2023/05/16 21:13:17 / 22961354_株式会社日立製作所_招集通知(Securities Identification Code : 6501)[Translation]

THE

154

th

Notice of Annual
General Meetingof Shareholders
Date and Time

： Wednesday, June 21, 2023

Location：at 10:00 a.m.

Tokyo Dome City Hall
(East side of Tokyo Dome Hotel)
3-61, Koraku 1-chome, Bunkyo-ku, Tokyo

Matter to Be
Resolved： ItemElection of 12 Directors due to expirationof the term of office of all Directors

wWe will live-stream the General Meeting of Shareholders
to make it viewable on the internet.

Please refer to page 5 for details.

Note: This English translation incorporates, from page 34 to page 79, the contents that are not provided in thepaper-based documents delivered to shareholders who have requested pursuant to the provisionsof the Articles of Incorporation of the Company and the relevant laws and regulations.

Cover2023/05/16 21:13:17 / 22961354_株式会社日立製作所_招集通知

Dear Shareholders:June 1, 2023
(Commencement date of measures for electronic provision: May 31, 2023)

6-6, Marunouchi 1-chome, Chiyoda-ku, Tokyo

Hitachi, Ltd.
President & CEOa n d D i r e c t o r

Keiji Kojima

Notice of the 154th Annual General Meeting of Shareholders

The 154th Annual General Meeting of Shareholders of Hitachi, Ltd. is to be held as follows:

Date and Time

Location

Wednesday, June 21, 2023 at 10:00 a.m. (Reception Start: 9:00 a.m.)
3-61, Koraku 1-chome, Bunkyo-ku, Tokyo

Tokyo Dome City Hall (East side of Tokyo Dome Hotel)
Report on the Business Report, Financial Statements, and Consolidated Financial
ReportingStatements for the 154th Business Term (from April 1, 2022 to March 31, 2023),

Matterand the results of the audit on the Consolidated Financial Statements by the
Accounting Auditors and the Audit Committee

A g e n d a
Matters to Be
Resolved

Item

Election of 12 Directors due to expiration of the term of office of all Directors● The following materials or items are not provided in the paper-based documents delivered to shareholders who have requested pursuant to the provisions of the
Articles of Incorporation of the Company and the relevant laws and regulations:(a) Business Report: “Five-year Summary of Asset and Results of Operation of Hitachi Group,” “Business Overview and Results of Hitachi Group - Results by
Segment,” “Research and Development of Hitachi Group,” “Employees of Hitachi Group”, “Structures and Other Things to Ensure Adequacy of Business
Operations (Internal Control System) and Operation of the Internal Control System,” “Fundamental Policy on the Conduct of Persons Influencing Decision on
the Company’s Financial and Business Policies,” “Matters Concerning the Company’s Stock,” "Information on the Stock Acquisition Rights, etc.," “Policy on
Determination of Distribution of Surplus etc.,” and “Matters Concerning Accounting Auditor”.
(b) Consolidated Financial Statement: "Consolidated Statements of Changes in Equity" and "Notes to Consolidated Financial Statements".
( c) Financial Statement: "Unconsolidated Statement of Changes in Net Assets" and "Notes to Unconsolidated Financial Statements".
(d) Transcript of Accounting Auditors’ Audit Report on Consolidated Financial Statements, Transcript of Accounting Auditors’ Audit Report on Unconsolidated
Financial Statements, and Transcript of Audit Committee’s Audit Report.
The Audit Committee and the accounting auditor have audited the materials to be audited including the above.
In addition, the Company website also posts Consolidated Statements of Comprehensive Income and Consolidated Statements of Cash Flows as supplementary
information.
● In the case that the Business Report, Consolidated Financial Statements, Financial Statements or Reference Documentation for the Annual General Meeting of
Shareholders need to be modified, the Company will post such modification on its website as below.

https://www.hitachi.com/smeet-e/index.html

1Annual General2023/05/16 21:13:17 / 22961354_株式会社日立製作所_招集通知

Live Streaming of the General Meeting of Shareholders
We will live-stream the General Meeting of Shareholders (the “Meeting”) to make it viewable on the internet as
detailed below.
To protect the privacy of the shareholders present at the meeting, the webcast will only show the areas of thevenue around the chairperson and executives; however, the camera may capture some shareholders in cases
where it cannot be avoided. Thank you in advance for your understanding.

1

Time and date of streaming
From 10:00 a.m. to the end of the Meeting on Wednesday, June 21, 2023

*The live stream web page will be accessible starting around 9:50 a.m., 10 minutes before the start of the Meeting.
*The live stream may be cancelled due to unavoidable circumstances. Thank you in advance for your understanding.

Viewing Information2

To access the webcast, please have your shareholder number ready, which will be required
for shareholder authorization (login) (Please be sure to keep your shareholder number withyou when mailing your voting slip).
1. Viewing site: https://www.icue-gmos.com/soukai/hitachi/154/
2. ID: Hitachi6501 (half-width characters)
3. Password: shareholder number (indicated on your voting slip (voting-right exercising form),
or dividend-related documents, etc.)
4. For inquiries about ID and/or password, please contact
Shareholder registry administrator: Tokyo Securities Transfer Agent Co., Ltd.
TEL: 0120-25-6501 (toll-free)(Japanese Only)(Business hours: Between 9:00 a.m. and 5:00 p.m. (except Saturday and Sunday))

Please limit the viewers of the live streaming to shareholders and do not allow others, such as representatives, to watch the live stream.

Precautions regarding the live stream
Viewing the live stream is not considered attendance at the Meeting prescribed in the Companies Act, and you will not be able
to ask questions or exercise your voting rights on the meeting day. Please send us your voting slip or exercise your voting
rights on the internet in advance.
Note that any problem with the device used to watch the Meeting, internet connection, or other conditions may prevent you
from viewing or cause audio or visual problems.
The viewer will bear any expense for viewing such as internet services.

Questions regarding the Meeting are accepted on the website.
We accept your questions regarding the Meeting on our website below. We will answer some questions
in which shareholders are supposed to be interested at the Meeting. Please note that the questions which
are not answered at the Meeting will not be answered after that.
Accepted period: to Wednesday, June 14, 2023
UR
L: https://krs.bz/hi6501/m?f=1
Please access the website with your shareholder number, which is required to register your question.

2

Live Streaming2023/05/16 21:13:17 / 22961354_株式会社日立製作所_招集通知

Reference Documentation

Election of 12 Directors due to expiration of the term of office of all
Directors

Item

Due to expiration of the term of office of all Directors at the close of this Meeting, it is proposed that 12 Directors beelected. The Company has proposed the following 12 nominees for Directors (including 9 independent directors*) to reflect global
and diverse viewpoints to the management as well as to realize further growth of social innovation business and reinforce thefunctions of supervision of management.
* The "Independent Directors" in this notice are the directors who fulfill the qualification requirements to be outside directors as provided
by the Companies Act of Japan and also meet the independence criteria defined by the Company and those as provided by Japanesestock exchanges where the Company is listed, unless otherwise stated.

The list of nominees
No

Name

Current Position and Responsibilities at the Company

1

Katsumi Ihara

RE

OD

ID

Independent Director Chairman of the Board■ Nominating Committee (Chair) ■ Audit Committee■ Compensation Committee

2

Ravi Venkatesan

RE

OD

ID

Independent Director

3

Cynthia Carroll

RE

OD

ID

Independent Director■ Nominating Committee

4

Ikuro Sugawara

RE

OD

ID

Independent Director■ Audit Committee5

Joe Harlan

RE

OD

ID

Independent Director■ Compensation Committee

6

Louise Pentland

RE

OD

ID

Independent Director

7

Takatoshi Yamamoto

RE

OD

ID

Independent Director■ Compensation Committee (Chair)

8

Hiroaki Yoshihara

RE

OD

ID

Independent Director■ Nominating Committee

9

Helmuth Ludwig

RE

OD

ID

Independent Director■ Audit Committee

10

Keiji Kojima

RE

Representative Executive Officer, President & CEO and Director■ Compensation Committee

11

Mitsuaki Nishiyama

NEW

Associate12

Toshiaki Higashihara

RE

Executive Chairman, Representative Executive Officer and Director■ Nominating Committee

NEW : Newly selected nomineeRE: Re-selected nominee

OD: Outside Director nominee as provided by the Companies Act of JapanID: Independent Director as provided by Japanese stock exchanges where the Company is listed3

item3 リスト

■ Audit Committee (Chair)

2023/06/13 17:02:33 / 22961354_株式会社日立製作所_招集通知No1

Katsumi Ihara(Date of Birth: Sept. 24, 1950)

RE

OD

Position and Responsibilities at the Company

Term of office as Independent Director

Share Ownership

Independent Director
Chairman of the Board
Nominating Committee (Chair)
Member of Audit Committee
Member of Compensation Committee

Five years

1,300

ID

Brief Biography
5/19816/2005
Attendance for Fiscal 2022
Board of Directors meetings
9 out of 9 days (100%)
Nominating Committee
8 out of 8 days (100%)
Audit Committee
14 out of 15 days (93%)
Compensation Committee
8 out of 8 days (100%)

No24/20096/20096/20106/20114/20156/20166/2018Joined Sony Corporation
Executive Deputy President, Representative Corporate Executive Officer, Member of the Board, Sony
Corporation
Executive Deputy President, Corporate Executive, Sony Corporation
Executive Vice President, Representative Director, Sony Financial Holdings Inc.
President, Representative Director, Sony Financial Holdings Inc.
President, Representative Director, Sony Life Insurance Co., Ltd.
Chairman, Director, Sony Life Insurance Co., Ltd. (Retired in June 2017)
Chairman, Director, Sony Financial Holdings Inc. (Retired in June 2017)
Director, Hitachi, Ltd. (currently in office)Reason for selection as Independent Director nominee and his expected roles
Mr. Ihara has rich experience and insight in the area of global corporate management gained through the
involvement in management at major companies conducting diversified businesses globally. He was selected as anindependent director nominee, since he was expected to leverage such experience and insight to reinforce thesupervisory and decision making functional aspects of the Company’s Board of Directors by offering opinions andproposals regarding the general management of the Company and supervising the execution of duties by Executive
Officers and others from an independent perspective.

Ravi Venkatesan(Date of Birth: Jan. 12, 1963)

RE

OD

Position and Responsibilities at the Company

Term of office as Independent Director

Share Ownership

Independent Director

Two years 11 months

500

ID

Brief Biography
7/19991/20044/2011

Attendance for Fiscal 2022
Board of Directors meetings
9 out of 9 days (100%)

4/20138/20159/20187/2020Chairman of the Board of Directors, Cummins India Ltd. (India) (Retired in March 2004)
Chairman, Microsoft India Pvt. Ltd. (India) (Retired in September 2011)
Independent Director, Infosys Ltd. (India) (Retired in May 2018, served as Co-Chairman from April 2017
to August 2017)
Venture Partner, Unitus Ventures LLC. (India) (currently in office)
Chairman (Non-Executive), Bank of Baroda (India) (Retired in August 2018)
Special Representative for Young People & Innovation, UNICEF (Retired in September 2022)
Director, Hitachi, Ltd. (currently in office)

Other Principal Positions Held
Chairman, Global Energy Alliance for People and Planet, LLC (USA)
Trustee, The Rockefeller Foundation (USA)
Venture Partner, Unitus Ventures LLC. (India)
Reason for selection as Independent Director nominee and his expected roles
Mr. Venkatesan has rich experience and insight in the area of global corporate management, digital business andemerging markets. He was selected as an independent director nominee, since he was expected to leverage such
experience and insight to reinforce the supervisory and decision making functional aspects of the Company’s Boardof Directors by offering opinions and proposals regarding the general management of the Company from a global
viewpoint and supervising the execution of duties by Executive Officers and others from an independent perspective.

4

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2023/06/13 17:02:33 / 22961354_株式会社日立製作所_招集通知No3

Cynthia Carroll

RE(Date of Birth: Nov. 13, 1956)

OD

Position and Responsibilities at the Company

Term of office as Independent Director

Share Ownership

Independent Director
Member of Nominating Committee

Ten years

1,600

ID

Brief Biography

Attendance for Fiscal 2022
Board of Directors meetings
9 out of 9 days (100%)
Nominating Committee
9 out of 10 days (90%)

10/1991
1/1996
10/1998
1/20023/20076/2013General Manager, Foil Products, Alcan Inc. (Canada)
Managing Director, Aughinish Alumina Ltd., Alcan Inc.
President, Bauxite, Alumina and Specialty Chemicals, Alcan Inc.
President & CEO, Primary Metal Group, Alcan Inc.
CEO, Anglo American plc. (UK) (Retired in April 2013)
Director, Hitachi, Ltd. (currently in office)

Other Principal Positions Held
Director, Baker Hughes Company (USA)*
Director, Pembina Pipeline Corporation (Canada)*
Director, Glencore plc (Switzerland)*Reason for selection as Independent Director nominee and her expected roles
Ms. Carroll has rich experience and insight as the top executive of major global companies in the mining industry.
She was selected as an independent director nominee, since she was expected to leverage such experience andinsight to reinforce the supervisory and decision making functional aspects of the Company’s Board of Directors byoffering opinions and proposals regarding the general management of the Company from a global viewpoint andsupervising the execution of duties by Executive Officers and others from an independent perspective.

No

4

Ikuro Sugawara

RE(Date of Birth: Mar. 6, 1957)

OD

Position and Responsibilities at the Company

Term of office as Independent Director

Share Ownership

Independent Director
Member of Audit Committee

One year

400

ID

Brief Biography
4/19817/2010Attendance for Fiscal 2022
Board of Directors meetings
7 out of 7 days (100%)
Audit Committee
9 out of 9 days (100%)9/20126/20137/20158/2017
6/2022Joined Ministry of International Trade and Industry of Japan
Director-General of the Industrial Science and Technology Policy andEnvironment Bureau, Ministry of Economy, Trade and Industry of Japan (“METI”)
Director-General of the Manufacturing Industries Bureau, METI
Director-General of the Economic and Industrial Policy Bureau, METI
Vice-Minister of Economy, Trade and Industry of Japan
Special Advisor to the Cabinet of Japan (Retired in June 2018)
Director, Hitachi, Ltd. (currently in office)

Other Principal Positions Held
Outside Director, Toyota Motor Corporation
Outside Director, FUJIFILM Holdings Corporation
Reason for selection as Independent Director nominee and his expected roles
Mr. Sugawara has rich experience and insight in the area of public administration, etc. gained through leading
positions at government agencies. He was selected as an independent director nominee, since he was expected toleverage such experience and insight to reinforce the supervisory and decision making functional aspects of theCompany’s Board of Directors by offering opinions and proposals regarding the general management of theCompany and supervising the execution of duties by Executive Officers and others from an independent
perspective.

5

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2023/05/16 21:13:17 / 22961354_株式会社日立製作所_招集通知No5

Joe Harlan(Date of Birth: May 5, 1959)

RE

OD

Position and Responsibilities at the Company

Term of office as Independent Director

Share Ownership

Independent Director
Member of Compensation Committee

Five years

1,300

ID

Brief Biography

Attendance for Fiscal 2022
Board of Directors meetings
9 out of 9 days (100%)Compensation Committee
8 out of 8 days (100%)

9/19999/2001
11/2002
10/2004
10/2009
9/20119/2012
10/2014
10/2015
6/2018Vice President and Chief Financial Officer, Lighting Business, General Electric Company (USA)Vice President, Corporate Financial Planning and Analysis, 3M Company (USA)President and Chief Executive Officer, Sumitomo 3M Ltd.
Executive Vice President, Electro and Communications Business, 3M Company (USA)
Executive Vice President, Consumer and Office Business, 3M Company (USA)
Executive Vice President, Performance Materials, The Dow Chemical Company (USA)
Executive Vice President, Chemicals, Energy and Performance Materials, The Dow Chemical Company(USA)
Chief Commercial Officer and Vice Chairman, Market Business, The Dow Chemical Company (USA)Vice Chairman and Chief Commercial Officer, The Dow Chemical Company (USA) (Retired in August
2017)
Director, Hitachi, Ltd. (currently in office)Reason for selection as Independent Director nominee and his expected roles
Mr. Harlan has rich experience and insight in the area of global corporate management gained through the
involvement in management at major companies conducting diversified businesses globally. He was selected as anindependent director nominee, since he was expected to leverage such experience and insight to reinforce thesupervisory and decision making functional aspects of the Company’s Board of Directors by offering opinions andproposals regarding the general management of the Company from a global viewpoint and supervising theexecution of duties by Executive Officers and others from an independent perspective.

No

6

Louise Pentland(Date of Birth: Apr. 11, 1972)

RE

OD

Position and Responsibilities at the Company

Term of office as Independent Director

Share Ownership

Independent Director

Eight years

1,200

ID

Brief Biography

Attendance for Fiscal 2022
Board of Directors meetings
9 out of 9 days (100%)

8/19977/20019/20077/20086/20092/20114/20156/20157/20159/2016
1/2022Admitted as a Solicitor (UK)
Senior Legal Counsel, Nokia Networks, Nokia Corporation (Finland)
Vice President, Acting Chief Legal Officer and Head of IP Legal, Nokia Corporation (Finland)
Senior Vice President and Chief Legal Officer, Nokia Corporation (Finland)
Admitted to New York State Bar Association
Executive Vice President and Chief Legal Officer, Nokia Corporation (Finland) (Retired in May 2014)
General Counsel, PayPal, eBay Inc. (USA)
Director, Hitachi, Ltd. (currently in office)Senior Vice President and Chief Legal Officer, PayPal Holdings, Inc. (USA)
Executive Vice President, Chief Business Affairs and Legal Officer, PayPal Holdings, Inc. (USA)
Executive Vice President and Senior Advisor, PayPal Holdings, Inc. (USA) (Retired in July 2022)

Other Principal Positions Held
Director, Experian plc (Ireland/UK)*
Reason for selection as Independent Director nominee and her expected roles
Ms. Pentland has deep insight into corporate legal matters and corporate governance gained through her richexperience as the chief legal officer of major global companies. She was selected as an independent director
nominee, since she was expected to leverage such experience and insight to reinforce the supervisory and decision
making functional aspects of the Company’s Board of Directors by offering opinions and proposals regarding thegeneral management of the Company from a global viewpoint and supervising the execution of duties by Executive
Officers and others from an independent perspective as well as reflecting her global viewpoint.

6

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2023/05/16 21:13:17 / 22961354_株式会社日立製作所_招集通知No7

Takatoshi Yamamoto(Date of Birth: Oct. 20, 1952)

RE

OD

Position and Responsibilities at the Company

Term of office as Independent Director

Share Ownership

Independent Director
Compensation Committee (Chair)

Seven years

14,000ID

Brief Biography

Attendance for Fiscal 2022
Board of Directors meetings
9 out of 9 days (100%)
Audit Committee
6 out of 6 days (100%)Compensation Committee
8 out of 8 days (100%)No84/1975
4/198912/1995
6/19997/20056/20096/20116/2016

Joined Nomura Research Institute, Ltd.
Joined Morgan Stanley Japan Limited
Managing Director, Morgan Stanley Japan Limited
Managing Director and Vice Chairman, Tokyo Branch, Morgan Stanley Japan Limited
Managing Director and Vice Chairman, UBS Securities Japan Co., Ltd.
Managing Director, CASIO COMPUTER CO., LTD.
Advisor, CASIO COMPUTER CO., LTD. (Retired in June 2012)
Director, Hitachi, Ltd. (currently in office)

Other Principal Positions Held
Outside Director, Murata Manufacturing Co., Ltd.
Reason for selection as Independent Director nominee and his expected roles
Mr. Yamamoto has broad range of insight in business and management gained through his experience in the areaof corporate analysis and global corporate management. He was selected as an independent director nominee,
since he was expected to leverage such experience and insight to reinforce the supervisory and decision making
functional aspects of the Company’s Board of Directors by offering opinions and proposals regarding the generalmanagement of the Company and supervising the execution of duties by Executive Officers and others from an
independent perspective.

Hiroaki Yoshihara(Date of Birth: Feb. 9, 1957)

Position and Responsibilities at the Company

Term of office as Independent Director

Share Ownership

Independent Director
Member of Nominating Committee
Audit Committee (Chair)

Nine years

3,300

RE

OD

ID

Brief Biography
11/1978
7/1996
10/1997
10/20036/2014

Joined Peat Marwick Mitchell & Co.
National Managing Partner, the Pacific Rim Practice, KPMG LLPThe Board Member, KPMG LLP
Vice Chairman and Global Managing Partner, KPMG International (Retired in April 2007)
Director, Hitachi, Ltd. (currently in office)Attendance for Fiscal 2022
Board of Directors meetings
9 out of 9 days (100%)
Nominating Committee
10 out of 10 days (100%)
Audit Committee
15 out of 15 days (100%)

Other Principal Positions Held
Outside Director, HOYA CORPORATION
Reason for selection as Independent Director nominee and his expected roles
Mr. Yoshihara has rich experience and insight in the area of global corporate management and accounting. He wasselected as an independent director nominee, since he was expected to leverage such experience and insight toreinforce the supervisory and decision making functional aspects of the Company’s Board of Directors by offering
opinions and proposals regarding the general management of the Company from a global viewpoint and supervising
the execution of duties by Executive Officers and others from an independent perspective.

7

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2023/05/16 21:13:17 / 22961354_株式会社日立製作所_招集通知No9Helmuth Ludwig(Date of Birth: Sept. 19, 1962)

RE

OD

Position and Responsibilities at the Company

Term of office as Independent Director

Share Ownership

Independent Director
Member of Audit Committee

Two years 11 months

4,200

ID

Brief Biography

Attendance for Fiscal 2022
Board of Directors meetings
9 out of 9 days (100%)
Audit Committee
15 out of 15 days (100%)

6/20018/20028/2007
10/2010
10/2011
10/2014
10/2016
1/20207/2020President, Software and System House Division, Siemens AG (Germany)
President, Systems Engineering Division, Automation and Drives Group, Siemens AG (Germany)
President, Siemens PLM Software, Inc. (USA)Global Head of Communications, Industry Automation, Siemens Corp. (USA)President and CEO, Industry Sector, North America, Siemens Industry, Inc. (USA)
Executive Vice President and Chief Digital Officer, Digital Factory Division, Product Lifecycle
Management, Siemens Corp. (USA)
Chief Information Officer, Siemens AG (Germany) (Retired in December 2019)
Professor of Practice in Strategy and Entrepreneurship, Cox School of Business, Southern Methodist
University (USA) (currently in office)Director, Hitachi, Ltd. (currently in office)

Other Principal Positions Held
Chairperson of the Board, Circor International, Inc. (USA)*
Professor of Practice in Strategy and Entrepreneurship, Cox School of Business, Southern Methodist University(USA)
Senior Advisor, Bridgepoint, LLC (USA)
Reason for selection as Independent Director nominee and his expected roles
Mr. Ludwig has rich experience and insight in the area of global corporate management and digital business. He
was selected as an independent director nominee, since he was expected to leverage such experience and insightto reinforce the supervisory and decision making functional aspects of the Company’s Board of Directors by offering
opinions and proposals regarding the general management of the Company from a global viewpoint and supervising
the execution of duties by Executive Officers and others from an independent perspective.

No

10

Keiji Kojima(Date of Birth: Oct. 9, 1956)

Position and Responsibilities at the Company

Share Ownership

Representative Executive Officer,
President & CEO and Director
Member of Compensation Committee

101,100

RE

Brief Biography

Attendance for Fiscal 2022
Board of Directors meetings
9 out of 9 days (100%)Compensation Committee
8 out of 8 days (100%)

4/19824/20114/20124/20164/20186/20214/2022Joined Hitachi, Ltd.
General Manager, Hitachi Research Laboratory
Vice President and Executive Officer
Senior Vice President and Executive Officer
Representative Executive Officer, Executive Vice President
Representative Executive Officer, President & COO and Director, Hitachi, Ltd.
Representative Executive Officer, President & CEO and Director, Hitachi, Ltd. (currently in office)Reason for selection as Director nominee and his expected roles
Mr. Kojima has rich experience and a proven performance record, having been engaged in R&D and business
management in the digital business both at the Company and at Group companies as well as in global promotion of
Lumada business. He has been engaged in the management of the Company as President & COO since June
2021 and as President & CEO since April 2022. Mr. Kojima was selected as a director nominee, since he was
expected to continue to promote information sharing and draw on his rich experience and performance record to
reinforce the decision-making function of the Board of Directors as a member of the Board.

