索尼(SONY) - 2023 Q1 - Quarterly Report

FORM 6-K Filing Details This section details Sony Group Corporation's Form 6-K submission, including its Q1 2023 financial statements and FY2024 outlook Registrant Information This report is a Form 6-K filing by Sony Group Corporation, disclosing its first-quarter financial statements as of June 30, 2023, and the outlook for the fiscal year ending March 31, 2024 - Sony Group Corporation submitted a Form 6-K report, including Q1 2023 financial statements and FY2024 outlook[1][3][4] - Report signed by Hiroki Totoki, President, COO, and CFO, on August 9, 2023[3] Quarterly Financial Statements (Unaudited) This section presents Sony Group's unaudited condensed consolidated financial statements for the first quarter ended June 30, 2023, prepared in accordance with IFRS Overview and Accounting Policy This section outlines Sony Group's first-quarter financial statements as of June 30, 2023, emphasizing IFRS compliance and the retrospective restatement for IFRS 17 adoption from April 1, 2023 - All financial information is presented in accordance with International Financial Reporting Standards (IFRS)[5] - Sony adopted IFRS 17 'Insurance Contracts' from April 1, 2023, and retrospectively restated comparative data for the fiscal years ended June 30, 2022, and March 31, 2023[7] Condensed Consolidated Statements of Financial Position As of June 30, 2023, Sony Group's total assets and liabilities significantly increased, driven by growth in inventories, goodwill, content assets, short-term borrowings, trade payables, and insurance contract liabilities Condensed Consolidated Statements of Financial Position Key Metrics (As of June 30, 2023) | Metric | March 31, 2023 (million JPY) | June 30, 2023 (million JPY) | Change (million JPY) | Change Rate | | :--- | :--- | :--- | :--- | :--- | | Assets | | | | | | Total Assets | 31,154,095 | 32,860,017 | 1,705,922 | 5.48% | | Liabilities | | | | | | Total Liabilities | 24,496,945 | 25,781,439 | 1,284,494 | 5.24% | | Equity | | | | | | Equity attributable to Sony Group Corporation stockholders | 6,598,537 | 7,002,988 | 404,451 | 6.13% | | Non-controlling interests | 58,613 | 75,590 | 16,977 | 28.96% | | Total Equity | 6,657,150 | 7,078,578 | 421,428 | 6.33% | - Inventories in current assets significantly increased by 361,468 million JPY, reaching 1,829,510 million JPY[8] - Goodwill and content assets in non-current assets increased by 124,995 million JPY and 196,666 million JPY, respectively[8] - Short-term borrowings and trade and other payables in current liabilities increased by 251,178 million JPY and 255,956 million JPY, respectively[9] - Insurance contract liabilities in non-current liabilities increased by 523,262 million JPY, reaching 12,888,235 million JPY[9] Condensed Consolidated Statements of Income For the three months ended June 30, 2023, Sony Group's total sales and financial services revenue increased by 32.9%, while operating profit and net profit declined due to a substantial rise in financial services expenses Condensed Consolidated Statements of Income Key Metrics (For the three months ended June 30, 2023) | Metric | 2022 (million JPY) | 2023 (million JPY) | Change (million JPY) | Change Rate | | :--- | :--- | :--- | :--- | :--- | | Total sales and financial services revenue | 2,229,760 | 2,963,652 | 733,892 | 32.91% | | Operating profit | 364,865 | 253,042 | (111,823) | -30.65% | | Net profit | 261,204 | 217,942 | (43,262) | -16.56% | | Net profit attributable to Sony Group Corporation stockholders | 261,094 | 217,545 | (43,549) | -16.68% | | Basic earnings per share (JPY) | 211.16 | 176.26 | (34.90) | -16.53% | | Diluted earnings per share (JPY) | 209.66 | 175.67 | (33.99) | -16.21% | - Financial services revenue significantly increased by 458,206 million JPY to 536,359 million JPY, primarily driven by other financial services revenue[11] - Financial services expenses surged by 550,079 million JPY to 624,543 million JPY, with insurance