2020/06/24 9:36:54 / 19610125_株式会社日立製作所_招集通知（Ｃ）(Securities Identification Code : 6501)[Translation]

THE

151

st

Notice of Annual
General Meetingof Shareholders
Date and Time ： Thursday, July 30, 2020 at 10:00

a.m.
Location ：Tokyo Dome Hotel
B1 Grand Ballroom TENKU
3-61, Koraku 1-chome, Bunkyo-ku, Tokyo

Matter to Be ： Item
Resolved
Election of 13 Directors due to expirationof the term of office of all Directors

Note: This English translation incorporates, from page 51 to page 74, 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 and securing theshareholders, we request the exercise of voting
rights in advance in writing or via the internet asmuch as possible and refraining from visiting theAnnual General Meeting of Shareholders on the day.

Cover2020/06/24 9:36:54 / 19610125_株式会社日立製作所_招集通知（Ｃ）

Dear Shareholders:Jul. 8, 2020

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

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

Notice of the 151st Annual General Meeting of Shareholders

First, I offer my heartfelt condolences for those who have lost their lives due to COVID-19, and I would like toexpress my deepest sympathies for those affected by it, their families and related people. I also appreciate those who arecommitted to preventing the spread of the infection.
Regarding our response to COVID-19, the Hitachi Group is implementing measures to prevent the spread,giving the highest priority to the safety and health of customers, business partners, cooperating firms and employees who
work globally in the Hitachi Group and their families. At the same time, the Hitachi Group makes maximum efforts tomaintain its support for customers and the social infrastructure by using its digital technologies. While the emergency
situation has given rise to various changes in our business environment, we will contribute to the maintenance, recovery
and development of people’s lives by considering what Hitachi can do.
The 151st Annual General Meeting of Shareholders of Hitachi, Ltd. is to be held as follows. I sincerely
apologize to the shareholders for any concerns and inconveniences owing to the postponement of this Annual General
Meeting of Shareholders due to the spread of COVID-19.
We are grateful for your understanding and support.

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Date and Time

Location

Thursday, July 30, 2020 at 10:00 a.m. (Reception Start: 9:00 a.m.)
3-61, Koraku 1-chome, Bunkyo-ku, Tokyo

Tokyo Dome Hotel

B1 Grand Ballroom TENKUReport on the Business Report, Financial Statements, and Consolidated
Reporting

Financial Statements for the 151st Business Term (from April 1, 2019 to March

Matter31, 2020), and the results of the audit on the Consolidated Financial Statements
by the Accounting Auditors and the Audit Committee

A g e n d a
Matter to Be
Resolved

Item

Election of 13 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
Requests to the Shareholders■ From the standpoint of preventing the spread of COVID-19, safeguarding and securing the shareholders, we request theexercise of voting rights in advance in writing or via the internet as much as possible and refraining from visiting theAnnual General Meeting of Shareholders on the day.
■ Refer to the next page for the advance exercise of voting rights in writing or via the internet.
■ The location of the Annual General Meeting of Shareholders has changed from the one in the previous year. In addition,
to prevent the spread of infection, the number of available seats will significantly decrease because wide space between
seats is required. Therefore, please note that some shareholders may be denied entrance even if they come to thelocation on the date of the Annual General Meeting of Shareholders.
■ We will inform you of the details of the operation of the Annual General Meeting of Shareholders to prevent the spread of
infection on the Company’s website. In addition, as we may update them depending on the situation of the spread of theinfection before the date of the Annual General Meeting of Shareholders, please check the Company’s website.

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Matters Concerning Exercise of Voting Rights in advance

Exercise your voting rights in writing

Please fill in the voting form and return it by the exercise due date below. In exercising yourvoting rights in writing, you will be deemed to have approved the agenda item, should no
indication be made on the voting form of whether you approve or disapprove the agenda item.

Exercise Due Date

Arrival of the voting form no later than 5:20 p.m. on Wednesday,
July 29, 2020

Exercise your voting rights via the internet

Please exercise your voting rights by the exercise due date via the internet.

Exercise Due Date

No later than 5:20 p.m. on Wednesday, July 29, 2020

● Should you exercise your voting rights via the Internet, your vote via the Internet will be deemed to be the official indication of your intent, even if
you mail your voting form.
● In the case that you submit multiple forms via the internet, the last one will be deemed to be the official indication of your intent.

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Reference Documentation

Election of 13 Directors due to expiration of the term of office of all
Directors

item

Due to expiration of the term of office of all Directors at the close of this Meeting, it is proposed that 13 Directors beelected. The Company has proposed the following 13 nominees for Directors (including 10 independent directors*, an increase
from 8 independent directors currently in office) to reflect global and diverse viewpoints to the management as well as toreinforce the global development of digital business and the functions of supervision of management.
* The "Independent Directors" in this notice are the directors who fulfill the qualification requirements to be outside directors asprovided by the Companies Act of Japan and also meet the independence criteria defined by the Company and those as provided by
Japanese stock exchanges where the Company is listed, unless otherwise stated.

The list of nominees
No

Name

Current Position and Responsibilities at the Company

1

Katsumi Ihara

RE

OD

ID

2

Ravi Venkatesan

NEW

OD

ID

3

Cynthia Carroll

RE

OD

ID

Independent Director■ Nominating Committee4

Joe Harlan

RE

OD

ID

Independent Director

5George Buckley

RE

OD

ID

Independent Director

6

Louise Pentland

RE

OD

ID

Independent Director

7

Harufumi Mochizuki

RE

OD

ID

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

8

Takatoshi Yamamoto

RE

OD

ID

Independent Director■ Audit Committee ■ Compensation Committee

9

Hiroaki Yoshihara

RE

OD

ID

Independent Director■ Nominating Committee

10

Helmuth Ludwig

NEW

OD

ID

11

Hideaki Seki

NEW

Associate

12

Hiroaki Nakanishi

RE

Executive Chairman■ Nominating Committee

13

Toshiaki HigashiharaRE

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

Independent Director■ Audit Committee ■ Compensation CommitteeRE: 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

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No

1

Katsumi Ihara
Position and Responsibilities at the Company
Independent Director
Member of Audit Committee
Member of Compensation Committee(Date of Birth: Sept. 24, 1950)

RE

OD

Term of office as Independent Director

Share Ownership

Two years

600

ID

Brief Biography
5/19816/2005

Attendance for fiscal 2019
Board of Directors meetings
9 out of 9 days (100%))
Audit Committee
15 out of 15 days (100%)Compensation Committee
4 out of 4days (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
Mr. Ihara was selected as an independent director nominee, since he was expected to reinforce the functional
aspects of the Company’s Board of Directors by supervising the execution of duties by Executive Officers andothers from an independent perspective based on his rich experience and insight in the area of global corporate
management.

No

2

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

NEW

OD

Position and Responsibilities at the Company

Term of office as Independent Director

Share Ownership

-

-

0

ID

Brief Biography
7/19991/20044/20114/20138/20159/2018Chairman 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)

Other Principal Positions Held
Venture Partner, Unitus Ventures LLC. (India)
Special Representative for Young People & Innovation, UNICEF
Reason for selection as Independent Director nominee
Mr. Venkatesan was selected as an independent director nominee, since he was expected to reinforce thefunctional aspects of the Company’s Board of Directors by supervising the execution of duties by Executive Officers
and others from an independent perspective as well as reflecting his global viewpoint to the Company’s Board of
Directors, based on his rich experience and insight in the area of global corporate management, digital businessand emerging markets.

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No

3

Cynthia Carroll(Date of Birth: Nov. 13, 1956)

RE

OD

Position and Responsibilities at the Company

Term of office as Independent Director

Share Ownership

Independent Director
Member of Nominating Committee

Seven years

1,200

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 Speciality 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 2019
Board of Directors meetings
9 out of 9 days (100%)
Nominating Committee
8 out of 8 days (100%)

Other Principal Positions Held
Director, Baker Hughes Company (USA)*
Director, Century Aluminum Company (USA)*
Director, Pembina Pipeline Corporation (Canada)*
Reason for selection as Independent Director nominee
Ms. Carroll was selected as an independent director nominee, since she was expected to reinforce the functional
aspects of the Company’s Board of Directors by supervising the execution of duties by Executive Officers andothers from an independent perspective as well as reflecting her global viewpoint to the Company’s Board of
Directors based on her rich experience and insight as the top executive of major global companies.

No

4

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

Two years

600

ID

Brief Biography
9/19999/2001
11/2002
10/2004
10/2009
9/20119/2012
Attendance for fiscal 2019
Board of Directors meetings
9 out of 9 days (100%)

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
Mr. Harlan was selected as an independent director nominee, since he was expected to reinforce the functional
aspects of the Company’s Board of Directors by supervising the execution of duties by Executive Officers andothers from an independent perspective as well as reflecting his global viewpoint to the Company’s Board of
Directors based on his rich experience and insight in the area of global corporate management.

6

The first item

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No

5

George Buckley(Date of Birth: Feb. 23, 1947)

RE

OD

Position and Responsibilities at the Company

Term of office as Independent Director

Share Ownership

Independent Director

Eight years

6,000

ID

Brief Biography

Attendance for fiscal 20192/1993
9/1994
7/19974/20006/200012/2005
2/20126/2012

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

Chief Technology Officer, Motors, Drives and Appliances, Emerson Electric Company (USA)President, US Electrical Motors, Emerson Electric Company (USA)President, Mercury Marine Division and Corporate Vice President, Brunswick Corporation (USA)President and Chief Operating Officer, Brunswick Corporation (USA)
Chairman and Chief Executive Officer, Brunswick Corporation (USA)
Chairman of the Board, President and Chief Executive Officer, 3M Company (USA)
Executive Chairman of the Board, 3M Company (USA) (Retired in May 2012)
Chairman, Arle Capital Partners Limited (UK) (Retired in December 2015)
Director, Hitachi, Ltd. (currently in office)

Other Principal Positions Held
Chairman, Smiths Group plc (UK)*
Chairman of the Board, Stanley Black & Decker, Inc. (USA)*
Reason for selection as Independent Director nominee
Mr. Buckley was selected as an independent director nominee, since he was expected to reinforce the functional
aspects of the Company’s Board of Directors by supervising the execution of duties by Executive Officers andothers from an independent perspective as well as reflecting his global viewpoint to the Company’s Board of
Directors based on his rich experience and insight as the top executive of major global companies.

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

Five years

900

ID

Brief Biography

Attendance for fiscal 2019
Board of Directors meetings
8 out of 9 days (89%)

8/19977/20019/20077/20086/20092/20114/20156/20157/20159/2016

Admitted 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)(currently in office)

Other Principal Positions Held
Executive Vice President, Chief Business Affairs and Legal Officer, PayPal Holdings, Inc. (USA)
Reason for selection as Independent Director nominee
Ms. Pentland was selected as an independent director nominee, since she was expected to reinforce the functional
aspects of the Company’s Board of Directors by supervising the execution of duties by Executive Officers andothers from an independent perspective as well as reflecting her global viewpoint to the Company’s Board of
Directors based on deep insight into corporate legal matters and corporate governance gained through her richexperience as the chief legal officer of major global companies.

7

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No

7Harufumi Mochizuki
Position and Responsibilities at the Company
Independent Director
Chairman of the Board
Nominating Committee (Chair)
Member of Audit Committee
Compensation Committee (Chair)(Date of Birth: Jul. 26, 1949)

RE

OD

Term of office as Independent Director

Share Ownership

Eight years

3,600

ID

Brief Biography
4/19737/2002
Attendance for fiscal 2019
Board of Directors meetings
9out of 9 days (100%)
Nominating Committee
8 out of 8 days (100%)
Audit Committee
15 out of 15 days (100%)Compensation Committee
4 out of 4 days (100%)

7/20037/20067/20088/201010/20106/20126/2013Joined Ministry of International Trade and Industry of Japan
Director-General for Commerce and Distribution Policy, Minister’s Secretariat, Ministry of Economy,
Trade and Industry of Japan (“METI”)
Director-General, Small and Medium Enterprise Agency, METI
Director-General, Agency for Natural Resources and Energy, METI
Vice-Minister of Economy, Trade and Industry of Japan
Special Advisor to the Cabinet of Japan (Retired in September 2011)
Senior Adviser to the Board, Nippon Life Insurance Company (Retired in April 2013)
Director, Hitachi, Ltd. (currently in office)President and Representative Director, Tokyo Small and Medium Business Investment & Consultation
Co., Ltd. (currently in office)

Other Principal Positions Held
President and Representative Director, Tokyo Small and Medium Business Investment & Consultation Co., Ltd.
Outside Director, ITOCHU Corporation
Reason for selection as Independent Director nominee
Mr. Mochizuki was selected as an independent director nominee, since he was expected to reinforce the functional
aspects of the Company’s Board of Directors by supervising the execution of duties by Executive Officers andothers from an independent perspective based on his rich experience and insight in the area of public
administration, etc.

No

8

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

Four years

9,300

ID

Brief Biography

Attendance for fiscal 2019
Board of Directors meetings
9 out of 9 days (100%)
Audit Committee
15 out of 15 days (100%)Compensation Committee
4 out of 4days (100%)

4/1975
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
Mr. Yamamoto was selected as an independent director nominee, since he was expected to reinforce the functional
aspects of the Company’s Board of Directors by supervising the execution of duties by Executive Officers andothers from an independent perspective based on a broad range of insight in business and management gained
through his experience in the area of corporate analysis and global corporate management.

8

The first item

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No

9

Hiroaki Yoshihara
Position and Responsibilities at the Company
Independent Director
Member of Nominating Committee
Audit Committee (Chair)(Date of Birth: Feb. 9, 1957)

RE

OD

Term of office as Independent Director

Share Ownership

Six years

2,100

ID

Brief Biography
11/1978
7/1996
10/1997
10/20036/2014
Attendance for fiscal 2019
Board of Directors meetings
9 out of 9 days (100%)
Nominating Committee
8 out of 8 days (100%)
Audit Committee
15 out of 15days (100%)

No

10

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)

Other Principal Positions Held
Outside Director, HOYA CORPORATION
Reason for selection as Independent Director nominee
Mr. Yoshihara was selected as an independent director nominee, since he was expected to reinforce the functional
aspects of the Company’s Board of Directors by supervising the execution of duties by Executive Officers andothers from an independent perspective as well as reflecting his global viewpoint to the Company’s Board of
Directors based on his rich experience and insight in the area of global corporate management and accounting.

Helmuth Ludwig(Date of Birth: Sept. 19, 1962)

NEW

OD

Position and Responsibilities at the Company

Term of office as Independent Director

Share Ownership

-

-

1,500

ID

Brief Biography
6/20018/20028/2007
10/2010
10/2011
10/2014
10/2016
1/2020President, 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)

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)
Reason for selection as Independent Director nominee
Mr. Ludwig was selected as an independent director nominee, since he was expected to reinforce the functional
aspects of the Company’s Board of Directors by supervising the execution of duties by Executive Officers andothers from an independent perspective as well as reflecting his global viewpoint to the Company’s Board of
Directors based on his rich experience and insight in the area of global corporate management and digital business.

9

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No

11

Hideaki Seki

(Date of Birth: Mar. 10, 1957)

Position and Responsibilities at the Company

Share Ownership

Associate

11,200NEW

Brief Biography
4/19794/20114/20134/20144/20154/20164/20184/2020Joined 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. (currently in office)Reason for selection as Director nominee
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 anda proven performance record.

No

12

Hiroaki Nakanishi(Date of Birth: Mar. 14, 1946)

Position and Responsibilities at the Company
Executive Chairman andExecutive Officer
Member of Nominating Committee

RE

Share Ownership
117,300

Brief Biography
4/19706/20034/20046/2005
Attendance for fiscal 2019
Board of Directors meetings
8 out of 9 days (89%)
Nominating Committee
7 out of 8 days (88%)

4/20064/20094/20106/20104/20144/20164/2018Joined Hitachi, Ltd.
Vice President and Executive Officer
Senior Vice President and Executive Officer
Chairman and Chief Executive Officer, Hitachi Global Storage Technologies, Inc. (Retired as CEO in
March 2009)
Executive Vice President and Executive Officer, Hitachi, Ltd. (Retired in December 2006)
Representative Executive Officer, Executive Vice President and Executive Officer, Hitachi, Ltd.
Chairman of the Board, Hitachi Global Storage Technologies, Inc. (Retired in March 2010)
Representative Executive Officer and President, Hitachi, Ltd.
Representative Executive Officer, President and Director, Hitachi, Ltd.
Representative Executive Officer, Chairman & CEO and Director, Hitachi, Ltd.
Representative Executive Officer, Executive Chairman, Hitachi, Ltd.
Executive Chairman, Hitachi, Ltd. (currently in office)

Other Principal Positions Held
Chairman, Japan Business Federation
Reason for selection as Director nominee
Mr. Nakanishi has rich experience and a proven performance record, having been engaged in business
management in the fields of information & telecommunication systems business, social infrastructure business andhard disk drives business, both at the Company and at overseas 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 since April
2010 as President, and as Chairman and CEO since April 2014. He has been serving as Executive Chairman sinceApril 2016. Mr. Nakanishi was selected as a director nominee, since he was expected to promote information
sharing and draw on his rich experience and performance record to reinforce the decision-making function of theBoard of Directors as a member of the Board.

