(Note) This is a translation of the official Japanese original for reference purposes only. In the event of any
discrepancy between this translation and the official Japanese original, the Japanese original shall prevail.
Please note that differences between this translation and those in the previous years may not necessarily mean that
there have been changes in the official Japanese original, since the translation differences may stem only from amore accurate translation.

[Security Code: 7011]

Electronic Provision Measures Commencement Date: May 29, 2024
Date of Issuance: June 10, 2024
To the Shareholders:

Seiji Izumisawa, President and CEO
Mitsubishi Heavy Industries, Ltd.
2-3, Marunouchi 3-chome,
Chiyoda-ku, TokyoNOTICE OF THE 99TH ANNUAL GENERAL MEETING OF SHAREHOLDERS

We are pleased to announce that the 99th Annual General Meeting of Shareholders of Mitsubishi
Heavy Industries, Ltd. (“MHI”) will be held as described below.
For this General Meeting of Shareholders, you may exercise your voting rights in writing or via theInternet (as indicated in the following “INSTRUCTIONS FOR VOTING”).
Please examine the Reference Materials Relating to the General Meeting of Shareholders andexercise your voting rights in advance, by 5:30 p.m. on Wednesday, June 26, 2024 (Japan time).

1. Date and Time:Thursday, June 27, 2024 at 10:00 a.m. (Japan time)

2. Place:

Tokyo Kaikan, 3F “Rose”
2-1, Marunouchi 3-chome, Chiyoda-ku, Tokyo

3. Purposes:
To report on the following items:
Item No. 1: Business Report, Consolidated Financial Statements for the 2023 fiscal year
(from April 1, 2023 to March 31, 2024), and Audit Report on the Consolidated
Financial Statements by the Financial Auditor and Audit and Supervisory
Committee.
Item No. 2: Non-consolidated Financial Statements for the 2023 fiscal year (from April 1,
2023 to March 31, 2024).
1

To consider and resolve the following proposals:
Proposal No. 1: Appropriation of Surplus
Proposal No. 2: Election of 7 Directors (Excluding Directors Who Are Serving as Audit andSupervisory Committee Members)
Proposal No. 3: Election of 1 Director Who Is Serving as an Audit and Supervisory
Committee Member
Proposal No. 4: Revision to Amount and Details Related to Stock-based Remuneration Plan
for Directors (Excluding Directors Who Are Serving as Audit andSupervisory Committee Members and Outside Directors)
4. Matters Concerning Measures for Electronic Provision, Etc.:
 When convening this General Meeting of Shareholders, MHI takes measures for electronic
providing information that constitutes the content of the Reference Materials Relating to theGeneral Meeting of Shareholders, etc. (items subject to measures for electronic provision), andposts this information as “Notice of the 99th Annual General Meeting of Shareholders” on eachof the following websites. Please access either of those websites to review the information.
Website Posting Informational Material for a

Website of MHI

General Meeting of Shareholders

https://www.mhi.com/jp/finance/stock/meeting/(in Japanese)

https://d.sokai.jp/7011/teiji/ (in Japanese)

In addition to posting items subject to measures for electronic provision on the aforementioned
websites, MHI also posts this information on the website of Tokyo Stock Exchange, Inc. (TSE)(Listed Company Search). To access this information, enter the issue name (Mitsubishi Heavy
Industries) or security code (7011), and click “Search,” and then click “Basic information” andselect “Documents for public inspection/PR information.”
Website of TSE
https://www2.jpx.co.jp/tseHpFront/JJK010010Action.do?Show=Show(in Japanese)Among the items subject to measures for electronic provision, pursuant to the provisions of thelaws of Japan and MHI’s Articles of Incorporation, the following items are not provided in thepaper-based documents delivered to shareholders who have made a request for delivery of such
documents.
(i) “Stock Acquisition Rights of MHI” and “Establishing a Framework for Ensuring
Appropriate Business Conduct” of Business Report(ii) “Consolidated Statement of Changes in Equity” and “Notes to the Consolidated Financial
Statements” of Consolidated Financial Statements and “(Reference) Consolidated
Statement of Cash Flows”(iii) “Non-consolidated Statement of Changes in Net Assets” and “Notes to the Nonconsolidated Financial Statements” of Non-consolidated Financial Statements

2





If revisions to the items subject to measures for electronic provision arise, a notice of therevisions and the details of the items before and after the revisions will be posted on each of theaforementioned websites.
For other matters to be resolved in this notice of convocation, please refer to“INSTRUCTIONS FOR VOTING” below.
(End)

3

INSTRUCTIONS FOR VOTING
You are kindly requested to exercise your voting right by either of the following methods.
Exercise of Voting Rights in Writing
Please examine the Reference Materials Relating to the General Meeting of Shareholders andindicate whether you are for or against each proposal on the voting card sent together with thisnotice and post it without affixing a postage stamp.
If neither the “agree” nor “against” box on the voting card is checked, it will be deemed to be avote to “agree” to the proposal.
Exercise due date: No later than 5:30 p.m., on Wednesday, June 26, 2024 (Japan time)
Guidance for filling in the voting card
Proposal No. 1, Proposal No. 3 and Proposal No. 4:- When you are for the proposal, mark 〇 in the “agree” box.
- When you are against the proposal, mark 〇 in the “against” box.
Proposal No. 2:- When you are for all of the proposed persons in the proposal, mark 〇 in the “agree” box.
- When you are against all of the proposed persons in the proposal, mark 〇 in the “against”
box.
- If you are against certain candidates, mark 〇 in the “agree” box, and also write the candidate
number for each candidate you are against inside the parentheses on the right side of the“agree” box (a consecutively ordered number has been given to each candidate in the
Reference Materials Relating to the General Meeting of Shareholders).
Exercise of Voting Rights via the Internet
Please examine the Reference Materials Relating to the General Meeting of Shareholders andindicate whether you are for or against each proposal by accessing the site “Procedures for
Shareholders’ Meetings” (https://evote.tr.mufg.jp/) (in Japanese).
For details, please refer to the “Instructions for Voting Right via the Internet” on the following.
Exercise due date: No later than 5:30 p.m., on Wednesday, June 26, 2024 (Japan time)
Attend the General Meeting of Shareholders
Please present the voting card sent together with this notice to the reception desk on the day of
the General Meeting of Shareholders.
Date and Time: Thursday, June 27, 2024 at 10:00 a.m.
(The reception desk will open at 9:00 a.m.) (Japan time)
Place:
Tokyo Kaikan, 3F “Rose”
2-1, Marunouchi 3-chome, Chiyoda-ku, Tokyo- If you exercise your voting right by proxy, the proxy shall be limited to one other shareholder
who has the voting right, pursuant to the provisions of Article 18 of MHI’s Articles ofIncorporation. In this case, in addition to the voting card for exercising voting rights as proxy
and the letter of attorney, the proxy should submit the proxy’s own voting card.

4

Handling of the Duplicated Exercises of Voting Rights for the Same Proposal- If the voting right is exercised multiple times both in writing and via the Internet, the exerciseof the voting right via the Internet will be deemed effective.
- If the voting right is exercised multiple times other than as described above, the last exercise of
the voting right will be deemed effective.
Instructions for Voting Right via the Internet
1. Access to the Website for Exercise of Voting Rights
Access by scanning the QR code
Using a smartphone to scan the “Login QR code” printed on the voting card will result in you
being taken automatically to the website for the exercise of voting rights. Please follow thedirections that appear on the screen to indicate whether you are for or against each proposal.
Depending on the model of smartphone used, it may not be possible to login using the QR code. If this is the case,please exercise your voting rights in accordance with “Access by entering a login ID and password,” below.
* QR Code is a registered trademark of DENSO WAVE INCORPORATED.

Access by entering a login ID and password
Please indicate whether you are for or against each proposal by accessing the site “Procedures
for Shareholders’ Meetings” (https://evote.tr.mufg.jp/) (in Japanese) in accordance with
instructions on the screen.
Enter the login ID and temporary password printed on the voting card (or the password
registered by the shareholder) and click Login button
2. Notes regarding the Exercise of the Voting Right via the Internet(1) When voting by a computer, please read the site’s “Terms of Use” and “Usage Guide.”
When voting by a smartphone, please read the site’s “Terms of Use” and “Usage
Guide.”(2) Please note that the website will be unavailable every day from 2:30 a.m. to 4:30 a.m.
(Japan time).
(3) Shareholders will be responsible for the Internet connection charges and thecommunication charges, etc. arising when exercising their voting rights via the Internet.
(4) Please contact the following if you have questions about the site “Procedures for
Shareholders’ Meetings”:
Mitsubishi UFJ Trust and Banking Corporation, Corporate Agency Division (Help Desk)
Telephone: 0120-173-027 (toll free)Service Hours: 9:00 a.m. to 9:00 p.m. (Japan time)
Shareholders participating in the “Electronic Proxy Voting Platform” managed by ICJ, Inc. mayplace their votes through this platform.

5

REFERENCE MATERIALSRELATING TO THE GENERAL MEETING OF SHAREHOLDERS
Proposal No. 1: Appropriation of Surplus
MHI has set a basic policy of implementing returns to shareholders with a consolidated dividend
payout ratio of around 30% while considering a balance between “business growth” and“financial soundness.”
Based on this policy and taking full account of our business results for the fiscal year underreview, financial position as of the end of the fiscal year under review and others, MHI proposes
to pay a dividend of ¥120 per share as the Year-end Dividend defined in Article 45 of the Articles
of Incorporation. Combined with the Interim Dividend of ¥80 per share paid in December 2023,
the total annual dividend will be ¥200 per share, an increase of ¥70 over that of the previous
fiscal year (FY2022).

1. Kind of Dividend Property
Cash
2. Dividend Allocation and Total Amount of Dividends
Dividend allocation: ¥120 per share of MHI’s common stock
Total amount of dividends: ¥40,432,362,600
3. Effective Date of Dividend Allocation
June 28, 2024
(Note)MHI conducted a stock split of its common stock on a 10 for 1 basis on April 1, 2024; however, as theabovementioned year-end dividend has a record date of March 31, 2023, it will be conducted based on
the number of shares before the stock split.

6

Proposal No. 2: Election of 7 Directors (Excluding Directors Who Are Serving as Audit andSupervisory Committee Members)
The terms of the 7 current Directors (excluding Directors who are serving as Audit andSupervisory Committee Members) will expire at the conclusion of this General Meeting of
Shareholders. Accordingly, MHI proposes to elect 7 Directors (excluding Directors who areserving as Audit and Supervisory Committee Members).
Candidates for Directors (excluding Directors who are serving as Audit and Supervisory
Committee Members) are as follows:
The Number of
The Number of Years in Office as
Director
Attendance at the
Position and Responsibility(as of theBoard of Directors
in MHI
Meetings
conclusion of this
General Meeting(FY2023)of Shareholders)
14 out of
Chairman of the Board
16 years
14 times

No.

Name

1

Shunichi Miyanaga

Re-election

2

Seiji Izumisawa

Re-election*President and CEO*1(Member of the Board)

14 out of
14 times

7 years

Re-election*Director (Member of theBoard), Senior Executive
Vice President, Assistant to
President and CEO, Head of
GX Solutions

14 out of
14 times

3 years

14 out of
14 times

4 years3

Hitoshi Kaguchi

4

Hisato Kozawa

Re-election*Director (Member of theBoard), Executive Vice
President, CFO*2

5

Ken Kobayashi

Re-election
OutsideIndependent

Director (Member of theBoard)

14 out of
14 times

8 years

Nobuyuki Hirano

Re-election
OutsideIndependent

Director (Member of theBoard)

14 out of
14 times

5 years

Mitsuhiro Furusawa

Re-election
OutsideIndependent

Director (Member of theBoard)

10 out of
10 times

1 year6

7*1 CEO: Chief Executive Officer*2 CFO: Chief Financial Officer(Notes)1. An asterisk mark (*) indicates a Representative Director.
2. As Mr. Mitsuhiro Furusawa took up his position as of June 29, 2023 (on the date of the 98th Annual General
Meeting of Shareholders), the number of times he attended the Board of Directors meetings for the year isdifferent from that of the other candidates.

7

1

Shunichi Miyanaga(April 27, 1948: 76 years old)

[Re-election]

Position and responsibility in MHI
Chairman of the Board
Number of MHI shares owned
635,000
Number of years in office as Director(as of the conclusion of this General Meeting of Shareholders)
16 years
Number of times attended Board of Directors meetings in FY2023
14 out of 14 times
Career summary
April 1972
Joined Mitsubishi Heavy Industries, Ltd.
April 2006
Senior Vice President, Deputy Head of Machinery Headquarters
May 2006
Senior Vice President, Deputy Head of Machinery & Steel Structures Headquarters
April 2008
Executive Vice President, Head of Machinery & Steel Structures Headquarters
June 2008*Director (Member of the Board), Executive Vice President, Head of Machinery & Steel Structures
Headquarters
April 2011
*Director (Member of the Board), Senior Executive Vice President, Head of the Presidential
Administration Office
April 2013
*President and CEO (Member of the Board)
April 2014
*President and CEO (Member of the Board)
April 2019
Chairman of the Board (Present position)(Note) An asterisk mark (*) indicates a Representative Director.
Important concurrent positions
Director, Mitsubishi Motors Corporation
Member of the Board, Mitsubishi Corporation
Chairman, Mitsubishi Memorial Foundation for Educational Excellence
Reason for nomination as a candidate for Director
Mr. Shunichi Miyanaga is being re-nominated for the position of a Director because he has extensive experience inoperations of Machinery & Steel Structures, and moreover, from April 2013 to March 2019, he served as President andCEO, demonstrating superior management skills by promoting management reform such as the shift to a domain
business structure. From April 2019, he has been serving as Chairman of the Board and conducting MHI’s management
oversight as Chairman of Meetings of the Board of Directors. Based on this knowledge and track record, MHI judgesthat he will contribute to the sustained growth of MHI and improvement of its corporate value in the medium and longterm through participation in MHI’s management decision-making, playing a leading role in management oversight.
Special interest between the candidate and MHI
Mr. Shunichi Miyanaga concurrently serves as Chairman of Mitsubishi Memorial Foundation for Educational
Excellence, and MHI has a relationship with the foundation through its provision of donations for business expenses,
etc.

8

2

Seiji Izumisawa(September 3, 1957: 66 years old)

[Re-election]

Position and responsibility in MHI*President and CEO (Member of the Board)
Number of MHI shares owned
243,600
Number of years in office as Director(as of the conclusion of this General Meeting of Shareholders)
7 years
Number of times attended Board of Directors meetings in FY2023
14 out of 14 times
Career summary
April 1981
Joined Mitsubishi Heavy Industries, Ltd.
April 2008
Senior General Manager, Technology Management Department of Technical Headquarters
April 2011
Senior General Manager, Technology Management Department of Technology & Innovation
Headquarters
April 2013
Senior Executive Officer, Mitsubishi Motors Corporation
June 2013
Director, Mitsubishi Motors Corporation
April 2016
Senior Vice President, Senior General Manager of Technology Strategy Office
June 2017
Director (Member of the Board), Full-time Audit and Supervisory Committee Member
June 2018*Director (Member of the Board), Executive Vice President, CSO
April 2019
*President and CEO (Member of the Board) and CSO
April 2020
*President and CEO (Member of the Board) (Present position)(Note) An asterisk mark (*) indicates a Representative Director.
Important concurrent positions
Director, Mitsubishi Research Institute, Inc.
Reason for nomination as a candidate for Director
Mr. Seiji Izumisawa has engaged in such areas as research and development, technology management and operations
related to strategic technology development, and has made significant contributions to strengthening and developing
MHI’s technology infrastructure. From June 2017 to June 2018, he filled the role of Director who is serving as an Audit
and Supervisory Committee Member. Since April 2019 he has served as President and CEO (Member of the Board), in
which roles he has drawn up and promoted strategy for MHI as a whole, and driven the development of a global
structure. He currently serves as Chief Executive Officer (CEO) in charge of the system for execution of business of
MHI. Based on these reasons, MHI judges that he will contribute to the sustained growth of MHI and improvement of
its corporate value in the medium and long term through participation in MHI’s management decision-making,providing management direction, and hence MHI re-nominates Mr. Seiji Izumisawa as a candidate for Director.
Special interest between the candidate and MHI
There is no special interest between Mr. Seiji Izumisawa and MHI.
* CSO (Chief Strategy Officer)93

Hitoshi Kaguchi(February 15, 1960: 64 years old)

[Re-election]

Position and responsibility in MHI*Director (Member of the Board), Senior Executive Vice President, Assistant to President and CEO, Head of GX
Solutions
Number of MHI shares owned
74,800
Number of years in office as Director(as of the conclusion of this General Meeting of Shareholders)
3 years
Number of times attended Board of Directors meetings in FY2023
14 out of 14 times
Career summary
April 1984
Joined Mitsubishi Heavy Industries, Ltd.
April 2018
Senior Vice President, Deputy Head of Business Strategy Office
April 2019
Senior Vice President, CoCSO, Head of Marketing & Innovation Headquarters
April 2020
Executive Vice President, CSO
April 2021
Executive Vice President, CSO, President and CEO, Energy Systems
June 2021*Director (Member of the Board), Executive Vice President, CSO, President and CEO, Energy
Systems
April 2023
*Director (Member of the Board), Senior Executive Vice President, Assistant to President and CEO
April 2024
*Director (Member of the Board), Senior Executive Vice President, Assistant to President and CEO,
Head of GX Solutions (Present position)(Note) An asterisk mark (*) indicates a Representative Director.
Important concurrent positions
None
Reason for nomination as a candidate for Director
Mr. Hitoshi Kaguchi is being nominated for the position of a Director because he has extensive business experience in
MHI, including having been involved in the technological development and business operation of nuclear powersystems for many years. He was appointed CoCSO in April 2019 and has served as CSO since April 2020, planning andpromoting MHI’s overall strategy under the CEO, and taking responsibility for overall planning of management
policies. Since April 2023 he has been leading MHI’s Energy Transition and the expansion of its business into growthareas, and MHI judges that he will contribute to the sustained growth of MHI and improvement of its corporate value inthe medium and long term through participation in MHI’s management decision-making as the person who formulates
and promotes MHI’s growth strategies, and hence MHI re-nominates Mr. Hitoshi Kaguchi as a candidate for Director.
Special interest between the candidate and MHI
There is no special interest between Mr. Hitoshi Kaguchi and MHI.

10

4

Hisato Kozawa(April 2, 1962: 62 years old)

[Re-election]

Position and responsibility in MHI*Director (Member of the Board), Executive Vice President, CFO
Number of MHI shares owned
71,400
Number of years in office as Director(as of the conclusion of this General Meeting of Shareholders)
4 years
Number of times attended Board of Directors meetings in FY2023
14 out of 14 times
Career summary
April 1986
Joined Mitsubishi Heavy Industries, Ltd.
October 2019
Senior Vice President, CoCFO
April 2020
Senior Vice President, CFO
June 2020*Director (Member of the Board), Senior Vice President, CFO
April 2021
*Director (Member of the Board), Executive Vice President, CFO (Present position)(Note) An asterisk mark (*) indicates a Representative Director.
Important concurrent positions
None
Reason for nomination as a candidate for Director
Mr. Hisato Kozawa is being nominated for the position of a Director because he has extensive experience, primarily inthe financial field, having been engaged for many years in the financial and accounting operations of MHI, and having
served as general manager of finance and accounting departments at a major subsidiary. He served as CoCFO from
October 2019, and has been serving as CFO from April 2020, and promoting financing activities that respond to
economic conditions and the business environment. Based on these reasons, MHI judges that he will contribute to thesustained growth of MHI and improvement of its corporate value in the medium and long term through participation in
MHI’s management decision-making as a person with expertise in the finances of MHI, and hence MHI re-nominates
Mr. Hisato Kozawa as a candidate for Director.
Special interest between the candidate and MHI
There is no special interest between Mr. Hisato Kozawa and MHI.

11

5

Ken Kobayashi(February 14, 1949: 75 years old)

[Re-election] [Outside] [Independent]

Position and responsibility in MHI
Director (Member of the Board)
Number of MHI shares owned
23,300
Number of years in office as outside director(as of the conclusion of this General Meeting of Shareholders)
8 years
Number of times attended Board of Directors meetings in FY2023
14 out of 14 times
Career summary
July 1971
Joined Mitsubishi Corporation
June 2007
Member of the Board, Executive Vice President, Mitsubishi Corporation
June 2008
Executive Vice President, Mitsubishi Corporation
April 2010
Senior Executive Vice President, Mitsubishi Corporation
June 2010
Member of the Board, President and CEO, Mitsubishi Corporation
April 2016
Chairman of the Board, Mitsubishi Corporation
June 2016
Director (Member of the Board), Mitsubishi Heavy Industries, Ltd. (Present position)
April 2022
Member of the Board, Corporate Advisor, Mitsubishi Corporation
June 2022
Corporate Advisor, Mitsubishi Corporation (Present position)
Important concurrent positions
Corporate Advisor, Mitsubishi Corporation
Director, Mitsubishi Research Institute, Inc.
Director, NISSIN FOODS HOLDINGS CO., LTD.
Chairman, The Japan Chamber of Commerce and Industry
Reason for nomination as a candidate for outside director and overview of expected roles
Mr. Ken Kobayashi is expected to perform supervision of MHI’s overall management, because he has expertise invarious fields, having served as a Member of the Board, President and CEO, and Chairman of the Board of Mitsubishi
Corporation, and extensive knowledge and experience gained as top executive of global companies, and he will provide
insightful views and frank assessments to the Board of Directors meetings and Nomination and Remuneration Advisory
Council, etc., as an outside director. As MHI judges that his election will contribute to the improvement of thesoundness and transparency of MHI’s management decision-making, and also help MHI achieve sustained growth andimprovement of its corporate value in the medium and long term, MHI re-nominates Mr. Ken Kobayashi as a candidatefor outside director.
Special interest between the candidate and MHI
There is no special interest between Mr. Ken Kobayashi and MHI.
Matters concerning the independence of outside director
Since Mr. Ken Kobayashi meets the “Independence Criteria for Outside Directors” (listed below) provided by MHI,MHI judges him to be independent from its management. Accordingly, MHI has notified Tokyo Stock Exchange, Inc.
and other listed financial instruments exchanges in Japan that he is an independent director.

126Nobuyuki Hirano(October 23, 1951: 72 years old)

[Re-election] [Outside] [Independent]

Position and responsibility in MHI
Director (Member of the Board)
Number of MHI shares owned
33,800
Number of years in office as outside director(as of the conclusion of this General Meeting of Shareholders)
5 years
Number of times attended Board of Directors meetings in FY2023
14 out of 14 times
Career summary
April 1974
Joined The Mitsubishi Bank, Limited
June 2005
Managing Executive Officer, The Bank of Tokyo-Mitsubishi, Ltd.
Member of the Board of Directors, Mitsubishi Tokyo Financial Group, Inc.
October 2008
Member of the Board of Directors, Senior Managing Executive Officer, The Bank of TokyoMitsubishi UFJ, Ltd.
June 2009
Member of the Board of Directors, Deputy President, The Bank of Tokyo-Mitsubishi UFJ, Ltd.
Managing Executive Officer, Mitsubishi UFJ Financial Group, Inc.
June 2010
Member of the Board of Directors, Mitsubishi UFJ Financial Group, Inc.
October 2010
Member of the Board of Directors, Deputy President, Mitsubishi UFJ Financial Group, Inc.
April 2012
President and CEO, The Bank of Tokyo-Mitsubishi UFJ, Ltd.
Member of the Board of Directors, Mitsubishi UFJ Financial Group, Inc.
April 2013
President and CEO, Mitsubishi UFJ Financial Group, Inc.
June 2015
Member of the Board of Directors, President & Group CEO, Mitsubishi UFJ Financial Group, Inc.
(Representative Corporate Executive)
April 2016
Chairman of the Board of Directors, The Bank of Tokyo-Mitsubishi UFJ, Ltd.
April 2019
Member of the Board of Directors, Chairman (Corporate Executive), Mitsubishi UFJ Financial
Group, Inc.
Member of the Board of Directors, MUFG Bank, Ltd. (until April 2020)
June 2019
Director (Member of the Board), Audit and Supervisory Committee Member, Mitsubishi Heavy
Industries, Ltd.
April 2021
Member of the Board of Directors, Mitsubishi UFJ Financial Group, Inc. (until June 2021)
Senior Advisor, MUFG Bank, Ltd. (Present position)
June 2021
Director (Member of the Board), Mitsubishi Heavy Industries, Ltd. (Present position)
Important concurrent positions
Senior Advisor, MUFG Bank, Ltd.
Director, Mitsubishi Research Institute, Inc.