8

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Mitsuaki Nishiyama(Date of Birth: Sep. 25, 1956)

Position and Responsibilities at the Company

Share Ownership

Associate

26,660NEW

Brief Biography
4/19794/20084/20116/20124/20137/20134/20144/20154/20164/20206/20201/20234/2023Joined Hitachi, Ltd.
General Manager, Finance Department Ⅰ
Executive Officer, Hitachi Cable, Ltd.
Executive Officer, Board Director, Hitachi Cable, Ltd.
Vice President and Executive Officer, Board Director, Hitachi Cable, Ltd.
Vice President and Managing Officer, Hitachi Metals, Ltd. (currently Proterial, Ltd.)
Vice President and Executive Officer, Hitachi Metals, Ltd. (Retired in March 2015)
Vice President and Executive Officer, Hitachi, Ltd.
Representative Executive Officer, Senior Vice President and Executive Officer, Hitachi, Ltd.
Representative Executive Officer, Chairperson and CEO, Hitachi Metals, Ltd.
Representative Executive Officer, Chairperson, President and CEO, Hitachi Metals, Ltd.
Representative Executive Officer, Chairperson, President and CEO, and Director, Hitachi Metals, Ltd.
Representative Director, Executive Chairman, Proterial, Ltd. (Retired in March 2023)
Associate, Hitachi, Ltd. (currently in office)Reason for selection as Director nominee and his expected roles
Mr. Nishiyama has rich experience and a proven performance record, having been engaged in operations in suchareas as accounting and financial affairs and management at the Company and Group companies, etc. Mr.
Nishiyama was selected as a director nominee, since he was expected to reinforce the supervisory functions of theCompany's Board of Directors by supervising the execution of duties by Executive Officers and others based on his
rich experience and a proven performance record.

No

12

Toshiaki Higashihara(Date of Birth: Feb. 16, 1955)

Position and Responsibilities at the Company

Share Ownership

Executive Chairman, Representative
Executive Officer and Director
Member of Nominating Committee

199,200

RE

Brief Biography

Attendance for Fiscal 2022
Board of Directors meetings
9 out of 9 days (100%)
Nominating Committee
10 out of 10 days (100%)

4/19774/20074/20084/20106/20104/20114/20134/20146/20144/20165/20216/20214/2022Joined Hitachi, Ltd.
Vice President and Executive Officer
President, Hitachi Power Europe GmbH
Representative Executive Officer, President and Chief Executive Officer, Hitachi Plant Technologies, Ltd.
President and Representative Director, Hitachi Plant Technologies, Ltd.
Vice President and Executive Officer, Hitachi, Ltd.
Senior Vice President and Executive Officer, Hitachi, Ltd.
Representative Executive Officer and President & COO, Hitachi, Ltd.
Representative Executive Officer, President & COO and Director, Hitachi, Ltd.
Representative Executive Officer, President & CEO and Director, Hitachi, Ltd.
Representative Executive Officer, Executive Chairman, President & CEO and Director, Hitachi, Ltd.
Representative Executive Officer, Executive Chairman & CEO and Director, Hitachi, Ltd.
Executive Chairman, Representative Executive Officer and Director, Hitachi, Ltd. (currently in office)Reason for selection as Director nominee and his expected roles
Mr. Higashihara has rich experience and a proven performance record, having been engaged in business
management in a broad range of fields, including social infrastructure business and power systems business, bothat the Company and at Group companies, as well as in the promotion of the Group’s global business development.
He has been engaged in the management of the Company as President since April 2014, as Executive Chairman
and President since May 2021 and as Executive Chairman since June 2021. He has been serving as Executive
Chairman and Director since April 2022. Mr. Higashihara was selected as a director nominee, since he was
expected to continue to promote information sharing and draw on his rich experience and performance record to
reinforce the decision-making function of the Board of Directors as a member of the Board.

9

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Notes:
1.

“Attendance” at Board of Directors meetings and the committees meetings is based on the days held each meetings during
each member’s term of office.
2. Messrs. Katsumi Ihara, Ravi Venkatesan, Ikuro Sugawara, Joe Harlan, Takatoshi Yamamoto, Hiroaki Yoshihara and Helmuth
Ludwig and Mses. Cynthia Carroll and Louise Pentland are nominees who fulfill the qualification requirements to be outside
director nominees as provided for in Article 2, Paragraph 3, Item 7 of the Enforcement Regulations of the Companies Act. The
Company has reported all of them as independent directors to the Japanese stock exchanges where the Company is listed.
3. The Company maintains a limited liability agreement (hereinafter referred to as “Agreement”) with Messrs. Katsumi Ihara, Ravi
Venkatesan, Ikuro Sugawara, Joe Harlan, Takatoshi Yamamoto, Hiroaki Yoshihara and Helmuth Ludwig and Mses. Cynthia
Carroll and Louise Pentland. The general intent of the Agreement is to limit the liability of Directors provided for in Article 423,
Paragraph 1 of the Companies Act to the aggregate amount of each item stipulated under Article 425, Paragraph 1 of theCompanies Act. The Agreement will be renewed should the aforementioned individuals be re-elected at this Meeting. In theevent Mr. Mitsuaki Nishiyama is elected as a director, the Company will newly enter into the same agreement with him.
4. The Company currently has a Directors' and Officers' Liability Insurance Agreement, which is stipulated in Article 430-3,
Paragraph 1 of Companies Act, nominating each of its director candidates other than Mr. Mitsuaki Nishiyama as an insured
person with an insurance company. The content of the Insurance Agreement is stated in “(6) Directors and Executive Officers 3) Contents of Directors’ and Officers’ Liability Insurance Agreement” in the Business Report. Upon the approval of director
election, each director other than Mr. Mitsuaki Nishiyama will continue to be and he will be newly an insured person of theinsurance agreement. The Company plans to renew the agreement with the same terms and conditions during the tenure ofeach director.
5. Mr. Hiroaki Yoshihara served as Non-Executive Director (a similar position to outside director under the Companies Act) at theCompany’s overseas subsidiaries from September 2008 to March 2012.
6. In the event this agenda is approved, the members and the chair of the committees are expected to be as follows:
Nominating Committee:Katsumi Ihara (Chair), Cynthia Carroll, Hiroaki Yoshihara, Toshiaki Higashihara
Audit Committee:Hiroaki Yoshihara (Chair), Katsumi Ihara, Ikuro Sugawara, Helmuth Ludwig, Mitsuaki Nishiyama
Compensation Committee :Takatoshi Yamamoto (Chair), Katsumi Ihara, Joe Harlan, Keiji Kojima
7. The Company has no transactions with Unitus Ventures LLC., where Mr. Ravi Venkatesan is currently serving as VenturePartner, with Southern Methodist University, where Mr. Helmuth Ludwig is currently serving as Professor of Practice and with
Bridgepoint, LLC, where Mr. Helmuth Ludwig is currently serving as Senior Advisor.
8. The Company has no transactions whose volume is more than 1% of the Company's consolidated revenues or each company's
respective consolidated revenues with Siemens AG, where Mr. Helmuth Ludwig had served as Chief Information Officer (retiredin December 2019).
9. Mr. Hiroaki Yoshihara served as Vice Chairman of KPMG International until April 2007. However, the Accounting Auditors of theCompany do not belong to the KPMG Group. In addition, there is no contractual relationship between Mr. Yoshihara and theCompany in relation to accounting and other professional services or consulting services, etc.
10. The positions with * in “Other Principal Positions Held” of each nominee are similar positions in each of the foreign corporations
to outside director under the Companies Act.

10

item3

2023/05/16 21:13:17 / 22961354_株式会社日立製作所_招集通知

Business Report (from April 1, 2022 to March 31, 2023)(1) Business Overview and Results of Hitachi Group
Business Results
The Hitachi Group secured revenues of 10,881.1 billion yen, mainly due to the expansion of the Lumada
business, solid performance in the power grid and railway systems businesses, higher revenues from Hitachi Astemo, Ltd.
as a result of the recovery in production volume by automakers and the impact of foreign exchange, despite the severebusiness environment owing from semiconductor shortage and soaring materials and energy prices. Adjusted EBITA was
884.6 billion yen and Adjusted EBITA Margin was 8.1%. Net income attributable to Hitachi, Ltd. stockholders was 649.1
billion yen, a new record high for the third consecutive year, mainly due to the gains on business reorganization resulting
from the sale of shares of listed group companies.
Regarding funds, core free cash flow* of 416.4 billion yen was secured.
As the Hitachi Group has maintained the profitability and ability to generate cash even under the difficult
business environment, the Group increased the amount of its annual dividend 20 yen to 145 yen (with an interim dividendof 70 yen and a year-end dividend of 75 yen) and repurchased its own shares of approximately 200.0 billion yen.
*Core free cash flows are cash flows presented as free cash flows excluding cash flows from M&A and asset sales, etc.

Measures Taken and Aims
In the current fiscal year, as the first year of the “2024 Mid-term Management Plan,” seeking global growth withthe three pillars, “Digital,” “Green” and “Innovation,” Hitachi chiefly pursued the following initiatives and move ahead withthe shift to growth mode.
‒ Global Growth of the Digital Business in Response to Rising
DX and GX* Demand
To accelerate digital business in the global market
experiencing growing DX demand in the field of social infrastructure,
Hitachi established Hitachi Digital LLC in North America. Hitachi
Digital has played a central role in advancing a digital strategy
spanning the Hitachi Group with Lumada and other solutions, and in
response to rising GX demand, Hitachi Energy Ltd, Hitachi Rail Ltd.
and other Group entities have secured expanded orders.
In addition, GlobalLogic Inc., which continues to grow,has also set up a site in Japan and is applying its development
techniques to Hitachi's projects in Japan. In anticipation of further
growth, GlobalLogic acquired digital engineering companies inRomania and Uruguay in order to establish a presence in Europe
and Latin America and to acquire new customers and humanresources.
*DX: Digital transformation, GX: Green transformation

Lumada business revenues(Billions of yen)

1,960(+42%)

1,378
119
366

215
466
630

388
505
FY2021
Digital engineering
Connected products
Notes:

649
FY2022
System integration
Managed services

1. Lumada business revenues in the three segments of Digital
Systems & Services, Green Energy & Mobility and Connective
Industries.
2. Number in parentheses is the growth rate from the previous
fiscal year.

‒ Global Risk Management Supporting Growth
Amid ongoing uncertainty in the business environment, Hitachi has developed a system to centrally monitor
global risk information and proactively respond to risks in response to risks that increase with business growth. We strive
to ascertain the risks that could impact the Hitachi Group, including soaring prices of goods, geopolitical risks and largescale disaster risks, and after quickly identifying priority risks, Hitachi tries to respond ahead of the rapidly changing
business environment.
‒ Reorganization of the Automotive Systems BusinessTo achieve the sustainable growth and enhanced corporate value of Hitachi Astemo, Ltd. in the automobile andmotorcycle industry undergoing a period of dramatic change, Hitachi decided to implement a partial transfer of shares in
the company. Through this transaction, Hitachi Astemo will become an equity-method affiliate of Hitachi. Hitachi willcontinue the collaboration with the growing Hitachi Astemo gaining a new joint partner, particularly in the areas ofelectrification and autonomous driving, enabling each company to grow together.

11

Business Results

2023/05/16 21:13:17 / 22961354_株式会社日立製作所_招集通知

Consolidated Financial Results for Fiscal 2022 (Billions of yen)

Revenues

Adjusted EBITA[Adjusted EBITA Margin]

10,881.1
Year over year 106％ROIC

Net income attributable to
Hitachi, Ltd. stockholders

884.6[8.1%]
Year over year 103％
[Year over year -0.2]

649.1

7.6%

Year over year 111％

Year over year -0.1

Notes: 1. The consolidated financial statements of the Company have been prepared in conformity with the International Financial Reporting Standards (IFRS)
2. Adjusted EBITA = Adjusted operating income + Acquisition-related amortization + Share of profits (losses) of investments accounted for using the equity method.
3. ROIC = ("NOPAT" + Share of profits (losses) of investments accounted for using the equity method) / "Invested Capital" × 100
NOPAT (Net Operating Profit after Tax) = Adjusted Operating Income × (1 - Tax burden rate)
Invested Capital = Interest-bearing debt + Total equity[Reference] Financial Results by Segment
Revenues
Hitachi
Metals847.7

Others475.1(4%)

Automotive
Systems

1,920.0(17%)

Adjusted EBITA (Adjusted EBITA Margin)(Billions of yen)
350

473.0
(4%)

Digital Systems &Services(7%)

HitachiConstruction
Machinery(Billions of yen)300

2,389.0(21%)

10,881.1

312.1

293.7

(10.5%)

250

Revenues
Total(12.3%)(9.1%)

200

Green
Energy &Mobility

150

2,492.5

(21%)

100

Connective
Industries

50

2,975.2

(26%)

132.7
(5.3%)

0.0

Notes: 1. Revenues by segment include intersegment transactions.
2. The number in parentheses in “Revenues” is the percentage of each segment’s revenues to total revenues.
3. The number in parentheses in “Adjusted EBITA (Adjusted EBITA Margin)” is Adjusted EBITA Margin.

12

Business Results

Digital Systems & Services
Green Energy & Mobility
Connective Industries
Automotive Systems
Hitachi Construction Machinery
Hitachi Metals
Others

(%)
14.0
12.0
10.0
8.0
6.0

(5.1%)(3.8%)(3.3%)

73.4 43.2 43.0
15.5

4.0
2.0
0.0

2023/05/16 21:13:17 / 22961354_株式会社日立製作所_招集通知[Refference]
Overseas Revenues Trends(Billions of yen)

10,0009,480.6

8,000

10,881.1

10,264.6
8,767.2

8,729.1

6,000
4,000

4,816.0
(51%)

2,000

4,574.3(52%)

4,238.1(48%)

6,762.9(62%)

6,077.5
(59%)

0

2018

2019

2020

2021

2022

(FY)

Revenues by Market
North
America

Europe1,877.9

1,535.9

Billion yen(17%)

Billion yen
(14%)

Japan

4,118.2
Asia

Billion yen(38%)

2,635.1
Billion yen
(24%)

713.8

Billion yen(7%)

Japan Revenues

Overseas Revenues

4,118.2 Billion yen (38%)
Notes:

Other
Ares

6,762.9 Billion yen (62%)

1. In “Overseas Revenues Trends,” the blue parts show overseas revenues and the red parts show domestic revenues. The number inparenthesis is the percentage of overseas revenues to total revenues.
2. The number in parenthesis in “Revenues by Market” is the percentage of revenues in each market to total revenues.

13

Sales revenue by region

2023/05/16 21:13:17 / 22961354_株式会社日立製作所_招集通知(2) Course of Actions for Hitachi Group
Since its establishment, Hitachi has operated under the Mission “Contribute to society through the developmentof superior, original technology and products.” In accordance with this Mission, Hitachi has resolved issues facing society
through the development of technologies and products that support social infrastructures.
In the 2024 Mid-term Management Plan, Hitachi aims to "support people's quality of life with data andtechnology that fosters a sustainable society." Establishing “Digital,” “Green” and “Innovation” as the three pillars, Hitachi
focuses on the following measures to realize such society through global growth with One Hitachi.

‒ Strengthening and Expanding the Data-driven Cycle of Value Co-creation with Customers in Lumada
Hitachi is strengthening the cycle of value co-creationwithcustomersinLumadabyunderstanding

customers'

management issues, then designing and implementing solutions tothose issues, and implementing operation and maintenance whiletackling solutions to the next issues. Riding the growing demand for
DX and GX as a tailwind, Hitachi expands Lumada solutions withevery business in the Hitachi Group including energy, transportationand industry.

‒ Aspiring to be an Innovator in Solving Environmental Issues
Through the Social Innovation Business based on collaborative creation with stakeholders, Hitachi works toboth solving environmental issues and improving people's quality of life.
Initiatives aimed at decarbonization in particular have picked up speed, Hitachi aims to achieve carbon
neutrality at its business sites by Fiscal 2030, and across the entire value chain by Fiscal 2050 as its long-term
environmental targets in “Hitachi Environmental Innovation 2050”. Hitachi is making progress in reducing CO2 emissions
faster than the target and aims to further reducing CO2 emissions reducing energy consumption and the use of renewableenergy. Hitachi also helps customers reduce their CO2 emissions by providing solutions driven by Hitachi's efficient,environmentally-conscious products.
‒ Creating Innovation for Growth
Hitachi aims to advance the creation of innovation for global business growth, to expand R&D investments
including cutting-edge research, and to also extend corporate venturing investments to collaborate with startup companies.
Hitachi will achieve sustainable growth that continues to future generations by exploring the issues faced by society andcustomers, and devising innovations aimed at solving them.
With this approach, Hitachi seeks business growth while tackling cost restructuring by promoting rationalizationthat includes site consolidation, thus ensuring its ability to generate cash in a stable fashion even in an uncertain
management environment due to soaring resources price and ongoing global inflation. While enhancing the ability togenerate cash, Hitachi also makes the investments necessary for growth in a swift but carefully selected manner,providing stable returns to shareholders.

14

Course of Actions for Hitachi Group2023/05/16 21:13:17 / 22961354_株式会社日立製作所_招集通知

Hitachi's Initiatives for ESG (Environment, Society, Governance)
To realize the sustainable society aimed in the “2024 Mid-term Management Plan,” Hitachi is pursuing various
ESG initiatives.

Omika Green Network: Collaboration for Decarbonization Capable of Growth from a Regional Perspective
Hitachi is working to develop the Omika Green Network led
by the Omika Works located in Hitachi, Ibaraki prefecture.
Applying the technologies and expertise gained throughdemonstration activities related to decarbonization conducted at the
Omika Works to the local community, suppliers and otherstakeholders, Hitachi aims to achieve carbon neutrality, which is acommon issue among all stakeholders, and Hitachi's businessgrowth.
<Please check the website for details>
https://www.hitachi.com/products/it/control_sys/ogn/

Diversity, Equity and Inclusion (DEI)
As one of its targets to achieve further growth through theuse of diverse human capital, Hitachi will increase the percentagesof female and non-Japanese executive-level staff (executive andcorporate officers) to 30% respectively by Fiscal 2030.
In April 2023, one new female executive officer was
appointed, bringing the ratio of female executives to 11.4%. In
addition, one new executive officer and two new corporate officers
who are non-Japanese were appointed, bringing the ratio of nonJapanese executives to a record high 20.3%.
Going forward, Hitachi is accelerating these initiatives tomeet its targets.

Female20.3%

Non-Japanese

10.1%

11.6%

8
7 persons
persons
June 2021

®

16

11.4%
9

persons

April 2023

Recognized as a Grand Prize Company in the Corporate Governance of the Year 2022 Awards
To date, Hitachi has made efforts to develop and strengthen
its corporate governance system by thoroughly separating
management supervision and execution functions through a highly
diverse Board of Directors, by establishing a structure enabling
swift business execution, and by continued reorganization ofbusiness portfolio.
These efforts were recognized with Hitachi being
designated as a Grand Prize Company in the Corporate
Governance of the Year 2022 awards organized by the Japan
Association of Corporate Directors from 1,800 companies listed in
the Prime Market in the Tokyo Stock Exchange.

15

Hitachi's Initiatives for ESG (Environment, Society, Governance)

persons

2023/05/16 21:13:17 / 22961354_株式会社日立製作所_招集通知(3) Borrowings and Financing Activity of Hitachi Group
Major Borrowings (As of March 31, 2023)
Name of Company

Creditor

The Company

Balance of Borrowings

Japan Bank for International Cooperation

162.9 billion yen

Mizuho Bank, Ltd.

30.0 billion yen

MUFG Bank, Ltd.

20.0 billion yen

Note: In addition to the figures shown above, the Company owes 484.4 billion yen of long-term borrowings by means of syndicatedloan agreements.

Major Financing Activities
There is no material financing by issuance of stock and corporate bonds, etc. in Fiscal 2022.

(4) Capital Investment of Hitachi Group
During Fiscal 2022, the Hitachi Group carried out capital investment of 349.7 billion yen for further global
business expansion. However, the total investment decreased 38.9 billion yen from the preceding fiscal year, mainly due
to strictly-selected capital investment in the Automotive Systems business and the effect of conversion of Hitachi
Construction Machinery into an equity-method affiliate and sale of Hitachi Metals.
Capital Investment by Segment
OthersCapital Investment Trend

Corporate Items &Eliminations

12.9

21.1
20.1

29.8

Automotive
Systems

66.6

CapitalInvestment
Total

349.7

(% )

(Billions of yen)
500

Digital Systems &Services

400

64.9

Hitachi Metals

HitachiConstruction
Machinery(Billions of yen)

(4.4%)
414.7

300

Green
Energy &Mobility

72.5

Connective
Industries

5.0(4.6%)(4.1%)
399.6(3.8%)

359.8

388.7

4.0

(3.2%)
349.7

200

2.0

100

1.0

0

0.0

2018
2019
2020
2021
2022 (FY)
Note: The number in parentheses is the percentage of capital
investment to total revenues.

61.2

3.0

16

Borrowings and Financing Activity of Hitachi Group、Capital Investment of Hitachi Group2023/05/16 21:13:17 / 22961354_株式会社日立製作所_招集通知(5) Major Facilities and Major Group Companies of Hitachi Group (As of March 31, 2023)
The Company’s facilities are located in Japan and Hitachi group companies are located all over the world,
including Japan.
The Company’s major facilities and group companies are shown below.

×4
×7
×2

×3

×4

×3

Hitachi, Ltd.

Group Companies (Segment)
Digital Systems & Services

Green Energy & Mobility

Automotive Systems

OthersConnective Industries

Note: The circles show the number and location of the Company and major group companies.

The Company
Location
Head Office

Tokyo (Chiyoda-ku)

R&D

Tokyo (Kokubunji), Ibaraki (Hitachi), Saitama (Hatoyama), Kanagawa (Totsuka-ku, Yokohama)

Manufacturing,
Design andEngineering

Tokyo (Adachi-ku, Shinagawa-ku, Chiyoda-ku, Minato-ku), Ibaraki (Hitachi, Hitachinaka),
Kanagawa (Saiwai-ku, Kawasaki; Hadano; Totsuka-ku, Yokohama), Yamaguchi (Kudamatsu)
Tokyo (Shinagawa-ku, Chiyoda-ku, Minato-ku)
Hokkaido Area Operation (Chuo-ku, Sapporo), Tohoku Area Operation (Aoba-ku, Sendai),

Sales and

Kanto Area Operation (Taito-ku), Hokuriku Area Operation (Toyama),

Area Operations

Chubu Area Operation (Nakamura-ku, Nagoya), Kansai Area Operation (Kita-ku, Osaka),
Chugoku Area Operation (Naka-ku, Hiroshima), Shikoku Area Operation (Takamatsu),
Kyushu Area Operation (Sawara-ku, Fukuoka)

17

Major Facilities of Hitachi Group2023/05/16 21:13:17 / 22961354_株式会社日立製作所_招集通知Group Companies
Name of Company

Location

Ratio of
Voting Rights(%)

Hitachi Information & Telecommunication Engineering, Ltd.

Nishi-ku, Yokohama,
Kanagawa

100.0

Hitachi Channel Solutions, Corp.

Shinagawa-ku, Tokyo

100.0

Hitachi Solutions, Ltd.

Shinagawa-ku, Tokyo

100.0

Hitachi Systems, Ltd.

Shinagawa-ku, Tokyo

100.0

GlobalLogic Worldwide Holdings, Inc.

U.S.A.

100.0

Hitachi Computer Products (America), Inc.

U.S.A.

100.0

Hitachi Digital LLC

U.S.A.

100.0

Hitachi Payment Services Private Limited

India

100.0

Hitachi Vantara LLC

U.S.A.

100.0

Hitachi-GE Nuclear Energy, Ltd.

Hitachi, Ibaraki

80.0

Hitachi Plant Construction, Ltd.

Toshima-ku, Tokyo

100.0

Hitachi Power Semiconductor Device, Ltd.

Hitachi, Ibaraki

100.0

Hitachi Power Solutions Co., Ltd.

Hitachi, Ibaraki

100.0

Hitachi Energy Ltd

Switzerland

100.0

Hitachi Rail Ltd.

U.K.

100.0

Hitachi Building Systems Co., Ltd.

Chiyoda-ku, Tokyo

100.0

Hitachi Global Life Solutions, Inc.

Minato-ku, Tokyo

100.0

Hitachi High-Tech Corporation

Minato-ku, Tokyo

100.0

Hitachi Industrial Equipment Systems Co., Ltd.

Chiyoda-ku, Tokyo

100.0

Hitachi Industrial Products, Ltd.

Chiyoda-ku, Tokyo

100.0

Hitachi Industry & Control Solutions, Ltd.

Taito-ku, Tokyo

100.0

Hitachi Plant Services Co., Ltd.

Toshima-ku, Tokyo

100.0

Hitachi Elevator (China) Co., Ltd.

China

70.0

Hitachi Industrial Holdings Americas, Inc.

U.S.A.

100.0

JR Technology Group, LLC

U.S.A.

100.0

Sullair, LLC

U.S.A.

100.0

Segment■■■

DigitalSystems &Services

Green
Energy &Mobility

Connective
Industries

18

Major Hitachi Group Companies

2023/05/16 21:13:17 / 22961354_株式会社日立製作所_招集通知

Location

Ratio of
Voting Rights(%)

Hitachi Astemo, Ltd.

Hitachinaka, Ibaraki

66.6

Hitachi Astemo Americas, Inc.

U.S.A.

100.0

Hitachi-LG Data Storage, Inc.

Minato-ku, Tokyo

51.0

Hitachi Real Estate Partners, Ltd.

Chiyoda-ku, Tokyo

100.0

Hitachi America, Ltd.

