2022/05/21 9:11:10 / 21846856_株式会社日立製作所_招集通知(Securities Identification Code : 6501)[Translation]

THE

153

rd

Notice of Annual
General Meetingof Shareholders
Date and Time

： Wednesday, June 22, 2022

Location：at 10:00 a.m.

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

Matters to Be
Resolved： Item 1

Partial Amendment to the Articles ofIncorporation (i)Item 2

Partial Amendment to the Articles ofIncorporation (ii)
Item 3

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

Note: This English translation incorporates, from page 52 to page 83, the materials that are provided to theshareholders for their review by posting on the Company’s website pursuant to the provisions of the Articles
of Incorporation of the Company and the relevant laws and regulations.

From the standpoint of preventing the spread of
COVID-19,
safeguarding
andsecuring
theshareholders, we request the exercise of voting rights
in advance in writing or via the internet as much as
possible and refraining from visiting the Annual
General Meeting of Shareholders on the day.

Cover2022/05/21 9:11:10 / 21846856_株式会社日立製作所_招集通知

Dear Shareholders:June 1, 2022

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 153rd Annual General Meeting of Shareholders

The 153rd Annual General Meeting of Shareholders of Hitachi, Ltd. is to be held as follows:

Date and Time

Location

Wednesday, June 22, 2022 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 153rd Business Term (from April 1, 2021 to March 31, 2022),

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 1 Partial Amendment to the Articles of Incorporation (i)Item 2 Partial Amendment to the Articles of Incorporation (ii)
Item 3 Election of 12 Directors due to expiration of the term of office of all Directors● The following materials or items are provided to the shareholders for their review by posting on the Company’s website pursuant to the provisions of the Articles ofIncorporation of the Company and the relevant laws and regulations:(a) “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” and "Information on the stockacquisition rights, etc." in the Business Report, (b) "Consolidated Statements of Changes in Equity" and "Notes to Consolidated Financial Statements" of theConsolidated Financial Statements, (c) "Unconsolidated Statement of Changes in Net Assets" and "Notes to Unconsolidated Financial Statements" of the
Unconsolidated Financial Statements, and (d) Transcript of Accounting Auditors’ Audit Report on Consolidated Financial Statements.
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.
● This notice is also posted on the Company’s website.
● In the event the Business Report, Financial Statements, Consolidated Financial Statements or Reference Documentation for the Annual General Meeting of
Shareholders need to be modified in the period from the dispatch of this notice to the preceding day of the Annual General Meeting, the Company will post suchmodification on its website as below.

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

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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 22, 2022

*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/153/
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: From Monday to Friday, between 9:00 a.m. and 5:00 p.m.)

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 15, 2022
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

2022/05/21 9:11:10 / 21846856_株式会社日立製作所_招集通知

Reference Documentation
The first item

Partial Amendment to the Articles of Incorporation (i)1. Reasons for proposal
The Company proposes to make following amendments to its Articles of Incorporation, due to the amendment
provision of "Act for Partial Amendment of the Companies Act" (Act No.70 of 2019) are to be enforced on September 1,
2022, in preparation for the introduction of the system for providing reference documents for the General Meeting of
Shareholders, etc. in electronic format (See the next page for the detailed information.)（1） The current Article 13 (Website disclosure of reference documents for the General Meeting of Shareholders, etc.)
shall be deleted since it will become unnecessary.
（2） The new Article 13 (Electronic provision, etc.) which provides following provisions shall be established:i) The Company will provide reference documents for the General Meeting of Shareholders, etc. in electronic format;ii) As provided in the applicable laws, the Company may limit the scope of the matters to be stated in the paper-based
documents to be delivered to shareholders who request it.
（3） Due to the deletion and establishment as above, supplementary provisions regarding the effective date, etc. shall beestablished.
2. Details of amendments(Underline indicates the amendments.)
Current Articles of Incorporation

Amendments to the Articles of Incorporation

Article 13. (Website disclosure of reference
documents for the General Meeting of
Shareholders, etc.)
As provided in the applicable laws, it isdeemed that the Company provided reference
documents for the General Meeting of
Shareholders,financialstatements
andconsolidated financial statements (including audit
report and Accounting Auditor's report for those
consolidated financial statements), as well asother information required to be included orpresented in the business report of the Company
to its shareholders by posting them on its website
on the Internet.

(deleted)(newly established)(newly established)

Article 13. (Electronic provision, etc.)
In convening the General Meetings of Shareholders, theCompany shall take measures for electronic provision of
information that constitutes the contents of reference documents
for the General Meeting of Shareholders, etc. as provided in
Article 325-2 of the Companies Act.
Among the matters to be provided electronically, theCompany may not include all or part of those matters as provided
in the Ordinance of the Ministry of Justice in paper-based
documents to be delivered to shareholders who requested thedelivery of materials in paper-based format by the record date forthe purpose of the General Meeting of Shareholders as provided
in Article 325-5 of the Companies Act.
Supplementary Provisions
Article 3. (Transitional measure regarding electronic provision ofreference documents for the General Meeting of Shareholders,etc.)
The deletion of Article 13 (Website disclosure of reference
documents for the General Meeting of Shareholders, etc.) andthe establishment of Article 13 (Electronic provision, etc.) shallcome into effect on September 1, 2022, the date of enforcement
as provided in the proviso of Article 1 of supplemental provisionof the "Act for Partial Amendment of the Companies Act" (ActNo.70 of 2019) (hereinafter the "Date of Enforcement").
Notwithstanding the provision of the preceding paragraph,
Article 13 (Website disclosure of reference documents for the
General Meeting of Shareholders, etc.) shall remain effective
regarding any General Meeting of Shareholders held on a datewithin six months from the Date of Enforcement.
This Article shall be deleted on the later date of the two dates: theday when six months passed since the Date of Enforcement or
the day when three months passed since the date of General
Meeting of Shareholders mentioned in the preceding paragraph.

3

item1

2022/05/21 9:11:10 / 21846856_株式会社日立製作所_招集通知[Reference] System for Providing General Meeting of Shareholders
Materials in Electronic Format● From March 2023, shareholders are to confirm the materials for General Meeting of
Shareholders (Reference Documentation, Business Report, Audit Reports,
Financial Statements and Consolidated Financial Statements (collectively called“Reference Documents, etc.”) on the Company’s website.
Image Diagram (As of June 2022)
Shareholders
GeneralMeeting of
Shareholders
so farHitachi, Ltd.

Convocation
NoticeReference
Documents, etc.

Confirm on paper

Voting Form

Mail

Shareholders

Hitachi, Ltd.

Convocation
NoticeFrom General
Meeting of
Shareholders
held in March
2023

Reference
Documents, etc.

URL of theCompany's
websiteConfirm on the website

Voting Form

Mail

Shareholders who want to receive paper-based materials, such as in case of having difficultyin using the internet, can request it from September 1, 2022.

Contact
Information(Japanese Only)

Tokyo Securities Transfer Agent Co., Ltd.

0120-79-9001 Weekdays from 9 a.m. to 5 p.m.

Please refer to the following Q&A website.
https://www.tosyodai.co.jp/company_law/question/index.html#qa

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2022/05/21 9:11:10 / 21846856_株式会社日立製作所_招集通知

The second item

Partial Amendment to the Articles of Incorporation (ii)

1. Reasons for proposal“The Act for Partially Amending the Industrial Competitiveness Enhancement Act and Other Related Acts” (Act No.70 of2021) has allowed listed companies to hold a general meeting of shareholders without specifying its venue (so-called “virtual-only
shareholders’ meeting”) under certain conditions, if such is defined in their Articles of Incorporation.
Accordingly, the Company proposes to make following partial amendments to its Articles of Incorporation so that theGeneral Meeting of Shareholders may be held without specifying its venue when the Board of Directors of the Company decides
that, in light of the interests of shareholders as well, it is not appropriate to hold the General Meeting of Shareholders with a
specified venue in situations including the spread of infectious diseases such as COVID-19 or the occurrence of large-scaledisasters such as natural disasters.
This partial amendment to the Articles of Incorporation shall come into effect on the conditions that the Company obtains
the confirmation from the Minister of Economy, Trade and Industry and the Minister of Justice on the day the Company obtains theconfirmation.
2. Details of amendments(Underline indicates the amendments.)
Current Articles of Incorporation(newly established)(newly established)

Amendments to the Articles of Incorporation
Article. 16 (General Meeting of Shareholders without Specifying its
Venue)The Company may hold the General Meeting of Shareholders
without specifying its venue when the Board of Directors of theCompany decides that it is not appropriate in light of the interests ofshareholders as well, to hold a General Meeting of Shareholders witha specified venue, in situations including the spread of infectious
diseases or the occurrence of large-scale disasters such as natural
disasters.
Supplementary Provisions
Article 4 (Transitional measure regarding General Meeting of
Shareholders without Specifying its Venue)
The establishment of Article 16 (General Meeting of
Shareholders without Specifying its Venue) shall come into effect on
the conditions that the Company obtains the confirmation from the
Minister of Economy, Trade and Industry and the Minister of Justiceas provided in Article 66, paragraph 1 of the Act on Strengthening
Industrial Competitiveness on the day the Company obtains theconfirmation.
This Article shall be deleted on the effective date of Article 16(General Meeting of Shareholders without Specifying its Venue).

In association with the establishment of Article 16, article numbers from 16 will move down one position, respectively.

5

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2022/05/21 9:11:10 / 21846856_株式会社日立製作所_招集通知

The third item

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

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

1

Katsumi Ihara

RE

OD

ID

Independent Director■ 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

NEW

OD

ID

ー

5

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■ Audit Committee ■ Compensation Committee

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

Hideaki Seki

RE

Director■ Audit Committee

12

Toshiaki Higashihara

RE

Executive Chairman, Representative Executive Officer and Director■ Nominating Committee

Current Position and Responsibilities at the Company

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 listed

6

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■ Audit Committee (Chair)

2022/05/21 9:11:10 / 21846856_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
Member of Audit Committee
Member of Compensation Committee

Four years

1,100

ID

Brief Biography
5/19816/2005

Attendance for Fiscal 2021
Board of Directors meetings
9 out of 9 days (100%)
Audit Committee
15 out of 15 days (100%)Compensation Committee
5 out of 5 days (100%)

4/20096/20096/20106/20114/20156/20166/2018Joined 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)

Other Principal Positions Held
Outside Director, Benesse Holdings, Inc.
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.

No

2

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

One year 11 months

300

ID

Brief Biography
7/19991/20044/2011

Attendance for Fiscal 2021
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 (currently in office)Director, Hitachi, Ltd. (currently in office)

Other Principal Positions Held
Venture Partner, Unitus Ventures LLC. (India)
Special Representative for Young People & Innovation, UNICEF
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 .

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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

Nine years

1,500

ID

Brief Biography
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)Attendance for Fiscal 2021
Board of Directors meetings
9 out of 9 days (100%)
Nominating Committee
10 out of 10 days (100%)

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(Date of Birth: Mar. 6, 1957)

NEW

OD

Position and Responsibilities at the Company

Term of office as Independent Director

Share Ownership

ー

ー

0

ID

Brief Biography
4/19817/20109/20126/20137/20158/2017

Joined 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)

Other Principal Positions Held
Outside Director, Toyota Motor 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.

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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

Four years

1,100

ID

Brief Biography

Attendance for Fiscal 2021
Board of Directors meetings
9 out of 9 days (100%)Compensation Committee
4 out of 4 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 the executionof 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

Seven years

1,100

ID

Brief Biography

Attendance for Fiscal 2021
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) (currently in office)

Other Principal Positions Held
Executive Vice President and Senior Advisor, PayPal Holdings, Inc. (USA)
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.

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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
Member of Audit Committee
Member of Compensation Committee

Six years

12,600ID

Brief Biography

Attendance for Fiscal 2021
Board of Directors meetings
9 out of 9 days (100%)
Audit Committee
15 out of 15 days (100%)Compensation Committee
5 out of 5 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)

Eight years

2,900

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 2021
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.

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2022/05/21 9:11:10 / 21846856_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

One year 11 months

2,700

ID

Brief Biography

Attendance for Fiscal 2021

6/20018/20028/2007
10/2010
10/2011
10/2014

Board of Directors meetings
9 out of 9 days (100%)

10/2016
1/2020

Audit Committee
9 out of 9 days (100%)

7/2020President, 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

67,700RE

Brief Biography

Attendance for Fiscal 2021
Board of Directors meetings
7 out of 7 days (100%)Compensation Committee
4 out of 4 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.

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2022/05/21 9:11:10 / 21846856_株式会社日立製作所_招集通知No11

Hideaki Seki

(Date of Birth: Mar. 10, 1957)

Position and Responsibilities at the Company

Share Ownership

Director
Member of Audit Committee

12,000RE

Brief Biography

Attendance for Fiscal 2021
Board of Directors meetings
9 out of 9 days (100%)
Audit Committee
15 out of 15 days (100%)

4/19794/20114/20134/20144/20154/20164/20184/20207/2020Joined Hitachi, Ltd.
Board Director, Hitachi Automotive Systems, Ltd.
Vice President, Board Director, Hitachi Automotive Systems, Ltd.
Executive Vice President, Board Director, Hitachi Automotive Systems, Ltd.
President & COO, Representative Director, Hitachi Automotive Systems, Ltd.
President & CEO, Representative Director, Hitachi Automotive Systems, Ltd. (Retired in March, 2018)
Senior Vice President and Executive Officer, Hitachi, Ltd.
President, Representative Director, Hitachi Building Systems Co., Ltd. (Retired in March, 2020)
Associate, Hitachi, Ltd.
Director, Hitachi, Ltd. (currently in office)Reason for selection as Director nominee and his expected roles
Mr. Seki has rich experience and a proven performance record, having been engaged in business management in
the fields of Elevator & Escalator Business and Automotive Systems Business, both at the Company and at Group
companies, as well as in the promotion of the global development of the businesses. Mr. Seki was selected as adirector nominee, since he was expected to reinforce the supervisory functions of the Company's Board of Directors
by supervising the execution of duties by Executive Officers and others based on his rich experience and a provenperformance 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

175,700

RE

Brief Biography

Attendance for Fiscal 2021
Board of Directors meetings
9 out of 9 days (100%)
Nominating Committee
8 out of 8 days (100%)Compensation Committee
1 out of 1 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.

12

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2022/05/21 9:11:10 / 21846856_株式会社日立製作所_招集通知

Notes:
1.

2.

3.

4.
5.

6.

7.

8.
9.

