Consolidated Results for the Fiscal Year Ended March 31, 2021
“Sales and operating revenue” in accordance with U.S. GAAP and, in respect of the results forecast for the fiscal year ending March 31, 2022, “Sales and Financial Services revenue” in accordance with
International Financial Reporting Standards (“IFRS”) are shown as “Sales” below.
|
|
(Billions of yen, except per share amounts)
|
|
|
|
Fiscal Year ended March 31
|
|
|
|
2020
|
|
|
2021
|
|
|
Change
|
|
Sales
|
|
¥
|
8,259.9
|
|
|
¥
|
8,999.4
|
|
|
¥
|
+739.5
|
|
Operating income
|
|
|
845.5
|
|
|
|
971.9
|
|
|
|
+126.4
|
|
Income before income taxes
|
|
|
799.5
|
|
|
|
1,192.4
|
|
|
|
+392.9
|
|
Net income attributable to Sony Group Corporation’s stockholders
|
|
|
582.2
|
|
|
|
1,171.8
|
|
|
|
+589.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to Sony Group Corporation’s stockholders per share of common stock:
|
|
|
|
|
|
- Basic
|
|
¥
|
471.64
|
|
|
¥
|
952.29
|
|
|
|
+480.65
|
|
- Diluted
|
|
|
461.23
|
|
|
|
936.90
|
|
|
|
+475.67
|
|
|
|
(Billions of yen, except per share amounts)
|
|
|
|
Fiscal Year ended March 31
|
|
For all segments excluding the Financial Services segment *
|
|
|
2020
|
|
|
|
2021
|
|
|
Change
|
|
Net cash provided by operating activities
|
|
¥
|
762.9
|
|
|
¥
|
1,122.2
|
|
|
|
+359.3
|
|
Net cash used in investing activities
|
|
|
(363.1
|
)
|
|
|
(581.2
|
)
|
|
|
- 218.1
|
|
Total
|
|
|
399.8
|
|
|
|
541.0
|
|
|
|
+141.3
|
|
* Cash flow for all segments excluding the Financial Services segment is not a measure in accordance with U.S. GAAP. However, Sony believes that this disclosure may be useful information to investors.
Please refer to page F-10 for details about the preparation of the Condensed Statements of Cash Flows.
The average foreign exchange rates during the fiscal years ended March 31, 2020 and 2021 are presented below.
|
|
Fiscal Year ended March 31
|
|
|
2020
|
|
|
2021
|
|
Change
|
The average rate of yen
|
|
|
|
|
|
|
|
1 U.S. dollar
|
|
¥
|
108.7
|
|
|
¥
|
106.1
|
|
2.6 yen appreciation
|
1 Euro
|
|
|
120.8
|
|
|
|
123.7
|
|
2.9 yen depreciation
|
Sales increased 739.5 billion yen (9%) compared to the previous fiscal year (“year-on-year”) to 8 trillion 999.4 billion yen mainly due to significant increases in sales in the Game & Network Services (“G&NS”) and the Financial Services segments, partially offset primarily by a significant decrease in sales in the Pictures segment. On a
constant currency basis, sales increased approximately 10% year-on-year. For further details about the impact of foreign exchange rate fluctuations on sales and operating income (loss), see Note on page 9. Sales in the previous
fiscal year also included 7.9 billion yen in patent royalty revenue resulting from the signing of a licensing agreement, recorded within Corporate and elimination.
Operating income increased 126.4 billion yen year-on-year to 971.9 billion yen. This increase was primarily due to significant increases in operating income in the G&NS, Electronics
Products & Solutions (“EP&S”) and Music segments, partially offset by a significant decrease in operating income in the Imaging & Sensing Solutions (“I&SS”) segment.
Operating income for the current fiscal year included the following:
・
|
Gain on the sale of a portion of shares of Pledis Entertainment Co., Ltd. (“Pledis”): 6.5 billion yen (Music segment)
|
・
|
Gain recorded in connection with a business transfer: 5.4 billion yen (Music segment)
|
・
|
An impairment charge against long-lived assets in the nursing care business: 7.4 billion yen (Financial Services segment)
|
・
|
Inventory write-downs of certain image sensors for mobile products: 7.2 billion yen (I&SS segment)
|
・
|
Expenses related to the Sony Global Relief Fund for COVID-19: 5.3 billion yen (Corporate and elimination)
|
Operating income for the previous fiscal year included the following:
・
|
Remeasurement and realized gains resulting from the public listing and sale of a portion of shares of SRE Holdings Corporation: 17.3 billion yen (All Other)
|
・
|
Realized and remeasurement gains resulting from the transfer of a portion of shares of NSF Engagement Corporation: 6.3 billion yen (Corporate and elimination)
|
During the current fiscal year, restructuring charges, net, increased 0.9 billion yen year-on-year to 25.9 billion yen. This amount is recorded as an operating expense included in the above-mentioned operating income.