13

Reason for nomination as a candidate for outside director and overview of expected roles
Mr. Nobuyuki Hirano is expected to perform supervision of MHI’s overall management, because he has extensive
knowledge and experience gained as a top executive at international financial institutions, including holding thepositions of President & Group CEO and Chairman (Corporate Executive) of Mitsubishi UFJ Financial Group, Inc. andPresident and Chairman of the Board of Directors of MUFG Bank, Ltd. and he will provide insightful views and frankassessments to the Board of Directors meetings and Nomination and Remuneration Advisory Council, etc., as an
outside director. As MHI judges that his election will contribute to the improvement of the soundness and transparencyof MHI’s management decision-making, and also help MHI achieve sustained growth and improvement of its corporate
value in the medium and long term, MHI re-nominates Mr. Nobuyuki Hirano as a candidate for outside director.
Special interest between the candidate and MHI
There is no special interest between Mr. Nobuyuki Hirano and MHI.
Matters concerning the independence of outside director
Since Mr. Nobuyuki Hirano meets the “Independence Criteria for Outside Directors” (listed below) provided by MHI,MHI judges him to be independent from its management. Accordingly, MHI has notified Tokyo Stock Exchange, Inc.
and other listed financial instruments exchanges in Japan that he is an independent director. Although Mitsubishi
Memorial Foundation for Educational Excellence, at which he served as Chairman, receives donations from MHI, theamount of donations given to the foundation does not exceed the criteria amount set forth in the “Independence Criteria
for Outside Directors,” and this is deemed not to have any impact on his independence.

14

7

Mitsuhiro Furusawa(February 20, 1956: 68 years old)

[Re-election] [Outside] [Independent]

Position and responsibility in MHI
Director (Member of the Board)
Number of MHI shares owned
2,700
Number of years in office as outside director(as of the conclusion of this General Meeting of Shareholders)
1 yearNumber of times attended Board of Directors meetings in FY2023
10 out of 10 times
Career summary
April 1979
Joined Ministry of Finance
August 2012
Director-General of the Financial Bureau, Ministry of FinanceMarch 2013
Vice Minister of Finance for International Affairs, Ministry of FinanceJuly 2014
Special Advisor to the Prime Minister, Special Advisor to the Minister of FinanceMarch 2015
Deputy Managing Director, the International Monetary Fund (IMF)
December 2021 President, Institute for Global Financial Affairs, Sumitomo Mitsui Banking Corporation (Present
position)
June 2023
Director (Member of the Board), Mitsubishi Heavy Industries, Ltd. (Present position)
Important concurrent positions
President, Institute for Global Financial Affairs, Sumitomo Mitsui Banking Corporation
Reason for nomination as a candidate for outside director and overview of expected roles
Mr. Mitsuhiro Furusawa is expected to perform supervision of MHI’s overall management, even though he has not been
involved in corporate management, except for acting as an outside director or outside statutory auditor, because he has
wide range of insights related to financial policy gained as a regulator and a global perspective gained as aninternational institution executive when he served as Vice Minister of Finance for International Affairs and Deputy
Managing Director of the International Monetary Fund (IMF), and he will provide insightful views and frankassessments to the Board of Directors meetings and Nomination and Remuneration Advisory Council, etc., as an
outside director. As MHI judges that his election will contribute to the improvement of the soundness and transparencyof MHI’s management decision-making, and also help MHI achieve sustained growth and improvement of its corporate
value in the medium and long term, MHI re-nominates Mr. Mitsuhiro Furusawa as a candidate for outside director.
Special interest between the candidate and MHI
There is no special interest between Mr. Mitsuhiro Furusawa and MHI.
Matters concerning the independence of outside director
Since Mr. Mitsuhiro Furusawa meets the “Independence Criteria for Outside Directors” (listed below) provided by
MHI, MHI judges him to be independent from its management. Accordingly, MHI has notified Tokyo Stock Exchange,
Inc. and other listed financial instruments exchanges in Japan that he is an independent director.
(Notes)
1. Mr. Ken Kobayashi, Mr. Nobuyuki Hirano and Mr. Mitsuhiro Furusawa are the candidates for outside
directors as defined in Article 2, paragraph (3), item (vii) of the Regulations for Enforcement of theCompanies Act.
2. MHI has entered into a liability limitation agreement with Mr. Ken Kobayashi, Mr. Nobuyuki Hirano and
Mr. Mitsuhiro Furusawa, which provides a limitation on their liabilities to compensate for damages
under Article 423, paragraph (1) of the Companies Act, the amount of which is the higher of ¥10 million
or the minimum amount of liability defined in Article 425, paragraph (1) of the Companies Act. Should
15

Mr. Ken Kobayashi, Mr. Nobuyuki Hirano and Mr. Mitsuhiro Furusawa be elected, MHI is bound tocontinue the above-mentioned agreement with each of them.
3. MHI plans to enter into a directors and officers liability insurance policy as provided for in Article 430-3,
paragraph (1) of the Companies Act with an insurance company. The policy will cover indemnificationand the litigation expenses arising from the legal liability of damages that are assumed by an insured in acase where the insured receives a claim etc. relating to the pursuit of liability arising from theperformance of duties. However, the aforementioned policy does not cover losses, etc. arising from
intentional misconduct or fraudulent acts by the aforementioned insured.
MHI’s Directors are insureds under the aforementioned policy, and the full amount of the insurance
premiums for all insureds is borne by MHI. For every candidate, if their election to the position of a
Director is approved, they will become an insured under the aforementioned policy. During the terms ofoffice, MHI plans to renew the aforementioned policy with the same terms and conditions.

16

Proposal No. 3: Election of 1 Director Who Is Serving as an Audit and Supervisory Committee
Member
The term of Director who is serving as an Audit and Supervisory Committee Member, Mr.
Ryutaro Takayanagi, will expire at the conclusion of this General Meeting of Shareholders.
Accordingly, MHI proposes to elect 1 Director who is serving as an Audit and Supervisory
Committee Member.
The candidate for a Director who is serving as an Audit and Supervisory Committee Member is
as follows.
In addition, the consent of the Audit and Supervisory Committee has been obtained for this
proposal.

17

Masayuki Fujisawa(August 23, 1960: 63 years old)

[Newly nominated]

Position and responsibility in MHI(Newly nominated)
Number of MHI shares owned
52,000
Number of years in office as Director(as of the conclusion of this General Meeting of Shareholders)–Number of times attended Board of Directors meetings in FY2023–
Number of times attended the Audit and Supervisory Committee meetings in FY2023–
Career summary
April 1983
April 2017
October 2018
April 2020
September 2020
April 2021
October 2021

Joined Mitsubishi Heavy Industries, Ltd.
Vice President, Power Systems
Senior Vice President, Vice President, Power Systems
Director, Executive Vice President, CFO and CAO, Mitsubishi Hitachi Power Systems, Ltd.
Director, Executive Vice President, CFO and CAO, Mitsubishi Power, Ltd.
Director, Executive Vice President, CSO, CFO and CAO, Mitsubishi Power, Ltd.
Vice President, Energy Systems, Mitsubishi Heavy Industries, Ltd. (Present position)* CAO (Chief Administrative Officer)
Important concurrent positions
None
Reason for nomination as a candidate for Director
Mr. Masayuki Fujisawa has extensive knowledge of finance and accounting in addition to possessing extensive practicalexperience in having served as CSO, CFO, and CAO at major subsidiaries and having held important positions in sales
and administrative divisions at MHI. As MHI judges that his participation in its management decision-making willcontribute to ensuring effective supervision and ensuring soundness and appropriateness and improving transparency ofits management decision-making, and also help MHI achieve sustained growth and improvement of its corporate value
in the medium and long term, MHI nominates Mr. Masayuki Fujisawa as a candidate for Director who is serving as an
Audit and Supervisory Committee Member.
Special interest between the candidate and MHI
There is no special interest between Mr. Masayuki Fujisawa and MHI.

18

(Note)MHI plans to enter into a directors and officers liability insurance policy as provided for in Article 430-3,
paragraph (1) of the Companies Act with an insurance company. The policy will cover indemnification and thelitigation expenses arising from the legal liability of damages that are assumed by an insured in a case where theinsured receives a claim etc. relating to the pursuit of liability arising from the performance of duties. However,
the aforementioned policy does not cover losses, etc. arising from intentional misconduct or fraudulent acts by
the aforementioned insured.
MHI’s Directors are insureds under the aforementioned policy, and the full amount of the insurance premiums for
all insureds is borne by MHI. For Mr. Masayuki Fujisawa, if his election to the position of a Director is approved,
he will become an insured under the aforementioned policy. During the term of office, MHI plans to renew the
aforementioned policy with the same terms and conditions.

Matters for Consideration for Proposals No. 2 and No. 3
 Policy and Procedures for Nominating Candidates for Directors
As a company that provides the infrastructure that forms the foundation of society, MHI will work
toward separating management oversight and execution in order to pursue the realization ofsupervision with a high degree of soundness and transparency, which includes an external point ofview, and to improve the efficiency and flexibility concerning execution of business, which will
promote sustained growth and improved corporate value in the medium and long term.
To realize this, it will be MHI’s policy to nominate as candidates to be Directors (excluding
Directors who are serving as Audit and Supervisory Committee Members) of the individuals from
MHI who are active in the core of MHI’s management, who have extensive experience in
executing MHI’s business, and who see things from the perspective of a senior management; andin addition, to invite more than one individual as candidates for the role of outside directors to
perform supervision from an objective standpoint while giving consideration to external
stakeholders. Furthermore, from the perspective of ensuring effective audits, as Directors who areserving as Audit and Supervisory Committee Members, MHI’s policy is to select individuals who
have extensive knowledge and experience in various fields such as corporate management, legal,finance and accounting in a well-balanced manner.
When selecting Director candidates, the President and CEO prepares a proposed list of candidates
based on the above policy and discusses such proposed list with the outside directors at theNomination and Remuneration Advisory Council constituted by the outside directors, theChairman of the Board and the President and CEO. The Board of Directors selects the final
Director candidates from the proposed candidates resulting from the council.

19 Independence Criteria for Outside Directors
Anyone who meets any of the following criteria, in addition to the independence criteriaprescribed by Tokyo Stock Exchange, Inc. and other listed financial instruments exchanges inJapan, shall not be deemed to be independent by MHI.
1. A person who is currently:(i) A major shareholder of MHI (i.e., a shareholder who holds 10% or more of voting rights), or
any executive (a person who executes operations) of such shareholder;(ii) A counterparty with whom MHI transacts in cases when MHI’s transaction amount with saidcounterparty in the last business year exceeded 2% of MHI’s annual consolidated gross sales
in amount, or any executive of said counterparty;(iii) A counterparty that transacts with MHI in cases when said counterparty’s transaction amountwith MHI in the last business year exceeded 2% of said counterparty’s annual consolidated
gross sales in amount, or any executive of said counterparty;(iv) A financial institution or any large creditor on which MHI is dependent to the extent that it isindispensable for MHI’s financing and is not substitutable, or any executive of said financial
institution or large creditor;(v) A certified public accountant or employee, partner or staff of an audit corporation serving as
the financial auditor of MHI (excluding staff serving as an assistant);(vi) Any executive of an organization that received a donation or subsidy from MHI exceeding¥10 million or 30% of said organization’s average annual total expenses in the last business
year, whichever is higher;(vii) An attorney, certified public accountant, certified tax accountant or any other consultant who
received ¥10 million or more in the form of money or other financial benefits on average inthe past three business years from MHI, other than remuneration as an MHI officer; or(viii)Anyone who belongs to a law firm, audit corporation, tax accountant corporation, consulting
firm or any other expert advisory firm that received payments accounting for 2% or more of
its annual consolidated gross sales on average in the past three business years from MHI(excluding staff serving as an assistant).
2. A person who corresponded to any of the items from (i) to (vi) above at any point in time overthe past three years.

20Structure of the Board of Directors After the Election and the Directors’ Skill Matrix
If Proposals No. 2 and No. 3 are approved as submitted, the Board of Directors is scheduled to becomprised as shown in the table below.
MHI Group has set out Our Principles as the fundamental management philosophy and objectives
and periodically formulates business plans in order to steadily fulfill these. MHI Group states thatthe mission is to integrate cutting-edge technology into expertise built up over many years toprovide solutions to the changing social issues and provide better lives.
Under this mission, for oversight of the management of MHI Group that is globally operating
diverse businesses, it is necessary to appropriately track social issues and trends including
relationships with all stakeholders based on the assumption of a deep understanding of theGroup’s basic philosophy and business, and discuss from diverse perspectives such as
strengthening the technological foundation, human resource foundation and financial foundation,and risk management.
For these reasons, we believe it is important that there be knowledge, experience and expertise insocial and economic issues, risk management and compliance, global corporate management,
technology and digital, marketing, finance and accounting, and human resource development.
MHI Board of Directors requires a good balance of these attributes.
The knowledge, experience and expertise possessed by each Director is as shown in the tablebelow and we believe the Board of Directors has an appropriate mix of such knowledge,
experience and expertise.
Position andResponsibility in MHI

Number of
Knowledge, experience and expertiseyears in officeRisk(as of theOutside Independent Socio- Manage- Global Technology
conclusion of
Finance
Human
Director
Director Economic ment / Enterprise /Digitaliza- Marketing
this General
ManageAccounting Resource
Issues Complition
Meeting of
ment
ance
Shareholders)

Name

GenderShunichiMiyanaga

Male

Chairman of the Board

16

○

○

○

Male

President and CEO(Member of the Board)

7

○

○

○

Hitoshi Kaguchi

Male

Director (Member ofthe Board), Senior
Executive Vice
President, Assistant to
President and CEO,
Head of GX Solutions

3

○

○

Hisato Kozawa

Male

Director (Member ofthe Board), Executive
Vice President, CFO

4

○

○

Ken Kobayashi

Male

Director (Member ofthe Board)

8

○

○

○

○

○

Nobuyuki
HiranoMale

Director (Member ofthe Board)

5

○

○

○

○

○

Mitsuhiro
Furusawa

Male

Director (Member ofthe Board)

1

○

○

○

○

Male

Director (Member ofthe Board)
Full-time Audit andSupervisory Committee
Member3○○

MasayukiFujisawa

Male

Director (Member ofthe Board)
Full-time Audit andSupervisory Committee
MemberNewly
nominated○○

Hiroo Unoura

Male

Director (Member ofthe Board)
Audit and Supervisory
Committee Member

5

○

○

○

○

○

NorikoMorikawa

FemaleDirector (Member ofthe Board)
Audit and Supervisory
Committee Member

4

○

○

○

○

○

Masako Ii

FemaleDirector (Member ofthe Board)
Audit and Supervisory
Committee Member

3

○

○

○

○

Seiji Izumisawa

SetsuoTokunaga

21

○
○

○

○

○
○
○
○
○

○

○

○

○

○
○

○
○

(Note) Sections marked with “○” in the table do not indicate all the knowledge, experience and expertise ofsuch Directors.

22

Proposal No. 4: Revision to Amount and Details Related to Stock-based Remuneration Plan
for Directors (Excluding Directors Who Are Serving as Audit and Supervisory Committee
Members and Outside Directors)
1 Reasons for submitting this proposal and why the remuneration is reasonable
Per resolution at the 90th Annual General Meeting of Shareholders held on June 26, 2015, theCompany introduced a stock-based remuneration plan (hereinafter in this proposal, the “Plan”) in
which the Company delivers shares of the Company to Directors (excluding Directors who areserving as Audit and Supervisory Committee Members and outside directors; hereinafter in this
proposal “Directors”) among Directors of the Company in accordance with the performance, etc.
of the Company, and per resolution at the 94th Annual General Meeting of Shareholders held on
June 27, 2019, the Company partially revised the amounts and details related to the Plan.
Currently, Directors’ remuneration consists of basic remuneration, performance-linked
remuneration and stock-based remuneration (remuneration based on the Plan). However, under
this proposal the Company requests approval for partial revision to details in relation tocontinuation of the Plan (hereafter in this proposal, the “Plan revisions”).
The revisions of the Plan are for the purpose of providing incentive for achieving the growthstrategy and enhancing corporate value in accordance with the 2024 Medium-Term Business Plan
released by the Company on May 28, 2024, while also seeking to more closely align the interestsof Directors with shareholders by encouraging them to hold shares of MHI. The revisions areaccordingly to be carried out due to the possibility that, at times of expansion in performance of
the Company going forward, etc., the money contributed by the Company and the points forawarding shares that are granted by the Company to Directors in accordance with theperformance, etc. of the Company (hereinafter in this proposal, “Stock Award Points”) under thePlan may exceed the current limits for such money and the upper limits for Stock Award Points.
The Company deems this proposal to be appropriate given that this proposal aligns with thepolicy used to determine details of individual remuneration, etc. for Directors (excluding
Directors who are serving as Audit and Supervisory Committee Members) (policy described in
OFFICERS, REMUNERATION, ETC. TO OFFICERS in the Business Report).
Furthermore, even after the Plan revisions, Directors will be provided under the Plan with stockbased remuneration separate to the basic remuneration and performance-linked remuneration
provided within the total monetary remuneration limit of ¥1.2 billion per fiscal year for Directors
who are not serving as Audit and Supervisory Committee Members (including outside directors),
which was resolved at the 90th Annual General Meeting of Shareholders held on June 26, 2015.
2 Details of the Plan revisions
The Company contributes money to establish a trust (hereinafter in this proposal, the “Trust”)
with a trust period of three years (including extensions to the trust period; hereinafter the same toapply throughout this proposal), whose beneficiaries are Directors who meet the requirements.
However, with regard to the limit for money contributed by the Company (the limit for eachperiod of three consecutive fiscal years, which is the applicable period for the Plan, as described
below in 3.(2)), in addition to revising the total amount from ¥2.4 billion to ¥6.0 billion, theupper limit for Stock Award Points granted by the Company to Directors is to be revised from
1,000,000 points to 1,500,000 points per fiscal year (equivalent to 1,500,000 shares of theCompany).
3 Details after Plan revisions(1) Summary
The Plan consists of a stock-based remuneration plan whereby the Company contributes money
to the Trust, and the Trust, in accordance with the instructions of the trust administrator (a third23

party, independent of the Company, which performs administrative actions for the Trust), uses themoney contributed by the Company as a source of funds to purchase MHI shares either from theCompany or on the stock market and, in accordance with Stock Award Points, delivers orprovides (hereinafter in this proposal, “deliver, etc.”) to Directors of the Company the shares of
the Company or money in the amount equivalent to the realized value of the shares (hereinafterin this proposal, “Company shares, etc.”).
(i) Persons eligible for thedelivery, etc., of Company
shares, etc., under the Plan

Directors of MHI (excluding Directors who are serving as Audit andSupervisory Committee Members and outside directors)(ii) Maximum amount of money A total of ¥6.0 billion for each applicable period, consisting of threecontributed by MHI
consecutive fiscal years(iii) Upper limit to the number ofshares of the Company(including the number of
The maximum permitted amounts of Stock Award Points are
1,500,000 points per fiscal year for Directors
shares of the Company
subject to realization)delivered, etc. to Directors(iv) Impact of MHI sharessubject to the Plan on the
total number of sharesissuedWhen the upper limit to the total Stock Award Points is converted toshares of the Company at the rate of 1 point per share, the number ofshares of the Company (1,500,000 shares) obtained is around 0.04%
of the total number of shares issued (as of April 1, 2024, after
excluding treasury shares).
Dilution of shares will not occur because the Company plans tomake purchase from the stock market of shares of the Company
associated with the Trust with respect to the initial Applicable Period
after revision.
(Note) The number of shares of the Company per point has been set to 1 share given that the Company
conducted a consolidation of its shares on a 1 for 10 basis on October 1, 2017, and conducted a split of its
shares on a 10 for 1 basis on April 1, 2024.

(v) Details of the performancecoefficient

Varies according to profit from business activities and evaluations
made by major ESG assessment institutions, etc. for each fiscal year(vi) Timing of the delivery, etc.
of Company shares, etc. to
Directors

In principle, after three years have passed since the granting of StockAward Points(2) Maximum amount of money contributed by MHI
The Plan applies to three consecutive fiscal years. (Hereinafter the “Applicable Period” in this
proposal, referring to the initial Applicable Period after the Plan revisions consisting of the threeconsecutive fiscal years starting with the fiscal year ending on March 31, 2025, and finishingwith the fiscal year ending March 31, 2027.)
The Company will establish the Trust by contributing money to an upper limit of ¥6.0 billion foreach applicable period. In addition, the Company may continue the Trust when the trust period
expires by changing the trust agreement and making additional trusts. In such an event, the trust
period for the Trust in each applicable period will be extended, and the Company will makeadditional contributions for each such extended applicable period, with Stock Award Points
continuing to be granted to Directors. However, when such additional contributions are made, if
the Trust holds shares of the Company (excluding shares of the Company corresponding to thenumber of Stock Award Points granted to Directors but not yet delivered) or money (hereinafter24

in this proposal, “outstanding shares, etc.”) as outstanding trust assets on the final day of the trust
period before the extension, the total value of the outstanding shares, etc. and the additional
contributions shall not exceed the limit of ¥6.0 billion.
(3) Upper limit and calculation method for the number of shares of the Company (including thenumber of shares of the Company subject to realization) delivered, etc. to Directors
MHI grants to Directors Stock Award Points every year. The total number of Stock Award Points
MHI grants to each Director for each fiscal year is determined by the following formula.
[Formula for computing Stock Award Points granted in each fiscal year]
Stock Award Points = Base points (*1) × Coefficient of business results (*2)
*1. Base points are determined in accordance with each Director’s position, content of executionof business, responsibilities, etc.
*2. The coefficient of business results is based on profit from business activities for each fiscal
year and evaluations made by major ESG assessment institutions, etc.
The total number of Stock Award Points granted to Directors is a maximum of 1,500,000 points
per fiscal year (equivalent to 1,500,000 shares of the Company). The total number of shares of
the Company to be delivered to each Director via the Trust and shares of the Company converted
into cash and equivalent amounts of money to be paid is determined at 1 MHI share per 1 StockAward Point (*3). Provided, however, that when the number of shares of the Company belonging
to the Trust is increased or decreased due to consolidation of shares, splitting of shares, allotmentof shares without contribution and others, MHI will make adjustments rationally such as inproportion to the share split ratio.
*3. The number of shares of the Company per point has been set to 1 share given that theCompany conducted a consolidation of its shares on a 1 for 10 basis on October 1, 2017, andconducted a split of its shares on a 10 for 1 basis on April 1, 2024.
In addition, the number of shares of the Company acquired for the Trust to deliver, etc. to
Directors during the trust period shall be equivalent to the upper limit for the total number ofStock Award Points for the fiscal year in question, multiplied by three, which is the number ofyears in the trust period (4,500,000 shares).
(4) Timing and method of the delivery, etc. of Company shares, etc. to Directors
Directors who fulfill the beneficiary requirements may receive delivery, etc. of, after three years
have passed, in principle, since the granting of Stock Award Points (however, at the point of
retirement from office in cases where a Director retires from office before the relevant number ofyears has passed), the Company shares, etc. corresponding to the Stock Award Points granted,
upon the performance of the prescribed beneficiary confirmation procedure. In this case, theDirector is delivered shares of the Company amounting to 50% of the shares of the Company(shares less than one unit rounded down) corresponding to the Stock Award Points, and money inthe amount equivalent to the amount obtainable if the Trust realizes the remaining shares of theCompany.
In the event that a Director has been involved in serious misconduct, violation, etc. during the
Director’s term of office, the Company may revoke or confiscate the Director’s rights to receive
delivery, etc. of the Company shares, etc. under the Plan, and may furthermore demand
repayment of money equivalent in value to the Company shares, etc. that have been delivered.