financial expenses (income) shifting from negative to positive, an increase of 527,537 million JPY[11] Condensed Consolidated Statements of Comprehensive Income For the three months ended June 30, 2023, Sony Group's comprehensive income slightly increased, primarily due to significant growth in other comprehensive income, offsetting a decline in net profit Condensed Consolidated Statements of Comprehensive Income Key Metrics (For the three months ended June 30, 2023) | Metric | 2022 (million JPY) | 2023 (million JPY) | Change (million JPY) | Change Rate | | :--- | :--- | :--- | :--- | :--- | | Net profit | 261,204 | 217,942 | (43,262) | -16.56% | | Other comprehensive income (net of tax) | 181,891 | 227,517 | 45,626 | 25.08% | | Comprehensive income | 443,095 | 445,459 | 2,364 | 0.53% | | Comprehensive income attributable to Sony Group Corporation stockholders | 439,546 | 443,428 | 3,882 | 0.88% | - Changes in financial assets measured at fair value through other comprehensive income significantly improved from negative 571,849 million JPY to negative 72,542 million JPY, an increase of 499,307 million JPY[13] - Foreign currency translation adjustments increased by 38,438 million JPY to 285,771 million JPY[13] Condensed Consolidated Statements of Changes in Stockholders' Equity For the three months ended June 30, 2023, Sony Group's total stockholders' equity grew by 421,428 million JPY, mainly from increased retained earnings and accumulated other comprehensive income Condensed Consolidated Statements of Changes in Stockholders' Equity Key Metrics (As of June 30, 2023) | Metric | April 1, 2023 (million JPY) | June 30, 2023 (million JPY) | Change (million JPY) | | :--- | :--- | :--- | :--- | | Equity attributable to Sony Group Corporation stockholders | 6,598,537 | 7,002,988 | 404,451 | | Retained earnings | 5,092,442 | 5,261,615 | 169,173 | | Accumulated other comprehensive income | (614,570) | (389,839) | 224,731 | | Dividends paid | - | (49,380) | (49,380) | | Purchase of treasury stock | - | (10,150) | (10,150) | - Net profit of 217,545 million JPY for the period was recognized in retained earnings[14] - Non-controlling interests increased by 16,977 million JPY to 75,590 million JPY[9][15] Condensed Consolidated Statements of Cash Flows For the three months ended June 30, 2023, Sony Group's operating cash outflow significantly decreased, and financing activities shifted to a net inflow, indicating an improved cash position Condensed Consolidated Statements of Cash Flows Key Metrics (For the three months ended June 30, 2023) | Metric | 2022 (million JPY) | 2023 (million JPY) | Change (million JPY) | | :--- | :--- | :--- | :--- | | Net cash outflow from operating activities | (430,018) | (12,669) | 417,349 | | Net cash outflow from investing activities | (315,057) | (198,647) | 116,410 | | Net cash inflow (outflow) from financing activities | (29,977) | 213,867 | 243,844 | | Net increase (decrease) in cash and cash equivalents | (677,769) | 51,199 | 728,968 | | Cash and cash equivalents at end of period | 1,371,867 | 1,532,099 | 160,232 | - The improvement in operating cash outflow was primarily due to an increase in insurance contract liabilities (561,732 million JPY) and an increase in bank deposits (144,119 million JPY), partially offset by increases in inventories and investments and advances in the financial services segment[16] - Financing activities shifted to a net inflow, mainly due to a net increase in short-term borrowings of 294,039 million JPY[17] Notes to Condensed Consolidated Financial Statements This section provides detailed notes to Sony Group's condensed consolidated financial statements, including segment information, accounting policies, and other relevant disclosures Business Segment Information This section details Sony Group's business segment performance, highlighting significant revenue changes in financial services, game & network services, and music, alongside profit shifts across segments - Game & Network Services (G&NS) segment sales increased by 166,542 million JPY year-on-year, reaching 755,003 million JPY[18] - Financial Services segment revenue significantly increased by 465,386 million JPY to 679,109 million JPY[18] - Pictures segment sales decreased by 21,069 million JPY, primarily due to a decline in television production revenue[18][23] Segment Sales and Financial Services Revenue For the three months ended June 30, 2023, financial services, game & network services, and music segments experienced substantial revenue growth, while the pictures segment saw a decline Segment Sales and Financial Services Revenue (For the three months ended June 30, 2023) | Segment | 2022 (million JPY) | 2023 (million JPY) | Change (million JPY) | Change Rate | | :--- | :--- | :--- | :--- | :--- | | Game & Network Services | 588,461 | 755,003 | 166,542 | 28.30% | | Music | 305,353 | 355,756 | 50,403 | 16.51% | | Pictures | 341,247 | 320,178 | (21,069) | -6.17% | | Entertainment, Technology & Services | 543,906 | 563,292 | 19,386 | 3.56% | | Imaging & Sensing Solutions | 219,223 | 270,476 | 51,253 | 23.38% | | Financial Services | 213,723 | 679,109 | 465,386 | 217.75% | | Consolidated Total | 2,229,760 | 2,963,652 | 733,892 | 32.91% | Segment Profit (Loss) For the three months ended June 30, 2023, financial services and pictures segments experienced significant operating profit declines, while the music segment showed growth Segment Operating Profit (Loss) (For the three months ended June 30, 2023) | Segment | 2022 (million JPY) | 2023 (million JPY) | Change (million JPY) | Change Rate | | :--- | :--- | :--- | :--- | :--- | | Game & Network Services | 52,762 | 49,160 | (3,602) | -6.83% | | Music | 60,973 | 73,380 | 12,407 | 20.35% | | Pictures | 50,655 | 15,971 | (34,684) | -68.47% | | Entertainment, Technology & Services | 53,568 | 55,646 | 2,078 | 3.88% | | Imaging & Sensing Solutions | 21,689 | 12,731 | (8,958) | -41.30% | | Financial Services | 139,208 | 54,514 | (84,694) | -60.84% | | Consolidated Operating Profit | 364,865 | 253,042 | (111,823) | -30.65% | Sales to Customers by Product Category For the three months ended June 30, 2023, digital software and add-on content, along with hardware in game & network services, saw increased sales, while TV production in pictures declined Sales to Customers by Product Category (For the three months ended June 30, 2023) | Product Category | 2022 (million JPY) | 2023 (million JPY) | Change (million JPY) | | :--- | :--- | :--- | :--- | | Game & Network Services | | | | | Digital Software and Add-on Content | 285,845 | 365,346 | 79,501 | | Hardware and Other | 196,093 | 265,158 | 69,065 | | Music | | | | | Streaming Recorded Music | 139,111 | 164,887 | 25,776 | | Pictures | | | | | Television Productions | 139,161 | 104,231 | (34,930) | | Entertainment, Technology & Services | | | | | Still and Video Cameras | 139,703 | 161,874 | 22,171 | | Mobile Communications | 99,030 | 87,362 | (11,668) | - Imaging & Sensing Solutions segment sales increased by 51,253 million JPY[23] Condensed Financial Services Financial Statements This section provides condensed financial statements for the financial services segment and other segments, offering a detailed view of their substantial assets, liabilities, and operational changes - Financial services segment and other Sony segments' financial statements are presented separately for clearer business analysis[24] - Investments and advances (non-current assets) in the financial services segment reached 18,669,354 million JPY as of June 30, 2023[25] - Insurance contract liabilities in the financial services segment reached 12,888,235 million JPY as of June 30, 2023[26] Condensed Statements of Financial Position (Segment) As of June 30, 2023, the financial services segment reported total assets of 20,488,322 million JPY and total liabilities of 19,366,876 million JPY, with other segments also showing significant figures Segment Condensed