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.
The Company maintains a limited liability agreement (hereinafter referred to as “Agreement”) with Messrs. Katsumi Ihara, Ravi
Venkatesan, Joe Harlan, Takatoshi Yamamoto, Hiroaki Yoshihara, Helmuth Ludwig and Hideaki Seki 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. Ikuro Sugawara is elected as a director, the Company will newly enter into the same agreement with him.
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. Ikuro Sugawara as an insured personwith an insurance company. The content of the Insurance Agreement is stated in page 37. Upon the approval of director
election, each director other than Mr. Ikuro Sugawara will continue to be and he will be newly an insured person of the insurance
agreement. The Company plans to renew the agreement with the same terms and conditions during the tenure of each director.
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.
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, Hideaki Seki
Compensation Committee :Takatoshi Yamamoto (Chair), Katsumi Ihara, Joe Harlan, Keiji Kojima
The Company has no transactions with Unitus Ventures LLC., where Mr. Ravi Venkatesan is currently serving as VenturePartner, with UNICEF, where Mr. Ravi Venkatesan is currently serving as Special Representative for Young People &Innovation, with PayPal Holdings, Inc., where Ms. Louise Pentland is currently serving as Executive Vice President and Senior
Advisor, 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.
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 Sony Financial Holdings Inc. (including its operating companies such as Sony InsuranceCo., Ltd.), where Mr. Katsumi Ihara had served as Chairman and Director (retired in June 2017), The Dow Chemical Company(currently Dow Inc., etc.), where Mr. Joe Harlan had served as Vice Chairman and Chief Commercial Officer (retired in August2017) and Siemens AG, where Mr. Helmuth Ludwig had served as Chief Information Officer (retired in December 2019).
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.
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.

13

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2022/05/21 9:11:10 / 21846856_株式会社日立製作所_招集通知(Reference) Matters considered by the Nominating Committee in nominating a director candidate
Size of the Board
Given the need for diversity of the Board views and efficiency of the Board, the number of directors shall be no morethan 20.
The Nominating Committee shall consider the optimal size of the Board following the policy described above in deciding
the matters relating to a proposal concerning election and removal of directors to be submitted to the General Meetingof Shareholders.
Composition of the Board
In nominating a director candidate, the Nominating Committee shall consider:
1. diversity in the experience and expertise, etc. possessed by the director candidates, the composition ratio between
independent directors and other directors (directors concurrently serving as executive officers and non-executive
directors from within the Hitachi Group), and other such matters in order to ensure the effectiveness of the
management supervision and decision-making functions of the Board;
2. that to maintain the continuity of the Board, new candidates do not constitute all or almost all of the nominees; and3. the period of time since the candidate's assumption of office as the Company's director and the candidate's age tokeep bringing fresh ideas and viewpoints regularly to the Board.
In principle, a person will not be nominated as a director candidate after his or her 75th birthday. However, in special
circumstances, a person over 75 years old may be nominated as a director candidate if the Nominating Committee
approves. Also, in principle, the Nominating Committee will not nominate a person as an independent director candidate
if a person has reached 10 years of total tenure. However, in special circumstances, a person with the total tenure of 10
years or more may be nominated as an independent director candidate, but even in this case, a person with the total
tenure of 12 years or more can no longer be nominated as an independent director candidate.
Qualification for Directors
In nominating a director candidate, the Nominating Committee shall consider that:
1. such nominee has the highest personal and professional ethics, integrity and insight; and2. such independent director nominee has distinguished records of leadership or experience at policy making levels inbusiness, law, administration, accounting or education, etc., in addition to satisfying the criteria for independency asprovided in this Guideline.
Criteria for Independency of Directors
The Nominating Committee considers director to be independent unless:
1. his or her immediate family member* is, or has been within the last three years, a director or an executive officer of
the Company or any of its subsidiaries;
2. he or she is currently an executive director, an executive officer or an employee of a company that has madepayments to, or received payments from, the Company for property or services in an amount which, in any of the last
three fiscal years, exceeds 2% of any of the companies' consolidated gross revenues;
3. he or she has received during any of the last three fiscal years more than 10 million yen in direct compensation for
his or her service as a specialist in law, accounting or tax, or as a consultant from the Company, other than director
compensations; or
4. he or she serves as an executive officer or director of a not-for-profit organization, and the Company's discretionary
charitable contributions to the organization in any of the last three fiscal years are more than 10 million yen and 2% ofthat organization's annual gross revenues.
* An "immediate family member" includes a person's spouse, parents, children, siblings, grand-parents, grand-children,
mothers and fathers-in-law, sons and daughters-in-law, spouses of siblings, grand-parents-in-law, grand-children-inlaw, and brothers and sisters-in-law.
Source: Corporate Governance Guidelines of Hitachi, Ltd. (Article 2 to 5)
https://www.hitachi.com/IR-e/corporate/governance/guidelines.html

14

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2022/05/21 9:11:10 / 21846856_株式会社日立製作所_招集通知

Business Report (from April 1, 2021 to March 31, 2022)(1) Business Overview and Results of Hitachi Group
Business Results
The Hitachi Group secured revenues of 10,264.6 billion yen and adjusted operating income of 738.2 billion yen,mainly due to business portfolio reforms, despite the severe business environment owing from semiconductor shortage,
soaring materials prices and the effect of COVID-19. Earnings before interest and taxes (EBIT) was 850.9 billion yen, andnet income attributable to Hitachi, Ltd. stockholders was 583.4 billion yen, a new record high for the second consecutive
year.
Regarding funds, 729.9 billion yen in operating cash flow was secured, and the cash flow margin from operating
activities (ratio of cash flows from operating activities to revenues) was 7.1%.
As the Hitachi Group has established a stable foundation that enables itself to maintain the profitability andability to generate cash even under the difficult business environment, the Group increased the amount of its annual
dividend 20 yen to 125 yen (with an interim dividend of 60 yen and a year-end dividend of 65 yen).
Measures Taken and Aims
In the current fiscal year, as the final year of the "2021 Mid-Term Management Plan," which aims to become a global
leader in the Social Innovation Business, Hitachi mainly undertake the following initiatives. Through these, Hitachi hasestablished a foundation for growth under its next mid-term management plan, "2024 Mid-Term Management Plan."‒ Business portfolio reform for the acceleration of the digital transformation (DX) of social infrastructure
GlobalLogic Inc., which was acquired in July last year, has started various collaborative creation initiatives using
facilities such as the newly opened “Lumada Innovation Hub Tokyo.” Taking advantage of its high-level digital engineering
capabilities and rich customer base, GlobalLogic is accelerating the global expansion of the Lumada business. In addition,in the power grid business, Hitachi, centered Hitachi Energy (former Hitachi ABB Power Grids Ltd), has been expanding
aggressively its business to realize sustainable energy. Further, in the railway systems business, Hitachi decided to acquire
the Grand Transportation Systems business of Thales S.A. to strengthen its railway systems and solutions using digitaltechnologies.
On the other hand, with the decision to partially transfer the shares of Hitachi Construction Machinery, all publicly
listed parent-subsidiary relationships in the Hitachi Group will be dissolved.
Through the 2021 Mid-term Management Plan, Hitachi's business portfolio reform has been promoted, andHitachi has strengthened the foundation for the continued growth of the Social Innovation Business.
‒ Communicate measures in the environmental field
Hitachi participated in COP26* held in November last year in Glasgow,
UK, as a Principal Partner, becoming the first Japanese company to participate
in the conference in this capacity. At this conference, Hitachi showcased its
climate change initiatives for the world by setting up the Hitachi booth where it
introduced initiatives to solve social issues using data, holding an event jointlywith the UK government and other activities.
Hitachi will continue to lead the decarbonization of the world and play
an innovative role in the domain of climate change.
*COP26: The 26th UN Climate Change Conference of the Parties
Hitachi's booth at COP26

15

Business Results

2022/05/21 9:11:10 / 21846856_株式会社日立製作所_招集通知

Consolidated Financial Results for Fiscal 2021 (Billions of yen)

Revenues

10,264.6

Year over year

118%

738.2

Year over year

149%

Adjusted operating income(Adjusted operating income ratio)

(

7.2%)

Earnings before interest andtaxes (EBIT)

850.9

Year over year

100%

Net income attributable to
Hitachi, Ltd. Stockholders

583.4

Year over year

116%

Year over year

+1.3

Return on invested capital(ROIC)
Notes: 1.
2.
3.
4.

7.7%

The consolidated financial statements of the Company have been prepared in conformity with the International Financial Reporting Standards (IFRS).
"Adjusted operating income" is presented as revenues less cost of sales as well as selling, general and administrative expenses.
"EBIT" is presented as income from continuing operations, before income taxes less interest income plus interest charges.
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

OthersHitachi Metals(Billions of yen)456.3 (4%)*

IT

942.7 (9%)*

2,153.6 (20%)*

Hitachi Construction Machinery

1,024.9 (9%)*

Revenues
Total

Automotive Systems

1,597.7 (15%)*

10,264.6

Energy1,447.9 (13%)*
Industry

900.7 (8%)*
Smart Life

Mobility

1,029.4 (9%)*

1,425.7 (13%)** Percentage to total revenues
Note: Revenues by segment include intersegment transactions.

16

Business Results

2022/05/21 9:11:10 / 21846856_株式会社日立製作所_招集通知

Results by Segment (Billions of yen)IT
The IT sector provides advanced digital solutions to create value fromdata using AI, IoT and other digital technologies through the Lumada
Business with the goal of achieving digital transformation (DX).

Revenues
Adjusted
operatingincomeEBIT
ROIC

2,153.6 billion yen

Revenues increased mainly due to an increase in Lumada businessand effect of the acquisition of GlobalLogic.

105% of the preceding fiscal year

Adjusted operating income was at the same level as the preceding
fiscal year mainly due to acquisition-related amortization and tentative
costs, despite an increase in revenues.

268.1 billion yen
100% of the preceding fiscal year

240.6 billion yen

Same as above

98% of the preceding fiscal year

12.6%
Decrease of 5.2 points
from the preceding fiscal year

[Measures Taken]
The IT sector responded to an increase in demand for DX
caused by the COVID-19 pandemic by providing digitalsolutions to the challenges faced by customers in thefinancial and social fields. This sector also contributed tothe creation of environmental value through initiatives
including efforts to achieve carbon neutrality at theCompany's business sites and support customers'
introduction of renewable energy. Further, this sector
established a foundation for the global development of theLumada Business by combining the digital engineering of
GlobalLogic Inc., which Hitachi acquired, and Hitachi’s
strengths such as highly reliable system integration.

17

IT

Co-creation project with GlobalLogic
at Lumada Innovation Hub Tokyo2022/05/21 9:11:10 / 21846856_株式会社日立製作所_招集通知

EnergyThe Energy sector operates power grids, clean energy businesses
and other businesses that include digital technologies and provides
energy solutions and other services contributing to the creation of acarbon-neutral society by initiating the development of advanced
services for the stable supply of energy such as EFaaS*.

*EFaaS: Energy & Facility Management as a Service. Services providing comprehensive support for the efficient operation and management of energy-related facilities.

Revenues
Adjusted
operatingincomeEBIT
ROIC

1,447.9 billion yen

Revenues increased mainly due to effect of the acquisition of ABB's
Power Grids business.

131% of the preceding fiscal year

18.1 billion yen

Adjusted operating income improved mainly due to an increase inrevenues, despite acquisition-related amortization.

Improved of 65.8 billion yen
from the preceding fiscal year

26.6 billion yen

EBIT improved mainly due to an increase in adjusted operating
income.

Improved by 82.1 billion yen
from the preceding fiscal year

1.3%
Increase of 4.0 points
from the preceding fiscal year

[Measures Taken]
The Energy sector contributed to the stable supply ofenergy, efficient equipment management, the reduction of
CO2 emissions and the realization of a decarbonizedsociety by providing energy solutions through collaborative
creation with its customers and partners throughleveraging its strengths in OT x IT x Products. To achieve
the SDGs, this sector propelled the Social Innovation
Business that is needed in every region, including thedevelopment of new solutions through the utilization ofHigh-Voltage Direct Current (HVDC) AC/DC converter (Hida
Converter Station of Chubu Electric Power Grid Co., Inc.)

digital technologies and increased resilience, by
combining the global competitiveness of Hitachi Energy
and the technologies and knowledge of Hitachi.

18

Energy2022/05/21 9:11:10 / 21846856_株式会社日立製作所_招集通知

Industry
The Industry sector provides industrial and distribution solutions
to achieve total optimization using robotics SI, etc. and water andenvironmental solutions to enable water resource circulation andincrease the efficiency of facilities with an aim to be the bestsolution partner for customers in industrial businesses.

Revenues
Adjusted
operatingincomeEBIT
ROIC

900.7 billion yen

Revenues increased mainly due to market recovery.

109% of the preceding fiscal year
Adjusted operating income increased mainly due to an increase inrevenues and improvement of profitability as a result of cost
reduction, etc.

82.2 billion yen
181% of the preceding fiscal year

79.4 billion yen

EBIT increased mainly due to an increase in adjusted operating
income.

188% of the preceding fiscal year

9.8%
Increase of 3.7 points
from the preceding fiscal year

[Measures Taken]
The Industry sector developed industrial equipment and
OT/IT solution businesses for industrial fields. The sector
enhanced and expanded to offer its total seamlesssolutions* for management, workplaces and supply chainsby using Lumada to digitally connect cyberspace and thephysical world. This sector has also accelerated its global
development, with JR Automation, the U.S. company
conducting robotics system integration (SI) business, etc.
Robotics SI business of JR Automation*Solutions to achieve the comprehensive optimization byconnecting the gaps among each operation, and eachcompany

19

Industry2022/05/21 9:11:10 / 21846856_株式会社日立製作所_招集通知

Mobility
The Mobility sector provides safe, secure, comfortable andenvironmentally friendly building systems and railway systems. It
develops smart building solutions to achieve centralized building
management using digital technologies and railway operation
solutions using MaaS* and other services.

*MaaS: Mobility as a Service. An all-inclusive service including searches, reservations, payment, etc. through the optimal combination of multiple public transportation andmobility services.

Revenues
Adjusted
operatingincomeEBIT
ROIC

Revenues increased mainly due to an increase in building systems
business as a result of expansion of Chinese business and foreignexchange impact and in railway systems business as a result of
project ramp-up and foreign exchange impact.

1,425.7 billion yen
119% of the preceding fiscal year

87.4 billion yen

Adjusted operating income increased mainly due to an increase inrevenues.

117% of the preceding fiscal year

EBIT decreased due to a decrease of profit owing from decreased
sales volume of Agility Trains East stocks as compared with thepreceding fiscal year, despite increased adjusted operating income.

113.6 billion yen
88% of the preceding fiscal year

8.4%
Decrease of 0.5 points
from the preceding fiscal year

[Measures Taken]
In the building systems business, Hitachi provided highquality products and services with analyses of building
equipment operation data and digital solutions that
contribute to increasing the added value of buildings.
Through these, the sector met the needs of the newnormal, such as reduction of the risks posed by infectious
diseases, improvement of disaster resilience, andpromotion of workstyle reforms in building management
operations.
In the railway systems business, Hitachi combined digitaltechnologies and smart mobility technologies to provide
products and services that support the transportation
system. The sector also decided to acquire the Ground
Transportation Systems business of Thales S.A. to leap
further forward.

20

Mobility

High-speed trains for ILSA, Spain

Totally renewed “Control Center” forbuilding equipment including elevators

2022/05/21 9:11:10 / 21846856_株式会社日立製作所_招集通知

Smart LifeThe Smart Life sector operates businesses such as Life andEcosystem (home appliances and air conditioning) and measurement
and analysis systems with an aim to achieve an increase in thepeople’s QoL (Quality of Life) and a “smart life.” The sector also
provides solutions using digital technologies such as AI and IoT in
the healthcare, home, semiconductor and other industries.