25

(5) Voting rights related to shares of the Company belonging to the Trust
To ensure management neutrality, voting rights shall not be exercised during the trust period inregard to shares of the Company belonging to the Trust (that is to say, shares of the Company thathave not yet been delivered, etc. to Directors in accordance with (4) above).
(6) Other matters related to the Plan
Other matters related to the Plan will be determined by the Board of Directors.
4 Number of Directors eligible for the Plan
If Proposal No. 2 “Election of 7 Directors (Excluding Directors Who Are Serving as Audit andSupervisory Committee Members)” is approved and adopted as originally proposed, the number
of Directors eligible for the Plan will become 4.
 Opinions of the Audit and Supervisory Committee about Election, etc. and Remuneration,etc. of Directors (excluding Directors who are serving as Audit and Supervisory Committee
Members)
In regard to the election, etc. and remuneration, etc. of Directors who are not serving as Audit andSupervisory Committee Members, all three outside directors who are serving as Audit andSupervisory Committee Members attended the Nomination and Remuneration Advisory Council
and provided their respective opinions, and the full-time Audit and Supervisory Committee
Members confirmed, such matters as the approach to remuneration structure and the specificcomputation method of remuneration, as well as the basic framework and approach relating to theBoard of Directors and Directors of MHI and the policy for nominating the candidates for such
Directors and made reports and participated in mutual discussions at a meeting of the Audit andSupervisory Committee.
Accordingly, the Audit and Supervisory Committee has determined that there are no special mattersor opinions that need to be stated at the General Meeting of Shareholders with regard to theelection, etc. and remuneration, etc. of Directors who are not serving as Audit and Supervisory
Committee Members, based on the provisions of the Companies Act.

26

Status of holdings and reduction of shares held for purposes other than pure investment
MHI acquires and holds shares of other companies for the purpose of developing its businessstrategies, creating business opportunities, and establishing, maintaining and strengthening
business relationships, only upon having judged that such holdings will facilitate MHI’s
sustainable growth and medium- to long-term improvement in social and economic value. While
investing in growth areas looking toward the future, MHI reviews and reduces holdings of sharesacquired in the past with the goal of reducing the total amount at which shares held for purposes
other than pure investment are recorded on the consolidated balance sheet to less than 15% of
total equity by the end of FY2025, and to less than 10% by the end of FY2030.
Based on this policy, MHI sold, etc. 11 issues/¥58.3 billion (including partial sales of 5 issues andtransition of 1 issue to affiliated company accounted for using the equity method) in FY2023.
Meanwhile, the total amount recorded on the balance sheet as of the end of FY2023 was ¥303.2
billion (up ¥6.0 billion from the end of FY2022 due to effects of significant gains in share prices
of Japanese equities, etc.), thereby constituting 12.8% of total equity on a consolidated basis(FY2025-end target of less than 15% achieved ahead of schedule).
Furthermore, listed shares held by MHI for purposes other than pure investment include shares ofstrategic partners such as Vestas Wind Systems A/S (“Vestas”) constituting 3 issues/¥109.9 billion
held as growth investment for promoting “Energy Transition” toward achieving a carbon-neutral
society.
MHI will continue to work with partners in various fields to expand renewable energy and pursue
decarbonization technologies.
Please see the Corporate Governance Guidelines of Mitsubishi Heavy Industries, Ltd. for MHI’s
policy on holding shares for purposes other than pure investment, the method of verifying therationality of holdings, and the approach to exercising voting rights.
(https://www.mhi.com/finance/management/governance/pdf/corporate_governance.pdf)
Number of Issues and Amount Recorded on the Balance Sheet
As of the end of FY2023
Number of issues

Total amountrecorded on balance sheet(Billions of Yen)

Non-listed shares

149

53.2

Shares other than non-listed shares[of which, Vestas and other investment
in growth areas]

35
[3]

250.0
[109.9]

Total

184

303.2
(End)

27

BUSINESS REPORT FOR THE 2023 FISCAL YEAR
(April 1, 2023 to March 31, 2024)
OVERVIEW OF MITSUBISHI HEAVY INDUSTRIES, LTD. (MHI) GROUP
1 REVIEW AND THE RESULTS OF BUSINESS ACTIVITIESOVERVIEW
During the fiscal year under review, the global economy continued to see economic expansion in
the United States and growth in India and Southeast Asian countries, yet encountered a moderate
slowdown in some regions against a backdrop of factors that included monetary tightening inEurope and the United States coupled with stagnation in China’s real estate market. Meanwhile,
the Japanese economy mounted a gradual recovery partially due to improvement in the nation’s
employment and income environment. However, uncertainty persists regarding the future outlook
given factors that include price increases, the situation in the Middle East, and changes in financial
and capital markets.
 Orders, Sales and Profits/Losses
In this operating environment, consolidated orders received by MHI Group in the fiscal year underreview increased by ¥2,182.7 billion year on year to ¥6,684.0 billion amid gains across all
segments.
Revenue increased by ¥454.3 billion year on year to ¥4,657.1 billion as a result of gains across all
segments.
Furthermore, in terms of profit from business activities, there were increases across all segments,
resulting in an overall gain of ¥89.2 billion year on year to ¥282.5 billion, while profit before
income taxes rose by ¥124.0 billion year on year to ¥315.1 billion. Meanwhile, profit attributableto owners of parent also came to ¥222.0 billion, ¥91.5 billion higher than in the previous fiscal
year.
As a result, the MHI Group achieved record highs across the board with respect to consolidated
orders received, revenue, profit from business activities, and profit attributable to owners of parent.

28 MHI Group Initiatives in FY2023
During the fiscal year under review, the final fiscal year of the 2021 Medium-Term Business Plan(“2021 MTBP”), we steadily implemented various measures based on targets set in the four areasof profitability, growth, financial stability, and shareholder returns enlisting the two focal themesof “return to and strengthen profitability” and “opening up growth areas.”- Return to and strengthen profitability
During the fiscal year under review, the MHI Group sought to return to and strengthen profitability
by promoting structural reforms such as those of shifting to services business, and optimizing
assets through integration of business sites. Meanwhile, we also made progress in prompting
growth of our existing businesses in part by adjusting prices and augmenting production capacity.
As for gas turbines, we have held the world’s top market share for two consecutive years in partdue to a scenario where we have secured orders in the United States, Singapore and Uzbekistan
due to the reputation of our gas turbines for high performance and reliability, in addition to theirlong-standing track record over many years. In aero engines, which are poised for long-term
growth in demand, we achieved growth in after-sales services. Moreover, we proceeded with
manufacturing plant expansion in order to enhance our production capacity and costcompetitiveness in alignment with escalating demand with respect to engine components for shortto medium-range commercial aircrafts. In metals machinery, we concluded multiple contracts forrevamping projects, in addition to having landed a number of large-scale orders for electrical steel
production facilities in China. In transportation systems, we concluded contracts respectively for
new construction of an Automated Guideway Transit (AGT) system in Macao, renewal of
operation and maintenance (O&M) services agreements in the United States and Dubai, andadditional cars associated with ongoing upgrade work in Singapore. In paper converting
machinery, we expanded our services business primarily in North America, which entails
addressing customer needs particularly with respect to labor savings and automation leveraging
digital technologies. In the field of logistics, we received our first order in Japan with respect toautomation and intelligence solutions for picking operations for beverage warehouses. In airconditioning & refrigeration systems, we rolled out a new model to its lineup of air-to-water(ATW) heat pumps in the European market, thereby preparing for escalating demand for ecofriendly products. For power generation engine, we launched a new high-output model for backup
power supply to data centers.
Moreover, we have delivered a total of three vessels such as and patrol vessels, plus one
submarine, to government entities, and have also been selected to serve as the primary contractor
for procurement of a new type of frigate. In addition to this, we have also booked orders forseveral large projects, including those related to next-generation fighter aircraft and missile
systems in the field of defense. As for nuclear power systems, we persisted with efforts that
contribute to restarting existing plants in Japan, and furthermore encountered a wider range of new
business opportunities given our reputation with respect to previous projects involving installationof Specialized Security Facilities (SSF)*1.
*1 Specialized Security Facilities (SSF) are isolated, large-scale facilities used to safely shut down a reactor in
the event of such security incidents as airplane strikes or terrorist attacks.

29

- Opening up growth areas
With respect to the aim of “opening up growth areas,” the MHI Group engaged in Energy
Transition initiatives seeking decarbonization of the energy supply side, and also engaged in Smart
Infrastructure initiatives for achieving lower energy usage, labor savings, and decarbonization on
the energy demand side, all for the sake of achieving a sustainable, safe, secure, and convenientworld.
In regard to Energy Transition, we have commenced operations of Nagasaki Carbon Neutral Park
as MHI Group’s center for developing energy decarbonization technologies. Meanwhile, weembarked on hydrogen production at Takasago Hydrogen Park and built a framework for enabling
seamless verification of technologies to achieve early commercialization of hydrogen gas turbines.
In addition, we have successfully achieved 30% hydrogen co-firing operation of cutting-edge JAC
Series gas turbines, and have furthermore embarked on combustion test with 100% hydrogen using
small- to middle-class gas turbines. In relation to boilers, we also successfully completed a
combustion test of an ammonia single-fuel burner.
In the field of CCUS*2, we launched joint validation testing enlisting regional cooperation of
methanation technology for synthesizing methane, the main component of city gas, usinghydrogen and CO₂ captured from the flue gas at a municipal waste-to-energy plant in Yokohama.
We have completed construction of a demonstration test ship for liquefied CO₂ transport for
demonstration projects of NEDO*3 with respect to CO₂ capture, utilization and storage. In the fieldof nuclear energy, we have been selected as the core company both for development of ademonstration fast reactor and also for development of a high temperature gas-cooleddemonstration reactor. We also enhanced our project management and engineering functions inhaving established the GX*4 Solutions business domain in April 2024 by integrating the energy
transition-related business, which currently spans multiple business divisions, in seeking toprovide customers one-stop solutions and effectively utilize shared resources.
Next in relation to Smart Infrastructure, we have completed acquisition of Concentric, LLC, aprovider of maintenance services for industrial power systems in North America, with the aim of
securing data center-related customer, supply chain, and service infrastructure. We will
accordingly promote data center business while also aiming to expand sales of products such aslarge power generation facilities, emergency power generation facilities, and cooling systems. In
addition, we have begun to provide the ΣSynX Supervision digital service platform for enabling
comprehensive support with respect to operation and maintenance (O&M) services of plants,
transportation systems, and other types of social infrastructure, underpinned by the concept
providing integrated monitoring services that will help realize a safe, secure, and comfortablesociety.
In the field of mobility, we engaged in joint efforts with a domestic automotive manufacturer inverifying performance of finished vehicle conveyance using robots for transporting automobiles.
We also received an order for millimeter-wave suppression equipment for enhancing highprecision of vehicle safety performance evaluations.
*2. CCUS: Carbon dioxide Capture, Utilization and Storage*3. NEDO: New Energy and Industrial Technology Development Organization*4. GX: Green Transformation (transformation of the overall socioeconomic system by transforming the
economic, social, and industrial structure centered on fossil fuels to one centered on clean energy)30

- Initiatives under MISSION NET ZERO
The MHI Group have already achieved a 45% reduction in CO₂ emissions as of the end of FY2022(fiscal year ending March 31, 2023) against our Scope 1 and Scope 2 target of 50% lower CO₂
emissions in 2030 relative to those of 2014. Meanwhile we carried out initiatives toward achievingcarbon neutrality during the fiscal year under review, such that included installing solar panels andconserving energy at Mihara Machinery Works, and estimated a 97.7% reduction in CO₂ emissions
at the plant compared with FY2021.

31

REVIEW OF BUSINESS SEGMENTS
Energy Systems
Consolidated orders received increased year on year to ¥2,428.0 billion due to factors that include
better results both of GTCC, for which we maintain top market share amid a thriving global
market, and of nuclear power systems due to our support for restarting existing plants.
Revenue rose year on year to ¥1,761.5 billion, mainly due to increases in results of aero engines
and nuclear power systems.
Profit from business activities rose year on year to ¥141.5 billion, mainly due to increases inresults of steam power and GTCC.
Some investment related to thermal power systems is included under “Corporate or Elimination”
effective from the fiscal year under review. The impact associated with this on previous fiscal year
results is minimal.

Main Businesses
Thermal power systems (GTCC*1, steam power), nuclear power systems (light water
reactors/nuclear fuel cycle & advanced solutions), wind power systems, aero engines,
compressors, AQCS*2, marine machinery*1: Gas Turbine Combined Cycle, *2: Air Quality Control System

Plants & Infrastructure Systems
Consolidated orders received increased year on year to ¥867.3 billion due to factors that include
better results from engineering amid a favorable market for Automated Guideway Transit (AGT)systems largely as a result of escalating demand associated with mobility particularly in the UnitedStates and Asia.
Revenue rose year on year to ¥795.2 billion, driven mainly by increases in results of metals
machinery and engineering.
Profit from business activities rose year on year to ¥54.8 billion, mainly due to increases in resultsof metals machinery and engineering.

Main Businesses
Metals machinery, commercial ships, engineering, environmental systems, machinery
systems32

Logistics, Thermal & Drive Systems
Consolidated orders received rose year on year to ¥1,318.6 billion, driven mainly by increasedorders for material handling equipment and engines against a backdrop of escalating demand
worldwide.
Revenue rose year on year to ¥1,314.5 billion, mainly due to increases in results of material
handling equipment, air-conditioning & refrigeration systems, and engines.
Profit from business activities increased year on year to ¥72.8 billion, mainly due to higher resultsfrom material handling equipment associated with price adjustments and higher revenue.

Main Businesses
Material handling equipment, air-conditioning & refrigeration systems, engines,
turbochargers, automotive thermal systems
Aircraft, Defense & SpaceConsolidated orders received increased year on year to ¥2,068.7 billion, primarily due to higher
results from missile systems, defense aircraft, and maritime systems given the Japanese
government’s policy of fundamentally enhancing the nation’s defense capabilities.
Revenue gained year on year to ¥791.5 billion, mainly due to increases in results of commercial
aviation and missile systems.
Profit from business activities increased year on year to ¥72.6 billion, mainly due to higher resultsfrom commercial aviation, missile systems, and defense aircraft.

Main Businesses
Commercial aviation, defense aircraft, missile systems, naval ships, maritime systems(torpedoes), special vehicles (tanks), space systems

33

2 KEY ISSUES FOR MHI GROUP
The external environment in which the MHI Group operates continues to undergo significant
changes thereby giving rise to increased complexity when it comes to social issues. Amid this
scenario, the MHI Group will embark on implementation of its 2024 Medium-Term Business Plan,
which is to serve as the next medium-term business plan beginning in May 2024 in order to fulfill
expectations in terms of its roles in contributing to efforts that include decarbonization, stablesupply of energy, and Japan’s Defense Buildup Program.
Under the 2024 Medium-Term Business Plan, we will look to further strengthen business growthand profitability by leveraging the business and financial foundations established during the 2021
Medium-Term Business Plan to “strengthen portfolio management.” We will “strengthen
technological and human-resources infrastructure” to support these strategies, and also continue“promoting MISSION NET ZERO.” With regard to “strengthening portfolio management,”
we have identified our priority fields as “steadfastly engaging in growth business” and“promoting commercialization in growth areas,” and we will invest ¥1,200.0 billion in theseand also in “enhancing business competitiveness.” In addition, we have set quantitative targets
for FY2026, such that include revenue of ¥5,700.0 billion or higher, profit from business activitiesof ¥450.0 billion (business profit margin of 8%) or higher, and ROE of 12%, while concurrently
pursuing shareholder returns in a manner that involves maintaining stable dividends and increasing
dividends in alignment with profit growth.
- Steadfastly engaging in growth business
Under the 2024 Medium-Term Business Plan, the MHI Group will take measures such asenhancing human resources and increasing production facilities with a view to strengthening its
business execution capabilities in gas turbines, nuclear power, and defense-related business, which
are poised for growth. By this means, we will steadily execute contracts for orders received andincrease our revenue by around ¥1 trillion. Gas turbines are expected to see demand for use in fuelconversion associated with global CO2 emissions regulations, onsite power supply for datacenters,
and adjustment power supplies accompanying the spread of renewable energy. We will develop
sales strategies in accordance with the characteristics of each market while continuing to develop
technologies in areas such as hydrogen- and ammonia-fired gas turbines and hydrogen production
equipment. In the nuclear power business, we will advance with the design of the Advanced Light
Water Reactor SRZ-1200, and promote the development of a demonstration fast reactor and ademonstration high-temperature gas-cooled reactor, while providing ongoing support for
maximum utilization of existing plants. In the defense related business, we will continue to work
steadily on stand-off defense, integrated air and missile defense, and next-generation fighter
development, while proposing solutions utilizing the comprehensive capabilities covering land,sea, air, and space.
- Promoting commercialization in growth areas
We will pursue partnerships looking toward commercialization in growth areas such as Energy
Transition and data centers, where the MHI Group has managed to build up achievements underits 2021 Medium-Term Business Plan. First, we will work with partners in the field of hydrogenand ammonia with our sights set on facilitating tangible outcomes with projects in which we are
currently involved in North America, Southeast Asia and elsewhere, while also promoting
validation tests and commercialization in domains subject to product development efforts thus far,34

such as hydrogen- and ammonia-fired gas turbines and hydrogen production systems. Next in thefield of CCUS, our aims include securing orders for projects in North America, Europe andelsewhere, advancing next-generation CO₂ capture technologies, establishing service infrastructurethat encompasses remote monitoring, and concurrently heightening our market presence further by
expanding our network with licensees. In the electrification and data center fields, we will further
strengthen our service framework and promote commercialization by forming a combination ofpartnerships, all while providing one-stop solutions for achieving decarbonization and lower
energy consumption enlisting power systems, high-efficiency refrigeration units, and highly
intelligent EMS*1, leveraging our thermal and electrical engineering technologies. Additionally in
our metals machinery business, we will work with steel companies and other partners in carryingout joint validation testing for hydrogen reduction steelmaking.
*1 Energy Management System- Enhancing business competitivenessWe will also proceed with efforts for further strengthening profitability in addition to theaforementioned measures. In markets where we leverage the Company’s strengths, we willcontinue to provide labor-saving and automation solutions in the field of logistics, while also
introducing products that facilitate decarbonization, such as heat pumps, environmentally-soundvessels, alternative fuel supply systems for ships, and hydrogen gas engines. Moreover, we will
expand our services business by addressing customer needs through services that entail drawing onarchived data and employing AI for failure prediction and preventative maintenance. In aeroengines and commercial aviation, we will proceed with expansion of the MRO*2 businesses andother aftermarket services. In addition, we will optimize business management by carrying out
business structure transformation through resource reallocation and other such means, while also
engaging in efforts that involve improving operational efficiency and enhancing productivity by
optimizing production sites and supply chains of the entire Group.
*2 Maintenance, Repair and Overhaul- Strengthening technological and human-resources infrastructure
The notion of providing solutions to social issues calls for maintenance and expansion of thetechnological foundation developed by the MHI Group over many years, while also enlisting its
cutting-edge technologies. To such ends, we will create new value while streamlining development
by drawing on our Group-wide technological foundation encompassing technologies, products andexpertise, and concurrently strengthening our intellectual property strategy. We will also strengthen
our human-resources infrastructure in alignment with strategies in our respective businesses. This
will involve reallocating resources to key domains, while also enhancing our ability to secure anddevelop professionals on a global basis.
- Promoting MISSION NET ZERO
The MHI Group is engaged in its MISSION NET ZERO initiatives with the aim of achieving asustainable, safe, secure, and convenient world. We will also take on initiatives to further reduce
the Company’s CO₂ emissions by applying on a Group-wide basis the expertise we have gained in
the process of shifting to carbon neutrality at plant facilities of Mihara Machinery Works. This will
involve initiatives at our factories for reducing electricity consumption, streamlining operations,shifting to electric power, and installing additional solar panels.
35

The MHI Group, through its MISSION NET ZERO activities, will work toward achieving carbon
neutrality while seeking to improve both environmental value and economic value, thereby
contributing to realization of a sustainable society by solving social problems through its
operations. In prompting development and growth of our business as described above, we willcontinue to manage our operations as we have thus far based on our awareness that complianceserves as a key premise of our operations. As such, we accordingly ask our shareholders for theircontinued understanding and support in these endeavors.

36



OPERATING RESULTS AND FINANCIAL CONDITIONS

Item(Billions of Yen)
Orders received
Revenue
Overseas revenue
ratio
Profit from businessactivities
Profit from businessactivities to revenue
ratio
Profit before income
taxes
Profit attributable toowners of parent
Total assets
Total equity
Return on equity(ROE)
Cash flows fromoperating activities
Cash flows frominvesting activities
Free cash flows
Cash flows fromfinancing activities
Research anddevelopment expenses
Capital investment
Per share informationof common stock(Yen)
Basic earnings per
share
Diluted earnings per
share
Equity attributableto owners of parent
per share

FY2018 FY2019 FY2020 FY2021 FY2022 FY2023
3,853.4
4,078.3
54.0%

4,168.6
4,041.3
51.9%

3,336.3
3,699.9
47.4%

4,067.7
3,860.2
51.1%

4,501.3
4,202.7
57.0%

6,684.0
4,657.1
58.1%

200.5

(29.5)

54.0

160.2

193.3

282.5

4.9%

(0.7)%

1.5%

4.2%

4.6%

6.1%

195.0

(32.6)

49.3

173.6

191.1

315.1

110.2

87.1

40.6

113.5

130.4

222.0

5,240.3
1,728.6
7.9%

4,985.6
1,290.0
6.6%

4,810.7
1,439.3
3.1%

5,116.3
1,662.5
7.7%

5,474.8
1,833.9
7.9%

6,256.2
2,360.6
11.1%

420.3

452.5

(94.9)

285.5

80.8

331.1

(161.8)(239.5)(182.2)

16.3(45.5)(131.0)258.4(271.0)212.9(204.4)(277.1)
221.7

301.8
(255.7)35.3(18.9)

200.1(158.9)

152.1

146.8

125.7

113.6

127.4

178.3

137.4

148.1

116.5

115.0

142.3

193.9

32.85

25.94

12.09

33.82

38.84

66.07

32.80

25.91

12.08

33.81

38.83

66.04

420.47362.77406.47469.64518.31667.86(Notes)1. MHI has adopted the International Financial Reporting Standards (IFRS).
2. MHI has applied IFRS 16 “Leases,” beginning with FY2019. Financial data for FY2018 isrecalculated, retrospectively applying this standard.
3. On April 1, 2024, MHI conducted a split of its shares on a 10 for 1 basis. The per share
information is calculated on the assumption that said split was carried out at the beginning of
FY2018.

37

Orders Received and Revenue by Segment(Millions of Yen)FY2018FY2019Segment

Orders
Received

Revenue

Orders
Received

Revenue

Power Systems

1,426,504

1,525,108

1,772,101

1,590,293

Industry &Infrastructure

1,852,059

1,907,871

1,723,779

1,778,095

Aircraft,Defense & Space

610,666

677,577

719,232

704,985

Others73,323

71,66170,18575,190Inter-Segment
Eliminations(109,126)(103,874)(116,608)(107,189)

Total

3,853,426

4,078,344

4,168,689

4,041,376

FY2019(Millions of Yen)FY2020

FY2021

Segment

Orders
Received

Revenue

Orders
Received

Revenue

Orders
Received

Revenue

Energy Systems

1,772,101

1,590,293

1,299,213

1,546,003

1,444,358

1,651,086

739,970

792,925575,281

637,258

890,982

651,886

985,962

990,105

868,095

860,307992,305

986,534

Aircraft,Defense & Space719,215

704,985

626,243

702,109774,248[774,248]

605,292[605,292]

Corporate or
Elimination(48,560)(36,934)(32,442)(45,732)(34,164)[(34,164)](34,516)[(34,516)]

Total

4,168,689

4,041,376

3,336,392

3,699,946

4,067,730

3,860,283

Plants &Infrastructure
Systems
Logistics,
Thermal &Drive Systems(Millions of Yen)FY2022

FY2023

Segment

Orders
Received

Revenue

Orders
Received

Revenue

Energy Systems

1,791,797

1,738,676

2,428,035

1,761,569

845,400

675,665

867,364

795,274

1,215,016

1,203,776

1,318,647

1,314,588

Aircraft,Defense & Space

703,694

619,4422,068,709

791,547

Corporate or
Elimination(54,597)(34,762)

1,277(5,831)

Total

4,501,311

4,202,797

6,684,035

4,657,147

Plants &Infrastructure
Systems
Logistics,
Thermal &Drive Systems

38

(Notes)
1. The orders received and revenue for each segment include inter-segment transactions, which are
all cancelled for their respective segments using the “Inter-Segment Eliminations” and“Corporate or Elimination” terms.
2. In FY2020, segment categories were changed to “Energy Systems,” “Plants & Infrastructure
Systems,” “Logistics, Thermal & Drive Systems,” and “Aircraft, Defense & Space.” Both orders
received and revenue of each segment for FY2019 are presented using the new segmentcategories as well for reference.
3. In FY2022, the segment category was changed from “Aircraft, Defense & Space” to “Corporate
or Elimination,” with respect to certain businesses. Both orders received and revenue in FY2021
are presented for those two categories as two figures with the restated figure based on the newcategorization shown in square brackets.