U.S.A.

100.0

Hitachi Asia Ltd.

Singapore100.0

Hitachi (China), Ltd.

China

100.0

Hitachi Europe Ltd.

U.K.

100.0

Hitachi India Pvt. Ltd.

India

100.0

Segment■■

Automotive
Systems

OthersName of Company

Notes: 1. The total number of consolidated subsidiaries is 696.
2. The number of equity-method affiliates is 267. The major equity-method affiliates are Hitachi Kokusai Electric Inc., Arcerik
Hitachi Home Appliances B.V., Johnson Controls-Hitachi Air Conditioning Holding (UK) Ltd, and Hitachi Construction MachineryCo., Ltd.
3. Sullair, LLC changed its name to Hitachi Global Air Power US, LLC on April 12, 2023.
4. Hitachi Construction Machinery Co., Ltd. was converted into an equity-method affiliate from a consolidated subsidiary as aresult of the partial share transfer on August 23, 2022.
5. Hitachi Metals, Ltd. (currently Proterial, Ltd.) has ceased to be a group company of the Company as a result of the sharetransfer on January 5, 2023.
6. Ratio of voting rights includes indirect ownership.

19

Major Hitachi Group Companies

2023/05/16 21:13:17 / 22961354_株式会社日立製作所_招集通知(6) Directors and Executive Officers
1) Directors
Name, Position and Responsibilities, etc. (As of March 31, 2023)
Name

Position

Committee Membership

Other Principal Positions Held

Katsumi Ihara

Independent
Director

Chairman of the Board
Nominating Committee (Chair)
Audit Committee
Compensation Committee--

Chairman, Global Energy Alliance for People and Planet, LLC (USA)
Trustee, The Rockefeller Foundation (USA)
Venture Partner, Unitus Ventures LLC. (India)

Ravi Venkatesan

Independent
Director
Independent
Director

Nominating Committee

Director, Baker Hughes Company (USA)*
Director, Pembina Pipeline Corporation (Canada)*
Director, Glencore plc (Switzerland)*Ikuro Sugawara

Independent
Director

Audit Committee

Outside Director, Toyota Motor Corporation
Outside Director, FUJIFILM Holdings Corporation

Joe Harlan

Independent
Director

Compensation Committee

Louise Pentland

Independent
Director

Takatoshi Yamamoto

Independent
Director

Compensation Committee(Chair)Outside Director, Murata Manufacturing Co., Ltd.

Hiroaki Yoshihara

Independent
Director

Nominating Committee
Audit Committee (Chair)Outside Director, HOYA CORPORATION

Helmuth Ludwig

Independent
Director

Audit Committee

Chairperson of the Board, Circor International, Inc. (USA)*
Professor of Practice in Strategy and Entrepreneurship, Cox
School of Business, Southern Methodist University (USA)Senior Advisor, Bridgepoint, LLC (USA)

Cynthia Carroll-

Director, Experian plc (Ireland/UK)*

Keiji Kojima

Director

Compensation Committee-

Hideaki Seki

Director

Audit Committee-

Toshiaki Higashihara

Executive
Chairman

Nominating Committee-

Notes: 1. Mr. Hiroaki Yoshihara, Director (Audit Committee (Chair)), has considerable knowledge of finance and accounting based on
his long experience at KPMG Group with businesses related to accounting, etc.
2. The Company has appointed Director Hideaki Seki as a Standing Committee member of the Audit Committee. The
Company strives to improve the audit and supervisory functions of the Audit Committee by appointing a Standing
Committee member and creating a system where the Audit Committee can discuss and make its decisions based on
coordination with the internal auditing division and others, along with a timely grasp of accurate information throughattendance to important internal meetings, etc. and information-sharing with other Committee members.
3. All of Independent directors of the Company have been reported as independent directors to the Japanese stock exchanges
where the Company is listed.
4. The positions with * in “Other Principal Positions Held” are similar positions in each of the foreign corporations to outside
director under the Companies Act.
5. The Company has transactions, including the sales of products and services and purchase of products and services, with
Toyota Motor Corporation, FUJIFILM Holdings Corporation, Murata Manufacturing Co., Ltd. and HOYA CORPORATION.
The volume of transactions with each of the companies and corporations is negligible in comparison to the total businessvolume of the Company and to the total business volume of the corresponding entity (less than 1% of either party's
consolidated revenues).

General Intent of Limited Liability Agreement with Directors
The Company has entered into a limited liability agreement stipulated in Article 427, Paragraph 1 of theCompanies Act with each of Directors (excluding Director concurrently serving as an Executive Officer). The generalintent of the agreement is to limit the liability of Directors to the aggregate amount of each item stipulated under Article
425, Paragraph 1 of the Companies Act.

20

Directors and Executive Officers

2023/05/16 21:13:17 / 22961354_株式会社日立製作所_招集通知【Major Activities of Independent Directors】
Each Independent Director attended the Board meetings and relevant Committee meetings, stated opinions andmade proposals proactively, conducted analyses from various perspectives, and discussed openly and effectively.
Attendance

Activities and duties performed by Independent Directors
regarding their expected role

Katsumi Ihara

Board of Directors meetings:
9 out of 9 days
Nominating Committee:
8 out of 8 days
Audit Committee:
14 out of 15 days
Compensation Committee:
8 out of 8 days

Mr. Ihara stated his opinions and made proposals with respect togeneral management of the Group such as management policies
and business strategies from a business management viewpoint
based on his rich corporate management experience and insightgained through the involvement in management at major
companies conducting diversified businesses globally. He also
led discussion as Chairperson at the Board meetings and theNominating Committee respectively.

Ravi Venkatesan

Board of Directors meetings:
9 out of 9 days

Cynthia Carroll

Board of Directors meetings:
9 out of 9 days
Nominating Committee:
9 out of 10 days

Ikuro Sugawara

Board of Directors meetings:
7 out of 7 days
Audit Committee
9 out of 9 days

Mr. Venkatesan stated his opinions and made proposals withrespect to general management of the Group such as
management policies and business strategies mainly focusing on
digital business from a global viewpoint based on his richexperience and insight in the area of digital business andemerging markets.
Ms. Carroll stated her opinions and made proposals with respect
to general management of the Group such as management
policies and business strategies from a global viewpoint as well
as a perspective of human capital management including
diversity & inclusion based on her rich experience and insight as
the top executive of major global companies.
Mr. Sugawara stated his opinions and made proposals withrespect to general management of the Group such as
management policies and business strategies based on his richexperience and insight in such areas as public administration.

Joe Harlan

Board of Directors meetings:
9 out of 9 days
Compensation Committee:
8 out of 8 days

Louise Pentland

Board of Directors meetings:
9 out of 9 days

Takatoshi Yamamoto

Board of Directors meetings:
9 out of 9 days
Audit Committee:
6 out of 6 days
Compensation Committee:
8 out of 8 days

Hiroaki Yoshihara

Board of Directors meetings:
9 out of 9 days
Nominating Committee:
10 out of 10 days
Audit Committee:
15 out of 15 days

Helmuth Ludwig

Board of Directors meetings:
9 out of 9 days
Audit Committee:
15 out of 15 days

Name

Mr. Harlan stated his opinions and made proposals with respect
to general management of the Group such as management
policies and business strategies from a global business
management viewpoint based on his rich corporate management
experience and insight gained through the involvement inmanagement at major companies conducting diversified
businesses globally.
Ms. Pentland stated her opinions and made proposals withrespect to general management of the Group such as
management policies and business strategies from global
viewpoint as well as a perspective of a compliance and risk
management viewpoint based on her rich experience and insightas chief legal officer at major global companies.
Mr. Yamamoto stated his opinions and made proposals withrespect to general management of the Group such as
management policies and business strategies from investor's
viewpoints focusing on the one regarding IR/information
disclosure and corporate value based on his rich experience andinsight in the area of corporate analysis and global corporate
management. He also led discussion as Chairperson at theCompensation Committee.
Mr. Yoshihara stated his opinions and made proposals withrespect to general management of the Group such as
management policies and business strategies mainly fromviewpoints of improving business results and risk management
based on his rich experience and insight in the area of global
corporate management and accounting. He also led discussion
as Chairperson at the Audit Committee.
Mr. Ludwig stated his opinions and made proposals with respect
to general management of the Group such as management
policies and business strategies mainly focusing on the digitalbusiness from a global viewpoint based on his rich experienceand insight in the area of global corporate management anddigital business.

Note: “Attendance” at Board of Directors meetings and the committees meetings is based on the days held each meetings during
each member’s term of office.

21

Directors and Executive Officers

2023/05/16 21:13:17 / 22961354_株式会社日立製作所_招集通知2) Executive Officers
Name, Position and Responsibilities, etc. (As of March 31, 2023)
Name

Position

Responsibilities

Other Principal Positions Held

*Toshiaki Higashihara Executive Officer

General-*Keiji Kojima

President

Overall management, innovation
strategies-*Masakazu Aoki

Executive Vice President Assistant to the President (business forand Executive Officer
industrial digital, water & environment
business, industrial products business,
industrial equipment systems business,building systems business, smart life &
ecofriendly systems business,measurement and analytical systems
business and healthcare business)-

Executive Vice President Assistant to the President (financeand Executive Officer
strategies, corporate pension system,
investment strategies, investor relations
strategies, cost structure reform, risk
management, corporate auditing andcorporate export regulation)-*Yoshihiko Kawamura*Alistair Dormer

Executive Vice President Assistant to the President (railway
Chairman, Hitachi Europe
and Executive Officer
systems business, nuclear energyLtd.
business, energy business, power grids
business)*Toshiaki Tokunaga

Executive Vice President Assistant to the President (business forand Executive Officer
financial institutions, business forgovernment, public corporation andsocial infrastructure systems, defense
systems business, services & platforms
business, social innovation businesspromotion and digital strategies)-

Jun AbeSenior Vice President
and Executive Officer

Services & platforms business-

Katsuya Nagano

Senior Vice President
and Executive Officer

Business for government, public
corporation and social
infrastructure systems, and defense
systems business-

Senior Vice President
and Executive Officer

Human capital strategies, diversity,
equity & inclusion strategies, corporate
communications strategies and safety
and health management-*Masahiko Hasegawa

Senior Vice President
and Executive Officer

Marketing & sales and regional
strategies-

Claudio Facchin

Senior Vice President
and Executive Officer

Power grids business

Mamoru Morita

Senior Vice President
and Executive Officer

Management strategies

Noriharu Amiya

Vice President andExecutive Officer

Railway systems businessTakashi Iizumi

Vice President andExecutive Officer

Healthcare business and measurement President and Director,
and analytical systems business
Hitachi High-Tech
Corporation

Hitoshi Ito

Vice President andExecutive Officer

Government & external relations

Tatsuro Ueda

Vice President andExecutive Officer

Business for financial institutions

Kenji Urase

Vice President andExecutive Officer

Energy business*Hidenobu Nakahata

22

Directors and Executive Officers--

2023/05/16 21:13:17 / 22961354_株式会社日立製作所_招集通知

Name

Position

Responsibilities

Other Principal Positions Held

Tomomi Kato

Vice President andExecutive Officer

Finance strategies and corporate
pension system

Tadashi Kume

Vice President andExecutive Officer

Nuclear energy business

Kohei Kodama

Vice President andExecutive Officer

Legal matters, risk management andcorporate auditing-

Takashi Saito

Vice President andExecutive Officer

Marketing & sales strategies (businessfor connective industries)-

Norihiro Suzuki

Vice President andExecutive Officer

Research & development

Kenichi Tanaka

Vice President andExecutive Officer

Human capital strategies

Jun Taniguchi

Vice President andExecutive Officer

Digital strategies and services &platforms business

LorenaDellagiovanna

Vice President andExecutive Officer

Sustainability strategies, environmental
strategies and diversity, equity &inclusion strategies

Kojin Nakakita

Vice President andExecutive Officer

Regional strategies (APAC)

Hideshi Nakatsu

Vice President andExecutive Officer

Water & environment businessSeiichiro Nukui

Vice President andExecutive Officer

Information technology strategies

Andrew BarrVice President andExecutive Officer

Railway systems business

Tatsuro Hoshino

Vice President andExecutive Officer

Marketing & sales strategies (businessfor digital systems & services)-

Kentaro Masai

Vice President andExecutive Officer

Supply chain management(manufacturing strategies and quality
assurance) and safety and healthmanagement-

Shinya Mitsudomi

Vice President andExecutive Officer

Urban business strategies and building President and Director,
systems business
Hitachi Building Systems,
Co., Ltd.

Masashi Murayama

Vice President andExecutive Officer

Cost structure reform and information
security management

Kazunobu Morita

Vice President andExecutive Officer

Business for industrial digital

Takashi Yoda

Vice President andExecutive Officer

Regional strategies (China)-

CEO, Hitachi Digital LLC

Chairman, Hitachi Asia Ltd.
Chairman, Hitachi India Pvt.
Ltd.
Director, Hitachi Rail Ltd.

Chairman, Hitachi (China), Ltd.

Notes: 1. The Executive Officers marked with * are the Representative Executive Officers.
2. The Executive Officer, Toshiaki Higashihara and the President, Keiji Kojima concurrently hold the position of Director.

23

Directors and Executive Officers

2023/05/16 21:13:17 / 22961354_株式会社日立製作所_招集通知

New Executive Officers
The Company changed its Executive Officers as of April 1, 2023 as follows.
Name

Position

Responsibilities*Toshiaki Higashihara

Executive Officer

General*Keiji Kojima

President

Overall management*Masakazu Aoki

Executive Vice President and Assistant to the President (business for industrial digital, water
Executive Officer& environment business, industrial products business, industrial
equipment systems business, building systems business, smart
life & ecofriendly systems business, measurement andanalytical systems business and healthcare business)*Yoshihiko Kawamura

Executive Vice President and Assistant to the President (finance strategies, corporate
Executive Officer
pension system, investment strategies, investor relations
strategies, cost structure reform, risk management, corporate
auditing and corporate export regulation)*Alistair Dormer

Executive Vice President and Assistant to the President (railway systems business, nuclear
Executive Officer
energy business, energy business, power grids business)*Toshiaki Tokunaga

Executive Vice President and Assistant to the President (cloud services platforms business,
Executive Officer
digital engineering business, business for financial institutions,business for government, public corporation and social
infrastructure systems, defense systems business, social
innovation business promotion and digital strategies)

Jun AbeSenior Vice President andExecutive Officer

Cloud services platforms business

LorenaDellagiovanna

Senior Vice President andExecutive Officer

Sustainability strategies, environmental strategies and diversity,
equity & inclusion strategies

Katsuya Nagano

Senior Vice President andExecutive Officer

Business for government, public corporation and social
infrastructure systems and defense systems business*Hidenobu Nakahata

Senior Vice President andExecutive Officer

Human capital strategies, diversity, equity & inclusion
strategies, corporate communications strategies and safety andhealth management*Masahiko Hasegawa

Senior Vice President andExecutive Officer

Marketing & sales and regional strategies

Claudio Facchin

Senior Vice President andExecutive Officer

Power grids business**Giuseppe Marino

Senior Vice President andExecutive Officer

Railway systems business

Mamoru Morita

Senior Vice President andExecutive Officer

Management strategies**Atsuhiro Aketa

Vice President and Executive Regional strategies (China)
Officer

Noriharu Amiya

Vice President and Executive Railway systems business
Officer

Takashi Iizumi

Vice President and Executive Healthcare business and measurement and analytical systems
Officerbusiness

Hitoshi Ito

Vice President and Executive Government & external relations
Officer**Yasunori Inada

Vice President and Executive Nuclear energy business
Officer

Tatsuro Ueda

Vice President and Executive Business for financial institutions
Officer

Kenji Urase

Vice President and Executive Energy business
Officer

Tomomi Kato

Vice President and Executive Finance strategies and corporate pension system
Officer

Tadashi Kume

Vice President and Executive Supply chain management (manufacturing strategies andOfficerquality assurance), environmental strategies and safety andhealth management24

Directors and Executive Officers

2023/05/16 21:13:17 / 22961354_株式会社日立製作所_招集通知

Name

Position

Responsibilities

Kohei Kodama

Vice President and Executive Legal matters, risk management and corporate auditing
Officer

Takashi Saito

Vice President and Executive Marketing & sales strategies (business for connective
Officerindustries)

Kenichi Tanaka

Vice President and Executive Human capital strategies
Officer

Jun Taniguchi

Vice President and Executive Digital strategies and digital engineering business
Officer

Kojin Nakakita

Vice President and Executive Regional strategies (APAC)
Officer

Hideshi Nakatsu

Vice President and Executive Water & environment business
Officer**Itaru Nishizawa

Vice President and Executive Research & development
Officer

Seiichiro Nukui

Vice President and Executive Information technology strategies
OfficerAndrew BarrVice President and Executive Regional strategies (EMEA)
Officer**Yoshinori Hosoya

Vice President and Executive Cloud services platforms business
Officer**Chie Mashima

Vice President and Executive Marketing & sales strategies (business for digital systems &Officer
services) and social innovation business promotion

Shinya Mitsudomi

Vice President and Executive Urban business strategies and building systems business
Officer

Masashi Murayama

Vice President and Executive Cost structure reform and information security management
Officer

Kazunobu Morita

Vice President and Executive Business for industrial digital
Officer

Takashi Yoda

Vice President and Executive Marketing & sales strategies (business for energy)
Officer

Notes: 1. The Executive Officers marked with * are the Representative Executive Officers.
2. The Executive Officers marked with** are newly appointed.
3. The Executive Officer, Chie Mashima’s name in the family register is Chie Aihara.

3) Contents of Directors' and Officers' Liability Insurance Agreement(i) Coverage of Insured Persons
The Company's Directors, Executive Officers and employees who work as officers at the company to which they
are assigned, and some domestic subsidiaries' directors, corporate auditors, executive officers and employees (including
employees who work as officers at the company to which they are assigned).
(ii) Outline of the Insurance Agreement
The agreement compensates damages, litigation costs, etc. incurred by an insured person as a result of a claim
for damages due to an act or omission of the insured person as an executive of a company. However, the Company hastaken measures to ensure that the appropriateness of the execution of duties by officers is not impaired by excluding
compensation for intentional negligence of duties, illegal acquisition of private benefits or benefits, and damages resulting
from criminal acts. The entire insurance costs are beard by the Company or its subsidiaries holding the insurance
agreement.

25

Directors and Executive Officers

2023/05/16 21:13:17 / 22961354_株式会社日立製作所_招集通知4) Compensation for Directors and Executive Officers
Regarding the compensation for Directors and Executive Officers, the Company’s Compensation Committee
determines the Policy for Determining Individual Compensation of Directors and Executive Officers (the "Compensation
Policy") as well as the amount of compensation, etc. of each Director and Executive Officer as follows.
Compensation Policy[Method of Determination of Policy]
The Company’s Compensation Committee sets forth the Policy for Determining Individual Compensation of
Directors and Executive Officer pursuant to applicable provisions of the Companies Act.
[Basic Policy]
Compensation for Directors and Executive Officers shall be determined in accordance with the following key policy.
- Compensation shall be commensurate with roles and responsibilities of each Director and Executive Officer.
- Compensation for Directors shall be such that it enables them to exercise functions of supervision ofmanagement effectively.
- Compensation for Executive Officers shall be reflected by considering the following factors;(Alignment with the 2024 Mid-Term Management Plan)
In the Short-term incentive compensation and Long-term incentive compensation, set performance
metrics toward the Mid-term Management Plan as Key Performance Indicator (“KPI”) to encourage
executives to achieve them.
(Establishment of compensation program and corporate performance program that foster a growth mindset)
Pursue an optimal balance between short and medium- to long-term performance about "growth,""improving profitability" and "cash generation", aiming for improvement of short-term performance andmedium to long-term growth in corporate value.
Establish a compensation program that significantly rewards performance by setting stretched goals
and commensurate compensation levels.
(Setting indicators to promote sustainable management)
Develop specific indicators and goals related to "Environments,” “Business with Integrity” and “Qualityof life” under its sustainability strategy, and encourage their implementation.
(Expansion of stock compensation that rewards growth in corporate value over the medium- to long- term)
Expand stock compensation to better align with medium to long-term corporate value.
- Competitive compensation levels with a global perspective
Ensure competitive compensation levels to attract and retain key executives in global market, regardlessof their residence or origin, who lead global management of global organization.
- Compensation benchmarking with objectivity and transparency
Reference to the benchmarks in the US and European markets in addition to the benchmarks in theJapanese market for analysis and level-setting from multiple perspectives.
- Transparency and objectivity through enhanced compensation disclosure and shareholder engagement
Endeavor to gain investors' understanding and support through sufficient disclosure of thecompensation program with a global perspective and ongoing shareholder engagement, and continuously
improve the program based on the insights gained through the engagement.

[Compensation Structure](i) Matters relating to Directors
Compensation for Directors is basic remuneration as fixed pay. The amount of basic remuneration is decided byadjusting a basic amount to reflect full-time or part-time status, committee membership and position, and travel from placeof residence, etc. A Director concurrently serving as an Executive Officer is not paid compensation as a Director.
(ii) Matters relating to Executive Officers
Compensation for Executive Officers consists of basic remuneration as fixed pay and short-term incentive
compensation & long-term incentive compensation as variable pay. The basic amount of basic remuneration, short-term
incentive compensation, and medium- and long-term incentive compensation is set based on the ratio of 1:1.2:2.0 as thestandard, taking into account the composition of executive compensation for major global companies including the U.S.
and European companies, in order to improve corporate value through the growth of global businesses. The higher
position Executive Officers holds, the higher proportion of variable pay is set to the total annual compensation.
The method of determination of each type of compensation is as follows.
Basic remuneration- The amount of basic remuneration is decided by adjusting a basic amount set in accordance with the relevant
position to reflect the results of an assessment.

26

Compensation for Directors and Executive Officers

2023/05/16 21:13:17 / 22961354_株式会社日立製作所_招集通知

Short-term incentive compensation- The amount of short-term incentive compensation is decided within the range of 0 to 200% of a basic amount
set according to the relevant position by adjusting that amount to reflect financial results and individual
performance. Evaluation items and proportion of evaluation item are as shown in the following table.
Proportion of evaluation item
Executive officers
Evaluation items
President
Executive officers
in charge of(CEO)in charge of businesscorporate affairs
Corporate
70％
30%
40％
Financial
Performance
Division
30%－－
Individual goals

10%

20%

40%

Sustainability measurement

20％

20%

20％

- The amount of the financial performance linked component varies according to the evaluation of corporate
performance and division performance.
- Corporate performance is evaluated using consolidated revenues, profit index and cash flaw in order tomeasure the level of achievement of consolidated financial forecasts disclosed to stakeholders,
including shareholders and investors.
- Division performance is evaluated using consolidated revenues, profit index and cash flaw in order tomeasure the level of achievement of targets under the Mid-term Management Plan and the annual
budgets for divisions.
- The amount of the individual goals linked component varies according to the evaluation of the level ofachievement of individual target for each Executive Officer determined based on his/her responsibility.
- The amount of the sustainability measurement linked component varies according to the degree ofachievement of the numerical goals about materiality which is established on the sustainability strategy.
Medium- and Long-term incentive compensation- The target amount (Medium- and Long-term incentive compensation target ( “LTI target”)) are decided basedon the positions of Executive Officers, and the shares of Restricted Stock ("RS”) compensation withincumbency condition and Performance-linked Restricted Stock ("Performance-linked RS”) compensation are
granted in order to propel management from a long-term perspective and to provide incentives to bring about asustainable increase in enterprise value by further promoting senior management’s shared values withshareholders through the holding of shares during their term of office. The conditions, the grant ratio to LTI
target and grant date of RS and Performance-Linked RS compensation are as follows;
Type ofstock compensation

Condition

The grant
ratio toLTI target

Grant date of Restricted
Stock

Restricted Stock
Compensation

Incumbency condition

30%

Every Fiscal Year

Stock price condition

70%

After the end of the threefiscal years beginning with thebase fiscal year

Performance-linked
Restricted Stock
Compensation

Conditions forachievement of Mid-termManagement Plan targets

ROIC

10%

Sustainability
targets

10%

After the end of the final fiscal
year of the Med-termManagement Plan period- In RS compensation, the shares of RS equivalent to 30% of the LTI target are granted and the restriction on
the shares is lifted depending on the tenure of each executive over the three fiscal years from the beginning of
the fiscal year when the RS is granted.
- In Performance-linked RS compensation, the shares of Performance-linked RS Compensation will be granted
depending on the degree of achievement of the evaluation KPI during a certain evaluation period, andrestriction on transfer will be lifted upon retirement. Performance-linked RS compensation compromises ofcompensation with stock price condition and with conditions for achievement of Mid-term Management Plan
targets.
In stock compensation with stock price condition, Performance Share Units (“PSUs”) equivalent to 70%of the LTI target are granted, and the shares of restricted stock equivalent to 0 ~ 200% of the PSUs are
granted in accordance with the results of comparing the Total Shareholder Return growth rate of theCompany stock with the TOPIX growth rate and with the stock price growth rates of comparable
companies in global competition as determined by the Compensation Committee for the three fiscal years
beginning at the beginning of the fiscal year to which the PSUs are granted.
In stock compensation with conditions for achievement of Mid-term Management Plan targets, PSUs
equivalent to 20% of the LTI target are granted. The shares of restricted stock equivalent to the PSUs are
granted when the target of ROIC and sustainability indicators during the period of Mid-term Management
Plan covering the fiscal year when the PSUs are granted are achieved.
- If it is deemed to be inappropriate to grant the shares of restricted stock due to laws and regulations in the
country of residence, etc., cash award based on the value of the Company’s share price shall be substituted
for restricted stock.
- From Fiscal 2019, shares of restricted stock have been granted in place of the stock options as stock-based
compensation the Company has granted until then. From Fiscal 2023, the medium- and long-termcompensation described above is granted.

