The following discussion covers the fiscal years ended March 31, 2025 and 2026. For the discussion covering the fiscal year ended March 31, 2024, refer to “Item 5. Operating and Financial Review and Prospects” of Sony’s Form 20-F for the fiscal year ended March 31, 2025 filed with the SEC on June 20, 2025. A. Operating Results Consolidated Financial Results Fiscal year ended March 31 2025 2026 Continuing Operations*: (Yen in billions) Sales 12,034.9 12,479.6 Operating income 1,276.6 1,447.5 Income before income taxes 1,343.2 1,422.4 Net income attributable to Sony Group Corporation’s stockholders 1,067.4 1,030.9 * The above financial results represent the results only for continuing operations. On a consolidated basis including the discontinued operation, net loss attributable to Sony Group Corporation’s stockholders for the fiscal year ended March 31, 2026 was 326.9 billion yen. (Income of 1 trillion 141.6 billion yen in the fiscal year ended March 31, 2025.) Results for the fiscal year ended March 31, 2026 are as follows (“(+)” represents positive contributing factors while “(–)” represents negative contributing factors): Sales: 12 trillion 479.6 billion yen (444.7 billion yen increase compared to the previous fiscal year (“year-on-year”)) (+) Increases in sales in the I&SS and Music segments A further breakdown of sales figures is presented under “Operating Performance by Business Segment” below. The calculations of all ratios below that pertain to reportable segments include intersegment transactions. Cost of Sales: 8 trillion 635.2 billion yen (130.4 billion yen increase year-on-year) The ratio of cost of sales to sales improved year-on-year from 70.7% to 69.2%. R&D costs (all R&D costs are included within cost of sales): 762.0 billion yen (27.4 billion yen increase year-on-year) The ratio of R&D costs to sales remained unchanged from the fiscal year ended March 31, 2025 at 6.1%. For further details, refer to “Research and Development” in Item 5.C. Selling, General and Administrative Expenses: 2 trillion 298.6 billion yen (41.8 billion yen increase year-on-year) The ratio of SGA expenses to sales improved year-on-year from 18.8% to 18.4%. Other Operating (Income) Expense, net: Expense of 34.1 billion yen (Income of 11.2 billion yen in the fiscal year ended March 31, 2025) (–) Recording of impairment losses against Bungie’s intangible and other assets: 120.1 billion yen (G&NS segment) (+) Realization of unrealized gains on land transferred by Sony Group Corporation to Sony Life in past fiscal years, in connection with the execution of the Partial Spin-off of the Financial Services business: 43.9 billion yen (Corporate and elimination) (+) Recording of remeasurement gain from the acquisition of additional equity interest in Peanuts Holdings: 34.7 billion yen (Music segment) Refer to Note 23 of the consolidated financial statements. Share of profit (loss) of investments accounted for using the equity method: Loss of 64.2 billion yen (Loss of 7.9 billion yen in the fiscal year ended March 31, 2025) (–) Recording of an additional share of loss of investments accounted for using the equity method in All Other, resulting from the discontinuation of the launch of Sony Honda Mobility’s electric vehicle models: 44.9 billion yen Operating Income: 1 trillion 447.5 billion yen (170.9 billion yen increase year-on-year) (+) Increases in operating income in the I&SS and Music segments - 37 - Table of Contents Financial Income: 76.0 billion yen (63.0 billion yen decrease year-on-year) Financial Expenses: 101.2 billion yen (28.7 billion yen increase year-on-year) Financial Income and Expenses, net: Expenses of 25.1 billion yen (Income of 66.6 billion yen in the fiscal year ended March 31, 2025) (–) Decrease in unrealized gains mainly on Sony’s shares of Spotify Technology S.A. Income before Income Taxes: 1 trillion 422.4 billion yen (79.2 billion yen increase year-on-year) Income Taxes: 367.1 billion yen (109.6 billion yen increase year-on-year) Effective Tax Rate: 25.8% (19.2% in the fiscal year ended March 31, 2025) The year-on-year change in the tax rate was mainly due to the impact of the following factors: • Absence of decrease in tax expense from the repayment of capital from a subsidiary in the fiscal year ended March 31, 2025 (48.4 billion yen) • Absence of decrease in tax expense from the dissolution of a subsidiary in the fiscal year ended March 31, 2025 (35.3 billion yen) Refer to Note 25 of the consolidated financial statements. Net Income Attributable to Noncontrolling Interests: 24.4 billion yen (6.1 billion yen increase year-on-year) Net Income Attributable to Sony Group Corporation’s Stockholders for continuing operations: 1 trillion 30.9 billion yen (36.5 billion yen decrease year-on-year) Basic net income per share attributable to Sony Group Corporation’s stockholders for continuing operations: 172.51 yen (176.45 yen for the fiscal year ended March 31, 2025) Diluted net income per share attributable to Sony Group Corporation’s stockholders for continuing operations: 171.44 yen (175.71 yen for the fiscal year ended March 31, 2025) 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. 