39

FINANCING CONDITIONS(Millions of Yen)
Change from the End of FY2022
Outstanding Balance(Figures in parentheses denote decrease) at the End of FY2023

Item
Short-term andLong-term borrowings
Bonds
Subtotal
Non-recourse loans
Total



(25,175)

443,227

10,000(15,175)
1,736(13,438)

225,000
668,227
60,755728,983

MAIN BANK LOANS(Millions of Yen)
Outstanding Balanceat the End of FY2023

Lender
MUFG Bank, Ltd.

184,636

Mizuho Bank, Ltd.

77,258

Sumitomo Mitsui Banking Corporation

59,000Meiji Yasuda Life Insurance Company

45,000Sumitomo Mitsui Trust Bank, Limited

39,76640



CAPITAL INVESTMENT

Capital investment* during FY2023 amounted to ¥193,902 million. The main purposes of theinvestments were to strengthen technological capabilities, to improve the ability to be competitive
and to enhance MHI’s capabilities in the fields where MHI aims to aggressively expand its
businesses in the future.
* Based on reported figures for property, plant and equipment
Capital Investment by Business Segment
Segment
Energy Systems
Plants &Infrastructure Systems
Logistics, Thermal &Drive Systems
Aircraft, Defense &Space
Others & Common
Total

Amount39,684
7,667
73,076(Millions of Yen)

Main Items
Expansion of facilities related to GTCC
Expansion of facilities related to metals
machinery
Expansion of facilities related to forklift trucks
and logistics equipment

24,146

Expansion of facilities related to defense aircraft

49,327
193,902

Construction of new office building

41



EMPLOYEES

1. EMPLOYEES OF MHI GROUP(INCLUDING ITS CONSOLIDATED SUBSIDIARIES)
Segment

Number of Employees
22,246
13,76823,644
10,741
7,298
77,697

Energy Systems
Plants & Infrastructure Systems
Logistics, Thermal & Drive Systems
Aircraft, Defense & Space
Others & Common
Total(Persons)(Note)The number of employees is presented based on the number of actual workers effective fromFY2023. However, the number of employees above does not include Senior Vice Presidents,
temporary employees (employees who were re-employed following compulsory retirement,
temporary contract employees, part-time employees, etc.), or employees of non-consolidated
subsidiaries.

2. EMPLOYEES OF MHI
Number of
Employees
22,538 persons

Change from FY2022

Average Age

increase of 480 employees

42.4 years old

Average Number ofYears of Service
19.0 years(Notes)1. The number of employees and change from FY2022 are presented based on the number ofactual workers effective from FY2023. However, the number of employees above does notinclude Senior Vice Presidents or temporary employees (employees who were re-employedfollowing compulsory retirement, temporary contract employees, part-time employees, etc.).
2. Average age and average number of years of service are calculated excluding from thenumber of actual workers, Senior Vice Presidents, temporary employees (employees who
were re-employed following compulsory retirement, temporary contract employees, parttime employees, etc.), and secondees to MHI from external entities.

42



MAIN OFFICES & MANUFACTURING FACILITIESHead Office
Chiyoda-ku, Tokyo
Research & Innovation Kobe City, Nagasaki City, Takasago City Hyogo Prefecture,
Centers
Hiroshima City, Mihara City Hiroshima Prefecture, Nagoya City,
Yokohama City, Sagamihara City, Chiyoda-ku Tokyo
Works, Plant, andNagasaki Shipyard & Machinery Works (Nagasaki City),
Center
Shimonoseki Shipyard & Machinery Works (Shimonoseki City,
Yamaguchi Prefecture), Hiroshima Machinery Works (HiroshimaCity), Mihara Machinery Works (Mihara City, Hiroshima
Prefecture), Kobe Shipyard & Machinery Works (Kobe City),
Takasago Machinery Works (Takasago City, Hyogo Prefecture),
Nagoya Aerospace Systems Works (Nagoya City), Nagoya Guidance& Propulsion Systems Works (Komaki City, Aichi Prefecture),
Yokohama Dockyard & Machinery Works (Yokohama City),
Sagamihara Machinery Works (Sagamihara City), Hitachi Works(Hitachi City, Ibaraki Prefecture), Kure Works (Kure City, Hiroshima
Prefecture), Meirei District (Kiyosu City, Aichi Prefecture)
Domestic Offices
Hokkaido Office (Sapporo City), Tohoku Office (Sendai City),
Hokuriku Office (Toyama City), Chubu Office (Nagoya City),
Kansai Office (Osaka City), Chugoku Office (Hiroshima City),
Shikoku Office (Takamatsu City), Kyushu Office (Fukuoka City)
Main Bases Overseas[Offices]
Middle East Office (UAE), Taipei Office (Taiwan), Hanoi Liaison
Office (Vietnam), Ho Chi Minh City Liaison Office (Vietnam),
Kuala Lumpur Office (Malaysia)[Head Offices and Networks]
Mitsubishi Heavy Industries America, Inc. (U.S.A.), MHI do Brasil
Ltda. (Brazil), Mitsubishi Heavy Industries Mexicana, S.A. de C.V.
(Mexico), Mitsubishi Heavy Industries EMEA, Ltd. (United
Kingdom), Mitsubishi Heavy Industries France S.A.S. (France),
MHI Russia LLC (Russia), MHI Technologies S.A.E (Egypt),
Mitsubishi Heavy Industries (China) Co., Ltd. (China), Mitsubishi
Heavy Industries (Shanghai) Co., Ltd. (China), Mitsubishi Heavy
Industries, (Hong Kong) Ltd. (China), Mitsubishi Heavy Industries
India Private Ltd. (India), Mitsubishi Heavy Industries Asia PacificPte. Ltd. (Singapore), Mitsubishi Heavy Industries (Thailand) Ltd.
(Thailand), PT Mitsubishi Heavy Industries Indonesia (Indonesia),
Mitsubishi Heavy Industries Australia, Pty. Ltd. (Australia)(Note)The main subsidiaries and their addresses are as presented below in “OUTLINES OF MAIN
SUBSIDIARIES.”

43

OUTLINES OF MAIN SUBSIDIARIES

Plants & Infrastructure Systems

Energy Systems

Segment

Name ofCompany

Address

CapitalMitsubishi
624.5
Power Aero
U.S.A.
millionLLC
US dollars
Mitsubishi
352.5
Power
U.S.A.
millionAmericas, Inc.
US dollars
Mitsubishi
6,000
Heavy
Komaki City,
millionIndustries Aero Aichi Prefecture
Yen
Engines, Ltd.
Mitsubishi
Heavy
4,000
Minato-ku,
Industries
millionTokyo
Compressor
Yen
Corporation
Mitsubishi
Heavy
Industries
1,000
MarineNagasaki City million
Machinery &YenEquipment Co.,Ltd.
Mitsubishi
Heavy
Industries
3,450
Environmental Yokohama City million& Chemical
Yen
Engineering
Co., Ltd.
Mitsubishi
3,000
Shipbuilding
Yokohama City million
Co., Ltd.
Yen
Mitsubishi
Heavy
2,005
Industries
Kobe City
millionYen
Machinery
Systems, Ltd.
Mitsubishi
Heavy
Industries
300
Transportation
Yokohama City million
andYen
Construction
Engineering,Ltd.
Primetals
0.1
UnitedTechnologies,
millionKingdom
LimitedEuros
44

Percentage
of Voting
Rights (%)

Main Business*100.0

Thermal power systemsrelated business*100.0

Thermal power systemsrelated business100.0 Aero engines-related business100.0 Compressors-related business

100.0

Marine machinery-related
business

100.0

Environmental systems-related
business

100.0

Commercial ships-related
business

100.0

Machinery systems-related
business

100.0 Engineering-related business*100.0

Metals machinery-related
businessOthers

Aircraft, Defense &Space

Logistics, Thermal & Drive Systems

Segment

Name ofCompany
Mitsubishi
Heavy
Industries
ThermalSystems, Ltd.
Mitsubishi
Heavy
Industries
Engine &Turbocharger,
Ltd.

Address

CapitalPercentage
of Voting
Rights (%)

Main BusinessChiyoda-ku,
Tokyo

12,000
millionYen

Air-conditioning andrefrigeration systems-related
100.0 business,
Automotive thermal systemsrelated business

Sagamihara
City

5,000
millionYen

100.0

Engines-related business,
Turbochargers-related business

Mitsubishi
Logisnext Co.,Ltd.

Nagaokakyo
City,
Kyoto
Prefecture

4,949
millionYen

64.6

Material handling equipmentrelated business

Mitsubishi
Heavy
Industries
Maritime
Systems Co.,Ltd.

Tamano City,
OkayamaPrefecture500
millionYen

100.0 Naval ships-related business

U.S.A.

0.2
million
US dollars*100.0245.0
millionEuros

Investment for projects,
100.0 financial operation within the
MHI Group

15.0
million
US dollars

100.0

MHI products-related businessin U.S.A.

(57.3
million
US dollars)*100.0Industrial power solutionsrelated business

MHI RJ
Aviation Inc.

MHIInternational
Netherlands
Investment B.V.
Mitsubishi
Heavy
U.S.A.
Industries
America, Inc.
Concentric,
LLC

U.S.A.

Commercial aviation-related
business(Notes)1. The item marked with an asterisk (*) denotes the percentage including voting rights held by
MHI’s subsidiaries.
2. For subsidiaries with no monetary amount with respect to capital, capital reserve (or anequivalent amount) is presented in parentheses as an amount equivalent to capital.

45

STOCKS OF MHITOTAL NUMBER OF SHARES AUTHORIZED TO BE ISSUED:
600,000,000 shares



TOTAL NUMBER OF THE SHARES ISSUED:
337,364,781 shares



NUMBER OF SHAREHOLDERS:
275,218 persons (increase of 14,144 persons from the end of FY2022)



MAJOR SHAREHOLDERS
Name of Shareholder

Number of Shares

The Master Trust Bank of Japan, Ltd.
(Trust Account)
Custody Bank of Japan, Ltd.
(Trust Account)
Meiji Yasuda Life Insurance Company
STATE STREET BANK WEST CLIENT –TREATY 505234
SSBTC CLIENT OMNIBUS ACCOUNTThe Nomura Trust and Banking Co., Ltd.
(Retirement Benefit Trust Account for The Bank of
Mitsubishi UFJ, Ltd.)
Mitsubishi Heavy Industries Employee
Shareholding Association
STATE STREET BANK AND TRUST COMPANY
505001
JP MORGAN CHASE BANK 385781
GOVERNMENT OF NORWAY

Ratio of
Shareholding (%)

51,957,600

15.4

20,600,515

6.1

8,002,274

2.3

6,561,305

1.9

5,761,188

1.7

4,894,500

1.4

4,501,838

1.3

4,174,713

1.2

3,921,319
3,842,335

1.1
1.1(Note)The ratios of shareholding are calculated excluding 428,426 treasury shares. The number of treasury
shares does not include the amount of shares owned by the Employee Stock Ownership Plan Trust(29,418 shares), Board Incentive Plan Trust I (190,200 shares) and Board Incentive Plan Trust II(619,200 shares).

46



STATUS OF SHARES GRANTED TO OFFICERS AS COMPENSATION FOREXECUTION OF DUTIES DURING FY2023
Number of Shares

Director (Member of the Board)(excluding Directors who are serving as Audit andSupervisory Committee Members and Outside
Directors)
Outside Directors(excluding Directors who are serving as Audit andSupervisory Committee Members)
Directors who are serving as Audit and Supervisory
Committee Members

Number of Persons
Eligible for Grants

36,900

4

–

–

2,600

1

(Notes)1. The number of shares includes shares granted to retired officers, and shares granted to
officers as compensation for execution of duties during their term as Senior Vice Presidentsof MHI, or as directors or senior vice presidents of its subsidiaries.
2. The number of shares in the table includes shares that were liquidated to provide payment incash (18,600 shares of the 36,900 shares, and 1,300 shares of the 2,600 shares).


OTHER IMPORTANT MATTERS REGARDING SHARESMHI conducted a split of its shares on a 10 for 1 basis on April 1, 2024, and concurrently
changed the aforementioned “total number of shares authorized to be issued” from 600,000,000
shares to 6,000,000,000 shares. As a result, the aforementioned “total number of the sharesissued” has increased by 3,036,283,029 shares to 3,373,647,810 shares.

47

STOCK ACQUISITION RIGHTS OF MHISTOCK ACQUISITION RIGHTS HELD BY MHI’S OFFICERS AT THE END OFFY2023 THAT HAVE BEEN DELIVERED AS CONSIDERATION FOR THEIREXECUTION OF DUTIESName(Approval
Date of
Stock
Acquisition
RightsOffering)#4 Stock
Acquisition
Rights(July 31,2006)
#5 Stock
Acquisition
Rights(July 31,2007)
#6 Stock
Acquisition
Rights(July 31,2008)
#8 Stock
Acquisition
Rights(July 31,2009)
#9 Stock
Acquisition
Rights(July 30,
2010)
#10 Stock
Acquisition
Rights(November
30,
2011)#11 Stock
Acquisition
Rights(July 31,2012)

Type andNumber of
Shares
Received
When
Exercising
Acquisition
RightsExerciseIssue Price
Price of theof Stock
Stock
Acquisition
Acquisition
RightsRights100
shares ofcommonstock¥412,000¥1,000100
shares ofcommonstock¥793,000¥1,000100
shares ofcommonstock¥410,000¥1,000100
shares ofcommonstock¥295,000¥1,000100
shares ofcommonstock¥268,000¥1,000100
shares ofcommonstock
100
shares ofcommonstock¥270,000¥225,000

Period to
Exercise
Each Stock
Acquisition
Right
August 18,2006
toJune 28,
2036
August 17,
2007
toAugust 16,
2037
August 19,
2008
toAugust 18,
2038
August 18,
2009toAugust 17,
2039
August 18,
2010
toAugust 17,
2040

Stock Acquisition Rights Heldby Directors (Excluding
Directors Who Are Serving as
Audit and Supervisory
Committee Members)

18(1 Director)

10(1 Director)

29(1 Director)

40(1 Director)

44(1 Director)¥1,000December 16,
2011
toDecember 15,
2041

66(1 Director)¥1,000August 17,
2012
toAugust 16,
2042

79(1 Director)

48

Name
(Approval
Date of
Stock
Acquisition
RightsOffering)#12 Stock
Acquisition
Rights(July 31,2013)
#15 Stock
Acquisition
Rights(July 31,2014)

Type andNumber of
Shares
Received
When
Exercising
Acquisition
RightsExerciseIssue Price
Price of theof Stock
Stock
Acquisition
Acquisition
RightsRights100
shares ofcommonstock¥435,000¥1,000100
shares ofcommonstock¥564,000¥1,000Period to
Exercise
Each Stock
Acquisition
Right
August 20,
2013
toAugust 19,
2043
August 19,2014
toAugust 18,
2044

Stock Acquisition Rights Heldby Directors (Excluding
Directors Who Are Serving as
Audit and Supervisory
Committee Members)

61(1 Director)

83(1 Director)(Notes)1. MHI does not grant stock acquisition rights to outside directors or Directors who are serving
as Audit and Supervisory Committee Members.
2. The issue prices of stock acquisition rights are the fair values of the rights offering(determined according to the Black-Scholes Options Pricing Model) as of the approval dateof these rights offering.
3. MHI conducted a split of its common stock on a 10 for 1 basis on April 1, 2024.
The figures presented above represent the number of shares and monetary amount as ofMarch 31, 2024, prior to adjustment due to the share split.

49

OFFICERSNAMES OF DIRECTORS, ETC.
Position

Name

Chairman of the Board

Shunichi Miyanaga*President and CEO
Seiji Izumisawa(Member of the Board)*Director
Hitoshi Kaguchi(Member of the Board),
Senior Executive Vice
President*Director
Hisato Kozawa(Member of the Board),
Executive Vice President
Director
Ken Kobayashi(Member of the Board)

Director(Member of the Board)

Nobuyuki Hirano

Director(Member of the Board)

Mitsuhiro Furusawa

Director(Member of the Board)
Full-time Audit andSupervisory Committee
MemberDirector(Member of the Board)
Full-time Audit andSupervisory Committee
MemberDirector(Member of the Board)
Audit and Supervisory
Committee Member

Setsuo Tokunaga

Responsibility

CEO*1

Important Concurrent
Positions in Other Entities
Director, Mitsubishi Motors
Corporation
Member of the Board,
Mitsubishi Corporation
Chairman, Mitsubishi
Memorial Foundation for
Educational Excellence
Director, Mitsubishi ResearchInstitute, Inc.

Assistant to President
and CEO
CFO*2
Corporate Advisor, Mitsubishi
Corporation
Director, Mitsubishi ResearchInstitute, Inc.
Director, NISSIN FOODSHOLDINGS CO., LTD.
Chairman, The Japan
Chamber of Commerce andIndustry
Senior Advisor, MUFG Bank,Ltd.
Director, Mitsubishi ResearchInstitute, Inc.
President, Institute for Global
Financial Affairs, Sumitomo
Mitsui Banking Corporation

Ryutaro Takayanagi

Hiroo Unoura

Senior Advisor, Nippon
Telegraph and Telephone
Corporation
Member of the Board,
KADOKAWACORPORATION
50

Position

Name

Director(Member of the Board)
Audit and Supervisory
Committee Member
Director(Member of the Board)
Audit and Supervisory
Committee Member

Responsibility

Noriko Morikawa

Masako Ii

Important Concurrent
Positions in Other Entities
Director, Resonac Holdings
Corporation
Professor, School ofInternational and Public
Policy, Hitotsubashi
University
Professor, Graduate School of
Economics/Faculty of
Economics, Hitotsubashi
University*1 CEO: Chief Executive Officer*2 CFO: Chief Financial Officer(Notes)1. The positions, the responsibilities, and the important concurrent positions in other entities areshown as of March 31, 2024.
2. An asterisk mark (*) indicates a Representative Director.
3. Mr. Ken Kobayashi, Mr. Nobuyuki Hirano and Mr. Mitsuhiro Furusawa, each a Director, andMr. Hiroo Unoura, Ms. Noriko Morikawa and Ms. Masako Ii, each a Director who is serving
as an Audit and Supervisory Committee Member, are outside directors as defined in Article
2, item (xv) of the Companies Act.
4. MHI has submitted notifications, specifying all MHI’s outside directors as independent
directors, to Tokyo Stock Exchange, Inc. and other listed financial instruments exchanges inJapan.
5. Mr. Ryutaro Takayanagi, a Director, Full-time Audit and Supervisory Committee Member,
has extensive knowledge of finance and accounting from business experience in theaccounting and finance departments of MHI.
6. Based on the judgment that given the size, characteristics, etc. of MHI’s business, audit by
full-time personnel is necessary for ensuring the effectiveness of the activities of the Audit
and Supervisory Committee, MHI has prescribed in the Articles of Incorporation that Fulltime Audit and Supervisory Committee Members shall be appointed. Pursuant to thisprovision, Mr. Setsuo Tokunaga and Mr. Ryutaro Takayanagi have been appointed as Fulltime Audit and Supervisory Committee Members.
7. Mr. Mitsuhiro Furusawa, a Director, took up his position as of June 29, 2023 (on the date of
the 98th Annual General Meeting of Shareholders).
8. Mr. Shunichi Miyanaga, a Director, took up his position as Chairman, Mitsubishi Memorial
Foundation for Educational Excellence as of June 30, 2023.
9. Mr. Nobuyuki Hirano, a Director, retired from his position as Chairman, Mitsubishi
Memorial Foundation for Educational Excellence as of June 30, 2023.
10. Ms. Masako Ii, a Director who is serving as an Audit and Supervisory Committee Member,retired from her position as Governor, Japan Broadcasting Corporation as of February 29,
2024.
The following changes were instituted in the responsibilities of Directors as of April 1, 2024.
Position*Director (Member of the Board),
Senior Executive Vice President

Name
Hitoshi Kaguchi(Note)An asterisk mark (*) indicates a Representative Director.
51

Responsibility
Assistant to President and CEO,
Head of GX Solutions

 Outline of Liability Limitation Agreement
MHI has entered into liability limitation agreements with Directors: Mr. Ken Kobayashi; Mr.
Nobuyuki Hirano; and Mr. Mitsuhiro Furusawa, and Directors who are serving as Audit andSupervisory Committee Members: Mr. Hiroo Unoura; Ms. Noriko Morikawa; and Ms. Masako Ii,
respectively, which provide a limitation on their liabilities to compensate for damages under
Article 423, paragraph (1) of the Companies Act, the amount of which is the higher of ¥10 million
or the minimum liability amount defined in Article 425, paragraph (1) of the Companies Act.
 Outline of the Directors and Officers Liability Insurance Policy
MHI plans to enter into a directors and officers liability insurance policy as provided for in Article
430-3, paragraph (1) of the Companies Act with an insurance company. The policy will coverindemnification and the litigation expenses arising from the legal liability of damages that are
assumed by an insured in a case where the insured receives a claim etc. relating to the pursuit ofliability arising from the performance of duties. However, the aforementioned policy does notcover losses, etc. arising from intentional misconduct or fraudulent acts by the aforementioned
insured.
In addition to MHI’s Directors, Senior Vice Presidents, etc., and the directors, senior vicepresidents, etc. of MHI’s subsidiaries in which MHI directly or indirectly owns a majority of theoutstanding shares or otherwise has a controlling interest (including persons seconded as directors,
senior vice presidents, etc. to corporations other than MHI and its subsidiaries) are insured under
the insurance policies, and the insurance premiums for all the insured are paid in full by MHI or its
subsidiaries, etc., in which the insured are serving as directors, senior vice presidents, etc.

52



OUTSIDE OFFICERS

1. ENTITIES WHERE OUTSIDE OFFICERS HOLD IMPORTANT CONCURRENTPOSITIONS AND THEIR RELATIONS WITH MHI
Position
Director

Name
Ken Kobayashi

Nobuyuki Hirano
Director, Hiroo Unoura
Audit andSupervisory Noriko Morikawa
Committee
Member
Masako Ii

Name of Entity
Mitsubishi ResearchInstitute, Inc.
NISSIN FOODSHOLDINGS CO., LTD.
The Japan Chamber ofCommerce and Industry
Mitsubishi ResearchInstitute, Inc.
KADOKAWACORPORATION
Resonac Holdings
Corporation
Hitotsubashi University

Relations with MHIConsignment of consulting
services, etc.
No notable relations
No notable relations
Consignment of consulting
services, etc.
No notable relations
Purchase of hydroelectric power
generation components, etc.
No notable relations(Notes)1. The entities above are those listed in “NAMES OF DIRECTORS, ETC.” where an MHI
outside officer serves as an “Executive” etc. as defined in Article 124, paragraph (1), item (i)of the Regulations for Enforcement of the Companies Act or as an “Outside Officer” etc. as
defined in item (ii) of the same paragraph.
2. Mr. Nobuyuki Hirano, a Director, retired from his position as Chairman, Mitsubishi
Memorial Foundation for Educational Excellence on June 30, 2023. Mitsubishi Memorial
Foundation for Educational Excellence has a trading relationship with MHI for donations ofcash, etc.
3. Ms. Masako Ii, a Director who is serving as an Audit and Supervisory Committee Member,retired her position as Governor, Japan Broadcasting Corporation on February 29, 2024.
Japan Broadcasting Corporation has no notable relations with MHI.