27

Compensation for Directors and Executive Officers

2023/05/16 21:13:17 / 22961354_株式会社日立製作所_招集通知

If it is found that an executive officer has been engaged in misconduct during his/her term of office, compensation
for Executive Officers that has been already paid shall be returned to the Company.
With regard to persons who are hired externally such as foreign persons, a compensation package could be
individually determined based on the level of compensation in a job market which is considered for compensation
benchmarking while referring the above policy. The Company grants restricted stock units to non-Japanese Executive
Officers as long-term incentive compensation. One third of vested restricted stock units are delivered in the form of sharesof common stock of the Company and cash each fiscal year over three years from the beginning of the fiscal year
containing the day on which restricted stock units are granted.
Total Amount of Compensation to and the Number of Directors and Executive Officers in Fiscal 2022
Total amount of each type(Millions of yen)
Total amount of
Variable pay
Number ofcompensation,
Category
personsetc.
Medium- andShort-term
Fixed pay
Others(Millions of yen)long-term
incentive
incentivecompensationcompensation
Directors
60
60
1(excluding Independent－－－
Directors)
Independent Directors
420
420
11
－
－
－
Executive Officers
4,850
1,726
1,694
1,429
33
－
Total
5,331
2,207
1,694
1,429
45
－
Notes: 1. The number of Directors indicated excludes two Directors who serve or served concurrently as Executive Officers.
2. Fixed pay and short-term incentive compensation consist of monetary compensation, and medium- and long-term incentive
compensation consists of non-monetary compensation and monetary compensation.

Performance Indicators Used to Calculate Performance-linked Compensation
Regarding the short-term incentive compensation, "Company performance" was evaluated referring toconsolidated revenues, adjusted operating income, EBIT, and net income attributable to Hitachi, Ltd. stockholders in order
to measure the level of achievement of consolidated financial forecasts disclosed to stakeholders, including shareholders
and investors. "Division performance" was evaluated referring to Adjusted EBITA and Core free cash flaws in eachdivision, among other indicators, to measure the level of achievement of targets under the Mid-term Management Plan andthe annual budgets for divisions.
Please refer to "Business Overview and Results of Hitachi Group" in this report regarding the business results in
Fiscal 2022.
The TSR/TOPIX Growth Rate Ratios defined in conditions for exercising stock option as stock-based
compensation (stock acquisition rights) and in conditions for lifting transfer restrictions of restricted stock issued as
medium- to long-term incentive compensation are as follows.
Name

The First Stock Acquisition Rights of Hitachi, Ltd.
The Second Stock Acquisition Rights of Hitachi, Ltd.
The Third Stock Acquisition Rights of Hitachi, Ltd.
Restricted Stocks issued in May 2019
Restricted Stocks issued in May 2020
Restricted Stocks issued in June 2021
Restricted Stocks issued in June 2022

Term

From April 1, 2016 to March 29, 2019
From March 31, 2017 to March 31, 2020
From March 30, 2018 to March 31, 2021
From April 1, 2019 to March 31, 2022
From April 1, 2020 to March 31, 2023
From April 1, 2021 to March 31, 2023 (Note)
From April 1, 2022 to March 31, 2023 (Note)

TSR/ TOPIX
Growth Rate Ratio

125.8%
121.6%
120.5%
146.7%
167.2%
149.1%
117.6%

Note: The ratios are calculated to determine the number of shares whose transfer restricted are lifted for persons who retired from
Executive Officers, Directors or Corporate Officers on March 31, 2023.

Reasons Why the Compensation Committee Judged that the Respective Amount of Compensation, etc. of Each
Director and Executive Officer in Fiscal 2022 was in Line with the Compensation Policy
The Compensation Committee judged that the respective amount of compensation, etc. of each Director andExecutive Officer was in line with the Compensation Policy, because it determined the "Compensation Structure" which isa specific criteria, based on the "Basic Policy," and determined the specific amount of compensation in accordance withthe "Compensation Structure."

28

Compensation for Directors and Executive Officers

2023/05/16 21:13:17 / 22961354_株式会社日立製作所_招集通知

Consolidated Financial Statements
Consolidated Statement of Financial Position
Fiscal 2021 (Reference)(As of March 31, 2022)

Fiscal 2022
(As of March 31, 2023)(Millions of yen)
(Assets)
Current assets
Cash and cash equivalents
Trade receivables and contract assets
Inventories
Investments in securities and other financial assets
Other current assets
Non-current assets
Investments accounted for using the equity method
Investments in securities and other financial assets
Property, plant and equipment
Goodwill
Other intangible assets
Other non-current assets
Total assets

6,599,431
968,827
2,978,149
2,042,432
376,315
233,708
7,288,071
411,201
584,806
2,478,901
2,153,706
1,257,128
402,329
13,887,502

5,928,535
833,2832,874,987
1,646,188
346,916
227,161
6,572,879
478,620496,8971,700,471
2,165,350
1,244,688
486,853
12,501,414(Liabilities)
Current liabilities
Short-term debt
Current portion of long-term debt
Other financial liabilities
Trade payables
Accrued expenses
Contract liabilities
Other current liabilities
Non-current liabilities
Long-term debt
Retirement and severance benefits
Other non-current liabilities
Total liabilities

5,854,066
1,234,119
336,418
294,047
1,754,633
738,030
1,069,732
427,087
2,678,159
1,556,175
414,839
707,145
8,532,225

5,166,178
777,650
141,861
263,748
1,548,497
720,961
1,241,366
472,095
1,999,669
1,293,837
323,264
382,568
7,165,847(Equity)
Hitachi, Ltd. stockholders’ equity
Common stock
Capital surplus
Retained earnings
Accumulated other comprehensive income
Treasury stock, at costNon-controlling interests
Total equity
Total liabilities and equity

4,341,836
461,731
46,1193,197,725
639,263(3,002)
1,013,441
5,355,277
13,887,502

4,942,854
462,817
3,637,184
846,392(3,539)392,713
5,335,567
12,501,414

29

2. Consolidated Statements of Financial Position

2023/05/16 21:13:17 / 22961354_株式会社日立製作所_招集通知

Consolidated Statement of Profit or Loss
Years ended March 312022 (Reference)

2023(Millions of yen)
Revenues
Cost of sales

10,264,602(7,705,981)

10,881,150(8,192,063)

Gross profit

2,558,621(1,820,385)
128,354(83,965)
27,938(97)

2,689,087(1,940,943)
302,196(245,016)
7,878(20,417)

40,48552,847

850,951
15,492(27,110)

845,632
25,652(51,313)

Income taxes

839,333(168,469)

819,971(116,101)

Net income

670,864

703,870

Net income attributable to:
Hitachi, Ltd. stockholders
Non-controlling interests

583,470
87,394649,124
54,746

Selling, general and administrative expenses
Other income
Other expenses
Financial income
Financial expenses
Share of profits (losses) of investments accounted for using
the equity method
Earnings before interest and taxes (EBIT)Interest income
Interest charges
Income before income taxes

30

3. Consolidated Statements of Profit or Loss

2023/05/16 21:13:17 / 22961354_株式会社日立製作所_招集通知

Unconsolidated Financial Statements
Unconsolidated Balance Sheet
Fiscal 2021 (Reference)
Fiscal 2022
(As of March 31, 2022)(As of March 31, 2023)(Millions of yen)
(Assets)
Current assets

1,139,368

1,020,191

Cash

62,22532,916

Trade receivables and contract assets

639,422591,333

Finished goods

12,987

15,493Semi-finished goods

17,317

14,954

Raw materials

27,52032,344Work in process

64,27962,805

Advances paid

31,752

26,266

Short-term loan receivables

114,00275,124

Others181,494

177,759

Allowance for doubtful receivables(11,634)(8,807)

4,676,251

4,920,307

202,192

192,605

Buildings

105,265

95,950

Structures

6,018

5,358

Machinery

7,522

6,744

Vehicles127

123

Tools and equipment

41,966

41,546

Land

23,81523,430

Lease assets

14,33914,982

Construction in progress

3,138

4,467

Fixed assets
Tangible fixed assets

Intangible fixed assets

96,77896,938

Patents

49

41

Software90,85591,57968

207

Right of using facilities
Lease assets
OthersInvestments and others
Affiliated companies’ common stock
Other securities of affiliated companies

75

54

5,729

5,055

4,377,279

4,630,763

3,610,468

3,849,069

9,058

18,592

Investments in affiliated companies

33,267

33,126

Investments in securities

284,485244,722Long-term loan receivables

347,176

362,011

Deferred tax assets

40,63758,624

Others52,41464,753

(228)

(137)

5,815,620

5,940,498

Allowance for doubtful receivables
Total assets

31

4. Unconsolidated Balance Sheets2023/05/16 21:13:17 / 22961354_株式会社日立製作所_招集通知

Fiscal 2021 (Reference)
Fiscal 2022
(As of March 31, 2022)(As of March 31, 2023)(Millions of yen)
(Liabilities)
Current liabilities

2,106,178

1,474,485

Electronically recorded obligations

10,292

10,613

Trade accounts payable

276,483

262,665

Short-term debt

682,328

143,730

Current installments of debentures

90,00030,000

Lease liabilities

3,723

4,261

Other accounts payable

20,10622,393

Accrued expenses

173,829

181,803

Contract liabilities

112,025

104,486

Deposits received

688,256

674,680460

69

Provision for loss on construction contracts

43,70837,272Others

4,963

2,507

Non-current liabilities

1,065,707

1,129,374

Debentures

160,000

130,000

Long-term debt

666,732

750,378

Lease liabilities

13,192

12,718Provision for product warranties

Accrued pension liability

74,00375,212

Provision for loss on business of affiliated companies

131,785

139,422

Asset retirement obligations

12,118

10,889Others

7,875

10,754

3,171,886

2,603,860

Total liabilities(Net assets)
Stockholders’ equity

2,555,037

3,216,044

Common stock461,731462,817

Capital surplus

452,473

254,133

179,697

180,783

Capital reserve
OthersRetained Earnings
OthersReserve for advanced depreciation of fixed assets
Retained earnings carried forward

272,775

73,3491,643,835

2,502,632

1,643,835

2,502,632

1,026

927

1,642,808

2,501,705

Treasury stock(3,002)(3,539)Valuation and translation adjustments

87,227

119,359

Unrealized holding gains on securities

76,502

103,379

Deferred profit or loss on hedges

10,725

15,980

Subscription rights to shares

1,468

1,233

Total net assets

2,643,733

3,336,637

Total liabilities and net assets

5,815,620

5,940,498

32

4. Unconsolidated Balance Sheets2023/05/16 21:13:17 / 22961354_株式会社日立製作所_招集通知

Unconsolidated Statement of Operations
Years ended March 312022 (Reference)

2023(Millions of yen)
Revenues

1,623,424

1,631,338

Cost of sales

1,155,026

1,173,314

Gross profit on sales

468,398

458,023

Selling, general and administrative expenses

354,447

369,999

Operating income

113,950

88,023

Other income

285,085

312,820

275,339

292,812

9,746

20,00833,987

46,125

6,034

14,185Interest income and dividends
OthersOther expenses
Interest expenses
Others27,952

31,939Ordinary income

365,049

354,719

Extraordinary gain

146,586

701,451

Gain on sale of affiliated companies’ common stock-

687,447

17,13812,640Gain on sale of real property

7,604

1,363

Gain on valuation of securities

121,833-

10-

Gain on sale of investments in securities

Gain on sale of investments in capital of affiliatedcompanies
Extraordinary loss

19,39023,690Loss on impairment of assets

4,552

12,091

Impairment loss on affiliated companies’ common stock

12,554

9,556

-

1,908

Impairment loss on investments in capital of affiliatedcompanies
Impairment loss on investments in securities
Income before income taxes

2,282

134

492,246

1,032,480(50,629)

76,455

Income taxes
Current
Deferred

26,760(31,922)Net Income

516,115

987,946

33

5. Unconsolidated Statements of Operations

2023/05/16 21:13:17 / 22961354_株式会社日立製作所_招集通知

The 154th Annual General Meeting of Shareholders of Hitachi, Ltd.
Matters subject to measures for electronic provision that are not provided in the paper-based documents
delivered to shareholders who have requested

Hitachi, Ltd.
Note: The contents are not provided in the paper-based documents delivered to shareholders who haverequested pursuant to the provisions of the Articles of Incorporation of the Company and the relevantlaws and regulations.

Contents(1) Five-year Summary of Asset and Results of Operation of Hitachi Group(2) Business Overview and Results of Hitachi Group - Results by Segment(3) Research and Development of Hitachi Group(4) Employees of Hitachi Group(5) Structures and Other Things to Ensure Adequacy of Business Operations (Internal Control System) andOperation of the Internal Control System(6) Fundamental Policy on the Conduct of Persons Influencing Decision on the Company’s Financial andBusiness Policies(7) Matters Concerning the Company’s Stock(8) Information on the Stock Acquisition Rights, etc.
(9) Policy on Determination of Distribution of Surplus, etc.
(10) Matters Concerning Accounting Auditor(11) Consolidated Statements of Comprehensive Income (Supplementary Information)(12) Consolidated Statements of Changes in Equity(13) Consolidated Statements of Cash Flows (Supplementary Information)(14) Notes to Consolidated Financial Statements(15) Unconsolidated Statement of Changes in Net Assets(16) Notes to Unconsolidated Financial Statements(17) Transcript of Accounting Auditors’ Audit Report on Consolidated Financial Statements(18) Transcript of Accounting Auditors’ Audit Report on Unconsolidated Financial Statements(19) Transcript of Audit Committee’s Audit Report

34

Contents

2023/05/16 21:13:17 / 22961354_株式会社日立製作所_招集通知(1) Five-year Summary of Assets and Results of Operation of Hitachi Group
1) Consolidated Basis(Billions of yen)
Fiscal Year

2018

2019

2020

2021

2022

9,480.6

8,767.2

8,729.1

10,264.6

10,881.1

754.9

661.8

495.1

738.2

748.1

-

-

609.1

855.3

884.6

Income Before Income Taxes

516.5

180.2

844.4

839.3

819.9

Net Income Attributable to Hitachi, Ltd.
Stockholders

222.5

87.5

501.6

583.4

649.1

9,626.5

9,930.0

11,852.8

13,887.5

12,501.4

Revenues
Adjusted Operating Income
Adjusted EBITA

Total Assets

Notes: 1. “Adjusting Operating Income” is presented as revenues less cost of sales as well as selling, general and administrative
expenses.
2. “Adjusted EBITA” is representing the operating income, adding back the amortization of intangible assets, etc. recognizing
upon business combinations, and adding or deducting shares of profits (losses) of investments accounted for using the equity
method.

2) Unconsolidated Basis(Billions of yen)
Fiscal Year

2018

2019

2020

2021

2022

1,927.2

1,793.2

1,678.2

1,623.4

1,631.3

Operating Income

93.0

108.0

39.0

113.9

88.0

Ordinary Income

304.0

355.4

305.4

365.0

354.7

Net Income

174.0

119.4

705.5

516.1

987.9

Total Assets

3,934.1

4,004.4

4,982.6

5,815.6

5,940.4

Revenues

Notes: 1. From Fiscal 2021, the Company adopted the “Accounting Standard for Revenue Recognition” (ASBJ Statement No.29,
March 31, 2020) etc. and the figures for Fiscal 2021 and 2022 have been calculated in accordance with this standard.
2. Net income reached a new record high due mainly to the increase in extraordinary income resulting from the sale of shares inlisted group companies.

35

Five-year Summary of Assets and Results of Operation of Hitachi Group2023/05/16 21:13:17 / 22961354_株式会社日立製作所_招集通知(2) Business Overview and Results of Hitachi Group - Results by Segment

Digital Systems & Services
To realize a sustainable society, Hitachi is utilizing
advanced digital technologies including AI, IoT andanalytics with the Lumada business at the core toprovide sophisticated digital solutions creating value
from data.

Adjusted EBITA
Revenues

2,389.0 billion yen
Year over year 111%

Adjusted EBITA
Margin293.7 billion yen
Year over year 104%

12.3%

Year over year -0.8 points

ROIC

8.3%
Year over year -2.3 points

Sales and profits increased mainly due to the impact of foreign exchange rates and the expansion of the Lumada
business. GlobalLogic, which continues to grow at a high rate, recorded revenues of 184% (154% in U.S. dollars) of theprevious fiscal year (from July 2021, when the acquisition was completed, to March 2022) and Adjusted EBITA Margin of
21.8%.

[Measures Taken]
To respond to global DX demand, Hitachi has strived
to provide digital solutions to the issues and needs of society
and customers through a range of collaborative creation
activities. Based on the robust growth foundations of theLumada business combining the digital engineering of
GlobalLogic with Hitachi's highly reliable system integrationand other qualities, Hitachi has worked to enhance andexpand sites to develop and provide services globally as well
as develop by strengthening its hiring and development
programs. Hitachi is also accelerating the creation of synergy
Co-creation project with GlobalLogic
at Lumada Innnovation Hub Tokyo

spanning the business fields of the entire Group.

36

DSS

2023/05/16 21:13:17 / 22961354_株式会社日立製作所_招集通知

Green Energy & Mobility
To realize a sustainable and decarbonized society, Hitachi is promoting to provide
the GX Solutions, including power grids combining IT and OT, clean energy
systems including renewable and nuclear energy, and eco-friendly railway
systems. Hitachi is also working to solve the issues faced by society andcustomers with the provision of cutting-edge solutions, including improved*1
convenience in transportation systems using MaaS, and the optimized operation*2and management of energy-related facilities through EFaaS.
*1

MaaS (Mobility as a Service) : A service integrating search, reservation, payment and other functions by optimally combining multiple means of public transportation andmobility services.

*2 EFaaS (Energy & Facility Management as a Service) : A service providing integrated support for the efficient operation and management of facilities.

Adjusted EBITA
Revenues

2,492.5 billion yen
Year over year 122%

Adjusted EBITA
Margin132.7 billion yen
Year over year 144%

5.3%
Year over year +0.8 points

ROIC

3.2%
Year over year +1.2 points

Sales and profits increased mainly due to the impact of foreign exchange and the steady performance of Hitachi Energy
and the railway systems business. At Hitachi Energy, sales and profits increased mainly due to the steady growth in orders
received, improvement of profitability and impact of foreign exchange, despite the impact of soaring component prices.

[Measures Taken]
Leveraging the One Hitachi structure based on
coordination with the digital business, Hitachi has strived toprovide services and solutions combining IT, OT andproducts.
In the energy business, Hitachi developed “Lumada
Inspection Insights,” a digital solution to inspect, monitor andoptimize key facilities such as power transmission networks.
Hitachi also launched carbon neutrality solutions that help
reduce CO2 emissions.
In the railway business, Hitachi has contributed theSubstation equipment for the offshore
energy environment

expansion of clean and highly convenient transportation
through smart mobility solutions and the provision of storage
battery-integrated hybrid rolling stock.

Smart mobility in Genoa, Italy

37

GEM

2023/05/16 21:13:17 / 22961354_株式会社日立製作所_招集通知

Connective Industries
Embracing "Connected" (connecting equipment and facilities) as a
keyword, Hitachi is seamlessly connecting highly competitive
products digitally and providing this as a solution in the fields ofindustrial systems including robotics SI, building systems, smart lifeand ecofriendly systems including home appliances and air
conditioners, measurement and analytical systems, and healthcare.

Adjusted EBITA
Revenues

2,975.2 billion yen
Year over year 108%

ROIC

Adjusted EBITA
Margin312.1 billion yen
Year over year 121%

10.5%
Year over year +1.1 points

10.8%
Year over year +1.4 points

Sales and profits increased mainly in the measurement and analytical systems business, which increased sales insemiconductor manufacturing equipment, clinical chemistry and immunochemistry analyzers, etc., and building systems
business, which expanded the building services business and received the impact of foreign exchange.

[Measures Taken]
Hitachi has focused on the expansion of total seamless*1*2

solutions and recurring business . Hitachi has also
accelerated the roll-out of Lumada Solutions utilizing digitaltechnologies based on collaborative creation with customers.
In North America, Hitachi has reinforced business structure
aimed at expanding total seamless solutions by acquiring
companies to strengthen the marking business in the productand to reinforce the system integration business in OT and
IT.
*1

*2

Solution connecting across the gaps among businesses and companies tosolve issues and offer solutions that achieve overall optimization withleveraging the strengths gained by maintaining a combination of products,
OT and IT

Operating in three groups: Urban, Advanced Technology andIndustry

Ongoing and cyclical services including after-sales service

38

CI2023/05/16 21:13:17 / 22961354_株式会社日立製作所_招集通知

Automotive Systems
To develop a sustainable mobility-based society that is friendly to theglobal environment and people, Hitachi provides high-efficiency
powertrain systems, advanced chassis, autonomous driving andadvanced driver-assistance systems for automobiles, as well as
systems for motorcycles with one of the highest market shares in theworld.

Adjusted EBITA
Revenues

1,920.0 billion yen
Year over year 120%

Adjusted EBITA
Margin73.4 billion yen
Year over year 118%

3.8%
Year over year -0.1 points

ROIC

4.0%
Year over year +0.5 points

Despite continued semiconductor shortages and supply chain disruptions in China, sales and profits increased due to theimpact of foreign exchange and a gradual recovery in production by automakers.

[Measures Taken]
Hitachi has contributed to improve corporate value forcustomers in response to the CASE (Connected,
Autonomous, Shared & Service, Electric) trends of theautomotive industry, through initiatives to commercialize
cybersecurity solutions for connected cars,* the developmentof all-round sensing systems for autonomous driving, nextgeneration chassis systems and the expanded supply ofelectric drive systems.
Hitachi decided a partial transfer of shares in Hitachi
Astemo. Hitachi Astemo will aim to achieve further growthwith a new joint partner.
*

A system that monitors cyber attacks in real-time and keeps damage to a minimum
in automobiles that connect to the Internet and are able to receive a range ofservices including software updates

39

Automotive Systems

Electric axle for electric vehicles

2023/05/16 21:13:17 / 22961354_株式会社日立製作所_招集通知

Hitachi Construction
Machinery
Revenues

475.1 billion yen
Year over year 46%

Hitachi Construction Machinery provides Hydraulic Excavators, Wheel Loaders, Mining
Machinery, Maintenance and Services and Construction Solutions and Mine Management
Systems, etc.

Adjusted EBITA
Adjusted EBITA Margin43.2 billion yen
Year over year 43%

9.1%
Year over year -0.7 points

On August 23, 2022, the partial sale of Hitachi Construction Machinery shares was completed, and the company became
an equity-method affiliate of the Company, resulting in a decrease in both sales and profits.

Hitachi Metals
Revenues

847.7 billion yen
Year over year 90%

Hitachi Metals provides Specialty Steel Products, Functional Components and Equipment,
Magnetic Materials and Power Electronics Materials, Wires, Cables and Related Products,
etc.

Adjusted EBITA
Adjusted EBITA Margin

43.0 billion yen
Year over year 140%

5.1%
Year over year +1.8 points

Despite price slides caused by a rise in raw material prices and the impact of foreign exchange, sales declined as the saleof Hitachi Metals shares was completed on January 5, 2023 and Hitachi Metals is not an affiliate of the Company. On theother hand, profit increased mainly due to cost reduction measures.

Others
Revenues

Main products and services in this segment are Optical Disk Drives and Property
Management, etc.

473.0 billion yen
Year over year 104%

Adjusted EBITA
Adjusted EBITA Margin40

Hitachi Construction Machinery、Hitachi Metals、Others

15.5 billion yen
Year over year 66%

3.3%
Year over year -1.9 points

2023/05/16 21:13:17 / 22961354_株式会社日立製作所_招集通知(3) Research and Development (R&D) of Hitachi Group
With an R&D mission, “Strengthen initiatives tocreate innovation with digital contributing to global businessgrowth,” Hitachi creates innovation to resolve issues ofsociety and customers. Specifically, through co-creation by
Lumada, Hitachi achieves DX driven by the customer
experience through creation of scenarios for customer
growth. Hitachi is also engaged in research aimed at therealization of the expansion of the use of hydrogen fuel,overcoming of intractable diseases and age-related diseases
and large-scale quantum computers contributing to theresolution of social issues, as future disruptive technologies
by back-casting from 2050.

Silicon quantum computer(Note)Part of this research was supported by the Japan
Science and Technology Agency (JST)” Moon Shot
Type R&D Project” (Grant No.JPMJMS2065).

