Annual Securities Report(The 153rd Business Term)
From April 1, 2021 to March 31, 2022

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

Hitachi, Ltd.

[Cover][Document Filed]Annual Securities Report (“Yukashoken Hokokusho”)[Applicable Law]

Article 24, Paragraph 1 of the Financial Instruments and Exchange Act of Japan[Filed with]

Director, Kanto Local Finance Bureau[Filing Date]

June 22, 2022

[Fiscal Year]

The 153rd Business Term (from April 1, 2021 to March 31, 2022)[Company Name]

Kabushiki Kaisha Hitachi Seisakusho[Company Name in English]

Hitachi, Ltd.

[Title and Name of

Keiji Kojima, President & CEO

Representative][Address of Head Office]6-6, Marunouchi 1-chome, Chiyoda-ku, Tokyo[Phone No.]

03-3258-1111[Contact Person]

Takahiro Yamada, Manager, Legal Division[Contact Address]

6-6, Marunouchi 1-chome, Chiyoda-ku, Tokyo[Phone No.]

03-3258-1111[Contact Person]

Takahiro Yamada, Manager, Legal Division[Place Where Available forTokyo Stock Exchange, Inc.

Public Inspection](2-1, Nihombashi Kabutocho, Chuo-ku, Tokyo)
Nagoya Stock Exchange, Inc.
(8-20, Sakae 3-chome, Naka-ku, Nagoya)

This is an English translation of the Annual Securities Report filed with the Director of the Kanto Local Finance Bureau
via Electronic Disclosure for Investors’ NETwork (“EDINET”) pursuant to the Financial Instruments and Exchange Act ofJapan with some contents including cover page, table of contents and URL of the reference information.
Certain information in “Part I. Information on the Company - II. Business Overview - 2. Risk Factors - Risks Related to
Our American Depositary Shares” is only included in this English translation of the Annual Securities Report for ADSs
holders and not included in the original report.
Certain information in “Part I. Information on the Company - V. Financial Information” in this document incorporates
financial statements prepared in conformity with the International Financial Report Standards (“IFRS”) as issued by theInternational Accounting Standards Board and independent auditor’s report instead of the English translation of the Annual
Securities Report.
The translation of the Internal Control Report, the Independent Auditors’ Report and the Confirmation Letter for theoriginal Annual Securities Report are included at the end of this document.
In this document, the terms “we,” “us,” “our” and “Hitachi” refer to Hitachi, Ltd. and consolidated subsidiaries or, as thecontext may require, Hitachi, Ltd. on a non-consolidated basis and the term “the Company” refers to Hitachi, Ltd. on a nonconsolidated basis.
Unless otherwise stated, in this document, where we present information in millions or hundreds of millions of yen, we
have truncated amounts of less than one million or one hundred million, as the case may be. Accordingly, the total of figures
presented in columns or otherwise may not equal the total of the individual items. We have rounded all percentages to thenearest percent, one-tenth of one percent or one-hundredth of one percent, as the case may be.
References in this document to the “Financial Instruments and Exchange Act” are to the Financial Instruments andExchange Act of Japan and other laws and regulations amending and/or supplementing the Financial Instruments andExchange Act of Japan.
References in this document to the “Companies Act” are to the Companies Act of Japan and other laws and regulations
amending and/or supplementing the Companies Act of Japan.

Part I Information on the Company

1

I.

Overview of the Company

1

1. Key Financial Data .………………………………………………………………………………
2. History ……………………………………………………………………………………………
3. Description of Business ..…………………………………………………………………………
4. Information on Affiliates …………………………………………………………………………
5. Employees ..………………………………………………………………………………………

1
3
7
10
19

Business Overview

20

1. Management Policy, Economic Environment and Challenges Hitachi Group Faces ……………
2. Risk Factors ………………………………………………………………………………………
3. Management's Discussion and Analysis of Consolidated Financial Condition,
Results of Operations and Cash Flows ...…………………………………………………………
4. Material Agreements, etc ...………………………………………………………………………
5. Research and Development ………………………………………………………………………

20
27

Property, Plants and Equipment

57

1. Summary of Capital Investment, etc. .……………………………………………………………
2. Major Property, Plants and Equipment ..…………………………………………………………
3. Plans for Capital Investment, Disposals of Property, Plants and Equipment, etc. .………………

57
58
62

Information on the Company

63

II.

III.

IV.

38
52
53

1. Information on the Company’s Stock, etc. .……………………………………………………… 63(1) Total number of shares, etc. ..………………………………………………………………… 63(2) Information on the stock acquisition rights, etc. ..…………………………………………… 64(3) Information on moving strike convertible bonds, etc. .……………………………………… 66(4) Changes in the total number of issued shares and the amount of common stock and other … 66
(5) Shareholders composition …………………………………………………………………… 67(6) Major shareholders ...………………………………………………………………………… 68(7) Information on voting rights .………………………………………………………………… 70
2. Information on Acquisition, etc. of Treasury Stock ...…………………………………………… 71
3. Dividend Policy ..………………………………………………………………………………… 73
4. Corporate Governance, etc. ……………………………………………………………………… 74(1) Corporate Governance ..……………………………………………………………………… 74(2) Directors and Senior Management. ..………………………………………………………… 79(3) Audit .………………………………………………………………………………………… 92(4) Compensation to Directors and Executive Officers .………………………………………… 96(5) Information on shareholdings ...……………………………………………………………… 102

V.

Financial Information ...………………………………………………………………………… 108

VI.

Stock-Related Administration for the Company ...………………………………………… 108

VII. Reference Information on the Company .…………………………………………………… 109

Part II Information on Guarantors, etc. for the Company

110[Consolidated Financial Statements] ..……………………………………………………………………… F-1
Consolidated Financial Statements. ...……………………………………………………………… F-2
Reports of Independent Registered Public Accounting Firm ....…………………………………… F-81
[Internal Control Report (Translation)] ..…………………………………………………………………… A-1[Independent Auditors’ Report (Translation)] ...…………………………………………………………… A-3[Confirmation Letter (Translation)] ...……………………………………………………………………… A-9

Part I Information on the Company
I. Overview of the Company
1. Key Financial Data
(1) Consolidated financial data, etc.

Fiscal year
Year end(Millions of yen, unless otherwise stated)
IFRS
149th
150th
151st
152nd
153rd
business term business term business term business term business term
March 2018
March 2019
March 2020
March 2021
March 2022
9,368,614
9,480,619
8,767,263
8,729,196
10,264,602

Revenues
Income from continuing
638,646
516,502180,268
844,443
839,333
operations, before income taxes
Net income attributable to362,988
222,546
87,596501,613583,470
Hitachi, Ltd. stockholders
Comprehensive income
382,341
171,140(8,465)838,237
958,008
attributable to Hitachi, Ltd.
stockholders
Total Hitachi, Ltd. stockholders’
3,278,024
3,262,603
3,159,986
3,525,502
4,341,836
equityTotal equity
4,511,671
4,414,403
4,266,739
4,458,232
5,355,277
Total assets
10,106,603
9,626,592
9,930,081
11,852,853
13,887,502
Total Hitachi, Ltd. stockholders’3,395.00
3,378.81
3,270.43
3,646.46
4,488.91
equity per share (yen)Earnings per share attributable
375.93230.4790.71
519.29603.75
to Hitachi, Ltd. stockholders,
basic (yen)Earnings per share attributable
375.60230.2590.60
518.51602.96
to Hitachi, Ltd. stockholders,
diluted (yen)Total Hitachi, Ltd. stockholders’
32.4
33.9
31.8
29.7
31.3
equity ratio (%)
Return on equity (%)
11.6
6.8
2.7
15.0
14.8
Price earnings ratio (times)
10.3
15.6
34.6
9.6
10.2
Net cash provided by operating
727,168
610,025
560,920
793,128
729,943
activities
Net cash used in investing(474,328)(162,872)(525,826)(458,840)(1,048,866)
activities
Net cash provided by (used in)(321,454)(320,426)
2,837(184,838)
202,739
financing activities
Cash and cash equivalents at
697,964
807,593
812,3311,015,886
968,827
end of year
Number of employees
307,275
295,941
301,056
350,864
368,247(Notes) 1. Our consolidated financial statements have been prepared in conformity with IFRS.
2. On October 1, 2018, the Company completed the share consolidation of every five shares into one sharefor its common stock. The figures for total Hitachi, Ltd. stockholders’ equity per share and earnings per
share attributable to Hitachi, Ltd. stockholders, basic and diluted, are calculated on the assumption that
the Company conducted this share consolidation at the beginning of the 149th business term.
3. Average numbers of part-time employees, etc. are not stated since those were less than 10% of thenumber of employees.

1(2) Financial data etc. of the Company
Fiscal year
Year end
Revenues
Ordinary income
Net income
Common stock
Number of issued shares (thousandsof shares)
Total net assets
Total assets
Net assets per share (yen)Dividends per share (yen)[Of the above, interim dividends per
share (yen) ]Net income per share, basic (yen)Net income per share, diluted (yen)Stockholders’ equity ratio (%)
Return on equity (%)
Price earnings ratio (times)
Dividend payout ratio (%)
Number of employees
Total shareholder return (%)[Comparative indicator : TOPIX] (%)(Millions of yen, unless otherwise stated)
149th
150th
151st
152nd
153rd
business term business term business term business term business term
March 2018 March 2019 March 2020 March 2021 March 2022
1,930,293
1,927,241
1,793,250
1,678,223
1,623,424
131,294
304,069
355,490
305,461
365,049
136,117
174,062
119,409705,511516,115
458,790458,790459,862
460,790
461,731
4,833,463

966,692

967,280

967,885

968,234

1,536,018
4,017,373
1,589.79
15[7]

1,563,456
3,934,118
1,617.32
58[8]

1,579,058
4,004,408
1,631.9795[45]

2,243,742
4,982,609
2,318.50105[50]

2,643,733
5,815,620
2,731.77
125[60]

140.97180.26123.59729.77533.63140.85
38.2
9.0
27.3
53.2
34,925130.4

180.09
39.7
11.2
19.9
50.0
33,490124.5

123.49
39.4
7.6
25.4
76.9
31,442113.0

729.18
45.0
36.9
6.9
14.4
29,850178.2

533.30
45.4
21.1
11.6
23.4
29,485220.9(113.5)(105.2)(92.8)(129.2)(128.7)

3,925.0
Highest share price (yen)944.2
4,693.0
5,515.0
7,460.0[873.7]2,767.5
Lowest share price (yen)566.3
2,524.0
2,855.0
4,750.0[692.1](Notes) 1. On October 1, 2018, the Company completed the share consolidation of every five shares into one sharefor its common stock. The figures for net assets per share and net income per share, basic and diluted,
are calculated on the assumption that the Company conducted this share consolidation at the beginningof the 149th business term.
2. On October 1, 2018, the Company completed the share consolidation of every five shares into one sharefor its common stock. 58 yen of dividends per share for the 150th business term is the sum of 8 yen of
the interim dividend per share before the share consolidation and 50 yen of the year-end dividend pershare after the share consolidation.
3. Average number of part-time employees, etc. is not stated since it was less than 10% of the number of
employees.
4. The highest and lowest share prices are market prices on the first section of the Tokyo Stock Exchange.
On October 1, 2018, the Company completed the share consolidation of every five shares into one sharefor its common stock. Regarding the 150th business term, the figures in the upper row are the highest
and lowest prices after the share consolidation and the figures in brackets in the lower row are those
before the share consolidation.
5. Effective from the 153rd business term, the Company adopted the “Accounting Standard for Revenue
recognition” (ASBJ Statement No.29, March 31, 2020). The figures for key financial data for the 153rd
business term are restated as the standard is applied.

22. History
1910

Founded as a repair shop at Hitachi copper mine of Kuhara Mining
Company

Feb.

1920

Incorporated as Hitachi, Ltd. with the Hitachi and Kameido Works

Feb.

1921

Acquired the Kasado shipyard from Nippon Kisen Co., Ltd. andestablished Kasado Works

May

1935

Equity participation in Kyousei Reiki Kogyo K.K. (later changed its
name to Hitachi Plant Engineering & Construction Co., Ltd.)

May

1937

Merged Kokusan Industries, Ltd. and established 7 factories,
including Totsuka Works

Apr.

1939

Established Taga Works, spun off Hitachi Research Laboratory from Hitachi Works

Sep.

1940

Established Mito Works

Apr.

1942

Established Central Research Laboratory

Sep.

1943

Merged Riken Vacuum Industry and established Mobara Works

Mar.

1944

Spun off Shimizu Works from Kameari Works
Spun off Tochigi Works from Taga Works

Dec.
Apr.

1947

Established Hinode Shokai Co., Ltd. (currently Hitachi High-Tech Corporation)

May

1949

Established Higashi-Nippon Senikikai K.K. (later changed its name to
Hitachi Medical Corporation)

Feb.

1950

Established Nitto Transport K.K. (currently Hitachi Transport
System, Ltd.)

May

1955

Established Hitachi Sales Corporation

Oct.

1956

Spun off Hitachi Metals Industries, Ltd. (currently Hitachi Metals,Ltd.) and Hitachi Cable, Ltd.
Established Hitachi Kiden Kogyo, Ltd.

Nov.
Jun.

1957

Spun off Kokubu Works from Hitachi Works

Feb.

1959

Established Yokohama Works
Established Hitachi New York, Ltd. (currently Hitachi America, Ltd.)

Oct.
Jun.

1960

Established Hitachi Geppan Corp. (later changed its name to Hitachi Credit Corporation)

Aug.
Feb.

Equity participation in Nippon Business Consultant Co., Ltd. (later changed its name to Hitachi Information
Systems, Ltd.)1961

Spun off Naka Works from Taga Works;
Equity participation in Maxell Electric Industrial Co., Ltd.
Established Katsuta Works

Aug.
Aug.

1962

Established Kanagawa Works

Feb.

1963

Spun off Narashino Works from Kameido Works
Spun off Hitachi Chemical Company, Ltd.

Apr.
Feb.

1966

Established Mechanical Engineering Research Laboratory

Feb.

1968

Spun off Sawa Works from Taga Works, spun off Tokai Works from
Yokohama Works, and spun off Odawara Works from Kanagawa
Works

3

Feb.

1969

Established Software Works

Apr.

Established Ome WorksAug.

Established Omika Works

Dec.

Spun off Hitachi Construction Machinery Co., Ltd.

May

1970

Established Hitachi Software Engineering Co., Ltd.

Sep.
Apr.

Established Takasaki Works

1971

Acquired Asahi Works from Hitachi Denshi, Ltd.
Established Production Engineering Research Laboratory

Jun.
Feb.

1973

Established Systems Development Laboratory

Jun.

1974

Established Tsuchiura Works
Relocated Kameido Works and renamed to Nakajo Works

Nov.
Jun.

1982

Established Hitachi Europe Ltd.

Apr.

1985

Established Advanced Research Laboratory

Feb.

1989

Established Hitachi Asia Pte. Ltd. (currently Hitachi Asia Ltd.)

Feb.

1991

Integrated Sawa Works into Automotive Products Division
Integrated Katsuta Works into Materials Process Technology Division; integrated Totsuka Works into
Information & Telecommunication Division; integrated Naka Works into Instruments Division

Aug.
Feb.

1992

Changed operation unit of home appliances, computers and electronic devices businesses from factory tobusiness division

Aug.
Feb.

1993

1994

Integrated Consumer Products Group and Image & Information
Media Division and renamed to Consumer Products & Information
Media Systems Group
Established Hitachi (China), Ltd.

Oct.
Feb.

Integrated Semiconductor Technology Development Center, Musashi Works and Takasaki Works into
Semiconductor Division
Integrated Shimizu Works into Air Conditioning Division, integrated Nakajo Works and Narashino Works
into Industrial Equipment Division

Aug.
Aug.

Integrated Yokohama Works and Tokai Works into AV Products Division

1995

Reorganized business groups as Power & Industrial Systems Group,
Consumer Products & Information Media Systems Group,
Information Systems Group and Electronics Components Group;
integrated a part of R&D division and sales division into the businessgroupsMerged Hitachi Sales Corporation

Apr.
Apr.

1999

Reorganized business groups into de facto companies to independently operate each business group

Oct.

2000

Merged Hitachi Credit Corporation with Hitachi Leasing Corp. and changed its name to Hitachi Capital
Corporation

4

Oct.

2001

Split Instruments Group and Semiconductor Manufacturing
Equipment Group via company split and reorganized as Hitachi High-Technologies Corporation (currently Hitachi High-Tech
Corporation);
Split Industrial Machinery Systems Division via company split andreorganized as Hitachi Industries Co., Ltd.

Apr.

2002

Split Home Appliance Group via company split and reorganized as
Hitachi Home & Life Solutions, Inc.;
Split Industrial Equipment Group via company split and reorganized
as Hitachi Industrial Equipment Systems Co., Ltd.
Split Display Group via company split and established Hitachi Displays, Ltd.;
Split Telecommunication Equipment Division via company split and reorganized as Hitachi
Communication Technologies, Ltd.;
Turned Unisia Jecs Corporation (later changed its name to Hitachi Unisia Automotive, Ltd.) into a wholly
owned subsidiary via share exchange

Oct.

Jan.

2003

Acquired HDDs business from IBM Corp., and commenced operations as Hitachi Global Storage
Technologies Netherlands B.V.

Apr.

Split semiconductor business, centering on system LSIs, via company split and established Renesas
Technology Corp. (merged with NEC Electronics Corporation and changed its name to Renesas Electronics
Corporation in April 2010, and ceased to be an affiliate of the Company due to a decrease in the
Company’s ownership percentage of voting rights in September 2013)

Jun.

Adopted committee system as the Company’s corporate governance structure

Oct.

2004

Merged TOKICO, Ltd. and Hitachi Unisia Automotive, Ltd.;
Split Mechatronics System Division, centering on ATMs, via company split and established Hitachi-Omron
Terminal Solutions, Corp. (later changed its name to Hitachi Channel Solutions, Corp.)

Apr.

2006

Split Social & industrial infrastructure business via company split and integrated with Hitachi Plant
Engineering & Construction Co., Ltd., Hitachi Kiden Kogyo, Ltd. and Hitachi Industries Co., Ltd. andreorganized as Hitachi Plant Technologies, Ltd.;
Merged Hitachi Home & Life Solutions, Inc. with Hitachi Air Conditioning Systems Co., Ltd. and changed
its name to Hitachi Appliances, Inc.
Turned Clarion Co., Ltd. into a consolidated subsidiary via tender offer

Dec.
Jul.

2007

Split nuclear power systems business via company split and reorganized as Hitachi-GE Nuclear Energy,
Ltd.

Mar.

2009

Turned Hitachi Koki Co., Ltd. into a consolidated subsidiary via tender offer;
Turned Hitachi Kokusai Electric Inc. into a consolidated subsidiary via tender offer

Jul.

Merged Hitachi Communication Technologies, Ltd.;
Split Automotive Systems Group via company split and established Hitachi Automotive Systems, Ltd.;
Split Consumer Business Group via company split and established Hitachi Consumer Electronics Co., Ltd.

Oct.

Reorganized business groups into in-house companies with independent accounting to promote quick
business operation

Feb.

2010

Turned Hitachi Information Systems, Ltd., Hitachi Software Engineering Co., Ltd. and Hitachi Systems &Services, Ltd. into wholly owned subsidiaries

Apr.

Turned Hitachi Plant Technologies, Ltd. and Hitachi Maxell, Ltd. into wholly owned subsidiaries via shareexchanges (turned Hitachi Maxell, Ltd. into an equity-method associate of the Company via selling its
shares in March 2014, and ceased to be an affiliate of the Company in March 2017 due to selling its shares)

Oct.

Merged Hitachi Software Engineering Co., Ltd. with Hitachi Systems & Services, Ltd. and changed its
name to Hitachi Solutions, Ltd.

Oct.

2011

Merged Hitachi Electronics Services Co., Ltd. with Hitachi Information Systems, Ltd. and changed its
name to Hitachi Systems, Ltd.

5

Mar.

2012

Transferred HDDs business to Western Digital Corporation via share sale of Viviti Technologies Ltd., aholding company for Hitachi Global Storage Technologies Inc., etc. Transferred small and medium-sized
displays business via share sale of Hitachi Displays, Ltd.

Apr.

2013

Merged Hitachi Plant Technologies, Ltd.
Merged Hitachi Metals, Ltd. with Hitachi Cable, Ltd.

Jul.
Feb.

2014

Turned Hitachi Medical Corporation into a wholly owned subsidiary via share exchange (changed its nameto Hitachi Healthcare Manufacturing, Ltd. following the reorganization of Hitachi’s healthcare business in
April 2016)

Mar.

Apr.

2015

Reorganized Central Research Laboratory, Hitachi ResearchLaboratory, Yokohama Research Laboratory, Design Division andoverseas R&D facilities into Global Center for Social Innovation,
Center for Technology Innovation and Center for Exploratory
Research to establish global R&D structure from the customers’
perspective
Hitachi Appliances, Inc. transferred its air-conditioning systems
business to a joint venture established with Johnson Controls Inc.

Oct.
Apr.

Split thermal power generating systems business via company split and transferred to Mitsubishi Hitachi
Power Systems, Ltd. (ceased to be an affiliate of the Company in September 2020 due to selling its shares)

2016

Reorganized in-house companies into business units as a marketspecific business structureMay

Turned Hitachi Transport System, Ltd. into an equity-method associateof the Company via sale of a part of its shares

Oct.

Turned Hitachi Capital Corporation into an equity-method associate of the Company via sale of a part of its
shares (ceased to be an affiliate of the Company as a result of the merger with Mitsubishi UFJ Lease &Finance Company Limited. in April 2021)

Mar.

2017

Transferred power tools business via share sale of Hitachi Koki, Co., Ltd.

Jun.

2018

Sold semiconductor manufacturing equipment business of Hitachi Kokusai Electric Inc. and also turned it
into an equity-method associate of the Company

Mar.

2019

Transferred car information systems business via share sale of Clarion, Co., Ltd.
Merged Hitachi Appliances, Inc. with Hitachi Consumer Marketing, Inc. and changed its name to Hitachi
Global Life Solutions, Inc.

Apr.
Apr.

2020

Transferred the business of Hitachi Chemical Company, Ltd. via sharesale of the company

May

Turned Hitachi High-Tech Corporation into a wholly owned subsidiaryJul.

Acquired the power grids business from ABB Ltd and commenced
operations as Hitachi ABB Power Grids Ltd. (later changed its nameto Hitachi Energy Ltd)

Jan.

2021

Merged Hitachi Automotive Systems, Ltd. with Keihin Corporation,
Showa Corporation and Nissin Kogyo Co., Ltd. and changed its nameto Hitachi Astemo, Ltd.

2021
Establishment of Lumada Innovation Hub Tokyo
as the flagship site for co-creationMar.

Split the diagnostic imaging-related business via company split and transferred to FUJIFILM Healthcare
Corporation and sold the business via share sale of the company

July

Hitachi Global Digital Holdings LLC (later changed its name to Hitachi Digital LLC) turned GlobalLogic
Worldwide Holdings, Inc., which has GlobalLogic Inc. as a subsidiary, into a wholly owned subsidiary

Please check out our YouTube channel.
https://www.youtube.com/watch?v=mclBcKeywTY

6

3. Description of Business
As of March 31, 2022, the Hitachi Group, which is comprised of the Company and 1,140 affiliates (853consolidated subsidiaries and 287 equity-method associates and joint ventures.), positions five sectors: “IT,”“Energy,” “Industry,” “Mobility” and “Smart Life,” as growth areas and allocates related business units into
each sector. “Automotive System” positions alongside the above five sectors. Ranging over the ninesegments from the six sectors to additional two listed subsidiary groups as Hitachi Construction Machineryand Hitachi Metals, and Others, the Hitachi Group engages in a broad range of business activities, fromproduct development and manufacturing to sales and services.
(Note) From April 1, 2022, in order to improve efficiency and speed of management, the Company
summarize its businesses with similar business characteristics and simplified the organization into
three sectors; “Digital Systems & Services,” “Green Energy & Mobility,” “Connective Industries.”
Therefore, Hitachi Group has seven segments; the above three sector, the Automotive Systems, twolisted subsidiary groups as Hitachi Construction Machinery and Hitachi Metals, and Others.
One of the Hitachi’s strengths is the ability to provide solutions that use digital technologies to resolve
issues that customers and society face and our operational technology (OT), which runs equipment andsystems at production sites, and social infrastructure such as railways and power distribution systems in
addition to the high-quality and highly reliable products.

At the present time when society and business continue to generate more data, Hitachi’s Lumada acts as
an engine that creates new value from these data and accelerates innovation. Lumada is a general term forthe solutions, services and technologies that utilize Hitachi’s advanced digital technologies to create value
from customers’ data and accelerate digital innovation. It is derived from the words “illuminate” and “data”
and was created based on the idea of combining the strengths of OT, IT and products cultivated within
Hitachi. Along with the development of IT and the Internet of things (IoT), social and business activities
continue to generate data at an increasing speed. Hitachi has focused on these data as a new source of value
in future society and launched the Lumada business in 2016 with the goal of using large volumes of data tocreate innovation for the world.
Based on its understanding of customers’ management issues, the Lumada business will design,
implement, operate, and maintain solutions through collaborative value with customers. Rather than relying
merely on product sales, we will strive to expand the Lumada business by leveraging our strengths in OT x
IT x Products, commercializing our expertise in various industries and operations and shifting to digitalsolutions that can be provided to multiple customers in order to build a business model based on value
created through the provision of solutions, such as fee income profit model.

Please check out our YouTube channel.
https://www.youtube.com/watch?v=3TVImeISeXE

7

Major business outline for each segment and the positioning of Business Units (BU) of the Company
and principal affiliated companies are described as follows.
(As of March 31, 2022)
Main products and services
IT
Digital Solutions (Consulting,
Software, Cloud Services, System
Integration, Control Systems), IT
Products (Storage, Servers), ATMsBU and principal affiliated companies
BU
Financial Institutions BU
Social Infrastructure Systems BU
Services & Platforms BU

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

Nuclear Energy BU
Energy BUPower Grid BU

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

Industry & Distribution BU
Water & Environment BU

Mobility
Building Systems (Elevators,
Escalators), Railway Systems

Building Systems BU
Railway Systems BU

Smart Life
Smart Life & Ecofriendly Systems(Home Appliances, Air
Conditioners), Measurement andAnalytical Systems (Medical andBio, Semiconductor, Industry),-

Automotive Systems
Automotive System(Powertrain,
Chassis, Advanced Driver
Assistance, Motorcycle)
Hitachi Construction Machinery
Hydraulic Excavators, Wheel
Loaders, Mining Machinery,
Maintenance and Services,
Construction Solutions, MineManagement Systems
Hitachi Metals
Specialty Steel Products,
Functional Components andEquipment, Magnetic Materials andPower Electronics Materials,
Wires, Cables and Related Products
Others
Optical Disk Drives, Property
Management-

Affiliated companies[Consolidated subsidiaries]
Hitachi Information & Telecommunication
Engineering, Ltd.
Hitachi Channel Solutions Corp.
Hitachi Solutions, Ltd.
Hitachi Systems, Ltd.
GlobalLogic Worldwide Holding, Inc.
Hitachi Computer Products (America), Inc.
Hitachi Global Digital Holdings LLC
Hitachi Payment Services Private Limited
Hitachi Vantara LLC[Consolidated subsidiaries]
Hitachi-GE Nuclear Energy, Ltd.
Hitachi Plant Construction, Ltd.
Hitachi Power Semiconductor Device, Ltd.
Hitachi Power Solutions Co., Ltd.
Hitachi Energy Ltd[Consolidated subsidiaries]
Hitachi Industrial Equipment Systems Co., Ltd.
Hitachi Industrial Products, Ltd.
Hitachi Industry & Control Solutions, Ltd.
Hitachi Plant Services Co., Ltd.
Hitachi Industrial Holdings Americas, Inc.
JR Technology Group, LLC
Sullair, LLC[Equity-method associates]
Hitachi Kokusai Electric Inc.
[Consolidated subsidiaries]
Hitachi Building Systems Co., Ltd.
Hitachi Elevator (China) Co., Ltd.
Hitachi Rail Ltd.
[Consolidated subsidiaries]
Hitachi Global Life Solutions, Inc.
Hitachi High-Tech Corporation[Equity-method associates]
Arcelik Hitachi Home Appliances B.V.
Johnson Controls-Hitachi Air Conditioning
Holding (UK) Ltd[Consolidated subsidiaries]
Hitachi Astemo, Ltd.
Hitachi Astemo Americas, Inc.

-

[Consolidated subsidiaries]
Hitachi Construction Machinery Co., Ltd.

-[Consolidated subsidiaries]
Hitachi Metals, Ltd.

-[Consolidated subsidiaries]
Hitachi-LG Data Storage, Inc.
Hitachi Real Estate Partners, Ltd.
Hitachi America, Ltd.
Hitachi Asia Ltd.
Hitachi (China), Ltd.
Hitachi Europe Ltd.
Hitachi India Pvt. Ltd.

8

(Notes) 1. Hitachi America, Ltd., Hitachi Asia Ltd., Hitachi (China), Ltd., Hitachi Europe Ltd. and Hitachi India Pvt. Ltd. are the
Hitachi Group’s regional supervising company for Americas, Asia, China, Europe and India, and they sell the HitachiGroup’s products.
2. Hitachi Global Digital Holdings LLC changed its name to Hitachi Digital LLC on April 1, 2022.
3. In addition to the table above, the major equity-method associate is Hitachi Transport System, Ltd. as of March 31, 2022.

94. Information on Affiliates(1) Consolidated subsidiaries(As of March 31, 2022)
Company nameLocation

Commonstock

Principal business

Ownership
percentage ofvoting rights(%)

Hitachi Information & Nishi-ku,
Telecommunication
Yokohama,
Engineering, Ltd.
Kanagawa

1,350

IT

100.0

Hitachi Channel
Solutions, Corp.

Shinagawaku, Tokyo

8,500

IT

100.0

Hitachi Solutions,Ltd.

Shinagawaku, Tokyo

20,000IT

100.0**Hitachi Systems,
Ltd.

Shinagawaku, Tokyo

19,162

IT

100.0

10

Relationship
The Company
outsources design,development,
manufacturing,evaluation andvalidation of storages,
servers andtelecommunication
networks equipment,
etc. The Company’s
Directors, Executive
Officers or employees
concurrently holdposition of directors orofficers.
The Company
purchases ATMs andother informationequipment. The
Company’s Directors,
Executive Officers or
employees
concurrently
hold position of
directors or officers.
The Company
outsources
development of
information systems
and software, etc. The
Company’s Directors,
Executive Officers or
employees
concurrently
hold position of
directors or officers.
The Company
outsources
calculation,
development ofsoftware, installationand maintenance of
telecommunicationequipment andcomputers. The
Company’s Directors,
Executive Officers or
employees
concurrently
hold position of
directors or officers.

(As of March 31, 2022)
Company nameLocation

Commonstock

Principal business

Ownership
percentage ofvoting rights(%)**GlobalLogic
Worldwide Holdings,
Inc.

ofCalifornia, (Thousands
US dollars) IT
U.S.A.
8,373,504[100.0]
100.0

Hitachi Computer
Products (America),
Inc.

Oklahoma,
U.S.A.

(Thousands of
US dollars) IT[100.0]100.0**Hitachi Global
California,
Digital Holdings LLC U.S.A.

(Thousands of
US dollars) IT

Hitachi Payment
Services Private
LimitedChennai,
India(Thousands ofIndian rupee) IT**Hitachi Vantara LLC

California,
U.S.A.

(Thousands of
US dollars)

Hitachi-GE Nuclear
Energy, Ltd.

Hitachi,
Ibaraki

14,000100.0

9,918,641[58.8]
100.0

79,158[100.0]100.0

925,000 IT

5,000 Energy

11

80.0

RelationshipThe company operates
digital engineering
service business. The
Company’s Directors,
Executive Officers or
employees concurrently
hold position of
directors or officers.
The Company supplies
parts for computer
peripherals. The
Company’s Directors,
Executive Officers or
employees concurrently
hold position of
directors or officers.
Holding company for
Hitachi Vantara LLC,
etc. The Company’s
Directors, Executive
Officers or employees
concurrently holdposition of directors orofficers.
Offering the HitachiGroup's payment
services for financial
institutions in India.
The Company’s
Directors, Executive
Officers or employees
concurrently holdposition of directors orofficers.
Sales company for theCompany's storage, etc.
The Company
outsources consulting
services. The
Company's Directors,
Executive Officers or
employees concurrently
hold position of
directors or officers.
The Company delivers
nuclear power
generation equipment,
etc. The Company’s
Directors, Executive
Officers or employees
concurrently holdposition of directors orofficers.

(As of March 31, 2022)
Company nameLocation

Commonstock

Ownership
percentage ofPrincipal businessvoting rights(%)

Hitachi Plant
Construction, Ltd.

Toshimaku, Tokyo

3,000 Energy

100.0

Hitachi Power
Semiconductor
Device, Ltd.

Hitachi,
Ibaraki

450 Energy

100.0

Hitachi Power
Solutions Co., Ltd.

Hitachi,
Ibaraki

4,000 Energy

100.0

Hitachi Energy Ltd

Zurich,Switzerland(Thousands of
Swiss franc) Energy

80.1

Hitachi Industrial
Equipment Systems
Co., Ltd.

Chiyodaku, Tokyo

10,000 Industry

100.0

Hitachi Industrial
Products, Ltd.

Chiyodaku, Tokyo

10,000 Industry

100.0

1,250

12

Relationship
Construction of theCompany’s energy andindustrial plants, etc.
The Company’s
Directors, Executive
Officers or employees
concurrently holdposition of directors orofficers.
The Company purchases
semiconductor
components. The
Company’s Directors,
Executive Officers or
employees concurrently
hold position of directors
or officers.
The Company
purchases power plantparts, and outsources
maintenance of power
generation equipment
and control
equipment, etc. The
Company’s Directors,
Executive Officers or
employees concurrently
hold position of directors
or officers.
Holding company for
power grids businesscompanies from which
the Company purchases
power grids devices, etc.
The Company’s
Directors, Executive
Officers or employees
concurrently holdposition of directors orofficers.
The Company
purchases industrial
equipment. The
Company’s Directors,
Executive Officers or
employees concurrently
hold position of directors
or officers.
The Company
purchases industrial
equipment. The
Company’s Directors,
Executive Officers or
employees concurrently
hold position of directors
or officers.

(As of March 31, 2022)
Company name

Hitachi Industry& Control Solutions,
Ltd.

Location

Hitachi,
Ibaraki

Hitachi Plant Services ToshimaCo., Ltd.
ku, Tokyo**Hitachi Industrial
Holdings Americas,
Inc.

Illinois,
U.SA.

Commonstock

Principal business

3,000 Industry

3,000 Industry(Thousands of
US dollars) Industry

1,967,670

JR Technology
Group, LLC

Michigan,
U.S.A.

- Industry

Sullair, LLC

Indiana,
U.S.A.

- Industry

13

Ownership
percentage ofvoting rights(%)

Relationship

The Company
outsources
development of
information control
systems, etc. The
100.0 Company’s Directors,
Executive Officers or
employees
concurrently holdposition of directors orofficers.
Construction of theCompany’s industrial
and public plants, etc.
The Company
outsources the services
for them. The
100.0
Company’s Directors,
Executive Officers or
employees
concurrently holdposition of directors orofficers.
Holding company for
JR Technology Group
LLC and Sullair, LLC.
The Company’s[100.0]
Directors, Executive
100.0
Officers or employees
concurrently holdposition of directors orofficers.
Holding company for
JR Automation
Technology, LLC, etc.
The Company’s[100.0]
Directors, Executive
100.0
Officers or employees
concurrently holdposition of directors orofficers.
The Company
purchases industrial
equipment. The
Company’s Directors,[100.0]Executive Officers or
100.0
employees
concurrently
hold position of
directors or officers.

(As of March 31, 2022)
Company nameLocation

Commonstock

Principal business

Hitachi Building
Systems Co., Ltd.

Chiyodaku, Tokyo

Hitachi Elevator(China) Co., Ltd.

Guangzhou, Chinese yuan)
Mobility
China
538,806**Hitachi Rail Ltd.

London,U.K.

5,105 Mobility(Thousands of(Thousandsof Sterlingpounds) Mobility

878,181

Hitachi Global Life
Solutions, Inc.

Minato-ku,
Tokyo

20,000 Smart Life

Hitachi High-Tech
Corporation

Minato-ku,
Tokyo7,938 Smart Life

14

Ownership
percentage ofvoting rights(%)

Relationship

Design, manufacturing,sales, installation andmaintenance, etc. ofthe elevators andescalators theCompany developed.
100.0
The Company’s
Directors, Executive
Officers or employees
concurrently holdposition of directors orofficers.
Sales, installation andmaintenance, etc. of
the Hitachi Group’s
elevators and escalators
in China. The[70.0]
Company’s Directors,
70.0
Executive Officers or
employees
concurrently holdposition of directors orofficers.
Manufacturing, sales,
engineering andmaintenance of theCompany’s railsystems products. The
100.0 Company’s Directors,
Executive Officers or
employees
concurrently
hold position of
directors or officers.
Manufacturing andsales of the HitachiGroup's home
appliances, and sales,
system installation andmaintenance of theGroup’s air100.0 conditioning andrefrigerating products.
The Company’s
Directors, Executive
Officers or employees
concurrently holdposition of directors orofficers.
The Company sells andpurchases information
100.0 equipment and powerrelated parts, etc.
through this company.

(As of March 31, 2022)
Company nameLocation

Hitachinak**Hitachi Astemo, Ltd. a, Ibaraki

Hitachi Astemo
Americas, Inc.
**
*Hitachi Construction
Machinery Co., Ltd.

Kentucky,
U.S.A.

Commonstock

51,500Principal business

Automotive
Systems(Thousands of
US dollars) Automotive

86,278 Systems

Taito-ku,
Tokyo

Hitachi
81,576 Construction
Machinery*Hitachi Metals, Ltd.

Minato-ku,
Tokyo26,283 Hitachi Metals

Hitachi-LG Data
Storage, Inc.

Minato-ku,
Tokyo

4,800 Others

Hitachi Real Estate
Partners, Ltd.

Chiyodaku, Tokyo

2,000 Others

15

Ownership
percentage ofvoting rights(%)

Relationship

The Company
purchases parts forrailway vehicles, etc.
The Company’s
66.6 Directors, Executive
Officers or employees
concurrently holdposition of directors orofficers.
Manufacturing andsales company in North[100.0]America for the Hitachi
100.0Group’s automotive
systems products.
The Company’s
Directors, Executive
Officers or employees
51.5
concurrently holdposition of directors orofficers.
The Company
purchases specialty
steel products,
functional components
and equipment,
magnetic materials andpower electronics
53.4 materials and wires,
cables, and related
products. The
Company’s Directors,
Executive Officers or
employees concurrently
hold position of
directors or officers.
Development,
manufacturing andsales company for the
Hitachi Group’s
optical disk drives.
51.0 The Company’s
Directors, Executive
Officers or employees
concurrently holdposition of directors orofficers.
The Company
outsources managementof welfare facilities for
employees, etc. The
100.0 Company’s Directors,
Executive Officers or
employees concurrently
hold position of
directors or officers.

(As of March 31, 2022)
Company name**Hitachi America,
Ltd.

Hitachi Asia Ltd.

Location

California,
U.S.A.

Singapore

Commonstock

Ownership
percentage ofPrincipal businessvoting rights(%)(Thousands of
US dollars) Others

100.0(Thousandsof Singapore
dollars) Others

100.0(Thousands of
US dollars) Others

100.0(Thousandsof Sterlingpounds) Others

100.0

14,007,947

127,649

Hitachi (China), Ltd.

Beijing,
China

Hitachi Europe Ltd.

Stoke Poges,
U.K.

226,380

253,049

16

Relationship
The Hitachi Group’s
regional supervising
company in Americas, andsells the Hitachi Group’s
healthcare-related
products, etc., as well as
promotes R&D in
Americas. The Company’s
Directors, Executive
Officers or employees
concurrently hold positionof directors or officers.
The Hitachi Group’s
regional supervising
company for Asia, andsells the Hitachi Group’s
industrial machinery andtrain-, healthcare- andinformation-related
products, etc. The
Company’s Directors,
Executive Officers or
employees concurrently
hold position of directors
or officers.
The Hitachi Group’s
regional supervising
company for China, andsells the Hitachi Group’s
plant, industrial machineryand train-, healthcare- andinformation-related
products, etc. The
Company’s Directors,
Executive Officers or
employees concurrently
hold position of directors
or officers.
The Hitachi Group’s
regional supervising
company for Europe, andsells the Hitachi Group’s
plants, industrial
machinery and digital
media- and informationrelated products, etc. The
Company’s Directors,
Executive Officers or
employees concurrently
hold position of directors
or officers.

(As of March 31, 2022)
Company name

Hitachi India Pvt. Ltd.

Location

New Delhi,
India

Commonstock

Principal business(Thousands ofIndian rupee) Others

344,000

Ownership
percentage ofvoting rights(%)

Relationship

The Hitachi Group’s
regional supervising
company for India,
and sells the HitachiGroup’s plants,
industrial machinery[100.0] and digital media100.0 related products, etc.
The Company’s
Directors, Executive
Officers or employees
concurrently holdposition of directors orofficers.

Others- 816 companies(Notes) 1. The unit of amounts and currency shown in the “Common stock” column are in millions of yen, unlessotherwise specified.
2. The common stock of JR Technology Group, LLC and Sullair, LLC is not shown since they are limited
liability companies under the U.S. law, and do not have the “common stock”.
3. Companies with two asterisks (**) in the “Company name” column are specified subsidiaries.
4.
Companies with one asterisk (*) in the “Company name” column submit Securities Registration Statement
or Annual Securities Report.
5. The name of segment in which the companies classified is shown in the “Principal business” column.
6. The amounts in brackets in upper row of the “Ownership percentage of voting rights” column represent
the percentage of voting rights owned indirectly by subsidiaries, of the total ownership percentage.
7. Companies with negative net worth are shown below, along with the amount of liabilities in excess ofassets.
Hitachi Power Europe GmbH
127,520 million yen
Hitachi Astemo Netherlands B.V.
11,522 million yen
8. Hitachi Global Digital Holdings LLC changed its name to Hitachi Digital LLC on April 1, 2022.
9. Hitachi Metals, Ltd. changed its head office location from Minato-ku, Tokyo to Koto-ku, Tokyo on June21, 2022.
10. Revenues of Hitachi Energy Ltd (excluding intra-group revenue among consolidated companies)
accounts for more than 10% of consolidated revenue.
Key information on profit or loss:
1) Revenues
1,075,776 million yen
2) Income from continuing
50,121 million yen
operations, before income taxes
3) Income
32,666 million yen
4) Total equity
52,147 million yen5) Total assets
1,220,703 million yen

17

(2) Equity-method associates and joint ventures(As of March 31, 2022)
Company name

Hitachi Kokusai
Electric Inc.

Location

Minato-ku,
Tokyo

Amsterda
Arcelik Hitachi Home m,
Appliances B.V.
Netherlands

Johnson ControlsHitachi Air
Conditioning Holding(UK) Ltd

Hampshire,
U.K.

*Hitachi Transport
System, Ltd.

Chuo-ku,Tokyo

Common
stock

1,000

Principal businessIndustry(Euros)
10,000 Smart Life

(Thousands of
US dollars) Smart Life

935,107

16,802 Logistics services

Ownership
percentage ofvoting rights(%)

Relationship

The Company
purchases
electronic equipment
and parts, etc. The
Company’s Directors,
20.0
Executive Officers or
employees
concurrently
hold position of
directors or officers.
Holding company for
operating companies[40.0] for the Hitachi
40.0 Group’s home
appliances business inoverseas market.
Holding company for
air-conditioning
systems business[40.0] companies from which
40.0 the Hitachi Grouppurchases airconditioning systems
devices.

39.9

The Company entrusts
transportation andstorage of products.

Others- 283 companies(Notes) 1. The unit of amounts and currency shown in the “Common stock” column are in millions of yen, unlessotherwise specified.
2. Companies with one asterisk (*) in the “Company name” column submit Securities Registration
Statement or Annual Securities Report.
3. The names of segment in which Hitachi Kokusai Electric Inc., Arcelik Hitachi Home Appliances B.V.
and Johnson Controls-Hitachi Air Conditioning Holding (UK) Ltd are classified are shown in the“Principal business” column.
4. Companies with negative net worth are shown below, along with the amount of liabilities in excess ofassets.
GE-Hitachi Nuclear Energy Holdings LLC
18,014 million yen

18

5. Employees(1) Consolidated basis
Name of segment
IT
EnergyIndustry
Mobility
Smart Life
Automotive Systems
Hitachi Construction Machinery
Hitachi Metals
OthersCorporate (Head Office and others)
Total(As of March 31, 2022)
Number of employees
96,996[15,575]
44,291[1,161]
23,221[2,548]53,604[2,958]18,402[1,076]64,152[-]
24,263[-]27,753[-]
12,375[2,977]
3,190[3,190]368,247[29,485](Note) The number in brackets in the lower row of the “Number of Employees” column is the number of employeesof the Company included in each of the numbers in the upper row.
(2) The Company
Number of employees
Average age
Average length of service
29,48542.7
19.3 years(Note) Average annual salary includes bonuses and extra wages.

(As of March 31, 2022)
Average annual salary
8,969,979 yen(3) Relationship with labor union
The Company’s labor union, Hitachi Workers Union, is a member of the Japanese ElectricalElectronic & Information Union.
The relationship between management and labor unions in the Hitachi Group is stable andcooperative.

19

II. Business Overview
1. Management Policy, Economic Environment and Challenges Hitachi Group Faces(1) Management Policy
The Hitachi Group aims to achieve further progress by delivering competitive products andservices, thereby creating higher value for customers, following its Mission: to contribute to society
through the development of superior, original technology and products. By taking full advantage of thediverse resources of the Hitachi Group, while at the same time reviewing and restructuring businesses,
Hitachi aims to bolster its competitiveness and achieve growth in global markets. This process will beconsistent with Hitachi’s basic management policy, which is to increase shareholder value by meetingthe expectations of customers, shareholders, employees and other stakeholders.
(2) Economic Environment and Challenges Hitachi Group Faces
1) Hitachi Group
In today’s world, the future is increasingly difficult to foresee. A myriad of changes is taking place,including climate change, resource shortages, aging populations and problems of urbanization. The
spread of COVID-19 (the new coronavirus infection) and Ukraine conflict is bringing dramatic changes
to society and economies worldwide, with its profound, adverse economic repercussions in each country.
On the other hand, innovations to solve social issues caused by these changes are emerging across theglobe.
In this economic environment, under this new mid-term management plan, Hitachi aims to help
establish a sustainable society, where Wellbeing (people’s happiness), a state where every person insociety can demonstrate their capabilities in comfort, is maintained as well as the global environment is
protected in a way that the Planetary Boundary (the planet’s limits) will not be exceeded.

We will focus on the following policies in particular.
i) Initiatives to achieve global growth
Hitachi aims to achieve global growth with “Digital,” “Green” and “Innovation” as threedrivers of growth. Each strategy is as follows.
DigitalHitachi will contribute to improve customers’ business value with the cycle of value cocreation that Hitachi will design, implement, operate, maintain solutions and assess for the next step
based on its understanding of customers' issues.
Hitachi aims to increase the profitability of its Social Innovation Business and achieve thegrowth globally by driving a cycle of Lumada business with digital technology and increasing
revenue from the entire cycle.
Green
Leading energy conversion, electrification, energy conservation, and automation, Hitachi aims
to help establish a sustainable society, Hitachi will actively invest in the green sector to realize acontribution to reducing CO2 emissions by approximately 100 million tons annually in fiscal year
2024, and move forward with decarbonization to achieve Hitachi Environmental Innovation 2050,
20

in which it has established the target of achieving carbon neutrality throughout its value chain by
2050. Leveraging the expertise acquired in the process, Hitachi will provide environmental valuethat suit each business domain and region, in its efforts to achieve a sustainable society and growth.
Innovation
Hitachi will accelerate innovation by identifying fields where it should engage in R&D
activities in anticipation of what the world will be like in 2050, strive to create innovativetechnologies and products that will help solve social issues, and continuing to accelerate its
collaborations with promising startup companies, government and academia.
In addition, Hitachi has combined businesses with similar characteristics to increase theefficiency and speed of management and simplified the organization into three sectors: “Green
Energy & Mobility,” “Digital Systems & Services” and “Connective Industries.” Hitachi provides
customers with solutions based on a business structure composed of these three sectors and theautomotive system business (Hitachi Astemo). As for the strategy of each sector, please refer to “2)4 focused business areas”.
ii) Enhancement of the sustainable management
At the same time, Hitachi aims to minimize the impact of risks by collecting information about
important business risks and building a global risk management system to proactively respond torisks. Hitachi will strive to acquire and develop digital talent, strengthen employee engagement andenhance diversity, equity and inclusion to support the cooperation beyond the organization. Hitachienhances its sustainable management to ensure sustainable growth through these actions.
Through these activities, Hitachi will improve our ability to generate cash and achieve greater
returns for our shareholders as well as invest in further growth.
While the business environment of Hitachi Group is changing rapidly and the future remains
uncertain, Hitachi will strive to realize a sustainable society under its new mid-term managementplan.
2) 4 focused business areas
The following are the operating environment and issues to be addressed in three focal sectors,
Digital Systems & Services, Green Energy & Mobility, and Connective Industries, as well as at
automotive systems.
(Digital System & Service)
Even in the uncertain social and economic situation, digital transformation (DX), an initiative
aimed to transform corporate management and business models by leveraging digital technologies
such as AI and IoT and an initiative for environment problems and Sustainable Development
Goals (SDGs) are accelerated. Such initiatives expand markets globally.
The Digital Systems & Services sector aims to create values and accelerate problem solving
for society and customers in the global DX market through combining Hitachi’s IT/ OT/ productsby leveraging digital engineering capability of GlobalLogic which has merged in July 2021, andlead the growth of Lumada business in other sectors. In addition, the sector will scale up Lumada
business by three approaches, such as evolving co-creation with customers, expanding pronven
solutions to customers and forming an ecosystem with customers and partners.
The sector aims to be “Global leader in social infrastructure DX” and achieve sustainablegrowth in Lumada business by providing values continuously for society and customers as apartner in solving their issues while continuing to strengthen its management base, such as
recruiting and training new human resources for digital technologies.
(Green Energy & Mobility)
Demand for energy is growing globally against the background of social innovation such as
the increase of the size of data centers due to utilization of AI, big data, etc., the electrification inindustry aiming for decarbonization, and the increase of applications for electric vehicles (EV), in
addition to the increase of the population and economic growth. Given the need for action on
climate change, moves toward a reduction in CO2 emissions and the creation of a decarbonizedsociety have been accelerating globally, while expectations are rising for an accelerating increase21

in the use of renewable energy and the use of railways as low-carbon mobility. The COVID-19
pandemic has triggered change (electrification/digitization) in the structure of industry due to theslowdown of the economy and decrease of capital expenditures, the promotion of economic
recovery policies linked to environmental protection (Green Policy), the acceleration of reforms toaddress the SDG management.
The Green Energy & Mobility Sector helps to achieve sustainable social infrastructure with
its integration capability and world’s leading products. It helps bring happiness to people aroundthe world through green energy and mobility that are friendly to the global environment. Morespecifically, the Green Energy & Mobility Sector products, services, and solutions leverage thestrengths derived from a combination of operational technology (OT), IT, and products in power
grids, renewable energy systems, nuclear power generation systems, railway systems, and otherbusinesses. In the energy business, the Group will expand the delivery of services and solutions
that will contribute to the achievement of carbon-neutral society by providing new solutions andpromoting clean energy through the fusion of the power grid technologies of Hitachi Energy(former Hitachi ABB Power Grids) and digital technologies using Lumada. The railway systemsegment digitally connects traffic networks to accelerate the development of railway operation
services using data.
Through these activities, the Green Energy & Mobility Sector contributes to an increase in thequality of life (QoL), including the creation of carbon-neutral society, stable energy supply, anddelivery of safe, secure, and comfortable railway systems, as the business constituting the core of
the creation of green value in the three growth areas in the Mid-term Management Plan 2024.
(Connective Industries)
Uncertainty in social environment is rapidly increasing due to the impact of COVID-19, andincrease of natural disasters and geopolitical risks. Moreover, people’s lifestyles and corporate
activities are changing remarkably as a result of rapid improvement of digital technology, resulting
in ever growing new demand for DX. This requires interdisciplinary boundary issue-solving
between organizations, companies and industries.
The Connective Industries Sector creates sustainable values through digitally connecting
competitive products such as industrial systems, elevators, measurement and analysis devices,
medical instruments and household appliances, and providing them as solutions.
More specifically, the sector will further evolve and expand its total seamless solutions thatsolve the boundary issues that lie between management and workplaces and in supply chains andachieve total optimization by digitally connecting the physical world and cyberspace using
Lumada. In addition, the sector strengthens the recurring business of continuously and cyclicallyproviding services such as the maintenance and preventive maintenance leveraging data byenhancement of connected products.
In addition, for the global growth, the sector will launch total seamless solutions and expand
its business through strengthening integration of robotics SI and digital technologies by JR
Automation, and developing product connectedness in Sullair’s air compressors, semiconductor
manufacturing and measurement equipment and particle therapy system in North America, a key
market.
The sector sets out “Connecting data, value, industry, and society” as its purpose and aims tobe “sustainable value creators” through co-creation with customers.
(Automotive Systems)
The automobile and motorcycle industry, in which the automotive system business is operated
by Hitachi Astemo and its affiliates, is embarking on a once-in-a-century revolution due to thegrowing needs of society, such as a decrease in the environmental burden, a further increase in
comfort, and a reduction in the frequency of traffic accidents through an increase in safety.
Competition continues to intensify in the CASE (“connected (internet connectivity),” “autonomous(self-driving),” “shared,” and “electric (electrification) businesses.
Against this background, the automotive systems business will contribute to a sustainable
society and the improvement of quality of life by meeting customer needs and providing advanced
mobility solutions that lead the world based on its portfolio, which includes five businesses:
powertrain and safety systems, chasses, motorcycles, software, and aftermarket services.
22

More specifically, the sector will contribute to better global environment by high-efficiency
internal-combustion systems and electrification systems reducing GHG emissions while improving
safety and comfort through self-driving systems, advanced driver-assistance systems, andadvanced chassis systems as for providing solutions for social challenges in the areas of “Green”,“Digital” and “Innovation”. The sector will leverage Lumada to provide connected solutions andmeet increasingly sophisticated customer needs, and also improve its ability to develop software to
respond to the future shift to software-defined vehicles whose functions will be operated throughsoftware applications.
Along with these activities, the sector will strengthen its management base and corporate
structure as a global mega supplier in the mobility industry.
(3) Climate-related Financial Information Disclosure
In June 2018, Hitachi announced its endorsement of the recommendations by the Financial Stability
Board’s (FSB) Task Force on Climate-related Financial Disclosures (TCFD), and disclosed the key
climate-related financial information in line with the TCFD’s recommendations.
This section is an extract. Please see the Hitachi Sustainability Report for more information.
i) Governance
Hitachi sees climate change and other environmental issues as important management issues.
The Board of Directors discusses the Group’s sustainability strategy, including climate change
measures, as a key component of management strategy. Hitachi Environmental Innovation 2050,
representing the Group’s long-term environmental targets including its CO2 emissions reduction
targets, was developed and announced following it's being reported to the Board of Directors bothwhen it was establishment and when it was revised.
In addition, the Audit Committee consisting of Outside Directors audits sustainability-related
operations once a year and the operating officer in charge makes a report on important mattersconcerning climate change.
ii) Strategy

Hitachi established its Environmental Vision in fiscal 2016. Based on this, Hitachi
Environmental Innovation 2050, including Hitachi’s long-term environmental targets, wasdeveloped considering the RCP 2.6 scenario (Note 1) and the RCP 8.5 scenario (Note 2) in the IPCC
Fifth Assessment Report and using globally necessary CO2 emissions reduction as a reference, tocontribute to the realization of a carbon-neutral society as it is demanded that global companies do.
Moreover, in order to help limit the global temperature rise to 1.5°C as recommended in the IPCC
Global Warming of 1.5°C report, in fiscal 2020 we revised our target to achieve carbon neutrality at
Hitachi factories and offices by fiscal 2030. And then in fiscal 2021 we revised our target again toachieve carbon neutrality in our value chain by fiscal 2050. Our aim is to help create a decarbonizedsociety by setting more ambitious targets to realize that goal.
(Notes)1. A Representative Concentration Pathway (RCP) scenario under which, at the end of
the 21st century, the increase in global temperatures from preindustrial levels is kept
below 2°C.