53

2. PRINCIPAL ACTIVITIESPosition

Director

Name

The NumberofAttendanceat the Boardof Directors
Meetings

The NumberofAttendanceat the Audit
andSupervisory
Committee
Meetings

Ken
Kobayashi

14 out of
14 times-

Nobuyuki
Hirano14 out of
14 times-

Mitsuhiro
Furusawa

10 out of
10 times-

14 out of
14 times

16 out of
16 times

Director,
Audit and
Hiroo
Supervisory
UnouraCommittee
Member54

Overview of the Duties Undertaken in Relation
to the Role Expected to Be Fulfilled as Outside
Director

Mr. Ken Kobayashi performs supervision of MHI’s
overall management by providing views andassessments to the Board of Directors meetings andNomination and Remuneration Advisory Council,
etc. based on his extensive knowledge andexperience gained as a top executive of a global
company because he has expertise in various fields,
having served as a Member of the Board, President
and CEO, and Chairman of the Board of Mitsubishi
Corporation.
Mr. Nobuyuki Hirano performs supervision of
MHI’s overall management by providing views andassessments to the Board of Directors meetings andNomination and Remuneration Advisory Council,
etc. based on his extensive knowledge andexperience gained as a top executive at international
financial institutions including holding the positionsof President & Group CEO and Chairman(Corporate Executive) of Mitsubishi UFJ Financial
Group, Inc. and President and Chairman of theBoard of Directors of MUFG Bank, Ltd.
Mr. Mitsuhiro Furusawa performs supervision of
MHI’s overall management by providing views andassessments to the Board of Directors meetings andNomination and Remuneration Advisory Council,
etc. based on his wide range of insights related tofinancial policy gained as a regulator and a global
perspective gained as an international institution
executive when he served as Vice Minister ofFinance for International Affairs and Deputy
Managing Director of the International Monetary
Fund (IMF).
Mr. Hiroo Unoura performs supervision of MHI’s
overall management by providing views andassessments to the Board of Directors meetings andNomination and Remuneration Advisory Council,
etc. based on his extensive knowledge andexperience gained as a top executive at a company
that is engaged in cutting-edge businesses, having
been the driver of initiatives to strengthen thecompetitiveness and profitability of the domestic
business of Nippon Telegraph and Telephone
Corporation (NTT) and expand the overseas
business as the former President & CEO of NTT.
In addition, based on his considerable knowledge
and experience, Mr. Hiroo Unoura has expressed his
views at the Audit and Supervisory Committee
meetings in relation to the overall activities of theCommittee, including auditing, and he has also
conducted interviews with various departments, etc.,
exchanged opinions with the financial auditor, andprovided necessary proposals.

PositionName

The NumberofAttendanceat the Boardof Directors
Meetings

The NumberofAttendanceat the Audit
andSupervisory
Committee
Meetings

NorikoMorikawa

14 out of
14 times

16 out of
16 times

Masako Ii

14 out of
14 times

16 out of
16 times

Director,
Audit andSupervisory
Committee
MemberOverview of the Duties Undertaken in Relation
to the Role Expected to Be Fulfilled as Outside
Director

Ms. Noriko Morikawa performs supervision of
MHI’s overall management by providing views andassessments to the Board of Directors meetings andNomination and Remuneration Advisory Council,
etc. based on her experience in internal audit andaccounting operations at foreign companies
operating in Japan, in addition to her extensive
knowledge and experience in global companies
related to business management and organizational
operation, such as overseeing administration
departments in the role of manager.
In addition, based on her considerable knowledge
and experience, Ms. Noriko Morikawa has
expressed her views at the Audit and Supervisory
Committee meetings in relation to the overall
activities of the Committee, including auditing, andshe has also conducted interviews with various
departments, etc., exchanged opinions with thefinancial auditor, and provided necessary proposals.
Ms. Masako Ii performs supervision of MHI’s
overall management by providing views andassessments to the Board of Directors meetings andNomination and Remuneration Advisory Council,
etc. based on her advanced knowledge cultivated asa researcher in the field of health economics, as aprofessor at a graduate school and abundant global
experience as a researcher at The World Bank andas a governor of the Japan Broadcasting
Corporation.
In addition, based on her considerable knowledge
and experience, Ms. Masako Ii has expressed herviews at the Audit and Supervisory Committee
meetings in relation to the overall activities of theCommittee, including auditing, and she has also
conducted interviews with various departments, etc.,
exchanged opinions with the financial auditor, andprovided necessary proposals.

(Note)As Mr. Mitsuhiro Furusawa, a Director, took up his position as of June 29, 2023 (on the date of the 98th Annual
General Meeting of Shareholders), the number of times he attended the Board of Directors meetings for the year isdifferent from that of the other Directors.

55



REMUNERATION, ETC. TO OFFICERS

1. AMOUNT OF REMUNERATION, ETC.

Position

Monetary Remuneration
Total Amount of
Performance-linked
Basic Remuneration
Remuneration,
Remuneration
etc.
Total
Total
(Millions of
FiguresAmountFiguresAmountYen)(persons) (Millions (persons) (Millions
of Yen)of Yen)Stock Remuneration

Figures(persons)

Total
Amount(Millionsof Yen)Directors(excluding
Directors who areserving as Audit
1,068
8
276
4
444
4
348
and Supervisory
Committee
Members)(Outside Directors)
(45)
(4)
(45)
(―)
(―)
(―)
(―)
Directors who areserving as Audit
and Supervisory
159
5
159
―
―
―
―
Committee
Members(Outside Directors)
(55)
(3)
(55)
(―)
(―)
(―)
(―)
Total
1,227
13
435
4
444
4
348
(Outside Directors)
(100)
(7)
(100)
(―)
(―)
(―)
(―)
(Notes)1. The figures include one Director (excluding Director who is serving as an Audit and Supervisory
Committee Member) who retired during FY2023.
2. The total amount of stock remuneration shown in the table above is the amount of expenses recognized
for the 557,000 Stock Award Points granted in total during FY2023 (equivalent to 55,700 shares of MHI).
3. MHI conducted a split of shares of MHI on a 10 for 1 basis on April 1, 2024, and the figures above
represent the number of shares as of March 31, 2024, prior to the share split.

2. MATTERS CONCERNING BASIC REMUNERATION
Basic remuneration for Directors (excluding Directors who are serving as Audit and Supervisory
Committee Members) (excluding outside directors) is determined after taking into account theroles and duties of each Director, and is based on the following formula.
Standard amount based on role + Additional amount based on duties
The standard amount based on role is determined in accordance with roles and duties, and the
additional amount based on duties varies, depending on said duties, by up to ¥500,000 per month.
Basic remuneration for Directors who are serving as Audit and Supervisory Committee Members
and outside directors is set at a reasonable level of fixed remuneration.
3. MATTERS CONCERNING PERFORMANCE-LINKED REMUNERATION
The indicator used as the basis for calculating performance-linked remuneration is consolidated
profit from business activities (“profit from business activities”), which was chosen to reflect theresults of business activities in this type of remuneration. (However, there may be partial
adjustments to the compensation computation depending on our assessment of the impact ofchanges in accounting principles.)56Performance-linked remuneration shall be determined with reference to consolidated earnings forthe fiscal year under review, and shall also take into account the roles of each Director and theearnings and achievements, etc. of the business for which they are responsible, based on thefollowing calculation method.
Role-based payment coefficient × Profit from business activities for the given fiscal year ÷
10,000 × Coefficient of business results
Furthermore, performance-linked remuneration shall be paid in cases where there is a profit frombusiness activities for the fiscal year under review (where adjustments have been made, theadjusted figure) and where dividend payments are made.
The role-based payment coefficient shall be determined in accordance with roles and duties, andthe coefficient of business results shall vary from 1.3 to 0.7, after assessing the earnings andachievements, etc. of the business for which they are responsible.
In FY2023, profit from business activities was ¥282.5 billion, against a target (initial forecast) of¥300.0 billion.
4. DETAILS OF NON-MONETARY REMUNERATION (STOCK REMUNERATION)
In terms of non-monetary remuneration, MHI utilizes a Board Incentive Plan (BIP) trust
mechanism, which is based on Stock Award Points granted to Directors (excluding Directors whoare serving as Audit and Supervisory Committee Members) (excluding outside directors) using the
calculation below, and in accordance with the position of each Director and the financial results of
MHI. In principle, when three years have elapsed since the granting of the Stock Award Points,
shares of MHI and money in the amount equivalent to liquidation value of shares of MHI are thendelivered or provided to these Directors.
Role-based standard points × Coefficient of business results
Role-based standard points are determined in accordance with roles and duties, and the basis fordetermining the coefficient of business results is profit from business activities for the previous
fiscal year. In the event that a Director engages in extremely improper conduct, MHI may withhold
the granting of Stock Award Points and the delivery of shares, or demand a payment equivalent tothe value of shares that have already been delivered to them.
The indicator used as the basis for calculating stock remuneration is profit from business activities,
which was chosen to reflect the results of business activities in stock remuneration. (However,there may be partial adjustments to the compensation computation depending on our assessment of
the impact of changes in accounting principles.) In order to strengthen the link to business planssuch as the medium-term business plan, the indicator in question has been changed from profit
before income taxes to profit from business activities, which is the main indicator used forbusiness plans, beginning with the fiscal year under review.
In FY2022, MHI had a profit from business activities of ¥193.3 billion, against a target (initial
forecast) of ¥200.0 billion.
In addition, MHI has decided to reflect evaluations made by major ESG assessment institutions in
the coefficient of business results beginning with the fiscal year under review in order to reflect its
extensive initiatives and objective evaluations regarding its ESG objectives.

57

5. MATTERS CONCERNING RESOLUTIONS OF THE GENERAL MEETING OF
SHAREHOLDERS IN RELATION TO REMUNERATION, ETC.
- The maximum permitted monetary remuneration amount for Directors (excluding Directors
who are serving as Audit and Supervisory Committee Members) (including outside directors)
was set at ¥1.2 billion per fiscal year by resolution of the 90th Annual General Meeting of
Shareholders held on June 26, 2015. The number of Directors (excluding Directors who areserving as Audit and Supervisory Committee Members) as of the conclusion of the Annual
General Meeting of Shareholders in question was nine, including two outside directors.
- The maximum permitted amount of Stock Award Points that may be granted to Directors(excluding Directors who are serving as Audit and Supervisory Committee Members)(excluding outside directors) was set at 1,000,000 points (equivalent to 100,000 shares of MHI)
per fiscal year by resolution of the 94th Annual General Meeting of Shareholders held on June27, 2019. The number of Directors (excluding Directors who are serving as Audit andSupervisory Committee Members) (excluding outside directors) as of the conclusion of theAnnual General Meeting of Shareholders in question was four. MHI conducted a split of sharesof MHI on a 10 for 1 basis on April 1, 2024, and the figures above represent the number ofshares as of March 31, 2024, prior to the share split.
- The maximum permitted monetary remuneration amount for Directors who are serving as Audit
and Supervisory Committee Members was set at ¥0.3 billion per fiscal year by resolution of the90th Annual General Meeting of Shareholders held on June 26, 2015. The number of Directors
who are serving as Audit and Supervisory Committee Members as of the conclusion of theAnnual General Meeting of Shareholders in question was five, including three outside directors.
6. POLICY AND METHOD USED TO DETERMINE DETAILS OF INDIVIDUALREMUNERATION, ETC. FOR DIRECTORS(1) Directors (excluding Directors who are serving as Audit and Supervisory Committee Members)
The Board of Directors of MHI decides the policy and the method used to determine details of
individual remuneration, etc. for Directors (excluding Directors who are serving as Audit andSupervisory Committee Members).
- Remuneration of Directors (excluding Directors who are serving as Audit and Supervisory
Committee Members) (excluding outside directors) consists of basic remuneration,
performance-linked remuneration, and stock remuneration, with the aim of reflecting financial
results in compensation and aligning the interests of Directors with shareholders.
- Outside directors are expected to provide objective opinions and suggestions from an external
standpoint. In view of the nature of this role, they are provided only with basic remuneration(fixed remuneration commensurate with their duties).
- An overview of the policy and method used to determine details of individual remuneration, etc.
for Directors is provided below.
Reasonable amount shall be determined in consideration of each Director’sroles and duties.
Reasonable amount shall be determined based on consolidated earnings for
Performance-linked the fiscal year under review, while also taking into account the roles of eachRemuneration
Director and the earnings and accomplishments, etc. of the business thathe/she is in charge of.

Basic Remuneration

58

Shares of MHI and money in the amount equivalent to liquidation value ofshares of MHI shall be delivered or provided based on Stock Award Points
calculated and granted in accordance with, among other factors, the role of
Stock Remuneration each Director and financial results of MHI using the system of Board
Incentive Plan Trust to raise the motivation of Directors to contribute to themedium- to long-term improvement of financial results and enhancement of
the corporate value of the entire MHI Group.
The standard for the remuneration of MHI’s president was set at roughly
30% basic remuneration, 40% performance-linked remuneration, and 30%
stock remuneration (in the event that profit from business activities reached¥200.0 billion; calculated based on the fair value of Stock Award Points
granted during FY2018), making for a remuneration structure in which the
Policy on thehigher a Director’s position is, the greater his or her performance-linked
proportions of
remuneration will be.
different types of
In addition, if profit from business activities exceeds ¥200.0 billion, stock
remuneration
remuneration will be increased to provide a medium- to long-term incentive,
and to more closely align the interests of Directors with shareholders byencouraging the holding of shares of MHI. The increase in performancelinked remuneration will be tapered off gradually, and will be unchanged
after profit from business activities exceeds ¥400.0 billion.
Basic remuneration is paid every month.
Performance-linked remuneration is paid in cases where there is a profit
Policy on the timing from business activities for the fiscal year under review (where adjustments
and conditions for have been made, the adjusted figure) and where dividend payments are
granting remuneration made.
In principle, stock remuneration is provided when three years have elapsed
since the granting of the Stock Award Points.
- The amount of remuneration shall be set at appropriate levels while also giving consideration to
the situation in other companies and other factors.
- For the purpose of further enhancing the transparency and fairness concerning the determinationof remuneration, etc. of Directors (excluding Directors who are serving as Audit andSupervisory Committee Members), MHI holds the Nomination and Remuneration Advisory
Council consisting of the outside directors, Chairman of the Board and President and CEO. At
such meetings the President and CEO explains to outside directors the policy and method used
to determine details of individual remuneration, etc. for Directors, and obtains opinions andadvice on the subject from the outside directors.
For reference, during FY2023, MHI held four Nomination and Remuneration Advisory Council.
(2) Directors who are serving as Audit and Supervisory Committee Members
The policy for determining the details of remuneration, etc. for Directors who are serving as Audit
and Supervisory Committee Members is determined through discussion among Directors who areserving as Audit and Supervisory Committee Members.
- Remuneration of Directors who are serving as Audit and Supervisory Committee Members shallconsist only of basic remuneration. The amount of remuneration shall be fixed at levels that arecommensurate with their roles and duties determined separately for full-time and non-full-timecategories. However, the amount of remuneration of full-time Audit and Supervisory Committee
Members may be reduced in consideration of the business conditions of MHI and other factors.

59

7. MATTERS CONCERNING THE DELEGATION OF AUTHORITY TO DETERMINE
DETAILS OF INDIVIDUAL REMUNERATION, ETC. FOR DIRECTORS
President and CEO Seiji Izumisawa is delegated by the Board of Directors to determine thespecific allocation of individual remuneration amounts (details of the calculation, additionalamount based on duties used for the basic remuneration of each Director, the coefficient ofbusiness results used for performance-linked remuneration, etc.) for Directors (excluding Directors
who are serving as Audit and Supervisory Committee Members), within the limit of the total
amount resolved at the General Meeting of Shareholders, and based on the policy used todetermine details of individual remuneration, etc. for Directors, and reports back to the Board of
Directors on the results of this allocation.
The Board of Directors delegates this authority because it judges that the President and CEO, who
is in charge of and responsible for the execution of overall business operations, is the appropriate
person to make final decisions in relation to the allocation of remuneration to individual Directors,
while also taking into account the overall performance of MHI.
The Board of Directors has put in place measures to ensure that the authority delegated to the
President and CEO is being executed appropriately, such as ensuring that the Nomination andRemuneration Advisory Council deliberates the allocation, including whether the allocation is inaccordance with the above-mentioned policy used to determine details of individual remuneration,etc. for Directors, before the results of the allocation are reported to the Board of Directors.
Because remuneration amounts for individual Directors are decided only after passing through thisprocedure, the Board of Directors deems that it is conducted in accordance with the policy for
determining the details of remuneration, etc. for Directors.

60

FINANCIAL AUDITORNAME OF FINANCIAL AUDITORKPMG AZSA LLCAMOUNT OF REMUNERATION PAID TO FINANCIAL AUDITOR¥442 million(Notes)
1. In the audit contract between MHI and its financial auditor, remuneration paid for audits under theCompanies Act and audits under the Financial Instruments and Exchange Act are not clearly
distinguished and cannot be practically separated. Therefore, the amount of payment for both is shown
above.
2. In addition to the aforementioned, there is an additional remuneration amount of ¥44 million for theprevious fiscal year.



REASONS FOR AGREEMENT BY THE AUDIT AND SUPERVISORY COMMITTEECONCERNING THE AMOUNT OF REMUNERATION, ETC. TO BE PAID TO
FINANCIAL AUDITORThe Audit and Supervisory Committee confirmed the policy and content of the audit plan, the basis
for calculation of estimates, etc., which constitute the basis for remuneration of the financial
auditor, and verified them by receiving necessary reports on them from internal departments
concerned. As a result, the Audit and Supervisory Committee determined that they were appropriate
for the financial auditor to conduct financial audit of MHI and agreed to the amount of
remuneration shown in “AMOUNT OF REMUNERATION PAID TO FINANCIAL AUDITOR”
above.
SUM OF THE AMOUNT OF MONEY AND OTHER MATERIAL ADVANTAGE TO BE
PAID BY MHI AND ITS SUBSIDIARIES¥731 million(Notes)
1. Part of MHI’s subsidiaries are audited by certified public accountants, etc. other than the financial
auditor of MHI.
2. In addition to the aforementioned, there is an additional remuneration amount of ¥62 million for theprevious fiscal year.



CONTENTS OF WORKS OTHER THAN AUDITINGIn terms of non-audit services, MHI has outsourced agreed procedural operations related tofactoring and so on to the financial auditor, and has provided consideration accordingly.


POLICY ON TERMINATING OR NOT REAPPOINTING THE FINANCIAL
AUDITORIf there are circumstances which give rise to reasonable expectations that the auditing of financial
statements will suffer great interference due to an event such as the financial auditor come under
any of the provisions set forth in each item of Article 340, paragraph (1) of the Companies Act, thefinancial auditor shall be dismissed by unanimous consent of the Audit and Supervisory Committee
Members.
In addition, if the Audit and Supervisory Committee has determined that the system for the
execution of duties, audit capability, expertise, etc. of the financial auditor is insufficient for MHI orthat MHI can put in place an audit system that is more appropriate for MHI by replacing the61financial auditor, the Audit and Supervisory Committee will determine a proposal not to re-elect thefinancial auditor, and MHI will submit it to the General Meeting of Shareholders.

62

ESTABLISHING A FRAMEWORK FOR ENSURING APPROPRIATE BUSINESSCONDUCTRESOLUTIONS OF THE BOARD OF DIRECTORS FOR THE ESTABLISHMENT OFA FRAMEWORK FOR ENSURING APPROPRIATE BUSINESS CONDUCTIn accordance with the applicable laws and ordinances, MHI has prepared a system to ensure
appropriate operations by resolution of the Board of Directors. We promote fair and solidmanagement. The content of the resolution is as follows:
1. Matters regarding Directors and employees who are assigned to support duties of the
Audit and Supervisory Committee
For the purpose of supporting the duties of the Audit and Supervisory Committee, MHI
shall establish the Audit and Supervisory Committee’s Office with dedicated employees toassist the smooth performance of its duties. MHI will not appoint any Director who isassigned to support duties of the Audit and Supervisory Committee.
2. Matters regarding independence of employees in 1. above from Directors (excluding
Directors who are serving as Audit and Supervisory Committee Members) and to ensure
the effectiveness of instructions by the Audit and Supervisory Committee to employees
The staff of the Audit and Supervisory Committee’s Office shall be assigned to said office
on an exclusive basis. They shall not receive any instructions or orders from Directors(excluding Directors who are serving as Audit and Supervisory Committee Members) andshall obey the instructions and orders of the Audit and Supervisory Committee. Any
personnel transfers and evaluation of said staff shall be subject to the consent of the Audit
and Supervisory Committee to ensure the independence of them from the departments
engaging in business execution and the effectiveness of instructions by the Audit andSupervisory Committee to them.
3. System for reporting to the Audit and Supervisory Committee by Directors and employees
and other systems for reporting to the Audit and Supervisory Committee(1) Directors, etc. of MHI shall implement arrangements concerning reporting to andcommunication with the Audit and Supervisory Committee (or the Audit andSupervisory Committee Members designated by the Audit and Supervisory
Committee; the same shall apply hereinafter) including reporting matters concerning
MHI Group companies. In addition, Directors, etc. of MHI shall ensure adequate
mutual understanding through regular exchange of opinions and make reports uponrequest of the Audit and Supervisory Committee.
(2) Directors, etc. of MHI Group companies shall carry out reporting to andcommunication with the Audit and Supervisory Committee in accordance with theoperational procedures prescribed in Item 12 and make reports upon request of the
Audit and Supervisory Committee.
(3) The department in charge of the whistleblower system shall report the matters reported
to it through the whistleblower system and other compliance-related matters reported
to it to the Audit and Supervisory Committee.
4. System to ensure that the person who made a report in 3. above shall not be subject to any
unfavorable treatment for reason of having made such report
It shall be prescribed in company regulations that a person who made a report through thewhistleblower system shall not be treated disadvantageously in any way on the grounds ofsuch report and this rule shall be internally informed and appropriately operated.

63

5. Matters concerning the policy on the treatment of expenses or debts arising in the courseof the execution of duties of Audit and Supervisory Committee Members including theprocedure for advance payment and reimbursement of expenses arising in the course of
the execution of said duties
A certain amount of annual budget shall be secured for the payment of expenses arising in
the course of the execution of duties of Audit and Supervisory Committee Members basedon the request of the Audit and Supervisory Committee. If the payment of other expenses
is requested by an Audit and Supervisory Committee Member, it shall be handledappropriately pursuant to Article 399-2, paragraph (4) of the Companies Act.
6. Other systems to ensure effectiveness of audits by the Audit and Supervisory Committee
Consideration to ensure the effectiveness of audits shall be given to any exchange of
opinions with internal departments concerned, financial auditor, etc., information
gathering and research that are conducted by the Audit and Supervisory Committee.
7. System to ensure that the Directors’ execution of their duties is in compliance with laws
and ordinances and MHI’s Articles of Incorporation(1) Directors shall lead by example in realizing MHI’s fundamental principle of fair andhonest business activities that comply with all laws and ordinances and emphasizesocial norms and business ethics.
(2) The Board of Directors shall fully discuss all matters raised and reported by Directors
and oversee MHI’s operations from the perspectives of sound and efficientmanagement. The views of outside officers shall be employed to introduce greater
objectivity and enhance the effectiveness of oversight.
8. System to store and manage information related to the Directors’ execution of their duties(1) Principle matters related to the management of documents shall be specified incompany regulations, and information related to the Directors’ execution of their duties
shall be appropriately recorded, stored and managed.
(2) Directors (including Audit and Supervisory Committee Members) shall be given
access to such information at any time where it is deemed necessary to supervise andaudit actions by Directors.
9. Regulations and other systems to manage risk of loss
(1) Systems designed to manage each type of risk shall be implemented andresponsibilities shall be clearly defined to ensure the appropriate management of risk.
(2) Risk shall be regularly evaluated and analyzed and necessary avoidance or mitigating
measures taken; internal audits shall monitor the effectiveness and appropriateness ofthese measures and reports shall be regularly submitted to the Board of Directors andAudit and Supervisory Committee.
(3) To prepare for cases where significant risk may materialize, MHI shall ensure themeans to immediately communicate information to senior management to respondpromptly and accurately to emergency situations; individuals responsible for crisis
management shall also be appointed in each business division.
10. System to ensure that Directors execute their duties efficiently(1) The Board of Directors shall formulate business plans and establish companywide
management policy and objectives; business execution, led by the President, shall be
conducted with the aim of achieving these objectives.
(2) MHI’s organizational structure, division of duties, and lines of authority shall be
specified in company regulations to ensure steps to achieve management objectives are
conducted efficiently.