Statements of Financial Position Key Metrics (As of June 30, 2023) | Metric | Financial Services Segment (million JPY) | Other Sony Segments (million JPY) | Consolidated Total (million JPY) | | :--- | :--- | :--- | :--- | | Total Assets | 20,488,322 | 13,067,682 | 32,860,017 | | Total Liabilities | 19,366,876 | 6,521,912 | 25,781,439 | | Total Equity | 1,121,446 | 6,545,770 | 7,078,578 | - Cash and cash equivalents in the financial services segment increased from 756,493 million JPY on March 31, 2023, to 816,248 million JPY[25] - Inventories in other Sony segments increased from 1,468,042 million JPY on March 31, 2023, to 1,829,510 million JPY[25] Condensed Statements of Income (Segment) For the three months ended June 30, 2023, the financial services segment saw substantial revenue growth but a decline in operating profit, while other segments reported increased sales and operating profit Segment Condensed Statements of Income Key Metrics (For the three months ended June 30, 2023) | Metric | Financial Services Segment (million JPY) | Other Sony Segments (million JPY) | Consolidated Total (million JPY) | | :--- | :--- | :--- | :--- | | Total sales and financial services revenue | 681,411 | 2,285,789 | 2,963,652 | | Operating profit | 54,514 | 198,531 | 253,042 | | Net profit | 38,609 | 229,372 | 217,942 | - Financial services expenses in the financial services segment significantly increased from 76,763 million JPY to 626,846 million JPY[28] - Cost of sales in other Sony segments increased from 1,394,565 million JPY to 1,627,562 million JPY[28] Condensed Statements of Cash Flows (Segment) For the three months ended June 30, 2023, the financial services segment's operating cash flow turned to a net inflow, primarily due to increased insurance contract liabilities, while other segments' operating cash outflow decreased Segment Condensed Statements of Cash Flows Key Metrics (For the three months ended June 30, 2023) | Metric | Financial Services Segment (million JPY) | Other Sony Segments (million JPY) | Consolidated Total (million JPY) | | :--- | :--- | :--- | :--- | | Net cash inflow (outflow) from operating activities | 118,065 | (80,669) | (12,669) | | Net cash outflow from investing activities | (5,601) | (193,076) | (198,647) | | Net cash inflow (outflow) from financing activities | (52,709) | 216,541 | 213,867 | | Cash and cash equivalents at end of period | 816,248 | 715,851 | 1,532,099 | - The increase in insurance contract liabilities of 561,732 million JPY in the financial services segment was the primary reason for the positive operating cash flow[29] - Financing activities cash flow for other Sony segments shifted from outflow to an inflow of 216,541 million JPY, mainly driven by a net increase in borrowings[29] Going Concern Assumption The applicability of the going concern assumption is not mentioned in this report - The going concern assumption is not applicable[31] Accounting Policy and Other Information Sony adopted IFRS 17 "Insurance Contracts" from April 1, 2023, with retrospective restatement, and this section also provides key data for earnings per share calculation - Sony adopted IFRS 17 'Insurance Contracts' from April 1, 2023, and retrospectively restated financial statements for comparative periods[31][32] - The retrospective application of IFRS 17 resulted in a change in Sony's total equity as of April 1, 2022, presented in the statements of changes in stockholders' equity[32] Earnings Per Share Calculation Key Data (For the three months ended June 30, 2023) | Metric | 2022 (million JPY/thousand shares) | 2023 (million JPY/thousand shares) | | :--- | :--- | :--- | | Net profit attributable to Sony Group Corporation stockholders | 261,094 | 217,545 | | Weighted average common shares outstanding for basic EPS | 1,236,489 | 1,234,242 | | Weighted average common shares outstanding for diluted EPS | 1,245,486 | 1,238,363 | Business Segment Definition This section defines Sony Group's various business