2024/05/20 19:12:52 / 23092450_株式会社日立製作所_招集通知

Consolidated Financial Statements
Consolidated Statement of Financial Position
Fiscal 2022 (Reference)(As of March 31, 2023)

Fiscal 2023
(As of March 31, 2024)(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

5,928,535
833,2832,874,987
1,646,188
346,916
227,161
6,572,879
478,620496,8971,700,471
2,165,350
1,244,688
486,853
12,501,414

5,854,597
705,367
2,991,316
1,510,647
331,280
315,9876,366,687
816,434
320,101
1,221,842
2,371,678
1,178,750
457,882
12,221,284(Liabilities)
Current liabilities
Short-term debt
Current portion of long-term debt
Other financial liabilities
Trade payables
Accrued expenses
Contract liabilities
Other current liabilities
Non-current liabilities
Long-term debt
Retirement and severance benefits
Other non-current liabilities
Total liabilities

5,166,178
777,650
141,861
263,748
1,548,497
720,961
1,241,366
472,095
1,999,669
1,293,837
323,264
382,568
7,165,847

4,802,600
37,827
187,486
266,245
1,399,699
697,471
1,658,435
555,437
1,559,081
954,709
246,231
358,141
6,361,681(Equity)
Hitachi, Ltd. stockholders’ equity
Common stock
Capital surplus
Retained earnings
Accumulated other comprehensive income
Treasury stock, at costNon-controlling interests
Total equity
Total liabilities and equity

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

5,703,705
463,417
4,084,729
1,160,550(4,991)
155,898
5,859,603
12,221,284

47

2. Consolidated Statements of Financial Position

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Consolidated Statement of Profit or Loss
Years ended March 312023 (Reference)

2024(Millions of yen)
Revenues
Cost of sales

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

9,728,716(7,146,629)

Gross profit

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

2,582,087(1,826,271)
116,653(97,184)
17,388(10,015)

52,84775,284

845,632
25,652(51,313)857,942
38,781(70,922)

Income taxes

819,971(116,101)

825,801(199,053)

Net income

703,870

626,748

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

649,124
54,746589,896
36,852

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

48

3. Consolidated Statements of Profit or Loss

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Consolidated Statement of Comprehensive Income (Supplementary Information)
Years ended March 31
2023

2024

(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 interests49

4. Consolidated Statements of Comprehensive Income

703,870

626,748

21,48440,202
1,511

45,156
13,872
1,437

63,19760,465

232,360
7,265
14,595354,395
14,91522,025254,220
317,417
1,021,287

391,335
451,800
1,078,548

905,819
115,468

1,013,811
64,737

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Consolidated Statement of Changes in Equity (April 1, 2023 to March 31, 2024)(Millions of yen)
Commonstock
Balance at beginning of year

462,817

Capitalsurplus

Accumulated
othercomprehensive
incomeRetainedearnings-

3,637,184

846,392

Reclassified into retained
earnings

110,653(110,653)

Net income

589,896

Treasurystock, atcost(3,539)

Total
Hitachi, Ltd.
stockholders’equityNoncontrollinginterests

Total equity

4,942,854

392,713

5,335,567

Changes in equity

Other comprehensive
income-423,915

Dividends to Hitachi, Ltd.
stockholders(144,461)-

589,896

36,852626,748

423,915

27,885451,800(144,461)

Dividends to noncontrolling interests-

Acquisition of treasury
stock(144,461)(30,580)(30,580)(100,458)(100,458)(100,458)

Sales of treasury stock

(151)

213

62

62

Cancellation of treasurystock(98,793)

98,793

-

-

1,200

1,200

-

-

Issuance of new shares

600

600

Transfer to capital surplus
from retained earnings

105,689(105,689)

Changes in non-controllinginterests(7,345)(2,854)896(9,303)(270,972)(280,275)

Total changes in equity

600-

447,545

314,158(1,452)760,851(236,815)

524,036

Balance at end of year

463,417-

4,084,729

1,160,550(4,991)

5,703,705

155,898

5,859,603

50

2. Consolidated Statements of Changes in Equity

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Consolidated Statement of Cash Flows (Supplementary Information)
Years ended March 31
2023