Equity in net income of affiliated companies, recorded within operating income, increased 1.9 billion yen
year-on-year to income of 11.5 billion yen.
The net effect of other income and expenses was income of 220.5 billion yen, compared to an expense of 46.0 billion yen in the previous fiscal
year. This was mainly due to the recording of 247.0 billion yen in unrealized gains on Sony’s shares of Bilibili Inc. (“Bilibili”) and Spotify Technology S.A. in the current fiscal year. The above unrealized gains also included 14.6
billion yen of an unrealized gain on an unlisted equity security and 11.2 billion yen of an unrealized gain on an equity security whose lockup restriction will expire within one year.
Income before income taxes increased 392.9 billion yen year-on-year to 1 trillion 192.4 billion yen.
During the current fiscal year, Sony recorded 1.0 billion yen of income tax expenses, resulting in an effective tax rate of 0.1%, which was lower than the effective tax rate of 22.2% in the previous fiscal year. This lower
effective tax rate was mainly due to the reversal of valuation allowances recorded against deferred tax assets in Japan and the United States. Sony reversed valuation allowances in Japan that were recorded against a significant
portion of the deferred tax assets related to the national taxes of Sony Group Corporation and its national tax filing group in Japan, which resulted in a tax benefit of 214.9 billion yen in the three months ended September 30, 2020,
and adjusted valuation allowances recorded against deferred tax assets related to the local taxes at some companies in Japan, which resulted in a net tax benefit of 7.6 billion yen in the fiscal year ended March 31, 2021. Sony
reversed valuation allowances in the United States recorded against the deferred tax assets for foreign tax credits and research and development credits of the consolidated tax filing group, which resulted in a tax benefit of 21.3
billion yen and 13.6 billion yen, respectively, in the fiscal year ended March 31,2021.
Net income attributable to Sony Group Corporation’s stockholders, which deducts net income attributable to noncontrolling interests, increased 589.6 billion yen year-on-year to 1 trillion
171.8 billion yen.
Cash Flows
For Consolidated Statements of Cash Flows, charts showing Sony’s cash flow information for all segments, all segments excluding the Financial Services segment and the Financial Services segment alone,
please refer to pages F-5 and F-12.
Operating Activities: During the current fiscal year, there was a net cash inflow of 1 trillion 350.2 billion yen from operating activities, an increase of 0.4 billion yen year-on-year.
For all segments excluding the Financial Services segment, there was a net cash inflow of 1 trillion 122.2 billion yen, an increase of 359.3 billion yen year-on-year. This increase was primarily due to an increase in net income
after taking into account non-cash adjustments (including depreciation and amortization, other operating (income) expense, net and (gain) loss on securities investments, net) as well as an increase in notes and accounts payable, trade
compared to a decrease in the previous fiscal year. This increase in net cash inflow was partially offset by an increase in inventory, notes and accounts receivable, trade and contract assets compared to a decrease in the previous
fiscal year.
The Financial Services segment had a net cash inflow of 247.6 billion yen, a decrease of 356.6 billion yen year-on-year. This decrease was primarily due to a year-on-year decrease in net income after taking into account non-cash
adjustments such as (gain) loss on marketable securities and securities investments, net.
Investing Activities: During the current fiscal year, Sony used 1 trillion 781.5 billion yen of net cash in investing activities, an increase of 429.2 billion yen year-on-year.
For all segments excluding the Financial Services segment, there was a net cash outflow of 581.2 billion yen, an increase of 218.1 billion yen year-on-year. This increase was mainly due to an increase in payments for fixed asset
purchases including semiconductor manufacturing equipment, as well as a cash outflow resulting from a payment for the purchase of shares of Bilibili. Additionally, the previous fiscal year included the cash inflow from the sale of
all of Sony’s shares of Olympus Corporation.