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 2025 2026 (Yen in millions) Sales to external customers by product category Digital Software and Add-on Content 2,290,498 2,415,305 Network Services 669,873 763,126 Hardware & Others 1,583,200 1,391,622 Sales to external customers 4,543,571 4,570,053 Intersegment sales 126,473 115,598 G&NS segment total sales 4,670,044 4,685,651 G&NS segment operating income 414,819 463,258 The operating performance for the G&NS segment for the fiscal year ended March 31, 2026 is as follows: Sales: 4 trillion 685.7 billion yen, essentially flat year-on-year (Impact of foreign exchange rates: +87.3 billion yen) (+) Impact of foreign exchange rates (+) Increase in sales from network services (+) Increase in sales of non-first-party game software titles (–) Decrease in sales of hardware due to a decrease in unit sales - 38 - Table of Contents Operating income: 463.3 billion yen, a 48.4 billion yen increase year-on-year (Impact of foreign exchange rates: +54.3 billion yen) (+) Impact of increase in sales from network services (+) Positive impact of foreign exchange rates (–) Recording of impairment losses against Bungie’s intangible and other assets (120.1 billion yen) Business Environment and Strategy The operating performance of the G&NS segment for the fiscal year ended March 31, 2026 reflected steady growth in revenues from network services and game software sales, benefitting from the expanded installed base of PS5, with operating income reaching a record high for the segment. In this environment, Sony aims to achieve sustainable business growth by seeking higher revenue and profits from PlayStation®Plus (“PS Plus”), maximizing average revenue per user on the PlayStation Store, expanding sales of first-party game software, and strengthening control over business costs and supply chain management. In hardware, although Sony expects to be affected by the impact of increased prices and supply shortages of memory semiconductors, it plans to manage the impact on profitability by flexibly adjusting plans for, among other things, unit sales and promotions. In Network Services, Sony is focused on driving profitable growth of PS Plus by increasing user engagement and continuously improving its service proposition and content, as well as inviting 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 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. In addition, Sony is utilizing AI to unleash the creativity of studios and further enhance the PlayStation experience. Within the studio business, Sony aims to improve productivity through the use of AI powered tools, allowing development teams to reinvest their time into building richer worlds and gameplay experiences. In the platform business, Sony is working to leverage AI to route transactions more efficiently, and to personalize and recommend content for individual users in the PlayStation Store. Sony also aims to push visual fidelity forward and deliver higher quality gameplay experiences through continued investments in AI and machine learning. Additionally, Sony plans to continue its efforts to create films and television shows based on PlayStation game IP in order to further expand the reach and monetization of its IP. 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 2025 2026 (Yen in millions) Sales to external customers by product category Recorded Music — Streaming 788,772 852,672 Recorded Music — Others 407,260 492,656 Music Publishing 379,812 419,864 Visual Media & Platform 244,419 325,342 Sales to external customers 1,820,263 2,090,534 Intersegment sales 22,341 29,576 Music segment total sales 1,842,604 2,120,110 Music segment operating income 357,255 446,986 The operating performance for the Music segment for the fiscal year ended March 31, 2026 is as follows: Sales: 2 trillion 120.1 billion yen, a 277.5 billion yen increase year-on-year (Impact of foreign exchange rates: –16.9 billion yen) (+) Higher revenues from streaming services in Recorded Music and Music Publishing (+) Higher revenues from live events and merchandising in Recorded Music (+) Higher revenues in Visual Media & Platform - 39 - Table of Contents (+) Contributions from Demon Slayer: Kimetsu no Yaiba Infinity Castle and Kokuho released in the fiscal year ended March 31, 2026 (+) Higher revenues from game applications, mainly for mobile Operating income: 447.0 billion yen, an 89.7 billion yen increase year-on-year (+) Impact of increase in sales (+) Recording of remeasurement gain from the acquisition of additional equity interest in Peanuts Holdings (34.7 billion yen) 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, 2026 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, the global hit film Demon Slayer: Kimetsu no Yaiba Infinity Castle in Visual Media & Platform also contributed to the sales 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 continuously explore strategic investment opportunities in high-quality music catalogs to expand revenue opportunities, discover and develop artists and songwriters, build and strengthen relationships with local independent labels and artists, and grow revenues from independent label distribution and indie artist services such as The Orchard and AWAL. Sony is also focusing on expanding businesses aimed at fans of artists and content, such as live events and merchandising. In addition, Sony aims to continuously expand utilization of its IP through biopics, documentaries and live events involving Sony Music artists. 