2024
(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 year51

5. Consolidated Statements of Cash Flows

703,870

626,748526,310
129,894
116,101(52,847)
18,204(297,351)(2,465)(60,673)(244,346)
43,96436,82649,93528,182995,604
25,675
26,419(49,770)(170,883)
827,045

451,525
29,668199,053(75,284)
21,824(97,048)(17,857)
40,206(88,320)
7,327
54,016(5,193)(34,598)
1,112,067
38,65529,963(69,165)(154,908)
956,612(252,638)(157,947)
55,580(232,874)(152,271)
45,048(106,069)(70,622)616,317265,693(4,180)151,063
978,108

13,483(131,543)
825,069(277,685)
80,062(288,795)
310(129,005)(52,217)(200,212)
164(274,687)(901)(1,142,966)
29,314(135,544)(550,170)
105,130(301,507)
487(144,343)(32,345)(100,458)
62(1,763)(1,024,907)
71,922(127,916)

968,827
833,283

833,283
705,3672024/05/20 19:12:52 / 23092450_株式会社日立製作所_招集通知

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 573 and the number of equity-method affiliates is 369.

3.

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

52

3. Notes to Consolidated Financial Statements、Notes on Important Matters for Basis of Presentation(Basis of presentation)、Notes on
Important Matters for Basis of Presentation(Scope of consolidation and application of equity method)、Notes on Important Matters for Basisof Presentation(Revenue Recognition)

2024/05/20 19:12:52 / 23092450_株式会社日立製作所_招集通知

4.

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

5.

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

6.

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

53

Notes on Important Matters for Basis of Presentation(Financial assets)、Notes on Important Matters for Basis of Presentation(Inventories)、
Notes on Important Matters for Basis of Presentation(P.P.& E. and intangible assets)

2024/05/20 19:12:52 / 23092450_株式会社日立製作所_招集通知7.

Accounting methods for retirement and severance benefits
The Company and certain subsidiaries have defined benefit pension plans, severance lump-sum payment plansand defined contribution pension plans to provide retirement and severance benefits to employees.
(1) Defined Benefit Plans
Defined benefit plans include defined benefit pension plans and severance lump-sum payment plans. The
present value of defined benefit obligations and retirement benefit costs are measured based on the
projected unit credit method. The present value of defined benefit obligations and the fair value of plan assets
are remeasured as of the end of reporting period. Actuarial differences arising during the year and changes infair value 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, isrecognized 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
amount of defined benefit liability or asset in non-current liabilities or assets. When a defined benefit plan has
a surplus, the net defined benefit asset is limited to the asset ceiling, which is the present value of any
economic benefits available in the form of refunds from the plan or reductions in future contributions to theplan.
(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 inexcess of such contributions. Contributions to the defined contribution plans are recognized in profit or loss inthe period when the service is provided by the employees.
Since the Company and a consolidated subsidiary of the Company introduced a risk-sharing corporate
pension plan on April 1, 2019, for current employees participating in the defined benefit pension planmanaged by the Hitachi Pension Fund, the same has been promoted to the other subsidiaries that participate
in pension plan managed by the Hitachi Pension Fund. On April 1, 2023, all the subsidiaries participating in
the Hitachi Pension Fund have completed changing their pension plans from defined benefit pension plan torisk-sharing corporate pension plan for current employees.
Under this plan, a risk reserve contribution is determined in advance in accordance with the rules governing
the plan, and the pension benefits are adjusted annually based on the financial position of the plan tomaintain balanced finance.
In terms of the corresponding accounting treatments for retirement benefits, risk-sharing corporate pension
plans, for which an entity accepts contribution obligations to the extent stipulated in the rules but has nofurther obligations to make any additional contributions, are classified as defined contribution plans. Since thisrisk-sharing corporate pension plan, which the Company and the consolidated subsidiaries have introduced,
imposes no additional contribution obligations, it is classified as defined contribution plan.