segments, including Game & Network Services, Music, Pictures, Entertainment, Technology & Services, Imaging & Sensing Solutions, and Financial Services, outlining their primary operations - The G&NS segment includes network services, manufacturing and sales of home gaming products, and software production and sales[34] - The Financial Services segment primarily includes individual life insurance, non-life insurance, and banking businesses in the Japanese market[34] - The I&SS segment primarily includes the image sensor business[34] Change in Presentation The condensed consolidated statements of cash flows for the three months ended June 30, 2022, were reclassified to align with the presentation for the period ended June 30, 2023 - The condensed consolidated statements of cash flows for the three months ended June 30, 2022, have been reclassified to align with the presentation for the same period in 2023[35] Adjusted OIBDA and Adjusted EBITDA Results Sony Group reported adjusted OIBDA and adjusted EBITDA results for the three months ended June 30, 2023, showing a decline in both metrics, primarily driven by the financial services segment - Sony considers three-year cumulative Adjusted EBITDA as the most important financial performance indicator (Group KPI) for its Fourth Mid-Range Plan (April 1, 2021, to March 31, 2024)[37] Segment Adjusted OIBDA and Consolidated Adjusted EBITDA (For the three months ended June 30, 2023) | Metric | 2022 (billion JPY) | 2023 (billion JPY) | Change (billion JPY) | Change Rate | | :--- | :--- | :--- | :--- | :--- | | Segment Adjusted OIBDA | | | | | | Game & Network Services (G&NS) | 70.2 | 75.9 | 5.7 | 8.12% | | Music | 74.8 | 82.9 | 8.1 | 10.83% | | Pictures | 61.8 | 28.5 | (33.3) | -53.88% | | Entertainment, Technology & Services (ET&S) | 76.9 | 80.9 | 4.0 | 5.20% | | Imaging & Sensing Solutions (I&SS) | 67.3 | 70.0 | 2.7 | 4.01% | | Financial Services | 145.6 | 61.4 | (84.2) | -57.83% | | Consolidated Adjusted OIBDA | 488.9 | 396.1 | (92.8) | -18.98% | | Consolidated Adjusted EBITDA | 496.9 | 406.2 | (90.7) | -18.25% | - Adjusted OIBDA and Adjusted EBITDA are not IFRS measures, but Sony believes they are useful to investors[38] Outlook for the Fiscal Year Ending March 31, 2024 This section provides Sony Group's revised outlook for the fiscal year ending March 31, 2024, including consolidated and segment-specific performance expectations Consolidated Outlook Revision Sony Group revised its FY2024 sales and net profit attributable to Sony Group Corporation stockholders upwards, while operating profit, pre-tax profit, adjusted OIBDA, and adjusted EBITDA forecasts remained unchanged FY2024 Consolidated Outlook Revision (billion JPY) | Metric | FY2023 Results | April Forecast | August Forecast | Change from April Forecast | | :--- | :--- | :--- | :--- | :--- | | Sales | 10,974.4 | 11,500 | 12,200 | +700 (+6.1%) | | Operating Profit | 1,302.4 | 1,170 | 1,170 | - | | Net Profit attributable to Sony Group Corporation stockholders | 1,005.3 | 840 | 860 | +20 (+2.4%) | | Adjusted OIBDA | 1,816.9 | 1,770 | 1,770 | - | | Adjusted EBITDA | 1,797.6 | 1,750 | 1,750 | - | - Sales forecast was revised upwards primarily due to higher-than-expected sales in the Financial Services, Game & Network Services, Music, and Entertainment, Technology & Services segments, partially offset by lower-than-expected sales in the Pictures and Imaging & Sensing Solutions segments[43] - Net profit attributable to Sony Group Corporation stockholders was revised upwards, mainly due to an expected decrease in income tax expenses[45] - Assumed foreign exchange rates: 1 USD to approximately 135 JPY (previously 130 JPY), and 1 Euro to approximately 146 JPY (previously 138 JPY)[43] Segment-Specific Outlook Revision This section details the revised FY2024 sales, operating profit, and adjusted OIBDA forecasts for each business segment, reflecting specific business conditions and external factors FY2024 Segment-Specific Outlook