Revenues
Adjusted
operatingincomeEBIT
ROIC

1,029.4 billion yen
82% of the preceding fiscal year

79.2 billion yen
100% of the preceding fiscal year

137.7 billion yen
68% of the preceding fiscal year

Revenues decreased mainly due to effect of selling diagnostic
imaging-related business and overseas home appliances business.
Adjusted operating income was at the same level as the preceding
fiscal year mainly due to a decrease in revenues, despite increased
profit in Hitachi High-Tech.
EBIT decreased due to gains from selling diagnostic imaging-related
business recorded in the preceding fiscal year, despite recording
gains from selling overseas home appliances business.

9.2%
Increase of 0.5 points
from the preceding fiscal year

Note: Since the fiscal year 2021, the automotive systems business, which is composed of Hitachi Astemo, Ltd. and its
group companies, was spun off from the Smart Life sector to the Automotive Systems segment. Figures shown
above, including the numbers for the preceding fiscal year, are presented on the basis of the new segmentation.

[Measures Taken]
The Smart Life sector increased the competitive edge of
its products with the highest market shares using AI andother digital technologies. It also expanded its service
business through collaborative creation with its
customers. The sector accelerated the expansion of
Lumada solutions in growing markets. Those solutions
include in-vitro diagnostic systems and radiation therapy
systems that help extend people's healthy life spans,semiconductor manufacturing and inspection systems that
support digitalization and 5G, and connected home
appliances and optimization of air conditioner operations
that reduce environmental impact.

21

Smart Life

Proton Therapy System(Shonan Kamakura Advanced Medical Center)2022/05/21 9:11:10 / 21846856_株式会社日立製作所_招集通知

Automotive Systems
The Automotive System business provides autonomous driving
systems, advanced driver-assistance systems, software, and otherproducts in addition to powertrains and chassis in the automotive
and motorcycle equipment industries with the goal of achieving
safe, comfortable and environmentally friendly driving.

Revenues
Adjusted
operatingincomeEBIT
ROIC

Revenues increased mainly due to the business integration with three
affiliated companies of Honda Motor Co., Ltd. and improvement ofplant capacity utilization rate.

1,597.7 billion yen
162% of the preceding fiscal year

58.7 billion yen

Adjusted operating income improved mainly due to an increase inrevenues, despite effect of soaring raw material prices, etc.

169% of the preceding fiscal year

60.8 billion yen

EBIT increased mainly due to an increase in adjusted operating
income.

Increase of 56.5 billion yen
from the preceding fiscal year

3.8%
Increase of 0.7 points
from the preceding fiscal year

Note: Since the fiscal year 2021, the automotive systems business, which is composed of Hitachi Astemo, Ltd. and its
group companies, was spun off from the Smart Life sector to the Automotive Systems segment. Figures shown
above, including the numbers for the preceding fiscal year, are presented on the basis of the new segmentation.

[Measures Taken]
Based on a strategic business portfolio, Hitachi worked onstrengthening business and technological innovation, andcontributed to the realization of a sustainable society andthe improvement of QoL (Quality of Life) by providing
world-leading, advanced mobility solutions. Those
solutions include highly efficient engines and electrification
technologies, which reduce exhaust gases, as well as
leading-edge driving assistance technologies and chassis
technologies.

22

Automotive Systems

High-efficiency internal combustion engine products
and electrification technologies products

2022/05/21 9:11:10 / 21846856_株式会社日立製作所_招集通知

Hitachi Construction
Machinery

1,024.9 billion yen

Revenues

126% of the preceding fiscal year

Adjusted
operatingincome91.7 billion yen
290% of the preceding fiscal year

112.2 billion yen

EBIT

405% of the preceding fiscal year

Adjusted
operatingincomeEBIT

942.7 billion yen
124% of the preceding fiscal year

26.8 billion yen
Improved of 31.7 billion yen
from the preceding fiscal year

34.1 billion yen
Improved of 83.3 billion yen
from the preceding fiscal year

Others

Revenues

Revenues increased mainly due to effect of market recovery andforeign exchange impact.

Adjusted operating income increased mainly due to an increase inrevenues.

EBIT increased mainly due to an increase in adjusted operating
income.

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

Hitachi Metals
Revenues

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

Revenues increased mainly due to market recovery such asincreasing demand for automobiles.

Adjusted operating income increased mainly due to an increase inrevenues.

EBIT increased mainly due to an increase in adjusted operating
income and impairment loss recorded in the preceding fiscal year.

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

456.3 billion yen Adjusted
102% of the preceding operating
fiscal year
income23.4 billion yen
111% of the preceding
fiscal year23

Hitachi Construction Machinery、Hitachi Metals、Others

EBIT

32.5 billion yen
129% of the preceding
fiscal year2022/05/21 9:11:10 / 21846856_株式会社日立製作所_招集通知(2) Five-year Summary of Assets and Results of Operation of Hitachi Group
1) Consolidated Basis(Billions of yen)
Fiscal Year

2017

2018

2019

2020

2021

Revenues
Adjusted Operating Income
EBIT
Income Before Income Taxes
Net Income Attributable to Hitachi, Ltd.
Stockholders
Total Assets

9,368.6
714.6
644.2
638.6

9,480.6
754.9
513.9
516.5

8,767.2
661.8
183.6
180.2

8,729.1
495.1
850.2
844.4

10,264.6
738.2
850.9
839.3

362.9

222.5

87.5

501.6

583.4

10,106.6

9,626.5

9,930.0

11,852.8

13,887.5

2017

2018

2019

2020

2021

1,930.2
59.0
131.2
136.1
4,040.8

1,927.2
93.0
304.0
174.0
3,934.1

1,793.2
108.0
355.4
119.4
4,004.4

1,678.2
39.0
305.4
705.5
4,982.6

1,623.4
113.9
365.0
516.1
5,815.6

2) Unconsolidated Basis(Billions of yen)
Fiscal Year

Revenues
Operating Income
Ordinary Income
Net Income
Total Assets

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 have been calculated in accordance with this standard.
2. In Fiscal 2021, operating income and ordinary income increased from the previous fiscal year due mainly to the effect of solid
performance of the IT sector and ordinary income reached a new record high. Net income decreased from the previous fiscal
year due to the decrease in extraordinary income such as the gain on stock sales.

Reference (Consolidated Basis)

Overseas Revenues Trends

Revenues by Market (Fiscal 2021)(Billions)¥10,000

Japan

Overseas Revenues

41%

59%

8,000

Asia

6,000

24%

4,000

North America

15%

2,000

9,368.6

9,480.6

4,725.5(50%)

10,264.6
8,767.2

4,816.0(51%)

8,729.1

4,238.1(48%)

4,574.3(52%)

6,077.5(59%)

Europe

13%

0

2017

Other Areas

2018

2019

2020

2021

(FY)

Note: The blue parts show overseas revenues and the red parts show
domestic revenues. The number in parenthesis is the percentage ofoverseas revenues to total revenues.

7%24

Five-year Summary of Assets and Results of Operation of Hitachi Group2022/05/21 9:11:10 / 21846856_株式会社日立製作所_招集通知

Memo

25

Memo

2022/05/21 9:11:10 / 21846856_株式会社日立製作所_招集通知(3) Course of Actions to Take Considering Challenges for Hitachi Group
Hitachi has newly formulated its “2024 Mid-term Management Plan,“ a mid-term management plan for the period
until Fiscal 2024.
Under this new mid-term management plan, Hitachi aims to help establish a sustainable society, where WellBeing(people’s happiness), a state where every person in society can demonstrate their capabilities in comfort, is maintained aswell as the global environment is protected in a way that the Planetary Boundary (the planet's limits) will not be exceeded.

For the realization of this society, Hitachi aims to achieve global growth with “Green,” ”Digital” and “Innovation” asthree pillars of growth.
In addition, Hitachi has combined businesses with similar characteristics to increase the efficiency and speed ofmanagement and simplified the organization into three sectors: “Green Energy & Mobility,” “Digital Systems & Services”
and “Connective Industries.” Hitachi provides customers with solutions based on a business structure composed of thesethree sectors and the automotive system business (Hitachi Astemo).
At the same time, Hitachi enhances its sustainable management to ensure sustainable growth by collecting
information about important business risks and building a global risk management system to proactively respond to risks.
Through these activities, Hitachi will improve our ability to generate cash and achieve greater returns for ourshareholders as well as invest in further growth.

26

Challenges Facing Hitachi Group (1)2022/05/21 9:11:10 / 21846856_株式会社日立製作所_招集通知‐Digital / Green / Innovation Strategy supporting growth
Specific strategies for the three pillars of growth ,”Green,” “Digital” and “Innovation,” are as follows:
Green
Hitachi will move forward with decarbonization to achieve Hitachi Environmental Innovation 2050, in which
it has established the target of achieving carbon neutrality throughout its value chain by 2050. Leveraging theexpertise acquired in the process, Hitachi will provide environmental value, such as energy conversion,
resource recycling, electrification, energy conservation, and automation, in ways that suit each business domain
and region, in its efforts to achieve the growth of its environmental business.
DigitalBased on its understanding of customers' issues, Hitachi will design, implement, operate and maintainsolutions through collaborative value creation with customers. Hitachi will build this cycle using data analysis,
AI, and other digital technologies.
Hitachi aims to increase the profitability of its Social Innovation Business and globally expand its
businesses through the cross-organizational sharing and use of businesses such as Lumada solutions.

Innovation
Hitachi will accelerate innovation by identifying fields where it should engage in R&D activities in
anticipation of what the world will be like in 2050, strive to create innovative technologies and products that will
help solve social issues, and continuing to accelerate its collaborations with promising startup companies,
government and academia.

27

Challenges Facing Hitachi Group (2)2022/05/21 9:11:10 / 21846856_株式会社日立製作所_招集通知‐Business structure and strategies for the evolution of the Social Innovation Business

The Green Energy & Mobility sector aims to

The Digital Systems & Services sector will

expand energy services and solutions that contribute

identify customers’ issues and provide Hitachi’s

to the creation of a carbon-neutral society byreliable IT services and platforms by applying digital

combining power grid and digital technologies andtechnologies

operating clean energy businesses. It will also

engineering and highly reliable system integration.

digitally connect traffic networks to accelerate theThrough this, it aims to achieve the DX (Digitaldevelopment of railway systems such as railway

Transformation)

operation services using data.

infrastrucures.

HVDC (high-voltage direct
current) converter station

Co-creative Session at Lumada Innovation Hubthat

combineofadvancedcustomers

digitalandsocialHS2 High Speed Train for UK

The Connective Industries sector aims to

HitachiAstemoimprove and expand recurring services* and total

technologies

seamless solutions by applying its advanced digitalelectrification of automobiles and motorcycles andtechnologies to highly competitive products inadvanced driver-assistance systems and improves

industrial systems, building systems, measurement

its development of software to update automobile

and analysis equipment, medical instruments, homefunctionality through communication using Hitachi’s

appliances and other industries based on the theme

digital technologies.

fordevelops

applications

next-generation
such

as

the

of “connected” (connecting equipment and facilities).
”Continuous and cyclical services, including after-sales
service

While the business environment of Hitachi Group is changing rapidly and the future remains uncertain, Hitachi
will strive to realize a sustainable society under its new mid-term management plan.

28

Challenges Facing Hitachi Group (2)2022/05/21 9:11:10 / 21846856_株式会社日立製作所_招集通知(4) Borrowings and Financing Activity of Hitachi Group
Major Financing Activities
The Company procured funds through borrowings from multiple financial institutions, etc. in order to allocate funds
for the acquisition of GlobalLogic Inc., etc.
There is no material financing by issuance of stock and corporate bonds for Fiscal 2021.
Major Borrowings (As of March 31, 2022)
Name of Company

Creditor

The Company

Hitachi Metals, Ltd.

Balance of Borrowings

Mizuho Bank, Ltd.

230.0 billion yen

MUFG Bank, Ltd.

220.0 billion yen

Japan Bank for International Cooperation

149.3 billion yen

Sumitomo Mitsui Banking Corporation

100.0 billion yen

MUFG Bank, Ltd.

30.5 billion yen

Note: In addition to the figures shown above, the Company owes 463.4 billion yen of long-term borrowings by means of syndicatedloan agreements.

(5) Capital Investment of Hitachi Group
During Fiscal 2021, Hitachi Group carried out capital investment of 388.7 billion yen. The total investment
increased 28.8 billion yen from the preceding fiscal year mainly due to an increase in Automotive Systems businessresulting from the effect of integration of Hitachi Astemo, Ltd., and continuous investment for global business expansion at
power grid business and railway business, etc. A breakdown of capital investment by segment is shown below.
Corporate Items & Eliminations(Billions of yen)

15.1

(%)

¥500

Others

17.2

IT

64.4

Hitachi Metals

33.4
HitachiConstruction
Machinery

Capital Investment Trends(Billions)

400 (4.0%)

374.9(4.4%)
414.7(4.1%)
399.6
359.8

300

Capital Investment
Total

388.7

43.3

49.2
Industry

17.5
28.7
Smart Life

86.2

(3.8%)
388.7

4.0
3.0

EnergyMobility
Automotive
Systems

5.0(4.6%)

33.4

200

2.0

100

1.0

0

0.0

2017

2018

2019

2020

2021

(FY)

Note: The number in parentheses is the percentage of capital
investment to total revenues.

(6) Research and Development of Hitachi Group
Hitachi Group has been striving to create innovation related to digital and green, It conducts R&D to provide highvalue to society by strengthening its core technology such as artificial intelligence, security, 5G, electrification, robotics andautonomous driving and by working on research on hydrogen fuels, cell and quantum as future disruptive technology.
Expenses on research and development during Fiscal 2021 amounted to 317.3 billion yen. A breakdown by
segment is shown below.
Hitachi Metals

12.4

Others1.8

Corporate Items

20.0

Hitachi Construction
Machinery

25.4
Automotive
Systems

75.8
Smart Life

50.5

(Billions of yen)IT

Research and Development Expenses Trends(Billions)

(%)

¥400

4.0

51.5
Research andDevelopment
Expenses
Total

317.3

Energy(3.6%)
300

332.9(3.4%)
323.1

38.3
Industry(3.4%)
293.7(3.4%)
293.5(3.1%)
317.3

3.0

200

2.0

100

1.0

10.6
Mobility

30.6
0

0.0

2017

2018

2019

2020

2021

(FY)

Note: The number in parentheses is the percentage of research anddevelopment expenses to total revenues.

29

Borrowings and Financing Activity of Hitachi Group、Capital Investment of Hitachi Group、Research and Development of Hitachi Group2022/05/21 9:11:10 / 21846856_株式会社日立製作所_招集通知(7) Employees of Hitachi Group (As of March 31, 2022)
Hitachi Metals

OthersCorporate Items

12,375

3,190

27,753
Hitachi Construction
Machinery

24,263
Automotive Systems

64,152
Smart Life

Number of
employees
Total

368,247(29,485)

IT

96,996
Energy44,291
Industry

18,402

23,221

Mobility

53,604
Overseas211,479

Number of
employees
in Japan andOverseasJapan

156,768(consolidated)

Figures in parentheses represent the number of employees on a
non-consolidated basis.