(Notes on Accounting Estimates)
1. Allowance for doubtful receivables (The ending balance of Allowance for doubtful receivables of 115,354 million
yen from trade receivables and contract assets, and 1,709 million yen from other receivables)
Calculation methods for Allowance for doubtful receivables are described in the note 4 in the "Notes on Important
Matters for Basis of Presentation of Consolidated Financial Statements".
Expected credit losses are measured by taking the probability weighted average of the discounted present
values of differences between the total amount of the contractual cash flows and the total amount of cash flows
expected to be received in the future from the financial assets. If one or more events occur, such as overdue
payments, extended payment terms, negative evaluation by third party credit rating agencies, and/or adeterioration in financial position and operating results, including capital deficit, the financial assets areindividually assessed as credit-impaired financial assets and expected credit losses are measured based mainly
on historical credit loss experience, future collectible amounts and other factors. The expected credit losses on
the financial assets that are not credit-impaired are measured through collective assessment based mainly on
provision rates depending on historical credit loss experience adjusted by the current and future economic
situation and other factors, if necessary.
Expected credit losses are determined based on the best estimates and judgements but may be affected bydeterioration of customers’ financial conditions in the future or by variance of uncertain economic conditions in
the future.
2. Impairment of Property, Plant and Equipment, Goodwill and Other Intangible Assets (Impairment losses of(28,180) million yen)
The calculation method used in determining impairment of property, plant and equipment, goodwill and otherintangible assets are described in note 6 in the “Notes on Important Matters for Basis of Presentation ofConsolidated Financial Statements”. The Company measures the recoverable amount of an asset or a CGU (ora group of CGUs) as the higher of fair value less costs of disposal and value in use. In measuring fair values, theCompany and its subsidiaries primarily use the income approach (present value technique) based on theestimated future cash flows expected to result from the use of the asset and its eventual disposal or the market
approach to derive reasonable estimates of values in orderly market transactions, such as comparisons of similar
public companies and the current gross value of the asset. Value in use is calculated by the estimated future
cash flows based on business plans approved by management, discounted at the discount rate which is derived
from the weighted average cost of capital. The business plan used is based on external information, reflects
historical experiences, and generally has a maximum of five years. Estimated cash flows beyond the period
covered by the business plan are calculated using the estimated growth rate not exceeding the long-term
average growth rate of the market to which the asset belongs. Although a certain amount of negative impact due
to the business environment is included in current business plans, these plans may be affected by risks related
to market or economic environment, and actual result may differ from the estimates. In addition, the discount rateused to calculate the value in use is affected by stock market trends and fluctuations in interest rates.
The group of CGUs to which a significant proportion of goodwill was allocated were the power grids business in54

Notes on Important Matters for Basis of Presentation(Retirement and Severance Benefits)、Notes on Accounting Estimates(Allowance for
doubtful receivables)、Notes on Accounting Estimates(Impairment of Non-Financial Assets - P.P.& E. and Intangible Assets)、Notes on
Accounting Estimates(Impairment of Non-Financial Assets - Goodwill)、Notes on Accounting Estimates(Retirement and Severance Benefits)、Notes
on Accounting Estimates(Revenue Recognition)、Notes on Accounting Estimates(Income Taxes)

2024/05/20 19:12:52 / 23092450_株式会社日立製作所_招集通知

3.

4.

5.