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13

No

Toshiaki Higashihara
Position and Responsibilities at the Company
Representative Executive Officer,
President & CEO and Director
Member of Compensation Committee(Date of Birth: Feb. 16, 1955)

RE

Share Ownership
135,200

Brief Biography

Attendance for fiscal 2019
Board of Directors meetings
9 out of 9 days (100%)Compensation Committee
4 out of 4 days (100%)

4/19774/20074/20084/20106/20104/20114/20134/20146/20144/2016

Joined 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. (currently in office)Reason for selection as Director nominee
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 & COO since April 2014 and as President& CEO since April 2016. Mr. Higashihara was selected as a director nominee, since he was expected to continue topromote information sharing and draw on his rich experience and performance record to reinforce the decisionmaking function of the Board of Directors as a member of the Board.

Notes:
1.

Messrs. Katsumi Ihara, Ravi Venkatesan, Joe Harlan, George Buckley, Harufumi Mochizuki, 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 Regulationsof the Companies Act. The Company has reported all of them as independent directors to the Japanese stock exchanges
where the Company is listed.
2. The Company maintains a limited liability agreement (hereinafter referred to as “Agreement”) with Messrs. Katsumi Ihara, Joe
Harlan, George Buckley, Harufumi Mochizuki, Takatoshi Yamamoto and Hiroaki Yoshihara and Mses. Cynthia Carroll andLouise Pentland. The general intent of the Agreement is to limit the liability of Directors provided for in Article 423, Paragraph 1of the Companies Act to the aggregate amount of each item stipulated under Article 425, Paragraph 1 of the Companies Act.
The Agreement will be renewed should the aforementioned individuals be re-elected at this Meeting. Should Messrs. Ravi
Venkatesan, Helmuth Ludwig and Hideaki Seki be elected, the Company will newly enter into the same agreement with each ofthem.
3. ITOCHU Corporation, where Mr. Harufumi Mochizuki serves as an outside director, was found to have committed breaches ofAntimonopoly Act for its activities regarding its sales and distribution of uniforms, and the Japan Fair Trade Commission issued
cease and desist orders and a surcharge payment order to ITOCHU Corporation in 2018. Mr. Mochizuki has been constantly
expressing his opinions for the importance of compliance at the company's Board of Directors, etc. After the aforementioned
facts were found, Mr. Mochizuki has proactively expressed suggestions for taking preventive measures and enhancing thecompliance management system.
4. SUBARU CORPORATION, where Mr. Takatoshi Yamamoto had served as an outside corporate auditor from June 2012 toJune 2016, identified certain incidents of improper conduct regarding final vehicle inspections. The Ministry of Land,
Infrastructure, Transport and Tourism made recommendation with respect to preventive measures and issued administrativefines in accordance with the Road Transport Vehicle Act. In March 2019, the Tokyo District Court imposed the fines and thecompany paid them. Mr. Yamamoto had constantly expressed his opinions for the importance of compliance at the company's
Board of Directors, etc. even though he was not aware of the incidents during his terms of office.
5. Mr. Hiroaki Yoshihara served as Non-Executive Director (a similar position to outside director under the Companies Act) at theCompany’s overseas subsidiaries from September 2008 to March 2012.
6. In the event this agenda is approved, the members and the chair of the committees are expected to be as follows:
Nominating Committee:Harufumi Mochizuki (Chair), Cynthia Carroll, Hiroaki Yoshihara, Hiroaki Nakanishi
Audit Committee:Hiroaki Yoshihara (Chair), Katsumi Ihara, Harufumi Mochizuki, Takatoshi Yamamoto,
Hideaki Seki
Compensation Committee :Harufumi Mochizuki (Chair), Katsumi Ihara, Takatoshi Yamamoto, Toshiaki Higashihara
7. The Company has no transactions with PayPal Holdings, Inc., where Ms. Louise Pentland is currently serving as Executive
Vice President, Chief Business Affairs and Legal Officer, with Tokyo Small and Medium Business Investment & Consultation
Co., Ltd., where Mr. Harufumi Mochizuki is currently serving as President and Representative Director, with Unitus Ventures
LLC., where Mr. Venkatesan is currently serving as Venture Partner, with UNICEF, where Mr. Venkatesan is currently servingas Special Representative for Young People & Innovation and with Southern Methodist University, where Mr. Ludwig iscurrently serving as Professor of Practice.
8. The Company has no transactions whose volume is more than 1% of the Company's consolidated revenues or eachcompany's respective consolidated revenues with Sony Financial Holdings Inc. (including its operating companies such as
Sony Insurance Co., 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 August 2017) and Siemens AG, where Mr. Helmuth Ludwig had served as Chief Information Officer (retired in
December 2019).
9. Mr. Hiroaki Yoshihara served as Vice Chairman of KPMG International until April 2007. However, the Accounting Auditors of
the Company do not belong to the KPMG Group. In addition, there is no contractual relationship between Mr. Yoshihara andthe Company in relation to accounting and other professional services or consulting services, etc.
10. The positions with * in “Other Principal Positions Held” of each nominee are similar positions in each of the foreign corporations
to outside director under the Companies Act.

11

The first item

2020/06/24 9:36:54 / 19610125_株式会社日立製作所_招集通知（Ｃ）(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 indeciding the matters relating to a proposal concerning election and removal of directors to be submitted to the General
Meeting of 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, theNominating Committee may nominate a person over 75 as a director candidate in special circumstances.
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 in direct compensation for hisor 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 and 2% ofthat organization's annual gross revenues.
* An "immediate family member" includes a person's spouse, parents, children, siblings, grand-parents, grandchildren, mothers and fathers-in-law, sons and daughters-in-law, spouses of siblings, grand-parents-in-law, grandchildren-in-law, 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

12

The first item

2020/06/24 9:36:54 / 19610125_株式会社日立製作所_招集通知（Ｃ）

Business Report (from April 1, 2019 to March 31, 2020)(1) Business Overview and Results of Hitachi Group
Business Results
While the business environment deteriorates due to the spread of COVID-19, the Hitachi Group maintained its
profitability (adjusted operating income ratio of 7.5%) close to the level in the previous fiscal year and cash flows fromoperating activities reached a little more than 560.0 billion yen as a result of strengthening the business foundation byfocusing on the Social Innovation Business since the global financial crisis of 2007 to 2008 and promoting businessportfolio reforms,.
Annual dividends increased 5 yen per share from the previous fiscal year to 95 yen (interim dividends of 45
yen and year-end dividends of 50 yen) due to progress in the enhancement of our profitability and the ability to generate
cash.
Revenues decreased 8% from the previous fiscal year to 8,767.2 billion yen due mainly to lower sales owing to
COVID-19 and the impact of the sale of businesses associated with the business portfolio reforms.
Adjusted operating income decreased from the previous fiscal year to 661.8 billion yen due to the impact of
COVID-19, in addition to lower income in Hitachi Construction Machinery and Hitachi Metals, etc. while the IT sector,
which achieved a record-high profit, supported overall income. Earnings before interest and taxes (EBIT) was 183.6
billion yen due to the posting of a loss for the settlement on projects in South Africa conducted by Mitsubishi Hitachi
Power Systems, Ltd. in the energy sector, and net income attributable to Hitachi, Ltd. stockholders was 87.5 billion yen.
Measures Taken and Aims
‒ Acceleration of the reorganization to become a global leader
In the Industry sector, we acquired JR Automation Technologies, LLC in the United States that builds productionlines and logistics systems by utilizing industrial robots. We will strengthen the robot systems integration business inNorth America, for which high growth can be expected.
In the automotive systems business, we acquired Chassis Brakes International B.V. in the Netherlands andmade a decision on management integration among three affiliates of Honda Motor Co., Ltd. and Hitachi Automotive
Systems, Ltd. We will strengthen our competitiveness in the industry where competition will be intensified toward nextgeneration technologies such as autonomous driving and electrification.
We also promoted selection and concentration to build an optimum business portfolio, which Hitachi aims for,including the sale of diagnostic imaging systems-related businesses in the healthcare business, in addition to thereorganization of listed subsidiaries including the conversion of Hitachi High-Tech Corporation with strengths inmeasurement and analysis technologies into a wholly-owned subsidiary and the sale of Hitachi Chemical Company, Ltd.
‒ Progress in the Lumada businessIn the Lumada business that analyzes issues of customers from their data and provides solutions by using
advanced digital technologies of the Hitachi Group, we steadily expanded the areas of provision from the manufacturingindustry to financial services, building systems and the entertainment industry. In Fiscal 2019, the Lumada business grew
to make up 12%, or 1,037.0 billion yen, of total revenues of the Hitachi Group.
In January 2020, our two subsidiaries in the United States were integrated to a new company, "Hitachi Vantara."
The new company will drive the Lumada business by playing a central role in providing sales, consulting and services
globally as a one-stop company.
‒ Strengthening of the business foundation and response to management issues
We have been promoting the focus on the Social Innovation Business and the business portfolio reforms for thelast 10 years and built a strong business structure that is able to make a profit and generate cash even under the effects
of COVID-19.
In Fiscal 2019, we strengthened our ability to generate cash and the earnings structure by promoting thesophistication of our business processes and production systems and cost structural reforms, including the streamliningof sales and indirect operations. In addition, we also reached a settlement with Mitsubishi Heavy Industries, Ltd.
regarding the dispute over the South African projects, which had been one of our major management issues.

13

Business Results2020/06/24 9:36:54 / 19610125_株式会社日立製作所_招集通知（Ｃ）

Consolidated Financial Results for Fiscal 2019 (Billions of yen)

Revenues

Adjusted operating income※1

8,767.2
661.8(Adjusted operating income ratio)
Earnings before interest andtaxes (EBIT)※2

Net Income Attributable to Hitachi,Ltd. Stockholders

Return on Invested Capital(ROIC)※3

Year over year

-8%

Year over year

-12%

183.6

Year over year

-64%

87.5

Year over year

-61%

(

7.5%)

9.4%

Year over year

+0.9

※1 "Adjusted operating income" is presented as revenues less cost of sales as well as selling, general and administrative expenses.
※2 "Earnings before interest and taxes (EBIT)" is presented as income from continuing operations, before income taxes less interest income plus interest charges.
※3 ROIC (Return on Invested Capital) = ("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

Billions of yen
Others

484.8
(5%)*

Hitachi Chemical

631.4
(7%)*

Hitachi Metals

881.4
(9%)*

931.3
HitachiConstruction Machinery (10%)*
Hitachi High-Tech

Smart LifeIT

Energy

399.2
(4%)*

Industry

840.7
(9%)*

Mobility

1,144.4(12%)*

Revenues

8,767.2

694.6
(7%)*
1,472.9(15%)** Percentage to total revenues
Note: Revenues by segment include intersegment transactions.

14

Business Results

2,099.4(22%)*

2020/06/24 9:36:54 / 19610125_株式会社日立製作所_招集通知（Ｃ）

Reference: Lumada Business

What is Lumada?
"Lumada" is a general term for the solutions, services and technologies that utilize Hitachi’s advanced
digital technologies to create value from customers’ data and drive digital innovation.
The Lumada business provides value by analyzing customer's issues and combining Hitachi’s digitaltechnologies to solve customer problems with the least amount of customization as possible. We will expand theLumada business by leveraging our strengths in OT (operational technology), IT and products, and converting our
expertise in various industries and operations into solutions that can be provided to customers.

Raise peoples’ QoL* and customers’ corporate value
Improvesocial value

Improveenvironmental value

Improveeconomic value

Simultaneously improve the three customer values through our five solutions

IT solutions

Energy solutions

Industry solutions

Mobility solutions

Smart Life solutions

Products

Products

Products

Products

Products*QoL:Quality of Life

Listed subsidiaries
197.0

Smart Life
34.0

Revenue(FY2019)IT
388.0

1,037.0

Mobility
224.0
Industry
153.0

Energy41.0
Billions of yen

15

特集

Lumada事業の進捗報告

事例（仮）2020/06/24 9:36:54 / 19610125_株式会社日立製作所_招集通知（Ｃ）

Lumada Business Cases
Hitachi's technology, hired for data utilization platform that Tokyo Stock
Exchange newly started operating, has realized optimization of operation
IT
Solutionand utilization of information asset. The expansion to the systems toanalyze and report trading data from various perspectives, etc. is planned.

At the solar power plant in Niimi, Okayama, performance degradation of
power generation has been prevented through high-precision oversight ofEnergySolutiondeterioration and breakdown of solar panels, and maintenance inaccordance with the situation.

Through collaborative creation with frozen food pioneer Nichirei Foods, aIndustrysolution

system that utilizes Lumada to automatically formulate optimum
production and personnel plans was installed at four food plants in Japan.

EMIEW, a communication robot that provides reception, information andpatrol monitoring services and supports in-building business operations,
Mobility

has been commercialized for use mainly in offices, hospitals, welfare

Solution

facilities.

Hitachi has launched a new range of connected products including robotic
Smart Life
Solution

vacuum cleaners, refrigerators and washing machines that can becontrolled and managed from a smartphone.

16

特集

Lumada事業の進捗報告

事例（仮）2020/06/24 9:36:54 / 19610125_株式会社日立製作所_招集通知（Ｃ）

Results by Segment (Billions of yen)

IT
Main Products and Services(As of March 31, 2020)

Systems Integration, Consulting, Control Systems, Cloud
Services, Software, IT Products (Storage, Servers), ATMs

Revenues
Adjusted
operatingincomeEBIT2,099.4 billion yen
99% of the preceding fiscal year

249.4 billion yen
108% of the preceding fiscal year

214.4 billion yen
101% of the preceding fiscal year(－) Impact due to COVID-19(－) Decline in storage systems for overseas markets(＋) Increase in IT services in Japan (including projects for one-time
demand)Achieved the record-high profit (11.9% of adjusted operating income
ratio)(－) Increase in strategic investments aimed at expanding digitalsolutions business(＋) Improved profitability from cost reductions, etc.
(＋) Increase in adjusted operating income(－) Lower profit from the sale of lands of former production base(－) Structural reform expenses* (＋) means main factor of increase while (－) means main factor of decrease.