Revision (billion JPY) | Segment | Metric | FY2023 Results | April Forecast | August Forecast | | :--- | :--- | :--- | :--- | :--- | | Game & Network Services (G&NS) | Sales | 3,644.6 | 3,900 | 4,170 | | | Operating Profit | 250.0 | 270 | 270 | | | Adjusted OIBDA | 337.0 | 365 | 375 | | Music | Sales | 1,380.6 | 1,410 | 1,490 | | | Operating Profit | 263.1 | 265 | 280 | | | Adjusted OIBDA | 316.4 | 325 | 335 | | Pictures | Sales | 1,369.4 | 1,520 | 1,470 | | | Operating Profit | 119.3 | 120 | 120 | | Entertainment, Technology & Services (ET&S) | Sales | 2,476.0 | 2,380 | 2,430 | | Imaging & Sensing Solutions (I&SS) | Sales | 1,402.2 | 1,600 | 1,560 | | | Operating Profit | 212.2 | 200 | 180 | | | Adjusted OIBDA | 408.9 | 445 | 425 | | Financial Services | Financial Services Revenue | 889.1 | 870 | 1,320 | | | Operating Profit | 318.1 | 180 | 180 | | | Adjusted OIBDA | 322.4 | 205 | 205 | Game & Network Services (G&NS) Outlook The G&NS segment's sales are projected to exceed the April forecast due to increased non-first-party game sales and foreign exchange impacts, while profit forecasts remain stable despite hardware profitability challenges - Sales are expected to be higher than the April forecast, mainly due to increased sales of non-first-party titles and add-on content, and foreign exchange impacts[49] - Operating profit and Adjusted OIBDA are expected to remain unchanged, primarily due to the offsetting effects of deteriorating PlayStation®5 hardware profitability from promotions and sales channel mix changes, and adjustments to some first-party game release dates[49] Music Outlook The Music segment's sales and operating profit are expected to surpass April forecasts, primarily driven by favorable foreign exchange rates and a revaluation gain from consolidating a previously equity-accounted company - Sales are expected to be higher than the April forecast, mainly due to foreign exchange impacts[50] - Operating profit is expected to be higher than the April forecast, primarily due to positive foreign exchange impacts and a revaluation gain from consolidating a previously equity-accounted company in Q1 FY2023[50] Pictures Outlook The Pictures segment's sales are projected to be lower than the April forecast due to WGA and SAG-AFTRA strikes causing production delays, though profit forecasts remain stable due to strong film performance and favorable exchange rates - Sales are expected to be lower than the April forecast, mainly due to the impact of WGA and SAG-AFTRA strikes, leading to delays in film releases and TV series deliveries[51] - Operating profit and Adjusted OIBDA forecasts remain unchanged, as the sales decline due to strikes is offset by strong performance of released films and positive foreign exchange impacts[51] Entertainment, Technology & Services (ET&S) Outlook The ET&S segment's sales are expected to exceed the April forecast primarily due to foreign exchange impacts, with operating profit and adjusted OIBDA forecasts remaining unchanged - Sales are expected to be higher than the April forecast, mainly due to foreign exchange impacts[52] - Operating profit and Adjusted OIBDA forecasts remain unchanged[52] Imaging & Sensing Solutions (I&SS) Outlook The I&SS segment's sales, operating profit, and adjusted OIBDA are projected to be lower than April forecasts, mainly due to weaker-than-expected image sensor sales for mobile products and industrial applications - Sales are expected to be lower than the April forecast, mainly due to lower-than-expected sales volume of image sensors for mobile products, industrial, and social infrastructure applications[53] - Operating profit and Adjusted OIBDA are expected to be lower than the April forecast, primarily due to the sales decline, partially offset by positive foreign exchange impacts[53] Financial Services Outlook Financial services revenue is expected to exceed the April forecast due to increased net gains on investments in separate accounts at Sony