the Green Energy & Mobility segment as of March 31, 2024. The recoverable amount used in the annual
impairment test of goodwill of the power grids business was calculated based on the value in use and in
calculation of the value in use, estimated future cash flows was discounted at the discount rate derived from theweighted average cost of capital. Estimated future cash flows was based on business plan for five years andbeyond the period covered by the business plan were calculated taking into account growth rate. The significant
assumptions were revenue growth rates and gross profit ratios which reflected past experience and external
information. The growth rate was set taking into account indices such as long-term inflation rate announced by
an external research organization. Impairment losses related to the goodwill were not recognized in the fiscal
year ended March 31, 2024.
The carrying amount of goodwill allocated to the power grids business was 623,034 million yen as of March 31,
2024.
The Company considers it unlikely for the carrying amount of each CGU (or group of CGUs), together withallocated goodwill, would exceed the respective recoverable amounts of the CGU (or group of CGUs) even if the
primary assumptions used for the impairment test changed within a reasonable range.
Employee Retirement Benefits (The ending balance of Retirement and severance benefits of 246,231 million
yen)Calculation methods for employee retirement benefits are described in the note 7 in the “Notes on Important
Matters for Basis of Presentation of Consolidated Financial Statements”.
The measurement of a significant amount of employee retirement benefit costs is derived from actuarial
valuations containing a number of actuarial assumptions including mortality, withdrawal and retirement rates,changes in wages and the discount rate. The Company and its subsidiaries make judgements regarding theactuarial assumptions used by taking into account various factors including personnel demographics, market
conditions and expected trends in interest rates. Actuarial assumptions are determined based on the best
estimates and judgements but may be affected by variance of uncertain economic conditions in the future or byamendments or issuance of related laws.
Long-term projects (The ending balance of Provisions for expected losses on construction contracts of 97,921
million yen)
The Company is engaged in long-term projects to provide goods and services according to customers’
specifications over a specified period of time, and revenue is recognized mainly based on the pattern of the costaccrual (the progress of the project mostly based on the cost incurred relative to the estimated total cost) andprovisions for expected losses on construction contracts are recognized based on future estimated losses when
there is a possibility of incurring losses in the future. For long-term projects, the total estimated revenue iscalculated to the extent that is highly probable that a significant reversal in the amount of cumulative revenue
recognized will not occur when uncertainty associated with the total estimated revenue is subsequently resolved.
In addition, the total estimated costs are estimated considering contract risks and other factors. The Company
regularly reviews these estimates and reflects them in its accounting treatment.
Deferred tax assets (The ending balance of Deferred tax assets of 285,337 million yen)
Deferred tax assets are recognized to the extent that it is probable that future taxable income will be available
against which unused tax loss carryforwards, unused tax credits and future deductible temporary differences canbe utilized. A certain amount of negative impact due to the business environment is included in future taxable
income. In assessing the realizability of deferred tax assets, the Company considers whether it is more likely
than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization ofdeferred tax assets is dependent upon the generation of future taxable income in specific tax jurisdictions during
the periods in which these deductible differences become deductible. The Company carries out an assessmentof the scheduled reversals of deferred tax liabilities and projected future taxable income, including the executionof certain available tax strategies if needed. Based on these factors, the Company considers it is more likely than
not it will realize the benefits of these deductible differences as of March 31, 2024. However, the times andamounts of taxable income occurrence may be affected by variance of uncertain economic conditions in the
future, and the actual times and amounts may differ from the estimates.
The Company has applied the temporary exception to recognizing and disclosing information about deferred tax
assets and liabilities related to income taxes arising from tax law enacted or substantively enacted to implement
the Pillar Two model rules published by the Organization for Economic Co-operation and Development(hereinafter “the Pillar Two income taxes”) in accordance with IAS 12 "Income taxes" amended on May 23, 2023.
As a result of applying the temporary exception, the Company does not recognize deferred tax assets andliabilities related to the Pillar Two income taxes.

55

Notes on Important Matters for Basis of Presentation(Retirement and Severance Benefits)、Notes on Accounting Estimates(Allowance for
doubtful receivables)、Notes on Accounting Estimates(Impairment of Non-Financial Assets - P.P.& E. and Intangible Assets)、Notes on
Accounting Estimates(Impairment of Non-Financial Assets - Goodwill)、Notes on Accounting Estimates(Retirement and Severance Benefits)、Notes
on Accounting Estimates(Revenue Recognition)、Notes on Accounting Estimates(Income Taxes)

2024/05/20 19:12:52 / 23092450_株式会社日立製作所_招集通知(Notes to Consolidated Statement of Financial Position)
1. The components of Trade receivables and contract assets: Accounts receivable of 1,975,770 million yen,Contract assets of 930,743 million yen, and Others of 84,803 million yen.
Trade receivables and contract assets are stated as net of the allowance for doubtful receivables. Others include
electronically recorded monetary claims and notes receivable.
2. Accumulated other comprehensive income: Foreign currency translation adjustments of 984,432 million yen,remeasurements of defined benefit plans of 103,039 million yen, net changes in financial assets measured at fairvalue through other comprehensive income of 50,378 million yen, and net changes in cash flow hedges of
22,701 million yen.
3. Collateralized assets: Trade receivables and contract assets of 310 million yen, investments in securities andother financial assets of 311 million yen, and property, plant and equipment of 9,088 million yen.
Secured debts: 7,142 million yen.
4. Allowance deducted directly from assets: 115,354 million yen from trade receivables and contract assets, and
1,709 million yen from other receivables.
5. Property, plant and equipment include buildings and structures of 423,749 million yen and machinery of 240,090
million yen.
Accumulated depreciation and impairment losses of property, plant and equipment are (2,474,652) million yen.
Other intangible assets include software of 183,728 million yen.
6. Guarantees: 10,725 million yen(Notes to Consolidated Statement of Profit or Loss)
1. Other income
Other income of 116,653 million yen mainly consists of net gain or loss on business reorganization and others of
97,048 million yen. It includes a gain on the sale of shares of Hitachi Astemo, Ltd. in the amount of 121,642
million yen.
2. Other expenses
Other expenses of (97,184) million yen mainly consists of impairment losses on property, plant and equipment
and other intangible assets of (28,180) million yen.
3. Income taxes
Income taxes of (199,053) million yen includes current tax expense of (254,207) million yen and deferred tax
expense of 55,154 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
927,167,877 shares(2) Treasury stocks Common stock
546,173 shares
2. Cash dividends
Total amount of cash dividends
144,461 million yen
3. Class and number of shares to be issued upon exercise of stock acquisition rights at end of year
Common stock
387,620 shares

