corporation, Sony Group Corporation has adopted a code of conduct to be observed by all its directors, officers and other employees. The code of conduct is available at: https://www.sony.com/en/SonyInfo/csr_report/compliance/code_of_conduct_En.pdf The code’s content covers principal items described in the NYSE Corporate Governance Standards.


1.1		Amended Articles of Incorporation of Sony Group Corporation (English Translation)

1.2		Share Handling Regulations (English Translation), incorporated by reference to Exhibit 1.2 to Sony’s annual report on Form 20-F for the fiscal year ended March 31, 2024 (Commission file number 001-06439) filed on June 25, 2024

1.3		Charter of the Board of Directors, as amended (English Translation), incorporated by reference to Exhibit 1.3 of Sony’s annual report on Form 20-F for the fiscal year ended March 31, 2024 (Commission file number 001-06439) filed on June 25, 2024

2.1		Second Further Amended and Restated Deposit Agreement, dated as of April 1, 2025, by and among Sony Group Corporation, JPMorgan Chase Bank, N.A. and holders and beneficial owners of American Depositary Shares issued thereunder, including the form of American Depositary Receipt, incorporated by reference to Exhibit 99. A to Sony’s registration statement on Form F-6 (Commission file number 333-285828) filed on March 14, 2025

2.2		Description of Rights of each Class of Securities Registered under Section 12 of the Securities Exchange Act of 1934

8.1		Significant subsidiaries (as defined in §210.1-02(w) of Regulation S-X) of Sony Group Corporation, including additional subsidiaries that management has deemed to be significant, as of March 31, 2025: Incorporated by reference to “Business Overview” and “Organizational Structure” in “Item 4. Information on the Company”

11.1		Global Policy on Insider Trading Prevention, incorporated by reference to Exhibit 11.1 to Sony’s annual report on Form 20-F for the fiscal year ended March 31, 2024 (Commission file number 001-06439) filed on June 25, 2024

12.1		302 Certification

12.2		302 Certification

13.1		906 Certification

15.1		Consent of PricewaterhouseCoopers Japan LLC

97.1		Sony Group Corporation Clawback Policy, incorporated by reference to Exhibit 97.1 to Sony’s annual report on Form 20-F for the fiscal year ended March 31, 2024 (Commission file number 001-06439) filed on June 25, 2024

101.INS		Inline XBRL Instance Document — the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document

101.SCH		Inline XBRL Taxonomy Extension Schema Document

101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document

104		The cover page for the Company’s Annual Report on Form 20-F for the fiscal year ended March 31, 2025, has been formatted in Inline XBRL


SONY GROUP CORPORATION
(Registrant)

By:		/s/ LIN TAO

		(Signature)
		Lin Tao
		Chief Financial Officer


			Yen in millions
	Note		March 31, 2024		March 31, 2025
ASSETS
Current assets:
Cash and cash equivalents		27		1,907,113		2,980,956
Investments and advances in the Financial Services segment (including assets pledged that secured parties are permitted to sell or repledge of 100,551 million yen and 131,544 million yen as of March 31, 2024 and March 31, 2025, respectively)		5, 14		398,153		453,677
Trade and other receivables, and contract assets		5, 22		2,158,196		1,943,184
Inventories		7		1,518,644		1,310,770
Other financial assets		5		125,365		145,192
Other current assets		19		669,335		621,209
Total current assets				6,776,806		7,454,988
Non-current assets:
Investments accounted for using the equity method		8		423,744		347,718
Investments and advances in the Financial Services segment (including assets pledged that secured parties are permitted to sell or repledge of 2,380,365 million yen and 2,797,194 million yen as of March 31, 2024 and March 31, 2025, respectively)		5, 14		18,939,794		18,736,298
Property, plant and equipment		9		1,522,640		1,513,660
Right-of-use assets		10		503,395		521,685
Goodwill		11		1,487,100		1,508,721
Content assets		11, 27		1,928,113		2,249,048
Other intangible assets		11		615,602		671,212
Deferred tax assets		25		499,550		559,284
Other financial assets		5		897,341		1,164,630
Other non-current assets		19		513,405		565,929
Total non-current assets				27,330,684		27,838,185
Total assets				34,107,490		35,293,173


(1) Europe:		United Kingdom, France, Germany, Spain and Italy
(2) Asia-Pacific:		India, South Korea, Oceania, Thailand and Malaysia
(3) Other Areas:		The Middle East/Africa, Brazil, Mexico and Canada


	March 31, 2024
	Book value (Yen in millions)		Weighted average interest rate			Due
Short-term borrowings		1,812,605		2.64	%
Long-term debt
Long-term loans		1,160,024		1.90	%		2024-2058
Unsecured bonds		544,078		0.41	%		2024-2034
Lease liabilities		571,726		2.53	%

		2,275,828
Less - Portion due within one year		217,711

		2,058,117


	Number of shares
	Fiscal year ended March 31
	2023		2024		2025* 1

Balance at beginning of the fiscal year		1,261,081,781		1,261,081,781		1,261,231,889

Issuance of new shares		-		150,108		-

Decrease by cancellation of treasury stock *2		-		-		(105,899,600	)