6411. System to ensure that the duties and actions of employees comply with laws andordinances and MHI’s Articles of Incorporation(1) MHI shall create a framework comprising the Compliance Committee and other bodies
to raise awareness of compliance among employees by formulating a code of conduct,
implementing various training programs and taking other steps.
(2) MHI shall establish a whistleblower system and other mechanisms to enhance theeffectiveness of compliance, conduct internal audits of the compliance framework, andreport the results to the Board of Directors and Audit and Supervisory Committee.
12. System to ensure appropriate business activities of MHI Group(1) Each MHI Group company shall operate autonomously as an independent enterpriseand its president shall be responsible for the management of the company. At the sametime, in order to ensure that the MHI Group as a whole is operated soundly andefficiently and in a manner to contribute to the improvement of its consolidated
financial performance, MHI shall support and provide guidance to MHI Group
companies by establishing the division of management responsibilities between MHI
and Group companies and operational procedures stipulating, among others, mattersthat should be requested or reported by Group companies to MHI.
(2) In order to ensure that the MHI Group as a whole is operated appropriately and various
risks existing within the MHI Group as a whole are managed appropriately, various
measures concerning compliance and risk management shall be promoted on a groupwide basis and each company shall put in place an internal control system that is
appropriate for its size and characteristics. The operating status of these internal
control systems shall be audited by the department of MHI responsible for their
management.
(3) MHI and MHI Group companies shall ensure the accuracy of their respective financial
information, and arrange the organization, company regulations and other mattersrequired for the preparation and disclosure of reliable financial reports.


SUMMARY OF THE OPERATION STATUS OF A FRAMEWORK FOR ENSURING
APPROPRIATE BUSINESS CONDUCTThe operation status of a framework for ensuring appropriate business conduct for FY2023 is assummarized below.
1. Initiatives to ensure the effectiveness of audits by the Audit and Supervisory Committee- Based on company regulations, MHI has established the Audit and Supervisory Committee’s
Office with the staff assigned on an exclusive basis to support the audit activities of the Audit
and Supervisory Committee. It is also prescribed in the same company regulations that theindependence of the exclusively assigned staff from the departments engaging in businessexecution shall be secured.
- A budget necessary for audit activities is appropriately secured based on the request of the
Audit and Supervisory Committee and expenses, etc. are paid from the budget.
- MHI responds appropriately to any requests of Full-time Audit and Supervisory Committee
Members received in advance for the attendance at an important meeting and the provision of
documents. In addition, any projects that are important from the audit perspective, etc. arereported to Full-time Audit and Supervisory Committee Members or the Audit andSupervisory Committee on an individual basis.
- On a regular basis, information is shared among Full-time Audit and Supervisory Committee
Members, officers of execution of business department and the internal auditing department.
In addition, the Audit and Supervisory Committee regularly and whenever necessary
exchanges opinions with financial auditor.
- All matters that have been reported through the whistleblower system are reported to Full-time
Audit and Supervisory Committee Members. It is prescribed in company regulations that aperson who made a report through the whistleblower system shall not be treateddisadvantageously in any way on the grounds of such report and this rule is internallyinformed and strictly enforced.
65

2. Initiatives to ensure legal compliance in the execution of duties by Directors and employees andthe appropriateness of decision-making processes- Regarding compliance, MHI established the “Corporate Governance Guidelines of Mitsubishi
Heavy Industries, Ltd.” and the “MHI Group Global Code of Conduct,” which apply to all
officers and employees of the MHI Group both in Japan and overseas. MHI also strives to
conduct several activities including regular Compliance Committee meetings, theestablishment of various company regulations, the provision of messages from management
about thorough legal compliance, the provision of education to promote legal compliance, andinternal audits that take into consideration the issues of each department subject to audit.
- In FY2023, 14 meetings of the Board of Directors were held to thoroughly deliberate on eachagenda, including compliance measures. In addition, the Nomination and Remuneration
Advisory Council consisting of outside directors, the Chairman of the Board and the President
and CEO and the meetings consisting of independent outside directors were held to hearbroadly the opinions of outside directors particularly on matters related to corporate
governance as the initiatives to increase the soundness and transparency of the management of
MHI.
3. Initiatives concerning the preservation and management of information about the execution ofduties by Directors- The minutes of the Board of Directors and other information about the execution of duties byDirectors are appropriately recorded in accordance with company regulations and managed ina manner to make them available for inspection any time upon request of a Director. In
addition, appropriate measures have been taken to prevent information leakage, loss, etc. andchecks, etc. on these measures are regularly conducted.
4. Initiatives concerning the management of risk of loss
- For business risk management, MHI holds business risk management committee meetings
based on the rules governing business risk management systems and processes, and checks
and discusses the framework of the business risk management, progress of measures tostrengthen the business risk management, and so on. Furthermore, MHI continuously holds
discussion meetings for sharing information and having discussion about economic security.
- In addition to conducting initial screening and monitoring of project negotiations, thededicated organization for risk management concerning the businesses addresses major risks
that are identified, and works with related departments to take appropriate action towards
problem resolution.
- For investments, the related departments control and manage the evaluation and execution
processes and conduct initial screening and monitoring.
5. Initiatives to ensure the efficiency of the execution of duties by Directors- Business plans, which set forth group-wide management policies and targets, are developed by
the Board of Directors. Under the business execution framework headed by President andCEO, MHI strives to achieve the targets set forth in the plans and the progress status isregularly reported at the meetings of the Board of Directors. In FY2023, the Board of
Directors held discussions regarding formulation of the next medium-term business plan.
- Part of decisions on important business execution has been delegated to President and CEO
pursuant to the provisions of the Articles of Incorporation. In addition, criteria for matters thatshould be deliberated by the Board of Directors have been prescribed in the Bylaws of theBoard of Directors to improve the efficiency and agility of the execution of duties byDirectors.
- MHI practices portfolio management based on the strategic business assessment system toallocate management resources as appropriate to the business.
66

6. Initiatives to ensure appropriate business conduct of an enterprise group- Each MHI Group company is also included in initiatives for the abovementioned “2.
Initiatives to ensure legal compliance in the execution of duties by Directors and employees
and the appropriateness of decision-making processes” and “4. Initiatives concerning themanagement of risk of loss.”- Company regulations on the system to define the management responsibilities for MHI Group
companies and other relevant matters have been established and important management
matters within Group companies are reported to MHI.

(End)

67

CONSOLIDATED FINANCIAL STATEMENT [IFRS]CONSOLIDATED STATEMENT OF FINANCIAL POSITION(Millions of Yen)
As of
As of
Mar. 31, 2024 Mar. 31, 2023
(Reference)

ASSETS

Current assets:
Cash and cash equivalents
Trade and other receivables
Other financial assets
Contract assets
Inventories
Other current assets
Total current assets

Non-current assets:
Property, plant and equipment (“PPE”)
Goodwill
Intangible assets
Right-of-use assets
Investments accounted for using the equity method
Other financial assets
Deferred tax assets
Other non-current assets
Total non-current assets
TOTAL ASSETSLIABILITIES AND EQUITYCurrent liabilities:
Bonds, borrowings and other financial liabilities
Trade and other payables
Income taxes payable
Contract liabilities
Provisions
Other current liabilities
Total current liabilities
Non-current liabilities:
Bonds, borrowings and other financial liabilities
Deferred tax liabilities
Retirement benefit liabilities
Provisions
Other non-current liabilities
Total non-current liabilities
TOTAL LIABILITIESEQUITY
Share capital
Capital surplus
Treasury shares
Retained earnings
Other components of equity
Equity attributable to owners of the parent
Non-controlling interests
TOTAL EQUITYTOTAL LIABILITIES AND EQUITY
68

431,287
916,011
39,771
776,399
974,577
281,895
3,419,942

347,663804,61335,382
731,820876,878245,943
3,042,302

908,448
172,493
93,78693,496
268,978
538,126
297,017463,969
2,836,316
6,256,259

839,813131,181
70,161
86,295
227,045
521,135
358,758
198,117
2,432,509
5,474,812

379,210
958,891
55,2281,095,138
216,220
235,8292,940,518

349,075
895,286
19,661
936,765
229,582
193,791
2,624,163

763,754
9,987
73,16579,74728,429955,085
3,895,604

843,359
10,46576,14660,81725,874
1,016,663
3,640,827

265,608
41,187(4,828)1,433,267
509,385
2,244,620
116,034
2,360,654
6,256,259

265,608
41,256(5,385)
1,243,565
195,929
1,740,974
93,0101,833,984
5,474,812

CONSOLIDATED STATEMENT OF PROFIT OR LOSS

(Millions of Yen)FY2023

FY2022(From April 1, 2022
(From April 1, 2023 to March 31, 2023)
to March 31, 2024)(Reference)

Revenue
Cost of sales
Gross profit

4,657,147
3,727,034
930,1124,202,797
3,437,779
765,017

Selling, general and administrative expenses
Share of profit of investments accounted for using the equity
methodOther income
Other expenses
Profit from business activities

695,342623,638

2,149

13,502

63,595
17,973
282,541

103,710
65,267
193,324

Finance income
Finance costs
Profit before income taxes

49,945
17,298315,187

28,984
31,181
191,126

Income taxes
ProfitProfit attributable to:
Owners of the parent
Non-controlling interests

71,622
243,565

44,818146,308

222,023
21,542

130,451
15,857(Yen)

Earnings per share attributable to owners of the parent *Basic earnings per share
66.07
38.84
Diluted earnings per share
66.04
38.83
*Note：On April 1, 2024, the Company executed a ten-for-one stock split of its common shares.
“Basic earnings per share” and “Diluted earnings per share” are calculated assuming thatthe stock split was conducted at the beginning of the fiscal year ended March 31, 2023.

69

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY(From April 1, 2023 to March 31, 2024)(Millions of Yen)
Equity attributable to owners of parent

Balance as of Apr. 1 ,2023

Total

Noncontrollinginterests

Total
equity221,314

1,740,974

93,0101,833,984

25,385(25,385)-

1,243,565

195,929

1,740,974

93,0101,833,984

222,023

21,542

243,565

334,411

334,411

9,939

344,350

222,023

334,411556,434

31,482587,916

20,937(20,937)

-

-

(39)

(39)

(39)

96

118

118

Share
capitalCapitalsurplusTreasurysharesRetainedearnings

Other
componentsof equity

265,608

41,256(5,385)

1,218,180

Cumulative effect of changein accounting policy
Restated balance as of Apr. 1, 2023

265,608

41,256(5,385)

Profit222,023

Other comprehensive income (loss)
Comprehensive income (loss)

-

-

-

Transfer to retained earnings
Purchase of treasury shares
Disposal of treasury shares

22

Dividends(50,398)

Transactions with non-controlling
Interests

(208)

Other

117

499

(2,860)

-

(68)

557

(53,258)

265,608

41,187(4,828)1,433,267

Total transactions with owners
Balance as of Mar. 31, 2024

(50,398)(6,898)(57,296)(226)(1,631)(1,857)(2,243)71(2,171)(18)(52,788)(8,458)(61,246)

509,385

2,244,620

116,034

2,360,654

(18)

70

-

(REFERENCE)CONSOLIDATED STATEMENT OF CASH FLOWSCash flows from operating activities:
Profit before income taxes
Depreciation, amortization and impairment loss
Finance income and costs
Share of profit of investments accounted for using the equity method
Loss (gain) on sale of PPE, and intangible assets
Loss on disposal of PPE, and intangible assets
Decrease (increase) in trade receivables
Decrease (increase) in contract assets
Decrease (increase) in inventories and advanced payments
Increase (decrease) in trade payables
Increase (decrease) in contract liabilities
Increase (decrease) in provisions
Increase (decrease) in retirement benefit liabilities
OthersSubtotalInterest received
Dividends received
Interest paid
Income taxes paid
Net cash provided by operating activities
Cash flows from investing activities:
Payments into fixed-term deposits
Proceeds from withdrawal of fixed-term deposits
Purchases of PPE and intangible assets
Proceeds from sales of PPE and intangible assets
Purchases of investments (including investments accounted for using the equity method)
Proceeds from sales and redemption of investments (including investments accounted
for using the equity method)
Payments for acquisition of businesses(including subsidiaries)
Proceeds from acquisition of businesses(including subsidiaries)
Net decrease (increase) in short-term loans
Disbursement of long-term loans
Collection of long-term loans
Payments for derivative transactions
Proceeds from derivative transactions
OthersNet cash provided by (used in) investing activities
Cash flows from financing activities:
Net increase (decrease) in short-term borrowings
Proceeds from long-term borrowings
Repayment of long-term borrowings
Proceeds from issuance of bonds
Payment for redemption of bonds
Payments for acquisition of interests in subsidiaries from non-controlling interests
Dividends paid to owners of the parent
Dividends paid to non-controlling interests
Proceeds from factoring agreements
Repayment of liabilities under factoring agreements
Repayment of lease liabilities
OthersNet cash provided by (used in) financing activities
Effect of exchange rate changes on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of the year
Cash and cash equivalents at end of the year

71

(Millions of Yen)FY2023

FY2022(From Apr. 1, 2023

(From Apr. 1, 2022

to Mar. 31, 2024)

to Mar. 31, 2023)

315,187
155,899(32,582)(2,149)(29,028)7,594(60,305)(29,697)(70,402)
20,734
118,637(3,445)
14,938(38,908)
366,472
9,630
15,467(11,181)(49,201)
331,186

191,126
148,549(2,147)(13,502)(29,018)
7,154(32,978)(64,500)(65,690)(55,676)
32,43627,285(3,102)(4,691)
135,244
7,755
26,898(13,114)(75,894)
80,888(25,556)
18,728(160,486)
37,263(11,892)(26,067)
28,809(131,905)
38,062(7,788)63,174

59,111(73,589)
1,420
(417)
102
(52,232)
76,619(4,181)(131,048)(4,420)1,863(1,932)(48)
711(38,918)
42,268(5,320)(45,575)

9,284
23,000(64,649)
25,000(15,000)(1,024)(50,289)(8,511)
171,544(215,845)(30,380)(2,030)(158,903)
42,38883,623
347,663431,287(4,532)50,966(97,656)
20,000(10,000)(24,473)(38,531)(6,769)200,235(80,738)(26,850)(551)(18,902)
16,99533,406314,257
347,663

Notes to the Consolidated Financial Statements
Basis of Preparation of Consolidated Financial Statements
1. Accounting standard applied to consolidated financial statements
The accompanying consolidated financial statements of the Mitsubishi Heavy Industries
Group (the “Group”), which consists of Mitsubishi Heavy Industries, Ltd. (“MHI”) and its
consolidated subsidiaries (“Subsidiaries”), have been prepared in accordance with Rulesof Corporate Accounting Article 120 (1), based on International Financial ReportingStandards (“IFRS”). Some disclosures articles required under IFRS have been omitted as
stipulated in the latter part of Article 120 (1).
2. Scope of consolidation
Number of consolidated subsidiaries: 257
Principal consolidated subsidiaries are described in “OVERVIEW OF MHI GROUPOUTLINES OF MAIN SUBSIDIARIES” of the business report.
3. Application of the equity method
Number of affiliated companies accounted for using the equity method: 35 *1,2
Principal affiliated companies accounted for using the equity method:
FRAMATOME S.A.S.
*1. The Group classified MITSUBISHI MAHINDRA AGRICULTURAL MACHINERYCO., LTD as an affiliated company accounted for using the equity method eventhough MHI owns the majority of voting rights, when considering the percentage ofholdings (including preferred stocks) and the contents of shareholders’ agreement.
*2. The Group classified FRAMATOME S.A.S as an affiliated company accounted forusing the equity method even though MHI owns less than 20% of the voting rights
as significant influence over the company is held when considering the member ofofficers of FRAMATOME S.A.S.
4. Accounting Policies(1) Financial instruments
Financial instruments are recognized on the date when the Group becomes a contracting
party to the financial instruments. Financial assets purchased in the common ways arerecognized on the transaction date.
a) Non-derivative financial assets
Non-derivative financial assets which are classified as debt instruments are measured
at amortized cost since all these instruments satisfy both of the following conditions:• The financial assets are held within a business model whose objective is to holdfinancial assets in order to collect contractual cash flows.
• The contractual terms of the financial assets give rise on specified dates to cash
flows that are solely payments of principal and interest on the principal amountoutstanding.
After initial recognition, financial assets measured at amortized cost are measured atamortized cost using the effective interest method.
Equity instruments are measured at fair value.
Non-derivative financial assets are measured at fair value plus transaction costs at
initial recognition, unless the assets are measured at fair value through profit or loss.
However, trade receivables that do not contain a significant financing component are
initially measured at the transaction price.

72

For financial assets measured at fair value, except for equity instruments held for
trading that must be measured at fair value through profit or loss (FVTPL), the Group
determines, for each equity instrument, whether the instrument is measured at FVTPL
or if it irrevocably designates the instrument as measured at fair value through othercomprehensive income (FVTOCI).
For assets designated as financial assets at FVTOCI at initial recognition, anychanges in fair value after the initial recognition are recognized as othercomprehensive income. If a financial asset at FVTOCI is derecognized, or the fairvalue decreases significantly, the amount accumulated in other components of equity
is transferred to retained earnings. Dividends from financial assets at FVTOCI arerecognized as profit or loss in principle.
When the contractual right to cash flows from a financial asset expires or the Grouptransfers a financial asset and substantially all the risks and rewards of ownership ofthe financial asset, the financial asset is derecognized.
b) Non-derivative financial liabilities
Non-derivative financial liabilities are classified as financial liabilities measured atamortized cost. Financial liabilities measured at amortized cost are measured at fairvalue less transaction costs at initial recognition.
After initial recognition, such liabilities are measured at amortized cost using theeffective interest method.
When the obligation specified in the contract for a non-derivative financial liability isdischarged, canceled or expires, the non-derivative financial liability is derecognized.
c) Derivative transactions and hedge accounting
The Group uses derivative instruments including forward exchange contracts,
currency swap contracts, interest rate swap contracts and forward contracts to hedge
foreign currency risks, interest rate risks and commodity price risks.
Derivative transactions are initially recognized at fair value on the date when the Group
becomes a party to the contract, and related transaction costs are expensed as
incurred. After the initial recognition, they are measured at fair value with changes in
the fair value recognized in profit or loss, unless they are designated as the hedging
instrument in a cash flow hedge.
When applying hedge accounting, the Group formally designates and documents thehedging relationship and the risk management objective and strategy at the inceptionof a hedge. The documentation includes identification of the hedging instrument, thehedged item, the nature of the risk being hedged, and the methods of assessing hedge
effectiveness. The Group assesses whether the hedging relationship is effective
prospectively on an ongoing basis.
The Group applies the following accounting treatment for derivative transactions thatmeet the requirements for hedge accounting.
(i) Fair value hedge
Changes in the fair value of derivative transactions that are designated as fairvalue hedges are recognized in profit or loss together with changes in the fairvalue of the hedged assets or liabilities that correspond to the hedged risk.
When derivative transactions are designated as the hedging instrument for equity
instruments that are designated as financial assets measured at FVTOCI,
changes in the fair value of the hedging instrument and hedged assets arerecognized in other comprehensive income.
(ii) Cash flow hedge
When a derivative transaction is designated as the hedging instrument in a cash

73

flow hedge, the effective portion of changes in the fair value of the derivative isrecognized as other comprehensive income and the ineffectiveness is recognized
immediately as profit or loss.
When applying a cash flow hedge to a currency swap contract, the Group
designates the portion other than the currency basis spread as the hedging
instrument and treats the currency basis spread as costs of hedging, andrecognizes changes in its fair value in other components of equity through othercomprehensive income.
The cash flow hedge accumulated in other components of equity is transferred to
profit or loss in the same period during which cash flows of the hedged item affectprofit or loss. However, when the hedged item is associated with acquisition of anon-financial asset, such amount is accounted for as an adjustment to the initialacquisition cost of the non-financial asset.
When the Group recognizes the costs of hedging for a derivative transaction
entered into in order to hedge a time-period related hedged item, it transfers the
cumulative costs of hedging accumulated in other components of equity to profit orloss on a systematic and rational basis over the period during which the hedge
adjustment from the hedging instrument could affect profit or loss.
When a forecast transaction is no longer highly probable to occur, hedge
accounting is discontinued. When the forecast transaction is no longer expected tooccur, the amount accumulated in other components of equity is transferred to
profit or loss.
d) Impairment of financial assets
For financial assets measured at amortized cost, the Group determines, at the end ofeach reporting period, whether credit risk on the asset has increased significantly sinceinitial recognition. If the credit risk has increased significantly, a loss allowance at an
amount equal to lifetime expected credit losses is recognized. If no significant increasein the credit risk is identified, a loss allowance at an amount equal to 12-month
expected credit losses is recognized.
However, for trade receivables and contract assets, loss allowance for doubtful
accounts is recognized at an amount equal to the lifetime expected credit losses,
regardless of whether or not the credit risk has increased significantly since the initialrecognition.
Evidence indicating a significant increase in credit risk includes default or delinquency
by a debtor, extension of the due date provided by the Group for a debtor on terms
that the Group would not implement under other circumstances, and indications thata debtor or issuer will enter bankruptcy. Provision of loss allowance is recognized in
profit or loss.
e) Offsetting of financial assets and financial liabilities
Financial assets and financial liabilities are offset and the net amount is presented in
the consolidated statement of financial position only if the Group currently has a legally
enforceable right to set off the recognized amounts and intend either to settle on a net
basis, or to realize the assets and settle the liabilities simultaneously.
(2) Inventories
Inventories are measured at the lower of cost and net realizable value. Cost is theamount including costs of purchase, costs of conversion and all costs incurred in bringing
the inventories to their present location and condition. Net realizable value is theestimated selling price in the ordinary course of business less the estimated costs ofcompletion and estimated costs necessary to sell.