The Financial Services segment used 1 trillion 200.4 billion yen of net cash in investing activities, an increase of 211.3 billion yen year-on-year. This increase was mainly due to a year-on-year increase in payments for
investments and advances at Sony Bank Inc. (“Sony Bank”).
Financing Activities: Net cash inflow from financing activities during the current fiscal year was 667.0 billion yen, an increase of 601.3 billion yen year-on-year.
For all segments excluding the Financial Services segment, there was a 252.6 billion yen net cash outflow, a decrease of 124.5 billion yen year-on-year. This decrease was mainly due to the procurement of approximately 2 billion
U.S. dollars in the form of a long-term bank loan in July 2020, as well as the redemption of straight bonds and the repayment of long-term debt in the previous fiscal year. This decrease was partially offset by the payment of 396.7
billion yen for the acquisition of all the shares of Sony Financial Holdings Inc. (“SFH”) and the related stock acquisition rights for the purpose of making SFH into a wholly-owned subsidiary of Sony Group Corporation. In order to
fund the acquisition of all the shares of SFH and the related stock acquisition rights, a total of 396.5 billion yen in short-term bank borrowings was secured in July and October of 2020, of which the entire amount was repaid by the
end of March 2021.
In the Financial Services segment, there was a 900.0 billion yen net cash inflow, an increase of 474.7 billion yen year-on-year. This increase was primarily due to a larger increase in deposits from customers at Sony Bank and an
increase in short-term borrowings at Sony Life Insurance Co., Ltd. (“Sony Life”).
Total Cash and Cash Equivalents: Accounting for the above factors and the effect of fluctuations in foreign exchange rates, the total outstanding balance of cash and cash equivalents at March
31, 2021 was 1 trillion 787.0 billion yen. Cash and cash equivalents of all segments excluding the Financial Services segment was 1 trillion 289.8 billion yen at March 31, 2021, an increase of 327.4 billion yen compared with the
balance as of March 31, 2020. Within the Financial Services segment, the outstanding balance of cash and cash equivalents was 497.2 billion yen at March 31, 2021, a decrease of 52.8 billion yen compared with the balance as of March
31, 2020.
* * * * *
Outlook for the Fiscal Year Ending March 31, 2022
Because Sony will voluntarily adopt IFRS starting in the first quarter of the fiscal year ending March 31, 2022, the following forecast is based on IFRS. Below are direct comparisons of the U.S. GAAP-based results for the fiscal
year ended March 31, 2021 and the IFRS-based results forecast for the fiscal year ending March 31, 2022. Please refer to pages 11 to 14, “Effects of Transition to International Financial Reporting Standards (IFRS), as of February 3,
2021” in “Supplemental Information,” for an explanation of the major expected impacts of the voluntary adoption of IFRS on Sony’s consolidated financial statements.
The forecast for consolidated results for the fiscal year ending March 31, 2022 is as follows:
|
|
(Billions of yen)
|
|
|
|
|
|
|
March 31, 2021
Results
|
|
|
March 31, 2022
April Forecast
|
|
|
Change from
March 31, 2021 Results
|
|
|
|
(US GAAP)
|
|
|
(IFRS)
|
|
|
(Reference)
|
|
Sales
|
|
¥
|
8,999.4
|
|
|
¥
|
9,700
|
|
|
+ ¥700.6 bil
|
|
|
+ 7.8
|
%
|
Operating income
|
|
|
971.9
|
|
|
|
930
|
|
|
- 41.9 bil
|
|
|
- 4.3
|
|
Income before income taxes
|
|
|
1,192.4
|
|
|
|
905
|
|
|
- 287.4 bil
|
|
|
- 24.1
|
|
Net income attributable to Sony Group Corporation’s stockholders
|
|
|
1,171.8
|
|
|
|
660
|
|
|
- 511.8 bil
|
|
|
- 43.7
|
|
For all segments excluding the Financial Services segment *
|
|
March 31, 2021
Results
|
|
|
March 31, 2022
April Forecast
|
|
Change from March 31,
2021 Results
|
|
Net cash provided by operating activities
|
|
|
1,122.2
|
|
|
|
910
|
|
- ¥212.2 bil
|
|
|
- 18.9
|
%
|
* Cash flow for all segments excluding the Financial Services segment is not a measure in accordance with U.S. GAAP and IFRS. However, Sony believes that this disclosure may be useful information to
investors. Please refer to page F-10 for details about the preparation of the Condensed Statements of Cash Flows.