Increase by stock split		-		-		4,994,478,356

Balance at end of the fiscal year		1,261,081,781		1,261,231,889		6,149,810,645


	Yen in millions
	Fiscal year ended March 31, 2024
	Beginning balance			Recognized in profit or loss			Recognized in other comprehensive income			Changes accompanying business combination			Recognized directly in equity			Other*			Ending balance
Deferred tax assets:
Operating loss carryforwards for tax purposes		81,088			(11,765	)		-			460			-			7,758			77,541
Defined benefit liabilities		67,135			16,287			(11,350	)		-			(613	)		4,088			75,547
Amortization including content assets		2,217			14,293			-			-			-			3,109			19,619
Lease liabilities		118,847			17,154			-			-			-			(271	)		135,730
Warranty reserves and accrued expenses		149,982			7,918			-			-			-			9,502			167,402
Inventories		44,723			2,892			-			-			-			1,192			48,807
Depreciation		40,052			(663	)		-			-			-			2,214			41,603
Equity securities measured at FVPL		-			-			17,230			-			-			2,010			19,240
Debt securities measured at FVOCI		27,581			74,703			273,954			-			-			6,289			382,527
Tax credit carryforwards		36,224			11,698			-			2,991			-			6,733			57,646
Loss allowances		6,150			3,525			-			-			-			1,066			10,741
Impairment of investments		6,052			2,279			-			-			-			(551	)		7,780
Deferred revenue		53,440			(11,697	)		-			-			-			6,711			48,454
Other		224,572			47,828			(598	)		(7,352	)		(1,005	)		25,836			289,281

Total deferred tax assets		858,063			174,452			279,236			(3,901	)		(1,618	)		75,686			1,381,918

Deferred tax liabilities:
Insurance contract liabilities		(203,719	)		(79,827	)		(219,099	)		-			-			2,936			(499,709	)
Right-of-use assets		(96,069	)		(16,775	)		-			-			-			(396	)		(113,240	)
Equity securities measured at FVOCI		(4,377	)		4,389			(206	)		-			-			194			-
Equity securities measured at FVPL		(24,567	)		(24,753	)		-			-			-			(3,014	)		(52,334	)
Intangible assets acquired through stock exchange offerings		(23,949	)		-			-			-			-			-			(23,949	)
Intangible assets derived from EMI Music Publishing acquisition		(105,956	)		3,466			-			-			-			(14,501	)		(116,991	)
Undistributed earnings of foreign subsidiaries and affiliates		(69,590	)		(6,856	)		-			-			-			(8,505	)		(84,951	)
Investment in M3, Inc.		(47,338	)		(5,287	)		-			-			-			-			(52,625	)
Other		(7,012	)		(65,932	)		19			(5,295	)		(20	)		(26,753	)		(104,993	)

Total deferred tax liabilities		(582,577	)		(191,575	)		(219,286	)		(5,295	)		(20	)		(50,039	)		(1,048,792	)


Name of company	Country of incorporation /residence	(As of March 31, 2025) Percentage owned

Sony Interactive Entertainment Inc.	Japan	100.0

Sony Music Entertainment (Japan) Inc.	Japan	100.0

Sony Corporation	Japan	100.0

Sony Global Manufacturing & Operations Corporation	Japan	100.0

Sony Network Communications Inc.	Japan	100.0

Sony Marketing Inc.	Japan	100.0

Sony Semiconductor Solutions Corporation	Japan	100.0

Sony Semiconductor Manufacturing Corporation	Japan	100.0

Sony Storage Media Solutions Corporation *	Japan	100.0

Sony Financial Group Inc.	Japan	100.0

Sony Life Insurance Co., Ltd.	Japan	100.0

Sony Bank Inc.	Japan	100.0

Sony Assurance Inc.	Japan	100.0

Sony Corporation of America	U.S.A.	100.0

Sony Interactive Entertainment LLC	U.S.A.	100.0

Sony Music Entertainment	U.S.A.	100.0

Sony Music Publishing LLC	U.S.A.	100.0

Sony Pictures Entertainment Inc.	U.S.A.	100.0

Sony Electronics Inc.	U.S.A.	100.0

Sony Interactive Entertainment Europe Ltd.	U.K.	100.0

Sony Europe B.V.	U.K.	100.0

Sony Global Treasury Services Plc	U.K.	100.0

Sony Overseas Holding B.V.	Netherlands	100.0

Sony (China) Limited	China	100.0

Sony EMCS (Malaysia) Sdn. Bhd.	Malaysia	100.0

Sony Electronics (Singapore) Pte. Ltd.	Singapore	100.0


	Yen in millions

Cash and cash equivalents		37,800

Trade and other receivables, and contract assets		5,093

Other current assets		3,412

Property, plant and equipment		7,481

Right-of-use assets		15,540

Goodwill		193,801

Content assets		45,512

Other intangible assets		66,257

Deferred tax assets		7,297

Other		3,564



Total assets		385,757



Trade and other payables		3,060

Other current liabilities		12,195

Long-term debt		30,944

Other		5,699



Total liabilities		51,898