[The Lumada Business Strategy]
The IT sector drives all areas of Hitachi’s business as the core of the Lumada business. During the term of the2021 Mid-term Management Plan, the IT sector continues to pursue an aggressive investment strategy related to
the Lumada business and strives to encourage and expand the utilization of Lumada in other sectors, and increase
the number of digital talents to around 30,000 by Fiscal 2021 by cultivating and enhancing digital talents who are
essential for accelerating the Lumada business. The IT sector will also work to expand the Lumada businessoverseas while also making use of M&A activities and strategic partnering.
Revenues
2,121.6 2,099.4

2018

Data analytics-related solutions

17

Results by Segment

2019

Adjusted operating income
230.1

2018

EBIT Billions of yen

249.4

2019

212.6

214.4

2018

2019 (FY)2020/06/24 9:36:54 / 19610125_株式会社日立製作所_招集通知（Ｃ）

EnergyMain Products and Services(As of March 31, 2020)

Energy Solutions (Nuclear, Renewable Energy, Thermal, Power
Grid)

Revenues
Adjusted
operatingincomeEBIT

399.2 billion yen
88% of the preceding fiscal year

13.5 billion yen
40% of the preceding fiscal year

- 375.7 billion yen- of the preceding fiscal year(－) Impact due to COVID-19(－) Impact due to transfer of receiving and transforming facilities forindustry(－) Decline in projects related to new nuclear regulation in the
nuclear energy business(－) Decrease in revenues(－) Decline in profitability of some projects in the renewable energy
business(－) Loss for the settlement on South Africa projects(＋) Clearance of impairment loss for the suspension of UK nuclear
power stations construction project in the preceding fiscal year

[The Lumada Business Strategy]
The Energy sector will contribute to the stable supply of energy and realization of a decarbonized society by
developing sophisticated energy management systems such as enhancement of management and optimization ofmaintenance and inspection at energy-related facilities with Lumada, leveraging expertise and digital technologies
which Hitachi has been cultivating. The Energy sector will also strengthen the Lumada-based grid solutions andservices business through the integration of the ABB's power grid business, which boasts a track record with theglobal top technology, while accelerating the expansion of the global business by leveraging its expertise andresources.
Revenues
453.9

Adjusted operating income
34.0

EBIT Billions of yen
20182019 (FY)

399.2

13.5
-298.02018

Ultra-high voltage gas insulated switching equipment

2019

2018

2019

-375.7* The thermal power generation systems business is mainly conducted by Mitsubishi Hitachi Power Systems, Ltd., an equity-method
affiliate of the Company

18

Results by Segment

2020/06/24 9:36:54 / 19610125_株式会社日立製作所_招集通知（Ｃ）

Industry
Main Products and Services(As of March 31, 2020)

Industry & Distribution Systems, Water & Environment Systems,
Industrial Machinery

Revenues
Adjusted
operatingincomeEBIT

840.7 billion yen
94% of the preceding fiscal year

54.7 billion yen
265% of the preceding fiscal year

57.8 billion yen
303% of the preceding fiscal year(－) Impact due to COVID-19(－) Decrease in revenues of the business for industry & distribution,
which recorded large-scale projects in the preceding fiscal year(＋) Impact due to the acquisition of JR Automation(＋) Clearance of Posting Cost of risk for large-scale projects of thebusiness for industry & distribution in the preceding fiscal year(＋) Steady performance of digital solutions business(＋) Increase in adjusted operating income[The Lumada Business Strategy]
Lumada will be utilized in products, OT and IT to provide digital solutions that link the value chain from management tofield operations, and from procurement to manufacturing, distribution, sales, services and maintenance. In doing so, theIndustry sector will strive to become the best solution partner to customers in the field of industry.
Revenues
895.4

Adjusted operating income

2018

19

Results by Segment

2019

57.8

54.7

840.7

20.6

Robot system integration business of JR Automation

EBIT Billions of yen

2018

19.1

2019

2018

2019 (FY)2020/06/24 9:36:54 / 19610125_株式会社日立製作所_招集通知（Ｃ）

Mobility
Main Products and Services(As of March 31, 2020)

Building Systems (Elevators, Escalators), Railway Systems

1,144.4 billion yen

Revenues(－) Impact due to COVID-19(－) Decrease in revenues of the railway systems business in the UK(＋) Impact due to exchange rates

94% of the preceding fiscal year

Adjusted
operatingincome92.3 billion yen(－) Decrease in revenues(－) Profitability improvement due to cost reductions, etc. of thebuilding systems business

100% of the preceding fiscal year

112.3 billion yen

EBIT(－) Decrease in gains from selling a part of Agility Trains Weststocks

88% of the preceding fiscal year

[The Lumada Business Strategy]
In the building systems business, the Mobility sector will upgrade and exchange solutions utilizing Lumada in
addition to offering products such as elevators and services boasting excellent technical capabilities andcompetitiveness. In the railway systems business, the Mobility sector will enhance added value of maintenanceservices by analyzing the data collected from railway vehicles, as well as providing safe, secured and comfortablemobility services through contributing to total solutions such as operational management and unmannedautonomous driving.
Revenues
1,214.1

Class 800 for the Intercity Express Programme (IEP) in the UK

20

Results by Segment

2018

Adjusted operating income

127.4

1,144.4

2019

EBIT Billions of yen

112.3
92.6

92.3

2018

2019

2018

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Smart Life
Main Products and Services(As of March 31, 2020)

Medical Electronics, Smart Life & Ecofriendly Systems(Refrigerators, Washing Machines, Room Air Conditioners, AirConditioning Equipment), Automotive Systems (Powertrain
Systems, Chassis Systems, Advanced Driver Assistance Systems)

Revenues
Adjusted
operatingincomeEBIT

1,472.9 billion yen
89% of the preceding fiscal year

58.6 billion yen
90% of the preceding fiscal year

29.5 billion yen
25% of the preceding fiscal year(－) Impact due to COVID-19(－) Impact due to divestitures of the car information systems
business, etc.
(＋) Impact due to the acquisition of Chassis Brakes International(－) Decrease in revenues(－) Profitability improvement in home appliances business andhealthcare business(－) Decrease in adjusted operating income(－) Clearance of gains by selling the car information systems
business, etc. in the preceding fiscal year

[The Lumada Business Strategy]
The Smart Life sector will contribute to more convenient and enriched lives through connecting automobiles, home
appliances, healthcare devices and other equipment that supports people’s daily lives to the Internet and utilizing
data analysis technology of Lumada for remote operation and management and the automation. The Smart Life
sector will also strive to expand the Lumada business mainly in the smart city market in Asia amid growing
urbanization.
Revenues
1,649.3

Adjusted operating income

EBIT Billions of yen
116.9

1,472.9

64.9

58.6
29.5

2018

Particle therapy system

21

Results by Segment

2019

2018

2019

2018

2019 (FY)2020/06/24 9:36:54 / 19610125_株式会社日立製作所_招集通知（Ｃ）

Hitachi High-Tech
Revenues
Adjusted
operatingincomeMain Products andServices(As of March 31, 2020)

694.6 billion yen
95% of the preceding fiscal year

60.3 billion yen
90% of the preceding fiscal year

60.4 billion yen

EBIT

94% of the preceding fiscal year

Medical and Life Science Products, Analytical Equipment,
Semiconductor Processing Equipment, Manufacturing andInspection Equipment, Advanced Industrial Products(－) Impact due to COVID-19(－) Decrease in demand for industrial products, etc., and decrease
in revenues of liquid crystal exposure systems(－) Decrease in revenues(－) Decrease in adjusted operating income

Revenues
731.1

694.6

EBIT Billions of yen

Adjusted operating income
66.7

60.3

64.2

60.4

LABOSPECT 008α automaticbiochemical analyzer
2018

Hitachi Construction
Machinery
Revenues
Adjusted
operatingincomeEBIT

Main Products andServices(As of March 31, 2020)

931.3 billion yen
90% of the preceding fiscal year

75.5 billion yen
65% of the preceding fiscal year

70.5 billion yen
68% of the preceding fiscal year

2019

2018

2019

2018

2019 (FY)

Hydraulic Excavators, Wheel Loaders, Mining Machinery,
Maintenance and Services, Construction Solutions, MineManagement Systems(－) Impact due to COVID-19(－) Impact due to foreign exchange(－) Decrease in revenues(－) Impact due to foreign exchange(－) Decrease in adjusted operating income(－) Structural reform expenses
Revenues
1,033.7

931.3

Adjusted operating income
115.7

EBIT Billions of yen

104.5
75.5

70.5

Ultra-large hydraulic excavator and rigid
dump truck for mining
2018

22

Results by Segment

2019

2018

2019

2018

2019 (FY)2020/06/24 9:36:54 / 19610125_株式会社日立製作所_招集通知（Ｃ）

Main Products andServices

Hitachi Metals
Revenues
Adjusted
operatingincomeEBIT(As of March 31, 2020)

881.4 billion yen
86% of the preceding fiscal year

14.3 billion yen
28% of the preceding fiscal year

- 57.2 billion yen- of the preceding fiscal year

Specialty Steel Products, Functional Components and Equipment,
Magnetic Materials and Power Electronics Materials, Wires, Cables
and Related Products(－) Impact due to COVID-19(－) Decrease in demand for automotive, semiconductor and factory
automation(－) Decrease in revenues(－) Revaluation loss on inventories(－) Decrease in adjusted operating income(－) Impairment loss on fixed assets and goodwill in magnetic
materials business
Revenues
1,023.4

EBIT Billions of yen

Adjusted operating income
51.4

45.3

881.4

2018

14.3

Clad metals for lithium-ion batteries

2018

Hitachi Chemical
Revenues
Adjusted
operatingincomeEBIT2019 (FY)

Main Products andServices(As of March 31, 2020)

631.4 billion yen
93% of the preceding fiscal year

35.2 billion yen
73% of the preceding fiscal year

24.8 billion yen
60% of the preceding fiscal year

2019

2018

-57.2

2019

Functional Materials (Electronics Materials, Printed Wiring Boards
Materials, Electronics Components), Advanced Components andSystems (Mobility Components, Energy Storage Devices, Life
Science-related Products)(－) Impact due to COVID-19(－) Decrease in demand for automotive and semiconductor(－) Decrease in revenues(－) Decrease in adjusted operating income

Revenues
681.0

631.4

Adjusted operating income

EBIT Billions of yen

48.5

41.1
35.2

24.8

Laminated materials for printed circuitboards
2018

23

Results by Segment

2019

2018

2019

2018

2019 (FY)2020/06/24 9:36:54 / 19610125_株式会社日立製作所_招集通知（Ｃ）

Others

Revenues
Adjusted
operatingincomeEBIT

Main Products andServices

Optical Disk Drives, Property Management(As of March 31, 2020)

484.8 billion yen
86% of the preceding fiscal year

Revenues
561.3

22.3 billion yen

31.3

EBIT Billions of yen
30.2

31.2

2018

2019 (FY)

484.8
22.3

71% of the preceding fiscal year

31.2 billion yen
103% of the preceding fiscal year
2018

24

Results by Segment

Adjusted operating income

2019

2018

2019

2020/06/24 9:36:54 / 19610125_株式会社日立製作所_招集通知（Ｃ）

Revenues and Operating Results by Segment(Billions of yen)Segment■ IT■ Energy■ Industry■ Mobility■ Smart Life
■ Hitachi High-Tech

Revenues
FiscalFiscal2018(A) 2019(B)(B)/(A)

Adjusted Operating Income
FiscalFiscal(B)/(A)
2018(A) 2019(B)Fiscal2018(A)EBIT
Fiscal2019(B)(B)/(A)

2,121.6453.9
895.4
1,214.1
1,649.3
731.1

2,099.4
399.2
840.7
1,144.4
1,472.9
694.6

99%
88
94
94
89
95

230.1
34.0
20.6
92.6
64.9
66.7

249.4
13.5
54.7
92.3
58.6
60.3

108%
40
265
100
90
90

212.6
(298.0)
19.1
127.4
116.9
64.2

214.4
(375.7)
57.8
112.3
29.5
60.4

101%
303
88
25
94

■ Machinery

1,033.7

931.3

90

115.7

75.5

65

104.5

70.5

68

■ Hitachi Metals■ Hitachi Chemical■ Others

1,023.4
681.0
561.3
10,365.1

881.4
631.4
484.8
9,580.5

86
93
86
92

51.4
48.5
31.3
756.2

14.3
35.2
22.3
676.4

28
73
71
89

45.3
41.1
30.2
463.5

(57.2)
24.8
31.2
168.2

60
103
36

(884.5)(813.2)-(1.2)(14.6)

-

50.3

15.3

-

9,480.6

8,767.2

92

754.9

661.8

88

513.9

183.6

36

Hitachi Construction

Subtotal
Corporate Items &Eliminations
Total

Notes: 1. The consolidated financial statements of the Company have been prepared in conformity with the International Financial
Reporting Standards (IFRS).
2. Revenues by segment include intersegment transactions.
3. "Adjusted operating income" is presented as revenues less cost of sales as well as selling, general and administrative
expenses.
4. "EBIT" is presented as income from continuing operations, before income taxes less interest income plus interest charges.
5. From Fiscal 2019, the classification of segments has been changed and the figures for each segment, including ones forthe preceding fiscal year reflect the new classification.

Reference

Overseas Revenues Trends

Revenues by Market (Fiscal 2019)(Billions)¥5,000Japan 52%

Overseas Revenues 48%

4,802.7(48%)

4,404.5(48%)

4,725.5(50%)

4,816.0(51%)

4,238.1
(48%)

4,000

Asia 20%

3,000
2,000

North America 13%

1,000Europe 10%
0

Other Areas 5%20182019 (FY)
2015
2016
2017
Note: The number in parentheses is the percentage of overseas revenues
to total revenues.

25

Revenues and EBIT by Segment

2020/06/24 9:36:54 / 19610125_株式会社日立製作所_招集通知（Ｃ）(2) Five-year Summary of Assets and Results of Operation of Hitachi Group
1) Consolidated Basis(Billions of yen)
Fiscal Year

2015

2016

2017

2018

2019

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

10,034.3
634.8
531.0
517.0

9,162.2
587.3
475.1
469.0

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

172.1

231.2

362.9

222.5

87.5

12,551.0

9,663.9

10,106.6

9,626.5

9,930.0

2015

2016

2017

2018

2019

1,859.6
0.3(20.9)
64.9
3,868.6

1,906.5
(9.8)
71.5
97.7
4,070.2

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

2) Unconsolidated Basis(Billions of yen)
Fiscal Year

Revenues
Operating Income (Loss)
Ordinary Income (Loss)Net Income
Total Assets

Note: In Fiscal 2019, operating income and ordinary income increased from the previous fiscal year due mainly to the affect of solid
performance of the IT sector. However, net income decreased from the previous fiscal year due to the extraordinary losses
such as loss for the settlement on the South Africa projects.

26

Five-year Summary of Assets and Results of Operation of Hitachi Group

2020/06/24 9:36:54 / 19610125_株式会社日立製作所_招集通知（Ｃ）(3) Course of Actions to Take Considering Challenges for Hitachi Group
Under the 2021 Mid-term Management Plan, we will offer solutions to solve the various issues our society faces
through the provision of the social innovation business. We will simultaneously improve three areas of customer value,
namely social value (solving social issues), environmental value (reducing the impact on the environment) and economic
value (improving business performance), and contribute to the realization of a human-centric society.
The COVID-19 has brought about dramatic changes in society, the economy and other areas on a global scale,and the future of the global economy remains uncertain. Even in these difficult times, we will focus on implementing thefollowing measures in pursuit of progress towards achieving our mid-term management plan.
- Contributing to society through business activities
We will accelerate value creation in the new society brought about by COVID-19 through the social
innovation business utilizing digital technologies.
We will be among the first to respond to rapid changes in society and new challenges such as demands forremote solutions, non-contact applications and automation, and seek to develop and seize upon business
opportunities by achieving the value society demands.
In particular, we will enhance the provision of solutions in areas where its strengths lie, such as
manufacturing industry automation, supply chain optimization, data utilization in the field of government & public
corporation, social infrastructure and healthcare, and support for workstyle reforms such as people utilizing IT toremote work. In catering to new needs, we will also seek to fully utilize Lumada, the core of our digital business, andstrive to expand our business.
- Striving to become a leader in the creation of environmental value
To contribute to the creation of a sustainable society, we will newly established the advanced goal of
becoming “carbon neutral in in-house production by Fiscal 2030 in an effort to transform itself into a leading
company in the creation of environmental value. In addition to internal efforts to reduce carbon dioxide emissions byreviewing product designs, adopting energy-efficient manufacturing equipment and other measures, we will also
support customers and procurement partners in their environmental efforts and accelerate initiatives to realize
environmental value.
- Continued efforts to strengthen the management base
By utilizing the human resources, technologies and customer bases in the digital field acquired throughinvestments focused on the IT and Industry sectors, as well as the acquisition and integration of ABB’s power gridbusiness in the Energy sector, we will further promote the reform of our business portfolio.
We will also promote the streamlining and optimization of business operations at the company-wide level,by utilizing digital technologies such as by reviewing business processes adapted for remote work. At the sametime, we will continue to promote investment yield management using return on investment capital (ROIC),
inventory asset reduction and reduced working capital, in an effort to boost profitability and the ability to generate
cash.
Leveraging the strengths of the Hitachi Group in a wide range of business fields, all in Hitachi Group will make aunited effort to overcome this crisis together with all of our stakeholders.

27

Challenges Facing Hitachi Group

2020/06/24 9:36:54 / 19610125_株式会社日立製作所_招集通知（Ｃ）(4) Borrowings and Financing Activity of Hitachi Group
Major Financing Activities
The Company issued unsecured straight bonds in March 2020, procuring a total of 200.0 billion yen to fundinvestment for growth.
Hitachi Construction Machinery Co., Ltd. issued unsecured straight bonds in March 2020, procuring a total of
30.0 billion yen to fund the repayment of short-term borrowings.
Major Borrowings (As of March 31, 2020)
Name of Company

The Company

Creditor

Balance of Borrowings

Mizuho Bank, Ltd.
Japan Bank for International Cooperation
MUFG Bank, Ltd.

30.0 billion yen
20.6 billion yen
20.0 billion yen

Note: In addition to the figures shown above, the Company owes 234.0 billion yen of long-term borrowings by means of syndicatedloan agreements.

(5) Capital Investment of Hitachi Group
During fiscal 2019, the Hitachi Group carried out capital investment of 399.6 billion yen, a decrease of 15.1
billion yen from the preceding fiscal year, for further global business expansion. However, the total investment decreased
from the preceding fiscal year mainly due to the suspension of UK nuclear power stations construction project. A
breakdown of capital investment by segment is shown below.