Assumed foreign currency exchange rates for the fiscal year ending March 31, 2022 are below.
|
(For your reference)
Average foreign currency exchange rates
for the fiscal year ended March 31, 2021
|
Assumed foreign currency exchange rates
for the fiscal year ending March 31, 2022
|
1 U.S. dollar
|
106.1 yen
|
approximately 107 yen
|
1 Euro
|
123.7 yen
|
approximately 126 yen
|
Sales for the fiscal year ending March 31, 2022 are expected to increase year-on-year primarily due to an expected significant increase in sales in the Pictures segment and expected increases in sales in the G&NS and EP&S
segments, partially offset by a significant decrease in sales in the Financial Services segment.
Operating income is expected to decrease year-on-year due to expected decreases in operating income in the Music, G&NS and I&SS segments, partially offset by expected increases in operating income in the EP&S, Financial
Services and Pictures segments.
Income before income taxes is expected to decrease significantly year-on-year as a result of unrealized gains and losses on securities not being included in the April forecast. Sony recorded 247.0 billion yen of unrealized gains
on securities in the fiscal year ended March 31, 2021.
Based on U.S. GAAP, in the fiscal year ended March 31, 2021, Sony recorded unrealized gains and losses on securities as other income or expenses. Based on IFRS, in the fiscal year ending March 31, 2022, such gains and losses will
be recorded as other comprehensive income with the exception of certain securities.
Net income attributable to Sony Group Corporation’s stockholders is expected to decrease significantly year-on-year mainly due to the impact of the above-mentioned decrease in income before income taxes and an increase in tax
expense following the reversal of valuation allowances recorded against deferred tax assets in the fiscal year ended March 31, 2021.
* * * * *
Business 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. For details regarding each segment’s product categories, please refer to page F-9.
Due to organizational changes as of April 1, 2021, from the first quarter of the fiscal year ending March 31, 2022, Sony will transfer some of the businesses and functions previously included within All Other and Corporate and
elimination to the EP&S segment, and make changes to the business segment classification for performance reporting. As a result of this segment change, sales and operating income (loss) for EP&S and All Other, Corporate and
elimination for the fiscal year ended March 31, 2021 in the below chart have been reclassified to conform to the presentation for the fiscal year ending March 31, 2022. For details about this reclassification, please refer to the
reconciliation on pages 7 and 8.
This reclassification is not a presentation in accordance with U.S. GAAP (for details, please refer to “Business Segment Information” on page F-6) as noted in Sony’s consolidated financial statements, but is presented to provide
investors with an understanding of Sony’s business segment information by providing a measure that aligns with the way Sony will manage its business. Sony’s management will use this measure to review operating trends and perform
analytical comparisons. This supplemental non-U.S. GAAP measure should be considered in addition to, not as a substitute for, Sony’s sales and operating income in accordance with U.S. GAAP.
|
|
(Billions of yen)
|
|
|
|
|
|
|
|
March 31, 2020
Results
|
|
|
March 31, 2021
Results
|
|
|
March 31, 2021
Results
(Reclassified)
|
|
|
March 31, 2022 April Forecast
|
|
|
|
(U.S. GAAP)
|
|
|
(U.S. GAAP)
|
|
|
(U.S. GAAP)
|
|
|
(IFRS)
|
|
Game & Network Services (G&NS)
|
|
|
|
|
|
|
|
Sales
|
|
|
1,977.6
|
|
|
|
2,656.3
|
|
|
|
-
|
|
|
|
2,900
|
|
Operating income
|
|
|
238.4
|
|
|
|
342.2
|
|
|
|
-
|
|
|
|
325
|
|
Music
|
|
|
|
|
|
|
|
|
|
Sales
|
|
|
849.9
|
|
|
|
939.9
|
|
|
|
-
|
|
|
|
990
|
|
Operating income
|
|
|
142.3
|
|
|
|
188.1
|
|
|
|
-
|
|
|
|
162
|
|
Pictures
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales
|
|
|
1,011.9
|
|
|
|
758.8
|
|
|
|
-
|
|
|
|
1,140
|
|
Operating income
|
|