23

2 An RCP scenario that assumes that emissions will continue to rise resulting in an
approximately 4°C rise in global temperatures compared to preindustrial levels.
Climate-related Risks (Hitachi Group)
The risks faced by the entire Hitachi Group in 1, the 1.5°C scenario, and 2, the 4°C
scenario, are presented below. The Group can take measures to reduce these risks associated withclimate change.

24

Identification and Assessment of Climate-related Opportunities (Hitachi Group)
Both the carbon neutrality of business sites and the reduction of CO2 emissions from theuse of products and services sold, which are a large part of the emissions from entire value
chains, are important for the achievement of the long-term environmental targets and the CO2
emission reduction target set in the 2024 Medium-term Management Plan. Hitachi is responding
to fulfill customers’ needs and contribute to the reduction of CO2 emissions that is demanded bysociety by developing and supplying products and services that emit little or no CO2 during use.
This is the basis of the Social Innovation Business operated as part of Hitachi’s management
strategies, which creates significant opportunities for short-, medium- and long-term businesses.

iii) Risk Management
The Hitachi Group evaluates and assesses climate-related risks for each business unit andGroup company as part of a process of assessing risks and opportunities in accordance with theEnvironmental Action Plan that is updated every three years. The results are tabulated by the
Sustainability Promotion Division of Hitachi, Ltd., and their importance is checked at
Sustainability Promotion Meetings. The Management Committee, and if necessary, the Board of
Directors, deliberates the risks and opportunities perceived as being particularly important for theGroup as a whole to make decisions.
iv) Metrics and Targets
Hitachi has established its medium- and long-term indicators and targets in the "Hitachi
Environmental Innovation 2050" and detailed short-term indicators and targets in the"Environmental Action Plan."
The indicators related to the mitigation of and adaption to climate change used include
total CO2 emissions and CO2 emission intensity reduction rate. The Group determines andfocuses on indicators to provide its customers with products and services that emit the least
possible CO2. Additionally, the Group will work to reduce CO2 emissions at its own businesssites using the Hitachi Internal Carbon Pricing (HICP) system that incentivizes capital
expenditures that contributes to the reduction of CO2 emissions.

25

(4) Targets under the mid-term management plan
Under the "2024 Mid-term Management Plan," the Hitachi Group utilizes the following
targets to measure performance in terms of meeting its strategic and operational goals:
Fiscal 2024
TargetReason for selection as indicators

Annual growth rate for revenue
5-7%
Indicator to measure growth(FY 2021-FY 2024 CAGR)(Notes 1, 2)
Adjusted EBITA margin
12%
Indicator to measure profitability(Note 3)
EPS growth rate (FY 2021-FY
Indicator to measure profitability
10-14%
2024 CAGR) (Notes 1, 4)
and shareholder’s valueCore free cash flows: cumulative
Indicator to measure ability to
1.4 trillion yen
for 3 years (Note 5)
generate cash
Return on invested capital (ROIC)
Indicator to measure investment
10%(Note 6)efficiency(Notes) 1. CAGR is presented as compound average growth rate.
2. It is calculated excluding listed subsidiaries.
3. Adjusted EBITA = adjusted operating income - acquisition-related amortization +equity in earnings affiliates. Adjusted EBITA margin is the ratio calculated by adjusted
EBITA by revenues.
4. EPS is presented as earnings per share.
5. Core free cash flows are cash flows presented as free cash flows excluding cash flows
from M&A and asset sales, etc.
6. ROIC (Return on Invested Capital) = ("NOPAT" + Share of profits (losses) ofinvestments accounted for using the equity method) / “Invested Capital” x 100
NOPAT (Net Operating Profit after Tax) = Adjusted Operating Income x (1 – Taxburden rate)
Invested Capital = Interest-bearing debt + Total equity

In addition to providing the performance targets above, under its Mid-Term Management Plan
the Group will address the following priority items in order to provide value to customers andsociety through the enhancement of human capital.

26

2. Risk Factors(1) About Risk Management
We aim to create new revenue opportunities while controlling risk. To do this, we maintain a clear
understanding and analysis of the business environment changing day by day, taking into account social
issues as well as our competitive advantages and management resources and conducting risk managementwith an eye toward the many risks the Company should be prepared for as well as opportunities for growth.
With respect to such various risks, each department strives to appropriately grasp and respond to risks
and opportunities, and reflects them in reporting to management executives and management strategies.
In April 2022, Hitachi established Risk Management Meeting (Chairman: President, Vice- chairman:
CRMO) as one of the new Executive Committees, which deliberates on important matters in the Group’sbusiness management. The Group has strengthened its system of proactively responding to risks by gathering
information about global risks at the Risk Management Meeting.
(2) Risk Factors
We conduct business on a global scale across a broad range of business areas and utilize sophisticated,
specialized technologies to carry out our operations. Therefore, we are exposed to risks attributable to theeconomic environment, risks inherent in individual industrial sectors and business lines and risks related toour operations. Investment in our securities also involves risks.
The following risks and countermeasures are based on assumptions we consider reasonable as of thedate of submission of this report. The countermeasures below will not necessarily eliminate the effects of therisks and may not effectively mitigate the effects.
1) Risks Related to Economy
Economic Trends
Our business is influenced by the global economy, economic and geopolitical conditions in certain
regions or countries. We are affected by downward economic trends in regions, countries and Japan. The
rising interstate conflicts and tensions represented by the situation in Ukraine, could cause decline in
consumer spending or capital investment and subsequently reduced demand for our products, systems andservices, which could adversely affect our business, financial condition, and results of operations.
In response to this risk, we combine the many different aspects of the Social Innovation Business in arange of business fields and regions, and we aim to take prompt countermeasures against geopolitical changes
through risk evaluation, etc.

Currency Exchange Rates Fluctuations
Since we conduct business in many foreign countries, our business activities are exposed to risks fromfluctuations in foreign currency exchange rates. We sell products, provide services and purchase raw materials
and components in local currencies. Therefore, fluctuations in foreign currency exchange rates may result in
lower revenues or higher costs in yen to us and thus affect our results of operations, which are reported inJapanese yen. Our price competitiveness may decline if we seek to increase prices in local currencies tocompensate for lower revenues or to increase prices in yen to absorb the higher cost, and thus our results ofprecautions may be harmed. In addition, since we hold assets and liabilities denominated in foreign
currencies, fluctuations in foreign currency exchange rates may adversely affect our financial condition
presented in Japanese yen through foreign currency translation.
The table below shows the foreign exchange sensitivity for the fiscal year ending March 31, 2023
(impact of exchange rate fluctuation by one-yen fluctuation from the forecasted rate) estimated as of March
31, 2022.
Foreign exchange sensitivity (Billions of yen)
Currency

Forecast
Revenues

Adjusted EBITA

U.S. dollar

120 yen／U.S. dollar

19.5

1.5

Euro

130 yen／Euro

7.0

0.5

To mitigate the risk, we hedge the foreign exchange risks using forward exchange contracts and currency
swap agreements and promote our strategy of selling locally produced goods and services.
27

Access to Liquidity and Long-term Financing
Our primary sources of funds are cash flows from operations, borrowings from banks and otherinstitutional lenders, and funding from capital markets, such as offerings of commercial paper and other debt
securities, as well as equity securities. We need liquid funds to pay our operating expenses, the principal of
and interest on our debt and dividends on our capital stock. We also need long-term financing to fund, among
other things, capital expenditures and research and development expenses. We currently believe our cash
flows from operations, borrowings from banks and other institutional lenders and funding from the capital
markets can provide sufficient funding for our operations and other liquidity needs. However, a global
economic downturn could adversely affect our cash flows from operations, business results and financial
condition and may adversely affect our credit ratings. If our ratings are downgraded, our ability to obtain
additional financing on terms we consider favorable may be negatively affected.
Our reliance on banks and institutional lenders exposes us to risks related to rising interest rates, and we
may need to increase our reliance on external sources of funding. An increased reliance on debt instruments
may adversely affect our credit ratings, which might affect our ability to successfully obtain additional
financing on terms we consider favorable. The inability to successfully obtain such financing may increase
our financing costs, and therefore could adversely affect our financial condition and results of operations. To
reduce risks related to rising interest rates, we enter into interest rate swap agreements.
Furthermore, failure of one or more of our major lenders or a decision by one or more of them to change
the terms and conditions of their loans or to stop lending to us could have an adverse effect on our access tofunding.
Marketable Securities Risks
We invest in securities to maintain or promote our business or other relationships with other companies.
These securities are exposed to the risk of declining stock prices. Such declines may require that we write
down equity securities that we hold. Further, contractual and other obligations may require us to maintain ourholdings of these securities despite declining share prices and this may lead to material losses.
The table below shows the number of stock names and balance sheet amount of the stocks the Company
owned at the end of the fiscal year ended March 31, 2022.
Number of

Total amount recorded

stock names(stock names)in the balance sheet(millions of yen)

Unlisted stocks

152

23,341Others46

251,129

To deal with those risks, we, under the basic policy, will not acquire and hold other companies’ shares
except for cases where acquiring or holding such shares is necessary in terms of transactions or business
relationship. The Company also promotes reducing shares that it already owns unless significance of holding
shares and economic rationales of holding are confirmed. Policy for shareholding and examination of thereasonableness of holding Equity securities held for purposes other than pure investment are described in “Ⅳ.
Information on the Company - 4. Corporate Governance, etc. - (5) Information on shareholdings.”
2) Risks related to Supply Chain
Material and Component Procurement
Our manufacturing operations rely on external suppliers for supplies of materials, parts, components
and services of adequate quality and quantity, delivered in a timely manner at a reasonable price. External
suppliers may not have sufficient capacity to meet all of our needs during periods of excess demand.
Shortages of materials, parts, components and services may cause a sharp rise in their prices. In addition,
prices of certain raw materials, parts and components which we purchase in local currencies, principally the
U.S. dollar and the euro, could be adversely affected by fluctuations in foreign currency exchange rates.
Increases in the market price of petroleum and other materials, such as copper, steel, synthetic resins, rare
metals and rare-earth minerals, can increase our production costs and may adversely affect our results ofoperations. Conversely, decreases in commodity prices, such as for raw materials, parts and components, canresult in write-downs of inventory. If natural disasters disrupt the operations of our suppliers and damage
supply chains, it may adversely affect our production. If there are violations of laws or regulations at
28

suppliers, including infringements of rights of workers such as child labor and forced labor, our reputation as
an entity that places orders may decline and the stable procurement of raw materials or parts from the
suppliers may be hindered, which may adversely affect our business, financial condition and results ofoperations.
To deal with those risks, we establish close relationships with suppliers, appropriately react to changes
in demand in different regions, promoting a strategy of selling locally produced goods and services,
formulates a business continuity plan (BCP) at domestic bases and major bases overseas to strengthen theabilities to deal with business interruption risk and use and strengthen the procurement function of our entire
group. To prevent violations of laws and regulations at suppliers, we carry out inspections and audits using
questionnaires and initiatives to understanding.

Credit Risks Arising from Business Transactions
We make transactions with diverse customers and suppliers in Japan and other countries. We sell our
products to certain customers on credit and pay in advance for products or services provided by certain
suppliers. Credit deterioration or failure of one or more of them could adversely affect our financial
condition, results of operations and cash flows.
To deal with those risks, we take measures to manage counterparty credit risk, such as regularly
monitoring credit conditions of such customers or suppliers and setting a limit on transaction amountaccording to their credit conditions.
3) Risks related to Geopolitics
Our Overseas Growth Strategies
We seek to expand our business, including our Social Innovation Business, in overseas markets as partof our business strategy. Through such overseas expansion, we aim to increase our revenues, reduce ourcosts and improve profitability. In many of these markets, we face barriers in the form of long-standing
relationships between our potential customers and their local suppliers. In addition, various factors in foreigncountries where we operate may adversely affect our overseas business activities. These factors include:・ changes in regulations relating to investments, exports, tariffs, antitrust, anti-bribery, consumer andbusiness taxation, intellectual property, foreign trade and exchange controls, human rights, employment
and labor, environmental and recycling requirements;
・ differences in commercial and business customs such as contract terms and conditions;・ changes in labor relations and practices;
・ public sentiment against Japan and local residents’ sentiment against us, various groups’ criticism ofus;・ prolonged conflict in Ukraine;・ expansion and frequent occurrence of interstate conflicts; and・ other political and social factors as well as economic trends and currency exchange rate fluctuations.
Because of these factors, there can be no assurance that we will be able to achieve the aims of ouroverseas growth strategy. This may adversely affect our business growth prospects and results of operations.
To deal with those risks, we constantly determine global political and economic conditions and analyze
their effects on our businesses. Based on the analysis, we take group-wide steps.
4) Risks related to Environment
Tightening of regulations to prevent climate change (risks associated with the transition to a carbon-neutral
society)
An increase in business costs due to carbon taxes, taxes on fuel and energy consumption and/or the
introduction of carbon emission rights trading, etc., loss of selling opportunities due to delays in thedevelopment of technology for products and services, delay in the transition from businesses using fossil fuels
to those that do not, and investors and society's disapproval of the Group’s stance on addressing the issue ofclimate change may adversely affect the Group's business activities, management performance and financial
condition.
In response to these risks, the Group has established its Hitachi Environmental Innovation 2050 long-term
environmental targets, has been implementing an array of activities to achieve carbon neutrality. The Groupwill accelerate its efforts to achieve its targets. Divisions are aiming to achieve carbon neutrality for own
29operations by fiscal 2030. They promote the introduction of energy-efficient equipment and power generation
using renewable energy through the introduction of Hitachi Internal Carbon Pricing, continue to streamline
production and transportation, and promote the use of electric power from non-fossil energy, etc. to prevent or
reduce an increase in carbon taxes and other business costs and to reduce the risk of negative assessment.
Businesses are aiming to develop and increase sales of innovative products and services that will lead to the
reduction of CO2 emissions, develop energy-efficient products that will help reduce energy consumption, andtransition from products currently using fossil fuels to products using electricity.
5) Risk related to Technology
Dependence on Information Systems
With the increased importance of information systems to our operating activities, disruptions in such
systems due to computer viruses and other factors could have a negative impact on our operating activities,
results of operations and financial condition. The expansion of remote work is at risk of generating new
security risks, including information leakage.
To deal with those risks, we continuously promote cybersecurity measures and strictly prescribe andimplement rules, products and procedures that apply to remote work. However, they may not be effective if
unprecedented cyberattacks occur, such as cyberattacks, or there are any vulnerabilities in systems that are not
managed by us.

Dependence on Specially Skilled Personnel
We believe recruiting and retaining additional people who are highly skilled in connection with ouroperations is indispensable to remaining competitive. We look particularly for human resources who can work
globally, those who can identify customer needs, working near them, and provide optimal solutions andservices and those who can take the lead in digital transformation. However, the number of skilled personnel islimited and the competition for attracting and maintaining such personnel is intense. We cannot ensure that wewill be able to successfully attract new or maintain our current skilled personnel.
To deal with the risk, we expand overseas direct recruitment of digitally savvy human resources to hire
human resources needed in Japan and overseas in a timely manner. We create employee-friendly workplaces
where diverse human resources work and employs excellent global human resources in a globally common
personnel system. Using a group-wide, globally common learning management system and an in-house
education program, we aim to maintain and cultivate excellent human resources.
Rapid Technological Innovation
New technologies are rapidly emerging in the segments in which we conduct business, with the pace oftechnological innovation. The development of new and advanced technologies, the continuous, timely andcost-effective incorporation of such technologies into products, systems and services and the effective
marketing of such products, etc. are indispensable to remaining competitive. It is important to respond totechnological innovations, including 5G, automation and electrification using technologies such as AI, IoT androbots, remote and non-contact technologies and environmentally friendly technologies. While introducing
such products, etc. requires significant resource commitment to research and development, there can be noassurance that our research and development will be successful. Failure in our endeavors to develop andincorporate such advanced technologies into products and services in a timely manner, or to achieve market
acceptance for such products, etc., may negatively affect our business, financial condition and results ofoperations.
To mitigate those risks, we promote open innovation involving industry, government and academia,
recruit and cultivate digitally savvy human resources and strengthens Lumada. Through those activities, wework to create an innovation ecosystem.
6) Risks related to Pandemic and Natural disasters
COVID-19
The spread of COVID-19 has caused restrictions on movement, including lockdowns on cities and stay-athome orders and requests, closures of business establishments, restrictions on production activities, decreases
in consumer spending and capital expenditure, supply chain disruptions, sporadic violent fluctuations on
capital markets worldwide and deterioration in the financing environment. As a consequence, it has caused
30

economic deterioration of the world and had adverse effects on the Group’s businesses, financial position andoperating results. The COVID-19 may have additional adverse effects depending on its future course.
In response to those risks, we are continuing manufacturing activities as far as safety is ensured, bringing
in diverse ways of working, including remote work, while enhancing the digital environment, strengthening
cash management, and cutting cost by changing the business structure.

Significant Disasters, climate change and Similar Events
We have many facilities, including our R&D facilities, manufacturing facilities and our headquarters inJapan. Historically, Japan has experienced numerous natural disasters such as earthquakes, tsunamis andtyphoons. Natural disasters in the future may have a significantly adverse effect on an array of our corporate
activities, from production to sales. We also have overseas facilities in Asia, the U.S. and Europe, which arealso subject to similar natural disasters. Natural disasters in each of the areas may cause damage on certain of
our plants and offices and the operations of our suppliers and customers. Due to climate change, large-scale
natural disasters, including drought, rising sea levels, long heat waves and floods, may become more serious.
Such significant natural disasters may directly damage or destroy our facilities, which could disrupt ouroperations, delay new production and shipments of existing inventory or result in costly repairs, replacements
or other costs, all of which would result in significant losses. Furthermore, even if such significant natural
disasters do not directly affect our facilities, they could result in disruptions in distribution channels or supply
chains. The spread of infectious diseases and geopolitical and social instability, such as terrorism, crime, civil
disturbance and conflict, etc., may also disrupt our operations, render our employees unable to work, reduce
consumer demand for our products or disrupt our supply and distribution channels. In addition, we are notinsured against all potential losses, and even losses that insurance covers may not be fully covered and may besubject to challenges of or delays in payment. Direct and indirect disruption of our operations as a result of
natural disasters or other events could have a negative impact on our operating activities, results of operations
and financial condition.
To deal with those risks, we work to strengthen its ability to deal with business interruption risk byformulating BCPs. When we build a new plant, we determine the layout, taking into consideration possible
floods.
7) Risks related to others
Estimates, Fluctuations in Cost and Cancellation of Long-term Projects
We enter into a substantial number of long-term projects, particularly in connection with theconstruction of infrastructure systems. When the outcome of a construction can be estimated reliably, we
recognize revenue and expenses by reference to the stage of completion of the contract activity. In this case,revenue is recognized mainly based on the progress of the project mostly based on the cost incurred relative
to the estimated total cost. When the outcome of a construction cannot be estimated reliably, we recognize
revenue only to the extent of contract costs incurred that it is probable will be recoverable, and recognize
contract costs as expenses in the period in which such costs are incurred. The revenue recognition for suchlong-term projects requires us to make significant assumptions about the estimated total cost, estimated total
selling price, contract risks and other factors. However, these estimates are subject to change. We regularly
review these estimates and adjust them as we deem necessary. We charge any anticipated losses on fixedprice contracts to operations when we are able to estimate such losses. While we employ our best judgment
based on available information, these estimates are subject to change. Fluctuations in costs can occur for avariety of reasons, many of which are beyond our control. In addition, we or our counterparties may cancel
these contracts. These factors would require us to revise our initial assumptions regarding a particular
contract, and may adversely affect our business, financial condition and results of operations.
To deal with those risks, we aim to identify and manage risks before the execution of contracts, and ouroperating division and finance division continue to manage and share identified risks after the execution ofcontracts for accurate estimates in a timely manner.

Intense Competition
We are subject to intense competition in many of the markets in which we operate, and this may
adversely affect our results of operations. We compete with diverse competitors ranging from huge global
corporations to specialized companies including startups. Advanced products, systems and services are31becoming commoditized. The production and development of them and the provision of services in low-cost
regions, and use of the cloud and automation are expanding. As a result, price competition is intensifying. To
succeed in this competitive environment, we believe that our products, etc. must be price competitive. The
commoditization of such products, etc. affects our ability to set prices for our products, etc. If we are unable tocharge comparable prices to those of our competitors, our competitiveness and overall profitability may beharmed. On the other hand, charging comparable prices to those of our competitors may require us to sell
products and services at a loss. Our products, etc. must also be competitive in terms of engineeringsophistication, quality and brand value. We must introduce our products and services to the markets in atimely manner. There can be no assurance that the products, etc. that we offer will be competitive. The failureof such products, etc. to be competitive may negatively affect our business, financial condition and results ofoperations.
To deal with those risks, we promote enhancing innovation through research and development,
expansion of Lumada business, collaborative creation with customers and strives to produce high value-added
products.

Supply and Demand Balance
Oversupply in the markets in which we compete may lead to declines in sales prices, revenues andprofitability. In addition, adjustment to demand may force us to dispose of excess supply or obsolete
equipment or reduce production, which can result in losses. For example, the imbalance between supply anddemand in information equipment, elevators, semiconductor and automotive equipment industries and a
resultant deterioration in market conditions could negatively affect our businesses, financial condition andresults of operations.
To deal with those risks, we work to strengthen the competitiveness of our products, etc. and control the
supply and inventory of products, etc. based on demand forecasts.
Overhaul of Cost Structure
We implement “the Hitachi Smart Transformation Project,” which promotes cost reductions in all
activities of our value chain by thoroughly overhauling our cost structure across our group. We seek tostabilize earnings and strengthen cash flows by improving our management efficiency through the Project.
The Project may be less successful than we currently anticipate. Even if the Project is successful, there is no
assurance that we will be able to sustain or increase profitability.
Our Strategy to Strengthen Our Social Innovation BusinessOur business strategy seeks to build our business portfolio and achieve a business structure with highgrowth potential and profitability mainly by strengthening our Social Innovation Business, which supplies
advanced social infrastructure supported by information and communication technology. We plan to devote
significant resources including capital expenditures and R&Ds and are making investments in mergers andacquisitions and in new projects to strengthen our Social Innovation Business. In addition, we attempt todesign suitable organizational structure for promoting our Social Innovation Business more effectively inresponse to market changes. To implement this strategy, we have incurred and may continue to incur
considerable expenses. Our efforts to implement this strategy may be unsuccessful or less successful than wecurrently anticipate. Even if these efforts are successful, there is no assurance that we will be able to sustain
or increase profitability.
To deal with those risks, we work to manage implementation in a phase gate process in each business
unit (BU) and analyze and discuss market trends, trends at competitors, technological trends and potential
risks, among other issues, from a range of perspectives, in the Investment Strategy Committee, Senior
Executive Committee, the Board of Directors and Audit Committee.
Acquisitions, Joint Ventures and Strategic Alliances
In every operating sector, we depend to some degree on acquisitions of other companies, joint venturesand strategic alliances with outside partners to design and develop key new technologies and products, tostrengthen competitiveness by scaling up and to expand into new regions through acquiring local bases or
distribution channels. The matters which may have adverse effects on our financial condition or profitability
are described in “Consolidated Financial Statements - Notes to Consolidated Financial Statements - (5)32Business Acquisitions and Divestitures.” Such transactions are inherently risky because of the difficulties in
integrating operations, technologies, products and personnel and achieving return of the investment.
Integration issues are complex, time-consuming and expensive and, without proper planning andimplementation, could adversely affect our business. Decisions made by or the performance of alliancepartners that we cannot control or adverse business trends may also negatively affect the success of ouralliances. We may incur significant acquisition, administrative and other costs in connection with thesetransactions, including costs related to integration or restructuring of acquired businesses. If it is expectedthat the amount invested is irrecoverable due to a decline in the profitability of an investee, we may incur
significant losses, including impairment loss for goodwill. There can be no assurance that these transactions
will be beneficial to our business or financial condition. We recorded goodwill of 1,137,719 million yen in
the IT segment, 513,616 million yen in the Energy segment and 168,475 million yen in the Industry segment
as of March 31, 2022. The amount of goodwill in each segment is described in “Consolidated Financial
Statements - Notes to Consolidated Financial Statements - (4) Segment Information.” Even assuming thesetransactions are beneficial, there can be no assurance that we will be able to successfully integrate acquired
businesses or achieve all or any of the initial objectives of these transactions.
To deal with those risks, we work to manage implementation in a phase gate process in each BU andanalyze and discuss market and industry trends, strategies, purchase prices, PMI (post-merger integration)
processes and potential risks, among other issues, from a range of perspectives, in the Investment Strategy
Committee, Senior Executive Committee, the Board of Directors and Audit Committee.

Restructuring of Our BusinessOur business strategy seeks to build our business portfolio and achieve a structure with high growthpotential and profitability in part by:・ closing unprofitable operations;・ divesting our subsidiaries and affiliated companies;
・ reorganizing production bases and sales networks; and・ selling select assets.
Our restructuring efforts may not be implemented in a timely manner or at all, including due togovernmental regulations, employment issues or a lack of demand in the M&A market for businesses wemay seek to sell. In addition, we have listed subsidiaries and from time to time the interests of these listed
subsidiaries’ shareholders may conflict with our interests. Such conflicts of interest may result in difficulties
in timely implementing group-wide policies, including mergers, company splits and other similartransactions to which the listed subsidiaries are parties. Restructuring efforts may also bring about
unintended consequences, such as negative customer or employee perceptions, and have caused and may
continue to cause us to incur significant expenses and other costs, including additional impairment losses on
our fixed assets and intangible assets, write-offs of inventory and losses on the disposal of fixed assets andlosses related to the sale of securities. Current and future restructuring efforts may be unsuccessful or lesssuccessful than we presently anticipate and may adversely affect our business, financial condition and resultsof operations.
To deal with those risks, we analyze and discuss market and industry trends, strategies, sale prices,
processes and potential risks, among other issues, from a range of perspectives, in the Investment Strategy
Committee, Senior Executive Committee, the Board of Directors and Audit Committee.

33

Worsening of Business Performance of Equity-Method Associates and Joint Ventures
We use the equity-method to account for a number of associates and joint ventures. If one or more ofsuch associates or joint ventures, accounted for using the equity-method, records a loss during a given
period, we must record that loss in a manner proportionate to our ownership interest in our consolidated
financial statements. In addition, if the carrying amount of our equity-method investments in associates orjoint ventures is below the recoverable amount of the investments, we could be required to record an
impairment loss.
The table below shows investments accounted for using the equity method as of March 31, 2021.
Millions of yen
Segment

March 31, 2022IT50,397

Energy49,854

Industry

23,789

Mobility

31,055

Smart Life

124,750

Automotive Systems

10,271

Hitachi Construction Machinery

26,661

Hitachi Metals

11,611Others

3,778

Subtotal

332,166

Corporate items and Eliminations

79,035

Total

411,201

To deal with those risks, we promote investment income management using return on invested capital(ROIC) and concentrate investment in fields where profitability and growth are high. We monitor
achievement of business plans and financial position at equity method affiliates in which we invest and sellbusinesses with low profitability and investee companies whose competitiveness we are concerned about.

Litigation and Regulatory Investigations
We face risks of being involved in litigation and alternative dispute resolution and regulatory
investigation and actions in connection with our operations. Lawsuits or any other legal procedures forresolving disputes and regulatory actions may seek payment of large, indeterminate amounts or otherwise
limit our operations, and their existence and magnitude may remain unknown for substantial periods of time.
In past, we have been the subject of several investigations of alleged antitrust violations in relation tocertain product markets in Japan, Europe and North America, etc. and received claims for damages from ourcustomers, etc., which may have adverse effects on our financial condition or profitability. See“Consolidated Financial Statements - Notes to Consolidated Financial Statements - (30) Commitments andContingencies.” These investigations or disputes may result in significant penalties or compensation fordamages, etc. Such substantial legal liability or regulatory action could have an adverse effect on ourbusiness, results of operations, financial condition, cash flows, reputation and credibility.
In addition, our business activities are subject to various governmental regulations in countries where
we operate, which include investments, exports, tariffs, antitrust, anti-bribery, consumer and businesstaxation, intellectual property, foreign trade and exchange controls, human rights, employment and labor,
environmental and recycling requirements. These regulations limit, and other new or amended regulations
may further limit, our business activities or increase operating costs. In addition, the enforcement of such
regulations, including the imposition of fines or surcharges for violation of such regulations, may adversely
affect our results of operations, financial condition, cash flows, reputation and credibility.
To deal with those risks, we work to identify operations where regulations are applied, assess risks, takesteps in response to risks and provide education to employees.

34

Product Quality and Liability
We increasingly provide products and services utilizing sophisticated technologies. Reliance on
external suppliers reduces our control over quality assurance. The occurrence of defects in our products andservices could negatively affect our reputation for quality of products and services, expose us to liability fordamages caused by such defects and negatively affect our ability to sell certain products. A significant
product defect could adversely affect our results of operations, financial condition and future businessprospects.
To deal with those risks, in addition to strengthening our quality assurance system, we conduct
activities to prevent accidents and comply with technical laws and regulations. We provide education on
thorough risk assessment, quality, reliability and reactions when product accidents occur.
Management of Confidential Information
We maintain and manage personal information obtained from our customers, as well as confidential
information relating to our technology, research and development, or R&D, production, marketing andbusiness operations and those of our customers and clients, in various forms. Unauthorized disclosures ofsuch information could subject us to complaints or lawsuits for damages or could otherwise have a negative
impact on our business, financial condition, results of operations, reputation and credibility.
To deal with those risks, we establish and implement rules on the management of confidential
information and implement identity management and access control through encryption and the building ofauthentication infrastructure. We also examine information security at suppliers.
Intellectual Property
We depend in part on proprietary technology and our ability to obtain patents, design right, trademarks
and other forms of intellectual property rights covering our products, product design, manufacturing
processes and software-based services in Japan and other countries. The fact that we hold such intellectual
property rights does not ensure that they will provide a competitive advantage to us. Various parties may
challenge, invalidate or circumvent our patents, design right, trademarks and other intellectual property
rights. There can be no assurance that claims allowed on any future patents will be sufficiently broad toprotect our technology. Effective patent, design right, copyright and trade secret protection may be
unavailable or limited in some of the markets in which we operate, and our trade secrets may be vulnerable
to disclosure or misappropriation by employees, contractors and other persons.
To deal with those risks, we search known examples before applying for intellectual property rights toincrease the probability of obtaining rights and to obtain rights suitable for business. In countries whereintellectual property protection is unavailable or limited, we strive to curb unauthorized use of intellectual
property primarily through contracts with employees and contractors.
We design many of our products to include software or other intellectual property licenses from third
parties. Competitors may not make their protected technology available to us, or may make it available to us
only on unfavorable terms and conditions. There can be no assurance that we will be able to maintain alicense for such intellectual property if obtained, for economic or other reasons, or that such intellectual
property will give us the commercial advantages that we desire.
To deal with those risks, we endeavor to maintain good relations with the third parties through contracts
and negotiations to exercise intellectual property rights.
From time to time, we are sued or receive notices regarding patent, design right and other intellectual
property claims. Whether or not these claims have merit, they may require significant resources to defend
against and may divert management attention from our business and operations and result in harm to our
reputation. In addition, a successful infringement claim and our inability to obtain the license for the
infringed technology or substitute similar non-infringing technology may adversely affect our business.
To deal with those risks, we work to avoid disputes with other companies chiefly by conducting apatent clearance study before selling a new product or providing a new service and by changing the designof products or services if necessary.
Employee Retirement Benefits
We have a significant amount of employee retirement benefit costs that we derive from actuarial
valuations based on a number of assumptions. Inherent in these valuations are key assumptions used in35estimating pension costs including mortality, withdrawal and retirement rates, changes in wages and thediscount rate. We are required to make judgments regarding the key assumptions by taking into accountvarious factors including personnel demographics, market conditions and expected trends in interest rates.
Although management believes that its key assumptions are reasonable in light of the various underlying
factors, there can be no assurance that the key assumptions will correspond to actual results. If our key
assumptions differ from actual results, the consequent deviation of actual pension costs from estimated costs
may have an adverse effect on our financial condition and results of operations. A decrease in the discountrate may result in an increase in the amount of projected benefit obligations. In addition, we may changethese key assumptions, such as the discount rate. Changes in key assumptions may also have an adverse
effect on our financial condition and results of operations.
To mitigate the risk, on April 1, 2019, we changed the corporate pension plan for employees of theCompany from a defined contribution plan to a risk-sharing corporate pension plan to fix the Company’s
premium payments and reduce investment risks.

368) Risks Related to Our American Depositary Shares
Rights of ADS holders
The rights of shareholders under Japanese law to take actions, including voting their shares, receiving
dividends and distributions, bringing derivative actions, examining our accounting books and records andexercising appraisal rights are available only to shareholders of record. Because the depositary, through its
custodian agents, is the record holder of the shares underlying the American Depositary Shares, or ADSs,
only the depositary can exercise those rights in connection with the deposited shares. The depositary will
make efforts to vote the shares underlying ADSs in accordance with the instructions of ADS holders andwill pay dividends and distributions collected from us as and to the extent provided in the deposit agreement.
However, ADS holders will not be able to bring derivative actions, examine our accounting books andrecords, or exercise appraisal rights through the depositary.
We are incorporated in Japan with limited liability. A significant portion of our assets are locatedoutside the United States. As a result, it may be more difficult for investors to enforce against us judgments
obtained in U.S. courts predicated upon the civil liability provisions of the federal securities laws of theUnited States or judgments obtained in other courts outside Japan. There is doubt as to the enforceability inJapanese courts, in original actions or in actions for enforcement of judgments of U.S. courts, of civil
liabilities predicated solely upon the federal securities laws of the United States.

Unit Share System
The Companies Act allows companies to establish a “unit” of shares for the purpose of exercising
voting rights at the general meetings of shareholders. Under our articles of incorporation, one unit of ourshares is composed of 100 shares, equivalent to 50 ADSs. Each unit of our shares has one vote. A holder
who owns shares or ADSs in other than multiples of 100 or 50, respectively, will own less than a whole unit
(i.e., for the portion constituting fewer than 100 shares, or fewer than 50 ADSs). Our articles ofincorporation, in accordance with the Companies Act, impose significant restrictions on the rights of holdersof shares constituting less than a whole unit, which include restrictions on the right to vote, to attend ashareholders meeting and to bring derivative actions. In addition, less than whole unit shares cannot be
traded on Japanese stock markets. Under the unit share system, holders of our shares constituting less than
one unit have the right to require us to purchase their shares and the right to require us to sell them additional
shares to create a whole unit of 100 shares. However, holders of our ADSs are unable to withdraw
underlying shares representing less than one unit and, as a practical matter, are unable to require us topurchase those underlying shares. The unit share system, however, does not affect the transferability of
ADSs, which may be transferred in lots of any number of whole ADSs.
Dilution of Your Shares by Issuances of Additional Shares
We may issue additional shares in the future within the unissued portion of our authorized share capitaland sell shares held as treasury stock, generally without shareholder vote unless the subscription or sale priceis significantly lower than the market price. Issuances and sales of our shares in the future may be at prices
below the prevailing market prices and may be dilutive.
Foreign Exchange Fluctuations
Market prices for our ADSs may fall if the value of the yen declines against the U.S. dollar. In addition,
the amount of cash dividends or other cash payments made to holders of ADSs will decline if the value ofthe yen declines against the dollar.

37

3. Management’s Discussion and Analysis of Consolidated Financial Condition, Results of Operations andCash Flows(1) Progress of Management Plan
1) Status of Key Indicators laid out as Strategic and Operational Targets
Under the "2021 Mid-term Management Plan," the key indicators to measure performances in termsof meeting our strategic and operational goals are as follows.
Year ended March 31, 2022
(Fiscal 2021)

Fiscal 2021 Target

Annual growth rate for revenues

18%(CAGR from Fiscal 2018 to
Fiscal 2021)
Over 3%Adjusted operating income margin

7.2%

Over 10%(Cumulative for three years from
Fiscal 2019 to Fiscal 2021)
2,084.0 billion yen(Cumulative for three years from
Fiscal 2019 to Fiscal 2021)

Return on invested capital (ROIC)

7.7%

Over 10%

Overseas revenue ratio

59%

Over 60%

Operating cash flow

Over 2,500.0 billion yen

The fiscal year under review was the final year of the 2021 Mid-term Management Plan, however,the Group was unable to reach its targets for adjusted operating margin, cash flow from operating
activities, ROIC, etc. due to the harsh business environment caused by the COVID-19 pandemic.
Nevertheless, efforts to reform cost structure, increase profitability, reform the Group’s business portfolio,
and other efforts resulted in a 1.5% year-on-year increase of the adjusted operating margin, which reached7.2%. This demonstrates that the foundation of the next medium-term management plan, the 2024
Medium-term Management Plan, was established in the final year of the 2021 Medium-term Management
Plan, which set the target of becoming a global leader in the Social Innovation Business.
2) Global Business Expansion‒ Business portfolio reform for the acceleration of the digital transformation (DX) of social infrastructure
GlobalLogic Inc., which was acquired in July last year, has started various collaborative
creation initiatives using facilities such as the newly opened “Lumada Innovation Hub Tokyo.” Taking
advantage of its high-level digital engineering capabilities and rich customer base, GlobalLogic is
accelerating the global expansion of the Lumada business. In addition, in the power grid business,
Hitachi, centered Hitachi Energy (former Hitachi ABB Power Grids Ltd), has been expanding
aggressively its business to realize sustainable energy. Further, in the railway systems business, Hitachi
decided to acquire the Grand Transportation Systems business of Thales S.A. to strengthen its railway
systems and solutions using digital technologies.
On the other hand, with the decision to partially transfer the shares of Hitachi Construction
Machinery, all publicly listed parent-subsidiary relationships in the Hitachi Group will be dissolved.
Through the 2021 Mid-term Management Plan, Hitachi's business portfolio reform has beenpromoted, and Hitachi has strengthened the foundation for the continued growth of the Social
Innovation Business.

38‒ Progress in the Lumada business
In Fiscal 2021, the revenues from Lumada business were 1,609.0 billion yen due mainly to theacquisition of the power grid business from ABB Ltd. and the acquisition of GlobalLogic Inc., as wellas an increased revenue in all segments as compared with fiscal 2020.

39

(2) Analysis of Results of Operations
1) Analysis of Statement of Operations

Revenues increased 18% from fiscal 2020, came to 10,264.6 billion yen. Revenue increased thankslargely to the mergers of Hitachi Automotive Systems, Ltd., Keihin Corporation, Showa Corporation,
and Nissin Kogyo Co., Ltd. affiliated with Hitachi Astemo, Ltd., the acquisition of the power gridbusiness of ABB Ltd., the acquisition of GlobalLogic Inc., and the recovery of the market from the
COVID-19 pandemic and the impact of foreign exchange rates.
Cost of sales increased 18% to 7,705.9 billion yen, as compared with fiscal 2020, and the ratio of
cost of sales to revenues was 75%, the same level as for fiscal 2020. Gross profit increased 17% to
2,558.6 billion yen, as compared with fiscal 2020.
Selling, general and administrative expenses came to 1,820.3 billion yen, up 7% year on year. The
ratio of selling, general and administrative expenses to revenues was 18%, down 1% year on year.
Adjusted operating income increased 243.0 billion yen year on year and reached 738.2 billion yen.
Other income decreased 347.7 billion yen to 128.3 billion yen and other expenses decreased 88.4
billion yen to 83.9 billion yen, as compared with fiscal 2020, respectively. The main components are as
follows;- Net gain on sales and disposal of property, plant and equipment increased 1.9 billion yen to 18.0
billion yen, as compared with fiscal 2020.
- Impairment losses decreased 73.9 billion yen to 35.0 billion yen, as compared with fiscal 2020.
This mainly reflected a posting of impairment losses on non-current assets in the Automotive
Systems business and a decline in impairment loss that had been caused by the declining
profitability of the Magnetic Materials business in Hitachi Metals in the fiscal 2020.
- Net gain on business reorganization and others decreased 350.2 billion yen year on year to 102.1
billion yen due mainly to the sale of shares of Hitachi Chemical Co., Ltd., the Diagnostic
Imaging-related business in the Smart Life sector, and a part of the shares of Agility Trains East
(Holding) Limited posted in the previous fiscal year, which in total exceeded the gain on sale ofpart of the shares of Arçelik Hitachi Home Appliances B.V. posted in the fiscal year underreview.
- Special termination benefits decreased 10.9 billion yen to 8.7 billion yen, as compared with fiscal
2020.
Financial income (excluding interest income) increased 13.9 billion yen to 27.9 billion yen andfinancial expenses (excluding interest charges) decreased 1.3 billion yen to 97.0 million yen, as
compared with fiscal 2020, respectively.
40

Share of gains (losses) of investments accounted for using the equity method rose 1.6 billion yen
year on year to the gains of 40.4 billion yen.
As a result of the foregoing, EBIT* increased 0.6 billion yen to 850.9 billion yen, as compared withfiscal 2020.
*EBIT (Earnings before interest and taxes) are the earnings before interest and taxes, which ispresented as income from continuing operations, before income taxes less interest income plus interest
charges. EBIT margin is calculated by dividing EBIT by revenue.
Interest income decreased 1.4 billion yen to 15.4 billion yen, as compared with fiscal 2020 andinterest charges increased 4.3 billion yen to 27.1 billion yen, as compared with fiscal 2020.
Income from continuing operations, before income taxes, decreased 5.1 billion yen to 839.3 billion
yen, as compared with fiscal 2020.
Income taxes decreased 156.7 billion yen to 168.4 billion yen year on year due in part to tax
expenses required for business reorganization.
Income from discontinued operations decreased 0.6 billion yen to 0 million yen, as compared withfiscal 2020.
Net income increased 152.3 billion yen to 670.8 billion yen, as compared with fiscal 2020.
Net income attributable to non-controlling interests increased 70.4 billion yen to 87.3 billion yen, as
compared with fiscal 2020.
As a result of the foregoing, net income attributable to Hitachi, Ltd. stockholders increased 81.8
billion yen to 583.4 billion yen, as compared with fiscal 2020.
2) Operations by Segment
The following is an overview of results of operations by segment. Revenues for each segment
include intersegment transactions. The numbers within each chart represent the results of the main
businesses, etc. in each segment, and the sum of these numbers in some segments does not correspond to
the total results in the segments.
(IT)* Acquisition-related amortization for GlobalLogic is included in IT segment total

Revenues increased year on year thanks primarily to strong results of the Lumada business andGlobalLogic Inc.
Adjusted operating income decreased from fiscal 2020. Profit decreased chiefly due tosemiconductor shortages, depreciation of intangible assets and other assets associated with theacquisition of GlobalLogic Inc., and temporary expenses for mergers and other related expenses.
EBIT decreased from fiscal 2020. The decrease in earnings was attributable primarily to expenses
for advisory services associated with the acquisition of GlobalLogic Inc. in addition the decrease inadjusted operating income.

41

(Energy)* Related cost includes acquisition-related amortization for the acquisition of the power grids business and PMI related costs

Revenues increased from fiscal 2020. The acquisition of the power grids business of ABB Ltd.
contributed to revenue growth despite a fall in revenue from the nuclear power business as a result of adecrease in operation.
Adjusted operating income increased from fiscal 2020. Profit increased as a result of the completionof improvement in measures in some projects in the energy business, cost reduction and fixed cost
control in the nuclear power and energy businesses, and the acquisition of the power grid segment of
ABB Ltd., which more than offset a fall in sales revenue from the nuclear power business.
EBIT increased compared with fiscal 2020, due mainly to the increased adjusted operating income.
(Industry)

Revenues increased from fiscal 2020. Following the recovery of market conditions, revenue fromthe Industrial Products Business Unit increased, as did revenue from the Industry and Distribution
Sectors, due to the growth of sales in the digital solution business. Revenues from the water andenvironment business rose largely due to an increase in sales in the air-conditioning system business.
Adjusted operating income increased year on year due mainly to improved profitability and reduced
costs in the digital solution business in the Industry and Distribution Sectors in addition to a rise in salerevenue.
EBIT grew year on year thanks to an increase in adjusted operating income and other factors.
42

(Mobility)

Revenues increased from fiscal 2020. Revenues in the Railway Systems business rose due to foreignexchange fluctuations and an increase in operation particularly in Asia and Europe in response to thelifting of restrictions associated with COVID-19. Revenue growth in the Building Systems business was
attributable to foreign exchange fluctuations in addition to the expansion of business in China and theconsolidation of Yungtay Engineering Co., Ltd. in October 2020.
Adjusted operating income increased from fiscal 2020. The income growth was primarily a result of
an increase in sales revenues, which more than offset the impact of a steep rise in materials prices in the
Building Systems business.
EBIT decreased from fiscal 2020. Despite an increase in the adjusted operating income, earnings
declined due to the impact of gains on sales of shares of Agility Trains East (Holdings) Limited in the
Railway Systems business and the gain on business reorganization and others posted in the previous
fiscal year.
(Smart Life)* The results of Smart Life segment include the revenues, adjusted operating income and EBIT of healthcare business and other businesses

Revenues decreased from fiscal 2020. The decrease was attributable to the sale of businesses related
to Diagnostic Imaging and the sale of overseas household appliance business in the Smart Life &Ecofriendly Systems segment (Hitachi Global Life Solutions). Revenues from Measurement & Analysis
Systems (Hitachi High-Tech) decreased partly due to the partial withdrawal from the Industrial Solution
business despite revenue growth in the Analytical Solutions business in response to the recovery of themarket.
Adjusted operating income decreased from fiscal 2020. Income from the Measurement & Analysis
Systems decreased due to a fall in sales revenue in Smart Life & Ecofriendly Systems despite an increase
in revenue from Analytical Solutions.
EBIT declined year on year principally as a result of gains on sale of the Diagnostic Imaging
business posted in the previous year, which more than offset the increase that resulted from a gain on
business reorganization and others associated with the partial sale of shares of Arçelik Hitachi Home
Appliances B.V. in Smart Life & Ecofriendly Systems business.

43

(Automotive Systems)

Revenues grew year on year thanks to business mergers related to Hitachi Astemo and revenue
growth resulted from an increase in the operation rate, which had fallen in the previous fiscal year due tothe COVID-19 pandemic, despite factors decreasing revenues such as the reduced production of
automakers due to semiconductor shortages and a decrease in component supply caused by municipal
lockdowns in India in response to the pandemic.
Adjusted operating income increased year on year due to growth in sales revenue despite thereduced production of automakers due to semiconductor shortages and a steep rise in material prices.
EBIT increased year on year thanks to growth in sales revenue despite the reduced production of
automakers due to semiconductor shortages and a steep rise in material prices.
(Hitachi Construction Machinery)

Revenues rose year on year as a result primarily of revenue growth thanks to the recovery of themarket except in China, price adjustments in the Americas, and foreign exchange fluctuations.
Revenues rose year on year as a result primarily of revenue growth thanks to the recovery of themarket except in China, price adjustments in the Americas, and foreign exchange fluctuations.
EBIT increased year on year as a result mainly of an increase in adjusted operating income and again on the sale of shares posted due to the termination of the partnership with Deere & Company.
(Hitachi Metals)

Revenues grew year on year chiefly due to revenue growth in line with a recovery in the market for
automobile products.
Adjusted operating income rose year on year as a result of an increase in sales revenue and otherfactors.
EBIT increased year on year due to an impairment loss in the magnetic material business posted in
the previous fiscal year in addition to an increase in adjusted operating income.
(Others)
Revenues increased 2% to 456.3 billion yen, adjusted operating income decreased 1.1 billion yen to21.2 billion yen and EBIT increased 7.2 billion yen to 32.5 billion yen, as compared with fiscal 2019,respectively.

443) Revenues by Geographic Area
The following is an overview of revenues attributed to geographic areas based on customer location.

Japan
Revenues in Japan increased from fiscal 2020. This was due mainly to the management integration
related to Hitachi Astemo, Ltd., the recovery of market conditions, and the increased revenues in the
Hitachi Metals, despite decreased revenues in the smart Life Sector as a result of the sale of diagnostic
imaging-related business and withdrawal in a part of industrial solution business in Hitachi High-Tech
Corporation.
Overseas
Revenues in Overseas increased compared with fiscal 2020, and the ratio to total revenues was
59%, a rise of 7% compared with fiscal 2020. Revenues in each area are as follows;(North America)
Revenues in North America increased from fiscal 2020, attributable mainly to the higher revenues
in the Automotive sector, Hitachi Construction Machinery and Hitachi Metals.
(Europe)
Revenues in Europe increased from fiscal 2020, due mainly to the increased revenues in the
Energy sectors, the Mobility sector, and Hitachi Construction Machinery.
(Asia)
Revenues in Asia composed of China and ASEAN, India and other areas increased compared withfiscal 2020, due mainly to the increased revenues in the Automotive sector and the Mobility sector,
despite decreased revenues in the Smart Life sector as a result of the sale of a part of the overseas
home appliance business.
(Other Areas)
Revenues in other areas increased compared with fiscal 2020, due mainly to increased revenues inthe Energy sector and Hitachi Construction Machinery.

45

(3) Analysis of Financial Condition and Cash Flows
1) Liquidity and Capital Resources
Policies for Financing Activities
We consider maintaining an appropriate level of liquidity and securing adequate funds for current
and future business operations to be important financial objectives. Through efficient management ofworking capital, we are working to optimize the efficiency of capital utilization throughout our business
operations. We endeavor to improve our group cash management by centralizing such management
among us and our overseas financial subsidiaries.
We introduced ROIC as a management indicator and are promoting the improvement of capitalefficiency and the growth of highly profitable businesses through our management. ROIC is an indicatorthat evaluates returns generated by invested capital calculated by dividing business profit after taxes byinvested capital. To increase returns, ROIC needs to exceed the weighted average cost of capital(WACC), which is the cost of raising invested capital.
In fiscal 2022, we have changed the key indicator of profitability from the conventional adjusted
operating income to adjusted EBITA (adjusted operating income less amortization of intangible assets
associated with acquisition added with equity-method profit or loss).
We will aim for adjusted EBITA of 12% and ROIC of 10% and ensure disciplined investment
judgments using adjusted EBITA and ROIC as the criteria, which are also used for assessing investmentsin the acquisition of businesses, in an effort to further increase profitability and the efficiency of businessassets.
Trends in the Funding Demands
Our major uses of funds are M&A for growth, investment in human resources, capital investments,
research and development (R&D) investments and shareholder returns. We plan to use cash income fromcore free cash flows and the sale-off of assets for investments in future growth and for shareholder
returns with good balance.
The major transactions of M&As, etc. are described in “Consolidated Financial Statements - Notes
to Consolidated Financial Statements - (5) Business Acquisitions and Divestitures.” The results and planof the capital investments are described in “III. Property, Plants and Equipment.” The policy and resultsof shareholder returns are described in “ IV. Information on the Company - 3. Dividend Policy.”
Capital Resources
Our internal sources of funds include cash flows generated by operating activities and cash on
hand. Our management also considers short-term investments to be an immediately available source offunds. In addition, we raise funds both in the capital markets and from Japanese and internationalcommercial banks in response to our capital requirements. Our management’s policy is to finance capital
expenditures primarily by internally generated funds and to a lesser extent by funds raised through theissuance of debt and equity securities in domestic and foreign capital markets.
When procuring funds through borrowing, our financial discipline policy is to maintain theappropriate financial condition by considering the financial indicators such as a D/E ratio and an interest
bearing debt/EBITDA ratio.
In order to flexibly access funding, we registered our shelf registration with the maximum
outstanding balance of 300.0 billion yen.
We maintain commitment line agreements with a number of domestic banks under which we may
borrow in order to ensure efficient access to necessary funds. These commitment line agreements
generally provide for a one-year term, renewable upon mutual agreement between us and each of thelending banks, as well as another commitment line agreement with a contract term of three years endingon July 29, 2022. As of March 31, 2022, our unused commitment lines totaled 631.9 billion yen,including those of 536.7 billion yen which the Company maintained.

46

We receive debt ratings from Moody’s Japan K.K. (Moody’s), S&P Global Rating Japan Inc.
(S&P), as well as Rating and Investment Information, Inc. (R&I). Our debt ratings as of March 31, 2022
were as follows.
Rating Company
Long-term
Short-term
P-2
Moody’s
A3
A
A-1
S&P
a-1+
R&I
AAWith our current ratings, we believe that our access to the global capital markets will remain
sufficient for our financing needs. We seek to improve our credit ratings in order to ensure financial
flexibility for liquidity and capital management, and to continue to maintain access to sufficient funding
resources through the capital markets.
2) Cash Flows(Cash Flows from Operating Activities)
Net income in fiscal 2021 increased by 152.3 billion yen, as compared with fiscal 2020. Net cash
inflow from a change in trade payables was 156.4 billion yen as compared with net cash outflow of 31.8
billion yen for fiscal 2020. However, net cash outflow from a change in trade receivables and contract
assets was 33.2 billion yen as compared with net cash inflow of 89.7 billion yen for fiscal 2020. Net cash
outflow from a change in inventories increased by 282.2 billion yen, and income tax payment increasedby 59.5 billion yen, as compared with fiscal 2020, respectively.
As a result of the foregoing, net cash provided by operating activities was 729.9 billion yen in
fiscal 2021, a decrease of 63.1 billion yen compared with fiscal 2020.
(Cash Flows from Investing Activities)
Purchase of investments in securities and other financial assets (including investments in
subsidiaries and investments accounted for using the equity method) in fiscal 2021 decreased by 72.1
billion yen, as compared with fiscal 2020, due mainly to the purchase of shares of GlobalLogic
Worldwide Holdings, Inc. in fiscal 2021, despite the purchase of shares of Hitachi Energy Ltd. in fiscal
2020. And, net amount of investments related to property, plant and equipment* was 330.0 billion yen in
fiscal 2021. This net sum increased by 40.5 billion yen compared with fiscal 2020. Proceeds from sale ofinvestments in securities and other financial assets (including investments in subsidiaries andinvestments accounted for using the equity method) in fiscal 2021 decreased by 513.5 billion yen, as
compared with fiscal 2020, due mainly to the sale of shares of Hitachi Chemical Company, Ltd. and the
diagnostic imaging-related business in fiscal 2020.
As a result of the foregoing, net cash used in investing activities was 1,048.8 billion yen in fiscal
2021, an increase of 590.0 billion yen compared with fiscal 2020.
* The sum of the purchase of property, plant and equipment and the purchase of intangible assets,less the proceeds from sale of property, plant and equipment, and intangible assets.
(Cash Flows from Financing Activities)
Net cash outflow related to long-term debt** in fiscal 2021 was 261.1 billion yen, as comparedwith 292.9 billion yen of net cash inflow related to long-term debt in fiscal 2020. However, net cash
inflow from a change in short-term debt in fiscal 2021 increased by 453.5 billion yen, as compared withfiscal 2020. And, net cash outflow related to purchase of shares of consolidated subsidiaries from noncontrolling interests in fiscal 2021 decreased by 523.7 billion yen, as compared with fiscal 2020, due
mainly to the purchase of shares of Hitachi High-Tech Corporation in fiscal 2020.
As a result of the foregoing, net cash provided by financing activities was 202.7 billion yen in
fiscal 2021, as compared with 184.8 billion yen of net cash outflow in fiscal 2020.
** The proceeds from long-term debt, less the payments on long-term debt.
As a result of the foregoing, cash and cash equivalents as of March 31, 2022 were 968.8 billion
yen, a decrease of 47.0 billion yen from March 31, 2021. Free cash flows, the sum of cash flows fromoperating and investing activities, were an outflow of 318.9 billion yen in fiscal 2021, a decrease of
653.2 billion yen compared with fiscal 2020.