Segment
IT
EnergyIndustry
Mobility
Smart Life
Hitachi High-Tech
Hitachi Construction Machinery
Hitachi Metals
Hitachi Chemical
OthersCorporate Items & Eliminations
Total(Billions of yen)Amount
63.8
6.7
12.8
16.7
79.8
28.0
47.1
51.6
45.3
39.1
8.2
399.6

Capital Investment Trends(Billions)

¥600

528.5
500
400

377.5

374.9

2016

2017

414.7

399.6

2018

2019 (FY)

300
200
100
0

2015

(6) Research and Development of Hitachi Group
Expenses on research and development during fiscal 2019 amounted to 293.7 billion yen.
The Hitachi Group has been conducting R&D to contribute to society, environment and economic value by
working on reinforcement of the collaboration among industry, academia and government, and that with startups, and on
evolution of co-creation with customers and partners as well as focusing on Artificial Intelligence, movie and voice
analysis, sensing, electrification, 5G (the fifth-generation mobile communications system), robotics and security.
A breakdown of R&D expenses by segment is shown below.

Segment
IT
EnergyIndustry
Mobility
Smart Life
Hitachi High-Tech
Hitachi Construction Machinery
Hitachi Metals
Hitachi Chemical
OthersCorporate Items
Total(Billions of yen)Amount
53.2
7.7
11.6
29.4
61.8
32.9
23.7
15.9
32.2
3.8
21.3
293.7

Research and Development Expenses Trends(Billions)

¥400

333.7

323.9

332.9

2016

2017

323.1

300

293.7

200

100

0

2015

2018

2019 (FY)28

Borrowings and Financing Activity of Hitachi Group、Capital Investment of Hitachi Group、Research and Development of Hitachi Group

2020/06/24 9:36:54 / 19610125_株式会社日立製作所_招集通知（Ｃ）(7) Employees of Hitachi Group (As of March 31, 2020)
Segment

Number of Employees

Change from the End of
the Preceding Year72,9998,876
24,21546,84745,371
10,95424,27429,677
21,852
12,8903,101
301,056
31,442 )-1,304-1,638+3,588+97+3,688
+347
+183
-382
+16
+237
+283
+5,115-2,048 )IT
EnergyIndustry
Mobility
Smart Life
Hitachi High-Tech
Hitachi Construction Machinery
Hitachi Metals
Hitachi Chemical
OthersCorporate (Head Office and others)
Total(the Company)((

Note: In addition to the figures shown above, the average number of part-time employees during fiscal 2019 at the Hitachi Group was
23,094 (of which, 1,132 worked at the Company).

(8) Major Facilities of Hitachi Group (As of March 31, 2020)
Major Facilities of the Company
Location

Head Office
R&D
Manufacturing,
Design andEngineering

Sales andArea Operations

Tokyo (Chiyoda-ku)
Tokyo (Kokubunji), Ibaraki (Hitachi, Hitachinaka), Saitama (Hatoyama), Kanagawa (Yokohama)Tokyo (Minato-ku, Chiyoda-ku, Toshima-ku, Shinagawa-ku, Taito-ku, Mitaka), Ibaraki (Hitachi,
Hitachinaka), Kanagawa (Kawasaki, Yokohama, Hadano, Odawara), Yamaguchi (Kudamatsu)
Tokyo (Chiyoda-ku, Taito-ku, Shinagawa-ku, Toshima-ku, Minato-ku), Hokkaido Area Operation(Chuo-ku, Sapporo), Tohoku Area Operation (Aoba-ku, Sendai), Kanto Area Operation (Chiyodaku, Tokyo), Yokohama Area Operation (Nishi-ku, Yokohama), 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.”

29

Employees of Hitachi Group、Major Facilities of Hitachi Group

2020/06/24 9:36:54 / 19610125_株式会社日立製作所_招集通知（Ｃ）(9) Major Hitachi Group Companies (As of March 31, 2020)
Name of Company

Location

Ratio of Voting
Rights (%)

Hitachi Information & Telecommunication Engineering, Ltd.
Hitachi-Omron Terminal Solutions, Corp.
Hitachi Solutions, Ltd.
Hitachi Systems, Ltd.
Hitachi Computer Products (America), Inc.
*Hitachi Global Digital Holdings Corporation
Hitachi Payment Services Private Limited
Hitachi Vantara LLC
Hitachi-GE Nuclear Energy, Ltd.
Hitachi Plant Construction, Ltd.
Hitachi Power Solutions Co., Ltd.
Hitachi Industrial Equipment Systems Co., Ltd.
Hitachi Industrial Products, Ltd.
Hitachi Industry & Control Solutions, Ltd.
Hitachi Plant Services Co., Ltd.
*JR Technology Group, LLC*Sullair US Purchaser, Inc.
Hitachi Building Systems Co., Ltd.
Hitachi Elevator (China) Co., Ltd.
Hitachi Rail Ltd.
Hitachi Automotive Systems, Ltd.
Hitachi Global Life Solutions, Inc.
Hitachi Automotive Systems Americas, Inc.
Hitachi Consumer Products (Thailand), Ltd.

Yokohama, Kanagawa
Shinagawa-ku, Tokyo
Shinagawa-ku, Tokyo
Shinagawa-ku, Tokyo
U.S.A.
U.S.A.
India
U.S.A.
Hitachi, Ibaraki
Toshima-ku, Tokyo
Hitachi, Ibaraki
Chiyoda-ku, Tokyo
Chiyoda-ku, Tokyo
Hitachi, Ibaraki
Toshima-ku, Tokyo
U.S.A.
U.S.A.
Chiyoda-ku, Tokyo
China
U.K.
Hitachinaka, Ibaraki
Minato-ku, Tokyo
U.S.A.
Thailand

100.0
55.0
100.0
100.0
100.0
100.0
100.0
100.0
80.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
70.0
100.0
100.0
100.0
100.0
80.1

Hitachi High-Tech Corporation

Minato-ku, Tokyo

51.8

Hitachi Construction Machinery Co., Ltd.

Taito-ku, Tokyo

51.5

Hitachi Metals, Ltd.

Minato-ku, Tokyo

53.5

Hitachi Chemical Company, Ltd.

Chiyoda-ku, Tokyo

51.4

Hitachi-LG Data Storage, Inc.
Hitachi Life, Ltd.
Hitachi Urban Investment, Ltd.
Hitachi America, Ltd.
Hitachi Asia Ltd.
Hitachi (China), Ltd.
Hitachi Europe Ltd.
Hitachi India Pvt. Ltd.

Minato-ku, Tokyo
Hitachi, Ibaraki
Chiyoda-ku, Tokyo
U.S.A.
Singapore
China
U.K.
India

51.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0

Segment■

IT■

Energy■Industry■

Mobility■

Smart Life

HitachiHigh-Tech
Construction■
Machinery
Hitachi■
MetalsHitachi■
Chemical■■Others

Notes: 1. The total number of consolidated subsidiaries is 814.
2. The number of equity-method affiliates is 409. The major equity-method affiliates are Hitachi Kokusai Electric Inc., Johnson
Controls-Hitachi Air Conditioning Holding (UK) Ltd, Hitachi Capital Corporation 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 Vantara Corporation and Hitachi Consulting Corporation were merged into Hitachi Vantara LLC as of January 1, 2020.
5. Hitachi Industrial Products, Ltd. is the company which succeeded the electric systems business and machine systems businessthrough an absorption-type company split from the Company on April 1, 2019.
6. JR Technology Group, LLC has become a consolidated subsidiary of the Company on December 27, 2019 as Hitachi America,
Ltd., a consolidated subsidiary of the Company, acquired all interests of JR Technology Group, LLC from JR Intermediate
Holdings, LLC.
7. Sullair US Purchaser, Inc. changed its name to Hitachi Industrial Holdings Americas, Inc. on April 1, 2020.
8. Hitachi Rail Ltd. is the company whose name was changed from Hitachi Rail Europe Ltd. on April 1, 2019.
9. Hitachi Global Life Solutions, Inc. is the company created through the merger of Hitachi Appliances, Inc. and Hitachi Consumer
Marketing, Inc., changing their names on April 1, 2019.
10. Hitachi High-Tech Corporation is the company whose name was changed from Hitachi High-Technologies Corporation on
February 12, 2020. The company became a wholly-owned subsidiary of the Company in May 2020.
11. Hitachi Chemical Company, Ltd. has ceased to be a consolidated subsidiary of the Company as a result of the share transfer
in April 2020.
12. Hitachi Urban Investment, Ltd. merged with Hitachi Life, Ltd. and changed its name to Hitachi Real Estate Partners, Ltd. on
April 1, 2020.
13. Ratio of voting rights includes indirect ownership.

30

Major Hitachi Group Companies

2020/06/24 9:36:54 / 19610125_株式会社日立製作所_招集通知（Ｃ）(10) Directors and Executive Officers
1) Directors
Name, Position and Responsibilities, etc. (As of March 31, 2020)
Name

Position

Katsumi Ihara

Independent
Director

Cynthia Carroll

Independent

Director
Joe Harlan

Committee Membership

Audit Committee
Compensation Committee
Nominating Committee

Independent
Independent

Director
Louise Pentland

Director, Flowserve Corporation (USA)**-

Director
George Buckley

Other Principal Positions Held

Outside Director, Benesse Holdings, Inc.

Independent

Director-

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

Executive Vice President, Chief Business Affairs and Legal Officer,
PayPal Holdings, Inc. (USA)Harufumi Mochizuki

Independent
Director

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

Takatoshi Yamamoto

Independent

Audit Committee
Compensation Committee

Outside Director, Murata Manufacturing Co., Ltd.

Nominating Committee
Audit Committee (Chair)Outside Director, Murata Manufacturing Co., Ltd.
Outside Director, HOYA CORPORATION

Director
Hiroaki Yoshihara

Independent

Director

President and Representative Director, Tokyo Small and Medium
Business Investment & Consultation Co., Ltd.
Outside Director, ITOCHU Corporation
Outside Audit & Supervisory Board Member, Tokyo Electron Limited

Hiroaki Nakanishi

Executive
Chairman

Nominating Committee

Chairman, Japan Business Federation

Toyoaki Nakamura

Director

Audit Committee

Director, Hitachi Metals, Ltd.

Toshiaki Higashihara

Director

Compensation 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. Mr. Toyoaki Nakamura, Director (Audit
Committee), has considerable knowledge of finance and accounting due to his long experience as the General Manager ofaccounting and finance of the Company as well as Executive Officer responsible for accounting and finance for many years.
2. The Company has appointed Director Toyoaki Nakamura as a Standing Committee member of the Audit Committee. The
Company strives to improve the audit and supervisory functions of the Audit Committee by appointing a Standing
Committee member and creating a system where the Audit Committee can discuss and make its decisions based on
coordination with the internal auditing division and others, along with a timely grasp of accurate information throughattendance to important internal meetings, etc. and information-sharing with other Committee members.
3. All of Independent directors of the Company have been reported as independent directors to the Japanese stock
exchanges where the Company is listed.
4. The positions with ** in “Other Principal Positions Held” are similar positions in each of the foreign corporations to outside
director under the Companies Act..
5. The Company has transactions, including the sales of products and services and purchase of products and services, with
Benesse Holdings, Inc., ITOCHU Corporation, Tokyo Electron Limited, Murata Manufacturing Co., Ltd. and HOYACORPORATION. The volume of transactions with each of the companies and corporations is negligible in comparison to
the total business volume of the Company and to the total business volume of the corresponding entity (less than 1% of
either party's consolidated revenues).

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

31

Directors and Executive Officers

2020/06/24 9:36:54 / 19610125_株式会社日立製作所_招集通知（Ｃ）

Major Activities of Independent Directors
Name

Katsumi Ihara

Cynthia Carroll

Joe Harlan

AttendanceParticipation

Board of Directors meetings:
9 out of 9 days
Audit Committee:
15 out of 15 days
Compensation Committee:
4 out of 4 days
Board of Directors meetings:
9 out of 9 days
Nominating Committee:
8 out of 8 days
Board of Directors meetings:
9 out of 9 days

Mr. Ihara stated his opinions and asked questions withrespect to overall management of the Group as necessary at
the Board and Audit Committee meetings based on his
management experience and insight in the area of global
corporate management.

George Buckley

Board of Directors meetings:
9 out of 9 days

Louise Pentland

Board of Directors meetings:
8 out of 9 days

Harufumi Mochizuki

Board of Directors meetings:
9 out of 9 days
Nominating Committee:
8 out of 8 days
Audit Committee:
15 out of 15 days
Compensation Committee:
4 out of 4 days
Board of Directors meetings:
9 out of 9 days
Audit Committee:
15 out of 15 days
Compensation Committee:
4 out of 4 days
Board of Directors meetings:
9 out of 9 days
Nominating Committee:
8 out of 8 days
Audit Committee:
15 out of 15 days

Takatoshi Yamamoto

Hiroaki Yoshihara

Ms. Carroll stated her opinions and asked questions withrespect to overall management of the Group as necessary at
the Board meetings based on her management experienceand insight with a major global business company.
Mr. Harlan stated his opinions and asked questions withrespect to overall management of the Group as necessary at
the Board meetings based on his management experienceand insight in the area of global corporate management.
Mr. Buckley stated his opinions and asked questions withrespect to overall management of the Group as necessary at
the Board meetings based on his management experienceand insight with a major global manufacturer.
Ms. Pentland stated her opinions and asked questions withrespect to overall management of the Group as necessary at
the Board meetings based on her experience and insight aschief legal officer at a major global business company.
Mr. Mochizuki stated his opinions and asked questions withrespect to overall management of the Group as necessary at
the Board and Audit Committee meetings based on his richexperience and insight in such areas as public administration.

Mr. Yamamoto stated his opinions and asked questions withrespect to overall management of the Group as necessary at
the Board and Audit Committee meetings based on his richexperience and insight in the area of corporate analysis andglobal corporate management.
Mr. Yoshihara stated his opinions and asked questions withrespect to overall management of the Group as necessary at
the Board and Audit Committee meetings based on his richexperience and insight in the area of global corporate
management and accounting.

32

Directors and Executive Officers

2020/06/24 9:36:54 / 19610125_株式会社日立製作所_招集通知（Ｃ）

2) Executive Officers
Name, Position and Responsibilities, etc. (As of March 31, 2020)
Name

Position*Toshiaki Higashihara President & CEO

Responsibilities

Overall management*Masakazu Aoki

Other Principal Positions Held-

Executive Vice President Assistant to the President (business
Chairman of the Board,and Executive Officer
for industry & distribution sectors,
Hitachi Industrial Equipment
water & environment business andSystems Co., Ltd.
industrial products business)*Keiji Kojima
Executive Vice President Assistant to the President (smart life &and Executive Officer
ecofriendly systems business,
automotive systems business andhealthcare business) and smart life &
ecofriendly systems business*Keiichi Shiotsuka
Executive Vice President Assistant to the President (systems &and Executive Officer
services business and defense
systems business), systems &services business and social
innovation business promotion*Hideaki Takahashi
Executive Vice President Assistant to the President (cost
Chairman of the Board,and Executive Officer
structure reform and supply chain
Hitachi Construction
management), cost structure reform
Machinery Co., Ltd.
and supply chain management(MONOZUKURI and quality assurance)*Alistair Dormer
Executive Vice President Assistant to the President (building
and Executive Officer
systems business and railway systems
business)*Toshikazu Nishino
Executive Vice President Assistant to the President (nuclear
and Executive Officer
energy business and energy business)
Atsushi Oda
Senior Vice President
Nuclear energy business and energy
and Executive Officer
business
Yoshihiko Kawamura Senior Vice PresidentManagement strategies, investment
and Executive Officer
strategies and strategies for next
generation business
Kenichi Kokubo
Chairman, Hitachi (China),
Senior Vice President
Regional strategies (China)
Ltd.
and Executive Officer
Setsuo Shibahara
Services & platforms business
Senior Vice President
and Executive Officer
Hideaki Seki
President and Director,
Senior Vice President
Building systems business
Hitachi Building Systems,
and Executive Officer
Co., Ltd.
*Yoshitaka Tsuda
Senior Vice President
Marketing & sales, regional strategies
Director, Hitachi Capitaland social innovation businessand Executive Officer
Corporation
promotion*Hidenobu Nakahata Senior Vice President
Corporate communications, legal
and Executive Officer
matters, risk management, corporate
auditing and human capital*Mitsuaki Nishiyama
Senior Vice President
Finance and corporate pension system
and Executive Officer

33

Directors and Executive Officers

2020/06/24 9:36:54 / 19610125_株式会社日立製作所_招集通知（Ｃ）

Name

Keiichi Akino

Jun AbeHitoshi Ito
Kenji Urase
Ryuichi Otsuki
Kohei Kodama
Norihiro Suzuki
Yoji Takeuchi

Hidetoshi Takehara
Toshiaki Tokunaga
Osamu Naito

Koujin Nakakita
Katsuya Nagano

Seiichiro Nukui
Yasushi Nomura
Andrew Barr
Kentaro Masai
Shinya Mitsudomi
Masashi Murayama
Mamoru Morita
Tsugio Yamamoto
Takashi Yoda
Masaya Watanabe
Hiroaki Nakanishi

Position

Vice President andExecutive Officer

Vice President andExecutive Officer
Vice President andExecutive Officer
Vice President andExecutive Officer
Vice President andExecutive Officer
Vice President andExecutive Officer
Vice President andExecutive Officer
Vice President andExecutive Officer

Vice President andExecutive Officer
Vice President andExecutive Officer
Vice President andExecutive Officer
Vice President andExecutive Officer
Vice President andExecutive Officer
Vice President andExecutive Officer
Vice President andExecutive Officer
Vice President andExecutive Officer
Vice President andExecutive Officer
Vice President andExecutive Officer
Vice President andExecutive Officer
Vice President andExecutive Officer
Vice President andExecutive Officer
Vice President andExecutive Officer
Vice President andExecutive Officer
Executive Officer

Responsibilities

Marketing & sales (business forfinancial institutions, government,
public corporation and social
infrastructure systems and defense
systems business)
Business for industry & distributionsectors
Governments & external relations
Energy business
Investment strategies
Legal matters, risk management andcorporate auditing
Research & development
Marketing & sales (business forindustry & distribution sectors, water &environment business, building
systems business, railway systems
business and healthcare business)
Nuclear energy business
Services & platforms businessGovernments & external relations,
CSR & environmental strategy andexecutive support
Regional strategies (APAC)
Business for government, public
corporation and social infrastructure
systems
Business for industry & distributionsectors
Information technology strategies
Railway systems businessSupply chain management(MONOZUKURI and quality assurance)
Railway systems businessSupply chain management(procurement)
Management strategies
Business for financial institutions
Marketing & sales (nuclear energy
business and energy business)
Information security management andcost structure reform
GeneralOther Principal Positions Held

-

-

-

-

Chairman of the Board andCEO, Hitachi Vantara LLC-

Chairman, Hitachi Asia Ltd.