56

BS Note 1：Trade Receivables and Contract Assets、BS Note 2：OCI、BS Note 3：Collateralized assets、BS Note 4：Allowance deducted directlyfrom assets、BS Note 5：P.P.& E. and intangible assets、BS Note 6：Guarantees、PL Note 1-2：Other Income and Expenses、PL Note 3：Other
Income and Expenses、Notes to Consolidated Statement of Changes in Equity

2024/05/20 19:12:52 / 23092450_株式会社日立製作所_招集通知(Notes on Revenue Recognition)
1. Disaggregation of revenue
The Company derives revenues primarily from contracts with customers.
The disaggregation of revenue attributable to each reportable segment and geographic area for the fiscal year
ended March 31, 2024 are as follows.
(Millions of yen)

Japan

North

Asia

America

Europe

Other
Areas

Overseas
Revenues
Subtotal

Total
Revenues

Digital Systems & Services

1,731,209

227,920

344,412

235,460

59,658867,450

2,598,659

Green Energy & Mobility

426,098

466,546

665,049

1,009,260

485,349

2,626,204

3,052,302

Connective Industries

1,519,738

1,030,523

267,199

204,838

35,662

1,538,222

3,057,960

Automotive Systems

273,069

395,538

305,639

100,80389,335891,315

1,164,384

Others427,956

60,131

7,029

9,751

2,929

79,840507,796

Subtotal

4,378,070

2,180,658

1,589,328

1,560,112

672,933

6,003,031

10,381,101

Corporate items & Eliminations(604,687)(29,114)(6,412)(9,234)(2,938)(47,698)(652,385)

Total

3,773,383

2,151,544

1,582,916

1,550,878

669,995

5,955,333

9,728,716

The Digital Systems & Services segment consists of Front Business, IT Services and Services & Platforms, forwhich revenue amounted to 1,111,193 million yen, 969,816 million yen and 983,456 million yen for the year
ended March 31, 2024 (including intersegment transactions). Front Business and IT Services are operated
mainly in Japan, and Services & Platforms is operated mainly in Japan, North America and Europe.
The Company’s revenues include revenue recognized based on the pattern of the cost accrual arising from longterm projects. Of the revenue recognized during the fiscal year ended March 31, 2024, the amount of revenue
recognized based on the pattern of the cost accrual arising from long-term projects was 2,255,703 million yen.

57

Notes on Revenue Recognition

2024/05/20 19:12:52 / 23092450_株式会社日立製作所_招集通知

2.

3.