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, opening and expanding new revenue channels through licensing agreements, while also protecting the rights of artists and pursuing transparency with consumers regarding AI-generated music. In the music business in Japan, Sony aims to further expand efforts to bring Japanese artists, such as YOASOBI and Kenshi Yonezu, to the global market. In Visual Media & 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. In March 2026, Sony acquired an additional equity interest in Peanuts Holdings, which owns the rights and manages the business of “PEANUTS” IP. Sony aims to further grow this business and further increase the value of the brand over the long term by leveraging the strengths of the Sony Group. Additionally, in its game business, Sony is focusing on creating new hit titles while maximizing the lifetime value of existing titles. 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 2025 2026 (Yen in millions) Sales to external customers by product category Motion Pictures 610,313 495,655 Television Productions 459,281 512,372 Media Networks 428,940 478,269 Sales to external customers 1,498,534 1,486,296 Intersegment sales 7,410 12,994 Pictures segment total sales 1,505,944 1,499,290 Pictures segment operating income 117,284 104,872 - 40 - Table of Contents The operating performance for the Pictures segment for the fiscal year ended March 31, 2026 is as follows (the following analysis is on a U.S. dollar basis): Sales: 1 trillion 499.3 billion yen, essentially flat year-on-year (U.S. dollar basis: an 18 million increase year-on-year) (+) Higher revenues from Crunchyroll mainly due to paid subscriber growth and the worldwide theatrical distribution of Demon Slayer: Kimetsu no Yaiba Infinity Castle* (+) Increase in series deliveries in Television Productions (–) Lower revenues from theatrical releases in the current fiscal year in Motion Pictures * Crunchyroll and Sony Pictures distributed the film theatrically worldwide, excluding Japan and select Asian territories. Operating income: 104.9 billion yen, a 12.4 billion-yen decrease year-on-year (U.S. dollar basis: an 87 million decrease year-on-year) (–) Impairment losses against assets associated with Pixomondo Holdings, Inc. and its subsidiaries, which operate VFX and virtual production businesses, and related shutdown costs (27.1 billion yen) (–) Impact of decrease in sales for Motion Pictures (+) Higher contribution from catalog product in Motion Pictures (+) Impact of higher revenues from Crunchyroll Business Environment and Strategy The operating performance of the Pictures segment for the fiscal year ended March 31, 2026 reflected an expansion of the contribution to the operating performance of the DTC anime platform Crunchyroll, mainly due to paid subscriber growth and the worldwide theatrical distribution of Demon Slayer: Kimetsu no Yaiba Infinity Castle, despite lower revenues from theatrical releases in the current fiscal year in Motion Pictures. 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. In the fiscal year ending March 31, 2027, Sony anticipates the theatrical releases of strong IP lineups, including Spider-Man: Brand New Day and Jumanji: Open World. 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, anime events, 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, and film adaptations of Bloodborne and Helldivers to be produced in collaboration with SPE and PlayStation Productions. - 41 - Table of Contents Entertainment, Technology & Services (ET&S) Key Financial Figures Fiscal year ended March 31 2025 2026 (Yen in millions) Sales to external customers by product category Imaging 737,639 722,465 Sound 290,538 278,846 Network Services 179,704 188,308 Displays 597,777 476,305 Other 557,180 518,891 Sales to external customers 2,362,838 2,184,815 Intersegment sales 46,437 75,717 ET&S segment total sales 2,409,275 2,260,532 ET&S segment operating income 190,926 158,584 The operating performance for the ET&S segment for the fiscal year ended March 31, 2026 is as follows: Sales: 2 trillion 260.5 billion yen, a 148.7 billion yen decrease year-on-year (Impact of foreign exchange rates: +7.1 billion yen) (–) Decrease in unit sales in Displays Operating income: 158.6 billion yen, a 32.3 billion yen decrease year-on-year (Impact of foreign exchange rates: +5.3 billion yen) (–) Impact of decrease in sales in Displays (+) Reductions in operating expenses Business Environment and Strategy In the fiscal year ended March 31, 2026, amid a challenging business environment impacted by intensified competition in Displays and additional U.S. tariffs, the operating performance of the ET&S segment reflected the results of efforts to prioritize profitability by responding flexibly to such changes in the environment through measures such as disciplined inventory management and fixed cost reduction initiatives. 