--

Director, Hitachi Chemical
Company, Ltd.
-

Chairman, Japan Business
Federation

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

34

Directors and Executive Officers

2020/06/24 9:36:54 / 19610125_株式会社日立製作所_招集通知（Ｃ）

New Executive Officers (As of April 1, 2020)
The Company changed its Executive Officers as of April 1, 2020 as follows.
Name*Toshiaki Higashihara*Masakazu Aoki**Ryuichi Kitayama*Keiji Kojima*Keiichi Shiotsuka*Alistair Dormer*Toshikazu Nishino
Atsushi Oda*Yoshihiko Kawamura
Toshiaki Tokunaga*Hidenobu Nakahata
Mamoru Morita
Keiichi Akino

Jun AbeHitoshi Ito
Kenji Urase
Ryuichi Otsuki**Tadashi Kume
Kohei Kodama
Norihiro Suzuki
Yoji Takeuchi

Position

Responsibilities

President & CEO
Overall management
Executive Vice President and Assistant to the President (business for industry & distribution
Executive Officer
sectors, water & environment business and industrial products
business)
Executive Vice President and Assistant to the President (marketing & sales and regional
Executive Officer
strategies), marketing & sales and regional strategies
Executive Vice President and Assistant to the President (smart life & ecofriendly systems
Executive Officer
business, automotive systems business and healthcare
business) and smart life & ecofriendly systems business
Executive Vice President and Assistant to the President (systems & services business andExecutive Officer
defense systems business), systems & services business,
defense systems business and social innovation businesspromotion
Executive Vice President and Assistant to the President (building systems business andExecutive Officer
railway systems business)
Executive Vice President and Assistant to the President (nuclear energy business andExecutive Officer
energy business)
Senior Vice President andNuclear energy business and energy business
Executive Officer
Senior Vice President and
Finance, corporate pension system and investment strategies
Executive Officer
Senior Vice President andServices & platforms business
Executive Officer
Senior Vice President andCorporate communications, corporate auditing, corporate
Executive Officer
export regulation and human capital
Senior Vice President andManagement strategies and strategies for next generation
Executive Officer
business
Vice President and Executive Marketing & sales (business for financial institutions,
Officergovernment, public corporation and social infrastructure
systems and defense systems business)
Vice President and Executive Business for industry & distribution sectors
Officer
Vice President and Executive Government & external relations and CSR & environmental
Officerstrategies
Vice President and Executive Energy business
Officer
Vice President and Executive Investment strategies
Officer
Vice President and Executive Nuclear energy business
Officer
Vice President and Executive Legal matters, risk management and corporate auditing
Officer
Vice President and Executive Research & development
Officer
Vice President and Executive Marketing & sales (business for industry & distribution sectors,
Officerwater & environment business, building systems business,railway systems business and healthcare business)

35

Directors and Executive Officers

2020/06/24 9:36:54 / 19610125_株式会社日立製作所_招集通知（Ｃ）

Name

Kojin Nakakita
Katsuya Nagano
Seiichiro Nukui
Yasushi Nomura
Andrew Barr**Masahiko Hasegawa
Kentaro Masai
Shinya Mitsudomi
Masashi Murayama
Tsugio Yamamoto
Takashi Yoda
Hiroaki Nakanishi

Position

Vice President and Executive
Officer
Vice President and Executive
Officer
Vice President and Executive
Officer
Vice President and Executive
Officer
Vice President and Executive
Officer
Vice President and Executive
Officer
Vice President and Executive
Officer
Vice President and Executive
Officer
Vice President and Executive
Officer
Vice President and Executive
Officer
Vice President and Executive
Officer
Executive Officer

Responsibilities

Regional strategies (APAC)
Business for government, public corporation and social
infrastructure systems and defense systems business
One Hitachi actions promotion
Information technology strategies
Railway systems business
Marketing & sales and regional strategies (Japan)
Supply chain management (MONOZUKURI and quality
assurance)
Building systems business
Cost structure reform and information security management
Business for financial institutions
Regional strategies (China)
GeneralNotes: 1. The Executive Officers marked with * are the Representative Executive Officers.
2. The Executive Officers marked with** are newly appointed.

36

Directors and Executive Officers

2020/06/24 9:36:54 / 19610125_株式会社日立製作所_招集通知（Ｃ）

3) 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 as well as the amount ofcompensation, etc. of each Director and Executive Officer.
Policy on the Determination of Compensation of Directors and Executive Officers[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 Directors and Executive Officers.
- 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
as well 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 fromplace of 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 the ratio 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 annualcompensation.
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.

37

Directors and Executive Officers

2020/06/24 9:36:54 / 19610125_株式会社日立製作所_招集通知（Ｃ）

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
constitute the Senior
Other Executive Officers
Executive Committee (*)
80%30%
Performance-linked Company performancecomponent
Division performance
50%
Individual target-linked component
20%
20%
*

In case that an “Executive Officers that constitute the Senior Executive Committee” is in charge of business units orbusinesses, the same proportion of evaluation item as for “Other Executive Officers” is used.

- 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 inorder 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
is lifted 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. From Fiscal 2020, the Company has granted restricted stock units to nonJapanese Executive Officers as medium- and long-term incentive compensation. One third of vested restricted stock
units are delivered in the form 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.

38

Directors and Executive Officers

2020/06/24 9:36:54 / 19610125_株式会社日立製作所_招集通知（Ｃ）(iii) Miscellaneous- It was decided at the Compensation Committee meetings held on December 18, 2007 and March 26, 2008
that the compensation structure for Directors and Executive Officers will be re-examined starting with thecompensation for fiscal 2008 and that 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.
Total Amount of Compensation to and the Number of Directors and Executive Officers in Fiscal 2018
Total amount of each type(Millions of yen)
Category

Directors(excluding Independent
Directors)
Independent Directors
Executive Officers
Total

Total amount ofcompensation,
etc.
(Millions of yen)

Variable pay
Fixed pay

Short-term
incentivecompensation

Medium- andlong-term
incentivecompensation

Others

54

54

－

－

－

1

310
4,592
4,957

310
1,738
2,103

－
1,682
1,682

－
1,166
1,166

－
4
4

8
37
46

Notes: 1. The number of Directors indicated excludes two Directors who serve concurrently as Executive Officers.
2. "Others" shows the amount of allowances.

39

Directors and Executive Officers

Number of
persons

2020/06/24 9:36:54 / 19610125_株式会社日立製作所_招集通知（Ｃ）(11) Matters Concerning the Company’s Stock (As of March 31, 2020)
1)

Authorized

2,000,000,000 shares

2) Number of Shares per Unit
3)

100 shares

10 Largest Shareholders
Name
The Master Trust Bank of Japan, Ltd. (Trust Account)
Japan Trustee Services Bank, Ltd. (Trust Account)
STATE STREET BANK AND TRUST COMPANY 505001
JP MORGAN CHASE BANK 385151
Hitachi Employees’ Shareholding Association
NATS CUMCO
Nippon Life Insurance Company
Japan Trustee Services Bank, Ltd. (Trust Account 5)
STATE STREET BANK AND TRUST COMPANY 505223
STATE STREET BANK WEST CLIENT‐TREATY 505234

Share Ownership
Shares81,189,800
55,286,400
21,463,830
20,609,612
20,319,676
20,185,002
20,000,099
19,572,500
19,012,329
15,270,687

Shareholding Ratio
%
8.40
5.72
2.22
2.13
2.10
2.09
2.07
2.03
1.97
1.58

Notes: 1. NATS CMUCO 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 (1,050,741 shares) is not included in the calculation of "Shareholding Ratio."

4)

Shareholders Composition
Class of
Shareholders
Financial
Institution and
Securities Firm
Individual
Foreign Investor
Other institutions
Government andMunicipality
Total

Number of
Shareholders

Share Ownership(Shares)

317

328,199,579

304,125
1,410
2,782

178,131,101
445,992,700
14,947,785

4

9,312

308,638

967,280,477

Percentage of Total
Other institutions
1.54%

Financial
Institution and
Securities Firm
33.93%

ForeignInvestor
46.11%

Note: Treasury stock is included in “Other institutions.”

5)

Other important matters relating to shares
The Company issued 604,800 of new shares as restricted stock compensation on May 27, 2020.

40

Matters Concerning the Company’s Stock

Government andMunicipality
0.00%

Individual
18.42%

2020/06/24 9:36:54 / 19610125_株式会社日立製作所_招集通知（Ｃ）(12) Matters Concerning Accounting Auditor
1)

Name of accounting auditor

2)

Fees to accounting auditor in Fiscal 2019

Ernst & Young ShinNihon LLC

Category
Total amount of cash and other financial benefits by the Company and its subsidiaries
Fees etc. by the Company*(Millions of yen)Amount1,553
515

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

3)

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

4)

Subsidiaries whose financial statements are audited by certified public accountants, etc. other thanCompany’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.

41

Matters Concerning Accounting Auditor

2020/06/24 9:36:54 / 19610125_株式会社日立製作所_招集通知（Ｃ）(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 continuously as an important managerial issue.
The policy of the Company regarding dividends is to aim for stable growth 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.
To complement its dividends, the Company flexibly conducts repurchase of its shares depending on factors
such as capital needs and the business 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 & CEO
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 the Company's website (https://www.hitachi.co.jp/smeet-e/index.html).

42

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2020/06/24 9:36:54 / 19610125_株式会社日立製作所_招集通知（Ｃ）

Consolidated Financial Statements
Consolidated Statement of Financial Position
Fiscal 2018 (Reference)(As of March 31, 2019)

Fiscal 2019
(As of March 31, 2020)(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

5,035,793
807,5932,399,933
1,356,762
284,267
187,238
4,590,799
724,461
568,349
1,956,685
561,936
398,080
381,2889,626,592

5,217,589
812,3312,260,205
1,408,937
279,951
456,165
4,712,492
480,375
440,5142,165,311
635,927
479,794
510,571
9,930,081(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

3,605,560
111,031
185,250
257,792
1,406,012
653,676
553,510438,289
1,606,629
708,490526,688371,451
5,212,189

3,733,178
183,303
231,237
252,403
1,270,668
604,415615,096
576,056
1,930,164
1,070,502
514,375
345,287
5,663,342(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

3,262,603
458,790
463,786
2,287,587
56,360(3,920)1,151,800
4,414,403
9,626,592

3,159,986
459,862
464,795
2,296,208(57,070)(3,809)1,106,753
4,266,739
9,930,081

43

2. Consolidated Statements of Financial Position

2020/06/24 9:36:54 / 19610125_株式会社日立製作所_招集通知（Ｃ）

Consolidated Statement of Profit or Loss
Years ended March 31
2019 (Reference)

2020(Millions of yen)
9,480,619(6,964,635)

8,767,263(6,396,895)

2,515,984(1,761,008)
206,371(442,659)
13,693(3,459)2,370,368(1,708,485)
51,992(570,635)
5,768(9,033)(15,016)

43,639Earnings before interest and taxes (EBIT)

513,906

Interest income

23,122(20,526)

183,614
20,638(23,984)

Revenues
Cost of sales
Gross profit
Selling, general and administrative expenses
Other income
Other expenses
Financial income
Financial expenses
Share of profits (losses) of investments accounted for using
the equity method

Interest charges
Income from continuing operations, before income taxes

516,502

Income taxes(186,344)

180,268(51,246)

Income from continuing operations
Loss from discontinued operations

330,158(9,136)129,022(1,776)

Net income

321,022

127,246

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

222,546
98,47687,59639,65044

3. Consolidated Statements of Profit or Loss2020/06/24 9:36:54 / 19610125_株式会社日立製作所_招集通知（Ｃ）

Unconsolidated Financial Statements
Unconsolidated Balance Sheet
Fiscal 2018 (Reference)
Fiscal 2019
(As of March 31, 2019)(As of March 31, 2020)(Millions of yen)
(Assets)
Current assets

1,641,066

1,573,421

Cash167,367

144,370

5,161

3,819

Notes receivable
Accounts receivable

738,627

678,447

Securities

5,000

-

Finished goods

27,23924,468Semi-finished goods

19,611

19,779Raw materials

32,07531,250Work in process

131,641

153,684

Advances paid

31,212

31,627

Short-term loan receivables

345,045

316,537

Others147,164

178,099(9,080)(8,664)2,293,052

2,430,987

242,644

228,572

Buildings

125,490

115,257

Structures

7,130

6,812

Machinery

12,782

10,358

Vehicles143

160

Tools and equipment

43,84944,646

Land

43,50640,564

Lease assets

4,934

7,154

Construction in progress

4,805

3,618

Allowance for doubtful receivables
Fixed assets
Tangible fixed assets

94,241

96,070Patents

45

37

Software85,08988,511405

306

Intangible fixed assets

Railway and public utility installation
Lease assets
OthersInvestments and others
Affiliated companies’ common stock

175

72

8,525

7,143

1,956,166

2,106,344

1,527,027

1,601,494-

884

Investments in affiliated companies

35,61334,539Investments in securities

181,152

144,150

Long-term loan receivables

102,12256,613

Deferred tax assets

67,854229,135

Prepaid pension cost

8,163

5,516

Others34,25334,017(20)(8)

3,934,118

4,004,408

Other securities of affiliated companies

Allowance for doubtful receivables
Total assets

45

4. Unconsolidated Balance Sheets2020/06/24 9:36:54 / 19610125_株式会社日立製作所_招集通知（Ｃ）

Fiscal 2018 (Reference)
Fiscal 2019
(As of March 31, 2019)(As of March 31, 2020)(Millions of yen)
(Liabilities)
Current liabilities

1,738,208

1,637,039

Electronically recorded obligations

33,00524,097

Trade accounts payable

336,988314,624

Short-term debt

107,493

52,483

Lease liabilities

1,410

1,621

Other accounts payable

159,91735,659Accrued expenses

185,948

344,044

Advances received from customers

190,262

182,761

Deposits received

674,200

627,609

Provision for product warranties

1,632

1,389

Provision for loss on construction contracts

39,99144,906

7,357

7,840

632,454788,310Debentures

50,000250,000

Long-term debt

355,740

318,369

OthersNoncurrent liabilities

Lease liabilities

4,309

6,386

Accrued pension liability

70,62868,334

Provision for retirement benefits for senior executives

116

111

Provision for loss on business of affiliated companies

120,407

124,035

Deferred tax liabilities for land revaluation

1,111

1,111

Asset retirement obligations

10,923

9,548

Others

19,217

10,414

Total liabilities

2,370,662

2,425,350

1,507,105

1,536,931

Common stock

458,790459,862

Capital surplus(Net assets)
Stockholders’ equity

449,751

450,746

Capital reserve

176,757

177,828

Others272,994

272,917602,483

630,131602,483

630,131

1,359

1,246

Retained Earnings
OthersReserve for advanced depreciation of fixed assets

601,123

628,885

Treasury stock(3,920)(3,809)Valuation and translation adjustments

54,59039,921

Unrealized holding gains on securities

56,66829,763

Deferred profit or loss on hedges(1,944)