Information about satisfaction of performance obligations
The following is information about satisfaction of performance obligations related to major goods and services ofeach reportable segment.
(Digital Systems & Services)
Front Business and IT Services primarily provide goods and services such as system integration, consulting
and cloud service. Services & Platforms primarily provides IT products and software.
These long-term projects in system integration, consulting and cloud service businesses provide goods andservices according to customers’ specifications over a specified period of time, and revenue is recognized
mainly based on the pattern of the cost accrual (the progress of the project mostly based on the cost incurred
relative to the estimated total cost) or the passage of time as performance obligations are satisfied over time.
Many of the contracts require payments based on milestones, and in some cases, payments are made before
performance obligations are satisfied.
In IT products and software businesses, revenue is recognized when control over the goods is transferred tocustomers as performance obligations are satisfied at the point in time upon the completion or upon deliveryof the goods. Mostly, payment terms stipulate that the consideration is received within one year after the
performance obligation is satisfied, and there are no significant transactions in which payment terms include
deferred payments, etc.
(Green Energy & Mobility and Connective Industries)
The Green Energy & Mobility segment includes revenue from businesses such as energy solutions andrailway systems. The energy solutions business is operated mainly in Asia, North America and Europe. The
railway systems business is operated mainly in Europe. The Connective Industries segment includes revenue
from businesses such as building systems, smart life & ecofriendly systems, measurement and analyticalsystems, and industry & distribution solutions. The building systems business is operated mainly in China, thesmart life & ecofriendly systems business is operated mainly in Japan, the measurement and analyticalsystems business is operated mainly in Japan, Asia, North America and Europe, and the industry &distribution solutions business is operated mainly in Japan.
Long-term projects related to contracts such as construction in these segments involve manufacturing andproviding goods based on customers’ specifications over a specified period of time. As performanceobligations are satisfied over time, revenue is recognized mainly based on the pattern of the cost accrual (theprogress of the project mostly based on the cost incurred relative to the estimated total cost). In addition,these segments provide certain services promised in the contracts such as maintenance throughout the
duration of the contract and recognize revenue over time based on the passage of time. Many of thecontracts require payments based on milestones, and, in some cases, payments are made before
performance obligations are satisfied.
Further, in the sale of elevators, home appliances, measurement and analytical systems, industrial
equipment, etc. included in the Connective Industries segment, revenue is recognized when control over the
goods is transferred to customers as performance obligations are satisfied at the point in time upon thecompletion or upon delivery of the goods. Mostly, payment terms stipulate that the consideration is received
within one year after the performance obligation is satisfied, and there are no significant transactions in which
payment terms include deferred payments, etc.
(Automotive Systems)
In the Automotive Systems segment, performance obligations are generally satisfied at a point in time uponcompletion or upon delivery of the goods, and revenue is recognized when control over goods is transferred
to customers. Mostly, payment terms stipulate that the consideration is received within one year after the
performance obligation is satisfied, and there are no significant transactions in which payment terms include
deferred payments, etc.
Information about contract balances
The following table shows the beginning and ending balances of Trade receivables, Contract assets andContract liabilities from contracts with customers for the fiscal year ended March 31, 2024.
(Millions of yen)
April 1, 2023

March 31, 2024

Trade receivables

2,072,238

2,063,056

Contract assets

849,402

971,988

Contract liabilities

1,314,799

1,739,770

Of the revenue recognized during the fiscal year ended March 31, 2024, the amount included in Contract
liabilities at the beginning of the fiscal year was 800,909 million yen. And the amount related to performanceobligations satisfied in the past periods was not material.

58

Notes on Revenue Recognition

2024/05/20 19:12:52 / 23092450_株式会社日立製作所_招集通知4.

Transaction price allocated to remaining performance obligations
The following table shows the balance of unsatisfied performance obligations by reportable segment for the fiscal
year ended March 31, 2024.
(Millions of yen)Intersegment
transactions

5.

Balance of unsatisfied
performance obligations

Digital Systems & Services

69,825

1,446,972

Green Energy & Mobility

50,743

10,189,630

Connective Industries

107,453

2,019,113

Segments of the Company and its subsidiaries that have contracts under which revenue is recognized over along period of time are primarily the Digital Systems & Services segment, Green Energy & Mobility segment andConnective Industries segment.
The estimated timing of unsatisfied performance obligations at the fiscal year ended March 31, 2024 is asfollows.
Approximately 90% of the balance of unsatisfied performance obligations of the Digital Systems & Services
segment was expected to be satisfied within three years and approximately 10% after three years but no morethan five years.
Approximately 60% of the balance of unsatisfied performance obligations of the Green Energy & Mobility
segment was expected to be satisfied within three years and approximately 20% after three years but no morethan five years.
Approximately 90% of the balance of unsatisfied performance obligations of the Connective Industries segment
was expected to be satisfied within three years.
The remaining segments have contracts whose initial expected terms are generally one year or less.
Accordingly, related information is excluded from this disclosure in accordance with the practical expedient.
Assets recognized from the costs incurred for obtaining or fulfilling contracts with customers
The Company and its subsidiaries recognize the costs incurred for obtaining or fulfilling contracts with customers
as an asset to the extent those costs are expected to be recovered. Such costs recognized as an asset as ofMarch 31, 2024 were not material.