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.” Sony has divided the businesses of this segment into three business areas – “Area Expansion,” “Business Growth/Generation” and “Structural Reform/Transformation.” In the Imaging and Sound businesses, positioned as the “Area Expansion” area, Sony aims to strengthen the stable earnings base, expand business domains, and achieve further growth. Specifically, 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, positioned as the “Business Growth/Generation” area, Sony intends to accelerate the evolution of its business models and create new businesses. Specifically, 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. In the Display business, positioned as the “Structural Reform/Transformation” area, Sony aims to accelerate structural reform to reduce volatility and control risk. Sony Corporation signed definitive agreements for a strategic partnership in the home entertainment field with TCL in March 2026. Going forward, Sony aims to further strengthen the competitiveness of this business and achieve sustainable business growth by bringing together its high-quality picture and audio technology, brand value and operational management expertise, while utilizing TCL’s advanced display technology, end-to-end cost efficiency, and vertical supply chain strength. Sony plans to mitigate the impact of the recent increases in price and shortages of memory semiconductors in this segment through procurement, design and sales actions in various regions. If memory semiconductor prices deviate further going forward, Sony aims to maintain profitability by flexibly adjusting its sales strategy with an eye on foreign exchange rates and the competitive environment. - 42 - Table of Contents Imaging & Sensing Solutions (I&SS) Key Financial Figures Fiscal year ended March 31 2025 2026 (Yen in millions) Sales to external customers 1,712,534 2,059,020 Intersegment sales 86,471 92,513 I&SS segment total sales 1,799,005 2,151,533 I&SS segment operating income 261,147 357,318 The operating performance for the I&SS segment for the fiscal year ended March 31, 2026 is as follows: Sales: 2 trillion 151.5 billion yen, a 352.5 billion yen increase year-on-year (Impact of foreign exchange rates: -15.0 billion yen) (+) Increase in sales of image sensors for mobile products (+) Improvement in product mix (+) Increase in unit sales Operating income: 357.3 billion yen, a 96.2 billion yen increase year-on-year (Impact of foreign exchange rates: -12.5 billion yen) (+) Impact of increase in sales (–) Recording of restructuring costs (–) Loss associated with the sale of equity interest in Sony Semiconductor Israel Ltd. (19.9 billion yen) (–) Impairment losses against a portion of the display device business’s long-lived assets (16.5 billion yen) Business Environment and Strategy The operating performance of the I&SS segment in the fiscal year ended March 31, 2026 reflected the continued trend toward larger size, higher image quality and higher performance image sensors for mobile products, primarily in high-end smartphones, as well as higher unit sales of mobile sensors, which led to record highs in both sales and operating income, despite the recording of one-time restructuring costs. 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. In the fiscal year ending March 31, 2027, although Sony is taking a cautious view of the growth of the sensor market due to the company’s view that the trend toward larger-sized sensors for smartphones will moderate and that the uncertainty regarding the impact of market conditions for memory semiconductors will remain, Sony expects that the trend toward larger-sized sensors for smartphones will remain unchanged in the mid- to long-term. 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 and the semiconductor laser business, among others, 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. Sony is also making efforts to raise the profitability of this segment by addressing low-profitability businesses. Under these circumstances, Sony has not changed its strategy of carefully selecting investments and reducing capital expenditures for the I&SS segment in the mid-range plan for the three fiscal years started on April 1, 2024 and ending on March 31, 2027 (the “fifth - 43 - Table of Contents mid-range plan”) compared to the fourth mid-range plan. Additionally, in May 2026, SSS and Taiwan Semiconductor Manufacturing Company Limited (“TSMC”) entered into a non-binding memorandum of understanding to pursue a strategic partnership for the development and manufacturing of next-generation image sensors. This partnership aims to significantly enhance the future technological competitiveness of image sensors, including through increased density, by combining the advanced design expertise of Sony and the process and manufacturing technologies of TSMC, and also seeks to explore and address emerging opportunities in physical AI applications, such as automotive and robotics, paving the way for future innovations and expanded technological advancements. From a financial perspective, Sony believes that this partnership will improve the cash flow, reduce invested capital, and improve profitability of the I&SS segment by lowering investment in production facilities and mitigating equipment procurement costs. All Other The operating performance for All Other for the fiscal year ended March 31, 2026 is as follows: Sales: 89.1 billion yen, a 7.3 billion yen decrease year-on-year Operating