47

3) Assets, Liabilities and Equity
As of March 31, 2022, total assets amounted to 13,887.5 billion yen, an increase of 2,034.6 billion
yen from March 31, 2021. This was attributable to increased goodwill by the acquisition of GlobalLogic
and increased inventories. Cash and cash equivalents as of March 31, 2022 amounted to 968.8 billion
yen, a decrease of 47.0 billion yen from the amount as of March 31, 2021.
As of March 31, 2022, total interest-bearing debt, the sum of short-term debt and long-term debt,
amounted to 3,126.7 billion yen, an increase of 729.3 billion yen from March 31, 2021, primarily as aresult of increases in short-term debt and long-term debt (excluding current portion). As of March 31,
2022, short-term debt, consisting mainly of borrowings from banks and commercial paper, amounted to1,234.1 billion yen, an increase of 817.4 billion yen from March 31, 2021. As of March 31, 2022, thecurrent portion of long-term debt amounted to 336.4 billion yen, an increase of 62.0 million yen fromMarch 31, 2021. As of March 31, 2022, long-term debt (excluding current portion), consisting mainly ofdebentures, and loans principally from banks and insurance companies, amounted to 1,556.1 billion yen,a decrease of 150.1 billion yen from March 31, 2021.
As of March 31, 2022, total Hitachi, Ltd. stockholders’ equity amounted to 4,341.8 billion yen, an
increase of 816.3 billion yen from March 31, 2021. As a result, the ratio of total Hitachi, Ltd.
stockholders’ equity to total assets as of March 31, 2022 was 31.3%, compared with 29.7% as of March
31, 2021.
Non-controlling interests as of March 31, 2022 was 1,013.4 billion yen, an increase of 80.7 billion
yen from March 31, 2021.
Total equity as of March 31, 2022 was 5,355.2 billion yen, an increase of 897.0 billion yen fromMarch 31, 2021. The ratio of interest-bearing debt to total equity was 0.58, an increase of 0.04 point fromMarch 31, 2021.
(4) Production, Order Received and Sales
The Hitachi Group does not present production and orders received in amount or volume terms foreach segment since it produces and sells a wide variety of products, there are variety of specifications insame kinds of products and certain products are mass-produced. The balance of unsatisfied performanceobligations for the segments that have contracts under which revenues are recognized over a long periodof time is described in “Consolidated Financial Statements － Notes to Consolidated Financial
Statements － (20) Revenues.” Regarding sales, see “(2) Analysis of Results of Operations.”(5) Important Accounting Policies and Estimates
The preparation of the consolidated financial statements in conformity with IFRS requires ourmanagement to make estimates and assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Management considers that certain
accounting estimates to be critical, and that their significance to the financial statements and thepossibility that future events affecting the estimate may differ significantly from management’s current
assumptions could have a material impact on the presentation of our financial condition, changes infinancial condition or results of operations. First, the estimates require us to make assumptions about
matters that are highly uncertain at the time the accounting estimates are made. Second, there could be
different estimates that we reasonably could have used for the accounting estimate in the current period,or changes in the accounting estimate that are reasonably likely to occur as time proceeds. Importantaccounting policies that require management to make estimates and assumptions are as follows.
Estimates, Fluctuations in Cost and Cancellation of Long-term Projects
We enter into a substantial number of long-term projects, particularly in connection with theconstruction of infrastructure systems. For a performance obligation satisfied over time, we measure its
progress towards complete satisfaction of that performance obligation based on the incurred cost or theperiod of services being provided in consideration of the nature of the goods and services for the purposeof recognizing revenue. When we cannot reasonably measure the progress, revenue is recognized only tothe extent of the costs incurred. The revenue recognition for such long-term projects requires us to makesignificant assumptions about the estimated total cost, estimated total selling price, contract risks and48

other factors. However, these estimates are subject to change. We charge any anticipated losses on fixedprice contracts to operations when we are able to estimate such losses. While we employ our best
judgment based on available information, these estimates are subject to change. We regularly review
these estimates and adjust them as we deem necessary. Fluctuations in costs can occur for a variety ofreasons, many of which are beyond our control. In addition, we or our counterparties may cancel thesecontracts. These factors would require us to revise our initial assumptions regarding a particular contract,
and may adversely affect our business, financial condition and results of operations.
Business Combinations
Business combinations are accounted for using the acquisition method. In addition to tangible assetsof the acquiree, intangible assets such as technologies, brands, and customer lists are valuated at fairvalue. In these valuations, estimates are made based on appropriate assumptions and future projections
according to each case. Independent external experts are usually involved in the valuation process, but
significant estimates and assumptions in the valuation include inherent uncertainty. We consider theestimates of the key assumptions to be reasonable, but actual results may differ.
Impairment of Assets
We review the carrying amounts of assets that it owns and uses whenever events or changes incircumstances indicate that the carrying amounts may be unrecoverable, to determine whether there is
any indication of impairment. If the carrying amount of an asset is judged to be impaired, the amountthat exceeds the recoverable amount is recognized as an impairment loss. We measure the recoverable
amount of an asset or a CGU (or a group of CGUs) as the higher of fair value less costs of disposal andvalue in use.
In measuring fair values, we 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 themarket approach to derive reasonable estimates of values in orderly market transactions, such ascomparisons of similar public companies and the current gross value of the asset. Value in use iscalculated using 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. It is based on
certain assumptions that it is considered reasonable as of the filing date of this report, but actual results
may differ significantly depending on market risks, business environment risks, and so forth. The
discount rate used to calculate the value in use is affected by stock market trends and interest rate
fluctuations. We believe that the estimates of future cash flows and value in use are reasonable, butchanges in estimates resulting from unpredictable changes in the business environment that lead todecreases in future cash flows or value in use can adversely affect the valuation of assets. We
appropriately employ external experts depending on the complexity of calculating fair value and value inuse.
Goodwill is the source of excess earning power based on the market competitiveness acquired throughbusiness acquisition, and the difference between the net assets of the acquiree and the consideration for
acquisition is recorded as goodwill except for the amount recorded as intangible assets, etc. Goodwill is
not amortized in accordance with IFRS. Irrespective of any indicators of impairment, we test assets for
impairment annually, mainly in the fourth quarter, by estimating the recoverable amount of each CGU ora group of CGUs to which such assets are allocated. We continuously monitor the comparison between
the initial estimate and the most recent estimate, and conduct impairment tests if there are signs that thevalue will fall below the original estimate and the carrying amount will not be recoverable, due tochanges in events or circumstances such as in business strategies or in the market environment. Suchchanges in the events or circumstances include crises in the global economy and financial markets, and if
the carrying amount of each CGU or a group of CGUs to which such assets are allocated exceeds therecoverable amount, the excess amount is recognized as an impairment loss.
The breakdowns of impairment and goodwill by segment are described in “Consolidated Financial
Statements ― Notes to Consolidated Financial Statements ― (4) Segment Information.” The maincontent is described in “Consolidated Financial Statements ― Notes to Consolidated Financial
Statements ― (9) Property, Plant and Equipment and (10) Goodwill and Other Intangible Assets."49Deferred Tax Assets
Deferred tax assets are the amounts of taxes that will be recovered in future periods. In assessing therealizability of deferred tax assets, we consider whether it is more likely than not that some portion or allof the deferred tax assets will not be realized. Although realization is not assured, we consider thescheduled reversals of deferred tax liabilities and projected future taxable income when assessing
realizability. The outlook for future performance, which is the basis for estimating future taxable income,may differ from the actual one due to unforeseen events such as economic trends, supply and demand
trends in markets, sales prices of products and services, procurement prices of raw materials and parts,
fluctuations in exchange rates, and rapid technological innovations, and may be corrected in the future.
As a result, the amounts of deferred tax assets that are determined to be recognizable may be adversely
affected. The realizability of deferred tax assets is evaluated for each tax payment in each tax
jurisdiction, and even if running similar businesses, the evaluations can differ depending on the productand the tax jurisdiction. The ultimate realization of deferred tax assets is dependent upon the generationof future taxable income in specific tax jurisdictions during the periods in which these deductible
differences become deductible. Based on these factors, we consider it is more likely than not it willrealize the benefits of these deducible differences as of March 31, 2022. However, the actual times andamounts of taxable income occurrence may differ from the estimates.
Employee Retirement Benefits
We have a significant amount of employee retirement benefit costs that we derive from actuarial
valuations based on a number of assumptions. Inherent in these valuations are a number of actuarial
assumptions used in estimating employee retirement benefit costs including mortality, withdrawal andretirement rates, changes in wages and the discount rate. We are required to make judgments regarding
the actuarial assumptions by taking into account various factors including personnel demographics,
market conditions and expected trends in interest rates. Although management believes that its actuarial
assumptions are reasonable in light of the various underlying factors, there can be no assurance that theactuarial assumptions will correspond to actual results. If our actuarial assumptions differ from actual
results, the consequent deviation of actual employee retirement benefit costs from estimated costs may
have an adverse effect on our financial condition and results of operations. A decrease in the discountrate may result in an increase in the amount of projected benefit obligations. In addition, we may changethese actuarial assumptions, such as the discount rate. Changes in actuarial assumptions may also have an
adverse effect on our financial condition and results of operations. Details of the evaluation of employee
retirement benefits are described in “Consolidated Financial Statements ― Notes to Consolidated
Financial Statements ― (3) Summary of Significant Accounting Policies ― (k) Retirement andSeverance Benefits.”(6) Forward-Looking Statements
Certain statements found in “1. Management Policy, Economic Environment and Challenges
Hitachi Group Faces,” “2. Risks Factors” and “3. Management's Discussion and Analysis ofConsolidated Financial Condition, Results of Operations and Cash Flows” and other descriptions in thisreport may constitute “forward-looking statements” as defined in the U.S. Private Securities Litigation
Reform Act of 1995. Such “forward-looking statements” reflect management’s current views withrespect to certain future events and financial performance and include any statement that does notdirectly relate to any historical or current fact. Words such as “anticipate,” “believe,” “expect,”“estimate,” “forecast,” “intend,” “plan,” “project” and similar expressions which indicate future eventsand trends may identify “forward-looking statements.” Such statements are based on currently available
information and are subject to various risks and uncertainties that could cause actual results to differ
materially from those projected or implied in the “forward-looking statements” and from historical
trends. Certain “forward-looking statements” are based upon current assumptions of future events which
may not prove to be accurate. Undue reliance should not be placed on “forward-looking statements,” assuch statements speak only as of the date of this report.
Factors that could cause actual results to differ materially from those projected or implied in any“forward-looking statement” and from historical trends include, but are not limited to:50• economic conditions, including consumer spending and plant and equipment investment in Hitachi’smajor markets, as well as levels of demand in the major industrial sectors Hitachi serves;• exchange rate fluctuations of the yen against other currencies in which Hitachi makes significant
sales or in which Hitachi’s assets and liabilities are denominated;• uncertainty as to Hitachi’s ability to access, or access on favorable terms, liquidity or long-term
financing;• uncertainty as to general market price levels for equity securities, declines in which may require
Hitachi to write down equity securities that it holds;• fluctuations in the price of raw materials including, without limitation, petroleum and other materials,
such as copper, steel, aluminum, synthetic resins, rare metals and rare-earth minerals, or shortages ofmaterials, parts and components;• credit conditions of Hitachi’s customers and suppliers;• general socioeconomic and political conditions and the regulatory and trade environment of countries
where Hitachi conducts business, particularly Japan, Asia, the United States and Europe, including,
without limitation, direct or indirect restrictions by other nations on imports and differences incommercial and business customs including, without limitation, contract terms and conditions andlabor relations;• uncertainty as to Hitachi’s ability to response to tightening of regulations to prevent climate change• uncertainty as to Hitachi’s ability to maintain the integrity of its information systems, as well as
Hitachi’s ability to protect its confidential information or that of its customers;• uncertainty as to Hitachi’s ability to attract and retain skilled personnel;• uncertainty as to Hitachi’s ability to continue to develop and market products that incorporate newtechnologies on a timely and cost-effective basis and to achieve market acceptance for such products;• exacerbation of social and economic impacts of the spread of COVID-19;• the possibility of disruption of Hitachi’s operations by natural disasters such as earthquakes andtsunamis, the spread of infectious diseases, and geopolitical and social instability such as terrorism
and conflict;• estimates, fluctuations in cost and cancellation of long-term projects for which Hitachi uses thepercentage-of-completion method to recognize revenue from sales;• increased commoditization of and intensifying price competition for products;• fluctuations in demand of products, etc. and industry capacity;• uncertainty as to Hitachi’s ability to implement measures to reduce the potential negative impact offluctuations in demand of products, etc., exchange rates and/or price of raw materials or shortages ofmaterials, parts and components;• uncertainty as to the success of cost structure overhaul;• uncertainty as to Hitachi’s ability to achieve the anticipated benefits of its strategy to strengthen its
Social Innovation Business;• uncertainty as to the success of acquisitions of other companies, joint ventures and strategic alliances
and the possibility of incurring related expenses;• uncertainty as to the success of restructuring efforts to improve management efficiency by divestingor otherwise exiting underperforming businesses and to strengthen competitiveness;• the potential for significant losses on Hitachi’s investments in equity-method associates and joint
ventures;• uncertainty as to the outcome of litigation, regulatory investigations and other legal proceedings ofwhich the Company, its subsidiaries or its equity-method associates and joint ventures have become
or may become parties;• the possibility of incurring expenses resulting from any defects in products or services of Hitachi;• uncertainty as to Hitachi’s access to, or ability to protect, certain intellectual property; and• uncertainty as to the accuracy of key assumptions Hitachi uses to evaluate its employee benefitrelated costs.

The factors listed above are not all-inclusive and are in addition to other factors contained elsewherein this report and in other materials published by Hitachi.

51

4. Material Agreements, etc.
Cross License Agreement
Party

Party

Country

Item undercontract

Contract
description

U.S.A.

Information
handling
systemsCrosslicense ofpatents

Hitachi, Ltd.
(The Company)

International
Business
Machines Corp.

Hitachi, Ltd.
(The Company)

HP Inc.
Hewlett Packard
U.S.A.
EnterpriseCompanyAllproducts
andservices

Crosslicense ofpatents

Hitachi, Ltd.
(The Company)

EMC
Corporation

U.S.A.

Information
handling
systemsCrosslicense ofpatents

U.S.A.

NuclearreactorsystemsCrosslicense ofpatents andtechnology

Hitachi-GE Nuclear GE-Hitachi
Energy, Ltd.
Nuclear Energy(Consolidated
Americas LLC
subsidiary)

52

Contract period
From January 1, 2008 to
the expiration of patents
applied on or before
January 1, 2023
From March 31, 2010 tothe expiration of patents
applied on or before
December 31, 2014
From January 1, 2003 to
the expiration of patents
applied on or before
December 31, 2007
From October 30, 1991
to June 30, 2023

5. Research and Development(1) Research goals and major issues
The Group (Hitachi Ltd. and its consolidated subsidiaries) prioritizes the Social Innovation Businesscentering on digitization (digital transformation, or, DX) and environmental protection (green transformation,or, GX) in the distribution of research and development resources, works to strengthen value creation throughDX and GX, strives to achieve business continuity, growth, to solve the issues of customers and society and toincrease the quality of life (QoL) of people.
In addition to increasing the global competitiveness of its business activities, the Group carries out
Collaborative Creation activities to solve issues faced by customers and society, invests in the creation of theworld’s best technologies and destructive technologies as medium- to long-term efforts for future growth, andexpands the infrastructure for digital technology and improves overseas research resources to expand andglobally develop the Lumada business, which constitutes a growth engine. The Group will accelerate theevolution of the Social Innovation Business with the research and development divisions of GlobalLogic Inc.,
Hitachi Energy Ltd., Hitachi Astemo, Ltd. and other affiliates.
(2) Research and development scheme
The Hitachi Group is striving to improve the efficiency of R&D through close coordination between the
R&D divisions of the Company and those of its group companies. It has been expanding collaboration with
universities and other research institutions both in Japan and abroad. In addition to partnering with domestic
and overseas universities and other research institutions, the Hitachi Group established the Corporate Venturing
Office in April 2019 and the second fund in October 2021 to actively strengthen its collaboration with startup
companies.
The Company seeks to accelerate growth globally through the expansion of its Social Innovation Business.
With this in mind, it has been facilitating research and development to quickly meet local needs by enhancing
and increasing the number of its R&D facilities and personnel in North America, Europe, China, Asia and India
while simultaneously expanding localization-oriented R&D. In 2015, the Company reorganized its R&D
facilities in Japan and overseas, establishing an R&D scheme in which the Global Center for Social Innovation
seeks to identify customer issues and create new solutions in collaboration with customers, the Center forTechnology Innovation works to create innovative products and services while also supporting thedevelopment of new solutions through the fusion and application of technology platforms in focused areas, andthe Center for Exploratory Research focuses on the cultivation of new areas through creative and vision-based
fundamental exploratory research leveraging open innovation. In 2019, the Company established its new
Kyōsō-no-Mori research initiative to accelerate innovation through open collaborative creation with customers
and partners, and opened the Lumada Data Science Lab in Kyōsō-no-Mori in April 2020, where top class data
scientists are encouraged to work together to achieve value creation through digital solutions.

Kyōsō-no-Mori (Central Research Laboratory)53

(3) R&D expenditures
The Hitachi Group’s R&D expenditures for the fiscal year ended March 31, 2022 were 317.3 billion yen,
3.1％ of revenues, that by segment is shown below.

Segment(Billions of yen)
Fiscal Year ended
Research and Development Expenses Trends
March 31, 2022

IT

51.5

Energy38.3

Industry

10.6

Mobility

30.6

Smart Life

50.5

Automotive Systems

75.8

Hitachi Construction Machinery

25.4

Hitachi Metals

12.4

Others1.8

Corporate Items

20.0

Total

317.3

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

(4) R&D achievements
Notable R&D achievements in the fiscal year ended March 31, 2022 are as follows.
(i) Launch of a data extraction solution focusing on dark data held by companies (IT segment)
The IT segment has developed and begun providing a data extraction solution service focusing on a verylarge amount of data called “dark data” that is created and has been accumulated during daily corporate
activities but not effectively used and developing new value from this dark data. This solution uses a dark
data analysis engine centered on AI developed in a Stanford University program in the US that privatesector companies including Hitachi participated in. This is the sophisticated automation of the extractionof the data that is necessary when using documents such as invoices and medical records, whose formats
and expressions vary depending on the issuer. The solution will contribute to the acceleration ofmanagement decision making and business reforms by using the valuable data extracted from the large
amount of dark data accumulated every day.
(ii) Launch of the operation of a demonstration facility for an energy management system using Hitachi’s
low-carbon-related technologies at Kyōsō-no-Mori (Energy segment)
The Energy segment built an energy management system demonstration facility gathering Hitachi’s
power generation, electricity storage, facility maintenance, and other technologies at the R&D center,
Kyōsō-no-Mori, and it has started to operate. An examination of the effects of this energy management
system in fiscal 2020 at the Kokubunji site showed the system achieved a 20% CO2 emissions reduction
and a 30% energy cost reduction compared with fiscal 2018. Hitachi will continue to use the facility to
pursue its customers achieving zero emissions, Collaborative Creation with customers in the environment
segment and the creation of new energy solutions.

54

(iii) Demonstrated assembly support using 5G SA and AR for the digital transformation of the
manufacturing and social infrastructure sectors (IT and Industry segments)
The IT and Industry segments have performed demonstration experiments to determine whether anassembly support application that uses the AR* technology in the 5G environment of the SA** system tocreate digital transformation use cases in the manufacturing and social infrastructure sectors. Thisapplication performs real-time analysis and decision-making from on-site image data using AI anddisplays recommended actions of workers on a workbench using project mapping to provide accurate
operation support. The demonstration (joint demonstration with NTT Docomo, Inc.) using the 5G service
provided by NTT Docomo resulted in the verification that the 5G settings met the allowable conditions forstable operation of the application, which had been unsuccessful using 4G LTE.
* AR: a technology that superimposes digital information into a real-world environment using a device
such as a projector** SA: a system that uses a 5G-dedicated base station and a 5G-dedicated core network(iv) The standard elevator received a Good Design Award, iF Design Award and 10 Best New ProductsAward (Mobility segment)
The new model of standard elevator Urban Ace HF, received a 2021 Good Design Award from theJapan Institute of Design Promotion, a 2022 iF Design Award from iF International Forum Design GmbH,and a 10 Best New Products Award: Japan Brand in The Nikkan Kogyo Shimbun's 64th (2021) 10 BestNew Products Awards. Elevators are equipped with the latest solutions to reduce the risk of infection,
including internal cleaning, overcrowding prevention, non-contact operation, and Lumada solutions suchas the dashboard for building owners and managers providing safe, secure and comfortable rides, which
will be the standard in the era of the new normal created by the COVID-19 pandemic, and a new elevator
use experience. (joint award with Hitachi Building Systems Co., Ltd.)Urban Ace HF

55

(v) Established the world’s first high-efficiency, high-quality manufacturing technology for actinium 225, amaterial required in alpha ray radionuclide therapy, which is radiotherapy given inside the body for cancer
treatment (Smart Life segment)
The Smart Life segment established the world’s first technology for manufacturing high-efficiency,
high-quality actinium 225 which is required for alpha ray radionuclide therapy, one type of radiation
therapy for cancer. The alpha ray radionuclide therapy is a new type of therapy in which a medicine madeby combining a substance that emits alpha rays that are destructive to cancer cells and a drug that
selectively accumulates in cancer cells is administered to attack cancer cells from inside the body. This
therapy is known to effectively treat cancer not easily treated using existing methods, including cancer
cells widely dispersed in the body, and expectations are rising for its fast development for practical use.
(joint development with Tohoku University and Kyoto University)(vi) Developed a compact, lightweight direct-drive system to make in-wheel electric vehicles a reality(Automotive System segment)
The Automotive System segment developed, a compact, lightweight direct-drive system, which allows
the mounting of a motor, inverter, and brake inside a wheel, as electric vehicles are increasingly being
driven for the creation of a carbon-neutral society. The new motor transmits the high drive force necessary
to operate an EV directly to the wheels, and its lightweight design significantly limits the weight increase
inside the wheels that has been conventionally a challenge for in-wheel units. Moreover, the integration of
the inverter and brake into a single unit with the compact motor enables installation inside the wheels
without a substantial change in the existing configuration of the suspension and other components. Hitachiand Hitachi Astemo will continue to research the practical implementation of the technology, whichenables a larger interior spaces and battery installation spaces for EVs. (joint development with Hitachi
Astemo, Ltd.)

Direct-drive system(section in red installed inside wheel)

Electric vehicle (mock-up)
with direct-drive system installed inside wheel(vii) Developed a technology for cyber-attacks, that enables the prompt sharing of information aboutcountermeasures with other organizations while maintaining confidentiality (IT segment and Corporate
Items)The IT segment developed a technology for cyber attacks, that enables the prompt sharing of
information about countermeasures with experts from other organizations while maintaining
confidentiality. With this technology, the organization that has been attacked prepares an incident ticket
stating the status of countermeasures and processes the information on the ticket based on the reliability ofthe security control of each organization participating in cooperative defense and the benefit that it isexpected the organization will gain by sending the ticket. The organization will be able to respondefficiently to the attack by sharing the ticket with other organizations that have a track record of
responding to cyber-attacks and obtaining useful feedback, thereby contributing to the creation of a safe
and secure digital society. (joint development with Keio University and Chubu Electric Power
Company,Incorporated)

56

III. Property, Plants and Equipment
1. Summary of Capital Investment, etc.
The Hitachi Group (the Company and consolidated subsidiaries) selectively invests in R&D andproduct fields expected to grow over the long term, and it also invests to streamline manufacturing process,etc. and to improve the reliability of its products and services.
Capital investment (based on the amount recorded as tangible fixed assets and the investment property)
in the fiscal year ended March 31, 2022 was 388.7 billion yen. A breakdown of capital investment bysegment is as follows. From the beginning of the fiscal year ending March 31, 2022, Automotive Systems
business consisting of Hitachi Astemo, Ltd. and its group companies’ figures of the preceding fiscal year,
which is compared with the figures of the beginning of the fiscal year ended March 31, 2022, is similarlychanged.

Segment

CapitalChange frominvestment
preceding fiscal(Billions of yen)year (%)

IT

64.4

82

Energy49.2

137

Industry

17.5

89

Mobility

28.7

140

Smart Life

33.4

67

Automotive Systems

86.2

131

Hitachi Construction
Machinery

43.3

125

Hitachi Metals

33.4

120

Others17.2

56

Main purpose of investment
Streamline development and production of
products
Facility of production for power grid products,
etc.,
Streamline development and production ofother products
Manufacturing facilities for industrial products
Increase production of railway systems,
Facility of production for building systems
Increase development and production ofsemiconductor processing and inspection
equipment, and measurement and analyticalsystems,
ERP (Enterprise Resource Planning),
Streamline development and production ofother products
Increase production of automotive equipment
Streamline production of construction
machineryStreamline production of specialty steel
products and functional components andequipment, Increase production of magnetic
materials, power electronics materials andapplications, wires, cables and related
products, etc.,
Renovation offices, R&D facilities

Corporate Items &15.1
Eliminations
Total
388.7
108
(Notes) 1. The figures in the above table include the amount of the right-of-use assets and the investment property
each of which is recorded as tangible fixed assets and other non-current assets, respectively.
2. These investments were mostly financed with the Hitachi Group’s own capital.

57

2. Major Property, Plants and Equipment
The Hitachi Group (the Company and consolidated subsidiaries) engages in diverse business operationsin Japan and overseas. It discloses information on major property, plants and equipment represented inbreakdown by segment and major facilities of the Company and consolidated subsidiaries.
The situation at the end of the fiscal year ended March 31, 2022 is as follows.
(1) Breakdown by Segment(As of March 31, 2022)
Book value (Millions of yen)Segment

Land
Tools,
Buildings Machinery[Area infurniture Right-of-use
andand
Assetsthousands
andstructures vehicles
2
fixturesof m ]

Other

Constructionin progress

Total

Number of
employees

8,341
[844]

67,61432,38243,06090,922

11,146

1,162

254,627

96,996

Energy28,946[10,609]

73,049102,436

15,80145,03986

38,341

303,698

44,291

Industry

12,826[2,063]31,217

15,8795,931

15,477-3,420

84,75023,221

Mobility

16,247[2,380]93,28929,813

20,581

14,536

1,136

8,632

184,234

53,604

Smart Life

14,660[2,345]60,47629,49628,20617,995-

12,454

163,287

18,402

Automotive Systems

51,747[10,071]

127,497

263,384

32,03525,285-75,409575,357

64,152

Hitachi Construction
Machinery

56,328[9,611]103,975

59,008

10,29758,740135,763

18,793442,904

24,263

Hitachi Metals

62,045[12,736]

87,791

144,113

12,79812,056-15,800334,60327,753

Others21,975[1,503]55,864

2,659

11,88637,485-

1,105

130,974

12,375273,115[52,162]

700,772

679,170

180,595

317,535

148,131

175,116

2,474,434

365,057(16,723)[1,040]22,295164

3,226(5,115)

343

277

4,467

3,190

256,392[53,202]723,067

679,334

183,821

312,420

148,474

175,3932,478,901

368,247

IT

Subtotal
Corporate Items &Eliminations
Total(Note) The “Book value - Other” column includes the amount of operating lease assets for leasing business.

58

(2) The Company(As of March 31, 2022)
Book value (Millions of yen)
Details ofLand
Tools,
major facilities [Area in Buildings Machinery furniture Right-ofandanduse
and equipment thousands
andstructures vehicles
Assets2
fixturesof m ]

Other

Constructionin progress

Total

Number of
employees

Financial
Institutions
Business Unit,
SocialInfrastructure
Systems Business IT
Unit and Systems& Services
Business Division(Kawasaki,
Kanagawa)

Systemdevelopment
facilities,
manufacturing
facilities forservers,
mainframes, etc.

607
[110]

37,911

114

16,16822,995

6,874

178

84,851

8,856

Head Office(Chiyoda-ku,
Tokyo)

Other facilities

5,230
[987]

10,243

147

1,773

22,821-

233

40,4491,049

R&D facilities

6,063
[776]

19,248

658

2,885

2,438

-

252

31,548

2,250

1,013
[666]

14,558

5,632

659

4,076

-

305

26,245

2,804

9,276
[3,057]

4,819

173

822

1,391

-

905

17,388

1,067

Medicalfacilities

63
[53]

11,284

13

1,282

46

-

43

12,734

1,857

Control System
Platform Business
IT
Division(Hitachi, Ibaraki)

Manufacturing
facilities forindustrial
machinery andplants,switchboards
and calculation
controlequipment,
systemdevelopment
facilities

521
[202]

6,275

523

2,047

2,074

1

361

11,805

6,400

IT Strategy &Digital Integration
OthersDivision(Chiyoda-ku,
Tokyo)

Systemdevelopment
facilities

[-]

1,492

-

6,390

7

-

14

7,905

508

Smart Life
Business
Smart LifeManagement
Division(Taito-ku, Tokyo)

Manufacturing
facilities for
medicalequipment

1,143
[12]

730

221

631

1,907

-

769

5,405

1,072

Industry &Distribution
Business Unit andWater &
Industry
Environment
Business Unit
(Chiyoda-ku,
Tokyo)

Manufacturing
facilities forindustrial
solution andwater solution
equipment

772

88

2,231

286

-

69

3,614

2,309

Facility(Main location)

Segment

Corporate

Research &Development
OthersGroup(Kokubunji,
Tokyo)
Railway Systems
Business Unit
Mobility(Kudamatsu,
Yamaguchi)
Nuclear Energy
Business Unit andEnergy Business Energy
Unit(Hitachi, Ibaraki)
Corporate
Hospital Group(Hitachi, Ibaraki)

Corporate

Manufacturing
facilities forrailway
vehicles, etc.
Manufacturing
facilities for
power
generating
equipment, etc.

165
[89]

59

(3) Domestic subsidiaries(As of March 31, 2022)
Book value (Millions of yen)
Details ofLand
Tools,
major facilities [Area in Buildings Machinery furniture Right-ofandanduse
and equipment thousands
andstructures vehicles
Assets2
fixturesof m ]

Other

Constructionin progress

Total

Number of
employees

Hitachi Astemo,
Automotive
Ltd. (Hitachinaka,
Systems
Ibaraki)

Manufacturing
facilities forautomotive
equipment

21,248[3,346]44,09374,054

9,255

-

8,364

9,422

166,440

16,469Hitachi Metals,Ltd., Yasugi
Hitachi Metals
Works(Yasugi, Shimane)

Manufacturing
facilities for
specialty steel
products

8,200[1,098]12,56531,948

1,836

18

-

1,886

56,453

1,618

Hitachi HighTech Corporation,
Smart Life
Naka Area(Hitachinaka,Ibaraki)

Manufacturing
facilities forsemiconductor
processing
equipment andtest andmeasurement
equipment, etc.

2,116
[241]

28,3408,907

13,689

823

-

536

54,411

3,101

Hitachi Metals
Neomaterial, Ltd. Hitachi Metals(Suita, Osaka)

Manufacturing
facilities for
specialty steel
products

11,160
[121]

3,505

14,297

1,118

247

-

152

30,479

1,038

Manufacturing
facilities forconstruction
machinery

5,629[4,963]

12,117

8,919

1,863

5,809

-

4,644

38,982

3,348

Manufacturing
facilities forconstruction
machinery

9,043
[259]

11,473

4,115

275

-

-

131

25,037526

Facility(Main location)

Segment

HitachiConstruction
Hitachi
Machinery Co.,
Construction
Ltd., Tsuchiura
Works
Machinery(Tsuchiura,
Ibaraki)
HitachiConstruction
Hitachi
Machinery Co.,
Ltd., Hitachinaka- Construction
Machinery
Rinko Works(Hitachinaka,Ibaraki)
Hitachi Metals,Ltd., Ibaraki
Works(Hitachi, Ibaraki)

Hitachi Metals

Manufacturing
facilities forwires andcables, etc.

4,679
[1,182]

6,767

2,501

364

767

-

26

15,104

1,209

HitachiConstruction
Machinery Co.,
Ltd., Hitachinaka
Works(Hitachinaka,Ibaraki)

HitachiConstruction
Machinery

Manufacturing
facilities forconstruction
machinery

1,980
[66]

5,132

5,448

489

1

-

320

13,370359

HitachiAstemo
Electric Motor
Systems, Ltd.
(Hitachinaka,Ibaraki)Automotive
Systems

Manufacturing
facilities forautomotive
equipment

[-]

852

9,144

305

3

-

2,628

12,932

318

Hitachi Global
Life Solutions,
Inc. Taga Works(Hitachi, Ibaraki)

Smart Life

Manufacturing
facilities forHomeappliances

289
[660]

3,430

4,523

4,070

3

-

168

12,486

1,110

60

(4) Overseas subsidiaries(As of March 31, 2022)
Book value (Millions of yen)
Subsidiary(Main location)

Segment

Details ofLand
Tools,
major facilities [Area in Buildings Machinery furniture Right-ofandanduse
and equipment thousands
andstructures vehicles
Assets2
fixturesof m ]

Other

Constructionin progress

Total

Number of
employees

Hitachi Energy
Ltd(Zurich,Switzerland)

EnergyManufacturing
facilities for
power gridproducts, etc.

15,092[2,334]59,67099,255

13,70941,567-37,327

266,620

37,520

Hitachi Vantara
LLC(California,
U.S.A.)IT

Other facilities[-]-

15,741

13,73823,769958-

54,206

11,353WaupacaFoundry, Inc.
(Wisconsin,
U.S.A.)

Hitachi Metals

Manufacturing
facilities forautomotive
components

810[5,085]

16,54530,456

2,309

1,303

-

3,588

55,011

3,943

Hitachi Astemo
Mexico,S.A. de C.V.
(Querétaro,
Mexico)Automotive
Systems

Manufacturing
facilities forautomotive
equipment

3,402
[426]

5,354

23,180

538

-

-

3,358

35,832

3,917

Hitachi Astemo
Netherlands B.V.
(Eindhoven,
Netherlands)

Automotive
Systems

Manufacturing
facilities forautomotive
equipment

[-]

7,425

15,440

1,309

1,409

-

5,517

31,1005,720(Note) The figures for Hitachi Energy Ltd, Hitachi Vantara LLC and Hitachi Astemo Netherlands B.V. are presented in consolidated
basis of each company.

61

3. Plans for Capital Investment, Disposals of Property, Plants and Equipment, etc.
The Hitachi Group (the Company and consolidated subsidiaries) engages in diverse operations in Japanand overseas, and has not decided on specific plans to newly install or expand each of facilities as of the endof the fiscal year. Therefore, it discloses amounts of capital investment by segment.
The amount of capital investment for the fiscal year ending March 31, 2023 will be 392.0 billion yen(new installation and expansions, based on the amount recorded as tangible fixed assets and the investment
property), and a breakdown by segment is as follows. From the beginning of the fiscal year ending March
31, 2023, report segments have been changed. Figures shown below are presented on the basis of the new
segmentation.
Segment

Amount(Billions of yen)

Main purpose of investment

Digital Systems & Services

65.0

Streamline development and production of products

Green Energy & Mobility

80.0

Facility of production for power grid products,
Facility of production for railway systems

Connective Industries

76.0

Manufacturing facilities for industrial products,
Increase development and production of semiconductor
processing and inspection equipment, and measurement
and analytical systems,
Facility of production for building systems,
Streamline development and production of other products

Automotive Systems

96.0

Increase production of automotive equipment

Hitachi Construction
Machinery

16.0

Streamline of production for construction machinery

Hitachi Metals

16.0

Increase and streamline production of specialty steel
products and functional components and equipment,
Increase production of magnetic materials and powerelectronics materials and applications, wires, cables andrelated products, etc.

Others27.0

Facility of system development

Corporate Items &Eliminations

16.0

-

Total

392.0

-

(Notes) 1. The figures in the above table include the amount of the right-of-use assets and the investment property,
each of which is recorded as property, plant and equipment and other non-current assets, respectively.
2. These planned investments are expected to be mostly financed with the Hitachi Group’s own capital.
3. There are no plans to dispose or sell principal facilities, with the exception of disposing and selling
facilities due to routine upgrading.

62

IV. Information on the Company
1. Information on the Company’s Stock, etc.
(1) Total number of shares, etc.
1) Total number of shares
Class

Total number of authorized shares (shares)

Common stock

2,000,000,000

Total

2,000,000,0002) Issued shares

Class

Commonstock
Total

Number of sharesissued as of the end of
fiscal year (shares)(March 31, 2022)

968,234,877

Number of sharesissued as of thefiling date (shares)(Note)(June 22, 2022)

968,571,877

Stock exchange on which
the Company is listed

Tokyo, Nagoya

Description

The number of shares per
one unit of shares is 100
shares.

968,234,877

968,571,877--(Note) The "Number of shares issued as of the filing date" does not include shares issued upon exercise of stock acquisition rights from
June 1, 2022 to the filing date.

63

(2) Information on the stock acquisition rights, etc.
1) Details of stock option plans
Name
Date of resolution
Category and numberof person to whom
stock acquisitionrights are granted
Number of stockacquisition rights
Class, detail andnumber of shares tobe issued upon
exercise of stockacquisition rights
Amount to be paid in
upon exercise ofstock acquisitionrightsExercise period ofstock acquisitionrightsIssue price for sharesissued upon exerciseof stock acquisitionrights and amount of
capitalization
Conditions for the
exercise of stockacquisition rights
Matters regarding
acquisition of stockacquisition rights
through transfer
Matters regarding
substitute payment
Matters regarding
grant of stockacquisition rights
upon organizational
restructuring

The First Stock
Acquisition Rights ofHitachi, Ltd.
(Note 1)
June 29, 2016

The Second Stock
Acquisition Rights ofHitachi, Ltd.
(Note 1)
April 6, 2017

The Third Stock
Acquisition Rights ofHitachi, Ltd.
(Note 1)
April 11, 2018

31 Executive Officers of
the Company
42 Corporate Officers of
the Company
8,009[6,570]33 Executive Officers of
the Company
37 Corporate Officers of
the Company
8,439[7,018]33 Executive Officers of
the Company
35 Corporate Officers of
the Company
8,502[7,279]Common stock
160,180 shares[131,400 shares](Note 2)

Common stock
168,780 shares[140,360 shares](Note 2)

Common stock
170,040 shares[145,580 shares](Note 2)

¥1 per share¥1 per share¥1 per share

From July 15, 2016
to July 14, 2046

From April 27, 2017
to April 26, 2047

From April 27, 2018
to April 26, 2048

Issue price: ¥1,345(Note 3)
Amount of capitalization:(Note 4)

Issue price: ¥1,843(Note 3)
Amount of capitalization:(Note 4)

Issue price: ¥2,431(Note 3)
Amount of capitalization:(Note 4)(Note 5, 6)(Note 5, 6)(Note 5, 6)

Acquisition of stockacquisition rights throughtransfer shall be subject tothe approval of the Boardof Directors.

Acquisition of stockacquisition rights throughtransfer shall be subject tothe approval of the Boardof Directors.

Acquisition of stockacquisition rights throughtransfer shall be subject tothe approval of the Boardof Directors.

－

－

－

(Note 7)(Note 7)(Note 7)(Notes) 1. The information is that as of the end of fiscal year (March 31, 2022). The number of stock acquisition rights and the numberof shares to be issued upon exercise of stock acquisition rights in brackets in the lower row is information as of the end of thelast month ended before the filing date (May 31, 2022). With regard to the other items, there is no change from theinformation as of the end of fiscal year.
2. If the Company implements a stock split (including gratis allotment of shares of common stock; the same shall apply toreferences to a stock split hereinafter) or a reverse stock split with respect to common stock of the Company after the date ofallotment of the stock acquisition rights, the Number of Shares to be Issued with respect to the stock acquisition rights not
exercised at that time will be adjusted in accordance with following formula:
Number of Shares to be Issued
Number of Shares to be
Ratio of stock split or=×after adjustment
Issued before adjustment
reverse stock split
In addition, if there is an unavoidable ground requiring an adjustment of the Number of Shares to be Issued, the Number of64

Shares to be Issued may be adjusted to the extent necessary by a resolution of the Board of Directors.
Any fractions of less than one share resulting from the adjustment will be rounded down.
3. Issue price for shares issued upon exercise of stock acquisition rights is the sum of the amount to be paid in upon exercise ofeach of the stock acquisition rights (¥1 per share) and the fair value of each of the stock acquisition right as calculated at thedate of allotment.
4. The amount of common stock to be increased upon issuing shares through the exercise of stock acquisition rights shall be
one half of the maximum amount of common stock, etc. to be increased calculated in accordance with Article 17, Paragraph
1 of the Ordinance on Company Accounting. Any fractions of less than one yen resulting from the calculation shall be
rounded up to the nearest yen.
5. 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 the Company.
6. 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 growth rate of TOPIX (Tokyo Stock Price Index) for thesame 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.
7. In the event that the Company engages in a merger (only if the Company is to be dissolved as a result of the merger), an
absorption-type company split or incorporation-type company split (in each case, only if the Company is to be a split
company), or share exchange or share transfer (in each case, only if the Company is to be a wholly-owned subsidiary)(hereafter all of which are collectively referred to as “Corporate Reorganization”), then stock acquisition rights for theentities specified under Article 236, Paragraph 1, Item 8 (a) through (e) of the Companies Act (such entity hereinafterreferred to as the “Reorganized Company”) shall be issued to the Stock Acquisition Right Holders holding stock acquisitionrights remaining in effect (the “Remaining Stock Acquisition Rights”) immediately prior to the effective date of the
Corporate Reorganization (hereinafter respectively referring to an effective date of absorption-type merger in case of anabsorption-type merger, a date of incorporation of a company incorporated through a consolidation-type merger in case of aconsolidation-type merger, an effective date of absorption-type company split in case of an absorption-type company split, adate of incorporation of a company incorporated through an incorporation-type company split in case of an incorporationtype company split, an effective date of a share exchange in case of a share exchange, or a date of incorporation of a wholly
owning parent company incorporated through share transfer). However, these stock acquisition rights shall be granted only ifprovisions for issuing the stock acquisition rights of the Reorganized Company in accordance with the following conditions
are included in an absorption-type merger agreement, a consolidation-type merger agreement, an absorption-type company
split agreement, an incorporation-type company split plan, a share exchange agreement, or a share transfer plan.
(1) The number of stock acquisition rights of the Reorganized Company to be issued
The number of stock acquisition rights equal to the number of Remaining Stock Acquisition Rights held byrespective Stock Acquisition Right Holders shall be issued.
(2) The class of shares of the Reorganized Company to be issued upon exercise of stock acquisition rights
Common shares of the Reorganized Company shall be issued.
(3) The number of shares of the Reorganized Company to be issued upon exercise of stock acquisition rights
The number shall be determined in accordance with terms and conditions of Remaining Stock Acquisition Rights,
taking into account the conditions and other factors concerning Corporate Reorganization.
(4) Amount of assets to be contributed upon the exercise of stock acquisition rights
The amount of assets contributed upon the exercise of stock acquisition rights to be issued shall be amount derived
by multiplying the amount to be paid in per share to be delivered upon exercise of stock acquisition rights of theReorganized Company (the “Post-reorganization Exercise Price”) prescribed below by the number of shares of theReorganized Company to be issued determined in accordance with paragraph (3) of this section. The PostReorganization exercise price shall be one yen.
(5) Exercise period of stock acquisition rights
The exercise period of stock acquisition rights shall be from the later of the first day of the exercise period of stockacquisition rights or the effective date of the Corporate Reorganization to the expiration date of the exercise period ofstock acquisition rights.
(6) Matters concerning common stock and capital reserve to be increased due to the issuance of shares upon the exercise ofstock acquisition rights
The matters shall be determined in accordance with terms and conditions of Remaining Stock Acquisition Rights.
(7) Restrictions on acquisition of stock acquisition rights through transfer
The acquisition of stock acquisition rights through transfer shall be subject to the approval of the ReorganizedCompany.
(8) Conditions for the exercise of stock acquisition rights
The matters shall be determined in accordance with terms and conditions of Remaining Stock Acquisition Rights.
(9) Matters concerning the acquisition of stock acquisition rights
The matters shall be determined in accordance with terms and conditions of Remaining Stock Acquisition Rights.

652) Details of shareholder right plans
Not applicable.
3) Details of other stock acquisition rights, etc.
Not applicable.
(3) Information on moving strike convertible bonds, etc.
Not applicable.
(4) Changes in the total number of issued shares and the amount of common stock and other
Change in
the total
number ofissued shares(shares)

Date

From April 1, 2017
to March 31, 2018
October 1, 2018

(Note 1)

From April 1, 2018
to March 31, 2019
May 31, 2019

(Note 2)

From April 1, 2019
to March 31, 2020
May 27, 2020

(Note 3)

From April 1, 2020
to March 31, 2021
June 15, 2021
From April 1, 2021
to March 31, 2022

(Note 4)

Balance of thetotal number ofissued shares(shares)

Change incommonstock(Millionsof yen)Balance ofcommonstock(Millionsof yen)Change incapitalreserve(Millionsof yen)Balance ofcapitalreserve(Millionsof yen)-4,833,463,387-

458,790-

176,757(3,866,770,710)

966,692,677-

458,790-

176,757-

966,692,677-

458,790-

176,757

587,800

967,280,477

1,072

459,862

1,072

177,828-

967,280,477-

459,862-

177,828

604,800

967,885,277

928

460,790928

178,756-

967,885,277-

460,790-

178,756

349,600

968,234,877

941

461,731941

179,697-

968,234,877-

461,731-

179,697(Notes) 1. The Company completed the share consolidation of every five shares into one share for its common stock.
2. This increase is due to the issuance of new shares as restricted stock compensation.
Issue price: 3,647 yen per share
Amount by which stated capital is to be increased: 1,823.5 yen per share
Allottees: 37 Executive officers of the Company and 34 Corporate officers of the Company
3. This increase is due to the issuance of new shares as restricted stock compensation.
Issue price: 3,067 yen per share
Amount by which stated capital is to be increased: 1,533.5 yen per share
Allottees: 31 Executive officers of the Company and 33 Corporate officers of the Company
4. This increase is due to the issuance of new shares as restricted stock compensation.
Issue price: 5,384 yen per share
Amount by which stated capital is to be increased: 2,692 yen per share
Allottees: 31 Executive officers of the Company and 35 Corporate officers of the Company
5. The Company issued its new shares on June 15, 2022. The total number of issued shares, common stock and capitalreserve increased 337,000 shares, 1,086 million yens and 1,086 million yens respectively.

66

(5) Shareholders composition(As of March 31, 2022)
Status of shares (one unit of stock: 100 shares)
Class ofGovernment
shareholders
andmunicipality

Financial
institution

Foreign corporations,
Financial
etc.
Other
Individuals
instruments
and others
business institution
NonIndividuals
operator
individuals

Total

Number ofsharesless than one
unit (shares)

Number ofshareholders
Shareownership

2

205

76

2,426

1,112

157

234,989

238,967-92

3,407,137

246,473

129,714

4,291,973

1,413

1,582,410

9,659,212

2,313,677

0.00

35.27

2.55

1.34

44.43

0.01

16.38

100.00-(units)Ownership
percentageof shares(%)(Notes) 1. Of 998,721 shares of treasury stock, 9,987 units are included in the “Individuals and others” column,
while 21 shares are included in the “Number of shares less than one unit” column.
2. Of the shares registered in the name of Japan Securities Depository Center, Incorporated (account for
managing stocks whose shareholders have not transferred titles), 53 units are included in the “Other
institution” column and 65 shares are included in the “Number of shares less than one unit” column.

67

(6) Major shareholders(As of March 31, 2022)

Share
Ownership(shares)

Ownership
percentage to thetotal number ofissued shares(excluding treasury
stock) (%)

Name

Address

The Master Trust Bank of Japan, Ltd.
(Trust Account)11-3, Hamamatsucho 2-chome, Minato-ku,
Tokyo

181,747,800

18.79

8-12, Harumi 1-chome, Chuo-ku, Tokyo

63,047,700

6.52

Custody Bank of Japan, Ltd.
(Trust Account)
State Street Bank and Trust Company

P.O. Box 351, Boston, Massachusetts 02101

505223(Standing proxy: Mizuho Bank, Ltd.)U.S.A.
(15-1, Konan 2-chome, Minato-ku, Tokyo)

22,788,025

2.36

Nippon Life Insurance Company

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

20,000,099

2.07

Hitachi Employees’ Shareholding
Association

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

19,551,338

2.02

SSBTC CLIENT OMNIBUS
ACCOUNT(Standing proxy: The Hongkong andShanghai Banking Corporation
Limited)One Lincoln Street, Boston MA USA 02111(11-1, Nihombashi 3-chome, Chuo-ku, Tokyo)

18,282,639

1.89

JP Morgan Chase Bank 385632(Standing proxy: Mizuho Bank, Ltd.)

25 Bank Street, Canary Wharf,
London, E14 5JP, United Kingdom(15-1, Konan 2-chome, Minato-ku, Tokyo)

17,799,073

1.84

State Street Bank West Client -1776 Heritage Drive, North Quincy, MA

Treaty 505234(Standing Proxy: Mizuho Bank, Ltd.)

02171, U.S.A.
(15-1, Konan 2-chome, Minato-ku, Tokyo)

16,509,187

1.71

15,671,900

1.62

NATS CUMCO(Standing proxy: Mizuho Bank, Ltd.)C/O Citibank, New York 111
Wall Street, New York, NY, U.S.A.
(15-1, Konan 2-chome, Minato-ku, Tokyo)

State Street Bank and Trust Company
505001(Standing proxy: Mizuho Bank, Ltd.)

P.O. Box 351, Boston, Massachusetts 02101
U.S.A.
(15-1, Konan 2-chome, Minato-ku, Tokyo)

14,656,120

1.52

Total

-

390,053,881

40.33(Notes) 1. NATS CUMCO is the nominee name of the depositary bank, Citibank, N.A., for the aggregate of theCompany’s American Depositary Receipts (ADRs) holders.
2. Some reports on substantial shareholdings regarding the Company under the Financial Instruments andExchange Act are available for public inspection. However, the information in the reports is not describedin the above table since the Company does not confirm the actual status of shareholdings as of March 31,
2022. The major contents of the reports are as follows. On October 1, 2018, the Company completed theshare consolidation of every five shares into one share for its common stock. The reports whose date on
which the duty to file report is prior to the effective date of the share consolidation show the number ofshares before the share consolidation.

68Holders
Date on which the duty to file report
Number of shares
Ownership percentage to the total
number of issued shares
Holders
Date on which the duty to file report
Number of shares
Ownership percentage to the total
number of issued sharesBlackRock Japan Co. Ltd and seven other persons
April 14, 2017
304,755,969 shares
6.31%

Sumitomo Mitsui Trust Asset Management Co., Ltd. andone other person
March 15, 2022
58,850,673 shares
6.08％

69

(7) Information on voting rights
1) Issued shares(As of March 31, 2022)
Classification

Number of voting
rightsNumber of shares (shares)

Description

Shares without voting right

－

－

－

Shares with restricted voting right (treasury
stock, etc.)

－

－

－

Shares with restricted voting right (others)

－

－

－

－

－

Shares with full voting right (treasury stock, etc.)

Common stock

1,031,900

Shares with full voting right (others)

Common stock

964,889,300

Shares less than one unit

Common stock

2,313,677－－

968,234,877－－

Number of issued shares
Total number of voting rights

9,648,893

9,648,893－－－(Note) The “Shares with full voting right (others)” column includes 5,300 shares registered in the name of Japan
Securities Depository Center, Incorporated (account for managing stocks whose shareholders have nottransferred titles) and 53 voting rights for those shares.
2) Treasury stock, etc.
(As of March 31, 2022)

Name ofshareholder

Hitachi, Ltd.

Address

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

Aoyama Special SteelCo., Ltd.

9-11, Shinkawa 2-chome, Chuoku, Tokyo

SAITA KOUGYOU

5-3, Takinogawa 5-chome, Kita-

CO., LTD.

ku, Tokyo

Nitto Jidosha
Kiki K.K.

3268, Nagaoka, Ibarakimachi,
Higashiibaraki-gun, Ibaraki

Mizuho Co., Inc.
Total

Number ofshares held
under own name(shares)

4-1, Koishikawa 5-chome,
Bunkyo-ku, Tokyo
－

70

Number ofshares held
under thenames ofothers(shares)

Total shares
held (shares)

Ownership
percentage tothe total
number ofissued shares(%)

998,700－

998,700

0.10

2,100

－

2,100

0.00

17,600－17,6000.00

10,500－10,500

0.00

3,000

－

3,000

0.00

1,031,900－

1,031,900

0.11

2. Information on Acquisition, etc. of Treasury StockClass of shares
Acquisition of common stock under Article 155, Item 3, 7 and 13 of the Companies Act(1) Acquisition of treasury stock resolved at the general meeting of shareholders
Not applicable.
(2) Acquisition of treasury stock resolved at the Board of Directors meetings
Acquisition of common stock under Article 155, Item 3Classification
Number of shares (shares)
Total amount (yen)Resolution details on Board of
Directors（April 28,2022）(Note 1)
50,000,000(maximum)
200,000,000,000(maximum)(Acquisition period From May 2, 2022
to March 31, 2023）
Treasury stock acquired before the fiscal－－
year
Treasury stock acquired during the－－
fiscal year
Total number and total value of
50,000,000
200,000,000,000
remaining shares to be acquired by the
resolution
Unexercised rate as of the end of the
100.0
100.0
fiscal year (%)
Treasury stock acquired during the2,267,700
14,563,892,048
current period (Note 2)
Unexercised rate as of the filing date (%)
95.5
92.7
(Notes) 1. The Board of Directors has resolved that the method of acquisition would be market purchase on theTokyo Stock Exchange.
2. The number of treasury stock acquired due to requests to purchase stock less than one unit shares from
June 1, 2022 to the filing date is not included.
(3) Details of acquisition of treasury stock not based on the resolutions of the general meeting ofshareholders or the Board of Directors meetings
Acquisition of common stock under Article 155, Item 7 (Note 1)
Classification

Number of shares (shares)

Total amount (yen)Treasury stock acquired during the40,813
252,049,491
fiscal year ended March 31, 2022
Treasury stock acquired during the
2,851
17,475,844
current period (Note2)(Notes) 1. Acquisition of stock less than one unit shares due to purchase requests from shareholders under Article
192, Paragraph 1 of the Companies Act.
2. The number of treasury stock acquired due to requests to purchase stock less than one unit shares from
June 1, 2022 to the filing date is not included.

71Acquisition of common stock under Article 155, Item 13 (Note)
Classification

Number of shares (shares)

Total amount (yen)Treasury stock acquired during the137,600
fiscal year ended March 31, 2022
Treasury stock acquired during the69,200current period(Note) Acquisition without consideration of a part of common stock allotted to the Company’s Executive Officers
and Corporate Officers as restricted stock compensation (Article 27, Paragraph 1 of the Order for
Enforcement of the Companies Act).