10,291

(133)

(133)

Retained earnings carried forward

Revaluation reserve for land

1,760

2,204

Total net assets

1,563,456

1,579,058

Total liabilities and net assets

3,934,118

4,004,408

Subscription rights to shares46

4. Unconsolidated Balance Sheets2020/06/24 9:36:54 / 19610125_株式会社日立製作所_招集通知（Ｃ）

Unconsolidated Statement of Operations
Years ended March 31
2019 (Reference)

2020(Millions of yen)
Revenues

1,927,241

1,793,250

Cost of sales

1,428,626

1,290,371

Gross profit on sales

498,614502,878

Selling, general and administrative expenses

405,542394,830

Operating income

93,072

108,048

Other income

259,610

277,836

Interest and dividends

229,519

263,773

Others30,091

14,062

48,61330,393

4,227

2,918

Other deductions
Interest
Others44,38527,475

Ordinary income

304,069

355,490Extraordinary gain

220,845

34,857

Gain on sale of real property

33,086

21,561Gain on sale of affiliated companies’ common stock

147,124

8,087

Gain on sale of investments in securities
Extraordinary loss

40,634

5,208

323,195

400,132-

384,744

8,592

8,934

294,066

3,804

594

2,236

Impairment loss on investments in securities

224

411

Loss on revision of retirement benefit plan

19,717-

Income (loss) before income taxes

201,719(9,783)

Loss due to the settlement of the South African project
Loss on impairment of assets
Impairment loss on affiliated companies’ common stock
Impairment loss on investments in capital of affiliatedcompanies

Income taxes
Current

37,464

29,114

Deferred(9,807)(158,308)

Net Income

174,062

119,40947

5. Unconsolidated Statements of Operations

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Transcript of Accounting Auditors’ Audit Report on Unconsolidated Financial Statements
REPORT OF INDEPENDENT AUDITORS
June 11, 2020
Mr. Toshiaki Higashihara, President & CEO
Hitachi, Ltd.
Ernst & Young ShinNihon LLC
Tokyo Office, Japan
Takashi Ouchida
Designated Engagement Partner
Certified Public Accountant
Takuya Tanaka
Designated Engagement Partner
Certified Public Accountant
Yoshitomo Matsuura
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 the related supplementary schedules of Hitachi, Ltd. (the“Company”) applicable to the 151th fiscal year from April 1,2019 to March 31,2020.
In our opinion, the accompanying financial statements and the related supplementary schedules present
fairly, in all material respects, the financial position and results of operations of the Company, applicable to thefiscal year ended March 31, 2020, in accordance with 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 and the Related Supplementary Schedules section of our report. We are independent of theCompany in accordance with the ethical requirements that are relevant to our audit of the financial statements inJapan, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believethat the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Responsibilities of Management and Audit Committee for the Financial Statements and the Related Supplementary
Schedules
Management is responsible for the preparation and fair presentation of these financial statements and therelated supplementary schedules in accordance with accounting principles generally accepted in Japan, and forsuch internal control as management determines is necessary to enable the preparation of financial statements andthe related supplementary schedules that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements and the related supplementary schedules, management is responsible
for assessing the Company's ability to continue as a going concern and disclosing, as required by accounting
principles generally accepted in Japan, matters related to going concern.
Audit Committee are responsible for overseeing the Company’s financial reporting process.

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Auditor’s Responsibilities for the Audit of the Financial Statements and the Related Supplementary Schedules
Our objectives are to obtain reasonable assurance about whether the financial statements and the related
supplementary schedules as a whole are free from material misstatement, whether due to fraud or error, and toissue an auditor’s report that includes our opinion. Misstatements can arise from fraud or error and are consideredmaterial if, individually or in the aggregate they could reasonably be expected to influence the economic decisionsof users taken on the basis of these financial statements and the related supplementary schedules.
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 and the related
supplementary schedules, 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.
- In making those risk assessments, we consider internal control relevant to the audit in order to design
audit procedures that are appropriate in the circumstances, while the purpose of the audit of the financial
statements and the related supplementary schedules 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
estimates and 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 orconditions that may cast significant doubt on the Company’s ability to continue as a going concern. If weconclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to therelated disclosures in the financial statements and the related supplementary schedules or, if suchdisclosures 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 theCompany to cease to continue as a going concern.
- Evaluate the overall presentation, structure and content of the financial statements and the related
supplementary schedules, including the disclosures, and whether the financial statements and the related
supplementary schedules represent the underlying transactions and events in a manner that achieves fairpresentation in accordance with accounting principles generally accepted in Japan.
We communicate with the Audit Committee regarding, among other matters, the planned scope and timingof 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
with them all relationships and other matters that may reasonably be thought to bear on our independence, andwhere applicable, related safeguards.
Conflicts of Interest
We have no interest in the Company which should be disclosed in accordance with the Certified Public
Accountants Act.
(Note)
This is an English translation of the Japanese language Report of Independent Auditors 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, 2020. Ernst & Young ShinNihon LLC has not audited theEnglish language version of the unconsolidated financial statements for the above-mentioned year.

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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 151st business term (from April 1, 2019 to March 31, 2020). 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 as necessary, and visited their Head Offices and principal business offices to conduct interviews andother tasks.
4) We examined the contents of the fundamental policy on the conduct of persons influencing decision on the
Company’s financial and business policies set forth in the business report giving due consideration to such things as
the circumstances of deliberations by the Board of Directors and others.
5) Further, we monitored and examined whether the Accounting Auditors maintained their independence andperformed their auditing duties adequately, as well as received reports from the Accounting Auditors on theperformance status of their duties and requested explanations as necessary.
6) We also received a notice from the Accounting Auditors to the effect that “structures for ensuring that duties areappropriately performed” (matters stipulated in each item under Article 131 of the Regulations of Companies’
Financial Statements) were being developed pursuant to the “Quality Management Standards for Auditing”(Business Accounting Council, October 28, 2005) and requested explanations as necessary.
We examined the business report and its supplementary schedules, the unconsolidated financial statements(the unconsolidated balance sheet, the unconsolidated statement of operations, the unconsolidated statement ofchanges in net assets, and the notes to unconsolidated financial statements) and their supplementary schedules, aswell as consolidated financial statements (the consolidated statements of financial position, the consolidated
statements of profit or loss, the consolidated statement of changes in equity, and the notes to consolidated financial
statements) for this business term in accordance with the foregoing method.
2. Results of Audit(1) Results of Audit on Business Report etc.
We are of the opinion:
1) that the business report and its supplementary schedules fairly present the state of the Company in accordancewith the 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 andbusiness 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.
June 17, 2020
Audit Committee, Hitachi, Ltd.
Hiroaki Yoshihara
Toyoaki Nakamura (Standing)
Katsumi Ihara
Harufumi Mochizuki
Takatoshi Yamamoto
Note: Messrs. Katsumi Ihara, Harufumi Mochizuki, Takatoshi Yamamoto and Hiroaki Yoshihara are outside Directors pursuant to Article
2, Item 15 and Article 400, Paragraph 3 of the Companies Act.

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The 151st 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.

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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 thecompany regulation that reporters using the internal reporting system, which applies to the employees of thecompany and its subsidiaries, shall not receive disadvantageous treatment for reason of having made areport, and the secretariat of the system shall thoroughly 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 foundto 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 be(ii)

Each subsidiary of the Company shall develop systems to ensure the appropriateness of operations

shared with the subsidiaries of the Company.
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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System2020/06/24 9:36:54 / 19610125_株式会社日立製作所_招集通知（Ｃ）(v) A structure shall be established in which each relevant department shall establish regulations andguidelines, 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 for responding 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 formulationof decisions based on due consideration of diverse factors regarding important issues that affect theCompany 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, an internal reporting system for employees of the Company and its
subsidiaries shall 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 theemployees 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
Office in advance and proposes changes in such plans, if necessary, and closely coordinate with theaccounting auditor and the Internal Auditing Office through exchanging information and opinions on a regularbasis.
Board of Directors Office- In order to assist with the duties of each Committee and the Board of Directors, the Office is staffed with four
employees (as of March 31, 2020) who exclusively serve the Office and are not subject to orders andinstructions of Executive Officers.

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Senior Executive Committee- The Senior Executive Committee meets twice a month, in principle, to deliberate on specific importantmatters concerning 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 a whistleblowing system, in which employees, etc. of theCompany and its subsidiaries may make reports to the internal secretariat for the system or an outside
attorney.
- 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
and improve 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.
- The Company allocates the full-time auditors auditing the management in each sector of IT, Energy,
Industry, Mobility, and Smart Life.

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2. Fundamental Policy on the Conduct of Persons Influencing Decision on the Company’s Financial andBusiness Policies
The Group invests a great deal of business resources in fundamental research and in the development ofmarket-leading products and businesses that will bear fruit in the future, and realizing the benefits from thesemanagement policies requires that they be continued for a set period of time. For this purpose, the Company keeps its
shareholders and investors well informed of not just the business results for each period but also of the Company’sbusiness policies for creating value in the future.
While the Company recognizes the importance of its revitalization of business activities and performance thatcan be brought about through a change in management control, it also recognizes the necessity of determining theimpact on company value and the interests of all shareholders of the buying activities and buyout proposals of parties
attempting to acquire a large share of stock of the Company or a Group company by duly examining the businessdescription, future business plans, past investment activities, and other necessary aspects of such a party.
There is no party that is currently attempting to acquire a large share of the Company’s stocks nor is there a
specific threat, neither does the Company intend to implement specified so-called anti-takeover measures in advance of
the appearance of such a party, but the Company does understand that it is one of the natural duties bestowed upon it by
the shareholders and investors to continuously monitor the state of trading of the Company’s stock and then to
immediately take what the Company deems to be the best action in the event of the appearance of a party attempting topurchase a large share of the Company’s stock. In particular, together with outside experts, the Company will evaluate
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 the necessity, content, etc., of specific countermeasures and prepare to implement them. The same response
will also be taken in the event a party attempts to acquire a large percentage of the shares of a Group company.

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3. Information on the stock acquisition rights, etc.
(Stock Acquisition Rights Held by Senior Managements) (As of March 31, 2020)
The First Stock
The Second Stock
Name of stock acquisition rights
Acquisition Rights ofAcquisition Rights ofHitachi, Ltd.
Hitachi, Ltd.
(Date of resolution)(June 29, 2016)(April 6, 2017)Class and number of shares to
Common stock 259,800
Common stock 242,480
be issued upon exercise of stock
sharessharesacquisition rights
Amount to be paid in upon
¥1 per share¥1 per share
exercise of stock acquisitionrightsExercise period of stock
From July 15, 2016 to
From April 27, 2017 toacquisition rights
April 26, 2047
July 14, 2046
Conditions for the exercise of(Note 1, 2)(Note 1, 2)
stock acquisition rights
28 Executive Officers of
26 Executive Officers of
the Company
the Company
Stock acquisition rights held by
12,990 of stock
12,124 of stock
senior managements
acquisition rights
acquisition rights(Note 3)(Note 3)

The Third Stock
Acquisition Rights ofHitachi, Ltd.
(April 11, 2018)
Common stock 260,720
shares¥1 per share
From April 27, 2018 toApril 26, 2048
(Note 1, 2)
34 Executive Officers of
the Company
13,036 of stockacquisition rights(Note 3)

Notes:1. A holder of stock acquisition rights may exercise all the stock acquisition rights together only within 10 days(in case the last day is not a business day, the following business day) from the day immediately following
the date on which he/she ceases to be an Executive Officer, a Director or a Corporate Officer of theCompany.
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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4. Consolidated Statement of Changes in Equity (April 1, 2019 to March 31, 2020)(Millions of yen)
Commonstock
Balance at beginning of year

458,790

Capitalsurplus

Accumulated
othercomprehensive
incomeRetainedearnings

463,786

Cumulative effects ofchanges in accounting
policies

2,287,587

56,360(3,920)(2,596)
463,786

2,284,991

56,360Reclassified into retained
earnings

15,382(15,382)

Net income

87,596

Restated balance

Treasurystock, atcost

458,790(3,920)

Total
Hitachi, Ltd.
stockholders’equityNoncontrollinginterests

Total equity

3,262,603

1,151,800

4,414,403(2,596)(1,075)(3,671)

3,260,007

1,150,725

4,410,732

Changes in equity

Other comprehensive
income-(96,061)

Dividends to Hitachi, Ltd.
stockholders(91,761)

39,650127,246(96,061)(42,264)(138,325)-

Acquisition of treasury
stock

Issuance of new shares

87,596(91,761)

Dividends to noncontrolling interests

Sales of treasury stock

(138)
1,072

Changes in non-controllinginterests(91,761)(47,361)(47,361)

(166)

(166)

(166)

277

139

139

2,144

2,144

1,072
75

-

(1,987)(1,912)

6,003

4,091

Total changes in equity

1,072

1,009

11,217(113,430)

111(100,021)(43,972)(143,993)

Balance at end of year

459,862

464,795

2,296,208(57,070)(3,809)3,159,986

1,106,753

4,266,739

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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 814 and the number of equity-method affiliates is 409.

3.

Financial assets
The Company has adopted IFRS 9 “Financial Instruments” (amended in October 2017).
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 bymaintaining 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, andthe changes in fair value are recognized in OCI. The cumulative amount of OCI is recognized in equity as
AOCI. Dividends on equity instruments designated as 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,
the allowance for doubtful receivables is measured at the amount equal to 12-month expected credit losses.
However, for trade receivables, contract assets, and lease receivables, allowance for doubtful receivables isalways measured at the amount equal to the lifetime expected credit losses. Whether credit risk has
increased significantly is determined based on changes in the risk of default and changes in expected credit
losses are recognized in profit or loss as impairment losses.

4.

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.

5.

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.

58

3. Notes to Consolidated Financial Statements

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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. Irrespectiveof 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 whichsuch assets are allocated.
6.

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
of such contributions. Contributions to the defined contribution plans are recognized in profit or loss in the period
when the service is provided by the employees.
The risk-sharing corporate pension plan introduced by the Company and its subsidiary in April 2019 is classified
as a defined contribution pension plan because the Company effectively has no further obligation to makeadditional contributions.

7.

Impact of COVID-19 on accounting estimates
For the fiscal year ended March 31, 2020, the Company tested fixed assets, such as goodwill, for impairment
and assessed the realizability of deferred tax assets, etc., which require management to make estimates of
future cash flows or future taxable income, based on the assumption that most of the impact of the slowdown in
the global economy caused by the spread of COVID-19 would occur in the first half of the fiscal year ending
March 31, 2021, with the decrease in demand to continue in the second half of the fiscal year in part of thebusiness, but would not be material in the longer term, although the situation varies from one segment or region
to another since the Company is engaged in a wide range of business activities around the globe. The Company
judged that this is the best assumption as of March 31, 2020. However, if the impact lasts longer or is wider than
the assumption described above, it could affect significant accounting estimates or judgements regarding
impairment of fixed assets, such as goodwill, and assessments of the realizability of deferred tax assets, etc.