income (loss): Loss of 74.6 billion yen, 56.7 billion yen deterioration year-on-year (–) Recording of an additional share of loss of investments accounted for using the equity method, resulting from the discontinuation of the launch of Sony Honda Mobility’s electric vehicle models (44.9 billion yen) Foreign Exchange Fluctuations and Risk Hedging During the fiscal year ended March 31, 2026, the average rates of the yen were 150.7 yen against the U.S. dollar and 174.7 yen against the euro, which were 1.8 yen stronger and 11.0 yen weaker, respectively, than the fiscal year ended March 31, 2025. For the fiscal year ended March 31, 2026, sales from continuing operations increased 444.7 billion yen (4%) year-on-year to 12 trillion 479.6 billion yen. On a constant currency basis, sales increased approximately 3% 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. During the fiscal year ended March 31, 2026, 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 33.0 billion yen, with a corresponding decrease in operating income of approximately 2.5 billion yen. A one-yen appreciation against the euro was estimated to decrease sales in these segments by approximately 11.4 billion yen, with a corresponding decrease in operating income of approximately 6.3 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 - 44 - Table of Contents 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 and does not use these derivative financial instruments for trading or speculative purposes. 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, 2025 and 2026 was a liability of 0.5 billion yen and 7.6 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 impact of foreign exchange hedging transactions entered into by the I&SS segment 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 Equity Sony’s consolidated assets, liabilities and equity as of the end of the fiscal year ended March 31, 2026 are as follows. Total assets amounted to 15 trillion 683.5 billion yen, a decrease of 19 trillion 609.7 billion yen compared with the end of the previous fiscal year. Total liabilities amounted to 7 trillion 169.9 billion yen, a decrease of 19 trillion 613.1 billion yen compared with the end of the previous fiscal year. Total equity amounted to 8 trillion 513.6 billion yen, an increase of 3.4 billion yen compared with the end of the previous fiscal year. The decreases in assets and liabilities were primarily attributable to the deconsolidation of SFGI, which operates the Financial Services business, in connection with the execution of the Partial Spin-off of the Financial Services business during the fiscal year ended March 31, 2026. Cash Flows Operating Activities: A net cash inflow of 1 trillion 945.6 billion yen (376.1 billion yen decrease year-on-year) Continuing operations: A net cash inflow of 1 trillion 966.3 billion yen (5.1 billion yen decrease year-on-year) (–) Smaller decrease in trade receivables and contract assets (–) Smaller decrease in inventories - 45 - Table of Contents (–) Smaller increase in trade payables (+) Increase in income before income taxes after taking into account non-cash adjustments (including depreciation and amortization, including amortization of contract costs, other operating (income) expense, gain on securities, net, and share of loss of investments accounted for using the equity method, net of dividends) Investing Activities: A net cash outflow of 1 trillion 970.5 billion yen (1 trillion 40.4 billion yen increase year-on-year) Continuing operations: A net cash outflow of 784.2 billion yen (119.0 billion yen decrease year-on-year) (+) Decrease in payments for purchases of property, plant and equipment (+) Decrease in payments for purchases of businesses and other (–) Increase in payments for investments and advances Discontinued operations: A net cash outflow of 1 trillion 186.3 billion yen (1 trillion 159.4 billion yen increase year-on-year) (–) Due to the exclusion from consolidation of SFGI, which operates the Financial Services business, in connection with the execution of the Partial Spin-off of the Financial Services business during the fiscal year ended March 31, 2026 Financing Activities: A net cash outflow of 842.8 billion yen (544.5 billion yen increase year-on-year) Continuing operations: A net cash outflow of 833.5 billion yen (556.2 billion yen increase year-on-year) (–) Increase in payments for the purchase of treasury stock (–) Decrease in capital contributions from non-controlling interests (–) Decrease in proceeds from the issuance of long-term debt Total outstanding balance of cash and cash equivalents accounting for the effect of fluctuations in foreign exchange rates in the Consolidated Statements of Financial Position as of March 31, 2026: 2 trillion 208.9 billion yen, a decrease of 772.1 billion yen as compared to the balance as of March 31, 2025 - 46 - Table of Contents B. Liquidity and Capital Resources The description below covers basic financial policy and figures for Sony’s consolidated operations except for certain subsidiaries, which secure liquidity on their own. 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, 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 299.3 billion yen in total for Sony Group Corporation, SGTS and SCC as of March 31, 2026. There were no amounts outstanding under the CP programs as of March 31, 2026. 