(4) Status of the disposition and holding of acquired treasury stock
Fiscal year ended March 31, 2022
Classification
Acquired treasury stock which wasoffered to subscribers
Acquired treasury stock which wascanceled
Acquired treasury stock which wastransferred due to merger, shareexchange, share delivery or company
split

Current period (Note)

Number of shares Total disposition Number of shares Total disposition(shares)amount (yen)(shares)amount (yen)
-

-

-

-

-

-

-

-

-

-

-

-

Others (Acquired treasury stock
which was transferred upon exerciseof stock acquisition rights, and which
was sold due to requests fromshareholders holding stock less than
one unit shares to sell additional
shares)235,491

742,679,435

82,005

246,493,097

Total number of treasury stock held

998,721-

3,256,467-(Note) The followings are not included: the number of treasury stock which was transferred upon exercise of stockacquisition rights from June 1, 2022 to the filing date; the number of treasury stock which was sold due torequests from shareholders holding less than one unit shares to sell additional shares from June 1, 2022 to
the filing date; the number of treasury stock acquired due to resolution at the Board of Directors meetingsfrom June 1, 2022 to the filing date; and the number of treasury stock acquired due to purchase requests fromshareholders holding stock less than one unit shares from June 1, 2022 to the filing date.

72

3. Dividend Policy
The Company views the return of profits to shareholders through enhancing corporate value from midto long-term perspective and paying dividends and repurchase of its shares as an important managerial
issue.
The policy of the Company regarding dividends is to aim for stable payment of dividends while also
securing funds necessary for investment, and the dividends are determined by comprehensively taking into
account factors such as financial performance trends, the financial situation, and the dividend payout ratio.
The Company flexibly conducts repurchase of its shares depending on factors such as capital needs
and 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 securecompetitiveness and aim for growth of the business as global enterprise.
Based on the above policy, annual dividends of 125.0 yen per share were paid for the fiscal year ended
March 31, 2022. It was resolved to pay interim dividends of 60.0 yen per share at the Board of Directors
meeting held on October 27, 2021, resulting in the total amount of interim dividends of 58,035 million yen.
In addition, it was resolved to pay year-end dividends of 65.0 yen per share at the Board of Directors
meeting held on May 13, 2022, resulting in the total amount of year-end dividends of 62,870 million yen.

73

4. Corporate Governance, etc.
(1) Corporate governance1) Basic policy about corporate governance
The Company considers growth of profits for shareholders and investors from long-term
perspective as one of its important managerial objectives. As there are wide range of stakeholders for
the Company and Hitachi group from shareholders and investors to customers and clients, the Company
realizes that building good relationships with such stakeholders forms an important part of its corporate
value.
The Company is a company with Nominating Committee, etc. under the Companies Act, aiming
to establish a framework for quick business operation and to realize highly transparent management byseparating responsibilities for management oversight and those for execution of business operations.
The Company attempts to have appropriate composition of the Board of Directors aiming to ensure theeffectiveness of management oversight function in addition to reflect global and various perspective tothe management. The Company set the Corporate Governance Guidelines as basic framework of its
corporate governance including functions of the Board of Directors.
In addition, the Company set Hitachi Group Codes of Conduct as behavior disciplines to beshared among Hitachi group to generate common values for the Hitachi group and promote
understanding of social responsibilities to be fulfilled by the Company.
2) Outline of corporate organizations
Board of Directors
The Board of Directors approves basic management policy for the Hitachi Group and supervises
the execution of the duties of executive officers and directors in order to sustainably enhance corporate
value and the shareholders’ common interests. The basic management policy includes medium-term
management plan and annual budget compilation. The Board of Directors focuses on strategic issues
related to the basic management policy as well as other items to be resolved that are provided in laws,
regulations, the Articles of Incorporation and Board of Directors Regulations. As of June 22, 2022, theBoard of Directors was made up of 12 Directors, and 9 of whom are Independent Directors* and two
concurrently serve as Executive Officers.
* The "Independent Directors" in this report are the directors who fulfill the qualification requirements
to be outside directors as provided by the Companies Act of Japan and also meet the independence
criteria defined by the Company and those as provided by Japanese stock exchanges where theCompany is listed, unless otherwise stated.
Within the Board of Directors, there are three statutory committees of the Nominating
Committee, the Audit Committee and the Compensation Committee with Independent Directors
accounting for the majority of members of each committee. The Board of Directors meetings were held
9 days during the fiscal year ended March 31, 2022, and the attendance rate of Directors at thosemeetings was 100%. The Nominating Committee meetings were held 10 days, the Audit Committee
meetings were held 15 days, and the Compensation Committee meetings were held 5 days during the
fiscal year ended March 31, 2022.
The Nominating Committee has the authority to determine particular proposals submitted to thegeneral meeting of shareholders for the election and dismissal of Directors, and consists of four
Directors, three of whom are Independent Directors.
The Audit Committee has the authority to audit the execution of duties of Directors andExecutive Officers and to determine on proposals submitted to the general meeting of shareholders forthe election and dismissal of accounting auditors, and consists of five Directors, including four
Independent Directors and one standing Audit Committee member.
The Compensation Committee has the authority to determine remuneration policies for Directors
and Executive Officers and remuneration for individuals based on them. The Compensation Committee
consists of four Directors, three of whom are Independent Directors.
The members of the board of directors and each committee are described in "(2) Directors andSenior Management - 1) Lists of directors and senior management - (a) Directors."
With regard to the number of Directors and their election, the Company stipulates in its Articles
of Incorporation that the Company shall have no more than 20 Directors. With regard to the adoption of74

resolution for the election of Directors, the Company stipulates in its Articles of Incorporation that thepresence of shareholders representing one-third or more of the voting, that resolutions for the electionof Directors shall be approved by attending shareholders possessing one-third or more of all voting
rights of the shareholders who are entitled to exercise their votes, and that the resolution shall not bemade by cumulative voting.
The Company maintains a limited liability agreement stipulated in Article 427, Paragraph 1 of theCompanies Act with each director (excluding Director who concurrently serves as an Executive
Officer) The general intent of the agreement is to limit the liability of Directors to the aggregate amountstipulated in each item under Article 425, Paragraph 1 of the Companies Act.
Executive Officers
Executive Officers decide on matters delegated to them by the Board of Directors and execute theCompany’s business affairs within the scope of assignments determined by the Board of Directors. As
of June 22, 2022, the Company has 34 Executive Officers (See "(2) Directors and Senior Management 1) Lists of directors and senior management - (b) Executive Officers.")
The Company stipulates in its Articles of Incorporation that the Company shall have no morethan 40 Executive Officers.
Senior Executive Committee
The Senior Executive Committee is a council to ensure that President deliberately decides onimportant managerial matters, which may affect the Company or the Hitachi Group business, throughdiscussing from diverse viewpoints. It consists of 8 regular attendees as of June 22, 2022; President &CEO (Keiji Kojima), three Executive Vice President and Executive Officers (Masakazu Aoki,
Yoshihiko Kawamura and Toshiaki Tokunaga), three Senior Vice President and Executive Officers(Hidenobu Nakahata, Masahiko Masahiko and Mamoru Morita) and one Vice President and Executive
Officer (Kohei Kodama), and other attendees designated by the President.
Summary of the directors' and officers' liability insurance agreement
The Company maintains a directors' and officers' liability insurance agreement stipulated in
Article 430-3, Paragraph 1 of the Companies Act. The coverage of insured persons and outline of theinsurance agreement are as follows.
i) Coverage of insured persons
The Company's Directors, Executive Officers and employees who work as officers at thecompany to which they are assigned and some domestic subsidiaries' directors, executive officers,
corporate auditors and employees (including employees who work as officers at the company to which
they are assigned).
ii) Outline of the insurance agreement
The agreement compensates damages, litigation costs, etc. incurred by an insured person as aresult of a claim for damages due to an act or omission of the insured person as an executive of acompany. However, the Company has taken measures to ensure that the appropriateness of theexecution of duties by officers is not impaired by excluding compensation for intentional negligence of
duties, illegal acquisition of private benefits, and damages resulting from criminal acts. The entire
insurance costs are beard by the Company or its subsidiaries holding the insurance agreement.
3) Matters determined by resolution of the Board of Directors without resolution at the general meeting ofshareholders pursuant to the provisions of the Articles of Incorporation
The Company stipulates in the Articles of Incorporation that it may, unless otherwise provided in
the applicable laws, determine on matters specified in each item of Article 459, Paragraph 1 of theCompanies Act by the resolution of the Board of Directors, without resolution at the general meeting ofshareholders.
For the repurchase of the company’s own shares (Article 459, Paragraph 1, Item 1 of theCompanies Act), the Board of Directors shall determine on the matter in order to enable timely
implementation of capital strategies.
Regarding reduction of capital reserve or earned surplus reserve (Article 459, Paragraph 1, Item 2of the Companies Act), appropriation of surplus (excluding dividends of surplus and disposal of the75

property of the Company) (Article 459, Paragraph 1, Item 3 of the Companies Act) and dividends ofsurplus (Article 459, Paragraph 1, Item 4 of the Companies Act), since the Company was a company
with committees as of the date of enforcement of the Companies Act, it was deemed that its Articles ofIncorporation had stipulations that the Board of Directors was able to decide the above matters without
resolution at the general meeting of shareholders and that it should not stipulate that such matters shallbe resolved at the resolution of the general meeting of shareholders, in accordance with Article 57 of
the Act on Arrangement of Relevant Acts Incidental to Enforcement of the Companies Act (July 26,
2005, Act No. 87). Even after the enforcement of the Companies Act, the Company has made it a rule
to timely decide on these important business judgments by the Board of Directors to enhance theshareholders’ common interests.
The Company has stipulated in its Articles of Incorporation that it may, by resolution of theBoard of Directors, exempt any Director (including former Director) and Executive Officer (including
former Executive Officer) from liabilities as provided Article 423, Paragraph 1 of the Companies Act tothe extent as provided in laws or regulations.
4) Requirement for special resolution of the general meeting of shareholders
To enable to securely meet the quorum of the general meeting of shareholders under Article 309,
Paragraph 2 of the Companies Act, the Company stipulates in its Articles of Incorporation that any
resolution as provided in Article 309, Paragraph 2 of the Companies Act shall be adopted at a general
meeting of shareholders where shareholders representing one-third or more of the voting rights of all
the shareholders shall be present, by a majority of two-thirds or more of the voting rights of theshareholders who are present in such meeting and are entitled to vote.
5) Internal control system and risk management system
Outlines of the internal control system and the risk management system of the Company are as
follows. In addition, these systems were resolved by the Board of Directors as the basic policy forinternal control system under the Companies Act.
i) The following measures shall be taken to ensure the effectiveness of audits by the Audit Committee.
(a) 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 establishedspecifically to assist with the duties of each Committee and the Board of Directors.
(b) In order to ensure the independence of the Office personnel from Executive Officers and theeffect 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 in advance of planned transfers of the Office personnel.
(c) 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 the implementation status of reporting under the internal reporting system. It shall be
provided for in the company regulation that reporters using the internal reporting system, whichis common for the Group, shall not receive disadvantageous treatment for reason of having madea report, and the secretariat of the system shall thoroughly administer this provision.
(d) The Office shall be in charge of payment for the expenses incurred in connection with theexecution of the duties of the Audit Committee members and other administrative duties, andshall promptly process the payment for the expense or debt except in the case where the expense
or debt of the claim is clearly found to be unnecessary to the execution of the duties of them.
(e) 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.
ii) The following measures shall be effective to ensure the adequacy of business operations within the
Company and the Hitachi Group.
(a) Such fundamental policies as the emphasis of the social responsibilities of businessenterprises shall be shared with the subsidiaries of the Company.
(b) Each subsidiary of the Company shall develop systems to ensure the appropriateness of76

operations corresponding to its size and other characteristics, basic framework of which issimilar to ones employed in the Company. In order to ensure development of such systems ineach subsidiary, directors and auditors shall be sent from the Company to its subsidiary, andregular audits shall be conducted for the subsidiary.
(c) 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 ofIncorporation.
(d) Information pertaining to the execution of duties by Executive Officers of the Company shall be
prepared and maintained in accordance with internal rules.
(e) 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 measureswith respect to various risks. Efforts shall be made to identify possible new risks through suchthings 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.
(f) Efficient performance of duties of the Executive Officers of the Company, and Directors andExecutive Officers of the subsidiaries shall be ensured through the following business
management systems.
- The Senior Executive Committee shall be established in order to deliberate on and facilitate
the formulation of decisions based on due consideration of diverse factors regarding important
issues that affect the Company and/or the Hitachi Group.
- Based on the management policy, medium-term business plans and annual budgets, on which
performance management is based, shall be prepared in order to operate business in a plannedand 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, andthe prior approval 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 the Company and its subsidiaries, and internal and external auditors shall examine
said processes in order to ensure 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.
(g) Continuous maintenance of a legal and regulatory compliance structure shall be ensured throughthe following business management systems.
- Internal audits shall be conducted, and various committees shall be established for legal andregulatory compliance activities. Furthermore, an internal reporting system common for theGroup 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 thatthe employees are aware of the internal control systems overall and that the systems are
effective.
(h) A system shall be established, in which the subsidiaries report on important issues and theprogress in measures for operations to the Company through the Company’s Senior Executive
Committee, medium-term business plans and the budget system.
(i) The policy on transactions within the Hitachi Group is to trade fairly based on market prices.
6) Fundamental Policy on the Conduct of Persons Influencing Decision on the Company’s Financial andBusiness Policies
We invest 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 fromthese management policies requires that they be continued for a set period of time. For this purpose, theCompany keeps its shareholders and investors well informed of not just the business results for eachperiod but also of the Company’s business policies for creating value in the future.
77

The Company does not deny the significance of the vitalization of business activities andperformance that can be brought about through a change in management control, but it recognizes thenecessity of determining the impact 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 ora Group company by duly examining the business description, 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-takeovermeasures in advance of the appearance of such a party, but the Company does understand that it is one of
the natural duties bestowed upon it by the shareholders and investors to continuously monitor the state of
trading of the Company’s stock and then to immediately take what the Company deems to be the best
action in the event of the appearance of a party attempting to purchase a large share of the Company’s
stock. In particular, together with outside experts, the Company will evaluate the buyout proposal of theparty and hold negotiations with the buyer, and if the Company deems that said buyout will not maintainthe 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 sharesof a Group company.

78

(2) Directors and Senior Management
1) Lists of directors and senior management
Men: 41 persons, Women: 3 persons(Women’s percentage to total number of Directors and Senior Management: 7%)
The Company is a company with Nominating Committee, etc. pursuant to the Companies Act. The
information on its Directors and Executive Officers is as follows.
(a) Directors

Katsumi Ihara

Cynthia Carroll

Ikuro Sugawara

Joe Harlan

Louise Pentland

Takatoshi Yamamoto Hiroaki Yoshihara

Helmuth Ludwig

Keiji Kojima

Hideaki Seki

Toshiaki Higashihara

Position andResponsibility

Director
Member of
Nominating
Committee(Chair), Audit
Committee andCompensation
Committee

Director

Ravi Venkatesan

Name

Katsumi Ihara

Ravi Venkatesan

Date ofbirth

Business experience, including experiencein Hitachi, and functions

Term ofofficeShareownership(shares)

Sept. 24,1950

6/2005 Executive Deputy President,
Representative Corporate Executive
Officer, Member of the Board, Sony
Corporation
4/2009 Executive Deputy President, Corporate
Executive, Sony Corporation
6/2009 Executive Vice President, Representative
Director, Sony Financial Holdings Inc.
6/2010 President, Representative Director, SonyFinancial Holdings Inc.
6/2011 President, Representative Director, Sony
Life Insurance Co., Ltd.
4/2015 Chairman, Director, Sony Life InsuranceCo., Ltd. (Retired in June 2017)
6/2016 Chairman, Director, Sony Financial
Holdings Inc. (Retired in June 2017)
6/2018 Director, Hitachi, Ltd.

(Note 1)1,100

(Note 1)

400

Jan. 12,1963

7/1999 Chairman of the Board of Directors,
Cummins India Ltd. (Retired in March
2004)
1/2004 Chairman, Microsoft India Pvt. Ltd.
(Retired in September 2011)
4/2011 Independent Director, Infosys Ltd. (Retired
in May 2018, served as Co-Chairman from
April 2017 to August 2017)
4/2013 Venture Partner, Unitus Ventures LLC.
(Currently in office)8/2015 Chairman (Non-Executive), Bank of
Baroda (Retired in August 2018)
9/2018 Special Representative for Young People &Innovation, UNICEF (Currently in office)7/2020 Director, Hitachi, Ltd.

79

Position andResponsibility

Director
Member of
Nominating
Committee

Name

Date ofbirth

Cynthia Carroll

Nov. 13,1956

DirecorMember of Audit Ikuro Suagawara
CommiteeMar. 6,1957

Director
Member ofCompensation
Committee

May 5,
1959

Joe Harlan

Business experience, including experiencein Hitachi, and functions
10/1991 General Manager, Foil Products, Alcan
Inc.
1/1996 Managing Director, Aughinish Alumina
Ltd., Alcan Inc.
10/1998 President, Bauxite, Alumina and Specialty
Chemicals, Alcan Inc.
1/2002 President & CEO, Primary Metal Group,
Alcan Inc.
3/2007 CEO, Anglo American plc. (Retired in
April 2013)
6/2013 Director, Hitachi, Ltd.
7/2010 Director-General of the Industrial Scienceand Technology Policy andEnvironment
Bureau, Ministry of Economy, Trade andIndustry of Japan (“METI”)
9/2012 Director-General of the Manufacturing
Industries Bureau, METI
6/2013 Director-General of the Economic andIndustrial Policy Bureau, METI
7/2015 Vice-Minister of Economy, Trade andIndustry of Japan
8/2017 Special Advisor to the Cabinet of Japan(Retired in June 2018)6/2022 Director, Hitachi, Ltd.
9/1999 Vice President and Chief Financial
Officer, Lighting Business, General
Electric Company
9/2001 Vice President, Corporate Financial
Planning and Analysis, 3M Company
11/2002 President and Chief Executive Officer,
Sumitomo 3M Ltd.
10/2004 Executive Vice President, Electro andCommunications Business, 3M Company
10/2009 Executive Vice President, Consumer andOffice Business, 3M Company
9/2011 Executive Vice President, Performance
Materials, The Dow Chemical Company
9/2012 Executive Vice President, Chemicals,
Energy and Performance Materials, The
Dow Chemical Company
10/2014 Chief Commercial Officer and Vice
Chairman, Market Business, The Dow
Chemical Company
10/2015 Vice Chairman and Chief Commercial
Officer, The Dow Chemical Company(Retired in August 2017)
6/2018 Director, Hitachi, Ltd.

80

Term ofofficeShareownership(shares)(Note 1)

1,500

(Note 1)0(Note 1)

1,100

Position andResponsibility

NameDate ofbirth

Director

Louise Pentland

Apr. 11,1972

Director
Member ofCompensation
Committee(Chair)Takatoshi
Yamamoto

Oct. 20,1952

Director
Member of
HiroakiNominating
Yoshihara
Committee andAudit Committee(Chair)Feb. 9,1957

Business experience, including experiencein Hitachi, and functions
8/1997 Admitted as a Solicitor (UK)
7/2001 Senior Legal Counsel, Nokia Networks,
Nokia Corporation
9/2007 Vice President, Acting Chief Legal Officer
and Head of IP Legal, Nokia Corporation
7/2008 Senior Vice President and Chief Legal
Officer, Nokia Corporation
6/2009 Admitted to New York State Bar
Association
2/2011 Executive Vice President and Chief Legal
Officer, Nokia Corporation (Retired in
May 2014)
4/2015 General Counsel, PayPal, eBay Inc.
6/2015 Director, Hitachi, Ltd.
7/2015 Senior Vice President and Chief Legal
Officer, PayPal Holdings, Inc.
9/2016 Executive Vice President and Chief
Business Affairs & Legal Officer, PayPal
Holdings, Inc.
1/2022 Executive Vice President and Senior
Advisor, PayPal Holdings, Inc. (USA)(currently in office)12/1995 Managing Director, Morgan Stanley Japan
Limited6/1999 Managing Director and Vice Chairman,
Tokyo Branch, Morgan Stanley Japan
Limited7/2005 Managing Director and Vice Chairman,
UBS Securities Japan Co., Ltd.
6/2009 Managing Director, CASIO COMPUTER
CO., LTD.
6/2011 Advisor, CASIO COMPUTER CO., LTD.
(Retired in June 2012)
6/2016 Director, Hitachi, Ltd.
11/1978 Joined Peat Marwick Mitchell & Co.
7/1996 National Managing Partner, the Pacific
Rim Practice, KPMG LLP
10/1997 The Board Member, KPMG LLP
10/2003 Vice Chairman and Global Managing
Partner, KPMG International (Retired in
April 2007)
6/2014 Director, Hitachi, Ltd.

81

Term ofofficeShareownership(shares)(Note 1)1,100

(Note 1)

12,800(Note 1)3,000

Position andResponsibility

NameDate ofbirth

Director
Member of
Audit Committee

Helmuth Ludwig

Sept. 19,1962

Director
Member ofCompensation
Committee

Keiji Kojima

Oct. 9,1956

Director
Member of Audit
Hideaki Seki
Committee(Standing)Mar. 10,1957

Business experience, including experiencein Hitachi, and functions
6/2001 President, Software and System House
Division, Siemens AG
8/2002 President, Systems Engineering Division,
Automation and Drives Group, Siemens
AG
8/2007 President, Siemens PLM Software, Inc.
10/2010 Global Head of Communications, Industry
Automation, Siemens Corp.
10/2011 President and CEO, Industry Sector, North
America, Siemens Industry, Inc.
10/2014 Executive Vice President and Chief Digital
Officer, Digital Factory Division, Product
Lifecycle Management, Siemens Corp.
10/2016 Chief Information Officer, Siemens AG(Retired in December 2019)
1/2020 Professor of Practice in Strategy and
Entrepreneurship, Cox School of Business,
Southern Methodist University (Currently
in office)7/2020 Director, Hitachi, Ltd.
4/1982 Joined Hitachi, Ltd.
4/2011 General Manager, Hitachi ResearchLaboratory
4/2012 Vice President and Executive Officer
4/2016 Senior Vice President and Executive
Officer
4/2018 Executive Vice President and Executive
Officer
6/2021 President & COO and Director
4/2022 President & COO and Director
4/1979 Joined Hitachi, Ltd.
4/2011 Board Director, Hitachi Automotive
Systems, Ltd.
4/2013 Vice President, Board Director, Hitachi
Automotive Systems, Ltd.
4/2014 Executive Vice President, Board Director,
Hitachi Automotive Systems, Ltd.
4/2015 President & COO, Representative Director,
Hitachi Automotive Systems, Ltd.
4/2016 President & CEO, Representative Director,
Hitachi Automotive Systems, Ltd.
4/2018 Senior Vice President and Executive
Officer, Hitachi, Ltd.
President, Representative Director, Hitachi
Building Systems Co., Ltd. (Retired in
March 2020)
4/2020 Associate, Hitachi, Ltd.
7/2020 Director, Hitachi, Ltd.

82

Term ofofficeShareownership(shares)(Note 1)1,300

(Note 1)

100,800(Note 1)

12,000Position andResponsibility

Director
Member of
Nominating
Committee(Notes)Name

ToshiakiHigashihara

Date ofbirthFeb. 16,
1955

Business experience, including experiencein Hitachi, and functions
4/1977 Joined Hitachi, Ltd.
4/2006 Chief Operating Officer, Information &Telecommunication Systems
4/2007 Vice President and Executive Officer(Retired in March 2008)
4/2008 President, Hitachi Power Europe GmbH
4/2010 President and Chief Executive Officer,
Hitachi Plant Technologies, Ltd.
6/2010 President and Representative Director,
Hitachi Plant Technologies, Ltd.
4/2011 Vice President and Executive Officer,
Hitachi, Ltd.
4/2013 Senior Vice President and Executive
Officer, Hitachi, Ltd.
4/2014 President & COO, Hitachi, Ltd.
6/2014 President & COO and Director, Hitachi,
Ltd.
4/2016 President & CEO and Director, Hitachi,Ltd.
5/2021 Executive Chairman, President & CEO and
Director, Hitachi, Ltd.
6/2021 Executive Chairman & CEO and Director,
Hitachi, Ltd.
4/2022 Executive Chairman, Representative
Executive Officer and Director, Hitachi,
Ltd.
Total

Term ofofficeShareownership(shares)(Note 1)

198,800

333,900

1. The term of office of the Directors starts upon the election at the Annual General Meeting of
Shareholders on June 22, 2022 and expires at the close of the Annual General Meeting of Shareholders
for the fiscal year ending March 31, 2023.
2. Messrs. Katsumi Ihara, Ravi Venkatesan, Ikuro Sugawara, Joe Harlan, Takatoshi Yamamoto, Hiroaki
Yoshihara and Helmuth Ludwig and Mses. Cynthia Carroll and Louise Pentland are directors who
fulfill the qualification requirements to be outside directors as provided for in Article 2, Item 15 of theCompanies Act.

83

(b) Executive Officers
Position and Responsibility
Representative Executive
Officer, Executive
Chairman
GeneralRepresentative Executive
Officer, President & CEO
Overall management,
railway systems business,
nuclear energy business,
energy business, power
grids business andinnovation strategies
Representative Executive
Officer, Executive Vice
President and Executive
Officer
Assistant to the President(business for industrial
digital, water &environment business,
industrial products
business, industrial
equipment systems
business, building systems
business, smart life &
ecofriendly systems
business, measurement andanalytical systems businessand healthcare business)

Name

Date ofbirth

ToshiakiHigashihara

Feb. 16,1955

Keiji Kojima

Oct. 9,1956

Masakazu Aoki

Jun. 23,
1954

Representative Executive
Officer, Executive Vice
President and Executive
Officer
Assistant to the President(financial strategies,
Yoshihikocorporate pension system,
Kawamura
investment strategies,
investor relations strategies,
cost structure reform, risk
management, corporate
auditing and corporate
export regulation)

Aug. 20,1956

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

Mar. 15,1967

ToshiakiTokunaga

Term ofofficeShareownership(shares)

See “(a) Directors”(Note 2)

198,800

See “(a) Directors”(Note 2)

100,800(Note 2)76,000(Note 2)

56,900(Note 2)55,700Business experience, including
experience in Hitachi, and functions

4/1977 Joined Hitachi, Ltd.
4/2012 President and Director, Hitachi
Industrial Equipment Systems
Co., Ltd.
10/2014 Vice President and Executive
Officer, Hitachi, Ltd.
4/2016 Senior Vice President andExecutive Officer, Hitachi, Ltd.
4/2017 Executive Vice President andExecutive Officer, Hitachi, Ltd.

4/1979 Joined Mitsubishi Corporation
4/2010 Senior Vice President, Division
COO, IT Service Division,
Mitsubishi Corporation
4/2015 Joined Hitachi, Ltd.
Executive Strategist, Information& Telecommunication Systems
Group
4/2016 Deputy General Manager of IoTBusiness Promotion Division andGeneral Manager of Incubation
Division, Hitachi, Ltd.
4/2017 Vice President and Executive
Officer, Hitachi, Ltd.
4/2018 Senior Vice President andExecutive Officer, Hitachi, Ltd.
4/2022 Executive Vice President andExecutive Officer, Hitachi, Ltd.
4/1990 Joined Hitachi, Ltd.
4/2017 President, Hitachi Appliances,Inc.
4/2018 General Manager, Smart Life &Ecofriendly Systems Division,
Hitachi, Ltd.
4/2019 Vice President and Executive
Officer, Hitachi, Ltd.
4/2020 Senior Vice President andExecutive Officer, Hitachi, Ltd.
4/2021 Executive Vice President andExecutive Officer, Hitachi, Ltd.

84

Position and Responsibility

NameDate ofbirth

Senior Vice President andExecutive Officer
Services & platforms
business

Jun AbeJun. 14,1961

Senior Vice President andExecutive Officer
Business for government,
public corporation andsocial infrastructure
systems, and defense
systems business

Katsuya Nagano

Aug. 30,
1958

Representative Executive
Officer, Senior Vice
President and Executive
Officer
Human capital strategies,
diversity & inclusion
strategies, corporate
communications strategies
and safety and healthmanagement

Hidenobu
Nakahata

Jan. 24,
1961

Representative Executive
Officer, Senior Vice
President and Executive
OfficerMarketing & sales andregional strategies

Masahiko
Hasegawa

Sept. 17,1964

Senior Vice President andExecutive Officer
Power grids business

Claudio Facchin

Jun. 26,
1965

Senior Vice President andExecutive Officer
Management strategies

Mamoru Morita

Apr. 12,1959

Vice President andExecutive Officer
Railway systems business

Noriharu Amiya

Feb. 1,
1969

Business experience, including
experience in Hitachi, and functions
4/1984 Joined Hitachi, Ltd.
4/2016 Senior General Manager,
Control System Platform
Division, Services & Platforms
Business Unit
4/2018 Vice President and Executive
Officer
4/2021 Senior Vice President andExecutive Officer
4/1983 Joined Hitachi, Ltd.
4/2016 General Manager of Social
Infrastructure Information
Systems Division, Information &Communication Technology
Business Division
4/2017 Vice President and Executive
Officer
4/2021 Senior Vice President andExecutive Officer
4/1983 Joined Hitachi, Ltd.
10/2013 Deputy General Manager,
Human Capital Group
4/2014 Vice President and Executive
Officer
4/2018 Senior Vice President andExecutive Officer

4/1987 Joined Hitachi, Ltd.
4/2018 General Manager of Kansai Area
Operation
4/2020 Vice President and Executive
Officer
4/2022 Senior Vice President andExecutive Officer
1/2016 President, Power Grids business,
ABB Ltd.
7/2020 CEO, Hitachi ABB Power Grids
Ltd (Currently Hitachi EnergyLtd) (Currently in office)4/2021 Senior Vice President andExecutive Officer, Hitachi, Ltd.
4/1983 Joined Hitachi, Ltd.
4/2015 General Manager of Strategy
Planning Division
4/2016 Vice President and Executive
Officer
4/2020 Senior Vice President andExecutive Officer
4/1992 Joined Hitachi, Ltd.
4/2018 COO and CDO (Chief
Digitalization Officer) of
Railway Systems Business Unit
10/2019 General Manager ofManagement Planning Office,Strategy Planning Division
Vice President and Executive
Officer
4/2022 Vice President and Executive
Officer

85

Term ofofficeShareownership(shares)(Note 2)

41,600(Note 2)38,400(Note 2)55,800(Note 2)28,600(Note 2)4,000

(Note 2)50,300(Note 2)

13,200Position and Responsibility

NameDate ofbirth

Vice President andExecutive Officer
Takashi Iizumi
Healthcare business andmeasurement and analyticalsystems business

Oct. 14,
1960

Vice President andExecutive Officer
Government & external
relations

Hitoshi Ito

Feb. 19,
1959

Vice President andExecutive Officer
Business for financial
institutions

Tatsuro Ueda

Oct. 9,1964

Vice President andExecutive Officer
Energy business

Kenji Urase

Jun. 18,
1961

Vice President andExecutive Officer
Finance strategies andcorporate pension system

Tomomi Kato

Oct. 13,
1963

Vice President andExecutive Officer
Nuclear energy business

Tadashi Kume

Jan. 4,
1963

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

Kohei Kodama

May 24,1961

Vice President andExecutive Officer
Marketing & sales
strategies (business forconnective industries)

Takashi Saito

Jan. 6,
1964

Business experience, including
experience in Hitachi, and functions
4/1985 Joined Hitachi, Ltd.
4/2021 President of Hitachi High-Tech
Corporation (Currently in office)4/2022 Vice President and Executive
Officer of Hitachi, Ltd.
4/1982 Joined Ministry of International
Trade and Industry
8/2011 Councillor, Cabinet Secretariat
1/2013 Director-General,
Reconstruction Agency
7/2014 Commissioner, Japan Patent
Office10/2016 Advisor, Tokio Marine &Nichido Fire Insurance Co., Ltd.
1/2018 Joined Hitachi, Ltd.
4/2018 Vice President and Executive
Officer
4/1987 Joined Hitachi, Ltd.
4/2019 COO, Financial Institutions
Business Unit
4/2021 Vice President and Executive
Officer
4/1986 Joined Hitachi, Ltd.
3/2015 President and Representative
Director, Hitachi Power
Solutions Co., Ltd.
4/2017 Vice President and Executive
Officer, Hitachi, Ltd.
4/1986 Joined Hitachi, Ltd.
4/2018 General Manager of Financial
Strategy Division, FinanceGroup, and General Manager ofAsset Management Office,Investment Strategy Division
4/2022 Vice President and Executive
Officer
4/1986 Joined Hitachi, Ltd.
4/2019 COO, Nuclear Energy Business
Unit
4/2020 Vice President and Executive
Officer
4/1987 Joined Hitachi, Ltd.
4/2017 Chief Business Risk
management Officer, Systems &Services Business Division
4/2018 Vice President and Executive
Officer
4/1987 Joined Hitachi, Ltd.
4/2020 General Manager of Kansai Area
Operation
4/2022 Vice President and Executive
Officer

86

Term ofofficeShareownership(shares)(Note 2)4,600

(Note 2)28,800(Note 2)

17,800(Note 2)

31,900(Note 2)

15,600(Note 2)

24,400(Note 2)

27,100(Note 2)

5,600

Position and Responsibility

NameDate ofbirth

Vice President andExecutive Officer
Research & development

Norihiro Suzuki

Dec. 5,
1961

Vice President andExecutive Officer
Human capital strategies

Kenichi Tanaka

Jul. 9,1961

Vice President andExecutive Officer
Digital strategies andservices & platforms
business

Jun Taniguchi

Dec 3,
1972

Vice President andExecutive Officer
Sustainability strategies,
environmental strategies
and diversity & inclusion
strategies

LorenaDellagiovanna

Apr. 15,
1969

Vice President andKojin Nakakita
Executive Officer
Regional strategies (APAC)

Sept. 28,
1963

Vice President andExecutive Officer
Water & environment
business

Hideshi Nakatsu

May. 10,1967

Vice President andExecutive Officer
Information technology
strategies

Seiichiro Nukui

Jan. 3,
1965

Business experience, including
experience in Hitachi, and functions
4/1986 Joined Hitachi, Ltd.
10/2014 General manager of Central
Research Laboratory
4/2015 General Manager of Global Center
for Social Innovation, Research &Development Group, and General
Manager of Central ResearchLaboratory Group
4/2016 Vice President and Executive
Officer
4/1985 Joined Hitachi, Ltd.
4/2018 General Manager of Secretarial
Office4/2022 Vice President and Executive
Officer
4/1995 Joined Hitachi, Ltd.
4/2018 General Manager of Information
Control Systems Division 3,
Control System Platform Division,
Services & Platforms Business Unit
4/2019 President of Hitachi Global Life
Solutions, Ltd.
4/2022 Vice President and Executive
Officer of Hitachi, Ltd.
10/1988 Joined Hitachi Europe GmbH
4/2020 Chief Diversity & Inclusion
Officer, Hitachi, Ltd.
(Currently in office)4/2021 Vice President and Executive
Officer, Hitachi, Ltd.
10/1988 Joined Hitachi, Ltd.
4/2017 Chairman of Hitachi Asia Ltd.
(Currently in office)6/2017 Chairman of Hitachi India Pvt. Ltd.
(Currently in office)4/2019 Vice President and Executive
Officer, Hitachi, Ltd.
10/1997 Joined Hitachi Metals, Ltd.
4/2016 President and Representative
Director, Hitachi Plant Services
Co., Ltd. (Retired in March 2020)
4/2019 CEO, Water & Environment
Business Unit, Hitachi, Ltd.
4/2021 Vice President and Executive
Officer, Hitachi, Ltd.
4/1988 Joined Accenture, Ltd. (Japan)
2/2010 Vice President of Company
Executive, and General Mangerof Communication, Electric,
Media and High-tech Industry,Power & Industrial Equipment
Division, Accenture Ltd. (Japan)
4/2015 Joined Hitachi, Ltd.
Executive IT Strategist, Hitachi,
Ltd.
4/2017 Urban Mobility Project Leader,
Future Investment Division,
Hitachi, Ltd.
4/2019 Vice President and Executive
Officer, Hitachi, Ltd.

87

Term ofofficeShareownership(shares)(Note 2)28,800(Note 2)

17,100(Note 2)5,000

(Note 2)2,600

(Note 2)

28,700(Note 2)

17,800(Note 2)

28,400Position and Responsibility

Vice President andExecutive Officer
Railway systems business

Vice President andExecutive Officer
Marketing & sales
strategies (business for
digital system & service)
Vice President andExecutive Officer
Supply chain management(manufacturing strategies
and quality assurance) andsafety and healthmanagement

Name

Date ofbirth

Andrew Barr

Jan. 9,1973

Tatsuro Hoshino

Feb. 5,1962

Kentaro Masai

May 22,
1959

Vice President andExecutive Officer
Urban business strategies
and building systems
business

Shinya Mitsudomi

Jul. 5,
1958

Vice President andExecutive Officer
Cost structure reform andinformation security
management

Masashi
Murayama

Dec. 23,
1961

Vice President andExecutive Officer
Business for industrial
digitalKazunobu Morita

May. 12,1966

Vice President andExecutive Officer
Regional strategies (China)

Takashi Yoda

Aug. 22,
1966

Business experience, including
experience in Hitachi, and functions
1/2002 Engineering Manager, Rolling
Stock, UK Government Strategic
Rail Authority
1/2005 Head of Maintenance Delivery[Rail Business], Hitachi EuropeLtd.
1/2014 COO, Hitachi Rail Europe Ltd.
5/2016 CEO, Ansaldo STS S.p.A.
(Currently Hitachi Rail STS
S.p.A.)
4/2019 Vice President and Executive
Officer, Hitachi, Ltd.
4/1984 Joined Hitachi, Ltd.
4/2018 President and Chief Executive
Officer, Hitachi Solutions, Ltd.
4/2021 Vice President and Executive
Officer, Hitachi, Ltd.
4/1982 Joined Hitachi, Ltd.
4/2014 President & CEO of Rail
Systems Company,
Infrastructure Systems Group
4/2016 Vice President and Executive
Officer
4/1982 Joined Hitachi, Ltd.
4/2017 Group Head of Sales andManaging Director, Japan / Asia
Pacific, Railway Systems
Business Unit
4/2018 Vice President and Executive
Officer
4/1985 Joined Hitachi, Ltd.
4/2016 CPO and General Manager,
Value Chain Integration Division
4/2019 Vice President and Executive
Officer
4/1991 Joined Mitsubishi PetrochemicalCo., Ltd.
3/2004 Joined Hitachi, Ltd.
4/2019 CSO, Industry Business
Division, Hitachi, Ltd.
4/2021 Vice President and Executive
Officer, Hitachi, Ltd.
4/1990 Joined Hitachi, Ltd.
4/2018 General Manager of Energy
Business Co-Creation &Promotion Division, Power andEnergy Business Administration
Division
4/2019 Vice President and Executive
Officer

Total

Term ofofficeShareownership(shares)(Note 2)9,100

(Note 2)

21,440(Note 2)31,300(Note 2)

29,100(Note 2)30,400(Note 2)

17,800(Note 2)28,6001,172,040(Notes) 1. The “Position and Responsibility” column describes positions and matters delegated to each of the
Executive Officers by the Board of Directors.
2. The term of office of the Executive Officers expires on March 31, 2023.

882) Independent Directors(a) Qualification for the Independent Directors and criteria for the independency
For electing an Independent Director, the Nominating Committee of the Company considers, inaddition to the following criteria for the independency, whether the Independent Director has thehighest personal and professional ethics, integrity and insight, and distinguished records of leadershipor experience at policy making levels in business, law, administration, accounting or education, etc.
For the independency of an Independent Director, the Company considers the Independent director
to be independent unless:- 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;- he or she is currently an executive director, an executive officer or an employee of a company
that has made payments to, or received payments from, the Company for property or services inan amount which, in any of the last three fiscal years, exceeds 2% of any of the companies’
consolidated gross revenues;- he or she has received during any of the last three fiscal years more than 10 million yen in directcompensation for his or her service as a specialist in law, accounting or tax, or as a consultant
from the Company, other than director compensations; or- he or she serves as an executive officer or director of a not-for-profit organization, and theCompany’s discretionary charitable contributions to the organization in any of the last threefiscal years are more than 10 million yen and 2% of that organization’s annual gross revenues.
* An “immediate family member” includes a person’s spouse, parents, children, siblings, grandparents, grand-children, mothers and fathers-in-law, sons and daughters-in-law, spouses ofsiblings, grand-children-in-law, and brothers and sisters-in-law.
(b) Function of the Independent Directors
Following the policy stated in “(a) Qualification for Independent Directors and criteria for the
independency,” the Company has elected nine persons; Messrs. Katsumi Ihara, Ravi Venkatesan, Ikuro
Sugawara, Joe Harlan, Takatoshi Yamamoto, Hiroaki Yoshihara and Helmuth Ludwig and Mses.
Cynthia Carroll and Louise Pentland, as outside Directors under Article 2, Item 15 of the Companies
Act. The functions and roles expected to them are as follows:
Name

Katsumi Ihara

Ravi Venkatesan

Function and Role
Mr. Ihara has rich experience and insight in the area of global corporate
management gained through the involvement in management at major
companies conducting diversified businesses globally. He is expected
to leverage such experience and insight to reinforce the supervisory anddecision making functional aspects of the Company’s Board of
Directors by offering opinions and proposals regarding the generalmanagement of the Company and supervising the execution of duties
by Executive Officers and others from an independent perspective.
Mr. Venkatesan has rich experience and insight in the area of global
corporate management, digital business and emerging markets. He is
expected to leverage such experience and insight to reinforce thesupervisory and decision making functional aspects of the Company’s
Board of Directors by offering opinions and proposals regarding thegeneral management of the Company from a global viewpoint andsupervising the execution of duties by Executive Officers and othersfrom an independent perspective.

89

Name

Cynthia Carroll

Ikuro Sugawara

Joe Harlan

Louise Pentland

Takatoshi Yamamoto

Hiroaki Yoshihara

Function and Role
Ms. Carroll has rich experience and insight as the top executive ofmajor global companies in the mining industry. She is expected toleverage such experience and insight to reinforce the supervisory anddecision making functional aspects of the Company’s Board of
Directors by offering opinions and proposals regarding the generalmanagement of the Company from a global viewpoint and supervising
the execution of duties by Executive Officers and others from an
independent perspective.
Mr. Sugawara has rich experience and insight in the area of public
administration, etc. gained through leading positions at government
agencies. He is expected to leverage such experience and insight toreinforce the supervisory and decision making functional aspects of theCompany’s Board of Directors by offering opinions and proposals
regarding the general management of the Company and supervising
the execution of duties by Executive Officers and others from an
independent perspective.
Mr. Harlan has rich experience and insight in the area of global
corporate management gained through the involvement in management
at major companies conducting diversified businesses globally. He is
expected to leverage such experience and insight to reinforce thesupervisory and decision making functional aspects of the Company’s
Board of Directors by offering opinions and proposals regarding thegeneral management of the Company from a global viewpoint andsupervising the execution of duties by Executive Officers and othersfrom an independent perspective.
Ms. Pentland has deep insight into corporate legal matters andcorporate governance gained through her rich experience as the chief
legal officer of major global companies. She is expected to leveragesuch experience and insight to reinforce the supervisory and decision
making functional aspects of the Company’s Board of Directors byoffering opinions and proposals regarding the general management of
the Company from a global viewpoint and supervising the execution ofduties by Executive Officers and others from an independent
perspective as well as reflecting her global viewpoint.
Mr. Yamamoto has broad range of insight in business and management
gained through his experience in the area of corporate analysis andglobal corporate management. He is expected to leverage such
experience and insight to reinforce the supervisory and decision
making functional aspects of the Company’s Board of Directors byoffering opinions and proposals regarding the general management of
the Company and supervising the execution of duties by Executive
Officers and others from an independent perspective.
Mr. Yoshihara has rich experience and insight in the area of global
corporate management and accounting. He is expected to leverage such
experience and insight to reinforce the supervisory and decision
making functional aspects of the Company’s Board of Directors byoffering opinions and proposals regarding the general management of
the Company from a global viewpoint and supervising the execution ofduties by Executive Officers and others from an independent
perspective.

90

Name

Helmuth Ludwig

Function and Role
Mr. Ludwig has rich experience and insight in the area of global
corporate management and digital business. He is expected to leveragesuch experience and insight to reinforce the supervisory and decision
making functional aspects of the Company’s Board of Directors byoffering opinions and proposals regarding the general management of
the Company from a global viewpoint and supervising the execution ofduties by Executive Officers and others from an independent
perspective.

(c) Relationship between Independent Directors and the Company
Each of Independent Directors has no relationship with the Company regarding his or her
independency as described in “(a) Qualification for the Independent Directors and criteria for the
independency.” In addition, there is no particular conflict of interest between each of Independent
Directors and the Company.
The Company considers that all Independent Directors are independent, and therefore has notified
them as independent directors to each of the Company’s listing stock exchanges in Japan.
In addition, the number of shares of the Company owned by each Independent Director isdescribed in “1) Lists of directors and senior management.”(d) Supervising by the Independent Directors
Independent Directors, comprising of majority of Directors, supervise execution of duties of
Executive Officers from an independent perspective. As described in the item “(3) Audit,” the Audit
Committee, of which majority members are Independent Directors, receives reports and explanations
about results of internal audits, accounting audit and internal control audit, and verifies the mattersreported or explained. In addition, the Audit Committee reports the results of its verification to theBoard of Directors.

91

(3) Audit
1) Audit by the Audit Committee
The Audit Committee consists of five Directors, including four Independent Directors and one
standing Audit Committee member.
Mr. Hiroaki Yoshihara, the Chair of the Audit Committee, has considerable knowledge of financeand accounting based on his long experience at KPMG Group with businesses related to accounting, etc.
The Audit Committee conducts audits for whether corporate administration by Directors andExecutive Officers are properly carried out under appropriate internal control systems.
The Audit Committee develops the audit policy and the audit plan, and periodically receives reports
or conducts hearing for execution of duties from Directors and Executive Officers. In addition, themembers of the Audit Committee, who are in charge of internal inspection, examine business units of theCompany and receive reports from subsidiaries in order to check whether business transaction andproperty management are properly carried out, and then report the results to the Audit Committee.
Furthermore, such members of the Audit Committee attend the important meetings including the budget
meeting, the Senior Executive Committee and the Disclosure Committee, inspect audit reports frominternal audit division, and provide internal audit division with instructions about divisions to be subject toauditing and items to be focused, if necessary.
The Audit Committee receives reports and explanations about the audit plan and results of the audit
from the accounting auditor, and based on the reports, verifies results of financial audits and internal
control audits. In addition, the Audit Committee receives reports and explanations of quality control
systems of the accounting auditor. Furthermore, the Company makes it a rule to obtain the prior approvalof the Audit Committee for remuneration to the accounting auditor.
The attendance record of each member of the Audit Committee during the fiscal year ended March
31, 2022 is as follows.

Katsumi Ihara

Attendance / Number of days held the
Audit Committee (Note 1)
15 days / 15 days

Name

Attendance rate (Note 1)
100%

Harufumi Mochizuki

15 days / 15 days

100%

Takatoshi Yamamoto

15 days / 15 days

100%

Hiroaki Yoshihara

15 days / 15 days

100%

Helmuth Ludwig (Note 2)

9 days / 9 days

100%

Hideaki Seki
15 days / 15 days
100%
(Notes) 1. They are based on the days held the Audit Committee during each member's term of office.
2. Mr. Ludwig was appointed on July 23, 2021.

During the fiscal year ended March 31, 2022, the Audit Committee engaged in a variety of activities
as a whole Hitachi Group and by each business segment to study priority matters such as strengthening ofcollaboration and the facilitation of information sharing under a “tripartite audit” (audit by the Audit
Committee, internal audit and audit by accounting auditors), and auditing of the establishment andoperation of internal control systems from the perspective of risk management and validity of execution ofduties. In addition, a standing committee member worked to obtain information as needed in a timely andaccurate manner, mainly by collaborating with the Internal Auditing Office, among other departments, andattending important internal meetings such as the Senior Executive Committee, and facilitated information
sharing with other committee members.
2) Internal audit
The Internal Auditing Office is in charge of internal audit within Hitachi Group and audits business
units, corporate divisions of headquarters and subsidiaries and affiliates. The number of staff of theInternal Auditing Office is 43 as of March 31, 2022.
The Internal Auditing Office monitors and assesses whether overall business operations, including
marketing, personnel management, labor management, compliance, procurement transactions, production,
environment, disaster prevention, export regulations, information system, accounting and financing
activities, and property management of Hitachi Group are properly carried out pursuant to audit standards
established by the Company, and points out items required to be improved based on the results of auditing
and follows up their improvements. The Internal Auditing Office reports in advance its internal audit plan
to the Audit Committee, and reports results of auditing to the President and the Audit Committee.
92

Furthermore, relating to the internal control over financial reporting, the internal control division in theInternal Audit Office promotes to establish and maintain the internal control systems pursuant to theCompany’s guideline, assesses its effectiveness, and reports the results to the President and the Audit
Committee.
3) Accounting audit(a) Name of accounting auditor
Ernst & Young ShinNihon LLC(b) Consecutive term of service of the certified public accountants
The Fukase accounting firm of certified public accountants carried out an accounting audit of theCompany in 1970 and, subsequently, accounting audits were conducted by Musashi Audit
Corporation, which was established by Fukase certified public accountant etc., from 1971, Century
Audit Corporation, into which Musashi Audit Corporation was merged, from 1986 and Ota Showa
Century Audit Corporation, into which Century Audit Corporation was merged, from 2000, andcurrently Ernst & Young ShinNihon LLC, which was renamed from Ota Showa Century Audit
Corporation, conducts the accounting audits of the Company. Since 2003 when Ernst & Young(“EY”) has become the network firm partnering with the accounting auditor, Hitachi Group
companies, including overseas companies, have selected EY as the accounting auditor uniformly on a
global basis and the Company has been striving to ensure that the accounting auditor performs its
duties properly from an independent standpoint, maintaining a proper degree of tension with theCompany through mutual assessment between the Company’s finance division and internal audit
division and the accounting auditor and the Audit Committee’s strong cooperation with the accounting
auditor and examination of selection of an accounting auditor and reappointment of the accounting
auditor.
At Ernst & Young ShinNihon LLC, certified public accountants are rotated and no certified
public accountants are involved in accounting audits of the same company for more than sevenconsecutive fiscal years. No lead certified public accountants are involved in accounting audits of thesame company for more than five consecutive fiscal years. If a certified public accountant is involvedin accounting audits of the same company for seven consecutive years, he or she will be involved inaccounting audits of that company only after an interval of five fiscal years. No lead certified public
accountants who are involved in accounting audits of the same company for five consecutive fiscal
years will be involved in accounting audits of that company again.
(c) Certified public accountants (CPAs) who executed accounting audit
Koji Fujima, Yasuhiro Ozeki, Shinya Yoshida(d) Assistants for audit works
58 CPAs and 109 staffs belonging to Ernst & Young ShinNihon LLC assist execution of
accounting audit works as instructed by the three CPAs mentioned in (b).
(e) Policy and reason for the selection of accounting auditors
With a view to ensuring the appropriate execution of duties by accounting auditors, the Audit
Committee selects accounting auditors by considering such factors as quality control systems foraccounting auditors, implementation systems for auditing and the level of audit fees.
In addition, the Audit Committee has prepared the following policies with respect to “policies fordetermination of removal and non-reappointment of accounting auditors” set forth in Item 4 of Article
126 of the Ordinance for Enforcement of the Companies Act.
- 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 theaccounting auditor needs to be removed immediately, the Audit Committee shall remove theaccounting 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 suchreason 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 theaccounting auditor to be submitted to the general meeting of shareholders.
The Audit Committee comprehensively evaluated and examined Ernst & Young ShinNihon LLC
from the perspectives of its history, business size, past performance of auditing and efforts to facilitatecommunication with the Audit Committee and other internal divisions, among other factors. As a93

result, the Audit Committee decided to select Ernst & Young ShinNihon LLC as the accounting
auditor since the Audit Committee judged that none of the abovementioned policies applies to Ernst &Young ShinNihon LLC and therefore adequate performance of duties by Ernst & Young ShinNihon
LLC is continuously secured.
(f) Evaluation for accounting auditor by the Audit Committee
The Audit Committee evaluated the appropriateness and relevance of auditing conducted byaccounting auditor from the perspectives of the effectiveness of initiatives to facilitate communication
with the Audit Committee and the top management in particular, the details and implementation ofaudit systems and auditing manuals and remuneration for auditing in accordance with evaluation
criteria the Audit Committee formulated in advance. For evaluating the accounting auditor, the Audit
Committee gathered information on matters such as the independence of the accounting auditor, audit
systems and the implementation of audits and audit quality thereof from the Accounting Control
Department and the Internal Auditing Office. The Audit Committee also received reports from theaccounting auditor regarding compliance with laws and regulations, including the accounting auditor’s
independence, methods for evaluating risks with respect to the acceptance and continuation of audit
services, audit and inspection systems and quality control systems, and detailed audit plans based on
the accounting auditor’s evaluations for risks pertaining to the Company, as well as results of audits
and details of and progress on plans for improving business operations and auditing efficiency at thetime of the completion of quarterly reviews and annual audits. Based on such reports, the Audit
Committee concluded that the accounting auditor conducted highly transparent audits and its activities
were appropriate and relevant.
4) Audit Fees(a) Fees to accounting auditor
Fiscal year ended March 31, 2022
Category

Fees for audit
services(Millions of yen)

Fiscal year ended March 31, 2021

Fees for non-audit
services(Millions of yen)

Fees for audit
services(Millions of yen)

Fees for non-audit
services(Millions of yen)

The Company

566 (Note 1)

39

525 (Note 1)

101

Consolidated
subsidiaries

986 (Note 1)

14959 (Note 1)

17

Total

1,552

53

1,484

118

(Notes) 1. The non-audit services were basically various consulting services and assurance engagements.

94

(b) Audit fees (excluding the amount mentioned in (a)) to the Company’s accounting auditor, Ernst &Young ShinNihon LLC Group (including Ernst & Young and its group firms which belong to thesame network as Ernst & Young ShinNihon LLC)
Fiscal year ended March 31, 2022
Category

Fees for audit
services(Millions of yen)

Fiscal year ended March 31, 2021

Fees for non-audit
services(Millions of yen)

Fees for audit
services(Millions of yen)

Fees for non-audit
services(Millions of yen)

The Company- (Note 1)

68- (Note 1)

37

Consolidated
subsidiaries

4,553 (Note 2)797

4,290 (Note 2)

515

4,553

865

4,290

552

Total

(Notes) 1. The non-audit services were basically various consulting services.
2. The non-audit services were basically various consulting services and assurance engagements.
(c) Policy on determination of audit fees
For determining the amount of audit fees, the Company conducts hearing of the audit plan andverify efficiency of audit services, including the number of days, hours for auditing, the number ofsubjects to be audited and the scope of audit, etc., and appropriateness of the estimate. The Company
also discusses with the accounting auditor taking into consideration the formation of auditors andaudit fees for the preceding fiscal year. In addition, the Audit Committee receives the audit plans of
the accounting auditors and the results of discussion between the auditors and Executive Officers of
the Company and approves the amount of the fees in advance of the Company’s decision.
(d) Reasons why the Audit Committee accepted the audit fees
The Audit Committee has obtained necessary information and examined the status of theexecution of duties by the accounting auditor, content of the audit plan, and grounds for calculating theestimated amount of fees, etc. and concluded that these are reasonable. Therefore, the Audit
Committee has given the consent with regard to the fees etc. to accounting auditor, in accordance with
Article 399, Paragraph 1 of the Companies Act.