|
68.2
|
|
|
|
80.5
|
|
|
|
-
|
|
|
|
83
|
|
Electronics Products & Solutions (EP&S)
|
|
Sales
|
|
|
1,991.3
|
|
|
|
1,920.7
|
|
|
|
2,066.5
|
|
|
|
2,260
|
|
Operating income
|
|
|
87.3
|
|
|
|
139.2
|
|
|
|
134.1
|
|
|
|
148
|
|
Imaging & Sensing Solutions (I&SS)
|
|
|
|
|
|
|
|
|
|
Sales
|
|
|
1,070.6
|
|
|
|
1,012.5
|
|
|
|
-
|
|
|
|
1,130
|
|
Operating income
|
|
|
235.6
|
|
|
|
145.9
|
|
|
|
-
|
|
|
|
140
|
|
Financial Services
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial services revenue
|
|
|
1,307.7
|
|
|
|
1,668.9
|
|
|
|
-
|
|
|
|
1,400
|
|
Operating income
|
|
|
129.6
|
|
|
|
164.6
|
|
|
|
-
|
|
|
|
170
|
|
All Other, Corporate and elimination
|
|
Operating loss
|
|
|
(55.9
|
)
|
|
|
(88.5
|
)
|
|
|
(83.4
|
)
|
|
|
(98
|
)
|
Consolidated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales
|
|
|
8,259.9
|
|
|
|
8,999.4
|
|
|
|
-
|
|
|
|
9,700
|
|
Operating income
|
|
|
845.5
|
|
|
|
971.9
|
|
|
|
-
|
|
|
|
930
|
|
Game & Network Services (G&NS)
Results for the fiscal year ended March 31, 2021
Sales increased 678.7 billion yen (34%) year-on-year to 2 trillion 656.3 billion yen (a 35% increase on a constant currency basis). This significant increase in sales was primarily due to an increase in game software sales
including add-on content and an increase in hardware sales due to the launch of PlayStation®5 (“PS5™”).
Operating income increased 103.8 billion yen year-on-year to 342.2 billion yen. This significant increase was primarily due to the impact of the above-mentioned increase in game software sales, and an increase in Network Services
sales, primarily from PlayStation®Plus, partially offset by a loss resulting from strategic price points for PS5™ hardware that were set lower than the manufacturing
costs, as well as an increase in selling, general and administrative expenses related to the launch of PS5™. During the current fiscal year, there was a 15.3 billion
yen positive impact from foreign exchange rate fluctuations.
Forecast for the fiscal year ending March 31, 2022
Sales are expected to increase year-on-year mainly due to an expected increase in hardware unit sales and the impact of foreign exchange rates, partially offset by a decrease in sales of
non-first-party titles including add-on content. Operating income is expected to decrease year-on-year primarily due to the above-mentioned expected decrease in sales of non-first-party titles, and an expected increase in cost,
primarily for game software development, partially offset by an expected increase in revenues from first-party titles and an expected improvement in hardware profitability.
Music
The Music segment results include the yen-based results of Sony Music Entertainment (Japan) Inc. and the yen-translated results of Sony Music Entertainment (“SME”) and Sony Music Publishing LLC (“SMP”)*,
which aggregate the results of their worldwide subsidiaries on a U.S. dollar basis.
* Sony/ATV Music Publishing LLC, which manages EMI Music Publishing Ltd., changed its trade name to Sony Music Publishing LLC as described in the news release titled “Introducing the New Sony Music
Publishing” dated February 12, 2021.
Results for the fiscal year ended March 31, 2021
Sales increased 90.0 billion yen (11%) to 939.9 billion yen (a 12% increase on a constant currency basis). The significant increase in sales was primarily due to higher Recorded Music and Visual Media and Platform sales. Sales
for Recorded Music increased mainly due to an increase in revenues from streaming services. Sales for Visual Media and Platform increased mainly due to an increase in sales for the anime business primarily reflecting the contribution
of Demon Slayer – Kimetsu no Yaiba – the Movie: Mugen Train and an increase in revenues for mobile game applications. Operating income increased
45.7 billion yen year-on-year to 188.1 billion yen. This significant increase was primarily due to the impact of the above-mentioned increase in sales, in addition to a 6.5 billion yen gain recorded on the sale of a portion of shares
of Pledis and a 5.4 billion yen gain recorded in connection with the transfer of an overseas business.