Life, while operating profit and adjusted OIBDA forecasts remain unchanged - Financial services revenue is expected to be higher than the April forecast, mainly due to increased net gains on investments in separate accounts at Sony Life Insurance Inc[54] - Operating profit and Adjusted OIBDA forecasts remain unchanged[54] - The retrospective application of IFRS 17 resulted in a decrease in financial services revenue for FY2023, but an increase in operating profit and Adjusted OIBDA due to the revaluation of insurance contract liabilities[56] All Other, Corporate and Elimination Outlook The "All Other, Corporate and Elimination" segment's operating loss is projected to decrease from the April forecast, while the adjusted OIBDA loss forecast remains unchanged All Other, Corporate and Elimination Outlook (billion JPY) | Metric | FY2023 Results | April Forecast | August Forecast | | :--- | :--- | :--- | :--- | | Operating Loss | (39.8) | (45) | (40) | | Adjusted OIBDA | (12.9) | (15) | (15) | Notes about Financial Performance of the Music, Pictures and Financial Services segments This section clarifies the reporting methods for the Music, Pictures, and Financial Services segments, noting currency conversions and differences from Japanese statutory disclosures - Music segment results include JPY-denominated results of Sony Music Entertainment (Japan) Inc. and USD-denominated results of Sony Music Entertainment and Sony Music Publishing LLC global subsidiaries converted to JPY[58] - Pictures segment results are USD-denominated results of Sony Pictures Entertainment Inc. global subsidiaries converted to JPY[59] - Financial Services segment results include Sony Financial Group Inc. and its consolidated subsidiaries, differing from results disclosed on a Japanese statutory basis[60] Supplemental Information Regarding Adjusted OIBDA and Adjusted EBITDA This section provides supplementary information on Adjusted OIBDA and Adjusted EBITDA, including their definitions, calculation methodologies, and reconciliation to IFRS metrics, highlighting their importance for long-term performance assessment - Adjusted OIBDA and Adjusted EBITDA are important financial performance indicators used by Sony for long-term management and assessing sustainable profitability[61] - Adjusted OIBDA = Operating profit + Depreciation and amortization expenses (excluding amortization of film costs, broadcast rights, internally developed game content, and master recordings) - Non-recurring gains or losses as deemed by Sony[62] - Adjusted EBITDA = Net profit attributable to Sony Group Corporation stockholders + Net profit attributable to non-controlling interests + Income tax + Net interest expense recorded in finance income and finance costs - Net revaluation gains or losses on equity instruments recorded in finance income and finance costs + Depreciation and amortization expenses (excluding amortization of film costs, broadcast rights, internally developed game content, and master recordings) - Non-recurring gains or losses as deemed by Sony[62] Reconciliation of Adjusted OIBDA (Q1 FY2023) This reconciliation table shows the adjusted OIBDA for each business segment and the consolidated total for the three months ended June 30, 2023, highlighting a significant decline in financial services and a gain in music Q1 FY2023 Adjusted OIBDA Reconciliation Table (billion JPY) | Segment | Operating Profit (2023) | Depreciation and Amortization Expenses (2023) | Non-recurring Gains (Losses) (2023) | Adjusted OIBDA (2023) | | :--- | :--- | :--- | :--- | :--- | | Game & Network Services (G&NS) | 49.2 | 26.7 | - | 75.9 | | Music | 73.4 | 15.6 | (6.0) | 82.9 | | Pictures | 16.0 | 12.5 | - | 28.5 | | Entertainment, Technology & Services (ET&S) | 55.6 | 25.2 | - | 80.9 | | Imaging & Sensing Solutions (I&SS) | 12.7 | 57.3 | - | 70.0 | | Financial Services | 54.5 | 6.9 | - | 61.4 | | Consolidated Total | 253.0 | 149.1 | (6.0) | 396.1 | - The Music segment recognized 6.0 billion