Expenses on R&D during Fiscal 2022 amounted to 316.2 billion yen. In order to achieve the goals of the 2024
Med-term Management Plan, Hitachi continues to devort to create innovation by expanding investments in advanced
research and corporate venturing investments for co-creation with start-up companies.

R&D Expenses Trends

R&D Expenses by Segment
Others3.5

Hitachi Metals

Corporate Items

26.7

9.1

HitachiConstruction
Machinery

9.5(3.4%)

Digital Systems &Services

300

52.7

Research andDevelopment
Expenses
Total

Automotive
Systems(Billions of yen)(Billions of yen)

316.2

76.4

Green
Energy &Mobility

293.7(3.4%)
293.5(3.1%)
317.3

316.2(2.9%)

3.0

200

2.0

100

1.0

0

0.0

53.3
2018
2019
2020
2021
2022 (FY)
Note: The number in parentheses is the percentage of R&D expenses
to total revenues.

Connective
Industries

84.6

41

Research and Development of Hitachi Group

323.1

(%)

(3.4%)

2023/05/16 21:13:17 / 22961354_株式会社日立製作所_招集通知(4) Employees of Hitachi Group (As of March 31, 2023)
Hitachi formulated “2024 Human Resources Strategy,”
whose mission is contribution to business through diverse
talents, equitable opportunity and inclusive organization.
Implementing the human resources strategy aligned withbusiness strategy contributes to further business growth of
Hitachi.
Hitachi held a briefing conference on "2024 Human
Resources Strategy." Please check the website for details.
https://www.hitachi.com/IR-e/library/presentation/webcast/221012.htm

Number of employees in the Hitachi Group is 322,525 (including 28,672 employees on a non-consolidated basis) asof March 31, 2023.
Number of Employees by Segments
OthersCorporate Items

12,044

3,283

Automotive Systems

64,372

Number of Employees in Japan and Overseas

Number of
employees

Digital Systems &Services

100,763

Overseas

188,763

Total

Connective
Industries

81,883

322,525(28,672)(consolidated)

Green Energy &Mobility

60,180Notes: 1. The figure in parentheses is the number of employees on a nonconsolidated basis.
2. As a result of the partial sale of Hitachi Construction Machinery Co.,
Ltd. shares and the sale of Hitachi Metals, Ltd. shares, there are no
employees belonging to the Hitachi Construction Machinery segment
and Hitachi Metals segment.

42

Employees of Hitachi Group

Number of
employees
in Japan andOverseasJapan

133,7622023/05/16 21:13:17 / 22961354_株式会社日立製作所_招集通知(5) Structures and Other Things to Ensure Adequacy of Business Operations (Internal Control System) andOperation of the Internal Control System
1) Summary of resolution of Board of Directors on enhancing the internal control systema. The following measures shall be taken to ensure the effectiveness of audits by the Audit Committee.
(i)When necessary, the Board of Directors may appoint one or more director(s), who does not serve
concurrently as an executive officer, as a director responsible for assisting with the duties of the Audit
Committee. In addition, the Board of Directors Office (the “Office”) shall be established specifically to assist
with the duties of each Committee and the Board of Directors.

(ii)

In order to ensure the independence of the Office personnel from Executive Officers and the effect of
instructions by the Audit Committee, the Office is staffed with personnel who work only for the Office and are
not subject to orders and instructions of Executive Officers, and the Audit Committee shall be informed inadvance of planned transfers of the Office personnel.

(iii)

Executive Officers and employees shall report without delay to the members of the Audit Committee
significant matters affecting the Company and its subsidiaries, results of internal audits, and theimplementation status of reporting under the internal reporting system. It shall be provided for in the company
regulation that reporters using the internal reporting system common to the Hitachi Group shall not receive
disadvantageous treatment for reason of having made a report, and the secretariat of the system shallthoroughly administer this provision.

(iv)

The Office shall be in charge of payment for the expenses incurred in connection with the execution of theduties of the Audit Committee members and other administrative duties, and shall promptly process thepayment for the expense or debt except in the case where the expense or debt of the claim is clearly found to
be unnecessary to the execution of the duties of them.

(v)Standing Committee member(s) shall be appointed to the Audit Committee, and activity plans of the Audit
Committee shall be prepared in coordination with the audit plans of Internal Auditing Office.

b. The following measures shall be effective to ensure the adequacy of business operations within the Company andthe Hitachi Group.
(i)

Such fundamental policies as the emphasis of the social responsibilities of business enterprises shall beshared with the subsidiaries of the Company.

(ii)

Each subsidiary of the Company shall develop systems to ensure the appropriateness of operations
corresponding to its size and other characteristics, basic framework of which is similar to ones employed in
the Company. In order to ensure development of such systems in each subsidiary, directors and auditors shallbe sent from the Company to its subsidiary, and regular audits shall be conducted for the subsidiary.

(iii)

A reporting system to Directors shall be established to ensure that the execution of duties by Executive
Officers of the Company is in compliance with laws, regulations, and the Articles of Incorporation.

(iv)

Information pertaining to the execution of duties by Executive Officers of the Company shall be prepared andmaintained in accordance with internal rules.

(v)

A structure shall be established in which each relevant department shall establish regulations and guidelines,
conduct training, prepare and distribute manuals, and carry out other such measures with respect to various
risks. Efforts shall be made to identify possible new risks through such things as progress reports on business
operations and, should it become necessary to respond to a new risk, an Executive Officer responsible forresponding thereto shall be appointed promptly.

(vi)

Efficient performance of duties of the Executive Officers of the Company, and Directors and Executive
Officers of the subsidiaries shall be ensured through the following business management systems.
- The Senior Executive Committee shall be established in order to deliberate on and facilitate the formulation ofdecisions based on due consideration of diverse factors regarding important issues that affect the Company
and/or the Hitachi Group.
- Based on the management policy, medium-term business plans and annual budgets, on which performance
management is based, shall be prepared in order to operate business in a planned and efficient manner.

43

Structures and Other Things to Ensure Adequacy of Business Operations (Internal Control System) and Operation of the Internal Control System

2023/05/16 21:13:17 / 22961354_株式会社日立製作所_招集通知- Internal audits of the Company and its subsidiaries shall be conducted to monitor and identify the status of
their business operations and to facilitate improvements.
- The Audit Committee shall receive the audit plans of the accounting auditors in advance, and the priorapproval of the Audit Committee shall be required with respect to the fees to be paid to the accounting
auditors.
- Documented business processes for matters to be reflected in financial reports shall be executed at theCompany and its subsidiaries, and internal and external auditors shall examine said processes in order toensure the reliability of financial reports.
- A structure for the adequate and efficient conduct of business operations common to the Hitachi Group
companies shall be established.
(vii)

Continuous maintenance of a legal and regulatory compliance structure shall be ensured through thefollowing business management systems.
- Internal audits shall be conducted, and various committees shall be established for legal and regulatorycompliance activities. Furthermore, the internal reporting system common to the Hitachi Groupshall be established and education on legal and regulatory compliance shall be provided.
- Various policies and rules on compliance with laws shall be established, aiming to ensure that the employees
are aware of the internal control systems overall and that the systems are effective.

(viii) A system shall be established, in which the subsidiaries report on important issues and the progress inmeasures for operations to the Company through the Company’s Senior Executive Committee, medium-termbusiness plans and the budget system.
(ix)

The policy on transactions within the Hitachi Group is to trade fairly based on market prices.

2) Summary of status of operation of the internal control system
Audit Committee- A standing committee member has been appointed to grasp information in a timely and accurate manner
through attendance to important internal meetings, such as the Senior Executive Committee, and promote
information-sharing with other Committee members.
- The Audit Committee receives reports on audit plans of the accounting auditor and the Internal Auditing Officein advance and proposes changes in such plans, if necessary, and closely coordinate with the accounting
auditor and the Internal Auditing Office through exchanging information and opinions on a regular basis.

Board of Directors Office- In order to assist with the duties of each Committee and the Board of Directors, the Office is staffed with 16
employees (as of March 31, 2023) who exclusively serve the Office and are not subject to orders andinstructions of Executive Officers. Nine of them are allocated as the full-time auditors auditing the governanceand risk management, etc. in each sector of Digital Systems & Services, Green Energy & Mobility andConnective Industries, and Automotive Systems business.
Senior Executive Committee- The Senior Executive Committee meets twice a month, in principle, to deliberate on specific important mattersconcerning the Company or its subsidiaries and the annual business plan.
- The Senior Executive Committee makes efforts to identify potential signal of new risks through such means as
progress reports on business operations of the Company and its subsidiaries, on a regular basis.
Business Performance Management- The Company has formulated business strategies, measures to be taken and financial targets as the mediumterm business plan and annual budget, and manages business performance based on these plans.
Establishment of Internal Regulations and Training, etc.
- With respect to risks related to compliance, information security, environment, disasters, quality, andinvestment activities, etc., the Company establishes and amends regulations and guidelines, conducts
training, and prepares and distributes manuals to ensure risk management.

44

Structures and Other Things to Ensure Adequacy of Business Operations (Internal Control System) and Operation of the Internal Control System

2023/05/16 21:13:17 / 22961354_株式会社日立製作所_招集通知

Whistleblowing System- The Company has established and operates the whistleblowing system common to the Hitachi Group.
- The Company has also established and operates a reporting system to directors for suspicion of illegal acts,
etc. of Executive Officers of the Company.
Internal Audit- The Internal Auditing Office has conducted internal audits of the Company and its subsidiaries to monitor andimprove their business operations, as well as to confirm the status of their compliance and prevent illegal acts.
- The Internal Auditing Office has reported the results of its internal auditing for the Company and its
subsidiaries to the Audit Committee members without delay.

45

Structures and Other Things to Ensure Adequacy of Business Operations (Internal Control System) and Operation of the Internal Control System

2023/05/16 21:13:17 / 22961354_株式会社日立製作所_招集通知[Reference] Corporate Governance System and Internal Control System
The Company is a company with Nominating Committee, etc. under the Companies Act, aiming to establish aframework for quick business operation and to realize highly transparent management by separating responsibilities for
management oversight and those for execution of business operations.
The Board of Directors, which is responsible for the oversight of management, determines basic policies for
management, etc. and also monitor business executions by executive officers while significantly delegating authorities to
executive officers.

General Meetingof Shareholders
Appointment
Appointment / OversightSenior Executive Committee

Board of Directors

President
Nominating Committee

Executive Officers

Compensation Committee
Report

Audit

Audit Committee

ReportInternal Auditing Office

Each department

Audit
ReportAccounting Auditors

46【ご参考】コーポレートガバナンス体制と内部統制システムについて

Audit

2023/05/16 21:13:17 / 22961354_株式会社日立製作所_招集通知(6) Fundamental Policy on the Conduct of Persons Influencing Decision on the Company’s Financial andBusiness Policies
The Group invests a great deal of business resources in fundamental research and in the development of marketleading products and businesses that will bear fruit in the future, and realizing the benefits from these management
policies requires that they be continued for a set period of time. For this purpose, the Company keeps its shareholders andinvestors well informed of not just the business results for each period but also of the Company’s business policies forcreating value in the future.
While the Company recognizes the importance of its revitalization of business activities and performance that canbe brought about through a change in management control, it also recognizes the necessity of determining the impact oncompany value and the interests of all shareholders of the buying activities and buyout proposals of parties attempting toacquire a large share of stock of the Company or a Group company by duly examining the business description, futurebusiness plans, past investment activities, and other necessary aspects of such a party.
There is no party that is currently attempting to acquire a large share of the Company’s stocks nor is there a
specific threat, neither does the Company intend to implement specified so-called anti-takeover measures in advance of
the appearance of such a party, but the Company does understand that it is one of the natural duties bestowed upon it by
the shareholders and investors to continuously monitor the state of trading of the Company’s stock and then to
immediately take what the Company deems to be the best action in the event of the appearance of a party attempting topurchase a large share of the Company’s stock. In particular, together with outside experts, the Company will evaluate thebuyout proposal of the party and hold negotiations with the buyer, and if the Company deems that said buyout will not
maintain the Company’s value and is not in the best interest of the shareholders, then the Company will quickly determine
the necessity, content, etc., of specific countermeasures and prepare to implement them. The same response will also betaken in the event a party attempts to acquire a large percentage of the shares of a Group company.

47

Fundamental Policy on the Conduct of Persons Influencing Decision on the Company's Financial and Business Policies

2023/05/16 21:13:17 / 22961354_株式会社日立製作所_招集通知(7) Matters Concerning the Company’s Stock (As of March 31, 2023)
1)
2)

Authorized

2,000,000,000 shares

Issued938,083,077 shares

Note: On December 14, 2022, the Company canceled 30,488,800 treasury shares.

3)

Number of Shares per Unit

4)

10 Largest Shareholders

100 shares

Name
The Master Trust Bank of Japan, Ltd. (Trust Account)
Custody Bank of Japan, Ltd. (Trust Account)
STATE STREET BANK AND TRUST COMPANY 505223
GOVERNMENT OF NORWAY
Nippon Life Insurance Company
Hitachi Employees’ Shareholding Association
SSBTC CLIENT OMNIBUS ACCOUNT
NATS CUMCOSTATE STREET BANK WEST CLIENT – TREATY 505234
JP MORGAN CHASE BANK 385632

Share Ownership(Shares)
170,613,800
62,533,350
24,766,482
24,582,891
20,000,099
19,674,086
19,566,283
17,331,942
17,147,487
14,748,517

Shareholding Ratio
(%)
18.20
6.67
2.64
2.62
2.13
2.10
2.09
1.85
1.83
1.57

Notes: 1. NATS CUMCO is the nominee name of the depositary bank, Citibank, N.A., for the aggregate of the Company's
American Depositary Receipts (ADRs) holders.
2. Treasury stock (510,830 shares) is not included in the calculation of "Shareholding Ratio."

5)

Shareholders Composition
Status of shares
Foreign corporations,etc.

Financial
Class of Government
Financial instruments
Other
Individuals
shareholders
andinstitution business institution
and others
Nonmunicipality
Individuals
operator
individuals

Total

Number ofshareholders

217,678

3

179

66

Share
ownership(units)110 3,186,976

250,814

Ownership
percentage ofshares (%)

0.00

34.06

2.68

2,234

1,139

117,951 4,324,784

1.26

46.21

151

213,906

Number ofsharesless thanone
unit (shares)-

1,570 1,476,105 9,358,310 2,252,077

0.02

15.77

100.00-Note: Of 510,830 shares of treasury stock, 5,108 units are included in the “Individuals and others” column, while 30 shares areincluded in the “Number of shares less than one unit” column.

6)

Shares Issued to the Executive Officers, etc. of the Company as Compensation
The Company issued 251,900 of new shares to 35 Executive Officers of the Company, 72,100 of newshares to 34 Corporate Officers (the executive positions next to Executive Officers) of the Company and 13,000 of
new shares to 5 Executives of the Group companies, respectively, as restricted stock compensation plan andrestricted stock unit compensation plan, the medium- and long-term incentive compensation on June 15, 2022.

7)

Other Significant Matters concerning the Company’s Stock
Acquisition of treasury stock (Market purchase at Tokyo Stock Exchange)
Treasury stock acquired pursuant to the resolution at the Bord of Directors Meeting held on April 28, 2022
- Type and number of shares acquired: Common stock of 29,983,800 shares- Total purchase price for acquisition of shares: 199,999,720,349 yen- Period of acquisition: From May 11, 2022 to November 30, 2022

48

Matters Concerning the Company’s Stock2023/05/16 21:13:17 / 22961354_株式会社日立製作所_招集通知(8) Information on the Stock Acquisition Rights, etc.
Stock Acquisition Rights Held by Senior Managements (As of March 31, 2023)
Name of stock acquisition rights(Date of resolution)
Class and number of shares to beissued upon exercise of stockacquisition rights
Amount to be paid in upon
exercise of stock acquisitionrightsExercise period of stockacquisition rights
Conditions for the exercise ofstock acquisition rights
Stock acquisition rights held bysenior managements

The First Stock
Acquisition Rights ofHitachi, Ltd.
(June 29, 2016)

The Second Stock
Acquisition Rights ofHitachi, Ltd.
(April 6, 2017)

The Third Stock
Acquisition Rights ofHitachi, Ltd.
(April 11, 2018)

Common stock 124,720
sharesCommon stock 137,400
sharesCommon stock 136,900
shares¥1 per share¥1 per share¥1 per share

From July 15, 2016 toJuly 14, 2046

From April 27, 2017 toApril 26, 2047

From April 27, 2018 toApril 26, 2048

(Note 1, 2)(Note 1, 2)(Note 1, 2)

13 Executive Officers of
the Company
6,236 of stock acquisitionrights(Note 3)14 Executive Officers of
the Company
6,870 of stock acquisitionrights(Note 3)19 Executive Officers of
the Company
6,845 of stock acquisitionrights(Note 3)

Notes:1. A holder of stock acquisition rights may exercise all the stock acquisition rights together only within 10 days(in case the last day is not a business day, the following business day) from the day immediately following thedate on which he/she ceases to be an Executive Officer, a Director or a Corporate Officer of the Company.
2. The number of stock acquisition rights which a holder of stock acquisition rights may exercise shall be
determined based on the ratio of (i) the total shareholder return for shares of Hitachi for three years from the
beginning of the fiscal year in which the date of allotment of the stock acquisition rights falls to (ii) the growthrate of TOPIX (Tokyo Stock Price Index) for the same period (the “TSR/TOPIX Growth Rate Ratio”), in
accordance with the stock price conditions:a. In case the TSR/TOPIX Growth Rate Ratio is 120% or more
All the stock acquisition rights allotted (the “Allotted Rights”) may be exercised.
b. In case the TSR/TOPIX Growth Rate Ratio is 80% or more but less than 120%
Only a part of the Allotted Rights may be exercised according to the degree of the TSR/TOPIX Growth
Rate Ratio (*).
*Number of stock acquisition
Number of
TSR/TOPIX=×{(× 1.25) – 0.5}
rights exercisable
Allotted Rights
Growth Rate Ratio
Any fraction less than one stock acquisition right will be rounded down.
c. In case the TSR/TOPIX Growth Rate Ratio is less than 80%
No Allotted Rights may be exercised.
3. The number of Executive Officers includes two Executive Officers who concurrently serve as Directors.

(9) Policy on Determination of Distribution of Surplus etc.
The Company views the return of profits to shareholders through enhancing corporate value from mid- to longterm perspective, and paying dividends and repurchase of its shares as an important managerial issue.
The policy of the Company regarding dividends is to aim for stable payment of dividends while also securing
funds necessary for investment, and the dividends are determined by comprehensively taking into account factors such as
financial performance trends, the financial situation, and the dividend payout ratio.
The Company flexibly conducts repurchase of its shares depending on factors such as capital needs and thebusiness environment.
In accordance with mid- to long-term management strategy, the Company utilizes undistributed profits in areas
such as M&A, research and development, and capital expenditure, in order to secure competitiveness and aim for growthof the business as global enterprise.

49

Information on the stock acquisition rights, etc、Policy on Determination of Distribution of Surplus etc.

2023/05/16 21:13:17 / 22961354_株式会社日立製作所_招集通知(10) Matters Concerning Accounting Auditor
1)

Name of accounting auditor

2)

Fees to accounting auditor in Fiscal 2022

Ernst & Young ShinNihon LLC(Millions of yen)AmountCategory

Fees foraudit services*

Fees fornon-audit services

Total

Fees etc. by the Company and its subsidiaries

1,371

62

1,433

579

46

625

Fees etc. by the Company

Notes: 1. The column marked with * includes fees for audits under the Financial Instruments and Exchange Act.
2. The Audit Committee of the Company has given the consent with regard to the fees etc. to accounting auditor, in
accordance with Article 399, Paragraph 1 of the Companies Act, after having obtained necessary information and examined
the status of the execution of duties by the accounting auditor, content of the audit plan, and grounds for calculating theestimated amount of fees, etc.

3)

Description of non-audit services
The Company commissioned various consulting services and assurance services (except auditing) to
Ernst & Young ShinNihon LLC and paid fees.

4)

Subsidiaries whose financial statements are audited by certified public accountants, etc. other than the
Company’s accounting auditors
Of the major subsidiaries of the Company (listed in “Major Facilities and Major Group Companies ofHitachi Group”), overseas subsidiaries have certified public accountants (“CPA”) or auditing firms, etc. of the
network firms that Ernst & Young ShinNihon LLC belongs audit their financial statements.

5)

Removal and non-retention policy on accounting auditors
In the event the Audit Committee determines that the causes provided for in each item of Paragraph 1 of
Article 340 of the Companies Act apply to an accounting auditor and the accounting auditor needs to be removed
immediately, the Audit Committee shall remove the accounting auditor by unanimity. Should this occur, the Audit
Committee member selected by the Audit Committee shall give a report on the removal of the accounting auditor
and the reason therefor at the first general meeting of shareholders to be convened after the said removal.
Besides the case above, it is determined that an accounting auditor should be replaced for such reason
as the difficulty of ensuring an adequate performance of duties by the accounting auditor, the Audit Committee
shall determine the contents of the agenda item on the non-retention of the accounting auditor to be submitted to
the general meeting of shareholders.

50

Matters Concerning Accounting Auditor

2023/05/16 21:13:17 / 22961354_株式会社日立製作所_招集通知(11) Consolidated Statement of Comprehensive Income (Supplementary Information)
Years ended March 31
2022

2023

(Millions of yen)
Net income
Other comprehensive income (OCI)
Items not to be reclassified into net income
Net changes in financial assets measured at fair value through OCI
Remeasurements of defined benefit plans
Share of OCI of investments accounted for using the equity method
Total items not to be reclassified into net income
Items that can be reclassified into net income
Foreign currency translation adjustments
Net changes in cash flow hedges
Share of OCI of investments accounted for using the equity method
Total items that can be reclassified into net income
Other comprehensive income (OCI)
Comprehensive income
Comprehensive income attributable to:
Hitachi, Ltd. stockholders
Non-controlling interests51

4. Consolidated Statements of Comprehensive Income

670,864

703,870(11,224)
30,795(403)

21,48440,202
1,511

19,16863,197391,489
8,172
41,207232,360
7,265
14,595440,868
460,036
1,130,900

254,220
317,417
1,021,287

958,008
172,892

905,819
115,4682023/05/16 21:13:17 / 22961354_株式会社日立製作所_招集通知(12) Consolidated Statement of Changes in Equity (April 1, 2022 to March 31, 2023)(Millions of yen)
Commonstock
Balance at beginning of year

461,731

Capitalsurplus

Accumulated
othercomprehensive
incomeRetainedearnings

46,1193,197,725

639,263

Reclassified into retained
earnings

72,970(72,970)

Net income

649,124

Treasurystock, atcost(3,002)

Total
Hitachi, Ltd.
stockholders’equityNoncontrollinginterests

Total equity

4,341,836

1,013,441

5,355,277

Changes in equity

Other comprehensive
income-256,695

Dividends to Hitachi, Ltd.
stockholders(129,148)-

649,124

54,746

703,870

256,695

60,722

317,417(129,148)

Dividends to noncontrolling interests-

Acquisition of treasury
stock(129,148)(34,828)(34,828)(200,212)(200,212)(200,212)

Sales of treasury stock

(94)

258

164

164

Cancellation of treasurystock(199,417)

199,417

-

-

2,172

2,172

-

-

Issuance of new shares

1,086

1,086

Transfer to capital surplus
from retained earnings

153,487

Changes in non-controllinginterests(1,181)(153,487)
23,40422,223(701,368)(679,145)

Total changes in equity

1,086(46,119)

439,459

207,129(537)

601,018(620,728)(19,710)

Balance at end of year

462,817-

3,637,184

846,392(3,539)4,942,854

392,713

5,335,567

52

2. Consolidated Statements of Changes in Equity

2023/05/16 21:13:17 / 22961354_株式会社日立製作所_招集通知(13) Consolidated Statement of Cash Flows (Supplementary Information)
Years ended March 31
2022

2023
(Millions of yen)

Cash flows from operating activities
Net income
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization
Impairment losses
Income taxes
Share of (profits) losses of investments accounted for using the equity method
Financial income and expenses
Net (gain) loss on business reorganization and others(Gain) loss on sale of property, plant and equipment
Change in trade receivables and contract assets
Change in inventories
Change in trade payables
Change in accrued expenses
Change in retirement and severance benefits
Other
SubtotalInterest received
Dividends received
Interest paid
Income taxes paid
Net cash provided by (used in) operating activities
Cash flows from investing activities
Purchase of property, plant and equipment
Purchase of intangible assets
Proceeds from sale of property, plant and equipment, and intangible assets
Purchase of investments in securities and other financial assets(including investments in subsidiaries and investments accounted for using theequity method)
Proceeds from sale of investments in securities and other financial assets(including investments in subsidiaries and investments accounted for using theequity method)Other
Net cash provided by (used in) investing activities
Free cash flows
Cash flows from financing activities
Change in short-term debt, net
Proceeds from long-term debt
Payments on long-term debt
Proceeds from payments from non-controlling interests
Dividends paid to Hitachi, Ltd. stockholders
Dividends paid to non-controlling interests
Acquisition of common stock for treasury
Proceeds from sales of treasury stock
Purchase of shares of consolidated subsidiaries from non-controlling interests
Other
Net cash provided by (used in) financing activities
Effect of exchange rate changes on cash and cash equivalents
Change in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year53

5. Consolidated Statements of Cash Flows

670,864

703,870

540,252
35,091
168,469(40,485)(2,012)(102,135)(21,066)(33,292)(330,187)
156,475
9,679(29,122)(52,596)
969,935
16,372
18,824(26,698)(248,490)
729,943526,310
129,894
116,101(52,847)
18,204(297,351)(2,465)(60,673)(244,346)
43,96436,82649,93528,182995,604
25,675
26,419(49,770)(170,883)
827,045(296,968)(142,893)
109,836(252,638)(157,947)
55,580(933,200)(106,069)

168,892

616,31745,467(1,048,866)(318,923)(4,180)151,063
978,108

653,244
44,798(305,943)(111,149)(56,338)(251)451(22,009)(64)
202,739
69,125(47,059)(277,685)
80,062(288,795)
310(129,005)(52,217)(200,212)
164(274,687)(901)(1,142,966)
29,314(135,544)

1,015,886
968,827

968,827
833,2832023/05/16 21:13:17 / 22961354_株式会社日立製作所_招集通知(14) Notes to Consolidated Financial Statements(Notes on Important Matters for Basis of Presentation of Consolidated Financial Statements)
1. Basis of presentation
The consolidated financial statements presented herein, under Article 120, Paragraph 1 of the Regulations ofCompanies’ Financial Statements, have been prepared in conformity with International Financial ReportingStandards (hereinafter “IFRS”). However, under the second sentence of the above provision, some descriptions
and notes required under IFRS are omitted.
2.