(8) Major Facilities of Hitachi Group (As of March 31, 2022)
Major Facilities of the Company
Location

Head Office

Tokyo (Chiyoda-ku)

R&D

Tokyo (Kokubunji), Ibaraki (Hitachi), Saitama (Hatoyama), Kanagawa (Yokohama)

Manufacturing,
Design andEngineering

Tokyo (Adachi-ku, Shinagawa-ku, Taito-ku, Chiyoda-ku, Minato-ku), Ibaraki (Hitachi, Hitachinaka),
Kanagawa (Kawasaki, Hadano, Yokohama), Yamaguchi (Kudamatsu)

Sales andArea Operations

Tokyo (Shinagawa-ku, Taito-ku, Chiyoda-ku, Minato-ku), Hokkaido Area Operation (Chuo-ku,
Sapporo), Tohoku Area Operation (Aoba-ku, Sendai), Kanto Area Operation (Chiyoda-ku, Tokyo),
Hokuriku Area Operation (Toyama), Chubu Area Operation (Naka-ku, Nagoya), Kansai Area
Operation (Kita-ku, Osaka), Chugoku Area Operation (Naka-ku, Hiroshima), Shikoku Area Operation(Takamatsu), Kyushu Area Operation (Sawara-ku, Fukuoka)

Major Facilities of Consolidated Subsidiaries of the Company
Major consolidated subsidiaries of the Company and their locations are as stated in “(9) Major Hitachi Group
Companies.”

30

Employees of Hitachi Group、Major Facilities of Hitachi Group2022/05/21 9:11:10 / 21846856_株式会社日立製作所_招集通知(9) Major Hitachi Group Companies (As of March 31, 2022)
Name of Company

Location

Ratio of Voting
Rights (%)

Hitachi Information & Telecommunication Engineering, Ltd.

Yokohama, Kanagawa

100.0

Hitachi-Chanel 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 Global Digital Holdings 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

80.1

Segment■ IT■ Energy■ Industry■ Mobility■ Smart Life■

Automotive
Systems

Hitachi■ Construction
Machinery■

Hitachi
Metals■ Others

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.

Hitachi, Ibaraki

100.0

Hitachi Plant Services Co., Ltd.

Toshima-ku, Tokyo

100.0*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

Hitachi Building Systems Co., Ltd.

Chiyoda-ku, Tokyo

100.0

Hitachi Elevator (China) Co., Ltd.

China

70.0

Hitachi Rail Ltd.

U.K.

100.0

Hitachi Global Life Solutions, Inc.

Minato-ku, Tokyo

100.0

Hitachi High-Tech Corporation

Minato-ku, Tokyo

100.0

Hitachi Astemo, Ltd.

Hitachinaka, Ibaraki

66.6

Hitachi Astemo Americas, Inc.

U.S.A.

100.0

Hitachi Construction Machinery Co., Ltd.

Taito-ku, Tokyo

51.5

Hitachi Metals, Ltd.

Minato-ku, Tokyo

53.4

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

Notes: 1. The total number of consolidated subsidiaries is 853.
2. The number of equity-method affiliates is 287. 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 Transport System, Ltd.
3. The companies marked with * are holding companies; their major operating companies are located in the United States.
4. Hitachi Global Digital Holdings LCC changed its name to Hitachi Digital LLC on April 1, 2022.
5. Ratio of voting rights includes indirect ownership.

31

Major Hitachi Group Companies

2022/05/21 9:11:10 / 21846856_株式会社日立製作所_招集通知(10) Directors and Executive Officers
1) Directors
Name, Position and Responsibilities, etc. (As of March 31, 2022)
Name

Position

Katsumi Ihara

Independent
Director

Ravi Venkatesan

Independent
Director

Cynthia Carroll

Committee Membership

Audit Committee
Compensation Committee

Other Principal Positions Held

Outside Director, Benesse Holdings, Inc.
Venture Partner, Unitus Ventures LLC. (India)
Special Representative for Young People & Innovation,
UNICEF
Director, Baker Hughes Company (USA)*
Director, Pembina Pipeline Corporation (Canada)*
Director, Glencore plc (Switzerland)*-Independent
Director

Nominating Committee

Joe Harlan

Independent
Director

Compensation Committee

George Buckley

Independent
Director-

Chairman, Smiths Group plc (UK)*
Chairman of the Board, Stanley Black & Decker, Inc. (USA)*Louise Pentland

Independent
Director-

Executive Vice President and Senior Advisor, PayPal
Holdings, Inc. (USA)Harufumi Mochizuki

Independent
Director

Chairman of the Board
Nominating Committee (Chair)
Audit Committee
Compensation Committee(Chair)President and Representative Director, Tokyo Small andMedium Business Investment & Consultation Co., Ltd.

Takatoshi Yamamoto

Independent
Director

Audit Committee
Compensation Committee

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)-Keiji Kojima

Director

Compensation Committee-

Hideaki Seki

Director

Audit Committee-

Toshiaki Higashihara

Director

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 through attendance to importantinternal 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,
Benesse Holdings, Inc. (including its operating companies such as Benesse Corporation), Murata Manufacturing Co., Ltd.
and HOYA CORPORATION. The volume of transactions with each of the companies and corporations is negligible incomparison to the total business volume of the Company and to the total business volume of the corresponding entity (lessthan 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 general intent
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.

32

Directors and Executive Officers

2022/05/21 9:11:10 / 21846856_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 and madeproposals proactively, conducted analyses from various perspectives, and discussed openly and effectively.
Name

Attendance

Katsumi Ihara

Board of Directors meetings:
9 out of 9 days
Audit Committee:
15 out of 15 days
Compensation Committee:
5 out of 5 days

Ravi Venkatesan

Board of Directors meetings:
9 out of 9 days

Cynthia Carroll

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

Joe Harlan

Board of Directors meetings:
9 out of 9 days
Compensation Committee:
4 out of 4 days

George Buckley

Board of Directors meetings:
9 out of 9 days

Louise Pentland

Board of Directors meetings:
9 out of 9 days

Harufumi Mochizuki

Board of Directors meetings:
9 out of 9 days
Nominating Committee:
10 out of 10 days
Audit Committee:
15 out of 15 days
Compensation Committee:
5 out of 5 days
Board of Directors meetings:
9 out of 9 days
Audit Committee:
15 out of 15 days
Compensation Committee:
5 out of 5 days

Takatoshi Yamamoto

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:
9 out of 9 days

Activities and duties performed by Independent Directors
regarding their expected role
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.
Mr. Venkatesan stated his opinions and proposals with respect togeneral management of the Group such as management policies
and business strategies mainly focusing on digital business from a
global viewpoint based on his rich experience and insight in thearea of digital business and emerging 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 asa perspective of human capital management including diversity &inclusion based on her rich experience and insight as the top
executive of major global companies.
Mr. Harlan stated his opinions and made proposals with respect togeneral management of the Group such as management policies
and business strategies from a global business management
viewpoint based on his rich corporate management experienceand insight gained through the involvement in management at
major companies conducting diversified businesses globally.
Mr. Buckley 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 management experienceand insight with a major global manufacturer.
Ms. Pentland stated her opinions and made proposals withrespect to general management of the Group such as
management policies and business strategies mainly from acompliance and risk management viewpoint based on her richexperience and insight as chief legal officer at major global
companies.
Mr. Mochizuki 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. He
also led discussion as Chairperson at the Board meetings, theCompensation Committee and the Nominating Committee
respectively.
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.
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 increasing profit margins and utilization of humancapital based on his rich experience and insight in the area ofglobal corporate management and accounting. He also led
discussion as Chairperson at the Audit Committee.
Mr. Ludwig stated his opinions and proposals with respect togeneral management of the Group such as management policies
and business strategies mainly focusing on the digital businessfrom a global viewpoint based on his rich experience and insight in
the area of global corporate management and digital business.

33

Directors and Executive Officers

2022/05/21 9:11:10 / 21846856_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, 2022)
Name

Position

Responsibilities

Other Principal Positions Held

*Toshiaki Higashihara Executive Chairman

General*Keiji Kojima

President

Overall management, smart life &
ecofriendly systems business,measurement and analytical systems
business and healthcare strategy*Masakazu Aoki

Executive Vice President Assistant to the President (business forand Executive Officer
industry & distribution sectors, water &environment business and industrial
products business)-

Executive Vice President Assistant to the President (marketing &and Executive Officer
sales and regional strategies),
marketing & sales and regional
strategies-

Executive Vice President Assistant to the President (building
and Executive Officer
systems business and railway systems
business) and environmental strategy-*Ryuichi Kitayama*Alistair Dormer-*Toshiaki Tokunaga

Executive Vice President Assistant to the President (systems &and Executive Officer
services business and defense
systems business), systems & services
business, defense systems businessand social innovation businesspromotion*Toshikazu Nishino

Executive Vice President Assistant to the President (nuclear
and Executive Officer
energy business and energy business)-

Atsushi Oda

Senior Vice President
and Executive Officer

Nuclear energy business and energy
business-

Jun AbeSenior Vice President
and Executive Officer

Services & platforms business*Yoshihiko Kawamura

Senior Vice President
and Executive Officer

Finance, corporate pension system andinvestment strategies-

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

Corporate communications, corporate
auditing, corporate export regulationand human capital-

Claudio Facchin

Senior Vice President
and Executive Officer

Power grids business

Mamoru Morita

Senior Vice President
and Executive Officer

Management strategies and strategies
Director, Hitachi Metals, Ltd.
for next generation business

Hitoshi Ito

Vice President andExecutive Officer

Government & external relations,sustainability strategy

Tatsuro Ueda

Vice President andExecutive Officer

Business for financial institutions

Kenji Urase

Vice President andExecutive Officer

Energy business

Tadashi Kume

Vice President andExecutive Officer

Nuclear energy business

Kohei Kodama

Vice President andExecutive Officer

Legal matters, risk management andcorporate auditing*Hidenobu Nakahata

34

Directors and Executive Officers

-

-

-

-

-

2022/05/21 9:11:10 / 21846856_株式会社日立製作所_招集通知

Name

Position

Responsibilities

Other Principal Positions Held

Norihiro Suzuki

Vice President andExecutive Officer

Research & development

Yoji Takeuchi

Vice President andExecutive Officer

Marketing & sales (business forindustry & distribution sectors, water &environment business, building
systems business, railway systems
business and healthcare business)--

LorenaDellagiovanna

Vice President andExecutive Officer

Diversity & inclusion strategy,
government & external relations
and environmental strategy

Koujin 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-

Chairman, Hitachi Asia Ltd.
Chairman, Hitachi India Pvt.
Ltd.
-

-

Director, Hitachi Rail Ltd

Masahiko Hasegawa Vice President andExecutive Officer

Marketing & sales and regional
strategies (Japan)-

Tatsuro HoshinoMarketing & sales (business forfinancial institutions, government,
public corporation and social
infrastructure systems and defense
systems business)-

Vice President andExecutive Officer

Supply chain management(manufacturing strategy and quality
assurance))-

Shinya Mitsudomi

Vice President andExecutive Officer

Building systems business

Masashi Murayama

Vice President andExecutive Officer

Cost structure reform and information
security management-

Kazunobu Morita

Vice President andExecutive Officer

Business for industry & distributionsectors-

Takashi Yoda

Vice President andExecutive Officer

Regional strategies (China)

Kentaro Masai

Vice President andExecutive Officer

President and Director,
Hitachi Building Systems,
Co., Ltd.

Chairman, Hitachi (China), Ltd.

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

35

Directors and Executive Officers

2022/05/21 9:11:10 / 21846856_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, 2022 as follows.
Name

Position

Responsibilities*Toshiaki Higashihara

Executive Officer

General*Keiji Kojima

President

Overall management, railway systems business, nuclear
energy business, energy business, power grids business andinnovation strategies*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 and analytical 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*Toshiaki Tokunaga

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

Jun AbeSenior Vice President andExecutive Officer

Services & platforms business

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 & inclusion strategies,
corporate communications strategies and safety and healthmanagement*Masahiko Hasegawa

Senior Vice President andExecutive Officer

Marketing & sales and regional strategies

Claudio Facchin

Senior Vice President andExecutive Officer

Power grids business

Mamoru Morita

Senior Vice President andExecutive Officer

Management strategies**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

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
Preparation of financial statements

Tadashi Kume

Vice President and Executive Nuclear energy business
Officer

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)

36

Directors and Executive Officers

2022/05/21 9:11:10 / 21846856_株式会社日立製作所_招集通知

Name

Position

Responsibilities

Norihiro Suzuki

Vice President and Executive Research & development
Officer**Kenichi Tanaka

Vice President and Executive Human capital strategies
Officer**Jun Taniguchi

Vice President and Executive Digital strategies and services & platforms business
Officer

Lorena Dellagiovanna Vice President and Executive Sustainability strategies, environmental strategies and diversity
Officer& inclusion strategies
Kojin Nakakita

Vice President and Executive Regional strategies (APAC)
Officer

Hideshi Nakatsu

Vice President and Executive Water & environment business
Officer

Seiichiro Nukui

Vice President and Executive Information technology strategies
OfficerAndrew BarrVice President and Executive Railway systems business
Officer

Tatsuro Hoshino

Vice President and Executive Marketing & sales strategies (business for digital system &Officer
service)

Kentaro Masai

Vice President and Executive Supply chain management (manufacturing strategies andOfficerquality assurance) and safety and health management

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 Regional strategy (China)
Officer

Notes: 1. The Executive Officers marked with * are the Representative Executive Officers.
2. The Executive Officers marked with** are newly appointed.

2) 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.

37

Directors and Executive Officers

2022/05/21 9:11:10 / 21846856_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 on the determination of 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 on the determination of the amount ofcompensation, etc. of each Director and Executive Officer pursuant to applicable provisions of the Companies Act.
[Basic Policy]- Compensation shall be such that it enables the company to attract necessary personnel to achieve an
improvement in corporate value through global business growth.
- 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 such that it enables them to contribute to sustained improvement
in corporate value through the execution of business and employs an appropriate balance between short-term
performance and medium- and long-term performance.
- The level of compensation shall be determined taking into account compensation levels at other companies aswell as economic and market trends.
- The Compensation Committee utilizes external experts to gain expert advice and an objective viewpoint, if
necessary, for considering the details and amounts of compensation.
[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 be 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 & medium- and 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 theratio of 1:1:1 as the standard, taking into account the composition of executive compensation for major global 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.
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
that
Evaluation items
Other Executive Officers
constitute the Senior
Executive Committee (Note)80％30％
Performance-linked Company performancecomponent－
Division performance
50％
Individual target-linked component
20％
20％
Note: As of June 1, 2022, “Executive Officers that constitute the Senior Executive Committee” consist of 8 members;
President & CEO (Keiji Kojima), three Executive Vice President and Executive Officers (Masakazu Aoki, Yoshihiko
Kawamura and Toshiaki Tokunaga), three Senior Vice President and Executive Officers (Hidenobu Nakahata,
Masahiko Hasegawa and Mamoru Morita), Vice President and Executive Officer (Kohei Kodama). In case that they
are in charge of sectors or business units, the same proportion of evaluation item as for "Other Executive Officers" is
used.