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 789.6 billion yen in unused committed lines of credit, as of March 31, 2026. 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. 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. - 47 - Table of Contents 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. 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. C. Research and Development Under its Purpose to “fill the world with emotion (Kando) through the power of creativity and technology,” Sony has established the “Creative Entertainment Vision” as its long-term vision for where it wants to be in 10 years. Under this vision, Sony develops and provides technologies and solutions for creators. To realize the “Creative Entertainment Vision,” R&D in the Sony Group is aimed at strengthening the technologies and platforms that support IP creation, IP cultivation and IP expansion. As part of these efforts, Sony is promoting the application of R&D results in its businesses by building and utilizing a technological portfolio based on business demands. In addition, Sony is promoting a system that allows technology professionals with diverse backgrounds and values to collaborate across business units, enabling them to understand and share the latest technological trends and work together across the Group. Sony aims to promote the use of AI, which has continued to evolve in recent years, based on the view that it can enhance human capabilities and increase the value of Sony’s businesses. In addition to supporting the creative activities of creators, Sony also places importance on protecting creators’ rights and ensuring the proper use of intellectual property. To this end, Sony is advancing R&D of technologies that contribute to preventing copyright infringement and misuse, such as the detection of unauthorized music. Sony works to support 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 next-generation women researchers whose work is driving positive impact on the planet and society. The second winners of the award were announced in February 2026, and were honored at an award ceremony held in Tokyo. Sony’s R&D 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. R&D costs for the fiscal year ended March 31, 2026 increased 27.4 billion yen (3.7%) year-on-year to 762.0 billion yen. The ratio of R&D costs to sales from continuing operations was 6.1%, unchanged from the previous fiscal year. - 48 - Table of Contents The following table shows a breakdown of R&D costs for each business segment in the fiscal years ended March 31, 2025 and 2026. Fiscal year ended March 31 2025 2026 (Yen in billions) R&D costs G&NS 279.2 316.1 ET&S 138.9 138.0 I&SS 228.4 238.5 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 R&D 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 Sony has a wide range of businesses globally. Changes in the global landscape, including increasing uncertainty regarding the situations in Ukraine and Russia and in the Middle East, 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 Sony’s businesses. 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. On May 8, 2026, Sony Group Corporation held its Corporate Strategy and Earnings Announcement Presentation. President and CEO, Hiroki Totoki, presented an update on Sony’s businesses, corporate priorities and direction as the company enters the final fiscal year of the fifth mid-range plan. Sony has set forth its long-term “Creative Entertainment Vision,” which articulates the direction for the evolution of its businesses centered on entertainment, IP, content creation, and real-time creation technologies, and aims to leverage the power of technology to empower creators, deliver new experiences to fans across both physical and digital spaces and maximize the value of IP. At the beginning of the presentation, Hiroki Totoki reviewed the progress toward realizing this long-term vision, along with key topics across each business. He also noted that anime is an important growth sector for Sony, introducing various initiatives centered on anime, and announcing that the DTC anime platform Crunchyroll has surpassed 21 million subscribers as of the end of March 2026. He then introduced AI as one of the most important themes across the Sony Group businesses to unlock new value creation and to capture new opportunities for growth for its entertainment businesses. He emphasized that “human creativity must remain at the center,” and stated that “AI is not a replacement for artists or creators.” He then presented examples of how AI is being utilized across Sony’s businesses and welcomed Hideaki Nishino, President and CEO of Sony Interactive Entertainment LLC, to share examples of AI utilization in the G&NS segment. Hiroki Totoki then announced that SSS signed a non-binding MOU with TSMC regarding a strategic partnership for the development and manufacturing of next-generation image sensors, with the aim of balancing growth and improving profitability for image sensor business. He emphasized the importance of adaptability in driving each business forward amid technological and geopolitical disruptions and noted that the diversity of its businesses