59

3. Notes to Consolidated Financial Statements

2020/06/24 9:36:54 / 19610125_株式会社日立製作所_招集通知（Ｃ）(Notes on Changes in Accounting Policies)
Adoption of IFRS16 “Leases” (IFRS 16)
From the beginning of the fiscal year ended March 31, 2020, the Company has adopted IFRS 16 “Leases” (IFRS
16). IFRS 16 sets out the principles for the recognition, measurement, presentation and disclosure of leases, andlessees are required to account for all leases under a single on-balance sheet model. As a transitional measure upon
the adoption of IFRS 16, the Company applies this standard and the method of recognizing the cumulative effect of
the initial application as an adjustment to the beginning balance of retained earnings at the date of initial application.
The Company’s leases consist mainly of the leasing of real estate, and the impact of adopting IFRS 16 on the
consolidated statement of financial position at the beginning of the fiscal year ended March 31, 2020 includes anincrease in assets of 218,161 million yen associated with the recognition of right-of-use assets, an increase inliabilities of 221,832 million yen associated with the recognition of lease liabilities, and a decrease in equity of 3,671
million yen associated with the recognition of an adjustment to the beginning balance of retained earnings, etc. at thedate of initial application. The impact on the consolidated statement of profit or loss was not material.
The Company elects to use the practical expedient under which it is not required to perform a review for the
existence of a lease in a contract judged under IAS 17 “Lease” (hereinafter “IAS 17”) and IFRIC 4 “Determining
whether an Arrangement contains a Lease” in prior periods at the commencement date of IFRS 16. In addition, when
IFRS 16 is applied to a lease that is classified as an operating lease under IAS 17, the following practical expedientsare mainly elected to use.
・A lessee accounts for the leases for which the lease term ends within 12 months of the date of initial
application, in the same way as short-term leases.
・A lessee uses hindsight, in determining the lease term if the contract contains options to extend or terminate
the lease.
The weighted average lessee’s incremental borrowing rate applied to lease liabilities recognized in the consolidated
statement of financial position at the beginning of the fiscal year ended March 31, 2020 is 1.46%.
The difference between the future minimum lease payments of 135,963 million yen under non-cancelable operatingleases in accordance with IAS 17 and the lease liabilities of 273,812 million yen recognized in the consolidated
statement of financial position at the beginning of the fiscal year ended March 31, 2020 is 137,849 million yen. The
main factors for the reconciliation from the future minimum lease payments based on non-cancelable operatingleases as of March 31, 2019 to lease liabilities recognized in the consolidated statement of financial position at the
beginning of the fiscal year ended March 31, 2020 include decreases of 32,940 million yen due to the application of
the practical expedient related to short-term leases, 17,980 million yen due to the separation of non-lease
components of the contract and 9,456 million yen due to the measurement of the discounted present value of leaseliabilities, and increases of 149,026 million yen due to the impact of periods covered by extension options andtermination options included in the lease term and 49,199 million yen due to the inclusion of lease liabilities classified
as finance leases under IAS 17.
(Notes on Changes in Presentation)
Consolidated Statement of Financial Position
Due to materiality of an account balance as a result of business reorganization and others, “Goodwill” which was
included in “Intangible assets” as of March 31, 2019, has been reclassified and separately presented as of March 31,
2020, and “Intangible assets” has been renamed to “Other intangible assets.”(Notes to Consolidated Statement of Financial Position)
1. The components of Trade receivables and contract assets: Accounts receivable of 1,684,225 million yen,Contract assets of 429,117 million yen, and Others of 146,863 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 (30,686) million yen,remeasurements of defined benefit plans of 1,958 million yen, net changes in financial assets measured at
FVTOCI of 66,373 million yen, and net changes in cash flow hedges of (94,715) million yen.
3. Collateralized assets: Trade receivables and contract assets of 9,958 million yen, inventories of 16,671 million
yen, investments in securities and other financial assets of 340 million yen, and property, plant and equipment of
51,236 million yen.
Secured debts: 55,065 million yen
4. Allowance deducted directly from assets: 39,651 million yen from trade receivables and contract assets, and4,384 million yen from other receivables.
5. Property, plant and equipment include land of 274,106 million yen and buildings and structures of 675,552
million yen.
Accumulated depreciation and impairment losses of property, plant and equipment is (4,398,937) million yen.
Other intangible assets include software of 132,779 million yen.
6. Guarantees: 63,108 million yen

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3. Notes to Consolidated Financial Statements

2020/06/24 9:36:54 / 19610125_株式会社日立製作所_招集通知（Ｃ）(Notes to Consolidated Statement of Profit or Loss)
1. Other income
Other income of 51,992 million yen mainly consists net gain or loss on sales and disposals of fixed assets of
29,920 million yen.
2. Other expenses
Other expenses of (570,635) million yen includes loss due to the settlement of the South African project of(375,967) million yen.
3. Income taxes
Income taxes of (51,246) million yen includes current tax expense of (175,072) million yen and deferred tax
expense of 123,826 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
967,280,477 shares(2) Treasury stocks Common stock
1,050,741 shares
2. Cash dividends
Total amount of cash dividends
91,761 million yen
3. Class and number of shares to be issued upon exercise of stock acquisition rights at end of year
Common stock
890,960 shares(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
Information on the fair value of financial instruments as of March 31, 2020 is as follows. Financial instruments
measured at fair value in the consolidated statements of financial position and financial instruments, whosecarrying amounts and book value are approximately equal, are not included in the following table.

Carrying amounts(Millions of yen)
Fair Values

AssetsInvestments in securities and otherfinancial assets
Lease receivables
83,55384,834
Debt securities
73,04873,051Long-term loans receivable
26,642
28,576
Liabilities
Long-term debt [1]Bonds
385,293
386,082Long-term debt
637,648
640,929[1] Long-term debt is included in current portion of long-term debt and long-term debt in the consolidated statementsof financial position.

61

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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, Short-term
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 for eachgroup 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 of anactive market for investment securities, quoted prices for similar investment securities, quoted prices associated withtransactions 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 to determine fair value. If significant
inputs of fair value measurement are unobservable, the Company uses price information provided by financial
institutions to evaluate such investments. The information provided is corroborated by the income approach using its
own valuation model, or the market approach using comparisons with prices of similar securities.
The fair value of long-term loans receivable is estimated based on the present value of future cash flows using theinterest 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 by financial
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.
(Note on Per Share Information)
Hitachi, Ltd. stockholders’ equity per share
Net income from continuing operations, attributable to Hitachi, Ltd. stockholders per share
Net loss from discontinued operations, attributable to Hitachi, Ltd. stockholders per share
Net income attributable to Hitachi, Ltd. stockholders per share62

3. Notes to Consolidated Financial Statements

3,270.43yen
92.55 yen
(1.84) yen
90.71 yen2020/06/24 9:36:54 / 19610125_株式会社日立製作所_招集通知（Ｃ）(Notes on Major Subsequent Events)
1. Sale of all shares of Hitachi Chemical Company, Ltd. (hereinafter “Hitachi Chemical”)
On December 18, 2019, the Company signed a tender offer agreement with Showa Denko K.K. (hereinafter“Showa Denko”) and HC Holdings K.K. (hereinafter “HC Holdings”), a wholly-owned subsidiary of Showa Denko,
under which the Company agrees to tender all shares of common stock in Hitachi Chemical held by theCompany, in response to a tender offer to be carried out by HC Holdings for the shares of common stock of
Hitachi Chemical, a consolidated subsidiary of the Company in the Hitachi Chemical segment. HC Holdingscommenced the tender offer on March 24, 2020, and the tender offer was completed on April 20, 2020. The
consideration to be received by the Company was 495,145 million yen.
As a result, the Company’s ownership ratio of shares of Hitachi Chemical decreased from 51.4% to 0%, andHitachi Chemical was deconsolidated. An expected gain on the sale of shares of Hitachi Chemical in the amountof 279 billion yen will be recognized in Other income in the consolidated statement of profit or loss. Furthermore,
non-controlling interest in Hitachi Chemical will decrease approximately 220 billion yen in the consolidated
statement of changes in equity as a result of its deconsolidation.
2.

Additional acquisition of shares of Hitachi High-Tech Corporation (hereinafter “Hitachi High-Tech”)
On January 31, 2020, the Company decided to conduct a tender offer to acquire all issued shares of Hitachi
High-Tech, a consolidated subsidiary of the Company in the Hitachi High-Tech segment, to establish themeasurement and analysis platform to strengthen Lumada. The Company commenced the tender offer on
February 17, 2020, and the tender offer was completed on April 6, 2020.
Furthermore, the Company conducted a series of procedures to make Hitachi High-Tech a wholly-owned
subsidiary of the Company. As a result, the Company’s ownership ratio of shares of Hitachi High-Techincreased to 100% on May 20, 2020. The total consideration paid will be 531,118 million yen, and the Company
will recognize a decrease in the total of capital surplus and non-controlling interest by the same amount as theconsideration.

(Other Notes)
1. Settlement regarding the South African projectAt the meeting of the Board of Directors held on December 18, 2019, the Company approved a settlement with
Mitsubishi Heavy Industries, Ltd. (hereinafter “MHI”) regarding the transfer price adjustment, etc. for the South
African project previously in the process of arbitration based on economic rationality and business strategy, etc.,
and reached a settlement agreement with MHI on the same day. As a result of the conclusion of this settlement,
it was agreed that all common shares of Mitsubishi Hitachi Power Systems, Ltd. (hereinafter “MHPS”) held by
the Company would be transferred to MHI, and the Company would pay 130,000 million yen to MHI comprisinga settlement payment of 200,000 million yen offset by a consideration of 70,000 million yen in loans receivable
to Mitsubishi Hitachi Power Systems Africa Proprietary Limited (hereinafter “MHPS Africa”) to be transferred to
MHI. Accordingly, the Company recorded other accounts payable of 200,000 million yen related to thesettlement payment to MHI and other provision of 273,272 million yen related to the transfer of shares of MHPS.
The Company also reversed the provision of 105,041 million yen related to the transfer price adjustment, etc. of
the South African project, which had been recorded prior to the conclusion of this agreement. As a result of theabove, the Energy segment recorded a loss of 375,967 million yen due to the settlement, which is included in
Other expenses in the consolidated statement of profit or loss for the year ended March 31, 2020. Other
provision related to this agreement is included in Other current liabilities in the consolidated statement offinancial position as of March 31, 2020, and the change in the provisions, including the reversal of the provision
related to the transfer price adjustment, etc. of the South African project, which had been recorded prior to theconclusion of this agreement, is included in Other under cash flows from operating activities in the consolidated
statement of cash flows for the year ended March 31, 2020. The shares of MHPS will be delivered to MHI assoon as the procedures required for the transfer are completed. Regarding the assets to be transferred to MHI
under this agreement, the shares of MHPS previously included in Investments accounted for using the equity
method and the loans receivable to MHPS Africa previously included in Investments in securities and otherfinancial assets classified as non-current assets in the consolidated statement of financial position, the total ofwhich was 333,614 million yen, were reclassified to Other current assets in the consolidated statement offinancial position since they met the criteria as held-for-sale assets in accordance with IFRS 5 “Non-current
Assets Held for Sale and Discontinued Operations.” Furthermore, on March 30, 2020, the Company transferred
to MHI, the loans receivable to MHPS Africa, and paid 130,000 million yen to MHI comprising the settlement
payment offset by the consideration in loans receivable. As of March 31, 2020, the corresponding amount ofassets meeting the criteria as held-for-sale assets included in Other current assets is 263,614 million yen.
2.

Acquisition of ABB’s power grids business
On December 17, 2018, the Company decided to acquire the power grids business from ABB Ltd (hereinafter“ABB”) and signed an agreement with ABB in order to strengthen and expand energy solutions businessglobally. The Company plans to acquire an 80.1% stake in the company operating the power grids business thatwill be divested by ABB in the first half of 2020 and make it a consolidated subsidiary of the Company. The
consideration is expected to be approximately 6.4 billion U.S. dollars (approximately 696.5 billion yen).
Furthermore, the Company is expected to repay certain loans owed by the company operating the power grids
business to be divested by ABB, in addition to the acquisition cost. The effects of this transaction on the
Company’s consolidated financial statements are currently being evaluated.

63

3. Notes to Consolidated Financial Statements

2020/06/24 9:36:54 / 19610125_株式会社日立製作所_招集通知（Ｃ）

3.

Reorganization of automotive systems business
On October 30, 2019, the Company and Hitachi Automotive Systems, Ltd. (hereinafter “HiAMS”), a consolidated
subsidiary of the Company in the Smart Life segment, signed an agreement with Honda Motor Co., Ltd.
(hereinafter “Honda”), and Keihin Corporation, Showa Corporation, and Nissin Kogyo Co., Ltd. (together,hereinafter “the Associates of Honda”), to integrate management of HiAMS and the Associates of Honda, inorder to strengthen development and distribution of global and competitive solutions in the CASE area.
HiAMS and the Associates of Honda plan to conduct an absorption-type merger in which HiAMS will be thesurviving company (hereinafter “the Integrated Company”) and each of the Associates of Honda will be thedisappearing companies after they become wholly-owned subsidiaries of Honda through tender offers to be
conducted by Honda for the common shares of the Associates of Honda. The consideration will be the commonshares of the Integrated Company. After the merger, the Company’s ownership ratio of shares of the Integrated
Company will become 66.6% and the Integrated Company will become a consolidated subsidiary of theCompany. The effects of this transaction on the Company’s consolidated financial statements are currently
being evaluated.

4.

Sale of Diagnostic Imaging-related Business
On December 18, 2019, the Company signed an agreement with FUJIFILM Corporation (hereinafter “Fujifilm”)
regarding the transfer of the Diagnostic Imaging-related Business included in the Company, the Company’s
subsidiaries and associates in the Smart Life segment to Fujifilm.
The Company plans to transfer all shares of common stock of a new company established by the Company toFujifilm after the Diagnostic Imaging-related Business is succeeded to the new company from the Company
through an absorption-type company split. The consideration is expected to be approximately 179 billion yen.
Assuming the transaction is settled, it is expected that the Company’s ownership ratio of shares of the newcompany will decrease from 100% to 0%, and the new company will be deconsolidated. An expected gain on
the sale of shares of the new company in the amount of approximately 111 billion yen will be recognized in
Other income in the consolidated statement of profit or loss.

64

3. Notes to Consolidated Financial Statements

2020/06/24 9:36:54 / 19610125_株式会社日立製作所_招集通知（Ｃ）

6. Consolidated Statement of Comprehensive Income (Supplementary Information)
Years ended March 31
2019

2020

(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 interests

65

4. Consolidated Statements of Comprehensive Income

321,022

127,246(45,356)(11,881)(1,964)(17,207)(8,396)(963)(59,201)(26,566)(4,175)(6,274)12,009(111,323)
13,173(13,609)

1,560(57,641)
263,381(111,759)(138,325)(11,079)

171,140
92,241(8,465)(2,614)

2020/06/24 9:36:54 / 19610125_株式会社日立製作所_招集通知（Ｃ）

7. Consolidated Statement of Cash Flows (Supplementary Information)
Years ended March 31
2019

2020
(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 year66

5. Consolidated Statements of Cash Flows

321,022

127,246

368,044344,997
183,699
15,016(6,387)(184,630)(18,966)
1,793(149,500)(16,107)(14,769)(38,461)(29,982)775,769
22,34322,710(22,530)(188,267)
610,025

433,158
136,993
51,244(43,639)870(19,650)(30,370)
185,935(143,072)(115,086)(47,575)(22,483)
224,378
737,949
23,607
13,362(24,885)(189,113)
560,920(382,351)(89,898)
61,623(322,894)(98,382)
82,539(72,422)(237,172)

306,971

57,624

13,205(162,872)
447,153(7,541)(525,826)
35,094

3,706
87,636(133,581)
5,149(77,194)(43,375)(231)
211(162,692)(55)(320,426)(17,098)
109,62980,849334,919(279,446)
5,004(91,699)(43,926)(166)
139(2,345)(492)
2,837(33,193)
4,738

697,964
807,593

807,593
812,3312020/06/24 9:36:54 / 19610125_株式会社日立製作所_招集通知（Ｃ）

8. Unconsolidated Statement of Changes in Net Assets (April 1, 2019 to March 31, 2020)(Millions of yen)
Stockholders’ equity
Capital surplus

Retained earnings

Stockholders’ equity

OthersCommonstock

Balance at beginning of year

Capitalreserve

458,790

176,757

1,072

1,072

Reserve for
Total capital advanced
surplusdepreciation

Others272,994449,751of
fixed assets

Retainedearnings(losses)carriedforward

1,359

601,123

Total retained
earnings

602,483

Treasurystock(3,920)

Total
stockholders’equity1,507,105

Change during year
Issuance of new shares

1,072

Reversal of reserve foradvanced depreciation of
fixed assets

2,144
(113)

113

-

-

Distribution of surplus(91,761)(91,761)(91,761)

Net income

119,409

119,409

119,409

Acquisition of treasury
stock
Disposition of treasury
stock

(76)

(76)

(166)

(166)

277

201

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

1,072

1,072

(76)

995

(113)

27,762

27,648110

29,826

Balance at end of year

459,862

177,828

272,917450,746

1,246

628,885

630,131(3,809)1,536,931

Valuation and translation adjustments

Balance at beginning of year

Unrealized
holding gains
on securities

Deferred
profitor loss onhedges

Revaluation
reserve forland

56,668(1,944)

(133)

Total
Subscription
valuationrights toandsharestranslation
adjustments
54,5901,760

Total net
assets1,563,456

Change during year
Issuance of new shares

2,144

Reversal of reserve foradvanced depreciation of
fixed assets-

Distribution of surplus(91,761)

Net income

119,409

Acquisition of treasury
stock

(166)

Disposition of treasury
stock

201

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

(26,904)

12,236

Total change during year

(26,904)

Balance at end of year

29,763-(14,668)

12,236-(14,668)444

15,601

10,291(133)

39,921

2,204

1,579,058

67

6. Unconsolidated Statement of Changes in Net Assets

444(14,224)

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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 which had readily determinable fair values are stated at fair value. The difference between
acquisition cost and carrying cost of other securities is recognized in “Unrealized holding gains on securities.”
The cost of other securities sold is computed based on the moving average method.
Other securities which did not have readily determinable fair values 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. Depreciation of intangible fixed assets (excluding lease assets)
Selling, leasing, or otherwise marketing software: Depreciated 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 doubtfulreceivables.
Provision for product warranties:
In order to prepare for expenditures related to after-sales product services, estimated in-warranty service costs
are accounted for based on past records.
Provision for loss on construction contracts:
In order to provide for losses relating to construction contracts and made-to-order software, an estimated loss
for subsequent fiscal years is accounted for.
Accrued pension liability:
Accrued pension liability is provided for employees’ retirement and severance benefits. Such liability isdetermined based on projected benefit obligation and expected plan assets as of the end of this fiscal year. The
projected benefit obligation is determined by attributing the expected retirement and severance benefits to eachyear 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 estimated averageremaining service years of employees from the next fiscal year.
Provision for retirement benefits for senior executives:
In order to provide for the payment of retirement benefits to senior executives, corporate officers, and the like,the Company accounted for the amount of payment required as of the end of this fiscal year according to the
stipulations in the Company’s internal rules.
Decisions were made at the Compensation Committee meetings held on December 18, 2007 and March 26,
2008 to abolish the retirement allowance system and to pay the retirement allowance for the applicable period tosenior executives, corporate officers, and the like at the time of their retirement, subject to resolutions of theCompensation Committee following decisions on their retirement.
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.