95

(4) Compensation to Directors and Executive Officers
1) 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 amountof compensation, etc. of each Director and Executive Officer pursuant to applicable provisions of theCompanies 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 appropriatebalance between short-term performance and medium- and long-term performance.
- The level of compensation shall be determined taking into account compensation levels at othercompanies 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 by adjusting a basic amount to reflect full-time or part-time status, committee membershipand position, and travel from place 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 and 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 thecomposition of executive compensation for major global companies, in order to improve corporate
value through the growth of global businesses. The higher position Executive Officers holds, the higher
proportion of variable pay is set to the total annual compensation.
The method of determination of each type of compensation is as follows.
Basic remuneration- The amount of basic remuneration is decided by adjusting a basic amount set in accordance with therelevant position to reflect the results of an assessment.
Short-term incentive compensation- The amount of short-term incentive compensation is decided within the range of 0 to 200% of a basic
amount set according to the relevant position by adjusting that amount to reflect financial results andindividual performance. Evaluation items and proportion of evaluation item are as shown in thefollowing table.
Proportion of evaluation item
Executive Officers that
Evaluation items
Other Executive Officers
constitute the Senior
Executive Committee (Note)
Performance- Company performance80%
30%
linkedDivision performance50%
component
Individual target-linked component
20%
20%(Note) “Executive Officers that constitute the Senior Executive Committee” are President o& CEO(Keiji Kojima), three Executive Vice President and Executive Officers (Masakazu Aoiki,
Yoshihiko Kawamura and Toshiaki Tokunaga), three Senior Vice President and Executive
Officers (Hidenobu Nakahata, Masahiko Hasegawa and Mamoru Morita) and Vice President
and Executive Officer (Kohei Kodama) as of June 22, 2022. In the case that these Executive
Officers are in charge of sectors or business units, the same proportion of evaluation item as
for “Other Executive Officers” is used.
96

- The amount of the performance-linked component varies according to the evaluation of company
performance and division performance.
- Company performance is evaluated referring to consolidated revenues, adjusted operating income,
EBIT, and net income attributable to Hitachi, Ltd. stockholders in order to measure the level ofachievement of consolidated financial forecasts disclosed to stakeholders, including shareholders andinvestors.
- Division performance is evaluated referring to adjusted operating income and operating cash flows
for each division, among other indicators, to measure the level 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 levelof achievement 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 longterm 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 ofshares during their term of office.
- The restriction on transfer shall be lifted if executive officers resign from all of the positions of theCompany’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 the ex-post evaluation, the total
shareholder return of Hitachi stock over the three years from the beginning of the fiscal year whenthe medium- and long-term incentive compensation is granted is compared with growth rate of
TOPIX over the same period.
- 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 lessthan 80%.
* Number of shares whose transfer restrictions are lifted= Number of granted shares × {(TSR/TOPIX Growth Rate 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 country of residence, etc., cash award based on the value of the Company’s share price shall be
substituted for restricted stock.
- From the fiscal year that commenced in April 2019, shares of restricted stock are granted in place ofthe 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 ofoffice, compensation for Executive Officers that has been already paid shall be returned to theCompany.
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 isconsidered for compensation benchmarking while referring the above policy. The Company grants
restricted stock units to non-Japanese Executive Officers as medium- and long-term incentive
compensation. One third of vested restricted stock units are delivered in 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.
(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 the compensation 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 theretirement allowance system will be in an amount determined by the Compensation Committee at thetime of the retirement of a relevant Director or Executive Officer.

972) Amount of compensation
Total amount of each type(Millions of yen)
Category

Total amount ofcompensation,etc.
Fixed pay
(Millions of yen)

Variable pay

NumberofMedium- andOthers persons
Short-termlong-term
incentive
incentivecompensationcompensation

Directors(excluding
－
－
－
60
60
1
Independent
Directors)
Independent
－
－
－
408
408
10
Directors
Executive
－
4,660
1,537
1,466
1,657
31
Officers
－
Total
5,129
2,006
1,466
1,657
42
(Notes) 1. The number of Directors indicated excludes three Directors who serve or served concurrently
as Executive Officers.
2. The amount of compensation, etc. for Executive Officers includes the compensation from
April to resignation for the Executive Officer who resigned as of May 12, 2021.
3. Fixed pay and short-term incentive compensation consist of monetary compensation, andmedium- and long-term incentive compensation consist of monetary and non-monetarycompensation.
4. Other than the above, there is the retirement allowance of 111 million yen for one Executive
Officer who resigned as of May 12, 2021.

Performance indicators referred to in company performance evaluations for short-term incentive
compensation are as follows.
(Unit: billions of yen)
Fiscal year ended March 31, 2022
Indicators
TargetResults
Revenues
9,500.0
10,264.6
Adjusted Operating Income

740.0

738.2

EBIT
Net income attributable to
Hitachi, Ltd. stockholders

820.0

850.9

550.0

583.4

The TSR/TOPIX Growth Rate Ratios defined in conditions for exercising stock option as stockbased compensation (stock acquisition rights) and in conditions for lifting transfer restrictions ofrestricted stock issued as medium- and long-term incentive compensation are as follows.
Total shareholder return
Name
Term
/ TOPIX Growth Rate Ratio
The First Stock Acquisition
From April 1, 2016125.8%
Rights of Hitachi, Ltd.
to March 29, 2019The Second Stock Acquisition
From March 31, 2017121.6%
Rights of Hitachi, Ltd.
to March 31, 2020
The Third Stock Acquisition
From March 30, 2018120.5%
Rights of Hitachi, Ltd.
to March 31, 2021
Restricted Stocks issued in May
From April 1, 2019146.7%
2019
to March 31, 2022 (Note)
Restricted Stocks issued in May
From April 1, 2020
144.2%
2020
to March 31, 2022 (Note)
Restricted Stocks issued in May
From April 1, 2021
128.3％
2021
to March 31, 2022 (Note)(Note) The ratios are calculated to determine the number of stock acquisition rights that can be
exercised by persons who retire from Executive Officers, Directors or Corporate Officers on
March 31, 2022.
98

In addition, Directors or Executive Officers whose compensation from the Company and its
subsidiaries is not less than ¥100 million and the amount of their compensation are as follows:
Total amount of each type (Millions of yen)
Variable pay
Total amount ofMedium andcompensation,
Short-term
Name
Company
Category
Long-term Othersetc.
Fixed pay
incentive
incentive (Note 3) (Millions of yen)compensationcompensation(Note 1)
(Note 2)
Executive
Toshiaki
Hitachi, Ltd.
148
156
203
0
508
Officer
Higashihara (The Company)(Note 4)
Executive
Hitachi, Ltd.
－
104
123
76
Officer(The Company)(Note 4)
Hitachi Global
Life Solutions,－
Keiji
Director
1
0
Inc.
308
Kojima(Consolidated
subsidiary)
Hitachi HighTech Corporation
Chairman10(Consolidated
subsidiary)
Masakazu Hitachi, Ltd.
Executive
60
80
76
217
Aoki
(The Company) Officer
Ryuichi
Hitachi, Ltd.
Executive
60
62
129
251
Kitayama(The Company) Officer
Alistair
Hitachi, Ltd.
Executive
243
92
203
539
Dormer(The Company) Officer
Toshiaki
Hitachi, Ltd.
Executive
60
94
26
180
Tokunaga(The Company) Officer
Toshikazu Hitachi, Ltd.
Executive
60
62
154
276
Nishino(The Company) Officer
Hitachi, Ltd.
Executive
45
71
35(The Company) Officer
HitachiInformation &Jun Abe155
Telecommunicati
2
1-on Engineering, Director
Ltd.
(Consolidated
subsidiary)
Hitachi, Ltd.
Executive
44
51
49(The Company) Officer
Yoshihiko Hitachi Astemo,
150
Kawamura Ltd.
Chairman3
2(Consolidated
subsidiary)
Katsuya
Hitachi, Ltd.
Executive
48
72
35
155
Naganno(The Company) Officer
Hitachi, Ltd.
Executive
44
48
49(The Company) Officer
Hidenobu
Hitachi High147
Nakahata
Tech Corporation
Chairman3
2(Consolidated
subsidiary)
Hitachi Energy
Ltd
Claudio
CEO
109
122
43
85
361
(Consolidated
Facchinsubsidiary)(Note 5)99

Total amount of each type (Millions of yen)

Name

Company

Hitachi, Ltd.
(The Company)
HitachiIndustrial
Equipment
Systems Co.,Ltd.
(Consolidated
subsidiary)
MamoruMorita
Hitachi Global
Life Solutions,
Inc.
(Consolidated
subsidiary)
Hitachi Metals,
Ltd.
(Consolidated
subsidiary)
Yoji
Hitachi, Ltd.
Takeuchi(The Company)
Hitachi, Ltd.
(The Company)
Hitachi
LorenaIndustrial
Dellagiovan Equipment-na
Systems Co.,Ltd.
(Consolidated
subsidiary)
Hitachi, Ltd.
(The Company)
Koji
Hitachi Asia Ltd.
Nakakita(Consolidated
subsidiary)(Note 5)
Hitachi Rail Ltd.
(Consolidated
Andrew Barr
subsidiary)(Note 5)

Category

Variable pay
Total amount ofcompensation,
Medium andShort-term
Othersetc.
Long-term
Fixed pay
incentive
incentive (Note 3) (Millions of yen)compensationcompensation(Note 1)
(Note 2)

Executive
Officer

41

48

42

-

Director

1

0

-

-

140
Director

0

0

-

-

Director

4

-

-

-

36

28

56

-

53

34

18

-

Director

1

0

-

-

Executive
Officer

-

-

3

-

Chairmanof the
Board

53

28

29

-

Director

76

45

92

7

Executive
Officer
Executive
Officer

120

108

114

221

Executive
17
18
138
111
285
Officer(Note 4)(Notes) 1. Compensations from the Company and consolidated subsidiaries paid depending on financial results andindividual performances in the short term are collectively called.
2. Medium- and long-term incentive compensation is stock options as stock-based compensation, restricted
stock compensation, restricted stock units or cash award based on the value of the Company's shareprice.
3. The "Others" column shows the retirement allowance and the fringe benefit equivalent, etc.
4. Although concurrently serving as Director for the fiscal year ended March 31, 2022, Messrs. Toshiaki
Higashihara, Keiji Kojima and Hiroaki Nakanishi did not receive compensation as Director.
5. The amount of the remuneration, etc. from foreign subsidiaries shows yen equivalent.
HiroakiNakanishi

Hitachi, Ltd.
(The Company)

1003) Authorities, roles and activities of the Compensation Committee
The Compensation Committee, which was established under the Companies Act, includes
Independent directors that have majority in the number of committee members, holds the legal authority
to determine remuneration for Directors and Executive Officers, and strives to ensure the objectivity,transparency and fairness of the remuneration determination processes. The Compensation Committee
has the authority to determine remuneration policies and the details of remuneration (amount ofcompensation, etc.) of Directors and Executive Officers individually based on the policies. To
determine the details of remuneration individually, the Committee confirms and reviews processes anddetails with respect to the assessment of basic remuneration amounts, evaluation of performance andindividual targets related to short-term incentive compensation.
For the fiscal year ended March 31, 2022, based on policies for determining compensation for
Directors and Executive Officers, the Compensation Committee determined amounts of remuneration
for Directors and Executive Officers individually including short-term incentive compensation of
Executive Officers in conjunction with which the Compensation Committee confirmed and reviewed
the process and details of performance and individual target evaluations. Furthermore, theCompensation Committee re-examined the executive compensation system from the viewpoint of
remuneration for top management at global enterprises and sharing of values with shareholders, anddecided on policies for determining remuneration for Directors and Executive Officers that is applied in
the fiscal year ending in March 2023, including the expansion of the restricted stock compensation to
Japanese officers of some of the Company's group companies.

101

(5) Information on shareholdings(a) Criteria for classification of investment securities
The Company classifies investment securities that it holds into two types. If investment securities
are held for the purpose of receiving benefits exclusively through stock price fluctuations or dividends,
those are classified as investment securities for pure investment and the rest of investment securities areclassified as investment securities owned for other purposes than pure investment.
(b) Equity securities held for purposes other than pure investment(i) Policy for shareholding and examination of the reasonableness of holding
Under the basic policy, the Company will not acquire and hold other companies’ shares except
for cases where acquiring or holding such shares is necessary in terms of transactions or business
relationship. The Company will promote reducing shares that it already owns unless significance ofholding shares and economic rationales of holding are confirmed.
The Board of Directors verifies whether it is appropriate to hold shares for all stock the Company
owns ever year. In such verification, each individual stock is re-examined as to the purpose of holding
the shares and whether benefits from holding shares are in line with target level of capital efficiency. As
the result of verification, the Company promotes the sales of shares for which significance of holding
shares and economic rationale are not confirmed. Details of shares sold in the fiscal year ended March
31, 2022, are presented in (ii) below.
(ii) Number of stock names and balance sheet amount
Number ofstock names(stock names)

Total amount recordedin the balance sheet(millions of yen)

Unlisted stocks

152

23,341Others46

251,129<Stocks increased in the fiscal year ended March 31, 2022> (Note)
Number ofstock names(stock names)
Unlisted stocks

Total purchase price forthe shares increased(millions of yen)
3

Reasons of increase

1,231

Purchasing for strengthening andmaintaining relationship for business andbusiness transactions

Others---(Note) In addition to the stocks in the above tables, the Company holds one unlisted stock and one listed
stock whose classification in accounting were changed from affiliated company's common
stocks to investment securities due to decreased ownership percentages.
<Stocks decreased in the fiscal year ended March 31, 2022>
Number of

Total selling price forstock names(stock names)

the shares decreased(millions of yen)

Unlisted stocks

17

1,887

Others10

47,750102

(iii) The number and the amount recorded in the balance sheet, etc. of specified investment securities
Specified investment securities
Fiscal year ended Fiscal year ended
March 31, 2022 March 31, 2021
(Note 1)
(Note 1)
Stock name

Mitsubishi HC CapitalInc.

Renesas Electronics
Corporation

Purpose of holdings
and reasons for increases(Note 2)

Number ofshares(shares)Number ofshares(shares)

Balance sheet
amount(Millions of yen)

Balance sheet
amount(Millions of yen)

167,678,580
95,576
61,990,548
88,770Acquired in relation to thereorganization, etc. of Hitachi Capital
Corp. which was an affiliate of the－Company (Note 4)
61,990,548 Acquired in relation to thereorganization, etc. of Renesas
74,388 Technology Corp. which was anaffiliate of the Company－

3,125,000

6,250,000

18,98946,186

Central Japan Railway
Company

900,000

900,000

14,36814,895Shin-Etsu ChemicalCo., Ltd.

521,000

521,000

9,789

9,695

East Japan Railway
Company

406,200

812,400

2,888

6,368

DAIICHI SANKYOCOMPANY, LIMITED

900,000

900,000

2,412

2,902

3,269,000

3,269,000

2,370

2,370

600,000

600,000

1,839

1,734

1,286,900

1,286,900

1,636

1,570

Sapporo Holdings
Limited597,600

597,600

1,378

1,370

West Japan Railway
Company

215,000

215,000

1,094

1,319

Western Digital
Corporation

The Chiba Bank, Ltd.

Ono PharmaceuticalCo., Ltd.

Seibu Holdings Inc.

Holding
shares of
Hitachi, Ltd.

103

No

No

Maintaining and enhancing business
relationship

No

Maintaining and enhancing business
transactions of selling products andproviding services

No

Maintaining and enhancing business
transactions of selling products andproviding services

Yes

Maintaining and enhancing business
transactions of selling products andproviding services

Yes

Maintaining and enhancing business
transactions of selling products andproviding services

No

Maintaining and enhancing business
transactions of selling products andproviding services

Yes

Maintaining and enhancing business
transactions of selling products andproviding services

Yes

Maintaining and enhancing business
transactions of selling products andproviding services

No

Maintaining and enhancing business
transactions of selling products andproviding services

Yes(Note 3)

Maintaining and enhancing business
transactions of selling products andproviding services

NoFiscal year ended Fiscal year ended
March 31, 2022 March 31, 2021
(Note 1)
(Note 1)
Number ofshares(shares)Number ofshares(shares)

Balance sheet
amount(Millions of yen)

Balance sheet
amount(Millions of yen)

830,320

830,320

1,057

1,642

206,574

206,574

988

1,536

400,000

400,000

972

1,260

801,500

1,603,000

963

2,242

Electric Power
Development Co., Ltd.

523,280523,280

914

1,012

TOKYU
CORPORATION

394,016

394,016627

580

328,500

328,500

595

695

The Bank of Kyoto,Ltd.

100,000

100,000

535

681

Keihan Holdings Co.,Ltd.

121,927

121,927

367

560

Kintetsu Group
Holdings Co., Ltd.

104,291

104,291365

440

375,000

375,000

308

397

550,275

550,275272

252

Cybertrust Japan Co.,Ltd.

64,00064,000240

14TOMONY Holdings,
Inc.

679,200

679,200

222

220

Stock name

Seiko Electric Co., Ltd.

Keio Corporation

Showa Denko K.K.

Maxell, Ltd.

Tosoh Corporation

euglena Co., Ltd.

The Keiyo Bank, Ltd.

104

Purpose of holdings
and reasons for increases(Note 2)

Holding
shares of
Hitachi, Ltd.

Maintaining and enhancing business
transactions of purchasing raw
materials and components, etc.

Yes

Maintaining and enhancing business
transactions of selling products andproviding services

Yes

Maintaining and enhancing business
transactions of selling products andproviding services

Yes

Maintaining and enhancing business
relationship

No

Maintaining and enhancing business
transactions of selling products andproviding services

Yes

Maintaining and enhancing business
transactions of selling products andproviding services

Yes(Note 3)

Maintaining and enhancing business
transactions of selling products andproviding services

No

Maintaining and enhancing business
transactions of selling products andproviding services

No

Maintaining and enhancing business
transactions of selling products andproviding services

No

Maintaining and enhancing business
transactions of selling products andproviding services

No

Maintaining and enhancing
cooperative relationship in the area of
R&DNo

Maintaining and enhancing business
transactions of selling products andproviding services

Yes

Maintaining and enhancing business
transactions of selling products andproviding services (Note 5)No

Maintaining and enhancing business
transactions of selling products andproviding services

Yes(Note 3)

Fiscal year ended Fiscal year ended
March 31, 2022 March 31, 2021
(Note 1)
(Note 1)
Number ofshares(shares)Number ofshares(shares)

Balance sheet
amount(Millions of yen)

Balance sheet
amount(Millions of yen)

508,030

508,030187

153

300,000

300,000

178

181

ANA HOLDINGS
INC.

50,00050,000128

128

THE TAIKO BANK，
LTD．

88,00088,00012213273,50073,500115

147

40,42540,425113

83

513,150

513,150

113

97

San ju San Financial
Group, Inc.

73,62373,623

108

102

THE SHIGA BANK，
LTD．

40,00040,000

88

95

THE DAITO BANK,
LTD.

110,000

110,000

75

77

16,250

16,25073

49

Senshu Ikeda Holdings,
Inc.

315,327

315,327

54

56

THE BANK OF
KOCHI, LTD.

69,90069,90052

59Tokyo Kiraboshi
Financial Group, Inc.

30,00030,00052

42

Stock nameTaragaon Regency
Hotel

Daido Signal Co., Ltd.

Kita-Nippon Bank, Ltd.

Nippon Yakin Kogyo
Co., Ltd.

Tochigi Bank, Ltd.

The Aichi Bank, Ltd.

105

Purpose of holdings
and reasons for increases(Note 2)

Holding
shares of
Hitachi, Ltd.

Acquired as a result of substituteperformance for accounting receivables

No

Maintaining and enhancing business
transactions of purchasing raw
materials and components, etc.

Yes

Maintaining and enhancing business
transactions of selling products andproviding services

No

Maintaining and enhancing business
transactions of selling products andproviding services

No

Maintaining and enhancing business
transactions of selling products andproviding services

Yes

Maintaining and enhancing business
transactions of selling products andproviding services

No

Maintaining and enhancing business
transactions of selling products andproviding services

No

Maintaining and enhancing business
transactions of selling products andproviding services

No

Maintaining and enhancing business
transactions of selling products andproviding services

No

Maintaining and enhancing business
transactions of selling products andproviding services

No

Maintaining and enhancing business
transactions of selling products andproviding services

No

Maintaining and enhancing business
transactions of selling products andproviding services

No

Maintaining and enhancing business
transactions of selling products andproviding services

No

Maintaining and enhancing business
transactions of selling products andproviding services

Yes(Note 3)

Fiscal year ended Fiscal year ended
March 31, 2022 March 31, 2021
(Note 1)
(Note 1)
Number ofshares(shares)Number ofshares(shares)

Balance sheet
amount(Millions of yen)

Balance sheet
amount(Millions of yen)

20,00020,00031

35

30,00030,00031

34

30,00030,00018

23

Nishi-Nippon Railroad
Co., Ltd.

6,000

6,000

16

17

The Michinoku Bank,
Ltd.

11,33011,330

10

12

THE NAGANOBANK, LTD.

6,900

6,900

8

9

Kyushu Electric Power
Company Inc.

－

237,000－

258

Taiwan High Speed
Rail Corporation－

957,361－116

Hokuriku ElectricPower Company－

116,600－

88

Tokyo Electric Power
Company Holdings,
Inc.

－

187,500－

69－

38,000－67－

23,831－60

Stock name

THE CHUKYOBANK, Ltd.

Tomato bank, Ltd.

Jimoto Holdings, Inc.

Zeon Corporation

Nankai Electric
Railway Co., Ltd.

Purpose of holdings
and reasons for increases(Note 2)

Holding
shares of
Hitachi, Ltd.

Maintaining and enhancing business
transactions of selling products andproviding services

No

Maintaining and enhancing business
transactions of selling products andproviding services

No

Maintaining and enhancing business
transactions of selling products andproviding services

No

Maintaining and enhancing business
transactions of selling products andproviding services

No

Maintaining and enhancing business
transactions of selling products andproviding services

No

Maintaining and enhancing business
transactions of selling products andproviding services

No

Held for Maintaining and enhancing
business transactions of selling
products and providing services

No

Held for Maintaining and enhancing
business transactions of selling
products and providing services

No

Held for Maintaining and enhancing
business transactions of selling
products and providing services

No

Held for Maintaining and enhancing
business transactions of selling
products and providing services

No

Held for Maintaining and enhancing
business transactions of selling
products and providing services

No

Held for Maintaining and enhancing
business transactions of selling
products and providing services

No(Notes) 1. Since the number of stock which the Company owned as of March 31, 2021 and March 31, 2022 isless than 60, all of the stocks are listed.
2. Since it is hard to state quantitative effects of holding the investment securities, such effects are notdescribed. Regarding the way to verify significance and relations of holding shares are described in"(i) Policy for shareholding and examination of the reasonableness of holding."
3. Shareholding by major subsidiaries of the issuers of each stock is included.
4. The classification in accounting was changed from affiliated company's common stocks toinvestment securities due to decreased ownership percentages.
5. The classification in accounting was changed to specified investment securities due to its newlisting in the fiscal year ended March 31, 2022.

106

(c) Equity securities held for pure investment
None.

107

V. Financial Information
Refer to the consolidated financial statements incorporated in this Annual Securities Report.
VI. Stock-Related Administration for the Company
Fiscal year

From April 1 to March 31

Annual General Meeting of
Shareholders

To be held within three months from the following day of the end of every fiscal
year

Record date

End of every fiscal year

Record date for distributionof surplus
Number of sharesconstituting one unit
Purchase and sale ofshares less than one unit
Handling officeTransfer agent

End of March and end of September
100 shares(Special account)
11, Kanda Nishikicho 3-chome, Chiyoda-ku, Tokyo
Main Office, Tokyo Securities Transfer Agent Co., Ltd.
(Special account)
Tokyo Securities Transfer Agent Co., Ltd.

Forward office-

Purchasing and selling fee

Free of charge

Method of public notice

The Company’s method of public notice is through electronic public notice.
However, if the Company cannot use the above-mentioned method of public notice
due to an accident or other inevitable reasons, Nihon Keizai Shimbun will be
adopted as its medium.

Special benefit for
None
Shareholders(Notes) 1. Under the Articles of Incorporation, distribution of surplus through dividend payment, if any, will bemade to shareholders of record as of March 31 and September 30 of each year. In addition, theCompany may make further distributions of surplus to shareholders of record as of another record
date.
2. The Articles of Incorporation provide that a holder of shares representing less than one unit does nothave any other rights of a shareholder in respect of those shares, other than those specified in the
Articles of Incorporation. This includes:(1) Rights under each item of Article 189, Paragraph 2 of the Companies Act;
(2) Rights to be allotted rights to subscribe for free for new shares and stock acquisition rights whensuch rights are granted to shareholders; or(3) Rights stipulated in the Articles of Incorporation

108VII. Reference Information on the Company
1. Information on a Parent Company, etc. of the Company
The Company has no parent company.
2. Other Reference Information
The Company filed the following documents during the period from the commencing date of the fiscal
year ended March 31, 2021 to the filing date of this Annual Securities Report.
(1) Annual Securities Report and documents attached, and Confirmation
Letter(The 152nd business term (from April 1, 2020 to March 31, 2021))

Filed with the Director of the
Kanto Local Finance Bureau
on June 23, 2021

(2) Internal Control Report

Filed with the Director of the
Kanto Local Finance Bureau
on June 23, 2021

(3) Extraordinary Report(pursuant to Article 19, Paragraph 2, Item 9-2 of the Cabinet Office
Ordinance Concerning Disclosure of Corporate Affairs, etc.)

Filed with the Director of the
Kanto Local Finance Bureau
on June 24, 2021

(4) Quarterly Report and Confirmation Letter(The First Quarter of the 153rd business term (from April 1, 2021 toJune 30, 2021))

Filed with the Director of the
Kanto Local Finance Bureau
on August 5, 2021

(5) Quarterly Report and Confirmation Letter(The Second Quarter of the 153rd business term (from July 1, 2021 toSeptember 30, 2021))

Filed with the Director of the
Kanto Local Finance Bureau
on November 12, 2021

(6) Extraordinary Report
Filed with the Director of the(pursuant to Article 19, Paragraph 2, Item 3 and 12 of the Cabinet Office Kanto Local Finance Bureau
Ordinance Concerning Disclosure of Corporate Affairs, etc.)
on January 14, 2022
(7) Extraordinary Report(pursuant to Article 19, Paragraph 2, Item 9 of the Cabinet Office
Ordinance Concerning Disclosure of Corporate Affairs, etc.)

Filed with the Director of the
Kanto Local Finance Bureau
on February 2, 2022

(8) Quarterly Report and Confirmation Letter
Filed with the Director of the(The Third Quarter of the 153rd business term (from October 1, 2021 to Kanto Local Finance Bureau
December 30, 2021))
on February 10, 2022
(9) Extraordinary Report(pursuant to Article 19, Paragraph 2, Item 12 of the Cabinet Office
Ordinance Concerning Disclosure of Corporate Affairs, etc.)

Filed with the Director of the
Kanto Local Finance Bureau
on April 28, 2022

(10) Report for Share Repurchase

Filed with the Director of the
Kanto Local Finance Bureau
on May 10, 2022 andJune 7, 2022(11) Securities Registration Statement

Filed with the Director of the
Kanto Local Finance Bureau
on May 11, 2022(12) Amended Securities Registration Statement(Amendment to Securities Registration Statement (11) above)

Filed with the Director of the
Kanto Local Finance Bureau
on May 11, 2022
May 12, 2022
May 13, 2022
May 16, 2022
May 17, 2022
May 18, 2022
May 19, 2022 andMay 20, 2022

109

(13) Amended Shelf Registration Statement(Amended Shelf Registration Statement concerning the Shelf
Registration Statement filed on June 28, 2021)

Part II Information on Guarantors, etc. for the Company
Not applicable.

110

Filed with the Director of the
Kanto Local Finance Bureau
on November 30,2021
January 14, 2022
February 2, 2022
April 28, 2022 andJune 20, 2022

Consolidated Financial Statements
Page
NumberConsolidated Financial Statements of Hitachi, Ltd. and Subsidiaries:
Consolidated Statement of Financial Position as ofMarch 31, 2022 and 2021

F-2

Consolidated Statement of Profit or Loss andConsolidated Statement of Comprehensive Income for the years ended
March 31, 2022 and 2021

F-3

Consolidated Statement of Changes in Equity for the years ended
March 31, 2022 and 2021

F-4

Consolidated Statement of Cash Flows for the years ended
March 31, 2022 and 2021

F-5

Notes to Consolidated Financial Statements

F-6

Reports of Independent Registered Public Accounting Firm

F-1

F-81

Consolidated Financial Statements
Consolidated Statement of Financial Position
Millions of yen
Note
AssetsCurrent assets
Cash and cash equivalents
Trade receivables and contract assets
Inventories
Investments in securities and other financial assets
Other current assets
Total 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 non-current assets
Total assets

26
6,20,26
7
11,26
5

5,8
5,11,26
9
5,10
5,10
12

Liabilities
Current liabilities
Short-term debt
Current portion of long-term debt
Other financial liabilities
Trade payables
Accrued expenses
Contract liabilities
Other current liabilities
Total current liabilities
Non-current liabilities
Long-term debt
Retirement and severance benefits
Other non-current liabilities
Total non-current liabilities
Total liabilities
EquityHitachi, Ltd. stockholders’ equity
Common stock
Capital surplus
Retained earnings
Accumulated other comprehensive income
Treasury stock, at cost
Total Hitachi, Ltd. stockholders’ equity

26
11,26
26
13
20
5,14

11,26
15
8,12,14,26

16
5,16,19,26
16,18
17
16

Non-controlling interests

5,26

March 31, 2022

March 31, 2021

968,827
2,978,149
2,042,432
376,315
233,708

1,015,886
2,734,476
1,653,395
328,153
211,3906,599,431

5,943,300

411,201
584,806
2,478,901
2,153,706
1,257,128
402,329472,105
534,324
2,408,887
1,161,210
964,830
368,197

7,288,071

5,909,553

13,887,502

11,852,853

1,234,119
336,418
294,047
1,754,633
738,030
1,069,732
427,087

416,635
274,392
288,973
1,515,954
698,553
933,844468,579

5,854,066

4,596,930

1,556,175
414,839
707,145

1,706,329
433,954
657,408

2,678,159

2,797,691

8,532,225

7,394,621

461,731
46,1193,197,725
639,263(3,002)

460,790
84,0402,710,604
273,561(3,493)

4,341,836

3,525,502

1,013,441

932,730

Total equity

5,355,277

4,458,232

Total liabilities and equity

13,887,502

11,852,853

See accompanying notes to consolidated financial statements.

F-2

Consolidated Statement of Profit or Loss
Years ended March 31, 2022 and 2021

Millions of yen

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
methodEBIT (Earnings before interest and taxes)
Interest income
Interest charges
Income from continuing operations, before income taxes
Income taxes
Income from continuing operations
Income (loss) from discontinued operations
Net income
Net income attributable to:
Hitachi, Ltd. stockholders
Non-controlling interests
Earnings per share from continuing operations,
attributable to Hitachi, Ltd. stockholders
Basic
DilutedEarnings per share attributable to Hitachi, Ltd. stockholders
Basic
DilutedNote
20

5,15,21
5,21
22
22
8

12
23

2022
10,264,602(7,705,981)
2,558,621(1,820,385)
128,354(83,965)
27,938(97)2021
8,729,196(6,533,890)
2,195,306(1,700,126)
476,137(172,407)
13,969(1,456)40,48538,864

850,951
15,492(27,110)
839,333(168,469)
670,8640670,864

850,287
16,934(22,778)
844,443(325,247)
519,196(686)
518,510

583,470
87,394

501,613
16,897603.75602.96

Yen
520.00519.22603.75602.96519.29518.5124

24

Consolidated Statement of Comprehensive Income
Years ended March 31, 2022 and 2021

Millions of yen
Note

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

See accompanying notes to consolidated financial statements.

F-3

2022
670,8642021
518,510(11,224)
30,795(403)
19,16869,362
88,7362,151
160,249

391,489
8,172
41,207440,868

191,8215,346
58,755
255,922460,036
1,130,900

416,171934,681

958,008
172,892

838,237
96,44417

Consolidated Statement of Changes in Equity

Year ended March 31, 2022

Millions of yen
2022

Commonstock(note 16)

Capitalsurplus(notes 16
and 26)

Retainedearnings(notes 16
and 18)

Accumulated
othercomprehensive
income(note 17)

460,790

84,0402,710,604

273,561

Reclassified into retained earnings--

14,861

Net income--

Other comprehensive income--

Dividends to Hitachi, Ltd. stockholders-

Dividends to non-controlling interests
Acquisition of treasury stock
Sales of treasury stock

Total
Hitachi, Ltd.
stockholders’equityNoncontrollinginterests(note 26)

Total equity(3,493)

3,525,502

932,730

4,458,232(14,861)

-

-

-

-

583,470--

583,470

87,394

670,864-

374,538-

374,538

85,498460,036-(111,210)--(111,210)-(111,210)

-

-

-

-

-

-

(63,647)(63,647)

-

-

-

-

(251)

(251)

-

(251)

-

(291)

-

-

742

451

-

451

941

941

-

-

-

1,882

-

1,882

-

(38,571)

-

6,025

-

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

Total changes in equity

941(37,921)487,121

365,702491

816,334

80,711

897,045

Balance at end of year

461,731

46,1193,197,725

639,263(3,002)

4,341,836

1,013,441

5,355,277

Balance at beginning of year

Treasurystock,
at cost(note 16)

Changes in equity

Issuance of new shares (note 19)
Changes in non-controlling interests

Year ended March 31, 2021

Millions of yen
2021

Commonstock(note 16)

Capitalsurplus(notes 5,
16 and 26)

Retainedearnings(notes 16
and 18)

Accumulated
othercomprehensive
income(note 17)459,862

464,795

2,296,208(57,070)(3,809)Reclassified into retained earnings

-

-

9,436

(9,436)

-

-

-

-

Net income--

501,613--501,613

16,897

518,510

Other comprehensive income

-

-

-

336,624-

336,624

79,547416,171

Dividends to Hitachi, Ltd. stockholders--(96,653)--(96,653)-(96,653)

Dividends to non-controlling interests

-

-

-

-

-

-

(41,076)(41,076)

Acquisition of treasury stock

-

-

-

-

(159)

(159)

-

(159)

Balance at beginning of year

Treasurystock,
at cost(note 16)

Total
Hitachi, Ltd.
stockholders’equityNoncontrollinginterests(notes 5
and 26)

Total equity

3,159,986

1,106,753

4,266,739

Changes in equity

Sales of treasury stock

-

108

-

-

475

583

-

583

928

928

-

-

-

1,856

-

1,856

-

(381,791)

-

3,443

-

(378,348)(229,391)(607,739)

Total changes in equity

928(380,755)

414,396

330,631316

365,516(174,023)

191,493

Balance at end of year

460,790

84,0402,710,604

273,561(3,493)

3,525,502

932,730

4,458,232

Issuance of new shares (note 19)
Changes in non-controlling interests

See accompanying notes to consolidated financial statements.

F-4

Consolidated Statement of Cash Flows
Years ended March 31, 2022 and 2021

Millions of yen
Note

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 the equity method)
Proceeds from sale of investments in securities and other financial assets(including investments in subsidiaries and investments accounted for using the equity method)Other
Net cash provided by (used in) investing activities
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 year

See accompanying notes to consolidated financial statements.

F-5

5

2022

2021

670,864

518,510

540,252
35,091
168,469(40,485)(2,012)(102,135)(21,066)(33,292)(330,187)
156,475
9,679(29,122)(52,596)
969,935
16,372
18,824(26,698)(248,490)
729,943

491,663
109,009325,247(38,864)
1,337(452,422)(16,976)
89,722(47,937)(31,811)32,693(29,239)
11,322962,254
21,64820,560(22,368)(188,966)
793,128(296,968)(142,893)
109,836(254,750)(118,195)
83,483(933,200)(861,035)

168,892
45,467(1,048,866)

682,408
9,249(458,840)

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

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

69,125(47,059)

54,105203,555

1,015,886
968,827

812,3311,015,88625

Notes to Consolidated Financial Statements(1) Nature of Operations
Hitachi, Ltd. (the Company) is a corporation domiciled in Japan, whose shares are listed on the Tokyo Stock Exchange. The
accompanying consolidated financial statements comprise the Company, its subsidiaries and the Company’s interests in associates
and joint ventures. The Company’s and its subsidiaries’ businesses are global and diverse, and include manufacturing and services
in nine segments consisting of IT, Energy, Industry, Mobility, Smart Life, Automotive Systems, Hitachi Construction Machinery,
Hitachi Metals and Others.
(2) Basis of Presentation
As the Company meets the requirements of a “Specified Company applying Designated International Financial ReportingStandards” pursuant to Article 1-2 of the Ordinance on Terminology, Forms and Preparation Methods of Consolidated Financial
Statements (Ordinance of the Ministry of Finance of Japan No. 28 of 1976), the consolidated financial statements of the Company
have been prepared in accordance with International Financial Reporting Standards (IFRS) issued by the International AccountingStandards Board (IASB), as permitted by the provision of Article 93 of the Ordinance. The Company’s fiscal year begins on April 1
and ends on March 31 of the following calendar year.
The Company’s consolidated financial statements have been prepared on a historical cost basis, except for derivative assets andliabilities, financial assets and liabilities measured at fair value through profit or loss (FVTPL), financial assets measured at fairvalue through other comprehensive income (FVTOCI) and assets and liabilities associated with defined benefit plans.
The consolidated financial statements are presented in millions of Japanese yen, the functional currency of the Company.
Management of the Company has made a number of judgments, estimates and assumptions relating to the application of accounting
policies, reporting of revenues and expenses and assets and liabilities in the preparation of these consolidated financial statements.
Actual results could differ from those estimates.
Estimates and assumptions are continually evaluated. The effect of a change in accounting estimates, if any, is recognized in thereporting period in which the change was made and in future periods.
The information regarding judgments used in applying accounting policies that could have a material effect on the Company’s
consolidated financial statements is included in the following notes:
・note 3. (a) Basis of Consolidation・note 3. (d) Financial Instruments and note 26. Financial Instruments and Related Disclosures
The information regarding uncertainties arising from assumptions and estimates that could result in material adjustments in thesubsequent consolidated financial statements is included in the following notes:
・note 3. (j) Impairment of Non-financial Assets, note 9. Property, Plant and Equipment and note 10. Goodwill and Other
Intangible Assets
・note 3. (k) Retirement and Severance Benefits and note 15. Employee Benefits
・note 3. (l) Provisions, note 3. (n) Revenue Recognition, note 14. Provisions and note 20. Revenues
・note 3. (o) Income Taxes and note 12. Deferred Taxes and Income Taxes

F-6

Notes to Consolidated Financial Statements(3) Summary of Significant Accounting Policies(a) Basis of Consolidation(i) Subsidiaries
Subsidiaries are entities controlled by the Company. Control is obtained when the Company has risks or rights to variable
returns from its involvement with the entity and has the ability to use its power over the entity to affect the variable returns.
The Company consolidates all subsidiaries from the date on which the Company acquires control until the date on which theCompany loses control.
Subsidiaries’ financial statements are adjusted as necessary if their accounting policies differ from those of the Company.
Changes in ownership interests in subsidiaries without a loss of control are accounted for as equity transactions. Changes inownership interests in subsidiaries with a loss of control are accounted for by derecognizing assets and liabilities, noncontrolling interests, equity and accumulated other comprehensive income (AOCI) attributable to the subsidiaries.
(ii) Associates and Joint Ventures
Associates are entities over whose operational and financial policies the Company has the ability to exercise significant
influence but which are not controlled by the Company.
Joint ventures are jointly controlled by more than one party, including the Company, and require unanimous agreement of allparties in deciding operational and financial policies of the entity.
Investments in associates and joint ventures are accounted for using the equity method. The consolidated financial statementsof the Company include changes in profit or loss and other comprehensive income (OCI) of these associates and joint venturesfrom the date on which the Company obtains significant influence or joint control to the date on which it loses significant
influence or joint control. The financial statements of the associates and joint ventures are adjusted as necessary if theiraccounting policies differ from those of the Company.
(iii) Structured Entities
The Company consolidates structured entities in case it is exposed or has rights to variable returns from its involvement withsuch entities and has the ability to affect those returns through its power over the entities.
(b) Cash Equivalents
Cash equivalents are highly liquid investments with insignificant risk of changes in value, with original maturities of threemonths or less from the date of acquisition.
(c) Foreign Currency Translation
The consolidated financial statements are presented in Japanese yen, which is the Company’s functional currency.
(i) Foreign Currency Transactions
Foreign currency transactions are converted into the functional currency of each company using the exchange rate prevailingat the transaction date or a rate that approximates such rate. Monetary assets and liabilities denominated in foreign currencies
are converted into the functional currency using the exchange rate at the end of the reporting period. Foreign exchange gains
and losses resulting from the currency conversion and settlement are recognized in profit or loss, except where gains andlosses on assets or liabilities are recognized in OCI, foreign exchange effects relating to such assets or liabilities are also
recognized in OCI, and presented in AOCI.
(ii) Foreign Operations
Assets and liabilities of foreign entities are translated into Japanese yen using the exchange rate at the end of the reporting
period, and revenue and expense items are translated using the average exchange rates during the period. Gains or losses
derived from translating foreign entities’ financial statements are recognized in OCI, and presented in AOCI.

F-7

Notes to Consolidated Financial Statements(d) Financial Instruments(i) Non-derivative Financial Assets
The Company initially recognizes trade and other receivables on the date such receivables arise. All other financial assets are
initially recognized at the transaction date, on which the Company becomes a party to the agreement.
The Company derecognizes financial assets when contractual rights to cash flows from the financial assets expire or when thecontractual rights to receive cash flows from the financial assets are transferred in transactions where the risks and economic
rewards of owning the financial assets are substantially transferred. In transactions where the risks and economic rewards ofowning the financial assets are neither substantially transferred nor retained, the Company continues to recognize the financial
assets to the extent of its continuing involvement and derecognizes such financial assets only if its control is transferred.
The classification and measurement model of non-derivative financial assets is summarized as follows:
Financial Assets Measured at Amortized Cost
Financial assets are subsequently measured at amortized cost in case they meet the following requirements:
・The financial asset is held within a business model with the objective of collecting contractual cash flows.
・The contractual terms of the financial asset provide cash flows on specified dates that are solely payments of principal andinterest 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.
Interest accrued on financial assets measured at amortized cost is included in Interest income in the consolidated statement of
profit or loss.
FVTOCI Financial Assets
The Company holds certain equity instruments with the purpose of expanding its revenue base by maintaining andstrengthening business relations with the investees. These equity instruments are classified as FVTOCI financial assets bydesignation. They are initially and subsequently measured at fair value (including direct transaction costs), and the changes infair 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 theinvestment.
FVTPL Financial Assets
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 are subsequently measured at fair value(including direct transaction costs) and the changes in fair value are recognized in profit or loss.
Impairment of Financial Assets
On a regular basis, but no less frequently than at the end of each quarterly reporting period, the Company evaluates theallowance for doubtful receivables based on expected credit losses on trade receivables, contract assets, and other receivables
depending on whether the credit risk has increased significantly since initial recognition.
If the credit risk has increased significantly since initial recognition, the allowance for doubtful receivables is measured at theamount equal to the lifetime expected credit 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 is always
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. Default is defined as thestate in which a critical problem with debtor’s payment of contractual cash flows has been identified and there are no
reasonable expectations of recovering the financial asset in its entirety or a portion. To determine whether there have been any
changes in the risk of default, external credit ratings, past due information and other factors are mainly taken into
consideration.

F-8

Notes to 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 futurefrom the financial assets. If one or more events occur, such as overdue payments, extended payment terms, negative evaluationby third party credit rating agencies, and/or a deterioration in financial position and operating results, including capital deficit,
the financial assets are individually 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 thefinancial 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.
For the expected credit losses on trade receivables, contract assets, and other receivables, the allowances for doubtfulreceivables are recorded instead of directly reducing the carrying amounts. Changes in expected credit losses are recognized in
profit or loss as impairment losses and are included in Selling, general and administrative expenses in the consolidated
statement of profit or loss. For financial assets, after all means of collection have been exhausted and the potential for recovery
is considered remote, it is determined that there are no longer any reasonable expectations of recovering the financial assets intheir entirety or a portion and the carrying amounts are generally written off.
(ii) Non-derivative Financial Liabilities
The Company initially recognizes debt instruments on the date of issuance. All other financial liabilities are initiallyrecognized at the transaction date, on which the Company becomes a party to the agreement.
The Company derecognizes financial liabilities if extinguished, or if the obligation in the contract is redeemed or the liability
is discharged, cancelled or expires.
Non-derivative financial liabilities the Company holds include bonds, debts, trade payables and other financial liabilities. They
are initially measured at fair value (less direct transaction costs), and bonds and long-term debt are subsequently measured atamortized cost using the effective interest method. Interest accrued on these financial liabilities is included in Interest charges
in the consolidated statement of profit or loss.
(iii) Derivatives and Hedge Accounting
The Company uses derivative instruments including forward exchange contracts, cross currency swaps and interest rate swaps
in order to hedge foreign currency exchange risks and interest rate risks. All derivatives are measured at fair value irrespectiveof the objective and intent of holding them.
The Company accounts for hedging derivatives as follows:・Fair value hedge: a hedge of the fair value of a recognized asset or liability or of an unrecognized firm commitment. Thechanges in fair value of the recognized assets or liabilities or unrecognized firm commitments and the related derivatives areboth recorded in profit or loss if the hedge is considered effective.
・Cash flow hedge: a hedge of a forecast transaction or of the variability of cash flows to be received or paid related to arecognized asset or liability. The changes in fair value of the derivatives designated as cash flow hedges are recorded inother comprehensive income (OCI) if the hedge is considered effective. This treatment continues until profit or loss isaffected by the variability of cash flows or the unrecognized firm commitment of the designated hedged item, when changes
in fair value of the derivative are recognized in profit or loss. If a non-financial asset or a non-financial liability isrecognized due to a hedged forecast transaction, the changes in the fair value of the derivative recognized in OCI are
included directly in the acquisition cost or other carrying amount of the asset or liability when the asset or liability isrecognized.
The Company follows the documentation requirements as prescribed by IFRS 9 “Financial Instruments”, which includes therisk management objective and strategy for undertaking various hedge transactions. In addition, a formal assessment is madeat the hedge’s inception and subsequently on a periodic basis, as to whether the derivative used in hedging activities iseffective in offsetting changes in fair values or cash flows of the hedged items. Hedge accounting is discontinued if a hedge
becomes ineffective.

F-9

Notes to Consolidated Financial Statements(iv) Offsetting Financial Assets and Liabilities
Financial assets and liabilities are offset and reported as net amounts in the consolidated statement of financial position, only if
the Company currently has a legally enforceable right to set off the recognized amounts and intends to settle on a net basis or
to realize the asset and settle the liability simultaneously.
(e) Put Options of Non-controlling Interests
The Company and its subsidiaries recognize put options on shares of subsidiaries held by non-controlling interests as financial
liabilities at the present value of the exercise price. The Company derecognizes the non-controlling interests and recognizes thedifference between the present value and non-controlling interests in capital surplus.
(f) 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, and generally by the moving averagemethod for raw materials. Net realizable value is the estimated selling price in the ordinary course of business less the estimatedcosts of completion and the estimated costs necessary to sell.
(g) Property, Plant and Equipment
Property, plant and equipment are measured using the cost model and stated at cost less accumulated depreciation andaccumulated impairment losses. Acquisition cost includes direct costs of acquisition, costs of dismantling, removing andrestoration of the assets. Each asset is depreciated mainly using the straight-line method over the following estimated useful lives
for major classes of assets:
Buildings and structures
Machinery, equipment and vehicles
Tools, furniture and fixtures
Right-of-use assets

2 to 60 years
2 to 17 years
2 to 20 years
2 to 40 years

Estimated useful lives and the method of depreciation are reviewed at the fiscal year end. Changes in estimated useful lives ordepreciation method are accounted for on a prospective basis as a change in accounting estimate.
(h) Goodwill and Other Intangible Assets
Other intangible assets with finite useful lives are measured using the cost model and stated at cost less accumulated amortizationand impairment losses. Each asset is amortized mainly using the straight-line method over the following estimated useful lives for
major classes of assets:
Software for internal use
Software for sale
Other

2 to 10 years
2 to 10 years
2 to 20 years

Goodwill and Other intangible assets with indefinite useful lives are stated at cost less accumulated impairment losses.

F-10Notes to Consolidated Financial Statements(i) Leases(i) Lessee
The Company and certain subsidiaries lease facilities, mainly buildings, machines, and vehicles, and recognize a right-of-use
asset, a right to use the underlying asset, and a lease liability, an obligation to make lease payments, and recognize lease costs
as depreciation charges for right-of-use assets and interest expenses on lease liabilities. Lease payments for short-term leases
with a lease term of 12 months or less are recognized in profit or loss on a straight-line basis.
Right-of-use asset
A lessee shall apply a cost model to measure the right‑of‑use asset, and shall present the corresponding amount in Property,
Plant and Equipment or Other intangible assets as the amount of the right‑of‑use asset at cost at the commencement date of thelease less any accumulated depreciation and any accumulated impairment losses. The right-of-use asset at cost includes theamount of the initial measurement of the lease liability and the initial direct cost incurred by the lessee. The lessee shalldepreciate the right-of-use asset from the commencement date of the lease to the earlier of the end of the useful life of theunderlying asset or the end of the lease term on a straight-line basis. Changes in the useful life or the lease term are accounted
for on a prospective basis as a change in accounting estimate.
Lease liability
The lease liability is measured at the present value of lease payments that are not paid at the commencement date of the lease,
discounted using the interest rate implicit in the lease or the lessee’s incremental borrowing rate, and is included in the Current
portion of long-term debt or Long-term debt. Interest expense on the lease liability in each period during the lease term that
produce a constant periodic rate of interest on the remaining balance of the lease liability is recognized in profit or loss overthe lease term and is included in Interest charges in the consolidated statement of profit or loss.
(ii) Lessor
The Company and certain subsidiaries, as lessors, lease facilities, mainly buildings, machines, and equipment, whereby
substantially all the risks and rewards incidental to the ownership of items of property, plant and equipment are transferred to
the lessee. Therefore, such leases are classified as finance leases with the recognition of the underlying asset discontinued andthe present value of the total amount of lease payments is used to recognize and measure the net investment in the lease.
If substantially all the risks and rewards incidental to the ownership remain with the lessor in a lease, it is classified as an
operating lease, and the underlying asset is continuously recognized, and lease income is recognized over the lease term on astraight-line basis.
(j) Impairment of Non-Financial Assets
For each non-financial asset, the Company reviews the carrying amount and tests for impairment if there are events orcircumstances indicating an asset’s carrying amount may not be recoverable. For an asset that does not generate cash flows thatare largely independent of the cash flows from other assets, the Company considers indicators of impairment based on a cash
generating unit (CGU) or a group of CGUs. Irrespective of any indicators of impairment, the Company tests intangible assets withindefinite useful lives and goodwill for impairment annually, mainly in the fourth quarter, by estimating the recoverable amountof each CGU (or group of CGUs) to which such assets are allocated.
The Company measures the recoverable amount of an asset or a CGU (or a group of CGUs) as the higher of fair value less costsof disposal and value in use. In measuring fair values, the Company and its subsidiaries primarily use the income approach(present value technique) based on the estimated 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 ofsimilar public companies and the current gross value of the asset. The Company consults with outside specialists, as appropriate,
depending on the complexity of estimating fair values. 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 ofcapital. The business plan used is based on external information, reflects historical experiences, and generally has a maximum of
five years. Since the Company and its subsidiaries are engaged in a wide range of business activities from development,
production and sales of diverse products and the provision of various services, appropriate external information for each businessactivity is used for evaluating value in use for each business. Estimated cash flows beyond the period covered by the businessplan are calculated using the estimated growth rate not exceeding the long-term average growth rate of the market to which theasset belongs. Although a certain amount of negative impact caused by soaring material prices and a shortage of semiconductors
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 rate used to calculate the value in use is affected by stock market

F-11

Notes to Consolidated Financial Statements
trends and fluctuations in interest rates.
If the carrying amount of the asset or the CGU (or the group of CGUs) exceeds its recoverable amount, an impairment loss isrecognized at the excess amount.
For an asset or a CGU (or a group of CGUs) other than goodwill, its recoverable amount is subsequently estimated if there is asignificant change in facts and circumstances and there is an indication that an impairment loss previously recognized on the asset
may no longer exist or has decreased. If the estimated recoverable amount exceeds the carrying amount, the impairment loss
recognized previously is reversed to the extent of the carrying amount that would have been recorded, net of depreciation oramortization, if impairment had not been recognized previously.
(k) Retirement and Severance Benefits
The Company and certain subsidiaries have defined benefit pension plans, severance lump-sum payment plans and defined
contribution plans to provide retirement and severance benefits to employees.
(i) Defined Benefit Plans
Defined benefit pension 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 valueof 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 fair 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 lessthe fair value of plan assets is presented as the net amount of defined benefit liability or asset in non-current liabilities or assets.
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 the actuarial 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 judgments, but may be affected by variance of uncertain economic conditions in the
future or by amendments or issuance of related laws.
(ii) Defined Contribution Plans
Defined contribution pension plans are post-employment benefit plans in which the employer pays a certain amount of premiums
to the 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.
(l) Provisions
The Company recognizes provisions if it has a present obligation (legal or constructive) as a result of past events, it is probablethat an outflow of resources embodying economic benefits will be required to settle the obligation, and the amount of obligation
can be reliably estimated. Provisions may be affected by unexpected events or changes in circumstances, and actual payments
may differ from the estimates.
In case that the time to settle an obligation is expected to be long, and thus the time value of money is material, the amount of aprovision is measured at the present value of the amount of expenditures expected to be required to settle the obligation.
(m) Contingencies
The Company discloses contingent liabilities in accordance with International Accounting Standards (IAS) 37 “Provisions,Contingent Liabilities and Contingent Assets” if an obligation does not meet the recognition criteria of provisions prescribedabove in (l) Provisions, excluding those where the possibility of an outflow of resources is remote.
The Company and its subsidiaries have financial guarantee contracts that require them to make payments to compensate theholder for a loss it incurs if a specified debtor defaults on payment based on the terms of a debt instrument.

F-12

Notes to Consolidated Financial Statements(n) Revenue Recognition
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 each contract’s consideration and the time the Company entered intosuch contracts, and the transaction price is allocated 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-specificfactors 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 for transferringpromised goods or services to a customer. Variable consideration, such as discounts and rebates, is included in the transaction
price only to the extent that it is highly probable that a significant reversal in the amount of cumulative revenue recognized will
not occur when the uncertainty associated with the variable consideration is subsequently resolved. The promised amount ofconsideration 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 in consideration of the nature of thegoods 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 acontract as an asset if those costs are expected to be recovered, and those assets are amortized based on the methods used torecognize 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 the amortization 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 to variance of uncertain economic
conditions in the future and may vary due to a variety of reasons beyond our control. The Company reviews these estimates on an
ongoing basis and reflects them in accounting practices.
(o) Income Taxes
Deferred tax assets and liabilities resulting from temporary differences and others are accounted for based on a liability method.
Deferred tax liabilities are not recognized for temporary differences arising from goodwill, temporary differences arising from anasset or liability in a transaction other than a business combination, which at the time of transaction affects neither accounting nor
taxable income and future taxable difference arising from investments in subsidiaries, associates and joint ventures where that theCompany is able to control the timing of reversal of the temporary difference while it is probable that the temporary difference
will not reverse in the foreseeable future. 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 can be utilized. A certain amount of negative impact caused by soaring material prices and a shortage ofsemiconductors is included in estimates of future taxable income. The timing and amounts of taxable income may be affected byfluctuations due to uncertain economic conditions in the future, and the actual timing and amounts may differ from the estimates.
Current tax and deferred tax on items recognized in OCI are also recognized in OCI.
Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in whichthose temporary differences are expected to be reversed. The effect on deferred tax assets and liabilities of a change in tax rates isrecognized in profit or loss and OCI in the period that includes the enactment date.