and employees will drive continued success for Sony. - 49 - Table of Contents The details of the corporate strategy announced in the Corporate Strategy and Earnings Announcement Presentation held on May 8, 2026 are as follows: 1. Advancing the Creative Entertainment Vision Under the Creative Entertainment Vision, Sony seeks to leverage the power of technology to empower creators, deliver new experiences to fans across both physical and digital spaces, and maximize the value of IP in its entertainment businesses. • In the anime field, Sony collaborates with Group companies and strategic partners spanning production, fan engagement, marketing and global distribution to generate synergies to deliver anime at scale to worldwide audiences. • The explosive worldwide growth of anime is exemplified by the massive global hit film Demon Slayer: Kimetsu no Yaiba Infinity Castle, which was produced by Aniplex and its partners. • Crunchyroll serves more than 21 million paid subscribers globally as of the end of March 2026. To further accelerate growth, Crunchyroll newly adopted MyAnimeList as the platform for global fan participation in voting for the 2026 Crunchyroll Anime Awards, in partnership with Gaudiy Inc. In addition, in fall 2026, Crunchyroll will host its first-ever “Crunchyroll Anime Future Forum,” bringing together leading companies from various fields to strengthen relationships with anime fans, Japanese publishers and creators. 2. Optimizing the Business Portfolio During the fifth mid-range plan period, Sony continues to optimize its business portfolio mainly through the following initiatives. • Executed the Partial Spin-off of the Financial Services business as of October 1, 2025. • Signed definitive agreements for a strategic partnership in the home entertainment field of ET&S segment with TCL on March 31, 2026. In parallel with these initiatives, Sony continues to invest and lean into areas where it sees ongoing growth and competitive advantages. • Building on the strategic partnerships announced with Bandai Namco, Sony is further strengthening its position in anime and other areas. • Sony acquired an additional equity interest in Peanuts Holdings, which was owned by WildBrain Ltd., increasing Sony’s ownership stake to 80%. • Following major deals to acquire the Pink Floyd and Queen catalogues, Sony Music Group announced a partnership with GIC Private Limited, to further build its music IP investments. 3. Driving Growth with AI AI brings new opportunities for value creation and growth, and remains a tool to unlock human potential, not a replacement for artists or creators. Under this principle, Sony introduced examples of how it is leveraging AI across its businesses. (1) The role of AI • AI is not only for efficiency, but also a tool to empower creators to expand their creativity, making it easier to take on more innovative projects that were previously difficult to pursue due to constraints of cost and time. • Sony is continuing a collaborative pilot initiative with Bandai Namco to explore the use of generative AI and other advanced technologies, and has confirmed gains such as a significant increase in speed and an improvement in productivity per person in video production. Sony aims to continue to integrate its own technologies with generative AI to establish a creator-first production environment that maximizes creative potential while ensuring safety and security. (2) How AI evolves the PlayStation experience • As AI lowers barriers to creation and increases the volume and diversity of content, the PlayStation platform and studios are expected to remain critical in delivering high quality experiences and helping players discover the right content in an increasingly crowded landscape. • Within the studio business, AI powered tools are automating repetitive workflows and improving productivity across areas such as software development, quality assurance, 3D modeling, and animation, allowing production teams to focus on building richer worlds and gameplay experiences. - 50 - Table of Contents • Across the platform business, AI is driving efficiency, personalization, and customer value at scale, while continued investments in AI and machine learning are expected to push visual fidelity forward and deliver higher quality player experiences. • Overall, AI is expected to unleash the creativity of Sony Interactive Entertainment’s studios, power a more curated and consumer-centric platform, and enhance the PlayStation experience, supported by its global player base, deep IP library, and integrated ecosystem. 