38

Compensation for Directors and Executive Officers

2022/05/21 9:11:10 / 21846856_株式会社日立製作所_招集通知- The amount of the performance-linked component varies according to the evaluation of company performanceand division performance.
- Company performance is evaluated using consolidated revenues and line items for income or earnings in order
to measure the level of achievement of consolidated financial forecasts disclosed to stakeholders, including
shareholders and investors.
- Division performance is evaluated using performance indicators determined as optimal ones to measure thelevel of achievement of targets under the Mid-term Management Plan and the annual budgets for divisions.
- The amount of the individual target-linked component varies according to the evaluation of the level ofachievement of individual target for each Executive Officer determined based on his/her responsibility.

Medium- and Long-term incentive compensation- The shares of restricted stock are granted in order to propel management from a medium- and long-term
perspective and to provide incentives to bring about a sustainable increase in enterprise value by further
promoting senior management’s shared values with shareholders through the holding of shares during theirterm of office.
- The restriction on transfer shall be lifted if executive officers resign from all of the positions of the Company’s
executive officer, director, and corporate officer.
- With regard to one-half of granted shares of restricted stock, the number of shares whose transfer restriction islifted shall be determined after ex-post evaluation in which the total shareholder return of Hitachi stock ("TSR")
is compared to growth rate of TOPIX.
- Lifting of transfer restrictions shall apply to all granted shares if the TSR/TOPIX Growth Rate Ratio is 120% or
more.
- Lifting of transfer restrictions shall apply to part of granted shares if the TSR/TOPIX Growth Rate Ratio is
between 80% or more but less than 120% (*).
- Transfer restrictions shall not be lifted for any shares if the TSR/TOPIX Growth Rate Ratio is less than 80%.
* Number of shares whose transfer restrictions are lifted= Number of granted shares × {(TSR/TOPIX Growth Ratio × 1.25) − 0.5}
Shares whose transfer restrictions are not lifted shall be acquired by the Company without consideration.
- If it is deemed to be inappropriate to grant shares of restricted stock due to laws and regulations in the countryof 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 previously.

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 medium- and long-term incentive compensation. One third of vested restricted stock units are delivered in theform of shares of 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.
(iii) Miscellaneous
It was decided at the Compensation Committee meeting held on December 18, 2007 and March 26, 2008 that thecompensation structure for Directors and Executive Officers will be re-examined starting with the compensation for fiscal
2008 and the retirement allowance will be abolished. The payment of retirement allowance to Directors and Executive
Officers due to the abolition of the retirement allowance system will be in an amount determined by the Compensation
Committee at the time of the retirement of a relevant Director or Executive Officer based on his/her position of office, etc.

39

Compensation for Directors and Executive Officers

2022/05/21 9:11:10 / 21846856_株式会社日立製作所_招集通知

Total Amount of Compensation to and the Number of Directors and Executive Officers in Fiscal 2021
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
408
408
10
－
Executive Officers
4,660
1,537
1,466
1,657
31
－
Total
5,129
2,006
1,466
1,657
42
Notes: 1. The number of Directors indicated excludes three Directors who serve or served concurrently as Executive Officers.
2. The compensation to Executive Officers includes the basic remuneration of a Executive Officer who retired due to expirationof his term of office on May 12, 2021.
3. 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.
4. Other than the above, there is payment of retirement allowance of 111 million yen to one Executive Officer who retired as of
May 12, 2021.

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 operating income and operating cash flows ineach division, among other indicators, to measure the level of achievement of targets under the Mid-term Management
Plan and the annual budgets for divisions.
Please refer to "(1) Business Overview and Results of Hitachi Group" in this report regarding the business resultsin Fiscal 2021.
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- and 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

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, 2022 (Note)
From April 1, 2021 to March 31, 2022 (Note)

Total Shareholder return.
TOPIX Growth Rate Ratio

125.8%
121.6%
120.5%
146.7%
144.2%
128.3%

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, 2022.

Reasons Why the Compensation Committee Judged that the Respective Amount of Compensation, etc. of Each
Director and Executive Officer in Fiscal 2021 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 is a
specific criteria, based on the "Basic Policy," and determined the specific amount of compensation in accordance with the"Compensation Structure."

40

Compensation for Directors and Executive Officers

2022/05/21 9:11:10 / 21846856_株式会社日立製作所_招集通知(11) Matters Concerning the Company’s Stock (As of March 31, 2022)
1)

Authorized

2)

Issued2,000,000,000 shares

3)

Number of Shares per Unit

4)

10 Largest Shareholders

968,234,877 shares
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
Nippon Life Insurance Company
Hitachi Employees’ Shareholding Association
SSBTC CLIENT OMNIBUS ACCOUNT
JP MORGAN CHASE BANK 385632
STATE STREET BANK WEST CLIENT – TREATY 505234
NATS CUMCOSTATE STREET BANK AND TRUST COMPANY 505001

Share Ownership
Shareholding Ratio
Shares%181,747,800
18.79
63,047,700
6.52
22,788,025
2.36
20,000,099
2.07
19,551,338
2.02
18,282,639
1.89
17,799,073
1.84
16,509,187
1.71
15,671,900
1.62
14,656,120
1.52

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 (998,721 shares) is not included in the calculation of "Shareholding Ratio."

5)

Shareholders Composition
Status of shares

Foreign corporations,
Financial
Class of Government
etc.
Financial instruments
Other
Individuals
shareholders
andinstitution business institution
and others
Nonmunicipality
Individuals
operator
individuals

Total

Number ofshareholders

2

205

76

238,967

Shareownership(units)

92 3,407,137

246,473

Ownership
percentage ofshares (%)

0.00

35.27

2.55

2,426

1,112

129,714 4,291,973

1.34

44.43

157

234,989

Number ofsharesless thanone
unit (shares)-

1,413 1,582,410 9,659,212 2,313,677

0.01

16.38

100.00-Note: Of 998,721 shares of treasury stock, 9,987 units are included in the “Individuals and others” column, while 21 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 262,300 of new shares to 31 Executive Officers and 87,300 of new shares to 35
Corporate Officers (the executive positions next to Executive Officers), respectively, as restricted stockcompensation plan and restricted stock unit compensation plan, the medium- and long-term incentive
compensation mentioned at Page 39 of this report, on June 15, 2021.

41

Matters Concerning the Company’s Stock2022/05/21 9:11:10 / 21846856_株式会社日立製作所_招集通知(12) Matters Concerning Accounting Auditor
1)

Name of accounting auditor
Ernst & Young ShinNihon LLC

2)Fees to accounting auditor in Fiscal 2020
(Millions of yen)AmountCategory

Fees foraudit services*

Fees fornon-audit services

Total

Fees etc. by the Company and its subsidiaries

1,552

53

1,605

566

39

605

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 accordancewith 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 the estimatedamount 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 Hitachi Group companies (listed in (9) Major Hitachi Group Companies), 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.

42

Matters Concerning Accounting Auditor

2022/05/21 9:11:10 / 21846856_株式会社日立製作所_招集通知(13) 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 utilize 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.

[Reference] Corporate Governance System and Internal Control System
The Company is a company with Nominating Committee, etc. under the Companies Act, aiming to establish a framework forquick business operation and to realize highly transparent management by separating responsibilities for management oversightand 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

Audit

Structures and Other Things to Ensure Adequacy of Business Operations (Internal Control Systems) and Operation of theInternal Control Systems is posted on Report on the 153rd Business Term contains the Materials Disclosed via the Internet.

43

Policy on Determination of Distribution of Surplus etc.、【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

2022/05/21 9:11:10 / 21846856_株式会社日立製作所_招集通知

Consolidated Financial Statements
Consolidated Statement of Financial Position
Fiscal 2020 (Reference)(As of March 31, 2021)

Fiscal 2021
(As of March 31, 2022)(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

5,943,300
1,015,886
2,734,476
1,653,395
328,153
211,3905,909,553
472,105
534,324
2,408,887
1,161,210
964,830
368,197
11,852,853

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(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

4,596,930
416,635
274,392
288,973
1,515,954
698,553
933,844468,579
2,797,691
1,706,329
433,954
657,408
7,394,621

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(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

3,525,502
460,790
84,0402,710,604
273,561(3,493)
932,730
4,458,232
11,852,853

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

44

2. Consolidated Statements of Financial Position

2022/05/21 9:11:10 / 21846856_株式会社日立製作所_招集通知

Consolidated Statement of Profit or Loss
Years ended March 31
2021 (Reference)

2022(Millions of yen)
Revenues
Cost of sales

8,729,196(6,533,890)

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

Gross profit

2,195,306(1,700,126)
476,137(172,407)
13,969(1,456)2,558,621(1,820,385)
128,354(83,965)
27,938(97)

38,864

40,485850,287
16,934(22,778)

850,951
15,492(27,110)

844,443(325,247)

839,333(168,469)

Income (loss) from discontinued operations

519,196(686)

670,8640

Net income

518,510

670,864

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

501,613
16,897

583,470
87,394

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

45

3. Consolidated Statements of Profit or Loss

2022/05/21 9:11:10 / 21846856_株式会社日立製作所_招集通知

Unconsolidated Financial Statements
Unconsolidated Balance Sheet
Fiscal 2020 (Reference)
Fiscal 2021
(As of March 31, 2021)(As of March 31, 2022)(Millions of yen)
(Assets)
Current assets

1,229,016

1,139,368

Cash

149,933

62,225

Notes receivable
Accounts receivable
Trade receivables and contract assets

3,923

-

623,879--

639,422

Finished goods

15,716

12,987Semi-finished goods

17,886

17,317

Raw materials

20,34627,520Work in process

147,165

64,279Advances paid

34,10531,752

Short-term loan receivables

113,377

114,002

Others114,054

181,494

Allowance for doubtful receivables(11,371)(11,634)

3,753,592

4,676,251

216,678

202,192

Buildings

112,722

105,265

Structures

6,351

6,018

Machinery

7,957

7,522

Vehicles154

127

Tools and equipment

42,01841,966

Land

36,23523,815

Lease assets

7,426

14,339Construction in progress

3,812

3,138

Fixed assets
Tangible fixed assets

Intangible fixed assets

92,901

96,778

Patents

57

49

Software86,31890,855

293

68

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

75

75

6,157

5,729

3,444,013

4,377,279

2,707,316

3,610,468

Other securities of affiliated companies

3,457

9,058

Investments in affiliated companies

33,30833,267

Investments in securities

206,755

284,485

Long-term loan receivables

392,080

347,176

Deferred tax assets

64,621

40,637

Others

36,70052,414

Allowance for doubtful receivables
Total assets

46

4. Unconsolidated Balance Sheets

(227)

(228)

4,982,609

5,815,620

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Fiscal 2020 (Reference)
Fiscal 2021
(As of March 31, 2021)(As of March 31, 2022)(Millions of yen)
(Liabilities)
Current liabilities

1,579,915

2,106,178

Electronically recorded obligations

15,566

10,292

Trade accounts payable

275,216

276,483

Short-term debt

210,340

682,328-

90,000

1,773

3,723

Current installments of debentures
Lease liabilities
Other accounts payable

67,77020,106

Accrued expenses

178,682

173,829

Advances received from customers

199,509-

Contract liabilities-

112,025

Deposits received

579,149

688,256

Provision for product warranties
Provision for loss on construction contracts
Others492

460

47,45643,708

3,956

4,963

Non-current liabilities

1,158,951

1,065,707

Debentures

250,000

160,000

Long-term debt

683,408

666,732

Lease liabilities

6,185

13,192

Accrued pension liability

70,38974,003

Provision for retirement benefits for senior executives

111-

Provision for loss on business of affiliated companies

129,884

131,785

Deferred tax liabilities for land revaluation
Asset retirement obligations
Others1-

11,64912,118

7,322

7,875

2,738,866

3,171,886

2,147,865

2,555,037

Common stock

460,790

461,731

Capital surplus

451,579

452,473

Capital reserve

178,756

179,697

Others272,823

272,775

1,238,988

1,643,835

1,238,988

1,643,835

Total liabilities(Net assets)
Stockholders’ equity

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

1,133

1,026

1,237,855

1,642,808

Treasury stock(3,492)(3,002)

Valuation and translation adjustments

93,73287,227

Unrealized holding gains on securities

90,88576,502

Deferred profit or loss on hedges

2,843

10,725

Revaluation reserve for land

2

-

2,144

1,468

Total net assets

2,243,742

2,643,733

Total liabilities and net assets

4,982,609

5,815,620

Subscription rights to shares47

4. Unconsolidated Balance Sheets2022/05/21 9:11:10 / 21846856_株式会社日立製作所_招集通知

Unconsolidated Statement of Operations
Years ended March 31
2021 (Reference)

2022(Millions of yen)
Revenues

1,678,223

1,623,424

Cost of sales

1,252,642

1,155,026

Gross profit on sales

425,580

468,398

Selling, general and administrative expenses

386,495

354,447

Operating income

39,085

113,950

Other income

303,028

285,085

Interest income and dividends

290,349

275,339

Others12,6799,746

36,65233,987

5,460

6,034

Other expenses
Interest expenses
Others31,191

27,952

Ordinary income

305,461

365,049

Extraordinary gain

638,025

146,586

Gain on valuation of securities-

121,833

1,096

17,138

45

7,604

179

10

Gain on sale of affiliated companies’ common stock

603,305-

Compensation income

33,398-26,54019,390

Impairment loss on affiliated companies’ common stock

12,98012,554

Loss on impairment of assets

8,688

4,552

Impairment loss on investments in securities

1,372

2,282

3,499

-

916,946492,246

Current

59,088(50,629)

Deferred

152,346

26,760Net Income

705,511516,115

Gain on sale of investments in securities
Gain on sale of real property
Gain on sale of investments in capital of affiliatedcompanies

Extraordinary loss

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

48

5. Unconsolidated Statements of Operations

2022/05/21 9:11:10 / 21846856_株式会社日立製作所_招集通知Transcript of Accounting Auditors’ Audit Report on Unconsolidated Financial Statements
Independent Auditor’s Report
May 11, 2022

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 operations, 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 153rd fiscal year from April 1, 2021 to March 31, 2022.
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, 2022, 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 other ethicalresponsibilities in accordance with these requirements. We believe that the audit evidence we have obtained issufficient 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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6. Transcript of Accounting Auditors’ Audit Report on Unconsolidated Financial Statements

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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 are freefrom 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 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 thecircumstances 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, 2022. Ernst & Young ShinNihon LLC has not audited theEnglish language version of the unconsolidated financial statements for the above-mentioned year.