74

The inventory valuation method is as follows:
Merchandise and finished goods: principally weighted average method
Work in process: principally specific identification method
Raw materials and supplies: principally weighted average method(3) PPE
PPE are presented at cost less accumulated depreciation and impairment losses, using
the cost model. Cost includes any costs directly attributable to the acquisition of assets,
dismantling costs, removal costs, and restoration costs for the site where the PPE havebeen located.
Except for assets that are not depreciated, such as land, PPE are depreciated using thestraight-line method over the estimated useful lives.
The estimated useful lives of major PPE are as follows:
Buildings and structures:
2 to 70 years
Machinery and vehicles:
2 to 20 years
Tools, furniture and fixtures: 2 to 20 years
The depreciation method, estimated useful lives and residual value are reviewed at theend of the fiscal year and revised where necessary.
(4) Intangible assets
Intangible assets are presented at cost less accumulated amortization and impairment
losses, using the cost model. Intangible assets are amortized over the estimated useful
lives using the straight-line method. The estimated useful lives of major intangible assets
are as follows:
Software: 3 to 10 years
Technologies recognized through business combination: 7 to 25 years
Customer relationship recognized through business combination: 2 to 25 years
Other: 3 to 15 years
Intangible assets with indefinite useful lives are presented at cost less accumulated
impairment losses.
Expenses incurred with respect to development activities of the Group are capitalized
only when it can be proved that the expenses satisfy all the following conditions:• The technical feasibility of completing the intangible asset so that it will be available
for use or sale.
• Its intention to complete the intangible asset and use or sell it.
• Its ability to use or sell the intangible asset.
• How the intangible asset will generate probable future economic benefits.
• The availability of adequate technical, financial and other resources to complete thedevelopment and to use or sell the intangible asset.
• Its ability to measure reliably the expenditure attributable to the intangible asset during
its development.
Development expenses that do not satisfy the above requirements for capitalization and
expenditures on research activities are expensed as incurred. The amortization method,
estimated useful lives and residual value are reviewed at the end of the fiscal year andrevised where necessary.
(5) Leasesa) Leases as lessor
Leases in which substantially all the risks and rewards of ownership of the asset aretransferred to the lessee under the contract are classified as finance leases. Leases
other than finance leases are classified as operating leases.
With regard to the amount received from lessees under finance leases, the net
investment in leases is recorded as “Trade and other receivables,” and unearned
finance income is allocated to the net investment at a constant rate over the lease term75and recognized in the fiscal year to which the profit is attributed. Lease revenues underoperating leases are recognized on a straight-line basis over the lease term.
b) Leases as lessee
For leases as lessee, the Group recognizes assets and liabilities under an on-balance
sheet accounting model. Under this model, leases are recognized as a right-of-use
asset representing the Group’s right to use the underlying leased asset and as a leaseliability representing the Group’s obligation to make lease payments for all leases atthe lease commencement date. The Group measures right-of-use assets and leaseliabilities as follows:
For short-term leases with a lease term of 12 months or less and leases of low value,
however, the Group has elected to apply to the recognition exemption.
• Right-of-use assets
Right-of-use assets are measured at cost, which mainly comprises the amount of
the initial measurement of the lease liability adjusted for any initial direct costs
incurred and any prepaid lease payments made at or before the commencement
date. After initial recognition, right-of-use assets are measured, at cost less any
accumulated depreciation and any accumulated impairment losses, using the costmodel.
Right-of-use assets are depreciated on a straight-line basis over the period until theearlier of the end of the useful life or the end of the lease term.
• Lease liabilities
Lease liabilities are initially recognized at the lease commencement date and aremeasured at the present value of the lease payments that are not paid at that date.
To calculate the present value, the interest rate implicit in the lease is used as thediscount rate. If that rate cannot be readily determined, the Group’s incremental
borrowing rate is used. Lease liabilities are remeasured, if each lease contractcontains an option to purchase the underlying asset or an option to extend or
terminate the lease and there is a change in possibilities to exercise such options.
The Group presents “Right-of-use assets” separately from other assets and leaseliabilities in “Bonds, borrowings and other financial liabilities” in the consolidated
statement of financial position.
(6) Impairment of non-financial assets
With regard to PPE and intangible assets, the Group determines, at the end of thereporting period, whether or not there is any indication of impairment. If any such
indication exists, the Group performs an impairment test by estimating the recoverable
amount of the asset. With regard to goodwill and intangible assets with indefinite useful
lives, the Group periodically conducts an impairment test once a year or whenever there
is any indication of impairment.
The recoverable amount is the higher of the fair value less costs of disposal of the asset
or cash-generating unit, or its value in use. Value in use is determined as the present
value of future cash flows that are expected to arise from the asset or cash-generating
unit. A cash-generating unit is the smallest identifiable group of assets that generates
cash inflows that are largely independent of cash inflows from other assets or groups ofassets. When the recoverable amount of an individual asset cannot be estimated, therecoverable amount of the cash-generating unit to which the asset belongs is determined.
If the recoverable amount of an asset or cash-generating unit is lower than its carrying
amount, the carrying amount of the asset or cash-generating unit is reduced to therecoverable amount.
For non-financial assets for which an impairment loss was recognized, except for76

goodwill, the Group reassesses the possibility that the impairment loss will be reversed
at the end of the reporting period.
(7) Provisions
The Group recognizes a provision when there is a present legal or constructive obligation
arising from past events, it is probable that an outflow of resources embodying economic
benefits will be required to settle the obligation, and the amount of the obligation can bemeasured reliably. In doing so, if the period up to the settlement of the obligation is
expected to be a long term and the time value of money is material, a provision ismeasured based on the present value of expenditure expected at the time of settlement.
If some or all of the expenditure required for the Group to settle the provisions is expected
to be reimbursed, the reimbursement is recognized as a separate asset only when it isvirtually certain that the Group will receive the reimbursement.
If provisions and external reimbursements are recognized in the same reporting period,
these amounts are presented on a net basis in the consolidated statement of profit or
loss.
(8) Post-employment benefits
The Group has adopted lump-sum payment on retirement and pension plans as postemployment benefit plans for employees. These plans are roughly classified as defined
benefit plans or defined contribution plans. Accounting policies for respective plans are
as follows.
a) Defined benefit plans
In defined benefit plans, the present value of defined benefit obligations is calculated
separately for each plan by estimating the amount of future benefits that employees
have earned in exchange for their service rendered in the prior fiscal years and thecurrent fiscal year. The amount used to settle the obligations less fair value of plan
assets is recognized as defined benefit liability (asset). The asset ceiling in thiscalculation is the present value of future economic benefits available in the form ofrefunds from the plan or reductions in future contributions to the plan. The present
value of defined benefit obligations is calculated using the projected unit credit method,
and the discount rate is determined by reference to the market yield on high quality
corporate bonds at the end of the fiscal year corresponding to the estimated timing for
future benefit payments.
Service cost and net interest cost on net defined benefit liability (asset) are recognizedin profit or loss, and remeasurement of defined benefit liability (asset) is recognized inother comprehensive income.
b) Defined contribution plans
Contributions for retirement benefits under defined contribution plans are recognized
as expenses in profit or loss as the related service is provided.
(9) Business combinations
Business combinations are accounted for by applying the acquisition method. The
consideration of acquisition is measured as the aggregate of the acquisition-date fairvalue of the assets transferred, liabilities assumed and equity securities issued by theGroup in exchange for control of the acquiree. Transaction costs directly attributable toacquisition are accounted for as expenses when they are incurred. Identifiable assets
and liabilities of the acquired entity are recognized at their fair value on the acquisition
date.
Goodwill is measured at the fair value of consideration for the acquisition of the acquired
entity measured on the acquisition date less the net recognized amount of identifiable
assets acquired and liabilities assumed on the acquisition date (usually, fair value). If the77

fair value of consideration for the acquisition is lower than the net recognized amount ofassets acquired and liabilities assumed, the difference is recognized as profit. In thebusiness combination, when consideration for the business combination transferred fromthe Group includes assets or liabilities arising from a contingent consideration
arrangement, the contingent consideration is measured at fair value on the acquisition
date and included as part of the above consideration for acquisition.
For the measurement of non-controlling interests, the method based on the proportionate
share of non-controlling interests in the acquired entity’s identifiable net assets is
employed principally.
(10) Foreign currency translation
Foreign currency transactions are translated into the functional currencies of MHI Group
companies at the exchange rates at the dates of the transactions or an approximation of
the rate.
Monetary assets and liabilities denominated in foreign currencies at the end of thereporting period are translated at the exchange rates at the end of the reporting period.
Exchange differences arising from translation or settlement are recognized as profit orloss. On the other hand, exchange differences arising from financial assets at FVTOCI
are recognized as other comprehensive income.
Assets and liabilities of foreign operations are translated into Japanese yen using theexchange rates at the end of the reporting period, whereas revenue and expenses aretranslated using the average exchange rate during the period unless there is significant
fluctuation in the exchange rates.
Exchange differences arising from the translation of financial statements of foreign
operations are recognized in other comprehensive income. At the time of disposal of aforeign operation, cumulative exchange differences recognized in other comprehensive
income are transferred to profit or loss.
(11) Revenue
The Group recognizes revenue at an amount that reflects consideration to which theGroup expects to be entitled in exchange for the transfer of goods or services tocustomers based on the following five-step approach, except for interest and dividend
income, etc. which are accounted for under IFRS 9.
Step 1: Identify the contract with the customer
Step 2: Identify the performance obligations in the contract
Step 3: Determine the transaction price
Step 4: Allocate the transaction price to the separate performance obligations in thecontract
Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation
Revenue is recognized to the extent that an inflow of economic benefits to the Group isprobable and its amount can be measured reliably, regardless of the timing of receiving
the payment, and measured at a fair value of the consideration received or receivable
after taxes in light of contractual payment terms.
Of incremental costs of obtaining contracts with customers and fulfillment costs directly
related to contracts, the portion that is expected to be recoverable is recognized asassets and is regularly amortized over the transfer of related goods or services tocustomers. Incremental costs of obtaining contracts with customers are costs that would
not be incurred if the contract is not obtained.
Requirements for revenue recognition of the Group are as follows.
a) Sale of products
For this transaction, the Group typically recognizes revenue at the time of the delivery78

of the goods, as the performance obligations in the contracts with customers are
principally considered to be satisfied at the time that the products are delivered andcontrol of the relevant goods is transferred to the customer.
Revenue from the sale of goods is measured at an amount of consideration promisedin the contract with the customer less sales returns, discounts, rebates, and taxes
collected on behalf of third parties and others.
b) Rendering of services and construction contracts
For these transactions, the control of the goods and services included in the contracts
is deemed to be transferred to customers over a certain period specified in the contract.
Therefore, the Group recognizes revenue by estimating total revenue for eachconstruction contract, measuring progress towards completion of the performanceobligation included in the contract with the customer, and calculating the portion of
total revenue corresponding to the progress. The progress is measured by a methodthat depicts the satisfaction of the performance obligation, and principally estimatedbased on the proportion of costs already incurred to satisfy the performance obligation
against the expected total costs to the complete satisfaction of the performanceobligation.
(12) Profit from business activities“Profit from business activities” on the consolidated statement of profit or loss ispresented as a measure that enables continuous comparison and assessment of theGroup’s business performance. “Profit from business activities” is calculated bysubtracting “Cost of sales”, “Selling, general and administrative expenses” and “Other
expenses” from “Revenue” and adding “Share of profit of investments accounted forusing the equity method” and “Other income” to the resulting amount.
“Other income” and “Other expenses” consist of dividend income, gains or losses on thesales of Non-current assets, impairment losses on Non-current assets, and others.
Dividend income from shares and investments in capital held by the Group, where theinvestment is held by the Group over the long term due to business operation
requirements, such as collaborating with other companies, is included in profit frombusiness activities as the results of the business. Dividend income is recognized when
the Group’s right to receive the dividend income is established.
(13) Finance income and costs“Finance income” and “Finance costs” consist of interest income, interest expenses,
foreign exchange gains or losses, gains or losses on derivatives (except for gains orlosses recognized in other comprehensive income) and others. Interest income andexpenses are recognized using the effective interest method when they arise.
(14) Income taxes
Income taxes consist of current taxes and deferred taxes. Except for income taxes
related to the initial recognition of business combinations and those which are recognizeddirectly in equity or other comprehensive income, income taxes are recognized as profit
or loss.
Current taxes are measured as the amount that is expected to be paid to or refundedfrom tax authorities. The amount of these taxes is calculated based on tax rates and tax
laws that are enacted or substantively enacted at the end of the reporting period.
Deferred taxes are recognized in relation to temporary differences arising fromdifferences between the carrying amounts of assets and liabilities for accounting
purposes and the related carrying amounts for tax purposes, unused tax losses andunused tax credits. Based on management plans taking into account tax implications
and others, deferred tax assets are recognized to the extent that it is probable that futuretaxable profits will be available against which the deductible temporary differences can79be utilized.
Deferred tax liabilities are recognized for all taxable temporary differences in principle.
However, taxable temporary differences relating to investments in subsidiaries, affiliates
and interests in joint ventures are not recognized if the timing of the reversal of thetemporary differences can be controlled by the Group and it is probable that thetemporary differences will not be reversed in the foreseeable future. With regard totaxable temporary differences arising from the initial recognition of goodwill, deferred tax
liabilities are also not recognized.
Deferred tax assets are reviewed at the end of each reporting period, and a reduction ismade for the portion for which it is probable that taxable profits sufficient to utilize all orpart of the deferred tax assets will not be available. On the other hand, unrecognizeddeferred tax assets are also reassessed at the end of each reporting period, and suchdeferred tax assets are recognized to the extent that the assets are recoverable if it
becomes probable that the assets will be recovered due to future taxable profits.
Deferred tax assets and liabilities are measured based on tax rates and tax laws that areenacted or substantively enacted by the end of the reporting period and are anticipatedto be applied in the period when the temporary difference is expected to be reversed.
Deferred tax assets and liabilities are offset when the Group has a legally enforceable
right to set off current tax assets against current tax liabilities and related taxes are leviedby the same tax authority on the same taxable entity.
With regard to uncertain tax position of income taxes, a reasonably estimated amount isrecognized as asset or liability when it is probable to pay or refund income taxes basedon interpretations for the purpose of tax law.

(Income Tax Treatment under the Global Minimum Tax)The Group applies the temporary exception established by amended IAS 12 “Income
Taxes” dated May 23, 2023 regarding introduction of the Pillar Two model rules. The
temporary exception stipulates that an entity shall neither recognize nor disclose
information about deferred tax assets and liabilities arising from tax laws enacted or
substantively enacted by national governments to introduce Pillar Two model rules. The
introduction of the Pillar Two model rules will have no material impact on the financial
position and operating results of the Group.

80Notes on change in accounting policy(Change in the treatment of intra-capital transfers related to the remeasurement of defined
benefit liability (asset))
As stated in Basis of Preparation of Consolidated Financial Statements, 4. Accounting
Policies, (8) Post-employment benefits, the Group has lump-sum payment on retirement
and pension plans as post-employment benefit plans for employees. In the accounting
treatment for defined benefit plans, the Group previously recognized the change inremeasurement of defined benefit liability (asset) as “Other comprehensive income” andimmediately transferred the amount to “Retained earnings”. However, beginning the
fiscal year ended March 31, 2024, the Group has decided to discontinue the transfer toretained earnings after remeasurement and to include the amount in “Other componentsof equity”.
It is because changing the presentation policy regarding the items within equity andpresenting the cumulative amounts from remeasurement of defined benefit liabilities(assets) separately from “Retained earnings” allows the financial impacts of the defined
benefit plans to be clearly indicated.
This change has been retroactively reflected in the consolidated financial statements forprior periods. Due to this change, “Retained earnings” in the consolidated statement offinancial position increased by 25,385 million yen as of March 31, 2023 and decreasedby 147,957 million yen as of March 31, 2024 and “Other components of equity”
decreased accordingly as of March 31, 2023 and increased as of March 31, 2024
compared with the amounts calculated using the previous method.
(There is no change in the total amount of “Equity attributable to owners of parent”.)“Transfer to retained earnings” in the consolidated statement of changes in equity also
decreased by 173,342 million yen for the fiscal year ended March 31, 2024.
Notes on Accounting Estimates
Items whose amounts were recorded in the consolidated financial statements for the fiscal
year ended March 31, 2024, based on accounting estimates, and that could have a material
impact on the consolidated financial statements for the fiscal year ending March 31, 2025,
are as follows.
1. Recoverable amount of non-financial assets• Amount recorded in the consolidated financial statements for the fiscal year ended
March 31, 2024:
Non-financial assets:¥ 1,278,431 million• Other information that contributes to users of the consolidated financial statements tounderstand the content of accounting estimates：
For details, refer to Basis of Preparation of Consolidated Financial Statements, 4.
Accounting Policies, (6) Impairment of non-financial assets.
2. Provisions• Amount recorded in the consolidated financial statements for the fiscal year ended
March 31, 2024:
Provisions:¥ 295,968 million• Other information that contributes to users of the consolidated financial statements tounderstand the content of accounting estimates：
For details, refer to Basis of Preparation of Consolidated Financial Statements, 4.
Accounting Policies, (7) Provisions.
The provision recognized in the fiscal year ended March 31, 2024, includes aprovision for losses on construction contracts on long-term service agreements
associated with the plant facilities that were delivered in the past fiscal year. The
Group recognizes the provision based on the reasonable estimates of81

compensation for loss during the non-operational period and its associated costs
necessary to fulfill the long-term service agreements.
3. Measurement of defined benefit obligations• Amount recorded in the consolidated financial statements for the fiscal year ended
March 31, 2024:
Retirement benefit assets:¥ 368,493 million
Retirement benefit liabilities:¥
73,165 million• Other information that contributes to users of the consolidated financial statements tounderstand the content of accounting estimates：
For details, refer to Basis of Preparation of Consolidated Financial Statements, 4.
Accounting Policies, (8) Post-employment benefits.
4. Recognition and measurement of revenue• Amount recorded in the consolidated financial statements for the fiscal year ended
March 31, 2024:
For details, refer to Notes on Revenue Recognition.
• Other information that contributes to users of the consolidated financial statements tounderstand the content of accounting estimates：
For details, refer to Basis of Preparation of Consolidated Financial Statements, 4.
Accounting Policies, (11) Revenue.
5. Recoverability of deferred tax assets• Amount recorded in the consolidated financial statements for the fiscal year ended
March 31, 2024:
Deferred tax assets:¥ 297,017 million• Other information that contributes to users of the consolidated financial statements tounderstand the content of accounting estimates：
For details, refer to Basis of Preparation of Consolidated Financial Statements, 4.
Accounting Policies, (14) Income taxes.

82Notes to the Consolidated Statement of Financial Position
1. Pledged assets and related liabilities
None of borrowings for which collateral was pledged when the loan agreements wereentered into as of March 31, 2024.
The Group converts trade receivables and other receivables into cash pursuant to asset
transfer contracts as a measure of financing. The amounts of trade receivables, contract
assets and PPE transferred without qualifying for derecognition as of March 31, 2024,
were 22,985 million yen, 109,448 million yen and 63,065 million yen, respectively.
Liabilities under factoring agreements (Bonds, borrowings and other financial liabilities)
recognized for current and non-current liabilities were 116,342 million yen and 84,209
million yen, respectively.
2. Provision for losses which were directly deducted from the assets.
Trade and other receivables¥
16,453 million
Other financial assets（current）¥
1,536 million
Contract assets¥
737 million
Other financial assets（non-current）¥
7,777 million
3. Accumulated depreciation of PPE¥ 2,194,178 million

The above accumulated depreciation of PPE amounts includes accumulated
impairment loss.
4. Guarantee obligations
The Group mainly guarantees employees’ loans from financial institutions. The total ofguarantees was 20,232 million yen at the end of the fiscal year ended March 31, 2024.

Notes to the Consolidated Statement of Profit or Loss
(Major items included in profit from business activities in the fiscal year ended March 31, 2024)
Other income•Dividend income
Other income includes dividend income. The amount of dividend income included in
the fiscal year ended March 31, 2024 was 11,180 million yen.
•Gain on sale of Non-current assets
With respect to owned property, such as land, the difference between the carrying
amount and the consideration is recorded as income in connection with sales to third
parties.

Notes to the Consolidated Statement of Changes in Equity
1. Type and number of the shares issued
Common stock

337,364,781 shares*

2. Type and number of shares subject to the share subscription rights
Common stock

96,700 shares*83

* On April 1, 2024, MHI executed a ten-for-one stock split of its common shares. The
number of shares before the stock split is disclosed as of the end of the fiscal year
ended March 31, 2024.
3. Cash dividends(1) Cash dividends paid
Resolution

Typeof shares

Total cash
dividends
paid*1,2

Cashdividends
per share

Record Effective Resource
of
date
date
dividends

Jun 29, 2023
Mar
Annual General Common ¥ 23,583 million
Jun 30, Retained¥
70
31,
Meeting of
Stock
2023
earnings
2023
Shareholders
Nov 6, 2023
Sep
Board ofCommon ¥ 26,952 million
Dec 5, Retained¥80
30,
Directors
Stock
2023
earnings
2023
Meeting*1 Total cash dividends paid in accordance with the resolution by Ordinary General Meeting of

Shareholders held on Jun 29, 2023, include 70 million yen of cash dividends for the stocks
held by the Stock Grant ESOP Trust and the Officer Remuneration BIP Trust I&II.
*2 Total cash dividends paid in accordance with the resolution by the Board of Directors meeting
held on Nov 6, 2023, include 67 million yen of cash dividends for the stocks held by the Stock
Grant ESOP Trust and the Officer Remuneration BIP Trust I&II.

(2) Dividends of which the record date is within this fiscal year which take effect in the next
fiscal year
Cash
Total cashTypedividends
Record Effective Resource
Resolution
dividends
tobeofof shares
per
date
date
paid*1
dividends
share*2
Jun 27, 2024
AnnualCommon ¥ 40,432 million
Mar 31, Jun 28, Retained
General
¥ 120
stock
2024
2024
earnings
Meeting of
Shareholders*1 Total cash dividends to be paid in accordance with the resolution by the ordinary general
meeting of shareholders to be held on June 27, 2024, include 100 million yen of cash dividends
for the stocks held by the Stock Grant ESOP Trust and the Officer Remuneration BIP Trust
I&II.

*2 On April 1, 2024, MHI executed a ten-for-one stock split of its common shares. As the record

date for dividends was March 31, 2024, the amount of cash dividends per share shows theamount before the stock split.

84

Notes on Financial Instruments
1. Condition of financial instruments
The Group is exposed to credit risk, liquidity risk, and market risk (foreign currency risk,interest rate risk and Share price risk) in the course of operating activities and conducts
risk management in accordance with certain policies to avoid or reduce these risks.
(1) Credit risk management
The Group’s “Trade and other receivables,” “Other financial assets,” and financial
assets measured at amortized cost under “Contract assets” and financial guarantee
contracts are exposed to the credit risk of the customers.
The Group regularly manages due dates and balances of receivables from eachcustomer, and assesses their credit status. The Group has accepted collateral withrespect to specific transactions with customers to deal with them for the credit
enhancement purpose. The Group also tries to reduce the credit risk by utilizing letterof credit, trade insurance, etc. The Group has no excessive credit risk concentrated ona single customer.
The credit risks related to deposits and derivative transactions that the Group hasentered into are limited because all transactions entered into are with highly creditworthy
financial institutions.
Loss allowances for “Trade and other receivables” and “Contract assets” presented in
the Consolidated statement of financial position are always measured at an amountequal to lifetime expected credit losses.
(2) Liquidity risk management
The Group’s “bonds, borrowings, and other financial liabilities” and “trade payables andother payables” are exposed to liquidity risk. However, each company of the Groupmanages the risk by, for example, preparing its cash budget every month.
The Group finances working capital and capital expenditures primarily by using net cash
provided by operating activities, and any shortage of funds is covered mainly byborrowings from banks and issuing bonds.
As one of the financing methods, the Group liquidates trade receivables underreceivable transfer contracts.
The Group has some unused commitment line agreements with highly creditworthybanks. Some bank loan agreements require the Group to maintain a certain level of
specific financial ratios and net assets.
(3) Market risk managementa) Foreign currency risk management
The Group develops its business on a global scale, and is exposed to the risk
caused by fluctuations in exchange rates. Foreign currency risk arises fromreceivables and payables denominated in foreign currencies that are alreadyrecognized and forecast transactions such as future purchases and sales.
Based on the natural hedge concept, the Group keeps a balance between
receivables and payables in the same currency to hedge the risk in accordance withits basic policy, but enters into forward exchange contracts as necessary for someof the receivables and payables and forecast transactions denominated in foreign
currencies.
Forward exchange contracts are mainly used to hedge the foreign currency risk on
trade receivables and trade payables denominated in foreign currencies. The Group
enters into derivative transactions to the extent corresponding to actual business inaccordance with its internal control policy, and does not carry out any speculative85

transactions. The Group also applies cash flow hedges to some forward exchange
contracts.
b) Interest rate risk management
The Group has borrowings with variable interest rates, and is exposed to the interest
rate risk. The Group enters into derivative transactions (interest rate swaps) for someof long-term borrowings in order to avoid the risk of variability in interest payments
and attempt to fix interest expenses. The Group applies hedge accounting to theinterest rate swaps, and adopts cash flow hedges.
c) Share price risk management
The Group holds shares in other companies such as its suppliers and other business
partners, and is exposed to the risk of changes in share prices. The primary purposeof such investments is to strengthen and maintain relationships with suchcompanies. The Group regularly reviews the status of shareholdings according to
the business relationships with its suppliers and other business partners sinceshares in such companies are held mainly out of the necessity that arises frombusiness operations such as collaboration with other companies.
2. The breakdown of financial instruments by each fair value level
The inputs to valuation techniques used to measure fair value are categorized into eitherof the following three based on the observability in the market.
Level 1 inputs: Quoted prices in active markets for identical assets or liabilities.
Level 2 inputs: Inputs other than quoted prices included within Level 1 that are
observable for the asset or liability, either directly or indirectly.
Level 3 inputs: Inputs that are not based on observable market data.
The following is the breakdown of measurements of assets and liabilities measured atfair value.
(Millions of yen)
Level1

Level2

Level3

Total

Assets：Securities and investments incapital279,559－

164,187443,746

－

4,582

679

5,261

279,559

4,582

164,867

449,008

－

9,737

－

9,737

－

9,737

－

9,737

Derivatives
Total
Liabilities：
Derivatives
Total

86

The fair value of marketable shares and investments in capital is measured at market
price. The fair value of non-marketable shares and investments in capital is measured
based on market multiples derived from the PBR (price-to-book ratio) of comparable
companies. For derivative assets and liabilities, the fair value of forward foreignexchange contracts is determined based on the forward exchange rate at the market
as of the end of each reporting period. The fair value of interest rate swaps is determinedby discounting the estimated future cash flows to the present value at the interest rate
as of the end of each reporting period.
Financial assets measured at fair value are separately presented as “Other financial
assets” in both the Current assets and Non-current assets sections of the consolidated
statement of financial position. Similarly, financial liabilities measured at fair value are
separately presented as “Bonds, borrowings and Other financial liabilities” in both theCurrent liabilities and Non-current liabilities sections.
MHI determines at the end of each reporting period whether there are transfers between
levels of the fair value. There were no such transfers between levels as of the transitiondate, March 31, 2023, and March 31, 2024.
3. Other financial instruments
The carrying amount and fair value of financial instruments at the end of the current fiscal
year are as follows.
Carrying amount(Millions of yen)