F-13

Notes to Consolidated Financial Statements(p) Earnings per Share
Basic earnings per share (EPS) for net income attributable to Hitachi, Ltd. stockholders is calculated based on the weighted
average number of ordinary shares outstanding during the period. Diluted EPS for net income attributable to Hitachi, Ltd.
stockholders is calculated based on the sum of weighted average number of ordinary shares outstanding during the period and theconversion of securities with dilutive effects or the number of authorized shares.
(q) Business Combinations
Business combinations are accounted for using the acquisition method. The Company determines, on a transaction by transaction
basis, whether to measure non-controlling interests at fair value or by the appropriate share in the fair value of identifiable net
assets of the acquiree. Acquisition related costs are expensed in the period in which the costs are incurred.
(r) New Accounting Standards not yet Adopted by the Company
The impact of adopting the principal new accounting standards and interpretations issued or amended prior to the approval dateof the consolidated financial statements that is not yet adopted by the Company as of the reporting date on the Company’s
financial position and business performance will not be material.

F-14

Notes to Consolidated Financial Statements(4) Segment Information
Business Segments
The operating segments of the Company are the components for which separate financial information is available and which isevaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance.
The Company discloses its business in nine reportable segments, corresponding to categories of activities classified primarily by thesimilarities for the nature of markets, products and services, and economic characteristics. Several operating segments areaggregated into Energy, Industry, Mobility and Smart Life for financial reporting purposes so that users of the financial statements
better understand the Company’s financial position and business performance. The Company aggregates operating segments basedon the similarities of economic characteristics mainly using gross profit margin ratios of operating segments. The primary products
and services included in each segment are as follows:
IT:
Digital solutions (Consulting, Software, Cloud services, System integration, Control systems), IT products (Storage, Servers), andATMs
Energy:Energy solutions (Nuclear, Renewable energy, Thermal, Power grid)Industry:
Industry & distribution solutions, Water & environment solutions and Industrial machinery
Mobility:
Building systems (Elevators, Escalators) and Railway systems
Smart Life:
Smart life & ecofriendly systems (Home appliances, Air conditioners), Measurement and analytical systems (Medical and Bio,
Semiconductor, Industry)
Automotive Systems:
Powertrain, Chassis, Advanced driver assistance and Motorcycle
Hitachi Construction Machinery:Hydraulic excavators, Wheel loaders, Mining machinery, Maintenance and services, Construction solutions and Mine management
systems
Hitachi Metals:
Specialty steel products, Functional components and equipment, Magnetic materials and power electronics materials, and Wires,
cables and related products
Others:
Optical disk drives, Property management and others
In January 2021, Hitachi Automotive Systems, Ltd., a consolidated subsidiary of the Company, integrated management with Keihin
Corporation, Showa Corporation, and Nissin Kogyo Co., Ltd and established Hitachi Astemo, Ltd. Subsequently, on April 1, 2021,
in addition to the current five sectors which are the areas of focus of the Social Innovation Business, Hitachi Astemo, Ltd. was spunoff from the Smart Life segment and positioned as a business alongside the five sectors. Also, this change will facilitate swift
decision-making to establish a structure that will achieve smooth integration and growth strategies, create synergies and further
accelerate the growth of the business. As a result, effective from April 1, 2021, the Automotive systems segment is identified as aseparate reportable segment. Figures for the year ended March 31, 2021 have been restated on the basis of the reclassification.
Effective from April 1, 2022, the Company changed its business structure in order to realize further evolution and growth of theSocial Innovation Business and aim to realize a sustainable society. Accordingly, the Company will reclassify its reportablesegments in seven segments as Digital Systems & Services, Green Energy & Mobility, Connective Industries, Automotive Systems,
Hitachi Construction Machinery, Hitachi Metals, and others.

F-15

Notes to Consolidated Financial Statements
In addition, from the year ending March 31, 2023, the segment profit (loss), previously presented based on EBIT, will be changed
and presented on an Adjusted EBITA basis, as a measure of profit (loss) used by the chief operating decision maker mainly in
deciding how to allocate resources and in assessing performance. Adjusted EBITA represents the profit (loss) calculated bydeducting the selling, general and administrative expenses from the gross profit, adding back the amortization of intangible assets,etc. recognized upon business combinations, and adding the share of profits (losses) of investments accounted for using the equity
method.
The following tables show business segment information for the years ended March 31, 2022 and 2021.
Revenues from External Customers
Millions of yen
2022

2021

IT
EnergyIndustry
Mobility
Smart Life
Automotive Systems
Hitachi Construction Machinery
Hitachi Metals
Others1,988,339
1,388,891
737,850
1,420,031
966,489
1,591,093
1,022,793
915,250
223,401

1,892,355
1,054,555
669,956
1,191,702
1,156,351
982,316
812,341
735,728
221,422

Subtotal
Corporate items

10,254,137
10,4658,716,726
12,470Total

10,264,602

8,729,196

Revenues from Intersegment Transactions
Millions of yen
2022

2021

IT
EnergyIndustry
Mobility
Smart Life
Automotive Systems
Hitachi Construction Machinery
Hitachi Metals
Others

165,286
59,076
162,911
5,719
62,954
6,625
2,168
27,451
232,904

156,401
53,431
160,206
7,930
96,4005,267
990
25,887
227,586

Subtotal
Corporate items and Eliminations

725,094(725,094)

734,098(734,098)

-

-

Total

F-16

Notes to Consolidated Financial Statements
Total Revenues
Millions of yen
2022

2021

IT
EnergyIndustry
Mobility
Smart Life
Automotive Systems
Hitachi Construction Machinery
Hitachi Metals
Others2,153,625
1,447,967
900,761
1,425,750
1,029,443
1,597,718
1,024,961
942,701
456,305

2,048,756
1,107,986
830,162
1,199,632
1,252,751
987,583
813,331761,615
449,008

Subtotal
Corporate items and Eliminations

10,979,231(714,629)

9,450,824(721,628)

Total

10,264,602

8,729,196

Segment Profit (Loss)
Millions of yen
2022

2021

IT
EnergyIndustry
Mobility
Smart Life
Automotive Systems
Hitachi Construction Machinery
Hitachi Metals
Others240,600
26,617
79,477
113,654
137,758
60,897112,233
34,19232,552244,860(55,567)
42,366129,036
202,187
4,340
27,678(49,155)
25,319Subtotal
Corporate items and Eliminations

837,980
12,971

571,064
279,223

Total
Interest income
Interest charges

850,951
15,492(27,110)850,287
16,934(22,778)

Income from continuing operations, before income taxes

839,333

844,443

Segment profit (loss) is measured by EBIT.
Intersegment transactions are generally recorded at the same prices used in arm’s length transactions. Corporate items include
corporate expenses not allocated to individual business segments, such as expenditures for advanced R&D, a part of net gain (loss)
on business reorganization and share of profits (losses) of investments accounted for using the equity method, and others.

F-17

Notes to Consolidated Financial Statements
Total Assets
Millions of yen
March 31, 2022

March 31, 2021

IT
EnergyIndustry
Mobility
Smart Life
Automotive Systems
Hitachi Construction Machinery
Hitachi Metals
Others2,987,359
2,453,215
1,064,214
2,049,840
1,216,090
1,612,438
1,440,674
1,072,025
2,058,239

2,060,781
2,277,117
986,3141,887,517
1,194,891
1,605,474
1,252,172
976,773
2,110,609

Subtotal
Corporate assets and Eliminations

15,954,094(2,066,592)

14,351,648(2,498,795)

Total

13,887,502

11,852,853

Corporate assets mainly consist of cash and cash equivalents, investments in securities and other financial assets, and investments
accounted for using the equity method.

F-18

Notes to Consolidated Financial Statements
Investments Accounted for Using the Equity Method
Millions of yen
March 31, 2022

March 31, 2021

IT
EnergyIndustry
Mobility
Smart Life
Automotive Systems
Hitachi Construction Machinery
Hitachi Metals
Others50,39749,85423,78931,055
124,750
10,271
26,661
11,611
3,778

48,47143,546
21,50424,89977,162
9,455
30,486
11,494
4,893

Subtotal
Corporate items and Eliminations

332,166
79,035271,910200,195

Total

411,201

472,105

Goodwill
Millions of yen
March 31, 2022

March 31, 2021

IT
EnergyIndustry
Mobility
Smart Life
Automotive Systems
Hitachi Construction Machinery
Hitachi Metals
Others

1,137,719
513,616
168,475
82,374
3,725
97,15455,367
95,276-214,280
480,006
155,240
76,051
3,475
94,55750,95586,646-

Subtotal
Corporate items

2,153,706-

1,161,210-

Total

2,153,706

1,161,210

F-19

Notes to Consolidated Financial Statements
Depreciation and Amortization
Millions of yen
2022

2021

IT
EnergyIndustry
Mobility
Smart Life
Automotive Systems
Hitachi Construction Machinery
Hitachi Metals
Others118,080
91,00522,83336,64032,622
93,93356,54946,53132,857

107,649
86,726
24,57830,95736,56760,71051,24650,40733,887

Subtotal
Corporate items and Eliminations

531,0509,202

482,727
8,936

Total

540,252

491,663

Depreciation consists of that of property, plant and equipment and investment properties.
Impairment Losses
Millions of yen
2022

2021

IT
EnergyIndustry
Mobility
Smart Life
Automotive Systems
Hitachi Construction Machinery
Hitachi Metals
Others

20,575
1,766
4,483
1,025
4,594
196
1,009
1,865

17,112
2,692
11,358816
5,664
34,2701,391
35,857469

Subtotal
Corporate items and Eliminations

35,513(422)

109,629
(620)

Total

35,091109,009

Impairment losses mainly consist of those recognized on property, plant and equipment, investment properties, goodwill and otherintangible assets.

F-20

Notes to Consolidated Financial Statements
Share of Profits (Losses) of Investments Accounted for Using the Equity Method
Millions of yen
2022

2021

IT
EnergyIndustry
Mobility
Smart Life
Automotive Systems
Hitachi Construction Machinery
Hitachi Metals
Others

2,286
4,955
3,142
2,047
15,202
526
6,224
1,152
134

1,732
4,545
2,462
6,966
12,535
380
1,428
77
541

Subtotal
Corporate items and Eliminations

35,6684,817

30,666
8,198

Total

40,48538,864

Share of profits (losses) of investments accounted for using the equity method includes impairment losses and reversal of
impairment losses on investments accounted for using the equity method.
Capital Expenditures
Millions of yen
2022

2021

IT
EnergyIndustry
Mobility
Smart Life
Automotive Systems
Hitachi Construction Machinery
Hitachi Metals
Others122,789
76,46020,82647,45742,525100,006
49,11934,35422,722

127,277
49,162
22,26036,64264,33675,32339,64028,80637,379Subtotal
Corporate items and Eliminations

516,258
15,769480,825(2,677)

Total

532,027

478,148

Capital expenditures represent additions to property, plant and equipment, investment properties and other intangible assets.

F-21

Notes to Consolidated Financial Statements
Geographic Information
The following table shows revenues attributed to geographic areas based on the location of the customers for the years ended March
31, 2022 and 2021.
Millions of yen
2022

2021

Japan

4,187,077

4,154,818

Asia
North America
EuropeOther Areas

2,514,843
1,555,142
1,299,413
708,127

1,893,620
1,117,554
1,013,487
549,717

Overseas Revenues Subtotal

6,077,525

4,574,378

Total Revenues

10,264,602

8,729,196

Revenues in China for the years ended March 31, 2022 and 2021 were 1,331,618 million yen and 1,043,279 million yen,respectively. Revenues in the U.S.A. for the years ended March 31, 2022 and 2021 were 1,411,681 million yen and 1,012,134
million yen, respectively. Revenues from external customers attributable to any individual country and region other than Japan,
China and the U.S.A. were not material for the years ended March 31, 2022 and 2021.
The following table shows the balances of property, plant and equipment, investment properties, goodwill and other intangible
assets for each geographic area as of March 31, 2022 and 2021.
Millions of yen
March 31, 2022

March 31, 2021

Japan
Asia
North America
EuropeOther Areas

1,689,869
606,730
1,895,835
1,468,064
262,535

1,767,672
543,842
677,996
1,322,323
263,152

Subtotal
Corporate items and Eliminations

5,923,033
7,756

4,574,985
5,325

Total

5,930,789

4,580,310

The balances of property, plant and equipment, investment properties, goodwill and other intangible assets in the U.S.A. as ofMarch 31, 2022 and 2021 were 1,880,653 million yen and 657,570 million yen, respectively. The balances of property, plant andequipment, investment properties, goodwill and other intangible assets in the Swiss Confederation as of March 31, 2022 and 2021
were 1,124,510 million yen and 1,065,360 million yen, respectively. The balances of property, plant and equipment, investment
properties, goodwill and other intangible assets in any individual country and region other than Japan, the U.S.A. and the Swiss
Confederation were not material as of March 31, 2022 and 2021.
Significant Customer Information
There was no concentration of revenues from a specific customer for the years ended March 31, 2022 and 2021.

F-22

Notes to Consolidated Financial Statements(5) Business Acquisitions and Divestitures
The following are the main Business Acquisitions and Divestitures for the year ended March 31, 2022, including the period up to
the approval date of the consolidated financial statements.
(a) Sale of all shares of Hitachi Transport System, Ltd. (Hitachi Transport System)
On April 28, 2022, the Company entered into an agreement regarding the following three points, etc. for the common stocks of
Hitachi Transport System (Hitachi Transport System Shares), an equity method affiliate of the Company, with HTSK Co., Ltd.
(Offeror), a wholly owned subsidiary of HTSK Holdings Co., Ltd. (Offeror Parent), all equity interests in which are currently
owned by HTSK Investment L.P., which is indirectly held and operated by Kohlberg Kravis Roberts & Co. L.P.
(i) The Offeror will launch a tender offer (Tender Offer) for Hitachi Transport System Shares and the Company will not tender
any of its shares of Hitachi Transport System (Shares to Be Sold by the Company) in the Tender Offer.
(ii) The Company will sell the Shares to Be Sold by the Company in accordance with the share repurchase to be conducted by
Hitachi Transport System.
(iii) The Company obtains 10.0 billion yen worth of the Offeror Parent’s shares with voting rights (equivalent to 10% of the total
voting rights).
The consideration is expected to be approximately 222.0 billion yen.
Assuming the transaction is settled, Hitachi Transport System will be no longer the Company’s equity method affiliate. An
expected gain on the sale of Hitachi Transport System Shares in the amount of approximately 140.0 billion yen will berecognized in Other income in the consolidated statement of profit or loss for the year ending March 31, 2023.
(b) Sale of shares of Hitachi Construction Machinery Co., Ltd. (Hitachi Construction Machinery)
On January 14, 2022, the Company entered into an agreement regarding the transfer of a part of the shares of Hitachi
Construction Machinery, a consolidated subsidiary of the Company in the Hitachi Construction Machinery segment, with HCJI
Holdings G.K., a special purpose company which is expected to be jointly invested by HCJ Holdings2 G.K., a special purpose
company wholly owned by a fund that Japan Industrial Partners, Inc. manages, operates, and provides information, and Citrus
Investment LLC, a special purpose company wholly owned by ITOCHU Corporation.
The consideration is expected to be approximately 182.4 billion yen. Assuming the transaction is settled, it is expected that theCompany’s ownership ratio of shares of Hitachi Construction Machinery will decrease from 51.4% to 25.4%, and Hitachi
Construction Machinery will turn into an equity-method associate of the Company.
An expected gain on the sale of Hitachi Construction Machinery shares in the amount of approximately 62.0 billion yen will berecognized in Other income in the consolidated statement of profit or loss for the year ending March 31, 2023. Furthermore, noncontrolling interests in Hitachi Construction Machinery will decrease approximately 369.0 billion yen in the consolidated
statement of changes in equity for the year ending March 31, 2023.
(c) Acquisition of Thales’ ground transportation systems business
On August 3, 2021, Hitachi Rail Ltd. (Hitachi Rail), a consolidated subsidiary of the Company in the Mobility segment, signed
an agreement with Thales S.A. (Thales) to acquire the ground transportation systems business in order to expand the rail
signalling systems business globally. Based on the agreement, Hitachi Rail will acquire Thales’ ground transportation systems
business which will be carved out from Thales. The transaction is subject to the usual conditions including regulatory andantitrust clearances and is expected to be completed by the fiscal year ending March 31, 2023. Hitachi Rail agreed on an
enterprise value of 1,660 million euro (approximately 215.0 billion yen) and the final purchase price will be determined after
certain adjustments. The effects of this transaction on the Company’s consolidated financial statements are currently being
evaluated.

F-23

Notes to Consolidated Financial Statements(d) Sale of all shares of Hitachi Metals, Ltd. (Hitachi Metals)
On April 28, 2021, the Company entered into an agreement regarding the following four points for the common stocks of Hitachi
Metals (Hitachi Metals Shares), a consolidated subsidiary of the Company in the Hitachi Metals segment, with K. K. BCJ-52(Tender Offeror), a wholly owned company of G.K. BCJ-51, the outstanding shares of which are indirectly owned by investment
funds which Bain Capital Private Equity, LP and its group provide with investment advice.
(i) Tender Offeror will launch a tender offer (Tender Offer) for Hitachi Metals Shares, when conditions for the commencementof Tender Offer are satisfied, and the Company will not apply for Tender Offer with regard to all of the Hitachi Metals
Shares held by the Company (Shares to Be Sold by the Company).
(ii) In the event Tender Offer is enacted and Tender Offeror is unable to acquire all of the Hitachi Metals Shares (excluding
treasury stock held by Hitachi Metals and Shares to Be Sold by the Company) in Tender Offer, Tender Offeror and theCompany will request convening of a general meeting of shareholders on the matter of items required for implementation ofshare consolidation (Share Consolidation) on Hitachi Metals and exercise approval right for the proposal.
(iii) As promptly as practically possible after Tender Offeror and the Company become holders of all shares of Hitachi Metals(excluding treasury stock held by Hitachi Metals) as a result of Share Consolidation, capital reduction and other measures(Capital Reduction) will be performed for Hitachi Metals in order to secure distributable amount required for acquisition oftreasury stock by Hitachi Metals (Share Repurchase).
(iv) Immediately after Capital Reduction takes effect, Shares to Be Sold by the Company will be transferred to Hitachi Metals asa result of Share Repurchase.
The consideration is expected to be approximately 382.0 billion yen.
Assuming the transaction is settled, it is expected that the Company will transfer Shares to Be Sold by the Company. As a result,
the Company’s ownership ratio of Hitachi Metals Shares will decrease from 53.4% to 0%, and Hitachi Metals will bedeconsolidated. An expected gain on the sale of Hitachi Metals Shares in the amount of approximately 106.0 billion yen will berecognized in Other income in the consolidated statement of profit or loss for the year ending March 31, 2023. Furthermore, noncontrolling interests in Hitachi Metals will decrease approximately 255.0 billion yen in the consolidated statement of changes inequity for the year ending March 31, 2023.
(e) Acquisition of GlobalLogic Inc.
On March 31, 2021, the Company decided to acquire GlobalLogic Inc. (GlobalLogic), a leading U.S.-headquartered digitalengineering service company, in order to strengthen the digital portfolio of “Lumada” and the definitive agreement was signed
among Hitachi Global Digital Holdings LLC (HGDH) which is a subsidiary located in the U.S., MergeCo H Global Inc. (SPC)
which was established by HGDH for the acquisition and GlobalLogic Worldwide Holdings, Inc. (GlobalLogic Worldwide
Holdings) which is the parent company of GlobalLogic.
On July 13, 2021, HGDH acquired 100% of the outstanding shares of GlobalLogic Worldwide Holdings and GlobalLogic
Worldwide Holdings and GlobalLogic have become wholly owned subsidiaries of the Company, as a result of the transaction,
including the merger of SPC with and into GlobalLogic Worldwide Holdings, which is the surviving company.
The following table summarizes the fair value of the consideration paid for GlobalLogic and the amounts of the assets acquired,liabilities assumed and goodwill recognized as of the acquisition date.
Millions of yen
11,39130,266
2,692
4,324

Cash and cash equivalents
Trade receivables and contract assets
Other current assets
Non-current assets (excluding intangible assets)
Intangible assets
Goodwill (not deductible for tax purposes)
Other intangible assets
Total

822,173
231,130
1,101,976

Current liabilities
Non-current liabilities
Total

134,272
45,454
179,726

Cash paid for the acquisition

922,250F-24

Notes to Consolidated Financial Statements
The goodwill mainly comprises excess earning power and expected synergies arising from the acquisition.
Other intangible assets include the intangible asset representing customer relationships in the amount of 227,424 million yen.
The intangible asset representing customer relationships is measured based on assumptions such as revenue growth rates,
EBITDA ratios, revenue growth rate for existing customers, attrition rate of existing customers, and discount rate.
Acquisition related costs included in Other expenses in the consolidated statement of profit or loss for the year ended March 31,
2022 were 3,874 million yen.
In addition to this acquisition, Hitachi America Capital, Ltd. which is a subsidiary located in the U.S., repaid 1,074 million U.S.
dollars (118,554 million yen) of certain loans owed by GlobalLogic.
The operating results of GlobalLogic for the period from the acquisition date to March 31, 2022 were not material.
On a pro forma basis, revenues and net income using an assumed acquisition date for GlobalLogic of April 1, 2021 would not
differ materially from the amounts reported in the consolidated financial statements for the year ended March 31, 2022.
On April 1, 2022, HGDH changed its name to Hitachi Digital LLC.
(f) Reorganization of the Global Home Appliances Business (excluding Japan)
On December 16, 2020, Hitachi Global Life Solutions, Inc. (Hitachi GLS), a consolidated subsidiary of the Company in the
Smart Life segment, and Arçelik A.S. (Arçelik) signed a share purchase agreement to establish a new joint venture company.
Based on the agreement, Hitachi GLS established a new company and transferred its global home appliances business outside ofJapan into the new company on July 1, 2021, and Hitachi GLS transferred 60% of the shares of common stock of the newcompany to Arçelik. The consideration is 350 million U.S. dollars (38,797 million yen). As a result, Hitachi GLS’s ownership
ratio of shares of the new company decreased from 100% to 40%, and the new company turned into an equity-method associateof the Company.

F-25

Notes to Consolidated Financial Statements

The following are the main Business Acquisitions and Divestitures for the year ended March 31, 2021.
(a) Sale of Diagnostic Imaging-related Business
On December 18, 2019, the Company signed an agreement with FUJIFILM Corporation (Fujifilm) regarding the transfer of the
Diagnostic Imaging-related Business included in the Company, the Company’s subsidiaries and associates in the Smart Lifesegment to Fujifilm.
The Company transferred all shares of common stock of FUJIFILM Healthcare Corporation (Fujifilm Healthcare) established by
the Company to Fujifilm after the Diagnostic Imaging-related Business is succeeded to Fujifilm Healthcare from the Company
through an absorption-type company split. The consideration to be received by the Company was 185,349 million yen.
As a result, the Company’s ownership ratio of shares of Fujifilm Healthcare decreased from 100% to 0%, and Fujifilm
Healthcare was deconsolidated. A gain on the sale of shares of Fujifilm Healthcare in the amount of 118,320 million yen wasrecognized in Other income in the consolidated statement of profit or loss for the year ended March 31, 2021.
(b) Reorganization of automotive systems business
On October 30, 2019, the Company and Hitachi Automotive Systems, Ltd. (HiAMS), a consolidated subsidiary of the Company
in the Automotive Systems segment, signed an agreement with Honda Motor Co., Ltd. (Honda), and Keihin Corporation(Keihin), Showa Corporation (Showa), and Nissin Kogyo Co., Ltd (Nissin Kogyo) (together, “the Associates of Honda”), to
integrate management of HiAMS and the Associates of Honda, in order to strengthen development and distribution of global andcompetitive solutions in the CASE area.
On January 1, 2021, HiAMS and the Associates of Honda conducted an absorption-type merger in which HiAMS is thesurviving company and each of the Associates of Honda are the disappearing companies, and established Hitachi Astemo, Ltd.
(Astemo). As a result, the Company’s ownership ratio of shares of Astemo became 66.6% and Astemo turned into a subsidiaryof the Company.
The consideration was the common shares of Astemo. The fair value of the consideration was allocated as follows: 88,747
million yen for Keihin, 59,062 million yen for Showa, and 48,242 million yen for Nissin Kogyo. The fair value of theconsideration was based on the valuation of HiAMS and the Associates of Honda agreed by the Company and Honda. For theagreement, the Company verified the validity of the valuation by taking into account the results of fair value measurements
conducted by third-party valuation specialists and other factors.
In addition to this acquisition, the Company’s ownership interest in the former HiAMS decreased from 100% prior to the
execution of this acquisition to 66.6%, and the Company recognized increases in capital surplus and non-controlling interests inthe amounts of 117,865 million yen and 81,242 million yen, respectively, for the year ended March 31, 2021.

F-26

Notes to Consolidated Financial Statements

The following table summarizes the fair value of the consideration paid for the Associates of Honda and the amounts of theassets acquired, liabilities assumed, goodwill and non-controlling interests recognized as of the acquisition date.
Millions of yen
158,503
115,185
113,033
67,656
231,139

Cash and cash equivalents
Trade receivables and contract assets
Inventories
Other current assets
Property, plant and equipment
Intangible assets
Goodwill (not deductible for tax purposes)
Other intangible assets
Other non-current assets
Total

44,69864,216
51,661
846,091

Current liabilities
Long-term debt
Other non-current liabilities
Total

229,550
273,791
42,872546,213

Common shares of Astemo transferred for the acquisitionNon-controlling interests
Total

196,058
103,820
299,878

The goodwill mainly comprises excess earning power and expected synergies arising from the acquisition.
Non-controlling interests are measured based on the proportionate share of the fair value of the identifiable net assets of the
Associates of Honda.
Acquisition related costs of 5,246 million yen have been posted up to the year ended March 31, 2021. Acquisition related costs
included in Other expenses in the consolidated statement of profit or loss for the year ended March 31, 2021 were 2,298 million
yen.
The operating results of the Associates of Honda for the period from the acquisition date to March 31, 2021 were not material.
Assuming that such acquisition occurred as of April 1, 2020, the results of operations of the Company for the year ended March
31, 2021 (pro forma information not subject to the audit) are as follows:
Millions of yen
9,225,776
830,340
458,931

Revenues
EBIT
Net income

F-27Notes to Consolidated Financial Statements(c) 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. (MHI) regarding the transfer price adjustment, etc. for the South African project previously in the processof arbitration based on economic rationality and business strategy, etc., and reached a settlement agreement with MHI on thesame day. As a result of the conclusion of this settlement, it was agreed that all common shares of Mitsubishi Hitachi Power
Systems, Ltd. (MHPS) held by the Company would be transferred to MHI, and the Company would pay 130,000 million yen to
MHI comprising a 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 (MHPS Africa) to be transferred to MHI. Accordingly, theCompany recorded other accounts payable of 200,000 million yen related to the settlement payment to MHI and other provisionof 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 ofthis agreement. As a result of the above, the Energy segment recorded a loss of 375,967 million yen due to the settlement, whichis included in Other expenses in the consolidated statement of profit or loss for the year ended March 31, 2020. Regarding theassets to be transferred to MHI under this agreement, the shares of MHPS previously included in Investments accounted forusing 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 of which was
333,614 million yen, were reclassified to Other current assets in the consolidated statement of financial 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. On September 1, 2020,
all shares of MHPS held by the Company, 263,614 million yen, which had been classified as held-for-sale assets, weretransferred to MHI, and MHPS ceased to be an associate. Accordingly, the Company reversed other provision of 273,272
million yen related to the transfer of shares of MHPS, which had been included in Other current liabilities in the consolidated
statement of financial position. On September 14, 2020, the Company and MHI received a notice from the Japan Commercial
Arbitration Association stating that the arbitration was closed.
On September 1, 2020, MHPS changed its name to Mitsubishi Power, Ltd.

F-28

Notes to Consolidated Financial Statements(d) Acquisition of ABB's power grids business
On December 17, 2018, the Company decided to acquire the power grid business of ABB Ltd (ABB) and signed an acquisition
agreement with ABB in order to strengthen and expand energy solution business globally. Pursuant to this agreement, theCompany invested 80.1% in Hitachi ABB Power Grids Ltd (Hitachi ABB Power Grid), which was spun off from ABB, and theacquisition was completed on July 1, 2020. As a result, Hitachi ABB Power Grid became a subsidiary of the Company. The
Company has a call option to purchase 19.9% of the shares of Hitachi ABB Power Grid held by ABB, and ABB has a put option
to sell 19.9% of the shares of Hitachi ABB Power Grid held by ABB to the Company exercisable after 2023.
The following table summarizes the fair value of the consideration paid for Hitachi ABB Power Grid and the amounts of theassets acquired, liabilities assumed, goodwill and non-controlling interests recognized as of the acquisition date.

Millions of yen
65,466372,999
174,198
63,883
239,287

Cash and cash equivalents
Trade receivables and contract assets
Inventories
Other current assets
Property, plant and equipment
Intangible assets
Goodwill (not deductible for tax purposes)
Other intangible assets
Other non-current assets
Total

448,977444,501
16,9101,826,221

Trade payables
Contract liabilities
Other current liabilities
Long-term debt
Other non-current liabilities
Total

199,789
140,005
215,595
349,189
120,332
1,024,910

Cash paid for the acquisitionNon-controlling interests
Total

722,062
79,249801,311

The goodwill mainly comprises excess earning power and expected synergies arising from the acquisition.
Other intangible assets include material intangible assets in the amount of 414,544 million yen (customer relationships of
233,989 million yen, technology of 95,987 million yen, order backlog of 53,542 million yen, and brand license agreement of
31,026 million yen). These intangible assets are measured based on assumptions such as revenue growth rates, gross profit
ratios, attrition rates of existing customers, royalty rates and discount rates.
Non-controlling interests are measured based on the proportionate share of the fair value of the identifiable net assets of Hitachi
ABB Power Grid.
Acquisition related costs of 8,300 million yen have been posted up to the year ended March 31, 2021, and acquisition related
costs included in Other expenses in the consolidated statement of profit or loss for the year ended March 31, 2021 were 2,909
million yen.
In addition to this acquisition, the Company repaid 3,000 million U.S. dollars (323,190 million yen) of certain loans owed by
Hitachi ABB Power Grid from ABB's subsidiary, ABB Capital B.V., and the repayment is included in Purchase of investments
in securities and other financial assets (including investments in subsidiaries and investments accounted for using the equity
method) under Cash flows from investing activities in the consolidated statement of cash flows for the year ended March 31,
2021.
The results of operations of Hitachi ABB Power Grid from the date of acquisition to March 31, 2021 (prior to elimination ofintercompany transactions) included in the consolidated statement of profit or loss are Revenues of 722,351 million yen, EBIT

F-29

Notes to Consolidated Financial Statementsof (32,233) million yen, and Net income of (27,507) million yen. EBIT and Net income include depreciation and amortization of
52,459 million yen on Other intangible assets and PP&E that were recognized as a result of this acquisition.
Assuming that such acquisition occurred as of April 1, 2020, the results of operations of the Company for the year ended March
31, 2021 (pro forma information not subject to the audit) are as follows:
Millions of yen
8,951,675
842,077
508,595

Revenues
EBIT
Net income

Hitachi ABB Power Grid's historical financial information has been adjusted from U.S. GAAP to IFRS to generate pro forma
information. EBIT and Net income include depreciation and amortization of 65,926 million yen on Other intangible assets andPP&E that were recognized as a result of this acquisition.
On June 30, 2021, Hitachi ABB Power Grid changed its name to Hitachi Energy Ltd.
(e) Additional acquisition of shares of Hitachi High-Tech Corporation (Hitachi High-Tech)
On January 31, 2020, the Company decided to conduct a tender offer to acquire all issued shares of Hitachi High-Tech, aconsolidated subsidiary of the Company in the Smart Life segment, to establish the measurement and analysis platform tostrengthen 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 theCompany. As a result, the Company’s ownership ratio of shares of Hitachi High-Tech increased to 100% on May 20, 2020. The
total consideration paid was 531,084 million yen, and the Company recognized decreases in capital surplus of 321,627 million
yen and non-controlling interest of 209,457 million yen, respectively, for the year ended March 31, 2021.
(f) Sale of all shares of Hitachi Chemical Company, Ltd. (Hitachi Chemical)
On December 18, 2019, the Company signed a tender offer agreement with Showa Denko K.K. (Showa Denko) and HC
Holdings K.K. (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 the Company, 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. HC Holdingscommenced the tender offer on March 24, 2020, and the tender offer was completed on April 20, 2020. The consideration
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%, and Hitachi Chemical
was deconsolidated. A gain on the sale of shares of Hitachi Chemical in the amount of 278,839 million yen was recognized in
Other income in the consolidated statement of profit or loss for the year ended March 31, 2021. Furthermore, non-controllinginterests in Hitachi Chemical decreased 220,402 million yen in Changes in non-controlling interests in the consolidated
statement of changes in equity for the year ended March 31, 2021.
On October 1, 2020, Hitachi Chemical changed its name to Showa Denko Materials Co., Ltd.

F-30

Notes to Consolidated Financial Statements(6) Trade Receivables and Contract Assets
The components of trade receivables and contract assets are as follows:
Millions of yen
March 31, 2022
Accounts receivable

March 31, 2021

2,210,590

1,948,569

Contract assets

623,766

634,318

Others143,793

151,589

Total

2,978,149

2,734,476

Trade receivables and contract assets are stated as net of the allowance for doubtful receivables.
Others include notes receivable and electronically recorded monetary claims.
(7) Inventories
The components of inventories are as follows:
Millions of yen
March 31, 2022

March 31, 2021

Finished goods

713,421656,527

Semi-finished goods and work in process

772,881

628,039

Raw materials

556,130

368,829

2,042,432

1,653,395

Total

For the years ended March 31, 2022 and 2021, the amounts of inventories expensed and included as cost of sales were 6,398,165
million yen and 5,339,244 million yen, respectively, and the write-downs of inventories were 54,615 million yen and 64,351 million
yen, respectively.
(8) Investments Accounted for Using the Equity Method
The aggregated carrying amounts of investments accounted for using the equity method as of March 31, 2022 and 2021, and theCompany and certain subsidiaries’ share of total comprehensive income of equity-method associates and joint ventures for the years
ended March 31, 2022 and 2021 are as follows:
Millions of yen
Associates
Carrying amount of investments

Joint ventures

March 31, 2022

March 31, 2021

March 31, 2022

March 31, 2021

342,190409,779

69,011

62,326

As of March 31, 2022 and 2021, the Company and certain subsidiaries’ interests in certain joint ventures operating at a loss have thecumulative loss exceeding the Company and certain subsidiaries’ investments, and thus the negative amounts of 17,067 million yen
and 41,258 million yen, respectively, were recognized in Other non-current liabilities.
Millions of yen
Associates
2022

Joint ventures
2021

2022

2021

Income fromcontinuing operations

34,57630,337

Other comprehensive income

9,887

27,2595,909
30,917

8,527
33,647

Total comprehensive income

44,46357,59636,82642,174

In addition to the share of Income from continuing operations of equity method associates and joint ventures, impairment losses andreversal of impairment losses on investments accounted for using the equity method were recognized in Share of profit (loss) ofinvestments accounted for using the equity method. The impairment losses recognized in the consolidated statement of profit or loss
for the year ended March 31, 2021 were 12,104 million yen. The impairment losses previously recognized on investments accounted
for using the equity method were reversed by 17,217 million yen in the year ended March 31, 2021.

F-31

Notes to Consolidated Financial Statements(9) Property, Plant and Equipment
The following table shows the changes in the net carrying amounts of property, plant and equipment.
Millions of yen
Tools,
furnitureandfixtures

Right-of-use
assetsOther

Constructionin progress

Total

Land

Buildings Machineryandandstructures
vehicles

274,106

675,552

553,148

176,748

267,279

102,129

116,349

2,165,311

61

5,362

25,937

21,845

107,742-

198,615

359,562(439)

56,067

90,83854,870

(558)

1,567

(202,345)-(3,175)(17,707)(9,600)(5,194)(4,298)(9,646)(2,086)(51,706)

Net carrying amountMarch 31, 2020
Additions
Transfers between
accounts
Sales and disposals
Depreciation
Impairment losses
Acquisitions anddivestitures
Currency translation effect-(51,134)(117,123)(64,127)(92,743)(18,198)-(343,325)(4,655)(11,611)(46,680)(4,374)(6,259)(71)(2,619)(76,269)

11,931

39,388144,224(5,766)18,092(63)

23,699231,505

4,269

18,57323,255

4,218

10,064

2,919

4,800

68,098Other(3,984)

3,691

174

9,239

4,008

42,915(332)

55,711March 31, 2021

278,114718,181664,173

187,459

303,327

121,552

136,0812,408,887

Additions

2,184

8,471

34,21318,924

98,7881,879

224,288388,747

Transfers between
accounts(1,024)

48,10791,49840,279(1,849)6,439(183,450)-

Sales and disposals(20,441)(15,460)(5,441)(2,814)(11,634)(16,676)(1,907)(74,373)-(55,337)(137,659)(67,363)(98,514)(21,722)-(380,595)

Impairment losses(3,858)(2,313)(5,231)(1,595)(3,254)(46)(1,093)(17,390)

Acquisitions anddivestitures(1,497)(2,597)(688)(3,971)

(709)

3,837

(366)

(5,991)

Currency translation effect

3,720

26,462

37,617

5,805

15,324

3,806

10,929103,663

Other

(806)

(2,447)

852

7,097

10,94149,405(9,089)55,953

256,392

723,067

679,334

183,821

312,420

148,474

175,3932,478,901

Depreciation

March 31, 2022

The amount of depreciation recognized is included in Cost of sales and Selling, general and administrative expenses in the
consolidated statement of profit or loss. Impairment losses are included in Other expenses in the consolidated statement of profit or
loss.

F-32

Notes to Consolidated Financial Statements
The following table shows the gross carrying amounts and accumulated depreciation and impairment losses of property, plant andequipment.
Millions of yen
Land

Buildings Machineryandandstructures
vehiclesTools,
furnitureandfixtures

March 31, 2020

346,566

1,767,093

2,525,387

938,059

535,682

187,168

264,2936,564,248

March 31, 2021

359,702

1,822,715

2,861,627

996,172

615,323

207,058

305,835

7,168,432

March 31, 2022

329,445

1,852,873

3,024,650

1,001,685

657,010

246,691

353,891

7,466,245

March 31, 2020

(72,460) (1,091,541) (1,972,239)(761,311)(268,403)(85,039)(147,944) (4,398,937)

March 31, 2021

(81,588) (1,104,534) (2,197,454)(808,713)(311,996)(85,506)(169,754) (4,759,545)

March 31, 2022

(73,053) (1,129,806) (2,345,316)(817,864)(344,590)(98,217)(178,498) (4,987,344)

Right-of-use
assetsOther

Constructionin progress

Total

Gross carrying amount

Accumulated depreciationand impairment losses

Impairment Losses Recognized for the Year Ended March 31, 2022:
The IT segment recognized impairment losses of 4,071 million yen, mainly attributable to determination of disposal of land andother assets relating to the consolidation of bases at a domestic subsidiary in the Services & Platforms business.
The Industry segment recognized impairment losses of 4,406 million yen, mainly attributable to right-of-use assets relating towithdrawal from some businesses in the Industry & Distribution Solutions business.
The Automotive Systems segment recognized impairment losses of 4,362 million yen, mainly attributable to the lower than
expected future revenue on business assets of machineries at some of factories of foreign subsidiaries.
Impairment Losses Recognized for the Year Ended March 31, 2021:
The Automotive Systems segment recognized impairment losses of 30,025 million yen, mainly attributable to the lower than
expected productivity at some domestic factories consisting of impairment losses on property, plant and equipment of 26,351
million yen relating to business assets of machinery and on other intangible assets of 1,288 million yen. The recoverable amount
was determined on the basis of fair value less costs of disposal, which was measured at 10,615 million yen as of December 31,
2020, the date on which impairment losses were recognized. A market approach was used in measuring the fair value of therelevant assets. These fair value measurements were based on real estate appraisal value, and thus classified as Level 3 of fair value
hierarchy.
The Hitachi Metals segment recognized impairment losses of 30,469 million yen, mainly attributable to the lower than expected
future revenue projected for the magnetic materials business consisting of impairment losses on property, plant and equipment of
10,356 million yen relating to business assets of machinery and on goodwill and other intangible assets of 5,301 million yen. The
recoverable amount was determined on the basis of value in use, which was measured at 74,875 million yen as of September 30,
2020, the date on which impairment losses were recognized. The value in use was discounted at 10.1% (before tax), which wasderived from the weighted average cost of capital. In addition, mainly attributable to the lower than expected future revenue
projected for the aircraft & energy materials business consisting of impairment losses on property, plant and equipment of 12,027
million yen relating to business assets of machinery and on goodwill and other intangible assets of 75 million yen. The recoverable
amount was determined on the basis of value in use, which was measured at 16,491 million yen as of March 31, 2021, the date on
which impairment losses were recognized. The value in use was discounted at 7.3% (before tax), which was derived from theweighted average cost of capital.

F-33

Notes to Consolidated Financial Statements(10) Goodwill and Other Intangible Assets
The following table shows the changes in the net carrying amounts of Goodwill and Other intangible assets.
Millions of yen
Other intangible assets
Goodwill

Software for Software forinternal use
sale

Other

Total

Net carrying amountMarch 31, 2020

635,927

98,91933,860347,015

479,794

Internal developments
Purchases
Transfers between accounts
Amortization
Impairment losses
Disposals
Acquisitions and divestitures
Currency translation effectOther(14,293)
486,11053,466-

7,334
10,274
63,678(43,768)(7,611)(1,885)
6,888
1,053
(112)

4,123
132
24,029(21,320)(3,463)
(14)
6,873
498
101

64,541
31,847(87,707)(81,374)(7,820)(1,012)497,926
22,254(429)

75,99842,253(146,462)(18,894)(2,911)
511,687
23,805(440)

1,161,210

134,770

44,819785,241

964,830(6,117)
824,914173,699-

20,346
4,634
44,100(46,431)(1,744)(3,348)190
3,481(1,190)6,102
12624,600(22,469)(5,750)
(53)
116
1,761
306

78,65733,415(68,700)(88,430)(3,940)(780)
229,946
87,569(216)

105,105
38,175(157,330)(11,434)(4,181)
230,252
92,811(1,100)2,153,706

154,808

49,5581,052,762

1,257,128

March 31, 2021
Internal developments
Purchases
Transfers between accounts
Amortization
Impairment losses
Disposals
Acquisitions and divestitures
Currency translation effect
Other
March 31, 2022

Other of Other intangible assets includes customer relationships and technology recognized upon business combinations. The net
carrying amounts of customer relationships and technology for the year ended March 31, 2022 were 711,653 million yen and
117,172 million yen, and for the year ended March 31, 2021 were 459,211 million yen and 119,567 million yen, respectively. The
amount of amortization of customer relationships and technology for the year ended March 31, 2022 were 37,244 million yen and
14,384 million yen, and for the year ended March 31, 2021 were 23,894 million yen and 10,330 million yen, respectively.
The amount of amortization recognized is included in Cost of sales and Selling, general and administrative expenses in the
consolidated statement of profit or loss. Impairment losses are included in Other expenses in the consolidated statement of profit or
loss.

F-34

Notes to Consolidated Financial Statements
The following table shows the gross carrying amount and accumulated amortization and impairment losses of goodwill and otherintangible assets.
Millions of yen
Other intangible assets
Goodwill

Software for Software forinternal use
sale

Other

Total

Gross carrying amountMarch 31, 2020

689,504

602,425565,416707,0311,874,872

March 31, 2021

1,218,173

650,657

569,118

1,218,584

2,438,359

March 31, 2022

2,210,512

696,925

602,142

1,587,824

2,886,891

March 31, 2020

(53,577)(503,506)(531,556)(360,016)(1,395,078)

March 31, 2021

(56,963)(515,887)(524,299)(433,343)(1,473,529)

March 31, 2022

(56,806)(542,117)(552,584)(535,062)(1,629,763)

Accumulated amortization andimpairment losses

The Company writes off goodwill if it has been fully impaired.
Impairment Losses Recognized for the Year Ended March 31, 2022:
The IT segment recognized impairment losses of 16,503 million yen, mainly due to the lower than expected future revenue on
goodwill and software for sale as a result of changes in market trends.
Impairment Losses Recognized for the Year Ended March 31, 2021:
The IT segment recognized impairment losses of 12,953 million yen, mainly due to the lower than expected future revenue on
software for sale and other intangible assets as a result of changes in market trends.
The Industry segment recognized impairment losses of 10,663 million yen, mainly due to the lower than expected future revenue
on goodwill and other intangible assets as a result of changes in market trends.
The carrying amounts of other intangible assets with indefinite useful lives as of March 31, 2022 and 2021 amounted to 23,530
million yen and 17,513 million yen, respectively. The main components of such assets are acquired brands. They are assessed tohave indefinite useful lives because there is no foreseeable limit to the period over which such assets are expected to generate net
cash inflows for the entity.
Expenditures on research activities aimed at obtaining new scientific or technical knowledge or understanding are expensed whenincurred. Expenditures on development activities for a new or major improvement of production plan or design prior to thebeginning of commercial production or use are capitalized as an internally generated intangible asset only when such expenditures
attributable to the intangible asset can be reliably measured, it is feasible for the Company to complete the development, and it ishighly probable that the Company will obtain the future economic benefit. Otherwise, the expenditures are recognized as an
expense when incurred.
The carrying amounts of internally generated other intangible assets (at cost less accumulated amortization and impairment losses)
as of March 31, 2022 and 2021 amounted to 260,189 million yen and 208,857 million yen, respectively. These assets are mainly
included in software for internal use or software for sale.
Research and development expenditures recognized as an expense for the years ended March 31, 2022 and 2021 were 317,383
million yen and 293,571 million yen, respectively, and they are included in Cost of sales and Selling, general and administrative
expenses in the consolidated statement of profit or loss.

F-35

Notes to Consolidated Financial Statements
The Company tests goodwill acquired through business combinations for impairment by comparing the carrying amount and therecoverable amount per CGU (or group of CGUs).
The following are the group of CGUs with a significant proportion of goodwill allocated for the year ended March 31, 2022.
As of March 31, 2022, the group of CGUs with a significant proportion of goodwill allocated was the power grids business in the
Energy segment, and the carrying amount of goodwill allocated to the power grids business was 513,616 million yen. The
recoverable amount used for the impairment test of goodwill of the power grids business for the year ended March 31, 2022 was
calculated based on the value in use. The value in use was determined using discounted future cash flows based on the businessplan and are estimated using significant assumptions including revenue growth rates and gross profit ratios which require
management judgements. The business plan reflected past experience based on external information. For the year ended March 31,
2022, cash flows were projected over five years, the discount rates (before tax) used was 10.6%, and the growth rate used was
2.3%.
As of March 31, 2022, the group of CGUs with a significant proportion of goodwill allocated was the Services & Platforms
business unit in the IT segment, and the carrying amounts of goodwill allocated to the Services & Platforms business unit was
1,107,575 million yen. The recoverable amount used for the impairment test of goodwill of the Services & Platforms business unit
for the year ended March 31, 2022 was calculated based on the fair value less costs of disposal. The fair value less costs ofdisposal was calculated by the market approach based on EV/EBITDA valuation multiples of similar companies that werecomparable to the Services & Platforms business unit. The fair value hierarchy classification was level 3 measured byunobservable inputs.
The following are the group of CGUs with a significant proportion of goodwill allocated for the year ended March 31, 2021.
As of March 31, 2021, the group of CGUs with a significant proportion of goodwill allocated was the power grids business in the
Energy segment, and the carrying amount of goodwill allocated to the power grids business was 480,006 million yen. The
recoverable amount used for the impairment test of goodwill of the power grids business for the year ended March 31, 2021 wascalculated based on the value in use. The value in use was determined using discounted future cash flows based on the businessplan and are estimated using significant assumptions including revenue growth rates and gross profit ratios which require
management judgements. The business plan reflected past experience based on external information. For the year ended March 31,
2021, cash flows were projected over five years, the discount rates (before tax) used was 10.6%, and the growth rate used was
2.1%.
As of March 31, 2021, the group of CGUs with a significant proportion of goodwill allocated was the System & Service Business
Division in the IT segment, and the carrying amounts of goodwill allocated to the System & Service Business Division was
201,001 million yen. The recoverable amount used for the impairment test of goodwill of the System & Service Business Division
for the year ended March 31, 2021 was calculated based on the fair value less costs of disposal. The fair value less costs ofdisposal was calculated by the market approach based on EV/EBITDA valuation multiples of similar companies that werecomparable to the System & Service Business Division. The fair value hierarchy classification was level 3 measured byunobservable inputs.
For goodwill allocated to each CGU (or group of CGUs), the Company considers the recoverable amount may be less than the
carrying amount if the primary assumptions used in the impairment test of goodwill change significantly.

F-36

Notes to Consolidated Financial Statements(11) Leases(a) Lessee
The Company and certain subsidiaries use leased facilities and equipment, including buildings, machinery and equipment andvehicles.
The following table shows the carrying amount of right-of-use assets at the end of March 31, 2022 and 2021 by class ofunderlying asset.
Millions of yen
Class of underlying asset
Buildings
andstructures

Tools,
furnitureandfixtures

Machineryandvehicles

Land

Total

Other

March 31, 2021

205,797

37,992

23,27435,426

1,139

303,628

March 31, 2022

224,393

32,01916,09439,492

1,081

313,079

The following table shows the expenses relating to leases and cash outflow for the years ended March 31, 2022 and 2021.
Millions of yen
2022

2021

Depreciation for right-of-use assets
Buildings and structures

76,49569,406

Machinery and vehicles

12,194

12,558Tools, furniture and fixtures

7,382

7,866

Land

2,389

2,442

Other

220

702

Total

98,68092,974

Interest charges on lease liabilities

5,606

4,339

Expense relating to short-term leases, etc.

26,416

21,639

Expenses relating to leases

130,702

118,952
Millions of yen

2022
Total cash outflow for leases

2021
141,292

Additions of right-of-use assets for the years ended March 31, 2022 and 2021 are disclosed in note 9.
Maturity analysis of lease liabilities at the end of March 31, 2022 and 2021 are disclosed in note 26.

F-37

123,622

Notes to Consolidated Financial Statements(b) Lessor
The Company and certain subsidiaries lease certain assets such as manufacturing machinery and equipment under finance andoperating lease arrangements.
The following table shows lease income for the years ended March 31, 2022 and 2021.
Millions of yen
2022

2021

Lease income from finance leases

1,021

3,058

Lease income from operating leases

55,77753,046

Total lease income

56,79856,104

A significant component of lease income from finance leases represents finance income on the net investment in the lease.
(i) Finance leases
The following table shows the maturity analysis of the finance lease payments receivable as of March 31, 2022 and 2021.
Millions of yen
March 31, 2022

March 31, 2021

Undiscounted lease payments to be received
Within 1 year

43,00751,367After 1 year but not more than 5 years

32,23743,361More than 5 years

3,871

5,798

Total

79,115100,526

Unearned finance income relating to the lease payments receivable(5,231)(7,396)-

139

73,884

93,269

Discounted unguaranteed residual value
Net investment in finance leases(ii) Operating leases
The following table shows the maturity analysis of the undiscounted operating lease payments to be received as of March 31,
2022 and 2021.
Millions of yen
March 31, 2022

March 31, 2021

Within 1 year

2,554

4,646

After 1 year but not more than 5 years

3,040

3,597

178

606

5,772

8,849

More than 5 years
Total

F-38

Notes to Consolidated Financial Statements(12) Deferred Taxes and Income Taxes
The components of income taxes recognized in the consolidated statement of profit or loss and deferred taxes recognized in the
consolidated statement of comprehensive income are as follows:
Millions of yen
2022

2021

Income taxes
Current tax expense

158,988

220,305

Temporary differences originated and reversed

89,60353,825

Changes in realizability of deferred tax assets(80,122)

51,117

168,469

325,247(5,834)

20,382Remeasurements of defined benefit plans

9,466

27,509Net changes in cash flow hedges

5,254

1,376

Foreign currency translation adjustments

3,702

2,958

Total

12,58852,225

Deferred tax expense

Total
Deferred taxes recognized in OCI
Net changes in financial assets measured at fair value through
OCI

The Company and its Japanese subsidiaries were subject to a national corporate tax, an inhabitant tax and business tax, for theyears ended March 31, 2022 and 2021, which in the aggregate resulted in a combined statutory income tax rates of approximately
30.5%.
Changes in realizability of deferred tax assets for the year ended March 31, 2022 includes the decrease of 37,136 million yen due
to recognition of deferred tax assets mainly for the unused tax loss carryforwards related to the acquisition of GlobalLogic.
The Company and certain subsidiaries file consolidated income tax returns in certain jurisdictions.

F-39

Notes to Consolidated Financial Statements
Reconciliations between the combined statutory income tax rate and the effective income tax rate are as follows:
2022

2021

Combined statutory income tax rate
Share of (profits) losses of investments accounted for using the equity
methodChange in excess amounts over the tax basis of investments in

30.5%

30.5%

(1.5)

(1.4)

2.6

(4.8)

(0.6)

7.4

0.7
0.2
(9.5)
(3.1)
0.8

0.6
0.5
6.1
(1.3)
0.9

20.1%

38.5%

subsidiaries and investments accounted for using the equity method
Gain or loss on sale of investments in subsidiaries and investments
accounted for using the equity method
Expenses not deductible for tax purposes
Impairment of goodwill
Change in realizability of deferred tax assets
Difference in statutory tax rates of foreign subsidiaries
Other, net
Effective income tax rate

Changes in deferred tax assets and liabilities are as follows:
Millions of yen
March 31, 2022

March 31, 2021

Deferred tax assets, net at beginning of year

10,879282,998

Recognized in profit or loss
Recognized in OCI
Acquisitions, divestitures and others(9,481)(12,588)(33,707)(104,942)(52,225)(114,952)

Deferred tax assets, net at end of year

(44,897)

10,879Significant components of the deferred tax assets and liabilities are as follows:
Millions of yen
Consolidated statement offinancial position
March 31,2022
Deferred tax assets
Retirement and severance benefits
Accrued expenses
Depreciation of property, plant andMarch 31,2021

Consolidated statement of
profit or loss
2022

2021

19,537
142,349

44,384
109,697(15,959)
10,192(5,844)(146,585)

5,868

6,476

(4,546)85

74,31633,845

24,694

14,61425,34027,090602(4,563)

17,74561,928

11,982
96,326

1,449
16,424(9,361)(1,206)

Total deferred tax assets

347,083

329,800

32,856(152,860)

Deferred tax liabilities
Deferred profit on sale of properties
Investments in securities
Intangible assets
Other(6,480)(152,766)(213,715)(19,019)(7,420)(115,173)(152,682)(43,646)

190(42,609)
14,046(13,964)

263
27,427
14,417
5,811

Total deferred tax liabilities(391,980)(318,921)(42,337)

47,918Net deferred tax assets(44,897)

10,879(9,481)(104,942)

equipment
Net operating loss carryforwards
Net intercompany profits oninventories, P.P.E. and others
Deferred revenues
Other

F-40

Notes to Consolidated Financial Statements
Net deferred tax assets are included in the following accounts in the consolidated statement of financial position.