50

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

2022/05/21 9:11:10 / 21846856_株式会社日立製作所_招集通知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 153rd business term (from April 1, 2021 to March 31, 2022). 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 and performed
their auditing duties adequately, as well as received reports from the Accounting Auditors on the performance statusof 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” (BusinessAccounting Council, October 28, 2005) and requested explanations as necessary.
We examined the business report and its supplementary schedules, the unconsolidated financial statements (theunconsolidated balance sheet, the unconsolidated statement of operations, the unconsolidated statement of changes in
net assets, and the notes to unconsolidated financial statements) and their supplementary schedules, as well 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 thisbusiness 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 13, 2022
Audit Committee, Hitachi, Ltd.
Hiroaki Yoshihara
Hideaki Seki (Standing)
Katsumi Ihara
Harufumi Mochizuki
Takatoshi Yamamoto
Helmuth Ludwig
Note: Messrs. Katsumi Ihara, Harufumi Mochizuki, Takatoshi Yamamoto, Hiroaki Yoshihara and Helmuth Ludwig are outside Directors
pursuant to Article 2, Item 15 and Article 400, Paragraph 3 of the Companies Act.

51

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

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The 153rd Annual General Meeting of Shareholders of Hitachi, Ltd.
Materials Disclosed via the Internet
Hitachi, Ltd.

Contents
1. Structures and Other Things to Ensure Adequacy of Business Operations (Internal Control System) andOperation of the Internal Control System
2. Fundamental Policy on the Conduct of Persons Influencing Decision on the Company’s Financial andBusiness Policies
3. Information on the stock acquisition rights, etc.
4. Consolidated Statements of Changes in Equity
5. Notes to Consolidated Financial Statements
6. Consolidated Statements of Comprehensive Income (Supplementary Information)
7. Consolidated Statements of Cash Flows (Supplementary Information)
8. Unconsolidated Statement of Changes in Net Assets
9. Notes to Unconsolidated Financial Statements
10. Transcript of Accounting Auditors’ Audit Report on Consolidated Financial Statements

Note: The aforementioned materials are provided to the shareholders for their review by posting on the
Company’s website pursuant to the provisions of the Articles of Incorporation of the Company and therelevant laws and regulations.

52

Contents

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1. 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
shall be 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.

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

2022/05/21 9:11:10 / 21846856_株式会社日立製作所_招集通知(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.
- 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 12
employees (as of March 31, 2022) who exclusively serve the Office and are not subject to orders andinstructions of Executive Officers. Six of them are allocated as the full-time auditors auditing the governanceand risk management, etc. in each sector of IT, Energy, Industry, Mobility, and Smart Life, and Automotive
Systems business.

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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 themedium-term 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.
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.

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

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2. Fundamental Policy on the Conduct of Persons Influencing Decision on the Company’s Financial and Business
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 to purchase alarge share of the Company’s stock. In particular, together with outside experts, the Company will evaluate the buyout
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 thenecessity, 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.

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

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3. Information on the stock acquisition rights, etc.
(Stock Acquisition Rights Held by Senior Managements) (As of March 31, 2022)
The First Stock
The Second Stock
Name of stock acquisition rights
Acquisition Rights ofAcquisition Rights of(Date of resolution)
Hitachi, Ltd.
Hitachi, Ltd.
(June 29, 2016)(April 6, 2017)Class and number of shares to be
Common stock 146,820
Common stock 156,940
issued upon exercise of stock
sharessharesacquisition rights
Amount to be paid in upon
¥1 per share¥1 per share
exercise of stock acquisition rights
Exercise period of stock
From July 15, 2016 to
From April 27, 2017 toacquisition rights
July 14, 2046
April 26, 2047
Conditions for the exercise of(Note 1, 2)(Note 1, 2)
stock acquisition rights
15 Executive Officers of
16 Executive Officers of
the Company
the Company
Stock acquisition rights held by
7,341 of stock acquisition 7,847 of stock acquisition
senior managements
rightsrights(Note 3)(Note 3)

The Third Stock
Acquisition Rights ofHitachi, Ltd.
(April 11, 2018)
Common stock 150,160
shares¥1 per share
From April 27, 2018 toApril 26, 2048
(Note 1, 2)
20 Executive Officers of
the Company
7,508 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 (incase 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.

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1. Information on the stock acquisition rights, etc

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4.Consolidated Statement of Changes in Equity (April 1, 2021 to March 31, 2022)(Millions of yen)
Commonstock
Balance at beginning of year

460,790

Capitalsurplus84,040

Accumulated
othercomprehensive
incomeRetainedearnings
2,710,604

273,561

Reclassified into retained
earnings

14,861(14,861)

Net income

583,470

Treasurystock, atcost(3,493)

Total
Hitachi, Ltd.
stockholders’equityNoncontrollinginterests

Total equity

3,525,502

932,730

4,458,232

Changes in equity

Other comprehensive
income-374,538

Dividends to Hitachi, Ltd.
stockholders(111,210)

87,394

670,864

374,538

85,498460,036-

Acquisition of treasury stock

Issuance of new shares

583,470(111,210)

Dividends to non-controllinginterests

Sales of treasury stock

(291)
941

Changes in non-controllinginterests(111,210)(63,647)(63,647)

(251)

(251)

(251)

742

451

451

1,882

1,882

941
(38,571)-

6,025(32,546)(28,534)(61,080)

Total changes in equity

941(37,921)487,121

365,702491

816,334

80,711

897,045

Balance at end of year

461,731

46,1193,197,725

639,263(3,002)

4,341,836

1,013,441

5,355,277

58

2. Consolidated Statements of Changes in Equity

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5. 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 853 and the number of equity-method affiliates is 287.

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 incurred cost 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.

59

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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.
FVTOCI financial assets(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 FVTOCI
financial assets by designation. They are initially and subsequently measured at fair value, and the changes infair value are recognized in OCI. The cumulative amount of OCI is recognized in equity as AOCI. Dividends onequity instruments designated as FVTOCI are recognized in profit or loss, except where they are considered to
be a return of the investment.
FVTPL financial assets(financial assets measured at fair value through profit or loss)
Equity instruments not designated as FVTOCI financial assets and debt instruments not classified as financial
assets measured at amortized cost are classified as FVTPL financial assets. These instruments aresubsequently 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, theallowance 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.

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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 some subsidiaries shifted to a risk-sharing corporate pension plans from a defined
benefit pension plan on April, 2019, the same has been promoted to the other susidiaries participating pension
plans managed by the Hitachi Pension Fund.
Newly 43 subsidiaries have changed their pension plans for curent employees from defined benefit pension plans
to risk-sharing corporate pension plans on April 1, 2022, and now the revision of Hitachi group pension plansmanaged by Hitachi Pension Fund has been almost completed.
Under the risk-sharing corporate plan, a risk reserve contribution is determined in advance in accordance with therules governing the plan, and the pension benefits are adjusted annually based on the financial position of theplan to maintain balanced fincance.
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 imposes no additional contribution obligations, at the time of the shift to therevised plan, the difference between the defined benefit obligations related to the portion transferred to therevised plan and the amount of assets transferred to the revised plan corresponding to the the decrease in
defined benefit obligations, approximately 44.0 billion yen, will be recognized as a settlement loss for the year
ending March 31, 2023.

(Notes on Accounting Estimates)
1. Impairment of Property, Plant and Equipment, Goodwill and Other Intangible Assets (Impairment losses of(35,091) 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 (or agroup of CGUs) as the higher of fair value less costs of disposal and value in use. In measuring fair value, 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 fromthe weighted average cost of capital. The business plan used is based on external information, reflects historicalexperiences, and generally has a maximum of five years. Estimated cash flows beyond the period covered by thebusiness 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 semiconductor is included in current business plans, these plans may be affected byrisks related to market or economic environment, and actual result may differ from the estimates. In addition, thediscount rate used to calculate the value in use is affected by stock market trends and fluctuations in interest
rates.
As of March 31, 2022, the group of CGUs to which a significant proportion of goodwill was allocated was thepower grid business in the Energy segment, and the carrying amount of goodwill allocated to the power grids
business was 513,616 million yen. The recoverable amount used in the impairment test of goodwill of the power
grid business for the year ended March 31, 2022 was calculated based on value in use. Cash flows were
projected over five years, and the primary assumptions used to calculate cash flows were revenue growth rate
and gross margin ratio. For the year ended March 31, 2022, there were no impairment losses recognized related
to goodwill.
For goodwill allocated to each CGU (or group of CGUs), the Company considers the recoverable amount may beless than the carrying amount if the primary assumptions used in the impairment test of goodwill change
significantly.

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2.

3.

4.

Employee Retirement Benefits (The ending balance of Retirement and severance benefits of 414,839 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 90,758
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 128,347 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 berealized. 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 futuretaxable income, including the execution of certain available tax strategies if needed. Based on these factors, theCompany considers it is more likely than not it will realize the benefits of these deductible differences as of March
31, 2022. However, the times and amounts of taxable income occurrence may be affected by variance of
uncertain economic conditions in the future, and the actual times and amounts may differ from the estimates.

(Notes to Consolidated Statement of Financial Position)
1. The components of Trade receivables and contract assets: Accounts receivable of 2,210,590 million yen,Contract assets of 623,766 million yen, and Others of 143,793 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 444,651 million yen,remeasurements of defined benefit plans of 105,675 million yen, net changes in financial assets measured at
FVTOCI of 110,109 million yen, and net changes in cash flow hedges of (21,172) million yen.
3. Collateralized assets: Trade receivables and contract assets of 7,205 million yen, inventories of 12,529 million
yen, investments in securities and other financial assets of 327 million yen, and property, plant and equipment of
64,673 million yen.
Secured debts: 60,884 million yen
4. Allowance deducted directly from assets: 80,945 million yen from trade receivables and contract assets, and5,025 million yen from other receivables.
5. Property, plant and equipment include land of 256,392 million yen and buildings and structures of 723,067 million
yen.
Accumulated depreciation and impairment losses of property, plant and equipment are (4,987,344) million yen.
Other intangible assets include software of 204,366 million yen.
6. Guarantees: 73,862 million yen

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Notes on Accounting Estimates(Retirement and Severance Benefits)、Notes on Accounting Estimates(Revenue Recognition)、Notes on Accounting Estimates(Income T2022/05/21 9:11:10 / 21846856_株式会社日立製作所_招集通知(Notes to Consolidated Statement of Profit or Loss)
1. Other income
Other income of 128,354 million yen mainly consists of net gain or loss on business reorganization and others of
102,135 million yen.
2. Other expenses
Other expenses of (83,965) million yen mainly consists of impairment losses on property, plant and equipment
and goodwill and other intangible assets of (35,091) million yen.
3. Income taxes
Income taxes of (168,469) million yen includes current tax expense of (158,988) million yen and deferred tax
expense of (9,481) 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
968,234,877 shares(2) Treasury stocks Common stock
998,721 shares
2. Cash dividends
Total amount of cash dividends
111,210 million yen
3. Class and number of shares to be issued upon exercise of stock acquisition rights at end of year
Common stock
499,000 shares(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

IT

North

Asia

America

Europe

Other
Areas

Overseas
Revenues
Subtotal

Total
Revenues

1,527,657

180,128

231,011

173,764

41,065625,968

2,153,625

Energy319,248

329,151

271,105

339,718

188,745

1,128,719

1,447,967

Industry

647,151

88,335116,584

17,441

31,250253,610

900,761

Mobility

352,188641,150

53,085319,80259,525

1,073,562

1,425,750

Smart Life

550,613

247,404

94,455

112,656

24,315478,830

1,029,443

Automotive Systems

455,282

606,321316,216130,01289,887

1,142,436

1,597,718

Hitachi Construction Machinery

216,922

195,722

196,425

162,798

253,094

808,039

1,024,961

Hitachi Metals

402,155

204,913274,458

42,26818,907

540,546

942,701

Others384,058

53,768

6,749

8,076

3,654

72,247456,305

Subtotal

4,855,274

2,546,892

1,560,088

1,306,535

710,442

6,123,957

10,979,231

Corporate items and Eliminations(668,197)(32,049)(4,946)(7,122)(2,315)(46,432)(714,629)

Total

4,187,077

2,514,843

1,555,142

1,299,413

708,127

6,077,525

10,264,602

The IT segment consists of Front Business and Services & Platforms, for which revenue amounted to 1,423,010
million yen and 874,663 million yen for the year ended March 31, 2022 (including intersegment transactions).
Front Business is operated mainly in Japan, 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, 2022, the amount of revenue
recognized based on the pattern of the cost accrual arising from long-term projects was 1,578,613 million yen.

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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.
(IT)
Front Business primarily provides goods and services such as system integration, consulting and cloud services.
These long-term projects 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 cost accrual (the progress of the
project mostly based on the cost incurred relative to the estimated total cost) or the passage of time as
performance obligations are satisfied over time.
Many of the contracts require payments based on milestones, and in some cases, payments are made before
performance obligations are satisfied.
Services & Platforms primarily sells control systems, software and IT products. Revenue is recognized whencontrol over the goods is transferred to customers as performance obligations are satisfied at the point in timeupon the completion or upon delivery of the goods. Mostly, payment terms stipulate that the consideration isreceived within one year after the performance obligation is satisfied, and there are no significant transactions inwhich payment terms include deferred payments, etc.
(Energy, Industry and Mobility)
The Energy segment includes revenue from businesses such as energy solutions, which are operated mainly inJapan, Asia, Europe, and North America. The Industry segment includes revenue from businesses such asindustry & distribution solutions, which are operated mainly in Japan. The Mobility segment includes revenue frombuilding systems and railway systems businesses. The building systems business is operated mainly in China
and the railway systems business is operated mainly in Europe.
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 of the
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, andrecognize revenue over time based on the passage of time. Many of the contracts require payments based on
milestones, and, in some cases, payments are made before performance obligations are satisfied.
Further, in the sale of industrial equipment, etc. included in the Industry segment, and in the sale of elevators,
etc. included in the Mobility segment, 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.
(Other)In the Smart Life, Automotive Systems, Hitachi Construction Machinery, and Hitachi Metals segments,
performance obligations 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 stipulatethat 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.
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 and Contract
liabilities from contracts with customers for the fiscal year ended March 31, 2022.
(Millions of yen)March 31, 2022

April 1, 2021

Trade receivables

2,381,832

2,115,973

Contract assets

665,627

676,524

Contract liabilities

1,150,592

1,016,207

Of the revenue recognized during the fiscal year ended March 31, 2022, the amount included in Contract
liabilities at the beginning of the fiscal year was 604,800 million yen. And the amount related to performanceobligations satisfied in the past periods was not material.

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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, 2022.
(Millions of yen)Intersegment
transactions

5.

Balance of unsatisfied
performance obligations

IT

58,982

1,141,343

Energy35,271

2,387,468

Industry

98,942555,297

Mobility

5,785

4,648,813

Segments of the Company and its subsidiaries that have contracts under which revenue is recognized over along period of time are primarily the IT segments, Energy segments, Industry segments and Mobility segments.
The estimated timing of unsatisfied performance obligations at the fiscal year ended March 31, 2022 is as follows.
Approximately 90% of the balance of unsatisfied performance obligations of the IT segment was expected to besatisfied within three years and approximately 10% after three years but no more than five years.
Approximately 80% of the balance of unsatisfied performance obligations of the Energy segment was expected tobe satisfied within three years and approximately 10% after three years but no more than five years.
Approximately 90% of the balance of unsatisfied performance obligations of the Industry segment was expected
to be satisfied within three years.
Approximately 50% of the balance of unsatisfied performance obligations of the Mobility segment was expected
to be satisfied within three years and approximately 10% after three years but no more than five 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, 2022 were not material.