59

Notes on Revenue Recognition

2024/05/20 19:12:52 / 23092450_株式会社日立製作所_招集通知(Notes on Financial Instruments)
1. Status of Financial Instruments
The Company and its subsidiaries, in an endeavor to optimize the capital efficiency of their business activities
through efficient management of operating funds, include highly liquid short-term investments, which mature
within three months of the date of acquisition and pose very little risk of fluctuation in value, in “cash equivalents”
as immediately available financial resources.
Customer credit risk regarding receivables is managed based mainly on the current economic conditions,inherent risks, the financial position of the relevant customer and the past record.
Investments in securities and other financial assets mainly comprise equity financial instruments, which aremanaged by constantly monitoring the fair value.
Short-term debt and long-term debt are mainly used to fund business operations and capital expenditures.
2.

Fair Value, etc. of Financial Instruments(1) Fair Value Measurements
The following methods and assumptions are used to measure the fair value of financial assets and liabilities.
Cash and cash equivalents, Trade receivables, Short-term loans receivable, Other accounts receivable,
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 each group of years to maturity using discount rates that reflect the time to maturity and credit risk.
Investment securities with quoted market prices are estimated using the quoted share prices. In theabsence of an active market for investment securities, quoted prices for similar investment securities,
quoted prices associated with transactions that are not distressed for identical or similar investment
securities or other relevant information including market interest rate curves, referenced credit spreads ordefault rates, are used to determine fair value. If significant inputs of fair value measurement areunobservable, the Company uses price information provided by financial institutions to evaluate suchinvestments. 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 the interest rate applicable to an additional loan of the same type.
Derivative assets and derivative liabilities are measured at fair value based on quoted prices associatedwith transactions that are not distressed, prices in inactive markets, or based on models using interest rate
curves and forward and spot prices for currencies and commodities. If significant inputs are unobservable,
the Company mainly uses the income approach or the market approach to corroborate relevant information
provided 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.
(2) Financial Instruments Measured at Amortized Cost
The carrying amounts and estimated fair values of the financial instruments measured at amortized cost as ofMarch 31, 2024 is as follows.
The fair value estimated for financial assets and liabilities measured at amortized cost is classified in Level 2of the fair value hierarchy.

Carrying amounts(Millions of yen)
Fair Values

AssetsInvestments in securities and otherfinancial assets
Lease receivables
27,414
28,810Debt securities
46,486
46,162Long-term loans receivable
8,840
8,840
Liabilities
Long-term debt [1]Bonds
220,000
218,586
Long-term debt
679,355
677,633[1] Long-term debt is included in Current portion of long-term debt and Long-term debt in the consolidated
statement of financial position.

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

60

Notes on Financial Instruments、Note on Per Share Information

2024/05/20 19:12:52 / 23092450_株式会社日立製作所_招集通知

The following table presents the assets and liabilities that are measured at fair value on a recurring basis as ofMarch 31, 2024.
(Millions of yen)Class of financial instruments
Financial assets measured at fair value through profit orloss:
Investments in securities and other financial assets
Equity securities
Debt securities
Derivatives
Financial assets measured at fair value through othercomprehensive income:Investments in securities and other financial assets
Equity securities
Total financial assets at fair value
Financial liabilities measured at fair value through profit
or loss:
Other financial liabilities
Derivatives
Total financial liabilities at fair value

Level 1

Level 2

Level 3

Total

510
10,523-

5,648
132,41035,404
2,901
2,171

35,914
19,072
134,581

58,92969,962138,058

105,910
146,386

164,839
354,406-

64,65964,659-64,65964,659The following table presents the changes in Level 3 instruments measured on a recurring basis for the year
ended March 31, 2024.
(Millions of yen)
Equitysecurities

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

[1]
[2]
[3]

Debt
securities

Derivatives

Total

132,797
512
4,375
10,408(8,176)(2,170)3,568
141,314

4,959
(47)
39
(746)
(14)
(1,290)
2,901

2,095
76
2,171

137,756
465
4,375
12,542(8,922)(2,184)
2,354
146,386

480

(7)