JPY in non-recurring revaluation gains in Q1 FY2023[64][68] Reconciliation of Adjusted EBITDA (Q1 FY2023) This reconciliation table presents the consolidated adjusted EBITDA for the three months ended June 30, 2023, showing a decrease from the prior year, influenced by lower net profit and changes in equity instrument revaluation gains Q1 FY2023 Adjusted EBITDA Reconciliation Table (billion JPY) | Metric | 2022 (billion JPY) | 2023 (billion JPY) | | :--- | :--- | :--- | | Net profit attributable to Sony Group Corporation stockholders | 261.1 | 217.5 | | Income tax | 88.1 | 58.1 | | Net revaluation gains (losses) on equity instruments | 22.7 | (13.4) | | Depreciation and amortization expenses | 124.0 | 149.1 | | Non-recurring gains (losses) | - | (6.0) | | Adjusted EBITDA | 496.9 | 406.2 | - In Q1 FY2023, net revaluation gains on equity instruments were negative 13.4 billion JPY, compared to positive 22.7 billion JPY in the prior year period[66] Reconciliation of Adjusted OIBDA (FY2023) This reconciliation table details the adjusted OIBDA for each business segment and the consolidated total for the fiscal year ended March 31, 2023, including non-recurring gains in music and financial services FY2023 Adjusted OIBDA Reconciliation Table (billion JPY) | Segment | Operating Profit | Depreciation and Amortization Expenses | Non-recurring Gains (Losses) | Adjusted OIBDA | | :--- | :--- | :--- | :--- | :--- | | Game & Network Services (G&NS) | 250.0 | 87.0 | - | 337.0 | | Music | 263.1 | 59.0 | (5.7) | 316.4 | | Pictures | 119.3 | 48.9 | - | 168.2 | | Entertainment, Technology & Services (ET&S) | 179.5 | 97.4 | - | 276.9 | | Imaging & Sensing Solutions (I&SS) | 212.2 | 196.7 | - | 408.9 | | Financial Services | 318.1 | 26.3 | (22.1) | 322.4 | | Consolidated Total | 1,302.4 | 542.2 | (27.8) | 1,816.9 | - The Music segment includes 5.7 billion JPY in non-recurring gains related to recorded music and music publishing litigation[70][74] - The Financial Services segment includes 22.1 billion JPY in recoveries from unauthorized withdrawals by a Sony Life subsidiary[70][74] Reconciliation of Adjusted EBITDA (FY2023) This reconciliation table presents the consolidated adjusted EBITDA for the fiscal year ended March 31, 2023, totaling 1,797.6 billion JPY, which includes 27.8 billion JPY in non-recurring gains FY2023 Adjusted EBITDA Reconciliation Table (billion JPY) | Metric | Amount (billion JPY) | | :--- | :--- | | Net profit attributable to Sony Group Corporation stockholders | 1,005.3 | | Net profit attributable to non-controlling interests | 6.5 | | Income tax | 262.7 | | Net interest expense | 4.0 | | Net revaluation gains (losses) on equity instruments | 4.6 | | Depreciation and amortization expenses | 542.2 | | Non-recurring gains (losses) | (27.8) | | Adjusted EBITDA | 1,797.6 | - Total non-recurring gains (losses) for FY2023 amounted to negative 27.8 billion JPY, primarily comprising litigation settlement gains in the Music segment and fund recoveries in the Financial Services segment[72][74] Cautionary Statement This section contains Sony's forward-looking statements and warns investors that actual results may differ significantly due to various risks and uncertainties, including market competition, economic conditions, and cybersecurity - Forward-looking statements are based on management's current assumptions, judgments, and beliefs, and actual results may differ materially due to various risks and uncertainties[75] - Key risks and uncertainties include product quality and customer satisfaction, market competition, technological developments, effectiveness of hardware, software, and content integration strategies, changes in laws and government policies, global economic and political conditions, foreign exchange rate fluctuations, cybersecurity risks, and outcomes of litigation and regulatory proceedings[76] - The ongoing situation in Ukraine and Russia may exacerbate many of the aforementioned risks and uncertainties[76]