Forecast for the fiscal year ending March 31, 2022
Sales are expected to increase year-on-year mainly due to higher sales for Recorded Music and Music Publishing primarily resulting from an expected increase in revenues from streaming services. This increase in sales is expected
to be partially offset by decreases in both the contribution of Demon Slayer – Kimetsu no Yaiba – the Movie: Mugen Train, which was released in the
previous fiscal year, and in revenues from mobile game applications in Visual Media and Platform. Operating income is expected to decrease year-on-year primarily due to the impact of the above-mentioned decrease in Visual Media and
Platform sales as well as the absence of the 6.5 billion yen gain on the sale of a portion of shares of Pledis Entertainment Co., Ltd. and the 5.4 billion yen gain in connection with the transfer of an overseas business that were
recorded during the previous fiscal year. These negative factors are expected to be partially offset primarily by the impact of the above-mentioned expected increase in Recorded Music and Music Publishing sales.
Pictures
The Pictures segment results are the yen-translated results of Sony Pictures Entertainment Inc. (“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.”
Results for the fiscal year ended March 31, 2021
Sales decreased 253.1 billion yen, a 25% decrease year-on-year (a 23% decrease on a U.S. dollar basis), to 758.8 billion yen. The significant decrease in sales was primarily due to decreases in sales for Motion Pictures and
Television Productions. The decrease in sales for Motion Pictures was due to the absence of any major theatrical releases in the current fiscal year resulting from the impact of theater closures due to COVID-19, partially offset by
higher home entertainment sales of prior year and catalog titles. The decrease in sales for Television Productions was due to lower deliveries of new shows primarily due to production delays related to COVID-19.
Operating income increased 12.3 billion yen year-on-year to 80.5 billion yen. The increase in operating income was primarily due to lower marketing costs in Motion Pictures as a result of the absence of major theatrical releases
due to COVID-19, as well as the impact of the above-mentioned home entertainment sales, partially offset by the above-mentioned decreases in sales. Operating income also benefited from a decrease in charges related to a channel
portfolio review in Media Networks which totaled 5.0 billion yen in the current fiscal year compared to 17.0 billion yen in the previous fiscal year.
Forecast for the fiscal year ending March 31, 2022
Sales are expected to significantly increase year-on-year primarily due to the impact of an expected increase in sales for Motion Pictures resulting from the increase in theatrical releases as theaters reopen, an increase in sales
for TV Productions including revenues from the licensing of Seinfeld and an expected increase in sales for Media Networks. Operating income is
expected to increase year-on-year primarily due to the above-mentioned increase in sales, partially offset by the increase in marketing costs in support of upcoming theatrical releases.
Electronics Products & Solutions (EP&S)
Results for the fiscal year ended March 31, 2021 (Before segment realignment)
Sales decreased 70.5 billion yen (4%) year-on-year to 1 trillion 920.7 billion yen (a 3% decrease on a constant currency basis). This decrease in sales was primarily due to a decrease in sales of digital cameras, broadcast- and
professional-use products and Audio and Video resulting from lower unit sales as well as the impact of foreign exchange rates, partially offset by an increase in sales of televisions resulting from an improvement in the product mix.
Operating income increased 51.9 billion yen year-on-year to 139.2 billion yen. This significant increase in operating income was primarily due to reductions in operating costs mainly within Mobile Communications, as well as an
improvement in the product mix mainly of televisions and digital cameras, partially offset by the impact of the above-mentioned decrease in sales. During the current fiscal year, there was a 6.6 billion yen positive impact from
foreign exchange rate fluctuations.
Forecast for the fiscal year ending March 31, 2022 (Reclassified*)
Sales are expected to increase mainly due to an increase in sales of televisions resulting from an improvement in the product mix and an increase in sales of digital cameras resulting from higher unit sales, as well as the impact
of foreign exchange rates. Operating income is expected to increase year-on-year primarily due to the above-mentioned increase in sales as well as the positive impact of foreign exchange rates, partially offset by an increase in
costs resulting from an increase in sales.
* A reconciliation between the sales and operating income (loss) of the EP&S segment and the reclassified
EP&S segment for the fiscal year ended March 31, 2021 is on page 8. The reconciliation in the following table includes the sales, cost of goods sold, and selling, general and administrative expenses related to businesses and
functions which were newly included in the EP&S segment as a result of changes to the organizational structure of the segment announced on November 17, 2020 in the news release entitled “Sony Group Organizational Changes and
Executive Appointments – Transition to new management structure for Electronics Products & Solutions business.” These amounts have been deducted from All Other, Corporate and elimination (Reclassified).