-

473

Gain (loss) in profit or loss related to Financial assets measured at fair value through profit or loss is
included in Financial income and Financial expenses in the consolidated statement of profit or loss.
Gain in OCI related to Financial assets measured at fair value through other comprehensive income isincluded in Net changes in financial assets measured at fair value through OCI in the consolidated
statement of comprehensive income.
Unrealized gain (loss) relating to Financial assets measured at fair value through profit or loss held at theend of year is included in Financial income and Financial expenses in the consolidated statement of profit
or loss.
Fair values are measured by the finance departments in accordance with the Company’s policies andprocedures. Valuation models are determined so that they reflect each financial instrument’s nature,
characteristics and risks most appropriately. The finance departments continually examine changes inimportant inputs that could affect the fair value. In case the fair value of a financial instrument was significantly
impaired, administrators review and approve the impairment loss.

(Note on Per Share Information)
Hitachi, Ltd. stockholders’ equity per share
Net income attributable to Hitachi, Ltd. stockholders per share

61

Notes on Financial Instruments、Note on Per Share Information

6,155.38 yen
634.57 yen

2024/05/20 19:12:52 / 23092450_株式会社日立製作所_招集通知(Notes on Major Subsequent Events)
1. Repurchase of Shares of Common Stock
The Board of Directors decided to repurchase shares of its own common stock pursuant to Article 459,
Paragraph 1 of the Companies Act of Japan and Article 32 of the Company’s Articles of Incorporation, as follows.
(a) Reason for repurchase
The Company views the return of profits to shareholders through enhancing corporate value from mid- andlong-term perspective and paying dividends continuously as an important managerial issue. The Company
decided to repurchase its own shares this time, taking into consideration its financial condition and theprogress of the asset sales.
(b) Outline of the Repurchase(i) Class of shares to be repurchased
Common stock of the Company(ii) Aggregate number of shares to be repurchased
Up to 21 million shares(*)(2.27% of the number of outstanding shares (excluding treasury stocks))(*)Aggregate number of shares to be repurchased will be 105 million shares after the effective date (July
1, 2024) of the Share Split that described below 2.
(iii) Aggregate amount of repurchase
Up to 200.0 billion yen(iv) Period of the repurchase
From April 30, 2024 to March 31, 2025(v) Method of repurchase
Expected open market purchase through the Tokyo Stock Exchange
2. Share Split and Partial Amendment of Articles of Incorporation
The Company decided on April 26, 2024 to implement a share split and partially amend its Articles ofIncorporation.
(a) Purpose of share split
The Company will conduct a share split in order to create a more investor-friendly environment and expand its
investor base by reducing the amount per investment unit of the Company’s shares.
(b) Overview of share split(i) Method of share split
The Company will conduct a share split into 5 shares for every one common share held by shareholders
recorded in the latest register of shareholders as of June 30, 2024.
(ii) Number of shares to be increased by share split(*)
927,167,877 shares
Total number of issued shares before the share split
Number of shares to be increased by this share split
3,708,671,508 shares
Total number of issued shares after the share split
4,635,839,385 shares
Total number of shares authorized to be issued after the share split
10,000,000,000 shares(*) The number of shares shown above is calculated based on the total number of shares outstanding asof March 31, 2024, and may change by the record date of the share split.
(c) Schedule
Date of public notice of the record date June 14, 2024 (scheduled)
Record dateJune 30, 2024 (scheduled)
Effective dateJuly 1, 2024 (scheduled)(d) Amendment of the total shares authorized to be issued by the Company
The total number of shares authorized to be issued by the Company will be amended to 10,000,000,000
shares as of July 1, 2024.
(e) Impact on per share information
Per share information assuming that the share split was performed at the beginning of this fiscal year is asfollows.
Hitachi, Ltd. stockholders' equity per share
1,231.08 yen
Net income attributable to Hitachi, Ltd. stockholders per share
126.91 yen(f) Others
There will be no change in the amount of stated capital as a result of the share split.
As the share split will take effect on July 1, 2024, the year-end dividend for the fiscal year ending March 31,
2024, which has a dividend record date of March 31, 2024, will be paid based on the shares before the share
split.

62

Notes on Major Subsequent Events