March 31, 2022

Millions of yen
March 31, 2021

Other non-current assets
Other non-current liabilities

128,347(173,244)

143,126(132,247)

Total(44,897)

10,879Deferred tax liabilities are not recognized for excess amounts over the tax basis of investments in subsidiaries and investments
accounted for using the equity method that are considered to be reinvested indefinitely, for such differences will unlikely reverse in
the foreseeable future. The temporary differences related to undistributed earnings of subsidiaries for which deferred tax liabilities
are not recognized were 853,870 million yen and 774,353 million yen, respectively, as of March 31, 2022 and 2021.
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 of deferred tax assets is dependent upon the generation of
future taxable income in specific tax jurisdictions during the periods in which these deductible differences become deductible.
Although realization is not assured, the Company carries out an assessment of the scheduled reversals of deferred tax liabilities andprojected future taxable income, including the execution of certain available tax strategies if needed. Based on these factors, theCompany considers it is more likely than not it will realize the benefits of these deductible differences as of March 31, 2022.
Deductible temporary differences and net operating loss carryforwards for unrecognized deferred tax assets are as follows:
Millions of yen
Deductible temporary differences
Net operating loss carryforwards
Total

March 31, 2022

March 31, 2021

1,472,491

1,634,738

639,614

675,461

2,112,105

2,310,199

Net operating loss carryforwards for unrecognized deferred tax assets will expire as follows:
Millions of yen
March 31, 2022

March 31, 2021

Within 5 years

148,530

193,286

After 5 years but not more than 10 years

195,641

211,753

More than 10 years

295,443

270,422

Total

639,614

675,461

F-41

Notes to Consolidated Financial Statements(13) Trade Payables
The components of trade payables are as follows:
Millions of yen
March 31, 2022

March 31, 2021

Accounts payable

1,606,006

1,383,702

Others148,627

132,252

Total

1,754,633

1,515,954

Others include electronically recorded monetary claims and notes payable.
(14) Provisions
Changes in the balance and components of provisions for the year ended March 31, 2022 are as follows:
Millions of yen
Provisions for
Provisions related
Asset retirement
Product warranty expected losses on
to restructuring
obligations
provisions
construction(structural reform)
contracts
March 31, 2021

29,38819,55065,795104,275

Other
provisions
126,713Additions

4,742

8,770

23,49935,24632,233

Utilized(1,579)(20,662)(20,461)(50,555)(32,717)

Acquisitions and divestitures

(127)

-

(766)

-

(178)

Currency translation effects,
and others

261

524

1,580

1,792

6,337

32,6858,182

69,64790,758132,388

466

7,948

58,52889,368109,60332,219234

11,1191,390

22,785

March 31, 2022
Current
Non-current

Asset Retirement Obligations
The Company and its subsidiaries recognize asset retirement obligations principally based on the estimated future expendituresusing historical experience when the Company and its subsidiaries have a legal or contractual obligation associated with theretirement of tangible fixed assets used in normal operations, such as lease dilapidations of factory facilities and premises.
Provisions Related to Restructuring (Structural Reform)
Provision related to restructuring (structural reform) is recognized when the Company and its subsidiaries have a detailed formal
plan for the restructuring of the business or a part of business and have raised a valid expectation in those affected that it will carryout the restructuring by starting to implement the plan or announcing its main features to those affected. The provision isrecognized based on the estimated amount of direct expenditures attributable to restructuring.
Provisions related to restructuring (structural reform) mainly include special termination benefits for restructuring (structuralreform).
Product Warranty Provisions
The Company and its subsidiaries provide warranties for certain products and services. Product warranty provisions are recognizedby estimating future expenditures based principally on historical experience of warranty claims.
Provisions for Expected Losses on Construction Contracts
Provisions for expected losses on construction contracts are recognized based on future estimated losses as the Company and its
subsidiaries fulfill long-term project requirements.

F-42

Notes to Consolidated Financial Statements(15) Employee Benefits(a) Retirement and Severance Benefits
The Company and certain subsidiaries have defined benefit pension plans and severance lump-sum payment plans, as well as
defined contribution pension plans to provide retirement and severance benefits to substantially all employees.
The principal defined benefit pension plan is a corporate pension plan based on the Japanese Defined Benefit Corporate
Pension Plan Act (the Act). Additionally, certain corporate pension plans adopt cash balance plans. Benefits under cash
balance plans are calculated per each plan participant with a notional account balance, based on the contribution credits per
salary level and interest credits based on market interest rate trends.
Pursuant to the Act, the Company has an obligation to make contributions to the Hitachi Pension Fund (the Fund) that manages
the corporate pension plans. The directors of the Fund are responsible for faithfully executing operations in compliance withlaws and regulations, and any orders issued by the Minister of Health, Labor and Welfare, and the director-generals ofRegional Bureaus of Health and Welfare based on laws and regulations, as well as the rules of the Fund and the resolution of
the Board of Representatives. The Fund prohibits the directors from acts that constitute conflicts of interests in the
management and operation of the funds contributed for benefit payments (the contributions). If breached, the board members
are jointly and severally held responsible.
The Fund is legally independent from the Company. The Board of Representatives comprises an equal number ofrepresentatives selected by the company and certain subsidiaries and representatives from the employee side. The proceedingsof a Board of Representatives are decided by a majority vote of the members attending. In case of a tied vote, the chairman has
the power to decide, except for exceptionally significant matters.
The actual management of the contributions is conducted by trustees in accordance with rules approved by the Board ofRepresentatives. The Fund is responsible for managing the contributions to safely and efficiently manage the contributions by
establishing the basic management policy of the contributions and preparing the management guidance in line with the policy
submitted to the trustees.
The Company has future obligations to make contributions as defined by the Fund. The amount of contribution is periodicallyreviewed to the extent allowed by law.
On April 1, 2019, for current employees participating in the defined benefit pension plan managed by the Hitachi Pension
Fund, the Company and Hitachi Industrial Products, Ltd., a consolidated subsidiary of the Company in the Industry segment,
introduced a risk-sharing corporate pension plan. Under this plan, contributions to the risk-sharing corporate pension plan aredetermined in advance in accordance with the rules governing the plan, and pension benefits are adjusted annually based on thefinancial position of the plan to maintain balanced finance.
The risk-sharing corporate pension plan introduced by the Company and Hitachi Industrial Products, Ltd., is a mechanism inwhich management and labor unions share risks. At the time of the transfer to this system, the employer bears certain risks bymaking fixed contributions, including contributions to the risk-sharing corporate pension plan, in accordance with agreements
between management and labor unions. In the event of a financial imbalance, the plan participants also bear certain risks byadjusting benefits. Under the previous defined benefit pension plan, employers were required to make additional contributionsin the event of a funding shortfall. The risk-sharing corporate pension plan, however, measures the risks that may arise in the
future, and sets contributions to the risk-sharing corporate pension plan within the scope of the agreement between
management and labor unions in advance to balance contributions. The amount equivalent to the contributions made to risksharing corporate pension plan determined based on the level of the fiscal deterioration risk, which is calculated at the time oftransfer, shall be contributed to the plan on a straight-line basis over five years from the date of transfer, and no additional
contributions are required.

F-43

Notes to Consolidated Financial Statements
In terms of the corresponding accounting treatment for retirement benefits, risk-sharing corporate pension plans, for which anentity accepts contribution obligations to the extent stipulated in the rules but has no further obligations to make any additional
contributions, are classified as defined contribution plans. The risk-sharing corporate pension plans managed by the Hitachi
Pension Fund impose no additional contribution obligations, so the risk-sharing corporate pension plans are also classified as
defined contribution plans. Since the Company and Hitachi Industrial Products, Ltd., shifted to risk-sharing corporate pension
plans from defined benefit pension plans on April, 2019, the same has been promoted to the other subsidiaries participating
pension plans managed by the Hitachi Pension Fund. Newly 43 subsidiaries have changed their pension plans for current
employees from defined benefit pension plans to risk-sharing corporate pension plans on April 1, 2022, and now the revisionof Hitachi group pension plans managed by Hitachi Pension Fund has been almost completed. At the time of the shift to therevised plans, the differences between the defined benefit obligations related to the portion transferred to the revised plans andthe amount of assets transferred to the revised plans corresponding to the decrease in defined benefit obligations,approximately 44.0 billion yen, will be recognized in Other expenses in the consolidated statement of profit or loss as asettlement loss for the year ending March 31, 2023.
The severance lump-sum payment plans provide a lump-sum payment at the time of retirement, and the benefit is calculated
based on factors such as the salary level at retirement and the years of service. The Company and certain subsidiaries have an
obligation to pay benefits directly to beneficiaries.
Defined contribution plans require companies to make contributions over a participation period, and plan participants
themselves are responsible for the management of plan assets. Benefits are paid by the trustee, and the Company and certain
subsidiaries’ responsibility is limited to making contributions.

F-44

Notes to Consolidated Financial Statements
Changes in the present value of defined benefit obligations and the fair value of plan assets for the years ended March 31, 2022
and 2021 are as follows:
Millions of yen
March 31, 2022

March 31, 2021

Defined benefit obligations
At beginning of year
Service cost
Interest cost
Plan amendments
Actuarial losses
Benefits paid
Acquisitions and divestitures
Transfer to defined contribution pension plan
Settlements/curtailments
Effect of shift to risk-sharing corporate pension plan
Currency translation effectAt end of year

1,934,204
64,728
11,654(523)(35,223)(100,347)(3,053)(589)(4,788)(10,448)
23,817
1,879,432

1,836,601
62,903
11,004(250)
41,512(104,472)
78,781
41(662)(4,713)
13,4591,934,204

Fair value of plan assets
At beginning of year
Interest income
Return on plan assets (excluding interest income)
Employers’ contributions
Employees’ contributions
Benefits paid
Acquisitions and divestitures
Transfer to defined contribution pension plan
Settlements/curtailments
Effect of shift to risk-sharing corporate pension plan
Currency translation effectAt end of year

1,584,799
9,542
11,456
66,986
2,754(73,796)(3,569)(14)(5,134)(10,201)
16,143
1,598,966

1,367,906
9,320
145,282
64,8691,439(80,427)
69,617(6)(365)(4,039)
11,203
1,584,799

8,692

2,113

289,158

351,518

March 31, 2022

March 31, 2021

Effect of asset ceiling
Net liability amount recognized in the consolidated statementof financial position

The components of actuarial gain or loss are as follows:
Millions of yen
Arising from changes in financial assumptions
Arising from changes in demographic assumptions
Other

33,091(2,799)4,931(10,548)(15,414)(15,550)

The Company and certain subsidiaries remeasure the defined benefit obligations and plan assets at the end of the fiscal year.
The discount rates used in actuarial calculation of defined benefit obligations are as follows:
Percentage
March 31, 2022
Discount rate

0.8

F-45

March 31, 2021
0.6

Notes to Consolidated Financial Statements
If, at March 31, 2022, the discount rate rose by 0.5%, the defined benefit obligations would decrease by 96,624 million yen,
and if the discount rate decreased by 0.5%, the defined benefit obligations would increase by 109,576 million yen.
The sensitivity analysis is based on an assumption that all other variables other than the one analyzed are held constant; inreality, changes in other assumptions may impact the outcome of the analysis.
The Fund’s plan asset management is based on the safe and efficient management of the contributions, diversified investments
and determination of the investment ratio that should be sustained over the long term. The Fund seeks to maintain current valueof assets sufficient for future obligations. A target rate of return is established to ensure a stable long term rate of return on
assets. A diversified investment strategy is carried out while a target asset allocation is established to achieve the target rate of
return. The target asset allocation is based on the expected rate of return by each class of asset, the standard deviation of therate of return and the correlation coefficient among the assets. It is currently approximately 20% in equity, 50% in public andcorporate bonds, and 30% in hedge funds, securitization products, life insurance general accounts and other assets. If market
values fluctuate exceeding certain levels, the investment ratio is adjusted to the target allocation ratio in order to control risks.
In selecting trustees or asset management companies, the Fund takes into account appropriate quantitative and qualitativeevaluations. The Fund also presents its management policies to the trustees or asset management companies, and periodicallyreceives asset management reports.
The fair values of plan assets invested as of March 31, 2022 and 2021 are as follows:
Millions of yen
March 31, 2022

EquityGovernment bonds and municipal
debt securities
Corporate bonds and other debt securities
Hedge funds
Securitization products
Cash and cash equivalents
Life insurance general accounts
Commingled funds
Other
Total

With quoted market
price in an active
marketWith no quoted
market pricein an active market

10,631

339

10,9704,821
34,2791,869
51,6001,011
13,84445,24344,205
155,627
1,255,021
32,076
1,547,366

5,832
13,84445,24344,20534,279155,627
1,255,021
33,945
1,598,966

Total

Millions of yen
March 31, 2021

EquityGovernment bonds and municipal
debt securities
Corporate bonds and other debt securities
Hedge funds
Securitization products
Cash and cash equivalents
Life insurance general accounts
Commingled funds
Other
Total

With quoted market
price in an active
marketWith no quoted
market pricein an active market

9,715

320

10,035112,970
36,378
3,890
162,953

1,019
14,72649,36846,477161,064
1,102,778
46,094
1,421,846

113,989
14,72649,36846,47736,378161,064
1,102,778
49,984
1,584,799

F-46

Total

Notes to Consolidated Financial Statements
As of March 31, 2022 and 2021, investments in equity were allocated to approximately 40% in stocks listed in Japan and 60%
in stocks listed in foreign markets.
As of March 31, 2022, Japanese government bonds made up approximately 1% of the government bonds and municipal debt
securities, the majority of which were Japanese national bonds. As of March 31, 2021, Japanese government bonds made up
approximately 95% of the government bonds and municipal debt securities, the majority of which were Japanese nationalbonds. Foreign public bonds, as of March 31, 2022, took approximately 99%, the majority of which were foreign nationalbonds, and as of March 31, 2021, foreign public bonds took approximately 5%, the majority of which were foreign nationalbonds.
As of March 31, 2022, investments in corporate bonds and other debt securities were allocated to approximately 4% inJapanese corporate bonds and debt instruments, and 96% in foreign corporate bonds and debt instruments. As of March 31,
2021, investments in corporate bonds and other debt securities were allocated to approximately 10% in Japanese corporate
bonds and debt instruments, and 90% in foreign corporate bonds and debt instruments.
Hedge funds primarily consist of investments in relative value strategy funds, event driven funds, equity long or short funds,
and macroeconomic and Commodity Trading Advisor (CTA) funds.
Securitization products primarily consist of investments in equity of Japanese real estate funds, and debt and equity ofcollateralized loan obligations (CLO).
Commingled funds represent pooled institutional investments. As of March 31, 2022 and 2021, commingled funds wereallocated to 30% in listed stocks, 40% in government bonds, 10% in corporate bonds and other debt securities, 10% in cash andcash equivalents and 10% in other assets.
Funding by the Fund is conducted by taking into account various factors such as funded status and actuarial calculations. For
the purpose of maintaining balanced finance into the future, the bylaws of the Fund require recalculation of the contribution
amounts at the end of fiscal year every five years. Basic assumptions (expected interest rates, mortality rates, withdrawal rate,etc.) are reviewed to recalculate the appropriate level of contribution.
The amount of contributions expected to be paid by the Company and its subsidiaries to the plan assets for the year ending
March 31, 2023 is 18,787 million yen.
The weighted average duration (expected average maturity) of defined benefit obligations as of March 31, 2022 and 2021 were
12.1 years and 12.2 years, respectively.
Contributions made to defined contribution plans and expensed in profit or loss in the years ended March 31, 2022 and 2021
were 44,123 million yen and 36,949 million yen, respectively.
In addition, contributions made to the risk-sharing corporate pension plan and expensed in profit or loss in the years ended
March 31, 2022 and 2021 were 18,011 million yen and 18,056 million yen, respectively. The amount of the contributions to
the risk-sharing corporate pension plan expected to be paid by the Company and its subsidiaries from the year ending March
31, 2023 is 20,299 million yen.
(b) Employee Benefit Expenses
The aggregated amounts of employee benefit expenses including salary recognized in the consolidated statement of profit orloss for the years ended March 31, 2022 and 2021 were 2,742,701 million yen and 2,425,658 million yen, respectively.

F-47

Notes to Consolidated Financial Statements(16) Equity(a) Common Stock
Number of shares
March 31, 2022
Total number of authorized shares

March 31, 2021

2,000,000,000
Issued shares outstanding(Number of shares)

2,000,000,000
Capital amount(Millions of yen)March 31, 2020

967,280,477

459,862

March 31, 2021

967,885,277

460,790

March 31, 2022

968,234,877

461,731

Note: The Company issued new shares as restricted stock compensation, the total number of issued shares increased 604,800 shareson May 27, 2020, and increased 349,600 shares on June 15, 2021, and became 968,234,877 shares.
Shares issued by the Company are non-par value common stock. The issued shares above include treasury stock. The changes
in treasury stock for the years ended March 31, 2022 and 2021 are as follows:
Treasury stock(Number of shares)
March 31, 2020
Acquisition of treasury stock
Sales of treasury stock(Millions of yen)

1,050,741

3,809

136,523

159(131,465)(475)

1,055,799

3,493

Acquisition of treasury stock

178,413

251

Sales of treasury stock(235,491)(742)

998,7213,002

March 31, 2021

March 31, 2022

The number of shares of the Company held by the Company’s associates as of March 31, 2022 and 2021 were 33,200 shares.
(b) Surplus(i) Capital Surplus
The Companies Act of Japan mandates that at least half of paid-in capital be appropriated as common stock and the rest be
appropriated as legal reserve within capital surplus.
The changes in capital surplus include the effect of changes in the Company’s ownership interest in its consolidated
subsidiaries. For the year ended March 31, 2021, the changes in capital surplus were mainly due to the decrease of 321,627
million yen in additional acquisition of shares of Hitachi High-Tech by the Company, the increase of 117,865 million yen
due to the decrease of the Company’s ownership interest in the former HiAMS from 100% to 66.6% and the decrease of
175,969 million yen due to a put option on non-controlling interests recognized by the Company and its subsidiaries.
For the year ended March 31, 2022, the changes in capital surplus were mainly the decrease due to a put option on noncontrolling interests recognized by the Company and its subsidiaries.
(ii) Retained Earnings
The Companies Act of Japan requires that ten percent of retained earnings appropriated for dividends be retained until the
total amount of earned reserves included in capital reserve and retained earnings reaches a quarter of the nominal value ofcommon stock. Earned reserves may be available for dividends by resolution at the shareholders’ meeting.

F-48

Notes to Consolidated Financial Statements(17) Accumulated Other Comprehensive Income (AOCI) and Other Comprehensive Income (OCI)
Components of AOCI, net of related tax effects, presented in the consolidated statement of changes in equity, and changes in eachcomponent for the years ended March 31, 2022 and 2021 are as follows:
Millions of yen
2022

2021

Foreign currency translation adjustments
Balance at beginning of year

110,727(30,686)

OCI, net of reclassification

322,062

133,106

Net transfer of non-controlling interests

11,862

8,307

Balance at end of year

444,651

110,727

Balance at beginning of year

80,3001,958

OCI26,09280,413264

3,066

Remeasurements of defined benefit plans

Net transfer of non-controlling interests
Reclassified into retained earnings(981)(5,137)

105,675

80,300

Balance at beginning of year

135,022

66,373

OCI(11,461)

69,721428

3,227

Reclassified into retained earnings(13,880)(4,299)Balance at end of year

110,109

135,022

Balance at beginning of year

(52,488)(94,715)

OCI, net of reclassification

37,84553,384

Balance at end of year
Net changes in financial assets measured at FVTOCI

Net transfer of non-controlling interests

Net changes in cash flow hedges

Net transfer of non-controlling interests

-

(71)

Others(6,529)(11,086)

Balance at end of year

(21,172)(52,488)

Total AOCI
Balance at beginning of year

273,561(57,070)

OCI, net of reclassification

374,538

336,624

Net transfer of non-controlling interests

12,554

14,529Reclassified into retained earnings(14,861)(9,436)

Others(6,529)(11,086)

Balance at end of year

639,263

273,561

F-49

Notes to Consolidated Financial Statements
The following shows a reconciliation of OCI, including non-controlling interests, to profit or loss items and deferred income tax
effect per components of OCI during the years ended March 31, 2022 and 2021.
Millions of yen
2022
Before tax

Tax effect

After tax

OCI arising during the year:
Foreign currency translation adjustments

396,113(3,702)392,411

Remeasurements of defined benefit plans

40,261(9,466)30,795

Net changes in financial assets measured at FVTOCI(17,058)

5,834(11,224)

Net changes in cash flow hedges

13,426(5,213)

8,213

Share of OCI of investments accounted for using the equity method

32,730(2,881)

29,849

Total

465,472(15,428)450,044

(922)

-

(922)

0

(41)

(41)

Share of OCI of investments accounted for using the equity method

12,126(1,171)

10,955

Total

11,204(1,212)

9,992

Foreign currency translation adjustments

395,191(3,702)

391,489

Remeasurements of defined benefit plans

40,261(9,466)30,795Reconciliation of OCI to profit or loss:
Foreign currency translation adjustments
Net changes in cash flow hedges

OCI, net of reclassification adjustments:

Net changes in financial assets measured at FVTOCI(17,058)

5,834(11,224)

Net changes in cash flow hedges

13,426(5,254)

8,172

Share of OCI of investments accounted for using the equity method

44,856(4,052)40,804

Total

476,676(16,640)

460,036

OCI, net of reclassification adjustments, attributable tonon-controlling interests:
Foreign currency translation adjustments

81,063Remeasurements of defined benefit plans

4,595

Net changes in financial assets measured at FVTOCI(58)

Net changes in cash flow hedges

(102)

Total

85,498

OCI, net of reclassification adjustments, attributable to
Hitachi, Ltd. stockholders:Foreign currency translation adjustments

310,426

Remeasurements of defined benefit plans

26,200Net changes in financial assets measured at FVTOCI(11,166)

Net changes in cash flow hedges

8,274

Share of OCI of investments accounted for using the equity method

40,804

Total

374,538

F-50

Notes to Consolidated Financial Statements

Millions of yen
2021
Before tax

Tax effect

After tax

OCI arising during the year:
Foreign currency translation adjustments

194,482(2,937)

191,545

Remeasurements of defined benefit plans

116,245(27,509)88,736

Net changes in financial assets measured at FVTOCI

89,744(20,382)

69,362

Net changes in cash flow hedges

4,635

(755)

3,880

Share of OCI of investments accounted for using the equity method

28,359(4,815)23,544

Total

433,465(56,398)

377,067

297

(21)

276

Reconciliation of OCI to profit or loss:
Foreign currency translation adjustments
Net changes in cash flow hedges

2,087

(621)

1,466

Share of OCI of investments accounted for using the equity method

45,110(7,748)37,362

Total

47,494(8,390)39,104Foreign currency translation adjustments

194,779(2,958)

191,821

Remeasurements of defined benefit plans

116,245(27,509)88,736

Net changes in financial assets measured at FVTOCI

89,744(20,382)

69,362

OCI, net of reclassification adjustments:

Net changes in cash flow hedges

6,722(1,376)

5,346

Share of OCI of investments accounted for using the equity method

73,469(12,563)

60,906

Total

480,959(64,788)416,171

OCI, net of reclassification adjustments, attributable tonon-controlling interests:
Foreign currency translation adjustments

69,439Remeasurements of defined benefit plans

9,039

Net changes in financial assets measured at FVTOCI

1,076

Net changes in cash flow hedges

(7)

Total

79,547

OCI, net of reclassification adjustments, attributable to
Hitachi, Ltd. stockholders:Foreign currency translation adjustments

122,382

Remeasurements of defined benefit plans

79,697

Net changes in financial assets measured at FVTOCI

68,286

Net changes in cash flow hedges

5,353

Share of OCI of investments accounted for using the equity method

60,906

Total

336,624

F-51

Notes to Consolidated Financial Statements(18) Dividends
Dividends paid on the Company’s common stock for the years ended March 31, 2022 and 2021 are as follows:
Cash dividends(millions of yen)

Appropriation from

Cash dividends
per share (yen)The Board of Directors
on October 27, 2021

58,035Retained earnings

The Board of Directors
on May 12, 2021

53,175The Board of Directors
on October 28, 2020
The Board of Directors
on May 13, 2020

Decision

Record date

Effective date

60.0

September 30, 2021

November 29, 2021

Retained earnings

55.0

March 31, 2021

June 2, 2021

48,342Retained earnings

50.0

September 30, 2020

November 30, 2020

48,311Retained earnings

50.0

March 31, 2020

June 8, 2020

The dividends on the Company’s common stock whose record date falls in the year ended March 31, 2022 and the effective datefalls in the next fiscal year is as follows:

Decision
The Board of Directors
on May 13, 2022

Cash dividends(millions of yen)

Appropriation from

Cash dividends
per share (yen)62,870Retained earnings

65.0

F-52

Record date

Effective date

March 31, 2022

June 2, 2022

Notes to Consolidated Financial Statements(19) Stock-based Compensation
The Company introduced a restricted stock compensation plan as stock-based compensation in place of the stock option plan andgrants shares of restricted stock in place of the existing stock options as stock-based compensation from the year ended March 31,
2020. In addition, the Company introduced a restricted stock unit plan and grants restricted stock units from the year ended March
31, 2021.
Stock-based compensation expenses recognized for the years ended March 31, 2022 and 2021 were 1,404 million yen and 1,031
million yen, respectively.
(a) Restricted stock compensation plan
In accordance with the restricted stock compensation plan (Plan) to be introduced by the Company, Executive Officers andCorporate Officers (Eligible Persons) will receive shares of common stock to be newly issued or disposed by the Company bymaking contributions in kind of the monetary compensation claims which are granted in order to allot the shares of restricted
stock to the Eligible Persons. In addition, with respect to the issuance or disposition of shares of common stock of the Company
under the Plan, the Company and each Eligible Person executes an agreement on allotment of restricted stock (Allotment
Agreement).
Outline of the Allotment Agreement(1) Transfer restriction period
From the payment date relating to the issuance or disposition of the shares of restricted stock to the date on which the Eligible
Person ceases to be an Executive Officer, Director or Corporate Officer of the Company.
(2) Acquisition by the Company without consideration
If certain events set out in the Allotment Agreement occur, the Company will acquire the shares without any consideration
promptly on or after a date notified to Eligible Persons. The Company will also acquire the shares for which the transfer
restrictions are definitely not lifted at the time of such determination, without any consideration.
The outlines of issuance for the years ended March 31, 2022 and 2021 are as follows.
March 31, 2022

March 31, 2021

Issuance dateJune 15, 2021

May 27, 2020

Number of shares

332,000 shares

604,800 shares

5,384 yen

3,067 yen

Issue price per share [1] [2][1] The issue price for the year ended March 31, 2022 is the closing price per share for the Company’s common stock on May 17,
2021 (preceding business day of the date upon the decision by the President regarding the issuance of new shares) in the firstsection of the Tokyo Stock Exchange, Inc.
[2] The issue price for the year ended March 31, 2021 is the closing price per share for the Company’s common stock on April 20,
2020 (preceding business day of the date upon the decision by the President regarding the issuance of new shares) in the firstsection of the Tokyo Stock Exchange, Inc.
(b) Restricted stock unit (RSU) plan
In accordance with the RSU plan to be introduced by the Company, the Company’s non-Japanese Executive Officers andCorporate Officers (Eligible Persons) will be granted restricted stock units (RSUs) corresponding to the number of shares of theCompany’s common stock (Shares to be Delivered) set in advance for each eligible person and, over three fiscal years after
granting, one-third of the RSUs will become vested after the end of each fiscal year and the Shares to be Delivered and cash forthe vested RSUs will be delivered.
The eligible persons will receive shares of common stock to be newly issued or disposed by the Company by making
contributions in kind of the monetary compensation claims which are granted after the end of each fiscal year in order to allot
the Shares to be Delivered to the eligible persons.
If the eligible persons retire due to expiration of their term of office, death or other legitimate reasons recognized by theCompany’s Compensation Committee, they will receive the Shares to be Delivered and cash corresponding to the portion of
RSUs granted reflecting the period from the granting date until such retirement.

F-53

Notes to Consolidated Financial Statements(c) Stock option plan
Under the Company’s stock option plan, Executive Officers and Corporate Officers are granted the right to purchase shares ofcommon stock of the Company (stock acquisition rights).
Details of the Company’s stock option plan for the years ended March 31, 2022 and 2021 are as follows.
Fiscal Year of Issuance and Name

Grant Date

Exercise period

April 11, 2018

From April 27, 2018
to April 26, 2048

April 6, 2017

From April 27, 2017
to April 26, 2047

June 29, 2016

From July 15, 2016
to July 14, 2046

Year ended March 31, 2019
The Third Stock Acquisition Rights of Hitachi, Ltd.
Year ended March 31, 2018
The Second Stock Acquisition Rights of Hitachi, Ltd.
Year ended March 31, 2017
The First Stock Acquisition Rights of Hitachi, Ltd.

Conditions for the exercise of stock acquisition rights(1) During the above exercise period, a holder of stock acquisition rights may exercise all the stock acquisition rights
determined in accordance with the provisions of paragraph (2) or (3) below in a lump sum only within ten days (in case thelast day is not a business day, the following business day) from the day immediately following the date on which he/sheceases to be an Executive Officer, a Director or a Corporate Officer of the Company.
(2) The number of stock acquisition rights that a holder of stock acquisition rights may exercise, shall be determined based on
the ratio of (i) the total shareholder return (TSR) for shares of the Company for three years from the beginning of the fiscal
year in which the date of allotment of the stock acquisition rights falls (Waiting Period) to (ii) the growth rate of TOPIX(Tokyo Stock Price Index) for the same period (TSR/TOPIX Growth Rate Ratio): market condition.
(3) The number of stock acquisition rights, that a holder of stock acquisition rights who has left his/her position in the Company
before the end of the Waiting Period (Resignee) may exercise, shall be determined by reducing the number of stockacquisition rights allotted to him/her in proportion to the term of office of the Resignee in the Waiting Period, and applying
the TSR/TOPIX Growth Rate Ratio for the period from the beginning of the fiscal year in which the date of allotment of thestock acquisition rights falls to the time of resignation in accordance with the provision of paragraph (2) above.
A summary of stock option activity for the years ended March 31, 2022 and 2021 is as follows. The number of stock options istranslated into their equivalent number of shares (20 shares per stock option).

Outstanding at beginning of year

2022
2021
Weighted average
Weighted average
Number of shares
Number of shares
exercise priceexercise price(shares)(shares)
(yen)
(yen)
890,960
731,5401
1Granted

-

-

-

1

(60)

1

(32,860)(232,480)1(126,560)

1

-

-

-

-

Outstanding at end of year

499,000

1

731,540

1

Exercisable at end of year

-

-

2,060

1

Forfeited [1]Exercised
Expired[1] Including the stock acquisition rights which became non-exercisable because of the market condition.
The weighted average share prices at the date of exercise for the years ended March 31, 2022 and 2021 were 5,358.5 yen and
3,128.0 yen.
The range of exercise price as of March 31, 2022 and 2021 was 1 yen. The weighted average remaining contractual lives of stock
options outstanding as of March 31, 2022 and 2021 were 25.2 years and 26.2 years, respectively.

F-54

Notes to Consolidated Financial Statements(20) Revenues(a) Disaggregation of revenue
The Company derives revenues primarily from contracts with customers. The following table shows the disaggregation ofrevenue attributable to each reportable segment and geographic area.
Effective from April 1, 2021, the Company reclassified its reportable segments. Accordingly, figures for the year ended March
31, 2021 have been restated on the basis of the reclassification. Details of the reclassification are described in note 4.
Millions of yen
2022
Overseas
Revenues
Subtotal

Total
Revenues

41,065625,968

2,153,625

339,718

188,745

1,128,719

1,447,967

116,584

17,441

31,250253,610

900,761

641,150

53,085319,80259,525

1,073,562

1,425,750

550,613

247,404

94,455

112,656

24,315478,830

1,029,443

Automotive Systems

455,282

606,321316,216130,01289,887

1,142,436

1,597,718

Hitachi Construction Machinery

216,922

195,722

196,425

162,798

253,094

808,039

1,024,961

Hitachi Metals

402,155

204,913274,458

42,26818,907

540,546

942,701

Others384,058

53,768

6,749

8,076

3,654

72,247456,305

Subtotal

4,855,274

2,546,892

1,560,088

1,306,535

710,442

6,123,957

10,979,231

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

Total

4,187,077

2,514,843

1,555,142

1,299,413

708,127

6,077,525

10,264,602

Japan

Asia

North
America

Europe

Other
Areas

1,527,657

180,128

231,011

173,764

Energy319,248

329,151

271,105

Industry

647,151

88,335

Mobility

352,188

Smart Life

IT

Millions of yen
2021
Overseas
Revenues
Subtotal

Total
Revenues

37,803511,306

2,048,756

227,612

127,205

769,564

1,107,986

98,964

15,294

15,358203,419

830,162

465,398

50,326

264,786

51,964

832,474

1,199,632

685,272

317,214106,549

106,455

37,261

567,479

1,252,751

Automotive Systems

340,877

276,119

197,222

110,100

63,265646,706

987,583

Hitachi Construction Machinery

203,337

191,801

107,175

110,542

200,476

609,994

813,331

Hitachi Metals

342,847

160,875

207,085

35,434

15,374

418,768

761,615

Others384,071

44,819

8,550

7,852

3,716

64,937449,008

Subtotal

4,826,177

1,929,057

1,125,115

1,018,053

552,4224,624,647

9,450,824

Corporate items and Eliminations(671,359)(35,437)(7,561)(4,566)(2,705)(50,269)(721,628)

Total

4,154,818

1,893,620

1,117,554

1,013,487

549,717

4,574,378

8,729,196

Japan

Asia

North
America

Europe

Other
Areas

1,537,450

167,762

165,763

139,978

Energy338,422

231,266

183,481Industry

626,743

73,803

Mobility

367,158

Smart Life

IT

F-55

Notes to Consolidated Financial Statements
The IT segment consists of Front Business and Services & Platforms, for which revenue amounted to 1,423,010 million yen and874,663 million yen for the year ended March 31, 2022 and 1,414,239 million yen and 790,258 million yen for the year ended
March 31, 2021, respectively (including intersegment transactions). Front Business is operated mainly in Japan, and Services &Platforms is operated mainly in Japan, North America and Europe.
The Company’s revenues include revenue recognized based on the pattern of the cost accrual arising from long-term projects.
Of the revenue recognized during the fiscal years ended March 31, 2022 and 2021, the amount of revenue recognized based on
the pattern of the cost accrual arising from long-term projects was 1,578,613 million yen and 1,389,409 million yen,respectively.
(b) Information about satisfaction of performance obligations
The following is information about satisfaction of performance obligations related to major goods and services of each reportablesegment.
(IT)
Front Business primarily provides goods and services such as system integration, consulting and cloud services. These longterm projects provide goods and services according to customers’ specifications over a specified period of time, and revenue isrecognized 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 performanceobligations are satisfied.
Services & Platforms primarily sells control systems, software and IT products. Revenue is recognized when control over the
goods is transferred to customers as performance obligations are satisfied at the point in time upon the completion or upondelivery of the goods. Mostly, payment terms stipulate that the consideration is received within one year after the performanceobligation is satisfied, and there are no significant transactions in which payment terms include deferred payments, etc.
(Energy, Industry and Mobility)
The Energy segment includes revenue from businesses such as energy solutions, which are operated mainly in Japan, Asia,
Europe, and North America. The Industry segment includes revenue from businesses such as industry & distribution solutions,which are operated mainly in Japan. The Mobility segment includes revenue from building systems and railway systems
businesses. The building systems business is operated mainly in China and the railway systems business is operated mainly inEurope.
Long-term projects related to contracts such as construction in these segments involve manufacturing and providing goods
based on customers’ specifications over a specified period of time. As performance obligations are satisfied over time, revenue
is recognized mainly based on the pattern of the cost accrual (the progress of the project mostly based on the cost incurred
relative to the estimated total cost). In addition, these segments provide certain services promised in the contracts such as
maintenance throughout the duration of the contract, and recognize revenue over time based on the passage of time. Many of
the contracts require payments based on milestones, and, in some cases, payments are made before performance obligations
are satisfied.
Further, in the sale of industrial equipment, etc. included in the Industry segment, and in the sale of elevators, etc. included in
the Mobility segment, revenue is recognized when control over the goods is transferred to customers as performanceobligations are satisfied at the point in time upon the completion or upon delivery of the goods. Mostly, payment terms
stipulate that the consideration is received within one year after the performance obligation is satisfied, and there are no
significant transactions in which payment terms include deferred payments, etc.
(Other)In the Smart Life, Automotive Systems, Hitachi Construction Machinery, and Hitachi Metals segments, performanceobligations are generally satisfied at a point in time upon completion or upon delivery of the goods, and revenue is recognizedwhen 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.
These segments provide certain services promised in the contracts such as maintenance throughout the duration of thecontract, and they recognize revenue over time based on the passage of time. Mostly, payment terms stipulate that theconsideration is received within one year after the performance obligation is satisfied, and there are no significant transactions
in which payment terms include deferred payments, etc.

F-56

Notes to Consolidated Financial Statements(c) Information about contract balances
The following table shows the beginning and ending balances of Trade receivables, Contract assets and Contract liabilities fromcontracts with customers for the fiscal years ended March 31, 2022 and 2021.
Millions of yen
2022
March 31, 2022

2021
April 1, 2021

March 31, 2021

April 1, 2020

Trade receivables

2,381,832

2,115,973

2,115,973

1,846,078

Contract assets

665,627

676,524

676,524484,999

Contract liabilities

1,150,592

1,016,207

1,016,207

707,352

Of the revenue recognized during the fiscal years ended March 31, 2022 and 2021, the amount included in Contract liabilities atthe beginning of the fiscal years was 604,800 million yen and 352,608 million yen, respectively. And the amount related toperformance obligations satisfied in the past periods was not material.
(d) Transaction price allocated to remaining performance obligations
The following table shows the balance of unsatisfied performance obligations by reportable segment for the fiscal years ended
March 31, 2022 and 2021.
Millions of yen
March 31, 2022
Intersegment
transactions

March 31, 2021

Balance of unsatisfied
performance obligations

Intersegment
transactions

Balance of unsatisfied
performance obligations

IT

58,982

1,141,343

50,181

1,080,587

Energy35,271

2,387,468

29,2881,884,151

Industry

98,942555,297

89,043476,109

Mobility

5,785

4,648,813

3,905

4,247,366

Segments of the Company and its subsidiaries that have contracts under which revenue is recognized over a long period of time
are primarily the IT segments, Energy segments, Industry segments and Mobility segments.
The estimated timing of unsatisfied performance obligations at the fiscal year ended March 31, 2022 is as follows.
Approximately 90% of the balance of unsatisfied performance obligations of the IT segment was expected to be satisfied within
three years and approximately 10% after three years but no more than five years.
Approximately 80% of the balance of unsatisfied performance obligations of the Energy segment was expected to be satisfied
within three years and approximately 10% after three years but no more than five years.
Approximately 90% of the balance of unsatisfied performance obligations of the Industry segment was expected to be satisfied
within three years.
Approximately 50% of the balance of unsatisfied performance obligations of the Mobility segment was expected to be satisfied
within three years and approximately 10% after three years but no more than five years.
The estimated timing of unsatisfied performance obligations at the fiscal year ended March 31, 2021 is as follows.
Approximately 90% of the balance of unsatisfied performance obligations of the IT segment was expected to be satisfied within
three years and approximately 10% after three years but no more than five years.
Approximately 80% of the balance of unsatisfied performance obligations of the Energy segment was expected to be satisfied
within three years and approximately 10% after three years but no more than five years.
Approximately 90% of the balance of unsatisfied performance obligations of the Industry segment was expected to be satisfied
within three years.
Approximately 50% of the balance of unsatisfied performance obligations of the Mobility segment was expected to be satisfied
within three years and approximately 10% after three years but no more than five years.
The remaining segments have contracts whose initial expected terms are generally one year or less. Accordingly, related
information is excluded from this disclosure in accordance with the practical expedient.

F-57

Notes to Consolidated Financial Statements(e) 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 tothe extent those costs are expected to be recovered. Such costs recognized as an asset as of March 31, 2022 and 2021 were notmaterial.
(21) Other Income and Expenses
The main components of other income and expenses for the years ended March 31, 2022 and 2021 are as follows:
Millions of yen
2022

2021

Net gain (loss) on sales and disposals of fixed assets

18,06816,126

Impairment losses(35,091)(109,009)

Net gain (loss) on business reorganization and others

102,135

452,422

Special termination benefits(8,770)(19,706)

Impairment losses are mainly recognized on property, plant and equipment, investment properties, goodwill and other intangible
assets. Net gain (loss) on business reorganization and others include gains and losses related to obtaining and losing control ofinvestees and gains and losses related to obtaining and losing significant influence over investees.
Restructuring charges (structural reform expenses) included in Other expenses for the years ended March 31, 2022 and 2021 were
43,861 million yen and 128,715 million yen, respectively. Restructuring charges (structural reform expenses) mainly include
impairment losses and special termination benefits.
(22) Financial Income and Expenses
The main components of financial income and expenses for the years ended March 31, 2022 and 2021 are as follows:
Millions of yen
2022

2021

Dividends received

6,454

3,445

Exchange gain (loss)

11,8709,193

Dividends received for the years ended March 31, 2022 and 2021 are from FVTOCI financial assets.

F-58

Notes to Consolidated Financial Statements(23) Discontinued Operations
In the Energy segment, the Company classified the part of thermal power generation systems business which was not transferred to
Mitsubishi Hitachi Power Systems, Ltd. (currently Mitsubishi Power, Ltd.) for business integration in the thermal power
generation systems business with Mitsubishi Heavy Industries, Ltd. but was operated by the Company and certain subsidiaries as
discontinued operations in the consolidated statement of profit or loss since the projects were completed in the year ended March
31, 2015.
Profit or loss and cash flows from the discontinued operations for the years ended March 31, 2022 and 2021 are as follows:
Millions of yen
2022

2021

Profit or loss from discontinued operations
Revenues

0

7

Cost of sales and expenses

0

(693)

0

(686)

Income (loss) from discontinued operations, before income taxes
Income taxes
Income (loss) from discontinued operations

-

-

0

(686)
Millions of yen

2022

2021

Cash flows from discontinued operations
Cash flows from operating activities

0

(611)

Cash flows from investing activities--

Cash flows from financing activities

0

736

F-59

Notes to Consolidated Financial Statements(24) Earnings Per Share (EPS) Information
The calculations of basic and diluted EPS attributable to Hitachi, Ltd. stockholders are as follows:
Number of shares
2022
Weighted average number of shares on which basic EPS is calculated

2021

966,413,255

965,965,329

Stock options

512,108

731,540

Restricted stock

715,736

684,997

Restricted stock units

37,232

24,533

967,678,331

967,406,399

Effect of dilutive securities

Number of shares on which diluted EPS is calculated

Millions of yen
2022

2021

Net income from continuing operations,
attributable to Hitachi, Ltd. stockholders
Basic583,470

502,299--

583,470

502,299

Basic

0

(686)

Effect of dilutive securities--

Diluted0(686)

583,470

501,613--583,470

501,613

Effect of dilutive securities
Diluted
Net income (loss) from discontinued operations,
attributable to Hitachi, Ltd. stockholders

Net income attributable to Hitachi, Ltd. stockholders
Basic
Effect of dilutive securities
Diluted

Yen
2022

2021

EPS from continuing operations,
attributable to Hitachi, Ltd. stockholders
Basic603.75520.00

Diluted602.96519.22

Basic

0.00

(0.71)

Diluted0.00(0.71)

Basic

603.75519.29Diluted602.96518.51

EPS from discontinued operations,
attributable to Hitachi, Ltd. stockholders

EPS attributable to Hitachi, Ltd. stockholders

F-60

Notes to Consolidated Financial Statements(25) Supplementary Cash Flow Information
Changes in liabilities from financing activities for the years ended March 31, 2022 and 2021 are as follows:
Millions of yen
Short-term debt

Bonds

Long-term
borrowings

Lease liability

Total

March 31, 2020

183,303385,293

637,648

278,798

1,485,042

Cash flows

199,679

9,991

383,334(100,346)

492,658---

111,505

111,505

Acquisitions and divestitures

15,864(29,878)

250,837

19,386

256,209

Currency translation effect and others

17,789553

23,7909,810

51,942

March 31, 2021

416,635

365,959

1,295,609

319,153

2,397,356

Cash flows

653,244(10,028)(136,241)(114,876)

392,099

Non-cash changes
Finance lease liability incurred

Non-cash changes
Finance lease liability incurred

-

-

-

99,17599,175Acquisitions and divestitures

118,554

-

2,344

(704)

120,194

Currency translation effect and others

45,686

1,617

46,11324,472

117,888

1,234,119

357,548

1,207,825

327,220

3,126,712

March 31, 2022

F-61

Notes to Consolidated Financial Statements(26) Financial Instruments and Related Disclosures(a) Capital Management
The Company manages its capital under the policy of maintaining appropriate level of assets, liabilities and capital for current
and future business operations, as well as optimizing the efficiency of capital utilization throughout the business operations.
The Company uses the total Hitachi, Ltd. stockholders’ equity ratio as an important indicator in capital management and it isregularly monitored. The total Hitachi, Ltd. stockholders’ equity ratio as of March 31, 2022 and 2021 were 31.3% and 29.7%,
respectively.
The Company is not subject to any capital requirements except for the general rules such as the Japanese Company Law.
(b) Financial Risks
The Company is engaged in business activities world-wide, and constantly exposed to various risks such as market risks(mainly currency exchange risk and interest rate risk), credit risk and liquidity risk. The Company implements risk
management policies to avoid or mitigate these financial risks.
(i) Currency Exchange Risk
The Company and its subsidiaries hold assets and liabilities exposed to currency exchange risk. In order to hedge this risk,
the management uses forward exchange contracts or cross currency swaps.
For trade receivables and payables denominated in foreign currencies, the Company and its subsidiaries measure the future
cash flows per currency on a monthly basis, and enter into forward exchange contracts using a constant ratio with the
purpose of fixing the future cash flows arising from receivables and payables and forecasted transactions denominated inforeign currencies. The terms of forward exchange contracts are largely within one year. If necessary, the Company and its
subsidiaries establish a risk control policy and a risk management approach specific to each transaction by reviewing thebusiness characteristics, the structure of income and expenditure, and conditions of the contract. The Company and its
subsidiaries hedge the risk exposure arising from specific transactions based on the risk control policy and the risk
management approach.
To fix cash flows from long-term debt denominated in foreign currencies, the Company and its subsidiaries enter into crosscurrency swap agreements with the same maturities as the underlying debt. The hedging relationship between the forward
exchange contracts or cross currency swaps and the underlying hedged items is highly effective in offsetting the impact fromchanges in foreign currency exchange rates.
The sensitivity analysis for currency exchange rates shown below indicates the impact on income from continuing
operations, before income taxes, in the Company’s consolidated statement of profit or loss, if the Japanese yen depreciatedby 1% on the foreign-currency-denominated financial instruments held by the Company and its subsidiaries as of March 31,
2022 and 2021, while all other variables are held constant.
Millions of yen
Currency
Impact on income from continuing
operations, before income taxes

US Dollar
Euro

F-62

2022

2021
2,852

2,559

76

101

Notes to Consolidated Financial Statements(ii) Interest Rate Risk
The Company and its subsidiaries are exposed to interest rate risk related principally to long-term debt obligations. In orderto minimize this risk, the Company and its subsidiaries enter into interest rate swap agreements to control fluctuation risk ofcash flows. The interest rate swaps entered into are mainly receive-variable, pay-fixed interest rate swaps. Under theinterest rate swaps, the Company and its subsidiaries receive variable interest rate payments on long-term debt and makefixed interest rate payments, thereby creating fixed interest rate long-term debt.
Certain financing subsidiaries raise funds by issuing long-term debt with a fixed interest rate and lending it at variableinterest rates, creating interest rate risk. In order to minimize this risk, interest rate swaps are used to convert, in effect, thefixed rate to a variable rate to manage fluctuations in fair value resulting from interest rate risk. The hedging relationshipbetween the interest rate swaps and the underlying hedged items is highly effective in offsetting the impact from changes incash flows and fair value resulting from interest rate risk.
The sensitivity analysis for interest rate shown below indicates the impact on income from continuing operations, before
income taxes, in the consolidated statement of profit or loss, if interest rates increased by 1% on the financial instruments(floating-interest financial assets and liabilities measured at amortized cost, FVTPL financial assets and liabilities andderivatives) held by the Company and its subsidiaries as of March 31, 2022 and 2021, while all other variables are held
constant.
Millions of yen
2022
Impact on income from continuing operations,(11,722)

before income taxes

2021(6,394)(iii) Credit Risk
Trade receivables and contract assets, and other receivables resulting from operating activities of the Company and its
subsidiaries are exposed to credit risk of the customers. Investments in debt securities held for managing cash surplus andequity instruments held for strategic purposes are exposed to credit risk of the issuers. Derivative transactions entered into inorder to lower market risks are exposed to credit risk of the counter-party financial institutions.
For credit risk of customers, the Company conducts periodic credit checks as appropriate for the products sold and thecustomers’ financial conditions and credit ratings. A credit limit is set according to the credit risk. For cash surplus,
investment is restricted to low risk debt securities, and derivative transactions are entered into with financial institutions
with high credit rating only.
No significant concentration of credit risk is present in a particular region or a customer, as the Company and its
subsidiaries are engaged in diverse industries worldwide.

F-63

Notes to Consolidated Financial Statements
The changes in the balance of allowance for doubtful receivables for trade receivables, contract assets and otherreceivables, and the changes in the gross carrying amounts of trade receivables and contract assets, and other receivables
corresponding to the allowance for doubtful receivables for the years ended March 31, 2022 and 2021 are as follows. Other
receivables mainly consist of lease receivables and financial assets measured at amortized cost such as short-term loans
receivable, other accounts receivable, debt securities measured at amortized cost and long-term loans receivable.
Millions of yen
Trade receivables and contract
assetsAllowance for doubtful receivables
Collective
assessment

Individual
assessment

20,824

Change, net
Credit-impairment [1]Write-off [2]Gross carrying amount

Total

Collective
assessment

Individual
assessment

18,82739,651

2,308,035

62,6932,370,728

701

6,245

6,946

(335,456)(6,714)(342,170)

(27)

27

-

14,778(14,778)-(834)(3,025)(3,859)(22,078)(3,391)(25,469)

Other [3]12,5697,379

19,948748,100

103,994

852,094

March 31, 2021

33,23329,45362,686

2,713,379

141,804

2,855,183

Change, net

3,476

18,90722,383

246,931(49,651)

197,280

Credit-impairment [1](1,252)

1,252-(8,962)

8,962-

Write-off [2](7,934)(2,534)(10,468)(47,996)(3,069)(51,065)

Other [3]

1,437

4,907

6,344

117,741

9,265

127,006

March 31, 2022

28,96051,98580,9453,021,093

107,311

3,128,404

March 31, 2020

F-64

Total

Notes to Consolidated Financial Statements
Millions of yen
Allowance for doubtful receivables
Other receivables

Collective
assessment

Individual
assessment

March 31, 2020

272

4,112

Change, net

27

Credit-impairment [1]-Write-off [2]Other [3]Gross carrying amountCollective
assessment

Individual
assessment

4,384

385,808

16,207402,015

1,057

1,084

(155,203)305(154,898)

-

-

(44)

44

-

(1)

(1,275)(1,276)(1,526)(1,495)(3,021)

3

136

139

176,433

20,762

197,195

March 31, 2021

301

4,030

4,331

405,468

35,823441,291

Change, net

(26)

539

513

56,193(25,432)

30,761Credit-impairment [1]

-

-

-

(1,253)

1,253-

Write-off [2]

(1)

(1)

(2)

(6,980)(905)(7,885)

Total

Total

Other [3]

18

165

183

(34,496)(1,603)(36,099)

March 31, 2022

292

4,733

5,025

418,932

9,136

428,068[1] The Company measures the allowance for doubtful receivables relating to credit-impaired financial assets based on
individual assessment and, therefore, transfers them from collective assessment.
[2] The Company generally writes off and derecognizes the corresponding carrying amount when it has no reasonable
expectations of recovering the financial asset in its entirety or a portion.
[3] Other mainly includes the impact of acquisitions and divestitures and currency translation effect.
The maximum exposure to the credit risk equals the financial assets’ carrying amount, net of allowance for doubtfulreceivables, in the consolidated statement of financial position, if collateral held is not included. The maximum exposure to
the credit risk from loan commitments is disclosed in note 30. The maximum exposure to the credit risk from guarantee
obligations is disclosed in note 30.

F-65

Notes to Consolidated Financial Statements(iv) Liquidity Risk
Trade payables and financial liabilities, such as long-term debts, held by the Company and its subsidiaries are exposed toliquidity risk. With respect to this risk, the Company and its subsidiaries try to optimize capital efficiency through efficientmanagement of working capital, and maintain cash control through a centralized cash management system. They are alsoable to raise funds, as necessary, from capital markets through the issuance of debt and equity securities, and fromcommercial banks through borrowings and commitment lines. The total unused commitment lines as of March 31, 2022 aredisclosed in note 30.
The following tables present the maturities of non-derivative financial liabilities. Trade payables are not included in thetables since the carrying amounts agree with the contractual cash flows and they all mature in less than one year.
Millions of yen
March 31, 2022
Contractual
cash flows

Within 1 year

After 1 year
but not morethan 5 years

1,234,119

1,236,688

1,236,688--

Lease liabilities

327,220

346,010

93,799177,561

74,650

Bonds

357,548

363,858

119,021

123,449

121,388

1,207,825

1,224,628

134,319

1,060,944

29,365

268,851

274,701-

274,701-

Carrying
amountShort-term debt

More than 5
yearsLong-term debt

Long-term borrowings
Other non-current liabilities
Put options of non-controllinginterests

Millions of yen
March 31, 2021
Contractual
cash flows

Within 1 year

After 1 year
but not morethan 5 years

416,635

417,993

417,993--319,153

335,421

93,270174,920

67,231

Carrying
amountShort-term debt

More than 5
yearsLong-term debt
Lease liabilities
Bonds
Long-term borrowings

365,959

373,650

11,508

179,797

182,345

1,295,609

1,314,067

179,905

825,661

308,501

239,218

245,347-

245,347-

Other non-current liabilities
Put options of non-controllinginterests

The weighted average interest rate for short-term debt is 0.6%, and the weighted average interest rate for long-termborrowings is 0.5% with maturities ranging from 2022 to 2039.

F-66

Notes to Consolidated Financial Statements
The details on each bond issued are provided below.
Millions of yen
MatureinIssuerName of bondIssuedMarch 31,
2022

The Company

Unsecureddebenture #16

2013

30,00030,000 Unsecured

0.8

2023

The Company

Unsecureddebenture #17

2013

20,00020,000 Unsecured

1.4

2028

The Company

Unsecureddebenture #18

2020

90,00090,000 Unsecured

0.1

2023

2020

20,00020,000 Unsecured

0.2

2027

2020

90,00090,000 Unsecured

0.3

2030

2014
2021

107,548

115,959 Unsecured

0.1
2.8

2022
2031

357,548

365,959

The Company
The Company

Subsidiaries

Unsecureddebenture #19
Unsecureddebenture #20
Unsecureddebentures

Total

March 31,2021

Interest
rates(%)

Security

The following table shows the maturities of the main types of derivatives, expressed in gross amounts, even though they are
net settlement derivatives.
Millions of yen
March 31, 2022

Forward exchange contracts
Cross currency swaps
Interest rate swaps
Option contracts

Within 1 year

After 1 year
but not morethan 5 years

In

4,670

1,684

-

6,354

Out

19,491

847-

20,338In

408

19,916-

20,324

Out

783

3,224

-

4,007

In

564

13,772-

14,336

Out

79

18

-

97

In

-

-

-

-

Out

-

-

-

-

More than 5
years

Total

Millions of yen
March 31, 2021

Forward exchange contracts
Cross currency swaps
Interest rate swaps
Option contracts

Within 1 year

After 1 year
but not morethan 5 years

More than 5
years

In

8,644

3,743

1

12,388Out

16,694

3,104-

19,798

In

6,128

9,375

-

15,503

Out

2,898

2,330

-

5,228

In

29

276

3,746

4,051

Out

316

1,140

-

1,456

In

22

87

-

109

Out

88

-

-

88

F-67

Total

Notes to Consolidated Financial Statements(c) Fair Value of Financial Instruments(i) 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
The fair value of lease receivables is based on the present value of lease payments receivable calculated for each group ofyears 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 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 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 suchinvestments. The information provided is corroborated by the income approach using its own valuation model, or themarket 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 are measured at fair value based on quoted prices associated with transactions that are not distressed,
prices in inactive markets, or based on models using interest rate curves and forward and spot prices for currencies andcommodities. If significant inputs are unobservable, the Company mainly uses the income approach or the market approachto 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.
Other financial liabilities
Derivative liabilities are measured at fair value based on quoted prices associated with transactions that are not distressed,
prices in inactive markets, or based on models using interest rate curves and forward and spot prices for currencies andcommodities. If significant inputs are unobservable, the Company uses mainly the income approach or the market approachto corroborate relevant information provided by financial institutions and other available information.