Scope of consolidation and application of equity method
The number of consolidated subsidiaries is 696 and the number of equity-method affiliates is 267.

3.

Accounting standard for income and expenses
The Company recognizes revenue in accordance with the following five-step approach.
Step 1: Identify the contract(s) with a customer
Step 2: Identify the performance obligations in the contract
Step 3: Determine the transaction price
Step 4: Allocate the transaction price to the performance obligations in the contract
Step 5: Recognize revenue when (or as) the Company satisfies a performance obligation
The Company offers multiple solutions to meet its customers’ needs which may involve the delivery or
performance of multiple elements, such as goods or services. When the Company enters into multiple contracts
for providing the goods or services, related contracts are combined based on interdependencies between eachcontract’s consideration and the time the Company entered into such contracts, and the transaction price isallocated to each performance obligation on the basis of the relative stand-alone selling prices of each distinct
goods or services for the purpose of recognizing revenue.
In estimating the stand-alone selling price, the Company considers various factors such as market conditions,entity-specific factors and information about the customer or situation of customer.
The transaction price is the amount of consideration to which the Company expects to be entitled in exchange fortransferring promised goods or services to a customer. Variable consideration, such as discounts and rebates, isincluded in the transaction price only to the extent that it is highly probable that a significant reversal in theamount of cumulative revenue recognized will not occur when the uncertainty associated with the variableconsideration is subsequently resolved. The promised amount of consideration does not include a significant
financing component.
For a performance obligation satisfied over time, the Company measures its progress towards complete
satisfaction of that performance obligation based on the costs incurred or the period of services being provided inconsideration of the nature of the goods and services for the purpose of recognizing revenue. When the
Company cannot reasonably measure the progress, revenue is recognized only to the extent of the costs
incurred.
The Company recognizes the incremental costs of obtaining a contract with a customer and the costs directly
related to fulfilling a contract as an asset if those costs are expected to be recovered, and those assets areamortized based on the methods used to recognize revenue of the goods or services to which the assets relate.
The Company recognizes the incremental costs of obtaining a contract as an expense when incurred if theamortization period of the asset is less than one year.
Revenue recognition under long-term projects requires significant assumptions about the estimated total cost,estimated total selling price, risk associated with the contract, and other factors. These estimates are subject tovariance of uncertain economic conditions in the future and may vary due to a variety of reasons beyond ourcontrol. The Company reviews these estimates on an ongoing basis and reflects them in accounting practices.

54

3. Notes to Consolidated Financial Statements、Notes on Important Matters for Basis of Presentation(Basis of presentation)、Notes on Important Matters for B

2023/05/16 21:13:17 / 22961354_株式会社日立製作所_招集通知

4.

Financial assets
The Company has adopted IFRS 9 “Financial Instruments”.
Financial assets measured at amortized cost
Financial assets are subsequently measured at amortized cost when they meet the following requirements:- The financial asset is held within a business model the objective of which is to hold the asset to collectcontractual cash flows.
- The contractual terms of the financial asset provide cash flows on specified dates that are solely payments
of principal and interest on the principal amount outstanding.
Financial assets measured at amortized cost are initially measured at fair value (including direct transaction
costs). The carrying amount of financial assets measured at amortized cost is subsequently measured using
the effective interest method.
Financial assets measured at fair value through other comprehensive income
The Company holds certain equity instruments with the purpose of expanding its revenue base by maintaining
and strengthening business relations with the investees. These equity instruments are classified as Financial
assets measured at fair value through other comprehensive income by designation. They are initially andsubsequently measured at fair value, and the changes in fair value are recognized in OCI. The cumulative
amount of OCI is recognized in equity as AOCI. Dividends on equity instruments designated as fair value
through other comprehensive income are recognized in profit or loss, except where they are considered to bea return of the investment.
Financial assets measured at fair value through profit or loss
Equity instruments not designated as Financial assets measured at fair value through other comprehensive
income and debt instruments not classified as financial assets measured at amortized cost are classified as
Financial assets measured at fair value through profit or loss. These instruments are subsequently measured
at fair value and the changes in fair value are recognized in profit or loss.
Impairment of financial assets
The Company evaluates allowance for doubtful receivables depending on whether the credit risk has
increased significantly since initial recognition, if the credit risk has increased significantly since initialrecognition, the allowance for doubtful receivables is measured at the amount equal to the lifetime expectedcredit losses on the financial assets, if the credit risk has not increased significantly since initial recognition,
the allowance for doubtful receivables is measured at the amount equal to 12-month expected credit losses.
However, for trade receivables, contract assets, and lease receivables, allowance for doubtful receivables isalways measured at the amount equal to the lifetime expected credit losses. Whether credit risk has increased
significantly is determined based on changes in the risk of default and changes in expected credit losses arerecognized in profit or loss as impairment losses.

5.

Inventories
Inventories are stated at the lower of cost or net realizable value. Cost is determined by the specific identification
method or by the moving average method for finished goods, semi-finished goods and work in process, andgenerally by the moving average method for raw materials. Net realizable value is the estimated selling price inthe ordinary course of business less the estimated costs of completion and the estimated costs necessary to sell.

6.

Property, plant and equipment, Goodwill and Other intangible assets
Property, plant and equipment
Property, plant and equipment are measured using the cost model and stated at the cost less accumulated
depreciation and accumulated impairment losses. Each asset is depreciated mainly using the straight-line
method over its estimated useful lives. Right-of-use asset is depreciated from the commencement date of thelease to the earlier of the end of the useful life of the underlying asset or the end of the lease term on astraight-line basis.
Goodwill and Other intangible assets
Other intangible assets with finite useful lives are measured using the cost model and stated at the cost lessaccumulated amortization and accumulated impairment losses. Each asset is amortized mainly using thestraight-line method over its estimated useful lives.
Goodwill and Other intangible assets with indefinite useful lives are stated at the cost less accumulated
impairment losses.
Impairment losses
For each non-financial asset, the Company reviews the carrying amount and tests for impairment when there
are events or circumstances indicating an asset’s carrying amount may not be recoverable. For an asset that
does not generate cash flows that are largely independent of the cash flows from other assets, the Company
considers indicators of impairment based on a cash generating unit (CGU) or a group of CGUs. Irrespective of
any indicators of impairment, the Company tests Goodwill and Other intangible assets with indefinite-lives for
impairment annually by estimating the recoverable amount of each CGU (or group of CGUs) to which such
assets are allocated.

55

Notes on Important Matters for Basis of Presentation(Financial assets)、Notes on Important Matters for Basis of Presentation(Inventories)、Notes on Importan

2023/05/16 21:13:17 / 22961354_株式会社日立製作所_招集通知7.

Accounting methods for retirement and severance benefits
The Company and certain subsidiaries have defined benefit pension plans, severance lump-sum payment plansand defined contribution pension plans to provide retirement and severance benefits to employees.
(1) Defined Benefit Plans
Defined benefit plans include defined benefit pension plans and severance lump-sum payment plans. The
present value of defined benefit obligations and retirement benefit costs are measured based on the projected
unit credit method. The present value of defined benefit obligations and the fair value of plan assets are
remeasured as of the end of reporting period. Actuarial differences arising during the year and changes in fairvalue of plan assets (excluding interest income) are recognized in OCI and are not subsequently reclassified into
profit or loss. Any prior service cost, which arises at the time of a plan amendment, is recognized immediately in
profit or loss when such an amendment occurs.
The present value of defined benefit obligations less the fair value of plan assets is presented as the net amountof defined benefit liability or asset in non-current liabilities or assets.
(2) Defined Contribution Plans
Defined contribution pension plans are post-employment benefit plans in which the employer pays a certain
amount of premiums to a third-party asset manager but has no legal or constructive obligation to pay in excess ofsuch contributions. Contributions to the defined contribution plans are recognized in profit or loss in the period
when the service is provided by the employees.
Since the Company and a consolidated subsidiary of the Company introduced a risk-sharing corporate pension
plan on April 1, 2019, for current employees participating in the defined benefit pension plan managed by the
Hitachi Pension Fund, the same has been promoted to the other subsidiaries that participate in pension planmanaged by the Hitachi Pension Fund. On April 1, 2022, newly 43 subsidiaries have changed their pension
plans for current employees from defined benefit pension plan to risk-sharing corporate pension plan, and now
the revision of Hitachi group pension plan managed by the Hitachi Pension Fund has been almost completed.
Under this plan, a risk reserve contribution is determined in advance in accordance with the rules governing theplan, and the pension benefits are adjusted annually based on the financial position of the plan to maintainbalanced finance.
In terms of the corresponding accounting treatments for retirement benefits, risk-sharing corporate pension
plans, for which an entity accepts contribution obligations to the extent stipulated in the rules but has no further
obligations to make any additional contributions, are classified as defined contribution plans. Since this risksharing corporate pension plan, which 43 subsidiaries newly introduced on April 1, 2022, imposes no additional
contribution obligations, the difference between the defined benefit obligations related to the portion transferredto the revised plan and the amount of assets transferred to the revised plan corresponding to the decrease in
defined benefit obligations, 51,185 million yen, was recognized as a settlement loss in Other expenses in theConsolidated Statement of Profit or Loss. In addition, in the Consolidated Statement of Financial Position, Other
non-current assets decreased by 49,334 million yen, and Retirement and severance benefits increased by 1,851
million yen, respectively. Excluding the settlement loss in above, the impacts of changing pension plans on profit
or loss for the fiscal year ending March 31, 2023 are not material.

(Notes on Accounting Estimates)
1. Impairment of Property, Plant and Equipment, Goodwill and Other Intangible Assets (Impairment losses of(129,894) million yen)
The calculation method used in determining impairment of property, plant and equipment, goodwill and otherintangible assets are described in note 6 in the “Notes on Important Matters for Basis of Presentation ofConsolidated Financial Statements”. The Company measures the recoverable amount of an asset or a CGU (ora group of CGUs) as the higher of fair value less costs of disposal and value in use. In measuring fair values, theCompany and its subsidiaries primarily use the income approach (present value technique) based on theestimated future cash flows expected to result from the use of the asset and its eventual disposal or the market
approach to derive reasonable estimates of values in orderly market transactions, such as comparisons of similar
public companies and the current gross value of the asset. Value in use is calculated by the estimated future
cash flows based on business plans approved by management, discounted at the discount rate which is derived
from the weighted average cost of capital. The business plan used is based on external information, reflects
historical experiences, and generally has a maximum of five years. Estimated cash flows beyond the period
covered by the business plan are calculated using the estimated growth rate not exceeding the long-term
average growth rate of the market to which the asset belongs. Although a certain amount of negative impact
caused by soaring material prices and a shortage of semiconductors is included in current business plans, theseplans may be affected by risks related to market or economic environment, and actual result may differ from theestimates. In addition, the discount rate used to calculate the value in use is affected by stock market trends andfluctuations in interest rates.
The group of CGUs to which a significant proportion of goodwill was allocated were the power grids business in
the Green Energy & Mobility segment as of March 31, 2023. Impairment losses on the goodwill of Hitachi Energy
were recognized 38,394 million yen mainly due to the rise in discount rate accompanying the significant rise ininterest rates, etc. for the three months ended September 30, 2022. Furthermore, the Company performed theannual impairment test of the goodwill of the power grids business in the fourth quarter of fiscal year 2022. The
recoverable amount used in the annual impairment test of goodwill of the power grids business was calculated
based on the value in use and in calculation of the value in use, estimated future cash flows was discounted at
the discount rate derived from the weighted average cost of capital. Estimated future cash flows was based on
business plan for five years and beyond the period covered by the business plan were calculated taking into
account growth rate. The significant assumptions were revenue growth rates and gross profit ratios whichreflected past experience and external information. The growth rate was set taking into account long-term
inflation rate announced by an external research organization and the impact of interest rates incorporated
discount rate at the annual impairment test of the goodwill. Additional impairment losses were not recognized as
the result of the annual impairment test.

56

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2.

3.

4.

The carrying amount of goodwill allocated to the power grids business was 524,951 million yen as of March 31,
2023.
The Company considers it unlikely for the carrying amount of each CGU (or group of CGUs), together withallocated goodwill, would exceed the respective recoverable amounts of the CGU (or group of CGUs) even if the
primary assumptions used for the impairment test changed within a reasonable range.
Employee Retirement Benefits (The ending balance of Retirement and severance benefits of 323,264 million
yen)Calculation methods for employee retirement benefits are described in the note 7 in the “Notes on Important
Matters for Basis of Presentation of Consolidated Financial Statements”.
The measurement of a significant amount of employee retirement benefit costs is derived from actuarial
valuations containing a number of actuarial assumptions including mortality, withdrawal and retirement rates,changes in wages and the discount rate. The Company and its subsidiaries make judgements regarding theactuarial assumptions used by taking into account various factors including personnel demographics, market
conditions and expected trends in interest rates. Actuarial assumptions are determined based on the best
estimates and judgements but may be affected by variance of uncertain economic conditions in the future or byamendments or issuance of related laws.
Long-term projects (The ending balance of Provisions for expected losses on construction contracts of 94,952
million yen)
The Company is engaged in long-term projects to provide goods and services according to customers’
specifications over a specified period of time, and revenue is recognized mainly based on the pattern of the costaccrual (the progress of the project mostly based on the cost incurred relative to the estimated total cost) andprovisions for expected losses on construction contracts are recognized based on future estimated losses when
there is a possibility of incurring losses in the future. For long-term projects, the total estimated revenue iscalculated to the extent that is highly probable that a significant reversal in the amount of cumulative revenue
recognized will not occur when uncertainty associated with the total estimated revenue is subsequently resolved.
In addition, the total estimated costs are estimated considering contract risks and other factors. The Company
regularly reviews these estimates and reflects them in its accounting treatment.
Deferred tax assets (The ending balance of Deferred tax assets of 271,567 million yen)
Deferred tax assets are recognized to the extent that it is probable that future taxable income will be available
against which unused tax loss carryforwards, unused tax credits and future deductible temporary differences canbe utilized. A certain amount of negative impact caused by soaring material prices and a shortage ofsemiconductor is included in future taxable income. In assessing the realizability of deferred tax assets, theCompany considers whether it is more likely than not that some portion or all of the deferred tax assets will not
be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable
income in specific tax jurisdictions during the periods in which these deductible differences become deductible.
The Company carries out an assessment of the scheduled reversals of deferred tax liabilities and projected
future taxable income, including the execution of certain available tax strategies if needed. Based on thesefactors, the Company considers it is more likely than not it will realize the benefits of these deductible differences
as of March 31, 2023. However, the times and amounts of taxable income occurrence may be affected byvariance of uncertain economic conditions in the future, and the actual times and amounts may differ from theestimates. As a result of the reevaluation of a realizability of deferred tax assets in line with an improvement oflong-term forecast related to future taxable income of the Company and its Japanese subsidiaries which apply
the group tax sharing system, for the year ended March 31, 2023, the Company and its Japanese subsidiaries
recognized deferred tax assets on a part of deductible temporary differences which had been unrecognized ever.
In the 2023 Japan tax reform, a corporate income tax corresponding to a global minimum tax was established,
and the tax reform act ("Act for Partial Revision of the Income Tax Act, etc." (Act No. 3 of 2023)), including therules related to the global minimum tax (hereinafter “Global minimum tax system”), was enacted on March 28,
2023. However, IAS 12 “Income Taxes” does not offer specific guidance on accounting for the Global minimum
tax system. It is unclear whether the Global minimum tax system create additional temporary differences,whether to remeasure deferred taxes for the Global minimum tax system and which tax rate to use to measuredeferred taxes. Furthermore, the tax rate that will apply to an entity’s excess profit in future periods depends on anumber of factors that are difficult, if not impossible, to forecast reliably. The Company and its subsidiaries,
therefore, developed an appropriate accounting policy, in accordance with IAS 8 “Accounting Policies, Changes
in Accounting Estimates and Errors”, and concluded that not accounting for deferred taxes related to the Global
minimum tax system would result in the most relevant and reliable information.

57

Notes on Important Matters for Basis of Presentation(Retirement and Severance Benefits)、Notes on Accounting Estimates(Impairment of Non-Financial Assets -2023/05/16 21:13:17 / 22961354_株式会社日立製作所_招集通知(Notes to Consolidated Statement of Financial Position)
1. The components of Trade receivables and contract assets: Accounts receivable of 1,972,168 million yen,Contract assets of 804,500 million yen, and Others of 98,319 million yen.
Trade receivables and contract assets are stated as net of the allowance for doubtful receivables. Others include
notes receivable and electronically recorded monetary claims.
2. Accumulated other comprehensive income: Foreign currency translation adjustments of 635,260 million yen,remeasurements of defined benefit plans of 87,967 million yen, net changes in financial assets measured at fairvalue through other comprehensive income of 115,355 million yen, and net changes in cash flow hedges of
7,810 million yen.
3. Collateralized assets: Trade receivables and contract assets of 349 million yen, investments in securities andother financial assets of 319 million yen, and property, plant and equipment of 2,004 million yen.
Secured debts: 286 million yen.
4. Allowance deducted directly from assets: 83,841 million yen from trade receivables and contract assets, and1,801 million yen from other receivables.
5. Property, plant and equipment include land of 141,293 million yen and buildings and structures of 522,790 million
yen.
Accumulated depreciation and impairment losses of property, plant and equipment are (3,731,315) million yen.
Other intangible assets include software of 208,294 million yen.
6. Guarantees: 11,337 million yen(Notes to Consolidated Statement of Profit or Loss)
1. Other income
Other income of 302,196 million yen mainly consists of net gain or loss on business reorganization and others of
297,351 million yen. It includes a gain on the sale of shares of Hitachi Transport System, Ltd. in the amount of
140,293 million yen, and on the sale of shares of Hitachi Metals, Ltd. in the amount of 95,324 million yen.
2. Other expenses
Other expenses of (245,016) million yen mainly consists of impairment losses on property, plant and equipment
and goodwill and other intangible assets of (129,894) million yen and a settlement loss of (51,185) million yen
due to the change to the risk-sharing corporate pension plan introduced by subsidiaries.
3. Income taxes
Income taxes of (116,101) million yen includes current tax expense of (280,420) million yen and deferred tax
expense of 164,319 million yen.
(Notes to Consolidated Statement of Changes in Equity)
1. Class and number of issued shares and treasury stocks at end of year
(1) Issued shares
Common stock
938,083,077 shares(2) Treasury stocks Common stock
510,830 shares
2. Cash dividends
Total amount of cash dividends
129,148 million yen
3. Class and number of shares to be issued upon exercise of stock acquisition rights at end of year
Common stock
417,340 shares

58

BS Note 1：Trade Receivables and Contract Assets、BS Note 2：OCI、BS Note 3：Collateralized assets、BS Note 4：Allowance deducted directly from assets、BS N

2023/05/16 21:13:17 / 22961354_株式会社日立製作所_招集通知(Notes on Revenue Recognition)
1. Disaggregation of revenue
The Company derives revenues primarily from contracts with customers. The following table shows thedisaggregation of revenue attributable to each reportable segment and geographic area.
(Millions of yen)

Japan

North

Asia

America

Europe

Other
Areas

Overseas
Revenues
Subtotal

Total
Revenues

Digital Systems & Services

1,555,208

236,443

321,996

222,346

53,102

833,887

2,389,095

Green Energy & Mobility

444,499

413,579

458,978

829,339

346,127

2,048,023

2,492,522

Connective Industries

1,480,942

994,751

259,907

201,80337,8691,494,330

2,975,272

Automotive Systems

485,774

699,256455,255

161,012

118,770

1,434,293

1,920,067

Hitachi Construction Machinery

80,64083,04094,67180,460136,303

394,474

475,114

Hitachi Metals

323,193

181,280

283,606

41,547

18,100524,533

847,726

Others391,886

62,748

6,121

8,140

4,120

81,129473,015

Subtotal

4,762,142

2,671,097

1,880,534

1,544,647

714,391

6,810,669

11,572,811

Corporate items and Eliminations(643,898)(35,983)(2,542)(8,699)(539)(47,763)(691,661)

Total

4,118,244

2,635,114

1,877,992

1,535,948

713,852

6,762,906

10,881,150

The Digital Systems & Services segment consists of Front Business, IT Services and Services & Platforms, forwhich revenue amounted to 982,541 million yen, 898,298 million yen and 938,130 million yen for the year ended
March 31, 2023 (including intersegment transactions). Front Business and IT Services are operated mainly inJapan, and Services & Platforms is operated mainly in Japan, North America and Europe.
The Company’s revenues include revenue recognized based on the pattern of the cost accrual arising from longterm projects. Of the revenue recognized during the fiscal year ended March 31, 2023, the amount of revenue
recognized based on the pattern of the cost accrual arising from long-term projects was 1,805,588 million yen.

59

Notes on Revenue Recognition

2023/05/16 21:13:17 / 22961354_株式会社日立製作所_招集通知

2.

3.

Information about satisfaction of performance obligations
The following is information about satisfaction of performance obligations related to major goods and services ofeach reportable segment.
(Digital Systems & Services)
Front Business and IT Services primarily provide goods and services such as system integration, consulting andcloud service. Services & Platforms primarily provides IT products and software.
These long-term projects in system integration, consulting and cloud service businesses provide goods andservices according to customers’ specifications over a specified period of time, and revenue is recognized mainly
based on the pattern of the cost accrual (the progress of the project mostly based on the cost incurred relative tothe estimated total cost) or the passage of time as performance obligations are satisfied over time. Many of thecontracts require payments based on milestones, and in some cases, payments are made before performanceobligations are satisfied.
In IT products and software businesses, revenue is recognized when control over the goods is transferred tocustomers as performance obligations are satisfied at the point in time upon the completion or upon delivery of
the goods. Mostly, payment terms stipulate that the consideration is received within one year after the
performance obligation is satisfied, and there are no significant transactions in which payment terms include
deferred payments, etc.
(Green Energy & Mobility and Connective Industries)
The Green Energy & Mobility segment includes revenue from businesses such as energy solutions and railway
systems. The energy solutions business is operated mainly in Asia, North America and Europe. The railway
systems business is operated mainly in Europe. The Connective Industries segment includes revenue frombusinesses such as building systems, smart life & ecofriendly systems, measurement and analytical systems,
and industry & distribution solutions. The building systems business is operated mainly in China, the smart life &
ecofriendly systems business is operated mainly in Japan, the measurement and analytical systems business is
operated mainly in Japan, Asia, North America and Europe, and the industry & distribution solutions business is
operated mainly in Japan.
Long-term projects related to contracts such as construction in these segments involve manufacturing andproviding goods based on customers’ specifications over a specified period of time. As performance obligations
are satisfied over time, revenue is recognized mainly based on the pattern of the cost accrual (the progress ofthe project mostly based on the cost incurred relative to the estimated total cost). In addition, these segments
provide certain services promised in the contracts such as maintenance throughout the duration of the contract
and recognize revenue over time based on the passage of time. Many of the contracts require payments basedon milestones, and, in some cases, payments are made before performance obligations are satisfied.
Further, in the sale of elevators, home appliances, measurement and analytical systems, industrial equipment,
etc. included in the Connective Industries segment, revenue is recognized when control over the goods istransferred to customers as performance obligations are satisfied at the point in time upon the completion or
upon delivery of the goods. Mostly, payment terms stipulate that the consideration is received within one year
after the performance obligation is satisfied, and there are no significant transactions in which payment terms
include deferred payments, etc.
(Other)In the Automotive Systems, Hitachi Construction Machinery and Hitachi Metals segments, performanceobligations are generally satisfied at a point in time upon completion or upon delivery of the goods, and revenue
is recognized when control over goods is transferred to customers. Mostly, payment terms stipulate that theconsideration is received within one year after the performance obligation is satisfied, and there are no significant
transactions in which payment terms include deferred payments, etc.
These segments provide certain services promised in the contracts such as maintenance throughout the durationof the contract, and they recognize revenue over time based on the passage of time. Mostly, payment terms
stipulate that the consideration is received within one year after the performance obligation is satisfied, and there
are no significant transactions in which payment terms include deferred payments, etc.
Information about contract balances
The following table shows the beginning and ending balances of Trade receivables, Contract assets andContract liabilities from contracts with customers for the fiscal year ended March 31, 2023.
(Millions of yen)
April 1, 2022

March 31, 2023

Trade receivables

2,381,832

2,072,238

Contract assets

665,627

849,402

Contract liabilities

1,150,592

1,314,799

Of the revenue recognized during the fiscal year ended March 31, 2023, the amount included in Contract
liabilities at the beginning of the fiscal year was 745,452 million yen. And the amount related to performanceobligations satisfied in the past periods was not material.