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(Billions of yen)
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EP&S
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All Other
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Corporate and elimination
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Before Reconciliation
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Sales
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1,920.7
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229.3
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-187.0
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Operating income
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139.2
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11.4
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-99.9
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Reconciliation
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Sales
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145.7
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-128.5
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-17.2
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Operating income
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-5.1
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-3.5
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8.6
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Reclassified
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Sales
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2,066.5
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100.7
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-204.2
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Operating income
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134.1
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7.8
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-91.2
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Imaging & Sensing Solutions (I&SS)
Results for the fiscal year ended March 31, 2021
Sales decreased 58.1 billion yen (5%) year-on-year to 1 trillion 12.5 billion yen (a 3% decrease on a constant currency basis). This decrease in sales was mainly due to a decrease in sales of image sensors for mobile products
reflecting a deterioration of the product mix, partially offset by an increase in unit sales. This decrease in sales was also due to the impact of foreign exchange rates and a decrease in sales of image sensors for digital cameras
reflecting a decrease in unit sales primarily as a result of the impact of COVID-19.
Operating income decreased 89.7 billion yen year-on-year to 145.9 billion yen. This significant decrease was mainly due to an increase in research and development expenses as well as in depreciation and amortization expenses, the
impact of the above-mentioned decrease in sales, the negative impact of foreign exchange rates and the above-mentioned 7.2 billion yen of inventory write-downs of certain image sensors for mobile products whose shipments were
suspended as a result of U.S. export restrictions. During the current fiscal year, there was an 8.6 billion yen negative impact from foreign exchange rate fluctuations.
Forecast for the fiscal year ending March 31, 2022
Sales are expected to increase primarily due to an expected increase in sales of image sensors for mobile products due to an increase in unit sales, partially offset by a deterioration of the product mix, as well as an expected
increase in sales of image sensors for digital cameras due to an increase in unit sales. Operating income is expected to decrease year-on-year primarily due to an increase in research and development expenses as well as in
depreciation and amortization expenses, partially offset by the impact of the above-mentioned increase in sales.
Financial Services
The Financial Services segment results include SFH and SFH’s consolidated subsidiaries such as Sony Life, Sony Assurance Inc. (“Sony Assurance”), and Sony Bank. The results of Sony
Life discussed in the Financial Services segment differ from the results that SFH and Sony Life disclose separately on a Japanese statutory basis.
Results for the fiscal year ended March 31, 2021
Financial services revenue increased 361.2 billion yen year-on-year to 1 trillion 668.9 billion yen mainly due to significant increases in revenue at Sony Life and Sony Bank. Revenue at Sony Life increased 299.2 billion yen
year-on-year to 1 trillion 470.9 billion yen, mainly due to an increase in net gains on investments in the separate accounts, partially offset by a decrease in premiums from single premium insurance despite an increase in the policy
amount in force. The increase in revenue at Sony Bank was due to an improvement in valuation gains and losses on securities.
Operating income increased 35.0 billion yen year-on-year to 164.6 billion yen due to significant increases in operating income at Sony Bank and Sony Assurance, partially offset by an impairment charge against long-lived assets
recorded in the nursing care business. The increase in operating income at Sony Bank was due to the above-mentioned improvement in valuation gains and losses on securities, and the increase in operating income at Sony Assurance was
due to a decline in the loss ratio for automobile insurance. Operating income at Sony Life increased 4.5 billion yen year-on-year to 128.0 billion yen. This increase in operating income was mainly due to a decrease in the provision
of policy reserves, primarily driven by the improvement in the stock market and an increase in interest rates, partially offset by an overall deterioration in the provision of policy reserves for minimum guarantees for variable life
insurance and other products, resulting from market fluctuations, and net gains and losses on derivative transactions to hedge market risks, as well as expenses recorded for various provisions related to COVID-19.
Forecast for the fiscal year ending March 31, 2022
Financial services revenue is expected to decrease significantly year-on-year primarily because the positive impact on net gains on investments in the separate accounts at Sony Life, resulting from positive market conditions in the
fiscal year ended March 31, 2021, is not incorporated into the forecast. Operating income is expected to increase year-on-year primarily due to the absence of the impairment charge against long-lived assets in the nursing care
business recorded in the fiscal year ended March 31, 2021 and due to an increase in insurance premium revenue reflecting an increase in the policy amount in force at Sony Life. Partially offsetting these factors is the absence of the
positive impact of the gains from market fluctuations in the fiscal year ended March 31, 2021 (including the impact of changes in the classification and measurement of financial instruments resulting from the adoption of IFRS starting
in the fiscal year ending March 31, 2022).