F-68

Notes to Consolidated Financial Statements(ii) Financial Instruments Measured at Amortized Cost
The carrying amounts and estimated fair values of the financial instruments measured at amortized cost as of March 31,
2022 and 2021 are as follows.
The fair value estimated for financial assets and liabilities measured at amortized cost is classified in Level 2 of the fairvalue hierarchy.
Millions of yen
March 31, 2022
Carrying amounts

March 31, 2021

Estimated
fair values

Carrying amounts

Estimated
fair values

AssetsInvestments in securities and otherfinancial assets
Lease receivables

70,22771,64890,044

91,483

Debt securities

55,05755,05855,71455,716Long-term loans receivable

1,650

1,650

21,10322,409357,548

357,468

365,959

367,537

1,207,825

1,207,727

1,295,609

1,296,373

Liabilities
Long-term debt [1]BondsLong-term borrowings[1] Long-term debt is included in Current portion of long-term debt and Long-term debt in the consolidated statement offinancial position.
(iii) Financial Instruments Measured at Fair Value
Financial instruments measured at fair value on a recurring basis after the initial recognition are classified into three levelsof 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 is significant withthe lowest level in the fair value measurement as a whole.
Transfers between levels are deemed at the beginning of each quarter period.

F-69

Notes to Consolidated Financial Statements
The following tables present the assets and liabilities that are measured at fair value on a recurring basis as of March 31,
2022 and 2021.
March 31, 2022
Class of financial instruments

Millions of yen
Level 1

Level 2

Level 3

Total

FVTPL financial assets:
Investments in securities and otherfinancial assets
Equity securities

1,364

-

17,591

18,955

Debt securities

9,521

4,692

5,686

19,899-63,596-

63,596

282,0252,144

106,041

390,210

292,91070,432

129,318

492,660-

47,145-47,145-47,145-47,145Derivatives
FVTOCI financial assets:
Investments in securities and otherfinancial assets
Equity securities
Total financial assets at fair value
FVTPL financial liabilities:
Other financial liabilities
Derivatives
Total financial liabilities at fair value
March 31, 2021
Class of financial instruments

Millions of yen
Level 1

Level 2

Level 3

Total

FVTPL financial assets:
Investments in securities and otherfinancial assets
Equity securities

131

-

9,865

9,996

Debt securities

12,749

4,548

6,054

23,351-

34,981

87

35,068235,278977

110,853

347,108

248,158

40,506

126,859

415,523-

26,739-26,739-26,739-26,739Derivatives
FVTOCI financial assets:
Investments in securities and otherfinancial assets
Equity securities
Total financial assets at fair value
FVTPL financial liabilities:
Other financial liabilities
Derivatives
Total financial liabilities at fair value

F-70Notes to Consolidated Financial Statements
The following tables present the changes in Level 3 instruments measured on a recurring basis for the years ended March
31, 2022 and 2021.
2022

Millions of yen
Level 3 financial assets

Balance at beginning of year
Gain (loss) in profit or loss [1]Loss in OCI [2]Purchases
Sales and redemption
Acquisitions and divestitures
Transfer from Level 3 [3]OtherBalance at end of year

Equitysecurities

Debt
securities

Derivatives

Total

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

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

87
(87)
-

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

3,780

294

-

3,987

Unrealized gain relating tofinancial assets held at end of year [4]2021Millions of yen
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

Equitysecurities

Debt
securities

Derivatives

Total

112,885
541
2,534
7,689
(1,985)(1,115)
169
120,718

8,617
(415)
450
(2,055)
(61)
(482)
6,054

6,147
1
(6,061)
87

127,649
127
2,534
8,139
(10,101)(1,176)(313)
126,859

493

(415)

1

79

Unrealized gain (loss) relating tofinancial assets held at end of year [4][1] Gain (loss) in profit or loss related to FVTPL financial assets is included in Financial income and Financial expenses in
the consolidated statement of profit or loss.
[2] Gain (loss) in OCI related to FVTOCI financial assets is included in Net changes in financial assets measured at fairvalue through OCI in the consolidated statement of comprehensive income.
[3] Transfer from Level 3 is mainly due to an investee becoming listed on the stock market.
[4] Unrealized gain (loss) relating to FVTPL financial assets held at the end of year is included in Financial income andFinancial expenses in the consolidated statement of profit or loss.
Fair values are measured by the finance departments in accordance with the Company’s policies and procedures. Valuation
models are determined so that they reflect each financial instrument’s nature, characteristics and risks most appropriately.
The finance departments continually examine changes in important inputs that could affect the fair value. In case the fairvalue of a financial instrument was significantly impaired, administrators review and approve the impairment loss.
(ⅳ) Other
The Company and its subsidiaries recognize put options on shares of subsidiaries held by non-controlling interests asfinancial liabilities at the present value of the exercise price. The Company derecognizes the non-controlling interests andrecognizes the difference between the present value and non-controlling interests in capital surplus.
Put options on non-controlling interests of the Company and its subsidiaries are measured at the present value of theexercise price. The carrying amount of the put options above as of March 31, 2022 and 2021 were 268,851 million yen and
239,218 million yen, respectively, included in Other non-current liabilities in the consolidated statement of financial
position.

F-71

Notes to Consolidated Financial Statements
Equity instruments held with the objective of maintaining and strengthening business relations with the issuers are classified
as FVTOCI financial assets. The following is a list of principal equity instruments designated as FVTOCI and their fairvalues.
March 31, 2022

Millions of yen

Principal FVTOCI financial assets

Fair value

Mitsubishi HC Capital Inc.

95,577

Renesas Electronics Corporation

88,770JECC Corporation

21,591

Western Digital Corporation

18,990Central Japan Railway Company

14,369Shin-Etsu Chemical Co., Ltd.

12,405

Nippon Steel Kowa Real Estate Co., Ltd.

11,749Honda Motor Co., Ltd.

6,974

Nippon Tochi-Tatemono Co., Ltd.

5,241

Dalian Hi-Think Computer Technology Corporation

3,849

March 31, 2021

Millions of yen

Principal FVTOCI financial assets

Fair value

Renesas Electronics Corporation

74,389Western Digital Corporation

46,187

Honda Motor Co., Ltd.

24,914JECC Corporation

21,591

Central Japan Railway Company

14,895Shin-Etsu Chemical Co., Ltd.

12,285

Nippon Steel Kowa Real Estate Co., Ltd.

8,794

East Japan Railway Company

6,368

Dalian Hi-Think Computer Technology Corporation

5,543

Nippon Tochi-Tatemono Co., Ltd.

5,484

See note 22 for dividends received from investment securities classified as FVTOCI financial assets.
Accumulated gains and losses on valuation of FVTOCI financial assets are reclassified into retained earnings when
derecognized during the fiscal year. The net gains reclassified, net of taxes, for the years ended March 31, 2022 and 2021
were 13,880 million yen and 4,299 million yen, respectively. These financial assets were derecognized upon disposal ofshares after reviewing particular business relations, or acquisitions and divestitures.
The information on FVTOCI financial assets that were derecognized for the years ended March 31, 2022 and 2021 is asfollows:
Millions of yen
2022

2021

Fair value at the time of derecognition

80,722

13,550

Accumulated gains at the time of derecognition

22,339

4,464

F-72

Notes to Consolidated Financial Statements(d) Derivatives and Hedging Activities(i) Fair Value Hedge
Changes in the fair value of recognized assets and liabilities, and of derivatives designated as a fair value hedge of theseassets and liabilities are recognized in profit or loss for the period in which the changes occur. Derivatives designated as afair value hedge include forward exchange contracts associated with operating transactions, cross currency swaps
agreements and interest rate swaps associated with financing transactions.
(ii) Cash Flow Hedge
Foreign Currency Risk
A portion determined as an effective hedge with respect to changes in the fair value of forward exchange contracts
designated as an effective cash flow hedge of forecasted foreign-currency-denominated transactions are recognized in OCI.
AOCI is subsequently reclassified into profit or loss when the hedged items affect profit or loss for the period. If a nonfinancial asset or a non-financial liability is recognized due to a hedged forecast transaction, the changes in the fair value ofthe derivative recognized in OCI are included directly in the acquisition cost or other carrying amount of the asset or
liability at which point the asset or liability is recognized.
Interest Rate Risk
A portion determined as an effective hedge with respect to changes in the fair value of interest rate swaps designated as ahedge of the variability of cash flows associated with long-term debt are recognized in OCI. AOCI is subsequently
reclassified to interest charges over the period in which the interest on the debt affects profit or loss.
When applying hedge accounting, the Company assesses hedge effectiveness through a qualitative assessment of whether
the critical terms of the hedged item and the hedging instrument match or are closely aligned and whether changes in thefair value or cash flows of the hedging instrument offset changes in the fair value or cash flows of the hedged item in order
to confirm that an economic relationship exists between the hedged item and the hedging instrument. The Company also
sets appropriate hedge ratios based on the economic relationship between the hedged item and the hedging instrument andthe Company’s risk management policies. For the years ended March 31, 2022 and 2021, hedge ineffectiveness recognizedin profit or loss were not material.
The notional amounts and carrying amounts of hedging instruments as of March 31, 2022 and 2021 are as follows. The
carrying amount of hedging instruments is included in Investments in securities and other financial assets and Other
financial liabilities or Other non-current liabilities in the consolidated statement of financial position.
March 31, 2022
Hedging instruments

Millions of yen
Carrying amount

Notional amountMore than 1 year

AssetsLiabilities

Fair value hedge
Foreign currency risk

363,354

75,154

17,67012,552

Interest rate risk

93,271

38,0711,137

70Foreign currency risk

313,575

163,392

4,538

6,990

Interest rate risk

179,107

159,107

13,19910949,307435,724

36,544

19,622

Cash flow hedge

Total
March 31, 2021
Hedging instruments

Millions of yen
Carrying amount

Notional amountMore than 1 year

AssetsLiabilities

Fair value hedge
Foreign currency risk

299,371

93,418

8,625

6,926

Interest rate risk

47,854

41,201276

1,063

Foreign currency risk

313,298

106,964

3,632

4,691

Interest rate risk

249,488

163,923

3,775

393

910,011405,506

16,30813,073

Cash flow hedge

Total

F-73

Notes to Consolidated Financial Statements
The carrying amounts of hedged items related to fair value hedges as of March 31, 2022 and 2021 are as follows.
March 31, 2022
Hedged items related tofair value hedges

Millions of yen
Carrying amount

Recognized in statement offinancial position

AssetsLiabilities

Trade receivables and contract assets,
Foreign currency risk

231,838

131,51675,524

17,747

Total

307,362

149,263

March 31, 2021

Millions of yen
Carrying amountInterest rate risk

Investments in securities and other financial assets,
Short-term debt, Trade payables and Long-term debt
Investments in securities and other financial assets,
Current portion of long-term debt

Hedged items related tofair value hedges

Recognized in statement offinancial position

AssetsLiabilities

Trade receivables and contract assets,
Foreign currency risk

Interest rate risk

Investments in securities and other financial assets,
Short-term debt, Trade payables and Long-term debt
Investments in securities and other financial assets,Long-term debt

Total

167,779

131,592

31,801

16,053

199,580

147,645

For the years ended March 31, 2022 and 2021, changes in the fair value of hedging instruments and hedged items related tofair value hedges and the accumulated amount of fair value hedge adjustments on hedged items included in the carrying
amount of the hedged items were not material.
For the years ended March 31, 2022 and 2021, changes in the fair value of hedging instruments related to cash flow hedges
recorded in Accumulated other comprehensive income are as follows.
Millions of yen
Changes in fairAmount directly
value of hedging
included in
instruments
carrying amount ofrecognized in otherhedged assets orcomprehensive
liabilities
incomeApril 1,2021

Price risk

Amountreclassified to
profit or loss
[1]

March 31,
2022

-

-

-

-

-

Foreign currency risk

(2,209)3,679(9,312)(97)(7,939)Interest rate risk

3,336

9,747

-

97

13,180

Total

1,127

13,426(9,312)0

5,241Millions of yen

April 1,
2020

Price risk

Changes in fairAmount directly
value of hedging
included in
instruments
carrying amount ofrecognized in otherhedged assets orcomprehensive
liabilities
incomeAmountreclassified to
profit or loss
[1]

March 31,2021

Foreign currency risk

(572)
12,078208(15,957)

572
1,462

(2,209)Interest rate risk

(1,144)

4,427

-

53

3,336

Total

10,362

4,635(15,957)

2,087

1,127

F-74

Notes to Consolidated Financial Statements[1] In the consolidated statement of profit or loss, the amount reclassified to profit or loss is included mainly in Revenues
and Financial expenses for hedges of foreign currency risk and mainly in Interest charges for hedges of interest raterisk.
(e) Securitization of Financial Assets
For the purpose of providing diversified and stable financing, the Company and certain subsidiaries securitize certain financial
assets, and transfer trade and lease receivables through certain third-party financial institutions or structured entities formed bythese financial institutions. The Company does not consolidate such structured entities used for securitization purposes since it
has been determined that they are not controlled by the Company.
These unconsolidated structured entities used for securitization purposes are operated in the ordinary course of business of thefinancial institutions, and they procure funds by issuing commercial paper and other borrowings. Basically, investors in thesestructured entities only have recourse to the assets owned by the entity itself, but not to any other assets held by the Company
or its subsidiaries. The amount of assets transferred by the Company and certain subsidiaries is considerably small compared tothe total assets of the structured entities sponsored by the financial institutions that purchase a large amount of assets fromentities other than the Company and certain subsidiaries. The Company and certain subsidiaries have only limited exposure to
the risks borne by these structured entities. The majority of the involvement with these structured entities used for
securitization purposes by the Company and certain subsidiaries concerns the servicing of assets. The Company and certain
subsidiaries do not provide any non-contractual support to the structured entities and have not made any implicit support
arrangements with them.
For the securitizations of financial assets by the Company and certain subsidiaries, which resulted in derecognizing thefinancial assets in their entirety, the Company and certain subsidiaries retain no significant continuing involvement. For othersecuritizations of financial assets, the Company and certain subsidiaries do not derecognize the financial assets in their entirety
when they retain substantially all credit risks and economic value related to the transferred financial assets through holding
subordinated interests, and the carrying amounts of these financial assets are not material.
(27) Pledged Assets
As a general contractual term for long-term and short-term debt, banks may demand collateral and guarantees for present andfuture obligations, and retain rights to offset the liabilities with bank deposits when repayment is overdue or any breach of contract
occurs.
Per trustee agreements of secured bonds and particular secured or unsecured loan agreements, trustees or lenders generally havethe right to pre-approve profit distributions including dividend payments and new stock issues, as well as the right to demand
additional collateral or mortgage.
The Company and its subsidiaries pledged a portion of their assets as collateral primarily for bank loans as follows:
Millions of yen
March 31, 2022

March 31, 2021

Trade receivables and contract assets

7,205

4,990

Inventories

12,529

9,103

327

333

1,951

1,777

5

50

Machinery and other property, plant and equipment

62,71759,272

Total

84,73475,525Investments in securities and other financial assets
Land
Buildings and structures

F-75

Notes to Consolidated Financial Statements(28) Principal Subsidiaries
The Company’s consolidated financial statements include the following subsidiaries listed below.

Reporting segment

Name of subsidiaryBusiness location

Ownership
percentage
of votingrights (%)

IT

Hitachi Information & Telecommunication
Engineering, Ltd.

Yokohama, Kanagawa

100.0

IT

Hitachi Channel Solutions, Corp.

Shinagawa-ku, Tokyo

100.0

IT

Hitachi Solutions, Ltd.

Shinagawa-ku, Tokyo

100.0

IT

Hitachi Systems, Ltd.

Shinagawa-ku, Tokyo

100.0

IT

GlobalLogic Worldwide Holdings, Inc.

California,

100.0

IT

Hitachi Computer Products (America), Inc.

U.S.A.
Oklahoma,

100.0

U.S.A.
IT

Hitachi Global Digital Holdings LLC

California,

100.0

U.S.A.
IT

Hitachi Payment Services Private Limited

Chennai,
India

100.0

IT

Hitachi Vantara LLC

California,
U.S.A.

100.0

EnergyHitachi-GE Nuclear Energy, Ltd.

Hitachi, Ibaraki

80.0

EnergyHitachi Plant Construction, Ltd.

Toshima-ku, Tokyo

100.0

EnergyHitachi Power Semiconductor Device, Ltd.

Hitachi, Ibaraki

100.0

EnergyHitachi Power Solutions Co., Ltd.

Hitachi, Ibaraki

100.0

EnergyHitachi Energy Ltd

Zurich,Switzerland

80.1

Industry

Hitachi Industrial Equipment Systems Co., Ltd.

Chiyoda-ku, Tokyo

100.0

Industry

Hitachi Industrial Products, Ltd.

Chiyoda-ku, Tokyo

100.0

Industry

Hitachi Industry & Control Solutions, Ltd.

Hitachi, Ibaraki

100.0

Industry

Hitachi Plant Services Co., Ltd.

Toshima-ku, Tokyo

100.0

Industry

Hitachi Industrial Holdings Americas, Inc.

Illinois,

100.0

U.S.A.
Industry

JR Technology Group, LLC

Michigan,
U.S.A.

100.0

Industry

Sullair, LLC

Indiana,
U.S.A.

100.0

F-76

Notes to Consolidated Financial Statements

Reporting segment

Ownership
percentage
of votingrights (%)

Name of subsidiaryBusiness location

Mobility

Hitachi Building Systems Co., Ltd.

Chiyoda-ku, Tokyo

100.0

Mobility

Hitachi Elevator (China) Co., Ltd.

Guangzhou,
China

70.0

Mobility

Hitachi Rail Ltd.

London,
U.K.

100.0

Smart Life

Hitachi Global Life Solutions, Inc.

Minato-ku, Tokyo

100.0

Smart Life

Hitachi High-Tech Corporation

Minato-ku, Tokyo

100.0

Automotive Systems

Hitachi Astemo, Ltd.

Hitachinaka, Ibaraki

66.6

Automotive Systems

Hitachi Astemo Americas, Inc.

Kentucky,

100.0

U.S.A.
Hitachi Construction
Machinery

Hitachi Construction Machinery Co., Ltd.

Taito-ku, Tokyo

51.5

Hitachi Metals

Hitachi Metals, Ltd.

Minato-ku, Tokyo

53.4

OthersHitachi-LG Data Storage, Inc.

Minato-ku, Tokyo

51.0

OthersHitachi Real Estate Partners, Ltd.

Chiyoda-ku, Tokyo

100.0

OthersHitachi America, Ltd.

California,
U.S.A.

100.0

OthersHitachi Asia Ltd.

Singapore

100.0

OthersHitachi (China), Ltd.

Beijing,
China

100.0

OthersHitachi Europe Ltd.

Stoke Poges,
U.K.

100.0

OthersHitachi India Pvt. Ltd.

New Delhi,
India

100.0

-

Other 816 companies

F-77

-

-

Notes to Consolidated Financial Statements(29) Related Party Transactions(a) Related Party Transactions
The Company’s and its subsidiaries’ receivable and payable balances with associates and joint ventures are as follows:
Millions of yen
With associates

March 31, 2022

March 31, 2021

Trade receivables and contract assets

42,14682,866

Trade payables

49,99760,30550

33,431

Lease obligations [1]Millions of yen
With joint ventures

March 31, 2022

Trade receivables and contract assets
Long-term loans receivable [2]March 31, 2021

35,16026,089-14,765[1] Included in Current portion of long-term debt and Long-term debt in the consolidated statement of financial position.
[2] Included in Investments in securities and other financial assets in the consolidated statement of financial position.
Revenue and purchase transactions of the Company and its subsidiaries with associates and joint ventures are as follows:
Millions of yen
With associates

2022

2021

Revenues

232,811346,630

Purchases

267,364

276,551
Millions of yen

With joint ventures

2022

2021

Revenues

56,96949,911

Purchases

9,035

9,482

(b) Compensation for Directors and Executive Officers of the Company
Millions of yen
2022

2021

Basic remuneration, year-end allowance and
3,221

3,481

etc.)

1,195

871

Total

4,417

4,353

performance-linked compensation
Medium and long-term incentive compensation(Stock options as stock-based compensation,

F-78

Notes to Consolidated Financial Statements(30) Commitments and Contingencies(a) Loan Commitments(i) Loan Commitments to Associates and Others
The Company provides loan commitments to associates and others. The outstanding balance of loan commitments as ofMarch 31, 2022 is as follows:
Millions of yen
March 31, 2022
Total commitments available

130

Less amount utilized-

Balance available

130

Since some loan commitments require credit approval before execution, the amount of total commitments available may
not be necessarily utilized in full.
(ii) Commitments with Financial Institutions
The Company and certain subsidiaries have line of credit arrangements with banks in order to secure efficient financing forbusiness operations. The total unused line of credit as of March 31, 2022 amounted to 631,960 million yen, primarily
belonging to the Company. The Company has commitment line agreements with a number of banks and pays commitment
fees as consideration. These commitment agreements generally provide a one year term with renewal at the end of theterm. The unused line of credit under these arrangements as of March 31, 2022 amounted to 336,717 million yen. The
Company also maintains other commitment line agreements with several financial institutions, with terms of three years
ending in July 2022. The unused line of credit under these arrangements as of March 31, 2022 amounted to 200,000
million yen.
(b) Commitments for Acquisition of Assets
As of March 31, 2022, outstanding commitments made to purchase property, plant and equipment were 77,812 million yen.
(c) Guarantee Obligations
The Company and certain subsidiaries provide debt guarantees to their associates, joint ventures and third parties. As of
March 31, 2022, the balance of the guarantee obligations was 73,862 million yen. It consisted of guarantees to associates of
59,185 million yen, to joint ventures of 1,764 million yen and to third parties of 12,913 million yen.
(d) Litigation
In November 2017, a subsidiary in Japan received a complaint that was filed against three companies, namely a construction
company of a condominium complex, the subsidiary and a secondary subcontractor, by a contractee in Japan seeking
approximately 45.9 billion yen in compensation for expenses allegedly incurred arising from concerns over partial
deficiencies of piling work during the construction phases of the condominium complex, which the subsidiary contracted as
the primary subcontractor. In July 2018, the compensation claim against these three companies was amended toapproximately 51.0 billion yen by the contractee.
In relation to the aforementioned lawsuit, in April 2018, the subsidiary in Japan received a complaint that was filed against
the subsidiary and the secondary subcontractor, by the construction company of the condominium complex seeking
approximately 49.6 billion yen in compensation for expenses allegedly incurred arising from the aforementioned lawsuit. In
July 2018, the compensation claim against these two companies was amended to approximately 54.8 billion yen by theconstruction company of the condominium complex. Although the subsidiary in Japan will address these claims and explain
its position, there can be no assurance that it will not be held liable for any amounts claimed.
In December 2017, a subsidiary in Europe received a complaint filed by a customer in Europe seeking compensation forconsequential losses of 263 million euro (35,958 million yen) and interest allegedly incurred by performance defects of apower plant. As of March 31, 2022, the amount of compensation claimed by the customer was changed to 270 million euro
(36,914 million yen). Although the subsidiary in Europe will vigorously defend itself against this lawsuit, there can be noassurance that it will not be held liable for any amounts claimed.

F-79

Notes to Consolidated Financial Statements
The Company and its subsidiaries execute a number of business reorganizations, including mergers, acquisitions anddivestitures. Contracts for these reorganizations include clauses for transaction price adjustments subsequent to thereorganizations. There is a possibility products or services provided by the Company and its subsidiaries contain defects. As
the result of price adjustments, or in compensation for defects in products or services etc. there is a possibility that theCompany pays for any amounts.
Depending upon the outcome of the above legal proceedings, there may be an adverse effect on the consolidated financial
position or results of operations. Currently, the Company is unable to estimate the adverse effect, if any, of many of theseproceedings. The actual amount of fines, surcharge payments or any other payments resulting from these legal proceedings
may be different from the accrued amounts.
In addition to the above, the Company and its subsidiaries are subject to legal proceedings and claims which have arisen in
the ordinary course of business and have not been finally adjudicated. These actions when ultimately concluded anddetermined will not, in the opinion of management, have a material adverse effect on the consolidated financial statements of
the Company and subsidiaries.
(31) Subsequent Events(a) 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 theCompanies Act of Japan and Article 32 of the Company’s Articles of Incorporation, as follows.
(i) Reason for repurchase
The Company views the return of profits to shareholders through enhancing corporate value from a mid- and long-term
perspective and paying dividends continuously as an important managerial issue. The Company has decided to repurchaseits own shares this time, taking into consideration its financial condition and the price of its common stock as well as the
progress of the review of the business portfolio.
(ii) Outline of the Repurchase1) Class of shares to be repurchased
Common stock of the Company
2) Aggregate number of shares to be repurchased
Up to 50 million shares(5.17% of the number of outstanding shares (excluding treasury stocks))
3) Aggregate amount of repurchase
Up to 200 billion yen
4) Period of the repurchase
From May 2, 2022 to March 31, 2023
5) Method of repurchase
Expected open market purchase through the Tokyo Stock Exchange(32) Approval of Consolidated Financial Statements
The consolidated financial statements were approved on June 22, 2022 by Keiji Kojima, President and CEO of the Company.

F-80

Independent Auditor’s Report
To the Stockholders and Board of Directors ofHitachi, Ltd.

OpinionWe have audited the accompanying consolidated financial statements of Hitachi, Ltd. and its subsidiaries (theGroup), which comprise the consolidated statement of financial position as at March 31, 2022, and the consolidated
statements of profit or loss, comprehensive income, changes in equity, and cash flows for the year then ended, andnotes to the consolidated financial statements.
In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, theconsolidated financial position of the Group as at March 31, 2022, and its consolidated financial performance and its
consolidated cash flows for the year then ended in accordance with International Financial Reporting Standards(IFRSs).
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 Consolidated
Financial Statements section of our report. We are independent of the Group in accordance with the ethicalrequirements that are relevant to our audit of the consolidated financial statements in Japan, and we have fulfilled
our other 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.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of theconsolidated financial statements of the current period. These matters were addressed in the context of the audit of
the consolidated financial statements as a whole, and in forming the auditor’s opinion thereon, and we do notprovide a separate opinion on these matters.
Measurement of intangible asset recognized in the acquisition of GlobalLogic Inc.
Description of Key Audit Matter
The Company acquired GlobalLogic Inc. as a wholly owned subsidiary on July 13, 2021.
The Company recognized an intangible asset representing customer relationships in the amount of 227,424 million
yen as a result of measuring the identifiable assets acquired and liabilities assumed (See Note (5) Business
Acquisitions and Divestitures, (b) Acquisition of GlobalLogic Inc.).
The measurement of this intangible asset representing customer relationships is determined based on discounted
future cash flows expected to be generated by the asset and is affected by estimates of future cash flows and thediscount rate. Future cash flows are estimated using significant assumptions, including revenue growth rates,
EBITDA ratios, revenue growth rate for existing customers and attrition rate of existing customers, which all require
management judgements.
We determined that the measurement of the intangible asset is a key audit matter because of the significance of thebalance of the intangible asset and the significant impact on the consolidated financial statements from the
management judgement related to the significant assumptions.

F-81

Auditor’s Response
We primarily performed the following procedures regarding the measurement of the intangible asset.
・ We obtained an understanding of the details and objectives of the transaction by examining related materials suchas the acquisition agreement and making inquiries of management.
・ We involved valuation specialists from a network firm in assessing the valuation methods of the intangible asset,
significant assumptions used in the estimation of future cash flows, and the discount rate.
・ We performed following procedures related to significant assumptions used in the estimation of future cash
flows.
- We made inquiries of management about measures to achieve the revenue growth rates and EBITDA ratios,and compared the assumptions with actual operating results and available external data such as market research
reports related to market growth rates.
- We analyzed customer sales trends over the past four years, made inquiries of management and compared therevenue growth rate for existing customers and attrition rate of existing customers with actual results after theacquisition.
・ We also made inquiries of management about the risks reflected in the discount rate, evaluating the consistency
with the risks reflected in future cash flows.
Measurement of recoverable amount of group of cash-generating units containing goodwill related to the power
grid business
Description of Key Audit Matter
The Company recognized goodwill in the amount of 513,616 million yen related to the power grid business (SeeNote (10) Goodwill and Other Intangible Assets). Such goodwill represents 23% of total goodwill and 3% of total
assets of the Group.
The Company measured the recoverable amount based on value in use in the impairment test of the group of cashgenerating units containing the goodwill. Value in use is determined using discounted future cash flows and isaffected by estimates of future cash flows and the discount rate. Future cash flows are based on the business plan
and are estimated using significant assumptions including revenue growth rates and gross profit ratios, which all
require management judgements.
We determined that the measurement of the recoverable amount is a key audit matter because of the significance ofthe balance of goodwill and the significant impact on the consolidated financial statements from the management
judgement related to the significant assumptions.
Auditor’s Response
We primarily performed the following procedures regarding the measurement of the recoverable amount of thegroup of cash-generating units containing the goodwill.
・ We obtained an understanding of the business plan by examining related business planning materials.
・ We assessed the effectiveness of the business planning process by comparing the business plan from the priorfiscal year with the corresponding operating results and the business plan at the time of the impairment test.
・ We involved valuation specialists from a network firm in assessing the valuation method of value in use,significant assumptions used in the estimation of future cash flows, and the discount rate.
・ We made inquiries of management about measures to achieve the business plan and compared revenue growth
rates and gross profit ratios with actual operating results and available external data such as market research
reports related to market growth rates.
・ We made inquiries of management about the risks reflected in the discount rate, evaluating the consistency withthe risks reflected in future cash flows.
・ We performed sensitivity analyses assuming reasonably possible changes in significant assumptions, assessing
the effect on the recoverable amount.

F-82

Estimation of total cost of long-term projects
Description of Key Audit Matter
The Group has long-term projects involving the manufacture and provision of goods in accordance with customer
specifications that are completed over specified periods of time to customers in a broad range of business areas
across the world.
The Group recognizes revenues from long-term projects in the amount of 1,578,613 million yen by measuring the
progress of the project mostly based on the cost incurred relative to the estimated total cost to satisfy theperformance obligations (See Note (20) Revenues, (a) Disaggregation of revenue, (b) Information about satisfactionof performance obligations). Furthermore, the Group recognizes provisions for expected losses on construction
contracts in the amount of 90,758 million yen based on the estimated amount of losses associated with fulfilling the
project requirements (See Note (14) Provisions).
Estimations of total cost of long-term projects affect the corresponding amounts of revenues and provisions. Each of
the Group’s long-term projects is distinct in terms of customer requirements, such as detailed specifications andscheduling, and therefore estimations of total cost depend on management judgement. Estimations of total cost are
particularly complex in relation to large-scale projects.
We determined that the estimation of total cost of long-term projects is a key audit matter because auditing
estimations of total cost of long-term projects requires consideration of various factors affecting such estimations
corresponding to each project as a result of the nature of the Group’s long-term projects.
Auditor’s Response
We obtained an understanding of the project management systems utilized by the Group as well as its processes for
estimating total cost, and tested the relevant internal controls, including the approval of initial and revised operating
budgets that serve as the basis of estimating total cost.
We selected samples of long-term projects, such as those projects whose total contract value exceeded certain
materiality thresholds and projects subject to various qualitative risks, including delays in the progress of the
project, and, on a quarterly basis, performed selected procedures from the following considering the status of eachproject:
・ We obtained an understanding of the significant factors influencing the estimates related to customer
specifications on goods and the timing of delivery and the effects of estimation uncertainty inherent in thosesignificant factors influencing the estimates by examining contracts and project management materials andmaking inquiries of management and compared specific line items in the estimated total cost with corresponding
quotations from suppliers.
・ We assessed the management’s judgements on the necessity of revising estimates of total cost considering thestatus of each project based on inquiries of management and by examining project management materials.
・ We assessed the effectiveness of the processes for estimating total cost by comparing initial and previous period
estimates with the actual total cost for completed projects and previous period estimates with the latest estimatesfor projects in progress.
We additionally made separate inquiries to project managers for projects that were considered particularly
significant to corroborate management explanations of their status.
Other Information
The other information comprises the information included in the annual report (Yukashoken Hokokusho) that
contains audited consolidated financial statements but does not include the consolidated financial statements,
financial statements and our audit report thereon. Management is responsible for preparation and disclosure of theother information. The Audit Committee is responsible for overseeing the Group’s reporting process of the otherinformation.
Our opinion on the consolidated financial statements does not cover the other information and we do not express
any form of assurance conclusion thereon.
In connection with our audit of the consolidated financial statements, our responsibility is to read the otherinformation and, in doing so, consider whether the other information is materially inconsistent with the consolidated
financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this otherinformation, we are required to report that fact.
We have nothing to report in this regard.

F-83

Responsibilities of Management and the Audit Committee for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of these consolidated financial statements inaccordance with IFRSs, and for such internal control as management determines is necessary to enable thepreparation 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 tocontinue as a going concern and disclosing, as required by IFRSs, matters related to going concern.
The Audit Committee is responsible for overseeing the Group’s financial reporting process.
Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole arefree from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes ouropinion. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate,
they could reasonably be expected to influence the economic decisions of users taken on the basis of these
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 tofraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is
sufficient and appropriate to provide a basis for our opinion.
・ Consider internal control relevant to the audit in order to design audit procedures that are appropriate in thecircumstances for our risk assessments, while the purpose of the audit of the consolidated financial statements is
not expressing an opinion on the effectiveness of the Group’s internal control.
・ Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates andrelated disclosures made by management.
・ Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on
the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may castsignificant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty
exists, we are required to draw attention in our auditor’s report to the related disclosures in the consolidated
financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on
the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may
cause the Group to cease to continue as a going concern.
・ Evaluate the overall presentation, structure and content of the consolidated financial statements, including thedisclosures, and whether the consolidated financial statements represent the underlying transactions and events ina manner that achieves fair presentation in accordance with IFRSs.
・ 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 are responsible forthe direction, supervision and performance of the group audit. We remain solely responsible for our audit
opinion.
We communicate with the Audit Committee regarding, among other matters, the planned scope and timing of theaudit and significant audit findings, including any significant deficiencies in internal control that we identify during
our audit.
We also provide the Audit Committee with a statement that we have complied with the ethical requirements
regarding independence that are relevant to our audit of the consolidated financial statements in Japan, and tocommunicate with them all relationships and other matters that may reasonably be thought to bear on our
independence, and where applicable, related safeguards.
From the matters communicated with the Audit Committee, we determine those matters that were of mostsignificance in the audit of the consolidated financial statements of the current period and are therefore the key audit
matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about
the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in ourreport because the adverse consequences of doing so would reasonably be expected to outweigh the public interest
benefits of such communication.

F-84

Interest Required to Be Disclosed by the Certified Public Accountants Act of Japan
Our firm and its designated engagement partners do not have any interest in the Group which is required to bedisclosed pursuant to the provisions of the Certified Public Accountants Act of Japan.
Ernst & Young ShinNihon LLC
Tokyo, Japan
June 22, 2022

Koji Fujima
Designated Engagement Partner
Certified Public Accountant

Yasuhiro Ozeki
Designated Engagement Partner
Certified Public Accountant

Shinya Yoshida
Designated Engagement Partner
Certified Public Accountant

F-85

(Translation)
Following is an English translation of the Internal Control Report filed under the Financial Instruments andExchange Act of Japan. We have made the assessment of internal control over financial reporting in accordancewith assessment standards for internal control over financial reporting generally accepted in Japan.
[Cover][Document Filed]Internal Control Report[Applicable Law]

Article 24-4-4, Paragraph 1 of the Financial Instruments and Exchange Act ofJapan[Filed with]

Director, Kanto Local Finance Bureau[Filing Date]

June 22, 2022

[Company Name]

Kabushiki Kaisha Hitachi Seisakusho[Company Name in English]

Hitachi, Ltd.

[Name and title of

Keiji Kojima, President & CEO

Representative][Name and title of CFO]

Yoshihiko Kawamura, Executive Vice President and Executive Officer[Address of Head Office]6-6, Marunouchi 1-chome, Chiyoda-ku, Tokyo[Place Where Available forTokyo Stock Exchange, Inc.

Public Inspection](2-1, Nihombashi Kabutocho, Chuo-ku, Tokyo)
Nagoya Stock Exchange, Inc.
(8-20, Sakae 3-chome, Naka-ku, Nagoya)A-1

1. Matters Related to Basic Framework of Internal Control over Financial Reporting
Mr. Keiji Kojima, President & CEO, and Mr. Yoshihiko Kawamura, Executive Vice President andExecutive Officer, are responsible for establishing and maintaining internal control over financial reporting of
Hitachi, Ltd. (the “Company”) and have established and maintained internal control over financial reporting inaccordance with the basic framework for internal control set forth in the “On the Revision of the Standards andPractice Standards for Management Assessment and Audit concerning Internal Control Over Financial Reporting(Council Opinions)” published by the Business Accounting Council.
The internal control over financial reporting is designed to achieve its objectives to the extent reasonablethrough the effective function and combination of its basic elements. Therefore, there is a possibility that internal
control over financial reporting may not completely prevent or detect misstatements.
2. Matters Related to Scope of Assessment, Record Date, and Assessment Procedure
We assessed the effectiveness of our internal control over financial reporting on the record date as of March
31, 2022. We made this assessment in accordance with assessment standards for internal control over financial
reporting generally accepted in Japan.
In making this assessment, we evaluated internal control which may have a material effect on the entire
financial reporting on a consolidated basis (“company-level controls”) and based on the result of this assessment,
we appropriately selected business processes to be evaluated, analyzed these selected business processes,
identified key controls that may have a material impact on the reliability of our financial reporting, and assessed
the design and operation of these key controls. These procedures have allowed us to evaluate the effectiveness of
our internal controls.
We determined the required scope of assessment of internal control over financial reporting for theCompany, as well as its consolidated subsidiaries, equity-method associates and joint ventures, from theperspective of the materiality that may affect the reliability of our financial reporting. The materiality that may
affect the reliability of our financial reporting is determined taking into account the materiality of quantitative andqualitative impacts. We confirmed that we had reasonably determined the scope of assessment of internal controls
over business processes in light of the results of assessment of company-level controls conducted for theCompany, its consolidated subsidiaries, equity-method associates and joint ventures. We did not include a part ofconsolidated subsidiaries, equity-method associates and joint ventures which do not have any quantitatively or
qualitatively material impact on the consolidated financial statements in the scope of assessment of companylevel controls.
Regarding the scope of assessment of internal control over business processes, we accumulated business
units in descending order of total revenues (after elimination of intercompany transactions) for the previous fiscal
year, and those business units whose combined amount of revenues reaches approximately 80% of total revenues
on a consolidated basis were selected as “significant business units.” In addition, some of our equity-method
associates and joint ventures which have a significant effect to our consolidated financial statements were selected
as “significant business units.” At the selected significant business units, we included, in the scope of assessment,
those business processes leading to revenues, accounts receivables and inventories and those business processes
relating to greater likelihood of material misstatements and significant account involving estimates or forecasts as
significant accounts that may have a material impact on our business objectives. Further, not only at selectedsignificant business units, but also at other business units, we added to the scope of assessment, as businessprocesses having greater materiality considering their impact on the financial reporting, those business processes
relating to businesses or operations dealing with high-risk transactions.
3. Matters Related to Results of Assessment
As a result of the assessment above, we concluded that our internal control over financial reporting was
effective as of March 31, 2022.
4. Supplementary Matters
None.
5. Special Notes
None.

A-2

TRANSLATION
Following is an English translation of the Independent Auditor’s Report filed under the Financial Instruments
and Exchange Act of Japan. This report is presented merely as supplemental information.
There are differences between an audit of internal control over financial reporting under the Financial
Instruments and Exchange Act and an audit of internal control over financial reporting under the attestation
standards established by the American Institute of Certified Public Accountants.
In an audit of internal control over financial reporting under the Financial Instruments and Exchange Act, theauditors express an opinion on management’s report on internal control over financial reporting, and do not
express an opinion on the Company’s internal control over financial reporting taken as a whole.

Independent Auditor’s Report(filed under the Financial Instruments and Exchange Act of Japan)
June 22, 2022
Mr. Keiji Kojima, President & CEO
Hitachi, Ltd.

Ernst & Young ShinNihon LLC
Tokyo, Japan
Designated Engagement Partner,
Certified Public Accountant:

Koji Fujima

Designated Engagement Partner,
Certified Public Accountant:

Yasuhiro Ozeki

Designated Engagement Partner,
Certified Public Accountant:

Shinya Yoshida[Financial Statements Audit]
OpinionPursuant to Article 193-2, Section 1 of the Financial Instruments and Exchange Act of Japan, we have audited theaccompanying consolidated financial statements, which comprise the consolidated statement of financial position,
the consolidated statement of profit or loss, the consolidated statement of comprehensive income, the consolidated
statement of changes in equity, the consolidated statement of cash flows and the notes to the consolidated financial
statements of Hitachi, Ltd. and its consolidated subsidiaries (the Group) applicable to the fiscal year from April 1,
2021 to March 31, 2022.

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, theconsolidated financial position, results of operations and cash flows of the Group applicable to the fiscal year ended
March 31, 2022, in accordance with International Financial Reporting Standards (IFRSs) under Article 93 of theRegulation on Terminology, Forms, and Preparation Methods of Consolidated Financial Statements.

A-3

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 Consolidated
Financial Statements section of our report. We are independent of the Group in accordance with the ethicalrequirements that are relevant to our audit of the consolidated financial statements in Japan, and we have fulfilled
our other 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.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of theconsolidated financial statements of the current period. These matters were addressed in the context of the audit of
the consolidated financial statements as a whole, and in forming the auditor’s opinion thereon, and we do notprovide a separate opinion on these matters.

Measurement of intangible asset recognized in the acquisition of GlobalLogic Inc.
Description of Key Audit Matter
The Company acquired GlobalLogic Inc. as a wholly owned subsidiary on July 13, 2021.
The Company recognized an intangible asset representing customer relationships in the amount of 227,424 million
yen as a result of measuring the identifiable assets acquired and liabilities assumed (See Note (5) Business
Acquisitions and Divestitures, (b) Acquisition of GlobalLogic Inc.).
The measurement of this intangible asset representing customer relationships is determined based on discounted
future cash flows expected to be generated by the asset and is affected by estimates of future cash flows and thediscount rate. Future cash flows are estimated using significant assumptions, including revenue growth rates,
EBITDA ratios, revenue growth rate for existing customers and attrition rate of existing customers, which all require
management judgements.
We determined that the measurement of the intangible asset is a key audit matter because of the significance of thebalance of the intangible asset and the significant impact on the consolidated financial statements from the
management judgement related to the significant assumptions.
Auditor’s Response
We primarily performed the following procedures regarding the measurement of the intangible asset.
・ We obtained an understanding of the details and objectives of the transaction by examining related materials
such as the acquisition agreement and making inquiries of management.
・ We involved valuation specialists from a network firm in assessing the valuation methods of the intangible
asset, significant assumptions used in the estimation of future cash flows, and the discount rate.
・ We performed following procedures related to significant assumptions used in the estimation of future cash
flows.
- We made inquiries of management about measures to achieve the revenue growth rates and EBITDA ratios
and compared the assumptions with actual operating results and available external data such as market
research reports related to market growth rates.
- We analyzed customer sales trends over the past four years, made inquiries of management and compared therevenue growth rate for existing customers and attrition rate of existing customers with actual results after theacquisition.
・ We also made inquiries of management about the risks reflected in the discount rate, evaluating the consistency
with the risks reflected in future cash flows.

A-4

Measurement of recoverable amount of group of cash-generating units containing goodwill related to the power
grid business
Description of Key Audit Matter
The Company recognized goodwill in the amount of 513,616 million yen related to the power grid business (SeeNote (10) Goodwill and Other Intangible Assets). Such goodwill represents 23% of total goodwill and 3% of total
assets of the Group.
The Company measured the recoverable amount based on value in use in the impairment test of the group of cashgenerating units containing the goodwill. Value in use is determined using discounted future cash flows and isaffected by estimates of future cash flows and the discount rate. Future cash flows are based on the business plan
and are estimated using significant assumptions including revenue growth rates and gross profit ratios, which all
require management judgements.
We determined that the measurement of the recoverable amount is a key audit matter because of the significance ofthe balance of goodwill and the significant impact on the consolidated financial statements from the management
judgement related to the significant assumptions.
Auditor’s Response
We primarily performed the following procedures regarding the measurement of the recoverable amount of thegroup of cash-generating units containing the goodwill.
・ We obtained an understanding of the business plan by examining related business planning materials.
・ We assessed the effectiveness of the business planning process by comparing the business plan from the priorfiscal year with the corresponding operating results and the business plan at the time of the impairment test.
・ We involved valuation specialists from a network firm in assessing the valuation method of value in use,significant assumptions used in the estimation of future cash flows, and the discount rate.
・ We made inquiries of management about measures to achieve the business plan and compared revenue growth
rates and gross profit ratios with actual operating results and available external data such as market research
reports related to market growth rates.
・ We made inquiries of management about the risks reflected in the discount rate, evaluating the consistency withthe risks reflected in future cash flows.
We performed sensitivity analyses assuming reasonably possible changes in significant assumptions, assessing theeffect on the recoverable amount.

Estimation of total cost of long-term projects
Description of Key Audit Matter
The Group has long-term projects involving the manufacture and provision of goods in accordance with customer
specifications that are completed over specified periods of time to customers in a broad range of business areas
across the world.
The Group recognizes revenues from long-term projects in the amount of 1,578,613 million yen by measuring the
progress of the project mostly based on the cost incurred relative to the estimated total cost to satisfy theperformance obligations (See Note (20) Revenues, (a) Disaggregation of revenue, (b) Information about satisfactionof performance obligations). Furthermore, the Group recognizes provisions for expected losses on construction
contracts in the amount of 90,758 million yen based on the estimated amount of losses associated with fulfilling the
project requirements (See Note (14) Provisions).
Estimations of total cost of long-term projects affect the corresponding amounts of revenues and provisions. Each of
the Group’s long-term projects is distinct in terms of customer requirements, such as detailed specifications andscheduling, and therefore estimations of total cost depend on management judgement. Estimations of total cost are
particularly complex in relation to large-scale projects.
We determined that the estimation of total cost of long-term projects is a key audit matter because auditing
estimations of total cost of long-term projects requires consideration of various factors affecting such estimations
corresponding to each project as a result of the nature of the Group’s long-term projects.

A-5

Auditor’s Response
We obtained an understanding of the project management systems utilized by the Group as well as its processes for
estimating total cost, and tested the relevant internal controls, including the approval of initial and revised operating
budgets that serve as the basis of estimating total cost.
We selected samples of long-term projects, such as those projects whose total contract value exceeded certain
materiality thresholds and projects subject to various qualitative risks, including delays in the progress of the
project, and, on a quarterly basis, performed selected procedures from the following considering the status of eachproject:
・ We obtained an understanding of the significant factors influencing the estimates related to customer
specifications on goods and the timing of delivery and the effects of estimation uncertainty inherent in thosesignificant factors influencing the estimates by examining contracts and project management materials andmaking inquiries of management and compared specific line items in the estimated total cost with corresponding
quotations from suppliers.
・ We assessed the management’s judgements on the necessity of revising estimates of total cost considering thestatus of each project based on inquiries of management and by examining project management materials.
・ We assessed the effectiveness of the processes for estimating total cost by comparing initial and previous period
estimates with the actual total cost for completed projects and previous period estimates with the latest estimatesfor projects in progress.
We additionally made separate inquiries to project managers for projects that were considered particularly
significant to corroborate management explanations of their status.
Other Information
The other information comprises the information included in the Group’s the annual report (Yukashoken
Hokokusho) that contains audited consolidated financial statements but does not include the consolidated financial
statements, financial statements and our audit report thereon. Management is responsible for preparation anddisclosure of the other information. The Audit Committee is responsible for overseeing the Group’s reporting
process of the other information.
Our opinion on the consolidated financial statements does not cover the other information and we do not express
any form of assurance conclusion thereon.
In connection with our audit of the consolidated financial statements, our responsibility is to read the otherinformation and, in doing so, consider whether the other information is materially inconsistent with the consolidated
financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this otherinformation, we are required to report that fact.
We have nothing to report in this regard.
Responsibilities of Management and the Audit Committee for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of these consolidated financial statements inaccordance with IFRSs and for such internal control as management determines is necessary to enable thepreparation 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 tocontinue as a going concern and disclosing, as required by IFRSs, matters related to going concern.
The Audit Committee is responsible for overseeing the Group’s financial reporting process.
Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole arefree from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes ouropinion. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate,
they could reasonably be expected to influence the economic decisions of users taken on the basis of these
consolidated financial statements.

A-6

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 tofraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is
sufficient and appropriate to provide a basis for our opinion.
・ Consider internal control relevant to the audit in order to design audit procedures that are appropriate in thecircumstances for our risk assessments, while the purpose of the audit of the consolidated financial statements is
not expressing an opinion on the effectiveness of the Group’s internal control.
・ Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates andrelated disclosures made by management.
・ Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on
the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may castsignificant doubt on the Group’s ability to continue as a going concern. If we conclude that a material
uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the
consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions
are based on the audit evidence obtained up to the date of our auditor’s report. However, future events orconditions may cause the Group to cease to continue as a going concern.
・ Evaluate the overall presentation, structure and content of the consolidated financial statements, including thedisclosures, and whether the consolidated financial statements represent the underlying transactions and eventsin a manner that achieves fair presentation in accordance with IFRSs.
・ 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 are responsible
for the direction, supervision and performance of the group audit. We remain solely responsible for our audit
opinion.
We communicate with the Audit Committee regarding, among other matters, the planned scope and timing of theaudit and significant audit findings, including any significant deficiencies in internal control that we identify during
our audit.
We also provide the Audit Committee with a statement that we have complied with the ethical requirements
regarding independence that are relevant to our audit of the consolidated financial statements in Japan, and tocommunicate with them all relationships and other matters that may reasonably be thought to bear on our
independence, and where applicable, related safeguards.
From the matters communicated with the Audit Committee, we determine those matters that were of mostsignificance in the audit of the consolidated financial statements of the current period and are therefore the key audit
matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about
the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in ourreport because the adverse consequences of doing so would reasonably be expected to outweigh the public interest
benefits of such communication.
[Internal Control Audit]
OpinionPursuant to Article 193-2, Section 2 of the Financial Instruments and Exchange Act of Japan, we have audited theaccompanying Management’s Report on Internal Control Over Financial Reporting for the financial statements as at
March 31, 2022 of Hitachi, Ltd. and its consolidated subsidiaries ("Management's Report").

In our opinion, Management's Report referred to above, which represents that the internal control over financial
reporting as at March 31, 2022 of Hitachi, Ltd. and its consolidated subsidiaries (the Group) is effective, presents
fairly, in all material respects, the result of management's assessment of internal control over financial reporting inaccordance with standards for assessment of internal control over financial reporting generally accepted in Japan.

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Basis for Opinion
We conducted our internal control audit in accordance with auditing standards on internal control over financial
reporting generally accepted in Japan. Our responsibilities under those standards are further described in the
Auditor’s Responsibilities for the Audit of Internal Control section of our report. We are independent of the Groupin accordance with the ethical requirements that are relevant to our audit of the financial statements in Japan, and wehave fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Responsibilities of Management and the Audit Committee for the Management’s ReportManagement is responsible for designing and operating internal control over financial reporting, and for the
preparation and fair presentation of Management's Report in accordance with standards for assessment of internal
control over financial reporting generally accepted in Japan.
The Audit Committee is responsible for monitoring and verifying the design and operation of internal control overfinancial reporting.
Internal control over financial reporting may not prevent or detect misstatements completely.
Auditor’s Responsibilities for the Audit of Internal Control
Our objectives are to obtain reasonable assurance about whether Management's Report is free from material
misstatement, and to issue an auditor’s report that includes our opinion from an independent standpoint.

As part of an audit in accordance with auditing standards on internal control generally accepted in Japan, we
exercise professional judgment and maintain professional skepticism throughout the audit. We also:・ Perform audit procedures to obtain audit evidence relating to the result of management's assessment of internal
control over financial reporting in Management's Report. The design and performance of audit procedures forinternal control audits is based on our judgement in consideration of the materiality of the effect on thereliability of financial reporting.
・ Consider the overall presentation of Management's Report with regards to the scope, procedures, and result of
the assessment of internal control over financial reporting including descriptions by management.
・ Obtain sufficient appropriate audit evidence regarding the result of management's assessment of internal control
over financial reporting in Management's Report. We are responsible for the direction, supervision, andperformance of the audit of Management's Report.
We communicate with the Audit Committee regarding, among other matters, the planned scope and timing of theinternal control audit, the results of the internal control audit, any significant deficiencies in internal control that we
identify, and the results of corrective measures for such significant deficiencies.
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 internal control in Japan, and to communicate with them all
relationships and other matters that may reasonably be thought to bear on our independence, and where applicable,
related safeguards.
Interest Required to Be Disclosed by the Certified Public Accountants Act of Japan
Our firm and its designated engagement partners do not have any interest in the Group which is required to bedisclosed pursuant to the provisions of the Certified Public Accountants Act of Japan.

(The above represents a translation, for convenience only, of the original report issued in the Japanese language.)

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(Translation)
Following is an English translation of the Confirmation Letter filed under the Financial Instruments andExchange Act of Japan.
[Cover][Document Filed]

Confirmation Letter[Applicable Law]

Article 24-4-2, Paragraph 1 of the Financial Instruments and Exchange Act ofJapan[Filed with]

Director, Kanto Local Finance Bureau[Filing Date]

June 22, 2022

[Company Name]

Kabushiki Kaisha Hitachi Seisakusho[Company Name in English]

Hitachi, Ltd.

[Name and title of

Keiji Kojima, President & CEO

Representative][Name and title of CFO]

Yoshihiko Kawamura, Executive Vice President and Executive Officer[Address of Head Office]6-6, Marunouchi 1-chome, Chiyoda-ku, Tokyo[Place Where Available forTokyo Stock Exchange, Inc.

Public Inspection](2-1, Nihombashi Kabutocho, Chuo-ku, Tokyo)
Nagoya Stock Exchange, Inc.
(8-20, Sakae 3-chome, Naka-ku, Nagoya)A-9

1. Matters Related to Adequacy of Statements Contained in the Annual Securities Report
Mr. Keiji Kojima, President & CEO, and Mr. Yoshihiko Kawamura, Executive Vice President andExecutive Officer, confirmed that statements contained in the Annual Securities Report for the 153rd fiscal year
(from April 1, 2021 to March 31, 2022) were adequate under the Financial Instruments and Exchange Act.
2. Special Notes
None.

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Information contained in this news release is current asof the date of the press announcement, but may be subject
to change without prior notice.
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