60

Notes on Revenue Recognition

2023/05/16 21:13:17 / 22961354_株式会社日立製作所_招集通知4.

Transaction price allocated to remaining performance obligations
The following table shows the balance of unsatisfied performance obligations by reportable segment for the fiscal
year ended March 31, 2023.
(Millions of yen)Intersegment
transactions

5.

Balance of unsatisfied
performance obligations

Digital Systems & Services

52,481

1,253,318

Green Energy & Mobility

45,801

7,554,950

Connective Industries

106,653

1,825,227

Segments of the Company and its subsidiaries that have contracts under which revenue is recognized over along period of time are primarily the Digital Systems & Services segment, Green Energy & Mobility segment andConnective Industries segment.
The estimated timing of unsatisfied performance obligations at the fiscal year ended March 31, 2023 is asfollows.
Approximately 90% of the balance of unsatisfied performance obligations of the Digital Systems & Services
segment was expected to be satisfied within three years and approximately 10% after three years but no morethan five years.
Approximately 60% of the balance of unsatisfied performance obligations of the Green Energy & Mobility
segment was expected to be satisfied within three years and approximately 40% after three years but no morethan five years.
Approximately 90% of the balance of unsatisfied performance obligations of the Connective Industries segment
was expected to be satisfied within three years.
The remaining segments have contracts whose initial expected terms are generally one year or less.
Accordingly, related information is excluded from this disclosure in accordance with the practical expedient.
Assets recognized from the costs incurred for obtaining or fulfilling contracts with customers
The Company and its subsidiaries recognize the costs incurred for obtaining or fulfilling contracts with customers
as an asset to the extent those costs are expected to be recovered. Such costs recognized as an asset as ofMarch 31, 2023 were not material.

61

Notes on Revenue Recognition

2023/05/16 21:13:17 / 22961354_株式会社日立製作所_招集通知(Notes on Financial Instruments)
1. Status of Financial Instruments
The Company and its subsidiaries, in an endeavor to optimize the capital efficiency of their business activities
through efficient management of operating funds, include highly liquid short-term investments, which mature
within three months of the date of acquisition and pose very little risk of fluctuation in value, in “cash equivalents”
as immediately available financial resources.
Customer credit risk regarding receivables is managed based mainly on the current economic conditions,inherent risks, the financial position of the relevant customer and the past record.
Investments in securities and other financial assets mainly comprise equity financial instruments, which aremanaged by constantly monitoring the fair value.
Short-term debt and long-term debt are mainly used to fund business operations and capital expenditures.
2.

Fair Value, etc. of Financial Instruments(1) Fair Value Measurements
The following methods and assumptions are used to measure the fair value of financial assets and liabilities.
Cash and cash equivalents, Trade receivables, Short-term loans receivable, Other accounts receivable, Shortterm debt, Other accounts payable and Trade payables
The carrying amount approximates the fair value because of the short maturity of these instruments.
Investments in securities and other financial assets and Other financial liabilities
The fair value of lease receivables is based on the present value of lease payments receivable calculated foreach group of years to maturity using discount rates that reflect the time to maturity and credit risk.
Investment securities with quoted market prices are estimated using the quoted share prices. In the absence ofan active market for investment securities, quoted prices for similar investment securities, quoted prices
associated with transactions that are not distressed for identical or similar investment securities or other relevant
information including market interest rate curves, referenced credit spreads or default rates, are used todetermine fair value. If significant inputs of fair value measurement are unobservable, the Company uses priceinformation provided by financial institutions to evaluate such investments. The information provided iscorroborated by the income approach using its own valuation model, or the market approach using comparisonswith prices of similar securities.
The fair value of long-term loans receivable is estimated based on the present value of future cash flows using
the interest rate applicable to an additional loan of the same type.
Derivative assets and derivative liabilities are measured at fair value based on quoted prices associated withtransactions that are not distressed, prices in inactive markets, or based on models using interest rate curves
and forward and spot prices for currencies and commodities. If significant inputs are unobservable, the Company
mainly uses the income approach or the market approach to corroborate relevant information provided byfinancial institutions and other available information.
Long-term debt
The fair value of long-term debt is estimated based on quoted market prices or the present value of future cash
flows using the market interest rates applicable to the same contractual terms.
(2) Financial Instruments Measured at Amortized Cost
The carrying amounts and estimated fair values of the financial instruments measured at amortized cost as ofMarch 31, 2023 is as follows.
The fair value estimated for financial assets and liabilities measured at amortized cost is classified in Level 2 ofthe fair value hierarchy.

Carrying amounts(Millions of yen)
Fair Values

AssetsInvestments in securities and otherfinancial assets
Lease receivables
22,85822,858Debt securities
46,72946,729Long-term loans receivable385
385
Liabilities
Long-term debt [1]Bonds
160,000
159,250
Long-term debt
1,022,994
1,022,130[1] Long-term debt is included in Current portion of long-term debt and Long-term debt in the consolidated
statement of financial position.

(3) Financial Instruments Measured at Fair Value
Financial instruments measured at fair value on a recurring basis after the initial recognition are classified into
three levels of the fair value hierarchy based on the measurement inputs’ observability as follows:
Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active markets
Level 2: Valuations measured by direct or indirect observable inputs other than Level 1
Level 3: Valuations measured by significant unobservable inputs
When several inputs are used for a fair value measurement, the level is determined based on the input that issignificant with the lowest level in the fair value measurement as a whole.
Transfers between levels are deemed at the beginning of each quarter period.

62

Notes on Financial Instruments、Note on Per Share Information

2023/05/16 21:13:17 / 22961354_株式会社日立製作所_招集通知

The following table presents the assets and liabilities that are measured at fair value on a recurring basis as ofMarch 31, 2023.
(Millions of yen)Class of financial instruments
Financial assets measured at fair value through profit orloss:
Investments in securities and other financial assets
Equity securities
Debt securities
Derivatives
Financial assets measured at fair value through othercomprehensive income:Investments in securities and other financial assets
Equity securities
Total financial assets at fair value
Financial liabilities measured at fair value through profit
or loss:
Other financial liabilities
Derivatives
Total financial liabilities at fair value

Level 1

Level 2

Level 3

Total

335
8,684
-

4,145
78,32728,352
4,959-

28,687
17,78878,327234,175
243,194

82,472

104,445
137,756

338,620
463,422-

49,38549,385-49,38549,385

The following table presents the changes in Level 3 instruments measured on a recurring basis for the year
ended March 31, 2023.
(Millions of yen)
Equitysecurities

Level 3 financial assets
Balance at beginning of year
Gain in profit or loss [1]Loss in OCI [2]Purchases
Sales and redemption
Acquisitions and divestitures
Other
Balance at end of year
Unrealized gain relating tofinancial assets held at end of year [3]

[1]
[2]
[3]

Debt
securities

Total

123,632
777(1,213)33,762(13,513)(13,964)
3,316
132,797

5,686
96
529
(521)
(846)
15
4,959

129,318873(1,213)34,291(14,034)(14,810)3,331
137,756

766

96

862

Gain in profit or loss related to Financial assets measured at fair value through profit or loss is included in
Financial income in the consolidated statement of profit or loss.
Loss in OCI related to Financial assets measured at fair value through other comprehensive income isincluded in Net changes in financial assets measured at fair value through OCI in the consolidated
statement of comprehensive income.
Unrealized gain relating to Financial assets measured at fair value through profit or loss held at the end ofyear is included in Financial income in the consolidated statement of profit or loss.

Fair values are measured by the finance departments in accordance with the Company’s policies andprocedures. Valuation models are determined so that they reflect each financial instrument’s nature,
characteristics and risks most appropriately. The finance departments continually examine changes in important
inputs that could affect the fair value. In case the fair value of a financial instrument was significantly impaired,administrators review and approve the impairment loss.
(Note on Per Share Information)
Hitachi, Ltd. stockholders’ equity per share
Net income attributable to Hitachi, Ltd. stockholders per share

63

Notes on Financial Instruments、Note on Per Share Information

5,271.97 yen
684.55 yen

2023/05/16 21:13:17 / 22961354_株式会社日立製作所_招集通知(Note on Major Subsequent Events)
Repurchase of Shares of Common Stock
The Board of Directors decided to repurchase shares of its own common stock pursuant to Article 459,
Paragraph 1 of the Companies Act of Japan and Article 32 of the Company’s Articles of Incorporation, as follows.
(a) Reason for repurchase
The Company views the return of profits to shareholders through enhancing corporate value from mid- andlong-term perspective and paying dividends continuously as an important managerial issue. The Company
has decided to repurchase its own shares this time, taking into consideration its financial condition and theprice of its common stock as well as the progress of the review of the business portfolio.
(b) Outline of the Repurchase(i) Class of shares to be repurchased
Common stock of the Company(ii) Aggregate number of shares to be repurchased
Up to 20 million shares(2.13% of the number of outstanding shares (excluding treasury stocks))(iii) Aggregate amount of repurchase
Up to 100.0 billion yen(iv) Period of the repurchase
From April 28, 2023 to March 31, 2024(v) Method of repurchase
Expected open market purchase through the Tokyo Stock Exchange(Other Note)
Sale of shares of Hitachi Astemo, Ltd. (hereinafter “Hitachi Astemo”)
On March 30, 2023, the Company entered into the following two agreements regarding the transfer of a part of theshares of Hitachi Astemo, a consolidated subsidiary of the Company in the Automotive Systems segment, to Hitachi
Astemo and Honda Motor Co., Ltd.(hereinafter “Honda”) and for inviting JIC Capital, Ltd. (hereinafter “JICC”) as a new
joint partner.
(i)Share Subscription Agreement with JICC-01 Limited Partnership (hereinafter “JICC-01”) managed by JICC-01 G.K.,
which is a wholly owned subsidiary of JICC including that Hitachi Astemo issues Class shares to JICC-01, and Hitachi
Astemo purchases a part of shares of its common stocks held by the Company, using a portion of the funds raised
through the issuance of Class shares(ii)Agreement for investment in kind and share transfer with Honda including that Hitachi Astemo issues common stocks
to Honda in exchange for Honda to invest the shares of Hitachi Astemo Electric Motor Systems, Ltd. in kind and theCompany transfers a part of shares of Hitachi Astemo’s common stocks to Honda
The consideration is expected to be approximately 158.0 billion yen.
Assuming the series of transactions based on the agreements is settled, it is expected that the Company’s ownership
ratio of shares of Hitachi Astemo will decrease from 66.6% to 40％, and Hitachi Astemo will turn into an equity-method
associate of the Company.
An expected gain on the sale of Hitachi Astemo shares in the amount of approximately 107.0 billion yen will berecognized in Other income in the consolidated statement of profit or loss for the year ending March 31, 2024.
Furthermore, non-controlling interests in Hitachi Astemo will decrease approximately 258.0 billion yen in the
consolidated statement of changes in equity for the year ending March 31, 2024.

64

Notes on Major Subsequent Events、Other Notes

2023/05/16 21:13:17 / 22961354_株式会社日立製作所_招集通知(15) Unconsolidated Statement of Changes in Net Assets (April 1, 2022 to March 31, 2023)(Millions of yen)
Stockholders’ equity
Capital surplus

Retained earnings
OthersCommonstock

Balance at beginning of year

Reserve for
Total capital advanced
surplusdepreciationof
fixed assets

Capitalreserve

Others461,731

179,697272,775

1,086

1,086

452,473

1,026

Retainedearnings
carriedforward

Total retained
earnings

1,642,808

1,643,835

Treasurystock(3,002)

Total
stockholders’equity2,555,037

Change during year
Issuance of new shares

1,086

Reversal of reserve foradvanced depreciation of
fixed assets

2,172
(98)

98

-

-

Distribution of surplus(129,148)(129,148)(129,148)

Net income

987,946

987,946

987,946

Acquisition of treasury
stock(200,212)(200,212)

Disposition of treasury
stock

(8)

(8)

258

249

Cancellation of treasurystock(199,417)(199,417)

199,417-(Net) Change in items
other than stockholders’equity during year
Total change during year

1,086

1,086

(199,426)(198,339)(98)

858,896858,797(537)

661,007

Balance at end of year

462,817

180,783

73,349254,133927

2,501,705

2,502,632(3,539)3,216,044

Valuation and translation adjustments

Balance at beginning of year

Unrealized
holding gains
on securities

Deferred
profitor loss onhedges76,502

10,725

Total
Subscription
valuationrights toandsharestranslation
adjustments
87,227

1,468

Total net
assets2,643,733

Change during year
Issuance of new shares

2,172

Reversal of reserve foradvanced depreciation of
fixed assets-

Distribution of surplus(129,148)

Net income

987,946

Acquisition of treasury
stock
Disposition of treasury
stock
Cancellation of treasury
stock(Net) Change in items
other than stockholders’equity during year

(200,212)
249
26,876

5,255

32,132(235)

31,896

Total change during year

26,876

5,255

32,132(235)

692,903

Balance at end of year

103,379

15,980

119,359

1,233

3,336,637

65

6. Unconsolidated Statement of Changes in Net Assets

2023/05/16 21:13:17 / 22961354_株式会社日立製作所_招集通知(16) Notes to Unconsolidated Financial Statements(Notes on Important Accounting Policy)
1. Inventories
Finished goods, semi-finished goods and work in process: Stated at cost. Cost is determined by the specificidentification method or the moving average method. (The figures shown in the Balance Sheet have been
calculated in accordance with the write-down approach based on decline in profitability.)
Raw materials: Stated at cost. Cost is determined by the moving average method. (The figures shown in the
Balance Sheet have been calculated in accordance with the write-down approach based on decline inprofitability.)
2. Securities
Affiliated companies’ common stock and investments in affiliated companies are stated at cost. Cost isdetermined by the moving average method.
Other securities except stock and investments without market value are stated at fair value. The difference
between acquisition cost and carrying cost of other securities except stock and investments without market value
is recognized in “Unrealized holding gains on securities.”
The cost of other securities except stock and investments without market value is computed based on themoving average method.
Other stock and investments without market value are stated at cost determined by the moving average method.
3. Derivatives
Derivatives are stated at fair value.
4. Depreciation of tangible fixed assets (excluding lease assets)
Straight-line method.
5. Amortization of intangible fixed assets (excluding lease assets)
Selling, leasing, or otherwise marketing software: Amortized based on expected gross revenues ratably.
Other intangible fixed assets: Straight-line method.
6. Depreciation of lease assets
Financial leases other than those that are deemed to transfer the ownership of the leased property to the lessee:
Depreciation is calculated by the straight-line method with no residual value, using the lease term as useful life.
Of the financial leases other than those that are deemed to transfer the ownership of the leased property to thelessee, leases commencing on or before March 31, 2008 are accounted for based on accounting methods
applied to ordinary lease transactions.
7. Allowances and Provisions
Allowance for doubtful receivables:
Estimated uncollectible amounts are accounted for based on loan loss ratios in the case of general
receivables and based on case-by-case examination of collectability in the case of specific receivables
including doubtful receivables.
Provision for product warranties:
In order to prepare for expenditures related to after-sales product services, estimated in-warranty service
costs are accounted for based on past records.
Provision for loss on construction contracts:
In order to provide for losses relating to construction contracts and made-to-order software, an estimated loss
for subsequent fiscal years is accounted for.
Accrued pension liability:
Accrued pension liability is provided for employees’ retirement and severance benefits. Such liability isdetermined based on projected benefit obligation and expected plan assets as of the end of this fiscal year.
The projected benefit obligation is determined by attributing the expected retirement and severance benefits
to each year by the benefit formula basis.
Prior service cost is amortized by the straight-line method over the estimated average remaining service
years of employees.
Unrecognized actuarial gain or loss is amortized by the straight-line method mainly over the estimatedaverage remaining service years of employees from the next fiscal year.
Provision for loss on business of affiliated companies:
In order to provide for losses relating to the business of affiliated companies, the amount the Company is
expected to bear in excess of the amounts invested in and loaned to for such companies is accounted for.

66

7. Notes to Unconsolidated Financial Statements(Notes on Important Accounting Policy)1. Invento

2023/05/16 21:13:17 / 22961354_株式会社日立製作所_招集通知8.

Accounting standard for income and expenses
The Company recognizes revenue in accordance with the following five-step approach.
Step 1: Identify the contract(s) with a customer
Step 2: Identify the performance obligations in the contract
Step 3: Determine the transaction price
Step 4: Allocate the transaction price to the performance obligations in the contract
Step 5: Recognize revenue when (or as) the Company satisfies a performance obligation

The Company sells goods and services such as system integration, cloud services, control systems, software, IT
products, industry & distribution systems, energy solutions, and railway systems. Long-term projects provide
goods and services and control over the goods is transferred to customers over a specified period of time. Thus,
revenue is recognized over the specified period of time. Further to other goods and services, revenue isrecognized when control over the goods is transferred to customers as performance obligations are satisfied atdelivery of the goods.
In addition, multiple solutions are offered to meet its customers’ needs which may involve the delivery or
performance of multiple elements, such as goods or services. When the Company enters into multiple contracts
for providing the goods or services, related contracts are combined based on interdependencies between eachcontract’s consideration and the time the Company entered into such contracts, and the transaction price isallocated to each performance obligation on the basis of the relative stand-alone selling prices of each distinct
goods or services for the purpose of recognizing revenue.
In estimating the stand-alone selling price, the Company considers various factors such as market conditions,entity-specific factors and information about the customer or situation of customer.
The transaction price is the amount of consideration to which the Company expects to be entitled in exchange fortransferring promised goods or services to a customer. Variable consideration such as discounts is included in
the transaction price only to the extent that it is highly probable that a significant reversal in the amount of
cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration issubsequently resolved. The promised amount of consideration does not include a significant financing
component.
For a performance obligation satisfied over time, the Company measures its progress towards complete
satisfaction of that performance obligation based on the costs incurred or the period of services being provided inconsideration of the nature of the goods and services for the purpose of recognizing revenue. When the
Company cannot reasonably measure the progress, revenue is recognized only to the extent of the costs
incurred.
Revenue recognition under long-term projects requires significant assumptions about the estimated total cost,estimated total selling price, risk associated with the contract, and other factors. These estimates are subject tovariance of uncertain economic conditions in the future and may vary due to a variety of reasons beyond ourcontrol. The Company reviews these estimates on an ongoing basis and reflects them in accounting practices.
9. Hedge accounting
Deferral hedge accounting is employed.
10. Accounting for income taxes and related tax effect accounting
From fiscal 2022, the Company adopted the group tax sharing system. In addition, in accordance with the"Practical Solution on the Accounting and Disclosure Under the Group Tax Sharing System" (ASBJ PITF No.42,
August 12, 2021), the Company performs the accounting for income taxes, and accounting and disclosure of
related tax effect accounting.

67(Notes on Important Accounting Policy)8. Accounting standard for income and expenses、(Notes on Important Accounting Policy)9. Hedge accounting、(Notes on I

2023/05/16 21:13:17 / 22961354_株式会社日立製作所_招集通知(Notes on Accounting Estimates)
1. Valuation of affiliated companies’ common stock and investments in affiliated companies(1) Amounts recorded in the financial statements of this fiscal year
The ending balance of Affiliated companies’ common stock and investments in affiliated companies, withoutmarket value: 3,851,309 million yen(2) Information that contributes to understanding of accounting estimates
Affiliated companies’ common stock without market value is evaluated by considering possibility of recovery
based on the performance according to the business plan of those companies if the real value of the stock
has declined significantly as compared to the purchase price. A part of affiliated companies’ common stock isevaluated based on the real value which includes the excess earning power calculated by enterprise value
measurement at the time of the acquisition of the Company concerned. Necessity of impairing the excess
earning power is determined by the possibility of achieving the future business plan.
Business plans are estimated based on revenue growth rate and gross margin ratio, and other factors. In
addition, although a certain amount of negative impact caused by soaring material prices and a shortage ofsemiconductor is included in current business plans, these plans may be affected by risks related to market
or economic environment, and actual result may differ from the estimates.
Significant changes in primary assumptions of the business plan could result in the real value being less thanthe purchase price.
2. Loss on impairment of Fixed Assets(1) Amounts recorded in the financial statements of this fiscal year
The ending balance of Tangible fixed assets: 192,605 million yen
The ending balance of Intangible fixed assets (excluding selling, leasing, or otherwise marketing software):78,036 million yen(2) Information that contributes to understanding of accounting estimates
This note is omitted as the same content is stated in ‘6. Property, plant and equipment, Goodwill and Other
intangible assets’ under ‘Notes on Important Matters for Basis of Presentation of Consolidated Financial
Statements’ in the Notes to Consolidated Financial Statements.
3. Provision for loss on business of affiliated companies(1) Amounts recorded in the financial statements of this fiscal year
The ending balance of Provision for loss on business of affiliated companies: 139,422 million yen(2) Information that contributes to understanding of accounting estimates
This note is omitted as the same content is stated in ‘7. Allowances and Provisions’ under ‘Notes on
Important Accounting Policy’ in the Notes to Unconsolidated Financial Statements.
4. Accrued pension liability(1) Amounts recorded in the financial statements of this fiscal year
The ending balance of Accrued pension liability: 75,212 million yen(2) Information that contributes to understanding of accounting estimates
This note is omitted as the same content is stated in ‘7. Allowances and Provisions’ under ‘Notes on
Important Accounting Policy’ in the Notes to Unconsolidated Financial Statements and ‘2. Employee
Retirement Benefits’ under ‘Notes on Accounting Estimates’ in the Notes to Consolidated Financial
Statements.
5. Provision for loss on construction contracts(1) Amounts recorded in the financial statements of this fiscal year
The ending balance of Provision for loss on construction contracts: 37,272 million yen(2) Information that contributes to understanding of accounting estimates
This note is omitted as the same content is stated in ‘7. Allowances and Provisions’ under ‘Notes on
Important Accounting Policy’ in the Notes to Unconsolidated Financial Statements and ‘3. Long-term
projects’ under ‘Notes on Accounting Estimates’ in the Notes to Consolidated Financial Statements.
6. Deferred tax assets(1) Amounts recorded in the financial statements of this fiscal year
The ending balance of Deferred tax assets: 58,624 million yen(2) Information that contributes to understanding of accounting estimates
This note is omitted as the same content is stated in ‘4. Deferred tax assets’ under ‘Notes on Accounting
Estimates’ in the Notes to Consolidated Financial Statements.

68(Notes on Accounting Estimate)2023/05/16 21:13:17 / 22961354_株式会社日立製作所_招集通知(Notes to Unconsolidated Balance Sheet)
1. Collateralized assets(Millions of yen)

2.

3.

4.