4. Strengthening Competitiveness in Sensor Technology that Underpins Creativity Building on the deep expertise cultivated over many years in the analog domain, Sony is strengthening the competitiveness of its sensor technology with a view to mid- to long-term business growth and value creation, while delivering the best possible imaging experience for its customers. • Sony’s image sensors have advanced to a phase beyond competition solely based on specifications. By leveraging deep analog-domain expertise cultivated over many years across areas such as pixel structure, stacking technologies, circuitry, and process technologies, Sony has established difficult-to-replicate strength that underpins its sustainable competitive advantage. • In the mobile image sensor business, which is the core of the I&SS segment, Sony is pursuing enhanced performance through the development of higher density enabled by finer process technologies and stacking technologies. • SSS signed a non-binding MOU with TSMC to form a strategic partnership for the development and manufacturing of next- generation image sensors. Under this partnership, the two companies intend to establish a joint venture, with Sony as the majority and controlling shareholder, and plan to conduct studies toward setting up development and production lines utilizing Sony’s newly constructed fab in Koshi City, Kumamoto Prefecture. 5. Navigating a Changing World Sony is carefully managing technological and geopolitical disruptions that are impacting international supply chains, including the current memory semiconductor shortage driven by surging AI infrastructure demand. Looking ahead, even amid geopolitical complexity and rapid change, the strengths and diversity of Sony’s businesses and employees will continue to support Sony’s growth. Fifth Mid-Range Plan -Financial Targets, Capital Allocation and their Progress <Financial Targets and Capital Allocation> On May 14, 2024, Sony announced the financial targets for the fifth mid-range plan. 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 fiscal years started on April 1, 2024 and ending on March 31, 2027 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. *1 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 has classified the Financial Services business as a discontinued operation from the first quarter of the fiscal year ended March 31, 2026, and presented 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. - 51 - Table of Contents <Progress> In the fiscal year ended March 31, 2026, the G&NS, Music and I&SS segments, the profit growth drivers of the entire Group, achieved record-high profits. The average annual growth rate of operating income for continuing operations from the fiscal year ended March 31, 2024 was 18%, and the cumulative operating income margin over the two fiscal years ended March 31, 2025 and March 31, 2026 was 11.1%. 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 previous forecast of 4.8 trillion yen to 5.7 trillion yen, taking into account the results of the fiscal year ended March 31, 2026. Because 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 mainly for greater shareholder returns. Although the strategic investment budget of 1.8 trillion yen remains unchanged from the original plan, Sony has revised the capital expenditure budget from the previous forecast of 1.7 trillion yen to 1.8 trillion yen. A total of approximately 1.0 trillion yen of strategic investments have been executed or determined already as of May 8, 2026. Regarding shareholder returns, Sony completed a total of 500.0 billion yen in repurchases of its own shares during the period from May 15, 2025 to March 24, 2026, and the annual dividend for the fiscal year ended March 31, 2026, taking into account the stock split*2, increased 5 yen year-on-year to 25 yen per share (a total of 148.6 billion yen)*3. For the fiscal year ending March 31, 2027, Sony has established a maximum 500 billion yen share buyback facility for the year from May 11, 2026 to May 10, 2027, and aims to increase the pace of its increase in dividends, raising the annual dividend by 10 yen per share year-on-year*3 to 35 yen per share. *2 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. *3 The above figures for the dividend for the fiscal year ended March 31, 2026 and the planned dividend increase for the fiscal year ending March 31, 2027 do 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. 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 other 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, 2026, except for certain CGUs, primarily in the Pictures segment, for which impairment losses were recognized. Also, the recoverable amount of these CGUs or groups 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 - 52 - Table of Contents analysis for goodwill performed for the fiscal year ended March 31, 2026 is included below. Refer to Note 11 of the consolidated financial statements for details. • The post-tax discount rates ranged from 6.0% to 15.5%. A hypothetical one percentage point increase in the discount rate, holding all other assumptions constant, would not have resulted in a significant impairment. • The growth rates applied to the terminal values for the CGUs within the G&NS, ET&S and I&SS were 2.0%. The growth rates beyond the mid-range plan period for the CGUs in the Music segment ranged from 1.0% to 3.4%, and in the Pictures segment ranged from (5.0%) to 10.0%. 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 8.9x to 11.0x and the revenue multiple was 1.5x. 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. - 53 - Table of Contents Valuation of deferred tax assets 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 deferred tax assets is assessed periodically with available evidence related to the realizability of the 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 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. - 54 - Table of Contents