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8.

Accounting standard for income and expenses
Accounting standard for income on construction contracts and made-to-order software:
Income is accounted for on the percentage of completion basis for progress made by the end of the relevant
fiscal year, if said progress is deemed certain to yield results (as a general rule, the estimated percentage ofprogress is obtained by the cost-to-cost method). Income is accounted for on the completion basis in all othercases.
9. Consumption tax
Consumption tax is accounted for based on the tax segregated method, under which consumption tax is
excluded from presentation of revenues, cost of sales and expenses.
10. Hedge accounting
Deferral hedge accounting is employed.
11. Application of tax effect accounting for the transition from the consolidated taxation system to the group tax
sharing system
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 application of Paragraph 44 of “Implementation Guidance on Tax Effect Accounting” (ASBJ
Guidance No. 28, February 16, 2018) is not mandatory.
12. Impact of COVID-19 on accounting estimates
For the fiscal year ended March 31, 2020, the Company tested fixed assets for impairment, assessed
recoverability of deferred tax assets and evaluated affiliated companies’ common stock, etc., which require
management to make estimates of future cash flows or future taxable income, based on the assumption thatmost of the impact of the slowdown in the global economy caused by the spread of COVID-19 would occur inthe first half of the fiscal year ending March 31, 2021, and with the decrease in demand to continue in thesecond half of the fiscal year in part of the business, but would not be material in the long term, although thesituation varies from one segment or region to another since the Company is engaged in a wide range ofbusiness activities around the globe. The Company judged that this is the best assumption as of March 31,
2020. However, if the impact lasts longer or is wider than the assumption described above, it could affectsignificant accounting estimates or judgements regarding impairment of fixed assets, assessments ofrecoverability of deferred tax assets, and evaluations of affiliated companies’ common stock, etc.
(Notes to Unconsolidated Balance Sheet)
1. Collateralized assets

2.

3.

Type of asset
Affiliated companies’ common
stock
Investments in securities

Year-end book value

Long-term loan receivables

57

46
8

(Millions of yen)
Description
Collaterals for borrowings by affiliatedcompanies
Collaterals for borrowings by investees
Collaterals for borrowings by affiliatedcompanies and investees

Total
111
Accumulated depreciation of tangible fixed assets
Buildings
185,732 million yen
Structures
24,931 million yen
Machinery
97,746 million yen
Vehicles
875 million yen
Tools and equipment
166,651 million yen
Lease assets
4,252 million yen
Land revaluation
Effective on April 1, 2016, the Company succeeded "Revaluation reserve for land" of Hitachi Medical
Corporation in conjunction with the absorption-type company split. As of March 31, 1998, in accordance with the"Act on Revaluation of Land" (Act No.34, promulgated on March 31, 1998), land owned by Hitachi Medical
Corporation for business use was revalued. The unrealized gains on the revaluation were included in net assets
as "Revaluation reserve for land", net of deferred taxes. The deferred taxes on the unrealized gains were
included in liabilities as "Deferred tax liabilities for land revaluation".
(1) Method of revaluation
The fair value of land was determined based on the assessed value of fixed assets stipulated in Article 2-3 of
the Ordinance Implementing the Act on Revaluation of Land (Article 119 of 1998 Cabinet Order, promulgatedon March 31, 1998). Reasonable adjustments are made to the assessed value of fixed assets.
(2) Date of revaluation
March 31, 2002
(3) Difference between the fair value of land subject to the revaluation and the book value as of March
31, 2020(334) million yen

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4

5.

Guarantees
The Company guarantees borrowings from financial institutions, etc. as follows.
(Millions of yen)
Guarantee
Year-end balance
Hitachi Rail S.p.A.
133,134
Hitachi Rail STS S.p.A.
65,597
Hitachi International Treasury Ltd.
15,780Kawasaki Heavy Industries, Ltd.
1,600
Other
1,373
Total
217,486
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
662,094 million yen
Long-term receivables from affiliated companies
69,728 million yen
Short-term payables to affiliated companies
891,778 million yen
Long-term payables to affiliated companies
5,105 million yen(Notes to Unconsolidated Statement of Operations)
1. Loss due to the settlement of the South African projectAt the meeting of the Board of Directors held on December 18, 2019, the Company approved a settlement with
Mitsubishi Heavy Industries, Ltd. (hereinafter “MHI”) regarding the transfer price adjustment, etc. for the South
African project previously in the process of arbitration based on economic rationality and business strategy, etc.,
and reached a settlement agreement with MHI on the same day. As a result of the conclusion of this settlement,
it was agreed that all common shares of Mitsubishi Hitachi Power Systems, Ltd. (hereinafter “MHPS”) held by
the Company would be transferred to MHI, and the Company would pay 130,000 million yen to MHI comprisinga settlement payment of 200,000 million yen offset by a consideration of 70,000 million yen in loans receivable
to Mitsubishi Hitachi Power Systems Africa Proprietary Limited (hereinafter “MHPS Africa”) to be transferred to
MHI. Accordingly, the Company recorded an extraordinary loss of 384,744 million yen related to the expected
loss due to the transfer the shares of MHPS and the settlement payment to MHI, etc. On March 30, 2020, theCompany transferred to MHI, the loans receivable to MHPS Africa, and paid 130,000 million yen to MHI
comprising the settlement payment offset by the consideration in loans receivable. The shares of MHPS will bedelivered to MHI as soon as the procedures required for the transfer are completed.
2.

(1) Summary of the assets or asset groups for which impairment loss was recognizedClassification
Description
Category
Location
Software relating toservice business for
Softwarefinancial institutions
Manufacturing facilityof transformation
Machinery, etc.
Hitachi, Ibaraki
station equipment
Assets to be held
Manufacturing facility ofand used
Machinery, etc.
Hitachi, Ibaraki
wind turbine equipment
eThekwini Metropolitan
Seawater desalination
Machinery
Municipality,
plant
Republic of South Africa
Cogeneration facility
Machinery, etc.
Ibaraki and Gunma, etc.
(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
676 million yen
Machinery
4,330 million yen
Land
252 million yen
Software2,409 million yen
Others1,266 million yen
Total
8,934 million yen(4) Method of grouping assets
Although the grouping of assets is principally based on business divisions or places of business, someassets and asset groups are grouped as a separate unit that generates cash flows independently of otherasset 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.

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3.

Sales to affiliated companies
Purchases from affiliated companies
Non-operating transactions with affiliated companies

501,449 million yen
852,846 million yen
42,377 million yen(Note to Unconsolidated Statement of Changes in Net Assets)
Matters related to Class and Number of Treasury Stock(Shares)Class
Common stock

At beginning of year
1,086,667

Number of shares
Increase during year Decrease during year
41,09877,024

At end of year
1,050,741(Summary of Reason for Change)
The increase during this fiscal year by 41,098 shares is due to the purchase of shares from less-than-one unit
shareholders at their request. The decrease during this fiscal year by 77,024 shares is due to the disposition of
74,240 shares as a result of the exercise of stock acquisition rights, and the sale of 2,784 shares to less-than-one
unit shareholders at their request.
(Note on Accounting for Deferred Taxes)
The major causes of deferred tax assets were loss due to the settlement of the South African project and provision
for loss on construction contracts.
(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)
Attribute

Name of company
etc.

% of voting
rights held

Subsidiary Hitachi America, Ltd. Direct: 100.0%

Subsidiary

Hitachi America
Capital, Ltd.

Subsidiary Hitachi Rail Ltd.

Subsidiary

Hitachi Automotive
Systems, Ltd.

Relationship with therelated parties

Description oftransaction

Transaction
amountClassification

Sale of theUnderwriting ofCompany's products* capital increase

154,935-

Loan (Note 1)(17,359)

Short-term
loan
receivables

119,713

Loan (Note 1)(33,175)

Short-term
loan
receivables

78,305

Loan (Note 2)

13,435

Indirect: 100.0% *Direct: 100.0%

Direct: 100.0%

Manufacturing, sale,engineering andmaintenance of theGroup’s products *Manufacturing of theCompany's products*

Loan (Note 2)
Sale of the
Deposit received
51.8% Company’s products,(Note 2)etc.
Outsourcing of theCompany’s softwaredevelopment,
outsourcing of
Deposit received
Subsidiary Hitachi Systems, Ltd. Direct: 100.0%
maintenance of the(Note 2)Company’s
telecommunications
equipment *Manufacturing and
Hitachi Building
sale of products
Deposit received
Subsidiary
Direct: 100.0%
Systems Co., Ltd.
developed by the(Note 2)Company *Outsourcing of theCompany’s
Deposit received
Hitachi Solutions,
Subsidiary
Direct: 100.0% information systems(Note 2)Ltd.
and softwaredevelopment *Manufacturing, sale,engineering andIndirect: 100.0%
Guarantee
Subsidiary Hitachi Rail S.p.A.
maintenance of theGroup’s products, etc.

Subsidiary

Hitachi High-Tech
Corporation

Direct:71

7. Notes to Unconsolidated Financial Statements

Short-term
loan
receivables
Long-term loan
60,500receivables

Year-endbalance-

13,43560,50036,242

Depositreceived

195,179

14,883

Depositreceived

58,073(40,435)

Depositreceived

56,733

9,932

Depositreceived

47,479133,134--

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Attribute

Name of company
etc.

Subsidiary

Hitachi Rail STS
S.p.A.

Affiliate

Mitsubishi Hitachi
Power Systems
Africa (Pty) Ltd.

% of voting
rights held

Relationship with the
Description ofrelated parties
transaction
Manufacturing, sale,engineering andIndirect: 100.0%
Guarantee
maintenance of theGroup’s products, etc.
Loan (Note 1)
Indirect: 35.0% Loans
Loan (Note 1)

Transaction
amount65,597

Classification

Year-endbalance-

Short-term
loan
receivables
Long-term loan
(70,000)
receivables(7,718)--* The Company’s Directors, Executive Officers or employees concurrently hold position of directors or officers at thesubsidiary and the affiliate.
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.
(Note on Per Share Information)
Net assets per share
1,631.97 yen
Net income per share
123.59 yen(Note on Major Subsequent Events)
Transfer of subsidiary’s shares
On December 18, 2019, the Company signed a tender offer agreement with Showa Denko K.K. (hereinafter “Showa
Denko”) and HC Holdings K.K. (hereinafter “HC Holdings”), a wholly-owned subsidiary of Showa Denko, under which
the Company agrees to tender all shares of common stock in Hitachi Chemical Company, Ltd. (hereinafter “Hitachi
Chemical”) held by the Company, in response to a tender offer to be carried out by HC Holdings for the shares ofcommon stock of Hitachi Chemical, a consolidated subsidiary of the Company. HC Holdings commenced the tender
offer on March 24, 2020, and the tender offer was completed on April 20, 2020. As a result, the Company plans topost an extraordinary gain of approximately 478 billion yen in gain on sale of affiliated companies’ common stock inthe unconsolidated statement of operations for the fiscal year ending March 31, 2021(from April 1, 2020 to March 31,2021).
Acquisition of shares
On January 31, 2020, the Company decided to conduct a tender offer to acquire all issued shares of Hitachi HighTech Corporation (hereinafter “Hitachi High-Tech”), a consolidated subsidiary of the Company, to establish themeasurement and analysis platform to strengthen Lumada. The Company commenced the tender offer on February
17, 2020, and the tender offer was completed on April 6, 2020. Furthermore, the Company conducted a series ofprocedures to make Hitachi High-Tech a wholly-owned subsidiary of the Company. As a result, the Company’sownership ratio of shares of Hitachi High-Tech increased to 100% on May 20, 2020. The total consideration paid willbe 531,118 million yen.
(Additional Information)
Acquisition of shares
On December 17, 2018, the Company decided to acquire the power grids business from ABB Ltd (hereinafter “ABB”)
and signed an agreement with ABB in order to strengthen and expand energy solutions business globally. The
Company plans to acquire an 80.1% stake in the company operating the power grids business that will be divested
by ABB in the first half of 2020. The consideration is expected to be approximately 6.4 billion U.S. dollars(approximately 696.5 billion yen).
Company spilt and transfer of shares
On December 18, 2019, the Company signed an agreement with FUJIFILM Corporation (hereinafter “Fujifilm”)
regarding the transfer of the Diagnostic Imaging-related Business included in the Company, the Company’s
subsidiaries and associates to Fujifilm. The Company plans to transfer all shares of common stock of a newcompany established by the Company to Fujifilm after the Diagnostic Imaging-related Business is succeeded to the
new company from the Company through an absorption-type company split. In accordance with the share transfer,
the Company plans to post an extraordinary gain of approximately 107 billion yen in gain on sale of affiliatedcompanies’ common stock in the unconsolidated statement of operations for the fiscal year ending March 31,
2021(from April 1, 2020 to March 31, 2021).

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10. Transcript of Accounting Auditors’ Audit Report on Consolidated Financial Statements
REPORT OF INDEPENDENT AUDITORS
June 11, 2020
Mr. Toshiaki Higashihara, President & CEO
Hitachi, Ltd.
Ernst & Young ShinNihon LLC
Tokyo Office, Japan
Takashi Ouchida
Designated Engagement Partner
Certified Public Accountant
Takuya Tanaka
Designated Engagement Partner
Certified Public Accountant
Yoshitomo Matsuura
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 statements of Hitachi, Ltd. (the “Company”) applicable to the fiscal year from April 1, 2019 to March 31,
2020.
In our opinion, the accompanying consolidated financial statements present fairly, in all material respects,
the consolidated financial position and results of operations of the Group, which consisted of the Company and its
consolidated subsidiaries, applicable to the fiscal year ended March 31, 2020, in accordance with International
Financial Reporting Standards with certain disclosure items omitted pursuant to the second sentence of Article 120,
Paragraph 1 of the Regulation 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 financial statements in Japan, and we have fulfilled ourother ethical responsibilities in accordance with these requirements. We believe that the audit evidence we haveobtained is sufficient and appropriate to provide a basis for our opinion.
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 International Financial Reporting Standards with certain disclosure items omitted
pursuant to the second sentence of Article 120, Paragraph 1 of the Regulation on Corporate Accounting, and forsuch 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 International Financial Reporting Standards
with certain disclosure items omitted pursuant to the second sentence of Article 120, Paragraph 1 of the Regulation
on Corporate Accounting, matters related to going concern.
Audit Committee are responsible for overseeing the Group’s financial reporting process.

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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
a whole 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
the aggregate they could reasonably be expected to influence the economic decisions of users taken on the basisof these 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.
- In making those risk assessments, we consider internal control relevant to the audit in order to design
audit procedures that are appropriate in the circumstances, while the purpose of the audit of theconsolidated 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
estimates and 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 orconditions that may cast significant doubt on the Group’s ability to continue as a going concern. If weconclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to therelated disclosures in the consolidated financial statements or, if such disclosures are inadequate, tomodify our opinion. Our conclusions are based on the audit evidence obtained up to the date of ourauditor’s report. However, future events or conditions may cause the Group to cease to continue as agoing 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 International Financial
Reporting Standards with certain disclosure items omitted pursuant to the second sentence of Article 120,
Paragraph 1 of the Regulation 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 timingof 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
with them all relationships and other matters that may reasonably be thought to bear on our independence, andwhere applicable, related safeguards.
Conflicts of Interest
We have no interest in the Company and its consolidated subsidiaries which should be disclosed inaccordance with the Certified Public Accountants Act.
(Note)
This is an English translation of the Japanese language Report of Independent Auditors 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, 2020. Ernst & Young ShinNihon LLC has not audited theEnglish language version of the consolidated financial statements for the above-mentioned year.

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