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2022/05/21 9:11:10 / 21846856_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 andforward 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, 2022 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
70,22771,648Debt securities
55,05755,058Long-term loans receivable
1,650
1,650
Liabilities
Long-term debt [1]Bonds
357,548
357,468
Long-term debt
1,207,825
1,207,727[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.

66

Notes on Financial Instruments、Note on Per Share Information

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The following table presents the assets and liabilities that are measured at fair value on a recurring basis as ofMarch 31, 2022.
(Millions of yen)Class of financial instruments

Level 1FVTPL financial assets:
Investments in securities and other financial assets
Equity securities
Debt securities
Derivatives
FVTOCI financial assets:
Investments in securities and other financial assets
Equity securities
Total financial assets at fair value
FVTPL financial liabilities:
Other financial liabilities
Derivatives
Total financial liabilities at fair value

Level 2

Level 3

Total

1,364
9,521
-

4,692
63,596

17,591
5,686-

18,95519,89963,596

282,025
292,9102,144
70,432106,041
129,318

390,210492,660-

47,14547,145-47,14547,145

The following table presents the changes in Level 3 instruments measured on a recurring basis for the year ended
March 31, 2022.
(Millions of yen)
Equitysecurities

Level 3 financial assets
Balance at beginning of year
Gain (loss) in profit or loss [1]Loss in OCI [2]Purchases
Sales and redemption
Acquisitions and divestitures
Transfer from Level 3 [3]OtherBalance at end of year
Unrealized gain (loss) relating tofinancial assets held at end of year [4]

[1]
[2]
[3]
[4]

Debt
securities

Derivatives

Total

120,718
3,830(1,342)
9,010(7,721)(25)(1,278)440
123,632

6,054
279
567
(993)
(239)
18
5,686

87
(87)
-

126,859
4,022(1,342)
9,577(8,714)(264)(1,278)458
129,318

3,780

294

(87)

3,987

Gain (loss) in profit or loss related to FVTPL financial assets is included in Financial income and Financial
expenses in the consolidated statement of profit or loss.
Loss in OCI related to FVTOCI financial assets is included in Net changes in financial assets measured atfair value through OCI in the consolidated statement of comprehensive income.
Transfer from Level 3 is mainly due to an investee becoming listed on the stock market.
Unrealized gain (loss) relating to FVTPL financial assets held at the end of year is included in Financial
income and Financial expenses in the consolidated statement of profit or loss

Fair values are measured by the finance departments in accordance with the Company’s policies and procedures.
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 thefair value. In case the fair value of a financial instrument was significantly impaired, administrators review andapprove the impairment loss.
(4) Other
The Company and its subsidiaries recognize put options on shares of subsidiaries held by non-controllinginterests as financial liabilities at the present value of the exercise price. The Company derecognizes the noncontrolling interests and recognizes the difference between the present value and non-controlling interests incapital surplus.
Put options on non-controlling interests of the Company and its subsidiaries are measured at the present value ofthe exercise price. The carrying amount of the put options above as of March 31, 2022 was 268,851 million yen,included in Other non-current liabilities in the consolidated statement of financial position.
(Note on Per Share Information)
Hitachi, Ltd. stockholders’ equity per share
Net income from continuing operations, attributable to Hitachi, Ltd. stockholders per share
Net income from discontinued operations, attributable to Hitachi, Ltd. stockholders per share
Net income attributable to Hitachi, Ltd. stockholders per share

67

Notes on Financial Instruments、Note on Per Share Information

4,488.91 yen
603.75 yen
0.00 yen603.75 yen

2022/05/21 9:11:10 / 21846856_株式会社日立製作所_招集通知(Notes on Major Subsequent Events)
1. 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 31 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 50 million shares(5.17% of the number of outstanding shares (excluding treasury stocks))(iii) Aggregate amount of repurchase
Up to 200.0 billion yen(iv) Period of the repurchase
From May 2, 2022 to March 31, 2023(v) Method of repurchase
Expected open market purchase through the Tokyo Stock Exchange
2. Sale of all shares of Hitachi Transport System, Ltd. (hereinafter “Hitachi Transport System”)
On April 28, 2022, the Company entered into an agreement regarding the following three points, etc. for thecommon stocks of Hitachi Transport System (hereinafter “Hitachi Transport System Shares”), an equity method
affiliate of the Company, with HTSK Co., Ltd. (hereinafter “Offeror”), a wholly owned subsidiary of HTSK Holdings
Co., Ltd. (hereinafter “Offeror Parent”), all equity interests in which are currently owned by HTSK Investment L.P.,
which is indirectly held and operated by Kohlberg Kravis Roberts & Co. L.P..
(i) The Offeror will launch a tender offer (hereinafter “Tender Offer”) for Hitachi Transport System Shares and theCompany will not tender any of its shares of Hitachi Transport System (hereinafter “Shares to Be Sold by theCompany”) in the Tender Offer.
(ii) The Company will sell the Shares to Be Sold by the Company in accordance with the share repurchase to be
conducted by Hitachi Transport System.
(iii) The Company obtains 10.0 billion yen worth of the Offeror Parent’s shares with voting rights (equivalent to 10%of the total voting rights).
The consideration is expected to be approximately 222.0 billion yen.
Assuming the transaction is settled, Hitachi Transport System will be no longer the Company’s equity method
affiliate. An expected gain on the sale of Hitachi Transport System Shares in the amount of approximately 140.0
billion yen will be recognized in Other income in the consolidated statement of profit or loss for the year ending
March 31, 2023.

68

Notes on Major Subsequent Events

2022/05/21 9:11:10 / 21846856_株式会社日立製作所_招集通知(Other Notes)
1. Acquisition of GlobalLogic Inc.
On March 31, 2021, the Company decided to acquire GlobalLogic Inc. (hereinafter “GlobalLogic”), a leading U.S.headquartered digital engineering service company, in order to strengthen the digital portfolio of “Lumada” and thedefinitive agreement was signed among Hitachi Global Digital Holdings LLC (hereinafter “HGDH”) which is a
subsidiary located in the U.S., MergeCo H Global Inc. (hereinafter “SPC”) which was established by HGDH for theacquisition and GlobalLogic Worldwide Holdings, Inc. (hereinafter “GlobalLogic Worldwide Holdings”) which is theparent company of GlobalLogic.
On July 13, 2021, HGDH acquired 100% of the outstanding shares of GlobalLogic Worldwide Holdings andGlobalLogic Worldwide Holdings and GlobalLogic have become wholly owned subsidiaries of the Company, as aresult of the transaction, including the merger of SPC with and into GlobalLogic Worldwide Holdings, which is thesurviving company.
The fair value of the consideration paid for GlobalLogic was 922,250 million yen. The amounts of the assets
acquired, liabilities assumed and goodwill recognized as of the acquisition date were 279,803 million yen, 179,726
million yen and 822,173 million yen, respectively.
On April 1, 2022, HGDH changed its name to Hitachi Digital LLC.
2. Sale of all shares of Hitachi Metals, Ltd. (hereinafter “Hitachi Metals”)
On April 28, 2021, the Company entered into an agreement regarding the following four points for the common
stocks of Hitachi Metals (hereinafter “Hitachi Metals Shares”), a consolidated subsidiary of the Company in the
Hitachi Metals segment, with K. K. BCJ-52 (hereinafter “Tender Offeror”), a wholly owned company of G.K.
BCJ-51, the outstanding shares of which are indirectly owned by investment funds which Bain Capital Private
Equity, LP and its group provide with investment advice.
(i)Tender Offeror will launch a tender offer (hereinafter “Tender Offer”) for Hitachi Metals Shares, when conditions
for the commencement of Tender Offer are satisfied, and the Company will not apply for Tender Offer withregard to all of the Hitachi Metals Shares held by the Company (hereinafter “Shares to Be Sold by theCompany”).
(ii)In the event Tender Offer is enacted and Tender Offeror is unable to acquire all of the Hitachi Metals Shares(excluding treasury stock held by Hitachi Metals and Shares to Be Sold by the Company) in Tender Offer,Tender Offeror and the Company will request convening of a general meeting of shareholders on the matter of
items required for implementation of share consolidation (hereinafter “Share Consolidation”) on Hitachi Metals
and exercise approval right for the proposal.
(iii)As promptly as practically possible after Tender Offeror and the Company become holders of all shares ofHitachi Metals (excluding treasury stock held by Hitachi Metals) as a result of Share Consolidation, capital
reduction and other measures (hereinafter “Capital Reduction”) will be performed for Hitachi Metals in order tosecure distributable amount required for acquisition of treasury stock by Hitachi Metals (hereinafter “Share
Repurchase”).
(iv)Immediately after Capital Reduction takes effect, Shares to Be Sold by the Company will be transferred to
Hitachi Metals as a result of Share Repurchase.
The consideration is expected to be approximately 382.0 billion yen.
Assuming the transaction is settled, it is expected that the Company will transfer Shares to Be Sold by theCompany. As a result, the Company’s ownership ratio of Hitachi Metals Shares will decrease from 53.4% to 0%,
and Hitachi Metals will be deconsolidated. An expected gain on the sale of Hitachi Metals Shares in the amount ofapproximately 106.0 billion yen will be recognized in Other income in the consolidated statement of profit or loss
for the year ending March 31, 2023. Furthermore, non-controlling interest in Hitachi Metals will decrease
approximately 255.0 billion yen in the consolidated statement of changes in equity for the year ending March 31,
2023.
3. Sale of shares of Hitachi Construction Machinery Co., Ltd. (hereinafter “Hitachi Construction Machinery”)
On January 14, 2022, the Company entered into an agreement regarding the transfer of a part of the shares ofHitachi Construction Machinery, a consolidated subsidiary of the Company in the Hitachi Construction Machinery
segment, with HCJI Holdings G.K., a special purpose company which is expected to be jointly invested by HCJ
Holdings2 G.K., a special purpose company wholly owned by a fund that Japan Industrial Partners, Inc. manages,
operates, and provides information, and Citrus Investment LLC, a special purpose company wholly owned by
ITOCHU Corporation.
The consideration is expected to be approximately 182.4 billion yen. Assuming the transaction is settled, it isexpected that the Company’s ownership ratio of shares of Hitachi Construction Machinery will decrease from
51.4% to 25.4%, and Hitachi Construction Machinery will turn into an equity-method associate of the Company.
An expected gain on the sale of Hitachi Construction Machinery shares in the amount of approximately 62.0 billion
yen will be recognized in Other income in the consolidated statement of profit or loss for the year ending March
31, 2023. Furthermore, non-controlling interest in Hitachi Construction Machinery will decrease approximately
369.0 billion yen in the consolidated statement of changes in equity for the year ending March 31, 2023.

69

Other Notes

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6. Consolidated Statement of Comprehensive Income (Supplementary Information)
Years ended March 31
2021

2022

(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 interests70

4. Consolidated Statements of Comprehensive Income

518,510

670,864

69,362
88,7362,151(11,224)
30,795(403)

160,249

19,168

191,8215,346
58,755

391,489
8,172
41,207

255,922416,171934,681440,868
460,036
1,130,900

838,237
96,444

958,008
172,8922022/05/21 9:11:10 / 21846856_株式会社日立製作所_招集通知

7. Consolidated Statement of Cash Flows (Supplementary Information)
Years ended March 31
2021

2022
(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 year71

5. Consolidated Statements of Cash Flows

518,510

670,864

491,663
109,009325,247(38,864)
1,337(452,422)(16,976)
89,722(47,937)(31,811)32,693(29,239)
11,322962,254
21,64820,560(22,368)(188,966)
793,128

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)
729,943(254,750)(118,195)
83,483(296,968)(142,893)
109,836(861,035)(933,200)

682,408

168,892

9,249(458,840)
334,288

45,467(1,048,866)(318,923)

199,679
523,467(230,488)
5,190(96,611)(40,687)(159)
583(545,790)(22)(184,838)
54,105203,555

653,244
44,798(305,943)(111,149)(56,338)(251)451(22,009)(64)
202,739
69,125(47,059)

812,3311,015,886

1,015,886
968,827

2022/05/21 9:11:10 / 21846856_株式会社日立製作所_招集通知

8.Unconsolidated Statement of Changes in Net Assets (April 1, 2021 to March 31, 2022)(Millions of yen)
Stockholders’ equity
Capital surplus

Retained earnings
OthersCommonstock

Balance at beginning of year

460,790

Reserve for
Total capital advanced
surplusdepreciationof
fixed assets

Capitalreserve

Others178,756

272,823

451,579

1,133

Cumulative effects ofchanges in accounting policy

Restated balance

460,790

178,756

941

941

272,823

451,579

1,133

Retainedearnings
carriedforward

Total retained
earnings

1,237,855

1,238,988

(58)

(58)

1,237,797

1,238,930

Treasurystock(3,492)

Total
stockholders’equity2,147,865(58)(3,492)

2,147,807

Change during year
Issuance of new shares

941

Reversal of reserve foradvanced depreciation of
fixed assets

1,882
(106)

106

-

-

Distribution of surplus(111,210)(111,210)(111,210)

Net income

516,115

516,115

516,115

Acquisition of treasury
stock
Disposition of treasury
stock

(47)

(47)

(252)

(252)

742

694

(Net) Change in items
other than stockholders’equity during year
Total change during year
Balance at end of year

941

941

(47)

893

(106)

405,011404,904490

407,229

461,731

179,697272,775

452,473

1,026

1,642,808

1,643,835(3,002)

2,555,037

Valuation and translation adjustments

Balance at beginning of year

Unrealized
holding gains
on securities

Deferred
profitor loss onhedges

Revaluation
reserve forland

90,885

2,843

2

Total
Subscription
valuationrights toandsharestranslation
adjustments
93,732

2,144

Cumulative effects ofchanges in accounting policy

Restated balance

Total net
assets2,243,742(58)

90,8852,843

293,7322,144

2,243,684

Change during year
Issuance of new shares

1,882

Reversal of reserve foradvanced depreciation of
fixed assets-

Distribution of surplus(111,210)

Net income

516,115

Acquisition of treasury
stock
Disposition of treasury
stock

(252)
694

(Net) Change in items
other than stockholders’equity during year

(14,383)

Total change during year
Balance at end of year

7,881

(2)

(6,504)(14,383)

7,881

(2)

(6,504)(675)

400,049

76,502

10,725-87,2271,468

2,643,733

72

6. Unconsolidated Statement of Changes in Net Assets(675)(7,180)2022/05/21 9:11:10 / 21846856_株式会社日立製作所_招集通知

9. 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 the moving
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 toeach year by the benefit formula basis.
Prior service cost is amortized by the straight-line method over the estimated average remaining service yearsof 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.