The effects of future gains and losses on investments held by the Financial Services segment due to market fluctuations have not been incorporated within the above forecast as it is difficult for Sony to predict market trends in
the future. Accordingly, future market fluctuations could further impact the above forecast.
The above forecast is based on management’s current expectations and is subject to uncertainties and changes in circumstances. Actual results may differ materially from those included in this forecast due to a variety of factors.
See “Cautionary Statement” below.
Note
Sales on a Constant Currency Basis and 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 same period of the previous fiscal year to local currency-denominated monthly sales in
the relevant period of the current fiscal year. For SME and SMP in the Music 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.
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. Because of this, the description of the year-on-year change in sales for the
Pictures segment represents the change on a U.S. dollar basis.
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 same period of the previous fiscal year from the relevant period of the
current fiscal year to the major transactional currencies in which the sales are denominated. The impact of foreign exchange rate fluctuations on operating income (loss) is calculated by subtracting from the impact on sales the impact
on cost of sales and selling, general and administrative expenses calculated by applying the same major transactional currencies calculation process to cost of sales and selling, general and administrative 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 operating income (loss) for that
segment.
This information is not a substitute for Sony’s consolidated financial statements measured in accordance with U.S. GAAP. However, Sony believes that these disclosures provide additional useful analytical information to investors
regarding the operating performance of Sony.
Financial Target of the Fourth Mid-Range Plan
At the Corporate Strategy Meeting for the fiscal year ending March 31, 2022 scheduled to be held on May 26, 2021, Sony Group Corporation plans to announce a mid-range plan (“Fourth Mid-Range Plan”) for the three fiscal years
starting on April 1, 2021 and ending on March 31, 2024.
In order to continue managing Sony with a long-term view, a three-year cumulative key performance indicator will be established. That indicator, which will be the most important metric of group performance for the Fourth Mid-Range
Plan, will be Adjusted EBITDA*. Sony Group Corporation will target total Adjusted EBITDA of 4.3 trillion yen on a consolidated basis for the three fiscal years starting on April 1, 2021 and ending on March 31, 2024.
Management believes that Adjusted EBITDA is a performance metric suitable for the long-term management that Sony prioritizes. This is because (i) it represents the sustainable earnings power of a business because it does not
include the effects of one-time gains and losses, (ii) it enables management to confirm that all the businesses of the Sony Group, including the Financial Services business which has become a wholly-owned subsidiary, are expanding
over the mid- to long-term through cycles of investment and return, and (iii) it is often used to calculate corporate value.
* EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) is calculated by the following formula, and Adjusted EBITDA excludes the profit and loss amount that Sony deems to be
non-recurring and discloses in the Quarterly Financial Statements, the Earnings Presentation Slides, the Quarterly Securities Reports and the Form 20-F. The financial figures in the Fourth Mid-Range Plan are based on IFRS.
EBITDA = Net income attributable to Sony Group Corporation’s stockholders + Net income attributable to noncontrolling interests + Income taxes + Interest expenses, net, recorded in Financial income
and Financial expense - Gain on revaluation of equity securities, net, recorded in Financial income and Financial expense + Depreciation and amortization expense excluding amortization for film costs included in Content assets and
deferred insurance acquisition costs.
EBITDA and Adjusted EBITDA are not measures in accordance with IFRS. However, Sony believes that this disclosure may be useful information to investors. EBITDA and Adjusted EBITDA should be
considered in addition to, not as a substitute for, Sony’s results and cash flows in accordance with IFRS.
* * * * *
Basic Views on Selection of Accounting Standards
Sony will voluntarily adopt IFRS from the first quarter of the fiscal year ending March 31, 2022, in lieu of the currently applied U.S. GAAP, with the goal of further streamlining and maintaining the quality of Sony’s financial and
management reporting systems over the mid- to long-term, and improving the international comparability of financial information in the capital markets.
Supplemental Information
Effects of Transition to International Financial Reporting Standards (IFRS), as of February 3, 2021
The following information is to provide investors with an understanding of Sony’s IFRS-based results forecast for the fiscal year ending March 31, 2022, by reprinting the material released on February 3, 2021.