Type of asset
Affiliated companies’ common
stock
Investments in securities

Year-end book value

Description

46

Collaterals for borrowings by affiliated companies

8Long-term loan receivables

37

Collaterals for borrowings by investees
Collaterals for borrowings by affiliated companies
and investees

Total
91
Accumulated depreciation of tangible fixed assets
Buildings
136,017 million yen
Structures
23,622 million yen
Machinery
82,408 million yen
Vehicles
933 million yen
Tools and equipment
144,138 million yen
Lease assets
7,583 million yen
Guarantees
The Company guarantees financial guarantees from financial institutions concerning
subsidiaries' order received, subsidiaries' borrowings from financial institutions, etc. as
follows.
(Millions of yen)
Guarantee
Year-end balance
Hitachi Energy Ltd
528,104
Hitachi Rail STS S.p.A.
271,048
Hitachi America Capital, Ltd.
93,471
Hitachi International (Holland) B.V.
39,781
Hitachi Rail Ltd.
35,234
Hitachi Energy Switzerland Ltd
6,013
Hitachi Energy Canada Inc.
5,219
Kawasaki Railcar Manufacturing Co., Ltd.
1,600
Others3,039
Total
983,513
In addition to the foregoing, the Company has entered into an agreement with each of thefollowing overseas affiliated companies on maintaining their finances in a sound condition,etc., mainly to enhance their credit in order to support their financing activities:
Hitachi America Capital, Ltd., Hitachi International (Holland) B.V., Hitachi International
Treasury Ltd., Hitachi (China) Finance Co., Ltd. and Hitachi Power Europe GmbH
Short-term receivables from affiliated companies
311,266 million yen
Long-term receivables from affiliated companies
372,441 million yen
Short-term payables to affiliated companies
755,838 million yen
Long-term payables to affiliated companies
6,308 million yen

69(Notes to Unconsolidated Balance Sheet)1. Collateralized assets、(Notes to Unconsolidated Balance Sheet)2. Accumulated depreciation of tangible fixed assets

2023/05/16 21:13:17 / 22961354_株式会社日立製作所_招集通知(Notes to Unconsolidated Statement of Operations)
1. Loss on impairment of assets(1) Summary of the major assets or asset groups for which impairment loss was recognizedClassification
Description
Category
Location
Software relating toAssets to be held
Softwareservice business forand usedfinancial institutions
Software relating toAssets to be held
Softwareaccounting and tax
and used
return(2) Reason to recognize impairment loss
The Company recognized the impairment loss for assets to be held and used since amounts invested in theabove assets are expected to be irrecoverable due to decline in their profitability.
(3) Amounts of impairment loss
Buildings
116 million yen
Structures
10 million yen
Machinery
396 million yen
Vehicles10 million yen
Tools and equipment
147 million yen
Land
133 million yen
Lease assets
8 million yen
Software10,447 million yen
Others819 million yen
Total
12,091 million yen(4) Method of grouping assets
Although the grouping of assets is principally based on business divisions or places of business, some assets
and asset groups are grouped as a separate unit that generates cash flows independently of other asset
groups.
(5) Calculation of recoverable amounts
For assets to be held and used, calculation is based on the higher of net sales price and value in use, andnet sales price is calculated by deducting the estimated cost of disposal from real estate appraisal value.
2. Revenues from affiliated companies
393,722 million yen
Purchases from affiliated companies
759,478 million yen
Non-operating transactions with affiliated companies
687,298 million yen

70(Notes to Unconsolidated Statement of Operations)1. Loss on impairment of assets、(Notes to Unconsolidated Statement of Operations)2. Sales to affiliated co2023/05/16 21:13:17 / 22961354_株式会社日立製作所_招集通知(Note to Unconsolidated Statement of Changes in Net Assets)
Matters related to Class and Number of Treasury Stock(Shares)Number of shares
At beginning of year Increase during year Decrease during year
At end of year
Common stock
998,72130,084,761
30,572,652
510,830
Summary of Reason for Change
The increase during this fiscal year by 30,084,761 shares is due to the repurchase of 29,983,800 shares of its own
common stock pursuant to Article 459, Paragraph 1 of the Companies Act of Japan and Article 32 of Hitachi's
Articles of Incorporation, which was approved at the Board of Directors meeting held on April 28, 2022, and theacquisition of 69,200 shares without consideration in accordance with the restricted stock compensation plan, andthe purchase of 31,761 shares from less-than-one unit shareholders at their request. The decrease during thisfiscal year by 30,572,652 shares is due to the cancellation of 30,488,800 shares of its treasury shares pursuant to
Article 178 of the Companies Act of Japan, and the disposition of 81,660 shares as a result of the exercise of stockacquisition rights, and the sale of 2,192 shares to less-than-one unit shareholders at their request.
Class(Note on Revenue Recognition)
Information about the basis to understand revenue is omitted as the same content is stated in ‘8. Accounting
standard for income and expenses’ under ‘Notes on Important Accounting Policy’ in the Notes on
Unconsolidated Financial Statements and ‘3. Accounting standard for income and expenses’ under ‘Notes on
Important Matters for Basis of Presentation of Consolidated Financial Statements’ in the Notes to Consolidated
Financial Statements.
Information about disaggregation of revenue and to understand the amount of revenue in the current and thefollowing fiscal years are omitted as the same content is stated in ‘Note on Revenue Recognition’ in the Notes
to Consolidated Financial Statements. Of the revenue recognized during the fiscal year ended on March 31,
2023, the amount of revenue recognized based on the pattern of the cost accrual arising from long-term project
was 390,496 million yen.
(Note on Accounting for Deferred Taxes)
The major causes of deferred tax assets are accrued pension liability and accrued bonuses to employees.
(Note on Leased Fixed Assets)
In addition to the capitalized fixed assets, as significant equipment, the Company utilizes cogeneration
facilities under lease arrangements.

71(Note to Unconsolidated Statement of Changes in Net Assets)、(Note on Revenue Recognition)、(Note on Accounting for Deferred Taxes)、(Note on Leased Fixed A

2023/05/16 21:13:17 / 22961354_株式会社日立製作所_招集通知(Note on Transactions with Related Parties)(Millions of yen)
Name of company
Attributeetc.
Hitachi Energy
Subsidiary
Finance Ltd% of voting
rights held

Relationship with therelated parties

Indirect: 100.0% Loans

Description oftransaction
Loan (Note 3)

Sale of the
Deposit received
Direct: 100.0% Company's products,(Note 4)etc.
Outsourcing of theCompany's softwaredevelopment,
Deposit received
outsourcing of
Subsidiary Hitachi Systems, Ltd. Direct: 100.0%(Note 4)maintenance of theCompany's
telecommunications
equipment *Manufacturing, sale
Hitachi Global Life
Deposit received
Subsidiary
Direct: 100.0% and maintenance of
Solutions, Inc.
(Note 4)
the Group's products *Outsourcing of theCompany's
Hitachi Solutions,
Deposit received
Subsidiary
Direct: 100.0% information systems
Ltd.
(Note 4)and softwaredevelopment *Subsidiary Hitachi Energy Ltd
Direct: 100.0% *Guarantee
Manufacturing, sale,
Hitachi Rail STS
engineering andSubsidiary
Indirect: 100.0%
Guarantee
S.p.A.
maintenance of theGroup's products, etc.
Hitachi America
Subsidiary
Indirect: 100.0% *Guarantee
Capital, Ltd.
Transfer of sharesof Hitachi Metals,
Hitachi Metals, Ltd. Direct:
Purchase of Hitachi
Subsidiary
53.4%
Ltd. (Note 1)(Note 1)
(Note 1)
Metals' products
Transfer priceProfits
Transfer of sharesof Hitachi
Hitachi Transport
Oursourcing of the
Direct:Transport System,
Affiliate System, Ltd.
39.9% Company's products(Note 2)
Ltd. (Note 2)(Note 2)transport and strage
Transfer priceProfits
Subsidiary

Hitachi High-Tech
Corporation

Transaction
Classification
amountLong-term loan
26,736
receivables

Year-endbalance
320,472

21,109Depositreceived

112,296

9,984

Depositreceived

74,676(23,945)

Depositreceived

71,2013,805

Depositreceived

61,591

528,104--

271,048--

93,471

-

-

-

-

-

-

382,042
328,648

221,983
210,653* The Company’s Directors, Executive Officers or employees concurrently hold position of directors or officers at thesubsidiary.
Notes: 1. Hitachi Metals, Ltd. changed its company name to Proterial, Ltd. on January 4, 2023. The Company
transferred all stocks of Hitachi Metals, Ltd. to Hitachi Metals, Ltd. in association with the acquisition oftreasury stock by itself on January 5, 2023. As a result, it is no longer a related party. The transfer price
was determined with due consideration to the valuation amount presented by an independent third party.
2. Hitachi Transport System, Ltd. changed its company name to LOGISTEED, Ltd. on April 1, 2023. The
Company transferred all stocks of Hitachi Transport System, Ltd. to Hitachi Transport System, Ltd. inassociation with the acquisition of treasury stock by itself on March 1, 2023. As a result, it is no longer a
related party. The transfer price was determined with due consideration to the valuation amount presented
by an independent third party.
3. The interest rate was determined with due consideration to market interest rates. The transaction amountof the loans indicates the change from the balance at the beginning of the fiscal year.
4. These are loans or deposits made based on the pooling system wherein the funds of affiliated companies
are concentrated at the Company to be loaned to affiliated companies who have financing needs. Theinterest rates on loans and deposits are determined with due consideration to market interest rates. The
transaction amount indicates the increase or decrease from the balance at the beginning of the fiscal year,
including interest received and paid.
(Note on Per Share Information)
Net assets per share
3,557.49 yen
Net income per share 1,041.20 yen

72(Note on Transactions with Related Parties)、(Note on Per Share Information)

2023/05/16 21:13:17 / 22961354_株式会社日立製作所_招集通知(Note on Major Subsequent Events)
Repurchase of Shares of Common Stock
The Board of Directors decided to repurchase shares of its own common stock pursuant to Article 459, Paragraph
1 of the Companies Act of Japan and Article 32 of the Company’s Articles of Incorporation, as follows.
(a) Reason for repurchase
The Company views the return of profits to shareholders through enhancing corporate value from mid- andlong-term perspective and paying dividends continuously as an important managerial issue. The Company has
decided to repurchase its own shares this time, taking into consideration its financial condition and the price ofits common stock as well as the progress of the review of the business portfolio.
(b) Outline of the Repurchase(i) Class of shares to be repurchased
Common stock of the Company(ii) Aggregate number of shares to be repurchased
Up to 20 million shares(2.13% of the number of outstanding shares (excluding treasury stocks))(iii) Aggregate amount of repurchase
Up to 100.0 billion yen(iv) Period of the repurchase
From April 28, 2023 to March 31, 2024(v) Method of repurchase
Expected open market purchase through the Tokyo Stock Exchange(Additional Information)
Transfer of subsidiary’s shares
On March 30, 2023, the Company entered into the following two agreements regarding the transfer of a part of theshares of Hitachi Astemo, Ltd. (hereinafter “Hitachi Astemo”), a consolidated subsidiary of the Company, to Hitachi
Astemo and Honda Motor Co. Ltd.(hereinafter “Honda”) and for inviting JIC Capital, Ltd. (hereinafter “JICC”) as a
new joint partner.
(i) Share Subscription Agreement with JICC-01 Limited Partnership (hereinafter “JICC-01”) managed by JICC-01
G.K., which is a wholly owned subsidiary of JICC including that Hitachi Astemo issues Class shares to JICC-01,
and Hitachi Astemo purchases a part of shares of its common shares held by the Company, using a portion of
the funds raised through the issuance of Class shares(ii) Agreement for investment in kind and share transfer with Honda including that Hitachi Astemo issues commonshares to Honda in exchange for Honda to invest the shares of Hitachi Astemo Electric Motor Systems, Ltd. inkind and the Company transfers a part of shares of Hitachi Astemo’s common shares to Honda.
The consideration is expected to be approximately 158.0 billion yen. Assuming the series of transactions based on
the agreements are settled, the Company plans to post an extraordinary gain of approximately 108.0 billion yen ingain on sale of affiliated companies' common stock in the unconsolidated statement of operations for the fiscal year
ending March 31, 2024 (from April 1, 2023 to March 31, 2024).

73(Note on Major Subsequent Events)、(Additional Information)

2023/05/16 21:13:17 / 22961354_株式会社日立製作所_招集通知(17) Transcript of Accounting Auditors’ Audit Report on Consolidated Financial Statements

Independent Auditor’s Report
May 10, 2023

Mr. Keiji Kojima, President & CEO
Hitachi, Ltd.
Ernst & Young ShinNihon LLC
Tokyo, Japan
Koji Fujima
Designated Engagement Partner
Certified Public Accountant
Yasuhiro Ozeki
Designated Engagement Partner
Certified Public Accountant
Shinya Yoshida
Designated Engagement Partner
Certified Public Accountant
OpinionPursuant to Article 444, paragraph 4 of the Companies Act, we have audited the accompanying consolidated
financial statements, which comprise the consolidated statement of financial position, the consolidated statement of
profit or loss, the consolidated statement of changes in equity, and the notes to the consolidated financial statementsof Hitachi, Ltd. and its consolidated subsidiaries (the Group) applicable to the fiscal year from April 1, 2022 to March
31, 2023.
In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, theconsolidated financial position and results of operations of the Group applicable to the fiscal year ended March 31,
2023, in accordance with International Financial Reporting Standards (IFRSs) (however, certain disclosures areomitted pursuant to the second sentence of Article 120-1 of the Regulations on Corporate Accounting).
Basis for Opinion
We conducted our audit in accordance with auditing standards generally accepted in Japan. Our
responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of theConsolidated Financial Statements section of our report. We are independent of the Group in accordance with the
ethical requirements that are relevant to our audit of the consolidated financial statements in Japan, and we havefulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence
we have obtained is sufficient and appropriate to provide a basis for our opinion.
Other Information
The other information comprises the information included in the Group’s business report and its
supplementary schedules. Management is responsible for preparation and disclosure of the other information. The
Audit Committee is responsible for overseeing the Group’s reporting process of the other information.
Our opinion on the consolidated financial statements does not cover the other information and we do not
express any form of assurance conclusion thereon.
In connection with our audit of the consolidated financial statements, our responsibility is to read the otherinformation and, in doing so, consider whether the other information is materially inconsistent with the consolidated
financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this otherinformation, we are required to report that fact.
We have nothing to report in this regard.

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2023/05/16 21:13:17 / 22961354_株式会社日立製作所_招集通知

Responsibilities of Management and the Audit Committee for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of these consolidated financial
statements in accordance with IFRSs (however, certain disclosures are omitted pursuant to the second sentence ofArticle 120-1 of the Regulations on Corporate Accounting) and for such internal control as management determines
is necessary to enable the preparation of consolidated financial statements that are free from material misstatement,
whether due to fraud or error.
In preparing the consolidated financial statements, management is responsible for assessing the Group’s
ability to continue as a going concern and disclosing, as required by IFRSs (however, certain disclosures are omitted
pursuant to the second sentence of Article 120-1 of the Regulations on Corporate Accounting), matters related togoing concern.
The Audit Committee is responsible for overseeing the Group’s financial reporting process.
Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as awhole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Misstatements can arise from fraud or error and are considered material if, individually or in theaggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis ofthese consolidated financial statements.
As part of an audit in accordance with auditing standards generally accepted in Japan, we exercise
professional judgment and maintain professional skepticism throughout the audit. We also:- Identify and assess the risks of material misstatement of the consolidated financial statements, whether
due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit
evidence that is sufficient and appropriate to provide a basis for our opinion.
- Consider internal control relevant to the audit in order to design audit procedures that are appropriate in
the circumstances for our risk assessments, while the purpose of the audit of the consolidated financial
statements is not expressing an opinion on the effectiveness of the Group’s internal control.
- Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimatesand related disclosures made by management.
- Conclude on the appropriateness of management’s use of the going concern basis of accounting and,based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions
that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that amaterial uncertainty exists, we are required to draw attention in our auditor’s report to the related
disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our
opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report.
However, future events or conditions may cause the Group to cease to continue as a going concern.
- Evaluate the overall presentation, structure and content of the consolidated financial statements, including
the disclosures, and whether the consolidated financial statements represent the underlying transactions
and events in a manner that achieves fair presentation in accordance with IFRSs (however, certain
disclosures are omitted pursuant to the second sentence of Article 120-1 of the Regulations on Corporate
Accounting).
- Obtain sufficient appropriate audit evidence regarding the financial information of the entities or businessactivities within the Group to express an opinion on the consolidated financial statements. We areresponsible for the direction, supervision and performance of the group audit. We remain solely
responsible for our audit opinion.
We communicate with the Audit Committee regarding, among other matters, the planned scope and timing of
the audit and significant audit findings, including any significant deficiencies in internal control that we identify during
our audit.
We also provide the Audit Committee with a statement that we have complied with the ethical requirements
regarding independence that are relevant to our audit of the consolidated financial statements in Japan, and tocommunicate with them all relationships and other matters that may reasonably be thought to bear on our
independence, and where applicable, related safeguards.

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2023/05/16 21:13:17 / 22961354_株式会社日立製作所_招集通知Interest Required to Be Disclosed by the Certified Public Accountants Act of Japan
Our firm and its designated engagement partners do not have any interest in the Group which is required tobe disclosed pursuant to the provisions of the Certified Public Accountants Act of Japan.
(Note)
This is an English translation of the Japanese language Independent Auditor’s Report issued by Ernst &Young ShinNihon LLC in connection with the audit of the consolidated financial statements of the Company,
prepared in Japanese, for the fiscal year ended March 31, 2023. Ernst & Young ShinNihon LLC has not audited theEnglish language version of the consolidated financial statements for the above-mentioned year.

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8. Transcript of Accounting Auditors’ Audit Report on Consolidated Financial Statements

2023/05/16 21:13:17 / 22961354_株式会社日立製作所_招集通知(18) Transcript of Accounting Auditors’ Audit Report on Unconsolidated Financial Statements

Independent Auditor’s Report
May 10, 2023

Mr. Keiji Kojima, President & CEO
Hitachi, Ltd.
Ernst & Young ShinNihon LLC
Tokyo, Japan
Koji Fujima
Designated Engagement Partner
Certified Public Accountant
Yasuhiro Ozeki
Designated Engagement Partner
Certified Public Accountant
Shinya Yoshida
Designated Engagement Partner
Certified Public Accountant

OpinionPursuant to Article 436, paragraph 2, item 1 of the Companies Act, we have audited the accompanying
financial statements, which comprise the balance sheet, the statement of operation, the statement of changes in net
assets, the notes to the financial statements, and its supplementary schedules of Hitachi, Ltd. (the Company)
applicable to the 154th fiscal year from April 1, 2022 to March 31, 2023.
In our opinion, the accompanying financial statements present fairly, in all material respects, the financial
position and results of operations of the Company applicable to the fiscal year ended March 31, 2023, in accordancewith accounting principles generally accepted in Japan.
Basis for Opinion
We conducted our audit in accordance with auditing standards generally accepted in Japan. Our
responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the
Financial Statements section of our report. We are independent of the Company in accordance with the ethicalrequirements that are relevant to our audit of the financial statements in Japan, and we have fulfilled our otherethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained
is sufficient and appropriate to provide a basis for our opinion.
Other Information
The other information comprises the information included in the Company’s business report and its
supplementary schedules. Management is responsible for preparation and disclosure of the other information. The
Audit Committee is responsible for overseeing the Company’s reporting process of the other information.
Our opinion on the financial statements does not cover the other information and we do not express any formof assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and,in doing so, consider whether the other information is materially inconsistent with the financial statements or our
knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this otherinformation, we are required to report that fact.
We have nothing to report in this regard.

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Responsibilities of Management and the Audit Committee for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements inaccordance with accounting principles generally accepted in Japan, and for such internal control as management
determines is necessary to enable the preparation of financial statements that are free from material misstatement,
whether due to fraud or error.
In preparing the financial statements, management is responsible for assessing the Company’s ability tocontinue as a going concern and disclosing, as required by accounting principles generally accepted in Japan,
matters related to going concern.
The Audit Committee is responsible for overseeing the Company’s financial reporting process.
Auditor’s Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole arefree from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes ouropinion. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate,
they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial
statements.
As part of an audit in accordance with auditing standards generally accepted in Japan, we exercise
professional judgment and maintain professional skepticism throughout the audit. We also:- Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or
error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is
sufficient and appropriate to provide a basis for our opinion.
- Consider internal control relevant to the audit in order to design audit procedures that are appropriate in
the circumstances for our risk assessments, while the purpose of the audit of the financial statements is
not expressing an opinion on the effectiveness of the Company’s internal control.
- Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimatesand related disclosures made by management.
- Conclude on the appropriateness of management’s use of the going concern basis of accounting and,based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions
that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude
that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related
disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our
conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However,
future events or conditions may cause the Company to cease to continue as a going concern.
- Evaluate the overall presentation, structure and content of the financial statements, including thedisclosures, and whether the financial statements represent the underlying transactions and events in amanner that achieves fair presentation in accordance with accounting principles generally accepted inJapan.
We communicate with the Audit Committee regarding, among other matters, the planned scope and timing of
the audit and significant audit findings, including any significant deficiencies in internal control that we identify during
our audit.
We also provide the Audit Committee with a statement that we have complied with the ethical requirements
regarding independence that are relevant to our audit of the financial statements in Japan, and to communicate withthem all relationships and other matters that may reasonably be thought to bear on our independence, and whereapplicable, related safeguards.
Interest Required to Be Disclosed by the Certified Public Accountants Act of Japan
Our firm and its designated engagement partners do not have any interest in the Company which is required
to be disclosed pursuant to the provisions of the Certified Public Accountants Act of Japan.
(Note)
This is an English translation of the Japanese language Independent Auditor’s Report issued by Ernst &Young ShinNihon LLC in connection with the audit of the unconsolidated financial statements of the Company,
prepared in Japanese, for the fiscal year ended March 31, 2023. Ernst & Young ShinNihon LLC has not audited theEnglish language version of the unconsolidated financial statements for the above-mentioned year.

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6. Transcript of Accounting Auditors’ Audit Report on Unconsolidated Financial Statements

2023/05/16 21:13:17 / 22961354_株式会社日立製作所_招集通知(19) Transcript of Audit Committee’s Audit Report
AUDIT REPORT
We, the Audit Committee of the Company, audited the performance by Directors and Executive Officers of theirduties during the 154th business term (from April 1, 2022 to March 31, 2023). We hereby report as follows on the method
and results thereof:
1. Method of Audit
1) We received periodical reports, obtained required explanations, and clarified opinions regarding the state of
implementation and operation of the contents of the resolutions of the Board of Directors concerning the matters aslisted in Article 416, Paragraph 1, Item 1 (ro) and (ho) of the Companies Act, and the status of the systems (internal
control systems) established thereunder.
2) In accordance with the audit policy, assignment of audit duties, etc., as determined by the Audit Committee, and, in
collaboration with the relevant departments, we attended important meetings, received reports or heard from the
Directors, Executive Officers, etc. on matters concerning the execution of their duties, requested explanations asnecessary, inspected important decision documents, etc., and made investigation into the state of activities andproperty at the head office and principal business offices of the Company.
3) As regards subsidiaries, we sought to communicate and exchange information with the Directors, Executive Officers,
Auditors, and others of the subsidiaries, received reports on their business operations, requested explanations asnecessary, and conduct interviews and other tasks for their Head Offices and principal business offices by visiting tothe offices or using the Internet, etc.
4) We examined the contents of the fundamental policy on the conduct of persons influencing decision on the
Company’s financial and business policies set forth in the business report giving due consideration to such things as
the circumstances of deliberations by the Board of Directors and others.
5) Further, we monitored and examined whether the Accounting Auditors maintained their independence andperformed their auditing duties adequately, as well as received reports from the Accounting Auditors on theperformance status of their duties and requested explanations as necessary.
6) We also received a notice from the Accounting Auditors to the effect that “structures for ensuring that duties areappropriately performed” (matters stipulated in each item under Article 131 of the Regulations of Companies’
Financial Statements) were being developed pursuant to the “Quality Management Standards for
Auditing” (Business Accounting Council, October 28, 2005) and requested explanations as necessary.
We examined the business report and its supplementary schedules, the unconsolidated financial statements(the unconsolidated balance sheet, the unconsolidated statement of operations, the unconsolidated statement ofchanges in net assets, and the notes to unconsolidated financial statements) and their supplementary schedules, aswell as consolidated financial statements (the consolidated statements of financial position, the consolidated statements
of profit or loss, the consolidated statement of changes in equity, and the notes to consolidated financial statements) for
this business term in accordance with the foregoing method.
2. Results of Audit(1) Results of Audit on Business Report etc.
We are of the opinion:
1) that the business report and its supplementary schedules fairly present the state of the Company in accordance withthe laws, regulations and the Articles of Incorporation;2) that, in connection with the performance by Directors and Executive Officers of their duties, no dishonest act ormaterial fact of violation of laws, regulations or the Articles of Incorporation exists;
3) that the contents of the resolution by the Board of Directors concerning internal control systems are appropriate.
Further, there is nothing to note with respect to the performance by Directors and Executive Officers of their duties
and description of the business report related to said internal control systems;4) that the fundamental policy on the conduct of persons influencing decision on the Company’s financial and business
policies set forth in the business report are appropriate.
(2) Results of Audit on Unconsolidated Financial Statements and Their Supplementary Schedules
We are of the opinion that the method and results of the audit made by the Company’s Accounting Auditors,
Ernst & Young ShinNihon LLC are appropriate.
(3) Results of Audit on Consolidated Financial Statements
We are of the opinion that the method and results of the audit made by the Company’s Accounting Auditors,
Ernst & Young ShinNihon LLC are appropriate.
May 12, 2023
Audit Committee, Hitachi, Ltd.
Hiroaki Yoshihara
Hideaki Seki (Standing)
Katsumi Ihara
Ikuro Sugawara
Helmuth Ludwig
Note: Messrs. Katsumi Ihara, Ikuro Sugawara, Hiroaki Yoshihara and Helmuth Ludwig are outside Directors pursuant to Article 2, Item
15 and Article 400, Paragraph 3 of the Companies Act.

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7. Transcript of Audit Committee’s Audit Report on Unconsolidated Financial Statements