73

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

2022/05/21 9:11:10 / 21846856_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 incurred cost 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. Adoption of tax effect accounting for the transition from the consolidated taxation system to the group tax sharing
systemThe Company will transition from the consolidated taxation system to the group tax sharing system from thefollowing fiscal year.
As for items involving the transition from the consolidated taxation system to the group tax sharing system,
which has been newly included in the 2020 tax reform, and related items under the single taxation system,
which were revised accordingly, the Company recorded deferred tax assets and deferred tax liabilities on thebasis of the provisions of the Corporation Tax Act of Japan in effect prior to the 2020 tax reform in accordancewith Paragraph 3 of “Practical Solution on the Treatment of Tax Effect Accounting for the Transition from theConsolidated Taxation System to the Group Tax Sharing System” (ASBJ PITF No.39, March 31, 2020), which
stipulates that the adoption of Paragraph 44 of “Implementation Guidance on Tax Effect Accounting” (ASBJ
Guidance No.28, February 16, 2018) is not mandatory.
From the beginning of the following fiscal year, the Company plans to adopt " Practical Solution on the
Accounting and Disclosure Under the Group Tax Sharing System" (ASBJ PITF No.42, August 12, 2021),
which provides for accounting treatment and disclosure of income taxes and tax effect accounting in the case thegroup tax sharing system is adopted.

(Note on Change in Accounting Policy)
1. Adoption of Accounting Standard for Fair Value Measurement and its implementation guidance
From fiscal 2021, the Company adopted the “Accounting Standard for Fair Value Measurement” (ASBJ
Statement No.30, July 4, 2019) etc. and in accordance with the transitional treatment set forth in Paragraph 19
of “Accounting Standard for Fair Value Measurement” and Paragraph 44-2 of “Accounting Standard for
Financial Instruments”(ASBJ Statement No.10, July 4, 2019), the Company will continue to apply new
accounting policies prescribed by “Accounting Standard for Fair Value Measurement” into the future. There
are no impacts on the Unconsolidated financial statements.

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

2022/05/21 9:11:10 / 21846856_株式会社日立製作所_招集通知

2.

Adoption of Accounting Standard for Revenue Recognition
From fiscal 2021, the Company adopted the “Accounting Standard for Revenue Recognition” (ASBJ
Statement No.29, March 31, 2020 (hereinafter “Revenue Recognition Standard”)) etc. Accordingly, revenue isrecognized in the amount expected to be received in exchange for goods or services when control of thepromised goods or services are transferred to customers. The Company also takes the opportunity of
adopting Revenue Recognition Standard to change the name of the following accounts: “Accounts receivable”
and “Notes receivable” into “Trade receivables and contract assets” and “Advances received from customers”
into “Contract liabilities”.
With regard to the adoption of the Revenue Recognition Standard, etc., in accordance with the transitional
treatment stipulated in the proviso to Paragraph 84 of the Revenue Recognition Standard, the cumulative
effect of retrospectively adopting the new accounting policy prior to the beginning of the current fiscal year has
been added to or deducted from retained earnings brought forward at the beginning of the current fiscal year,
and the new accounting policy has been adopted from the beginning of the current fiscal year. The effect of
adopting the new accounting policy is not material.

(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: 3,526,475 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: 202,192 million yen
The ending balance of Intangible fixed assets (excluding selling, leasing, or otherwise marketing software):
71,698 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: 131,785 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: 74,003 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: 43,708 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: 40,637 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.

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

2022/05/21 9:11:10 / 21846856_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

44

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

Total
98
Accumulated depreciation of tangible fixed assets
Buildings
171,680 million yen
Structures
24,938 million yen
Machinery
86,450 million yen
Vehicles
898 million yen
Tools and equipment
146,095 million yen
Lease assets
4,850 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
327,470
Hitachi Rail STS S.p.A.
209,191
Hitachi America Capital, Ltd.
85,673
Hitachi International Treasury Ltd.
17,746
Hitachi Rail Ltd.
11,376
Hitachi Energy Switzerland Ltd
5,156
Hitachi Energy Canada Inc.
4,087
Kawasaki Railcar Manufacturing Co., Ltd.
1,600
Hitachi Energy d.o.o.
1,184
Others248
Total
663,733
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
361,246 million yen
Long-term receivables from affiliated companies
358,236 million yen
Short-term payables to affiliated companies
781,184 million yen
Long-term payables to affiliated companies
6,159 million yen

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

2022/05/21 9:11:10 / 21846856_株式会社日立製作所_招集通知(Notes to Unconsolidated Statement of Operations)
1. Gain on valuation of securities
Gain on valuation of securities of 121,833 million yen is related to the absorption-type merger between Mitsubishi
UFJ Lease & Finance Company Limited (hereinafter “Mitsubishi UFJ Lease”) as a surviving company and Hitachi
Capital Corporation (hereinafter “Hitachi Capital”) as a merged company as of April 1, 2021. The Company
received 5.10 shares of Mitsubishi UFJ Lease’s common stock for one share of Hitachi Capital’s common stock
held by the Company and revaluated the shares at the market price as of the same date. Mitsubishi UFJ Leasechanged its name to Mitsubishi HC Capital Inc. as of April 1, 2021.
2. Loss on impairment of assets(1) Summary of the assets or asset groups for which impairment loss was recognizedClassification
Description
Category
Location
Assets to be held
Equipment for video
Lease assets, etc.
Osaka, etc.
and used
distribution systems(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
203 million yen
Structures
24 million yen
Machinery
782 million yen
Tools and equipment
139 million yen
Lease assets
2,578 million yen
Software801 million yen
Others22 million yen
Total
4,552 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.
3. Revenues from affiliated companies
355,267 million yen
Purchases from affiliated companies
781,599 million yen
Non-operating transactions with affiliated companies
10,199 million yen

77(Notes to Unconsolidated Statement of Operations)1. Gain on valuation of securities、(Notes to Unconsolidated Statement of Operations)2. Loss on impairment

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Matters related to Class and Number of Treasury Stock(Shares)Number of shares
Increase during year Decrease during year
178,413
235,491Class

At beginning of year
At end of year
Common stock
1,055,799
998,721
Summary of Reason for Change
The increase during this fiscal year by 178,413 shares is due to the acquisition of 137,600 shares without
consideration in accordance with the restricted stock compensation plan, and the purchase of 40,813 shares fromless-than-one unit shareholders at their request. The decrease during this fiscal year by 235,491 shares is due tothe disposition of 232,480 shares as a result of the exercise of stock acquisition rights, and the sale of 3,011
shares to less-than-one unit shareholders at their request.

(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 toConsolidated Financial Statements. Of the revenue recognized during the fiscal year ended on March 31, 2022,
the amount of revenue recognized based on the pattern of the cost accrual arising from long-term project was
435,101 million yen.
(Note on Accounting for Deferred Taxes)
The major causes of deferred tax assets were 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.
(Note on Transactions with Related Parties)(Millions of yen)
Name of company
etc.

% of voting
rights held

Relationship with the
Description of
Attribute
related parties
transaction
Sale of the Group's
Underwriting of
Subsidiary Hitachi America, Ltd. Direct: 100.0%
products*
capital increase
Hitachi Energy
Subsidiary
Indirect: 80.1% Loans
Loan (Note 1)
Finance Ltd
Manufacturing, sale
Hitachi Global Life
Deposit received
Subsidiary
Direct: 100.0% and maintenance of
Solutions, Inc.
(Note 2)the Group's products *Sale of the
Hitachi High-Tech
Deposit received
Subsidiary
Direct: 100.0% Company's products,
Corporation(Note 2)etc.
Outsourcing of theCompany's softwaredevelopment,
Deposit received
outsourcing of
Subsidiary Hitachi Systems, Ltd. Direct: 100.0%(Note 2)maintenance of theCompany's
telecommunications
equipment *Subsidiary Hitachi Energy Ltd
Direct:80.1% *
Guarantee
Manufacturing, sale,engineering and
Hitachi Rail STS
Subsidiary
Indirect: 100.0% maintenance of the
Guarantee
S.p.A
Group's products,
etc.*
Hitachi America
Subsidiary
Indirect: 100.0% *Guarantee
Capital, Ltd.

Transaction
Classification
amountYear-endbalance923,599--(38,394)

Long-term loan
receivables

293,736

31,630

Depositreceived

95,146

12,690

Depositreceived

91,186

1,333

Depositreceived

64,692

327,470--

209,191--

85,673--* The Company’s Directors, Executive Officers or employees concurrently hold position of directors or officers at thesubsidiary.
Notes: 1. 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.
2. 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.

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

2022/05/21 9:11:10 / 21846856_株式会社日立製作所_招集通知(Note on Per Share Information)
Net assets per share
2,731.77 yen
Net income per share
533.63 yen(Note on Major Subsequent Events)
1. Repurchase the Company’s shares
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 31 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) Details(i)Class of shares to be repurchased
Common stock of the Company(ii)Aggregate number of shares to be repurchased
Up to 50 million shares(5.17% of the number of outstanding shares (excluding treasury stocks))(iii)Aggregate amount of repurchase
Up to 200.0 billion yen(iv)Period of the repurchase
From May 2, 2022 to March 31, 2023
(v)Method of repurchase
Expected open market purchase through the Tokyo Stock Exchange
2.

Transfer of shares
On April 28, 2022, the Company entered into an agreement regarding the following three points, etc. for thecommon stocks of Hitachi Transport System, Ltd. (hereinafter “Hitachi Transport System Shares”), an affiliate of
the Company, with HTSK Co., Ltd. (hereinafter the “Offeror”), a wholly owned subsidiary of HTSK Holdings Co.,
Ltd. (hereinafter the “Offeror Parent”), all equity interests in which are currently owned by HTSK Investment L.P.,
which is indirectly held and operated by Kohlberg Kravis Roberts & Co. L.P.
(i)The Offeror will launch a tender offer (hereinafter “Tender Offer”) for Hitachi Transport System Shares and theCompany will not tender any of its shares of Hitachi Transport System (hereinafter “Shares to Be Sold by theCompany”) in the Tender Offer.
(ii)The Company will sell the Shares to Be Sold by the Company in accordance with the share repurchase to be
conducted by Hitachi Transport System Ltd.
(iii)The Company obtains 10.0 billion yen worth of the Offeror Parent’s shares with voting rights (equivalent to
10% of the total voting rights).
The consideration is expected to be approximately 222.0 billion yen. As a result, the Company plans to post an
extraordinary gain of approximately 210.0 billion yen in gain on sale of affiliated companies' common stock in theunconsolidated statement of operations for the fiscal year ending March 31, 2023 (from April 1, 2022 to March 31,2023).

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

2022/05/21 9:11:10 / 21846856_株式会社日立製作所_招集通知(Additional Information)
1. Acquisition of shares
On March 31, 2021, the Company decided to acquire GlobalLogic Inc. (hereinafter “GlobalLogic”), a leading U.S.headquartered digital engineering service company, in order to strengthen the digital portfolio of “Lumada” and thedefinitive agreement was signed among Hitachi Global Digital Holdings LLC (hereinafter “HGDH”) which is a
subsidiary located in the U.S., MergeCo H Global Inc. (hereinafter “SPC”) which was established by HGDH for theacquisition and GlobalLogic Worldwide Holdings, Inc. (hereinafter “GlobalLogic Worldwide Holdings”) which is theparent company of GlobalLogic.
On July 13, 2021, HGDH acquired 100% of the outstanding shares of GlobalLogic Worldwide Holdings andGlobalLogic Worldwide Holdings and GlobalLogic have become wholly owned subsidiaries of the Company, as aresult of the transaction, including the merger of SPC with and into GlobalLogic Worldwide Holdings, which is thesurviving company.
The consideration paid for GlobalLogic was 922,250 million yen. On April 1, 2022, HGDH changed its name to
Hitachi Digital LLC.
2.

Transfer of subsidiary’s shares
On April 28, 2021, the Company entered into an agreement regarding the following four points for the common
stocks of Hitachi Metals, Ltd. (hereinafter “Hitachi Metals Shares”), a consolidated subsidiary of the Company,
with K. K. BCJ-52 (hereinafter “Tender Offeror”), a wholly owned company of G.K. BCJ-51, the outstanding sharesof which are indirectly owned by investment funds which Bain Capital Private Equity, LP and its group provide withinvestment advice.
(i)Tender Offeror will launch a tender offer (hereinafter “Tender Offer”) for Hitachi Metals Shares, when conditions
for the commencement of Tender Offer are satisfied, and the Company will not apply for Tender Offer withregard to all of the Hitachi Metals Shares held by the Company (hereinafter “Shares to Be Sold by theCompany”).
(ii)In the event Tender Offer is enacted and Tender Offeror is unable to acquire all of the Hitachi Metals Shares(excluding treasury stock held by Hitachi Metals, Ltd. (hereinafter “Hitachi Metals”) and Shares to Be Sold by
the Company) in Tender Offer, Tender Offeror and the Company will request convening of a general meetingof shareholders on the matter of items required for implementation of share consolidation (hereinafter “Share
Consolidation”) on Hitachi Metals and exercise approval right for the proposal.
(iii)As promptly as practically possible after Tender Offeror and the Company become holders of all shares ofHitachi Metals (excluding treasury stock held by Hitachi Metals) as a result of Share Consolidation, capital
reduction and other measures (hereinafter “Capital Reduction”) will be performed for Hitachi Metals in order tosecure distributable amount required for acquisition of treasury stock by Hitachi Metals (hereinafter “Share
Repurchase”).
(iv)Immediately after Capital Reduction takes effect, Shares to Be Sold by the Company will be transferred to
Hitachi Metals as a result of Share Repurchase.
The consideration is expected to be approximately 382.0 billion yen. Assuming the transaction is settled, it isexpected that the Company will transfer Shares to Be Sold by the Company. As a result, the Company plans topost an extraordinary gain of approximately 328.0 billion yen in gain on sale of affiliated companies' common
stock in the unconsolidated statement of operations for the fiscal year ending March 31, 2023 (from April 1, 2022
to March 31, 2023).

3.

Transfer of subsidiary’s shares
On January 14, 2022, the Company entered into an agreement regarding the transfer of a part of the shares ofHitachi Construction Machinery, a consolidated subsidiary of the Company, with HCJI Holdings G.K., a special
purpose company which is expected to be jointly invested by HCJ Holdings2 G.K., a special purpose company
wholly owned by a fund that Japan Industrial Partners, Inc. manages, operates, and provides information, andCitrus Investment LLC, a special purpose company wholly owned by ITOCHU Corporation.
The consideration is expected to be approximately 182.4 billion yen. As a result, the Company plans to post an
extraordinary gain of approximately 150.0 billion yen in gain on sale of affiliated companies' common stock in theunconsolidated statement of operations for the fiscal year ending March 31, 2023 (from April 1, 2022 to March 31,2023).

80(Additional Information)

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10. Transcript of Accounting Auditors’ Audit Report on Consolidated Financial Statements
Independent Auditor’s Report
May 11, 2022

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, 2021 to March
31, 2022.
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,
2022, 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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Responsibilities of Management and 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 thecircumstances 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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2022/05/21 9:11:10 / 21846856_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, 2022. 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