Fair value(Millions of yen)

Financial assets:
Service concession receivables *73,962

72,285

Bonds

225,000

221,297

Long-term borrowings

371,153

361,235

Non-recourse borrowings

60,75560,755

Financial liabilities:* A service concession arrangement is an arrangement between the “grantor” (national
and local governments) and the “operator” (a private sector entity) to provide services
that give the access to public services to the operator. For the group, service
concession receivables are recognized as the financial assets measured at amortizedcost and presented as "Other financial assets".
Financial liabilities measured at amortized cost, which are included in the table above,
are classified as either current or non-current under “Bonds, borrowings and otherfinancial liabilities.” Non-recourse borrowings, which are classified as non-current,
include borrowings for which the Company has obtained consent from the counterparty
financial institutions to waive the right to demand lump-sum repayment in relation tofinancial covenants.
For financial assets and liabilities measured at amortized cost that are not included in
the above table, liabilities under factoring agreements, and lease receivables, thecarrying amount approximates the fair value. Fair values of marketable bonds are basedon the market price. Fair values of non-marketable bonds and long-term borrowings
include non-recourse borrowings are calculated by discounting the expected future
cash flows to the present value, based on the interest rate that would be used forborrowings with the same remaining maturity and on the same terms and conditions.
The fair value of service concession receivables is calculated by discounting expected87

future cash flows to the present value, based on the latest market interest rates.
In terms of fair value measurement, bonds are categorized within Level 2, and all others
are categorized within Level 3.
Notes on Revenue Recognition
1. Disaggregation of revenue
The Group is composed of four business domains and segments: Energy; Plants &Infrastructure; Logistics, Thermal & Drive and Aircraft, Defense & Space. The operating
results of these business domains and segments are regularly reviewed by the Board of
Directors of the Company for making decisions about resource allocation and assessing
their performance. Therefore, turnover recognized from these businesses is presented
as revenue.
The Group further disaggregates revenue from contracts with customers for the Aircraft,
Defense & Space business domains into “commercial aircraft” and “defense and spaceequipment” based on the type of markets or customers.
(Millions of yen)
2023
1,752,569
758,730
1,310,359

Revenue from external customers*1
Energy Systems
Plants & Infrastructure Systems
Logistics, Thermal & Drive Systems
Aircraft, Defense & Space
Commercial aircraft
Defense & space equipment
Subtotal
Reporting segments total
Corporate & Eliminations*2
Total

184,521605,820
790,342
4,612,001
45,146
4,657,147*1 Most of the revenue is recognized from contracts with customers under IFRS 15, and theamount of lease revenue recognized under IFRS 16 and revenue recognized from othersources is not material.
*2 “Corporate & Eliminations” includes proceeds from utilizing and disposing of assets andothers that are not included in any of the reporting segments.
The Group is engaged in the sales of products, the performance of constructions and therendering of services in the Energy, Plants & Infrastructure, Logistics, Thermal & Drive
and Aircraft, Defense & Space business domains. For details of the revenue recognitionin each transaction, refer to Basis of Preparation of Consolidated Financial Statements,
4. Accounting Policies, (11) Revenue.
Of these, Energy Systems, Plants & Infrastructure Systems, and Defense and spaceequipment businesses are engaged in construction work in which performanceobligations are satisfied over a long period exceeding one year. The revenue of thesethree businesses is set forth above. These amounts include revenue recognized overtime based on the progress towards completion and determining the total transaction
price for each construction contract.
The progress is measured using the method that depicts the satisfaction of88

performance obligation and is principally estimated based on the proportion of costs
incurred to satisfy the performance obligation against the expected total costs ofsatisfying the performance obligation.
The estimated total revenue and costs are subject to change due to the factors set out
below, among others, which could arise from contracts with customers and suppliers.
There were certain construction contracts which involved significant management
judgment.
(1) Factors that may cause changes in the estimated total revenue• Claims for damage or other requests by customers arising from delivery delays, theunderperformance of the product and other reasons(2) Factors that may cause changes in the estimated total costs• Changes in product specifications• Responses to process delays• Fluctuations of procurement costs such as materials and parts• Responses to underperformance• Events that were not considered in the planning of construction
The consideration of a transaction is received based on the progress for eachperformance obligation satisfied over time, such as a milestone in the case of aconstruction contract. The consideration for the sale of goods or rendering of services isreceived within one year after the performance obligation is satisfied. In either case, thecontract does not include a significant financing component. In addition, withinconsideration from contracts with customers, no significant amounts have been excluded
from the transaction price.
Further, the Group provides warranties assuring that a product satisfies specifications asprovided in the contract. However, the Group does not identify this warranty as a separate
performance obligation because it does not provide a distinct service. For certain
products and construction contracts, under which warranties on performance anddelivery guarantees are provided, revenue is reduced to the extent a refund liability tocustomers is deemed to be incurred, as a result of unsatisfied obligations.
2. The breakdown of revenue by geographical market
Revenue from external customers is classified based on their geographical location into
a country or region depending on geographical proximity.
Revenue from external customers(Millions of yen)
2023

Japan

1,950,028

U.S.A

1,053,196

Asia

701,020

Europe480,010Central and South America

175,402

Africa31,465

Middle East

148,397

Others117,625
Total

4,657,147

89

The major countries or regions in the category of the above table are as follows:(1) Asia... China, Singapore, India, South Korea, Taiwan, Thailand, Vietnam, Philippines,
Indonesia, Bangladesh, Macau, Hong Kong, and Malaysia(2) Europe... Germany, United Kingdom, France, Uzbekistan, Netherlands, Italy, Spain,
Poland, Sweden, Austria, Belgium, Greece, Finland, Denmark, Russia,
Hungary, Serbia, and Bulgaria(3) Central and South America... Mexico, Brazil, Panama, and Chile(4) Africa... South Africa, Algeria, and Egypt(5) Middle East... Saudi Arabia, United Arab Emirates, Turkey, Oman, Qatar, Israel, Kuwait,
and Bahrain(6) Others... Canada and Australia
3. Transaction price allocated to the remaining performance obligations
The aggregate amount of the transaction price allocated to the remaining performanceobligations as of March 31, 2024, and the balance by reporting segment are as follows.
(Millions of yen)
As of March 31, 2024
4,283,891
1,569,657
58,3692,474,222
8,386,141
14,4348,400,576

Energy Systems
Plants & Infrastructure Systems
Logistics, Thermal & Drive Systems
Aircraft, Defense & Space
Reporting segments total
Corporate & Eliminations *Total* “Corporate & Eliminations” includes general services not included in any of the reporting
segments.
The transaction amounts allocated to the remaining performance obligations in the threereporting segments, namely Energy Systems, Plants & Infrastructure Systems andAircraft, Defense & Space, are mainly attributable to the individual made-to-orderproducts business. As such, many of such transactions are for construction contracts thathave performance obligations to be satisfied over a long period exceeding one year. On
the other hand the transaction amounts allocated to the remaining performanceobligations in the Logistics, Thermal & Drive Systems, are mainly attributable to mediumvolume production business, and are mainly related to the sale of the products andrendering of the service for which the performance obligation is completed within one
year.
The remaining performance obligations for each reporting segment are expected to besatisfied and recognized as revenue within the number of years from the end of eachfiscal year as stated below.
• Energy Systems: Within 7 years• Plants & Infrastructure Systems: Within 4 years• Logistics, Thermal & Drive Systems: Within 1 year
• Aircraft, Defense & Space: Within 4 years
Per Share Information
Shareholders’ equity per share
Basic income per share¥ 667.86¥ 66.0790

* On April 1, 2024, MHI executed a ten-for-one stock split of its common shares. Shareholders’equity per share and Basic income per share are calculated assuming that the stock split was
conducted at the beginning of the fiscal years ended March 31, 2024.
Significant Subsequent Events
On February 6, 2024, the Company’s Board of Directors approved a stock split to be
executed on April 1, 2024. The details of the stock split executed on April 1, 2024 were set
out below:(1) Purpose of the stock split
To facilitate investment in MHI by decreasing share unit price, thereby expanding investorbase.
(2) Details of the stock splita) Method of the stock split
MHI executed a stock split on the record date of March 31, 2024 (effectively March 29,2024 due to the shareholder registry administrator’s holiday falls on March 31, 2024),
at a ratio of ten shares for one share of its common stock held by shareholders listed
or recorded in the shareholder registry as of the end of that day.
b) Number of shares to be increased by the stock split
・Total Number of shares Issued before the stock split
・Number of shares to be increased by the stock split
・Total Number of shares Issued after the stock split
・Total Number of Authorized shares after the stock splitc) Schedule of the stock split
Date of public notice of the record date
Record Date
Effective Date

337,364,781 shares
3,036,283,029 shares
3,373,647,810 shares
6,000,000,000 shares

March 8, 2024
March 31, 2024
April 1, 2024

(3) Impact on per share information
The impact on per share information is described in the relevant sections.
(4) Others
There was no change in the amount of stated capital as a result of this stock split.

91

Other notes
1. Major lawsuits
There was a temporary dispute between a consortium composed of MHI and Daewoo
Engineering & Construction Co., Ltd. (“the Company, etc.”) and El Sharika El-Djazairia ElOmania Lil Asmida SPA (“AOA”) regarding a chemical fertilizer plant construction contract inAlgeria whose orders had been received by the Company, etc., but a settlement wasreached in 2017 (the “Settlement Agreement”), and the consortium delivered the plant to
AOA. However, AOA subsequently refused to make some of the outstanding payment
under the Settlement Agreement. Therefore, the Company, etc. filed for arbitration against
AOA and one of its shareholders, Societe Nationale pour la Recherche, la Production, leTransport, la Transformation et la Commercialisation desHydrocarbures SPA(“SONATRACH”). In March 2021, the Company, etc. received a counterclaim from AOA
which mainly consists of the cancellation of the Settlement Agreement and the refund of thepayment already made under the Settlement Agreement. In October 2022, a decision wasmade by the arbitral tribunal to remove SONATRACH as a party to the arbitration. The
Company, etc. will assert that there are no reasonable grounds for AOA’s refusal to makethe outstanding payment and that the counterclaim should be dismissed.
2. Business combination
On October 2, 2023, the Group acquired all of its shares of Concentric, LLC (the“Concentric”), a top provider of industrial power solutions in North America, from OnPoint
Group.
(1) Outline of acquisition
Concentric will take steps under its new ownership as a member of the Group topromote zero emissions, energy conservation and electrification with the aim of
improving our services provided to customers of its North American data center,logistics warehouses and industrial facilities. It will also utilize the cutting-edge
technology and knowledge gained through its partnership with the Group to provide
sustainable power solutions.
Particularly, as the world digital technology evolves, the demand for data center is
rapidly growing, and the industry is faced with the challenges of how to adopt zero
emission power sources and energy conservation. The MHI Group aims to provide
solutions to such global challenges by providing total energy solutions that offer data
centers as a one-stop service that encompasses power systems, cooling systems, andcontrol and monitoring.
The acquisition aims for energy optimization in data centers and logistics warehouses
and reduction in CO2 emissions in cooperation with Concentric, which has a customer
network spanning the entire North American region.
(2) Consideration of acquisition and Settlement Methoda) Consideration of acquisition
USD479 million (¥71,772 million) ** Converted at ¥149.58/$1(as of October 1, 2023)
b) Settlement method
Payment in cashc) Acquisition related cost
In the fiscal year ended March 31, 2024, acquisition related cost amounted to 1,651
million yen and were recorded in selling, general and administrative expenses.

92

(3) The fair value of assets and liabilities and goodwill at the date of acquisition(Millions of yen)
Items
Amount*1
Consideration of acquisition
71,772
Assets acquired
Current assets
15,089Non-current assets*2
33,621
Total of assets acquired
48,710Liabilities assumed
Current liabilities
9,718
Non-current liabilities
1,991
Total of liabilities assumed
11,709Goodwill*3
34,771*1 Converted at ¥149.58/$1(as of October 1, 2023). In addition, the amounts ofassets acquired and liabilities assumed were provisionally calculated based on thecurrently available information since the allocation of the consideration of
acquisition has not been completed as of March 31, 2024.
*2 Non-current assets include 30,215 million yen of intangible assets.
*3 The main components of the goodwill represent synergies with the existing
business that are expected to arise from the acquisition, and excess earning
power. Goodwill recognized in the fiscal year ended March 31, 2024 wascalculated on a provisional basis based on the identifiable assets as of theacquisition date, and the recognized amount of goodwill may change as theamount of identifiable assets changes. The goodwill recognized is expected to be
deductible for tax purposes.
(4) Impact on operating results
On and after the acquisition date, Concentric contributed revenue of 28,236 million yen
and loss of (309) million yen to the Group’s consolidated statement of profit or loss forthe fiscal year ended March 31, 2024.
The impact above included temporary costs related to the integration.
In addition, assuming the business combination had been completed on April 1, 2023
such an impact on the consolidated statement of profit or loss was deemed immaterial,
and therefore, omitted from the inclusion in the consolidated statement of profit or loss.
3. Transfer of fixed asset
On February 28, 2024, our Board of Directors approved an ownership transfer of one of its
fixed assets as described below.
(1) Reasons for the transfer
To make effective use of management resources and strengthen its financial position.
(2) Asset designated for transfer
Description Plant land (a part of the Honmoku Plant)
Location 38-8, Nishikicho, Naka-ku, Yokohama, Kanagawa(3) Transfer schedule
Contract signed
February 29, 2024
Transfer date(planned)
September 30, 2024 and March 31, 2025 ** MHI plans to set up a trust for the transferred asset and transfer the trust beneficiary93right based on the trust. The transfer date is the date of the transfer of the trust
beneficiary right for the transferred asset. The asset will be transferred in two parts.
(4) Impact of the transfer on financial results
As a result of the transfer of the fixed asset cited, approximately 50 billion yen of gain onsale of non-current assets will be recognized for the fiscal year ending March 31, 2025.

94

NON-CONSOLIDATED BALANCE SHEET (1/2)

ASSETS
Current assets:
Cash and deposits
Trade notes receivable
Trade accounts receivable
Contract assets
Merchandise and finished products
Work in progress
Raw materials and supplies
Income taxes receivable
Advances to suppliers
Prepaid expenses
Short-term loans receivable
Short-term loans receivable from subsidiaries and affiliates
Other current assets
Allowance for doubtful accounts
Total current assets
Non-current assets:
PPE :Buildings
Structures
Docks and facilities for shipbuilding
Machinery
Vessels
Aircraft
Vehicles and transportation equipment
Tools, equipment and furniture
Land
Leased assets
Construction in progress
Subtotal
Intangible assets:
SoftwareRight of using facilities
Goodwill
Leased assets
OthersSubtotal
Investments and advances:
Investment securities
Investments in shares of subsidiaries and affiliates
Investments in capital
Investments in capital of subsidiaries and affiliates
Long-term loans receivable
Long-term loans receivable from employees
Long-term loans receivable from subsidiaries and affiliates
Claims provable in bankruptcy, claims provable in rehabilitation and other
Long-term prepaid expenses
Prepaid pension cost
Deferred tax assets
Long-term receivables
OthersAllowance for doubtful accounts
Subtotal
Total non-current assets
TOTAL ASSETS(Millions of Yen)
As of
As of
Mar.
31, 2023
Mar. 31, 2024
(Reference)
259,063104
264,349
421,047
34,845
249,077
50,406105,320
2,078
4,271
35
102,380(60)
1,492,921

165,416
159
190,581
340,818
29,167243,067
47,669
11,09869,9671,966
644
32
108,019(91)
1,208,517

214,892
26,875
2,314
92,24528
0964
18,878131,135
5,847
23,340516,522

198,518
26,484
2,062
97,25434
0901
18,788113,175
6,436
21,376
485,031

4,367
707
78
278
5,431

4,233
782
5,139
1,104
299
11,559317,631
698,934
1,060
46,38863
181,192649,991
5,473
13,355281,599
5,898
14,784(650,935)
1,465,441

308,880
673,0121,060
85,44979
581,207
8,605
4,720
12,016258,259
580,132
16,420(584,854)
1,444,996

1,987,395

1,941,587

3,480,317

3,150,105

NON-CONSOLIDATED BALANCE SHEET (2/2)

LIABILITIESCurrent liabilities:
Electronically recorded obligations
Trade accounts payable
Short-term borrowings
Current portion of long-term borrowings
Current portion of bonds
Lease obligations
Accrued payables
Accrued expenses
Income taxes payable
Contract liabilities
Deposits received
Provision for product warranties
Provision for construction warranties
Provision for losses on construction contracts
Provision for business structure improvement
Provision for stock benefits
Provision for losses on subsidiaries and affiliates
Asset retirement obligations
Other current liabilities
Total current liabilities
Non-current liabilities:
Bonds
Long-term borrowings
Lease obligations
Provision for product warranties
Provision for construction warranties
Provision for business structure improvement
Provision for stock benefits
Provision for retirement benefits
Provision for losses on guarantees
Provision for treatment of PCB waste
Provision for environmental measures
Provision for losses on subsidiaries and affiliates
Asset retirement obligations
Other non-current liabilities
Total non-current liabilities
TOTAL LIABILITIESNET ASSETSStockholders' equity:
Common stock
Capital surplus:
Capital reserve
Other capital reserve
Total capital surplus
Retained earnings:
Legal reserve
Revenue reserve:
Reserve for specified business restructuring investment loss
Reserve for reduction in costs of fixed assets
Reserve for accelerated depreciation
Earned surplus brought forward
Total revenue reserve
Total retained earnings
Treasury stock
Total stockholders' equity
Valuation, translation adjustments and others:
Unrealized holding gain (loss) on investment securities
Unrealized gain (loss) from hedging instruments
Total valuation, translation adjustments and others
Share subscription rights
TOTAL NET ASSETSTOTAL LIABILITIES AND NET ASSETS(Millions of Yen)
As of
As of
Mar.31,2023
Mar. 31, 2024 (Reference)
339,881
350,450
68,00030,0003,215
88,04536,45829,285678,537
17,716
4,595
28,351
48,429
1,925
393
425
54
11,571
1,737,334

1,535
317,453
399,585
51,50015,0003,634
70,26528,805463,962
15,0404,472
27,18456,580
4,782
366
709
0
6,233
1,467,110

195,000
286,900
17,333
10,976
5,713
3,641
2,394
6,578
10,015
1,607
7,260
8,241
24,525580,1872,317,521

200,000
331,900
22,285
11,512
6,163
4,151
1,292
19,347
3,190
1,875
7,238
1,778
7,037
21,694
639,467
2,106,578

265,608

265,608

203,536
1,886
205,422

203,536
2,063
205,600

66,36366,363

4,831
93,934446,808
545,574
611,938(1,312)
1,081,657

9,663
81,06855
352,252
443,039
509,402(1,369)979,242

83,560(2,832)80,728410
1,162,795
3,480,317

64,325(569)
63,756528
1,043,526
3,150,105

NON-CONSOLIDATED STATEMENT OF INCOME
FY2023(From April 1, 2023
to March 31, 2024)

Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Operating income(Millions of Yen)FY2022(From April 1, 2022
to March 31, 2023)

1,729,653
1,413,637
316,016(Reference)
1,549,487
1,326,839
222,647

242,438
73,578211,296
11,351Non-operating income:Interest income
Dividend income
Foreign exchange gains
Other income
Total non-operating income
Non-operating expenses:
Interest expenses
Interests on bonds
Losses on disposal of fixed assets
Provision for losses on guarantees
Provision of allowance for doubtful accounts
Provision for losses on subsidiaries and affiliates
Other expenses
Total non-operating expenses
Ordinary income

3,384
50,576
21,7782,846
78,585

4,003
80,16010,802
8,108
103,074

11,468
892
5,567
6,825
112
7,019
31,885120,278

9,476
819
4,535
3,190
226
709
6,161
25,11889,308Extraordinary gains:
Gains on sales of investment securities
Gains on sales of fixed assets
Gains on extinguishment of tie-in shares
Total extraordinary gains

34,361
28,355
9,256
71,97333,37324,9401,087
59,400Extraordinary losses:
Losses on revaluation of investment securities
Losses on impairment of fixed assets
Business structure improvement expenses
Losses related to SpaceJet project
Total extraordinary losses

25,45325,453

18,16015,247
7,599
5,949
46,955

Profit before income taxes

166,798

101,753

Income taxes:
Current
DeferredProfit40,327(26,600)
153,071

10,940(7,750)98,56497

NON-CONSOLIDATED STATEMENT OF CHANGES IN NET ASSETS(From April 1, 2023 to March 31, 2024)
Stockholders' equity

Retained earnings
Revenue reserve

Capital surplus
Commonstock

Balance as of Apr. 1, 2023

265,608

Other
capitalreserve

Capitalreserve

203,536

2,063(Millions of Yen)

Reserve for
specifiedReserve forbusiness
reduction in
restructuring costs of fixed
investment
assetsloss

Total
capitalsurplusLegalreserve

205,600

66,363

9,663

81,068Reserveforaccelerated
depreciation

55

Total
retainedearnings

Earnedsurplusbrought
forwardTotal
revenue
reserve352,252

443,039

509,402

4,831

-

-

Changes in the period
Reversal of reserve for specified
business restructuring investment
loss
Provision of reserve for reduction
in costs of fixed assets
Reversal of reserve for reduction
in costs of fixed assets
Reversal of reserve foraccelerated depreciation
Cash dividends
Profit (loss)
Purchase of treasury stock
Disposal of treasury stock
Net changes in items other thanstockholders' equity
Total changes in the period
Balance as of Mar. 31, 2024

-

(177)

Profit (loss)

15,909(15,909)---(3,042)

3,042

-

-

55

-

-

(50,536)
153,071(50,536)
153,071-(50,536)
153,071---

102,535
545,574

102,535
611,938

(55)

(177)
-

265,608

Treasurystock

Changes in the period
Reversal of reserve for specified
business restructuring investment
loss
Provision of reserve for reduction
in costs of fixed assets
Reversal of reserve for reduction
in costs of fixed assets
Reversal of reserve foraccelerated depreciation
Cash dividends--

203,536(1,369)

(177)
1,886

(177)
205,422

66,363(4,831)
4,831

12,866
93,934

Valuation, translation adjustments
and others

Stockholders' equity

Balance as of Apr.1, 2023

(4,831)

Total
stockholders’equityUnrealized
holding gain
(loss) on
investment
securities

979,242

64,325

Share
Unrealized Total valuation,
subscription
gain (loss)translationrightsfrom hedging adjustments
instruments
and others(569)

63,756

528

Total
net
assets

1,043,526

-

-

-

-

-

-

-

-

-

-

-

-

(50,536)-(50,536)

153,071-

153,071

Purchase of treasury stock

(39)

(39)

-

(39)

Disposal of treasury stock
Net changes in items other thanstockholders' equity

96

(80)

-

(80)

Total changes in the period

57

Balance as of Mar. 31, 2024

(1,312)-

19,234(2,262)

16,971(118)

16,853

102,415

19,234(2,262)

16,971(118)

119,268

1,081,657

83,560(2,832)80,728410

1,162,795

98

(55)
-

94,555446,808

Notes to the Non-Consolidated Financial Statements
Significant Accounting Policies
1. Asset valuation standards and methods(1) Securities
Investments in shares of subsidiaries and affiliates…Historical cost method (moving average method).
Available-for-sale securities
Securities other than shares that do not have a market value…Fair value method (with the entire amount of valuation differences inserted
directly into net assets, and the cost of sales calculated using the moving
average method)
Shares that do not have a market value…Historical cost method (moving average method).
(2) Inventories
Merchandise and finished products…Historical cost method (moving average method).
(Balance sheet amounts are determined by reflecting a decline in the
profitability of the assets through write-downs).
Work in progress…Historical cost method (specific identification method).
(Balance sheet amounts are determined by reflecting a decline in the
profitability of the assets through write-downs).
Raw materials and supplies…Historical cost method (moving average method).
(Balance sheet amounts are determined by reflecting a decline in the
profitability of the assets through write-downs).
2. Depreciation methods for non-current assets(1) PPE (excluding leased assets)
The straight-line method is applied.
(2) Intangible assets (excluding leased assets)
The straight-line method is applied.
(3) Leased assets
The straight-line method (where useful lives are equal to the lease terms andresidual values are assumed to be zero) is applied.
3. Allowance and provision(1) Allowance for doubtful accounts
An allowance for doubtful accounts is provided for possible losses on the collectionof receivables. The amount of the allowance for general receivables is based on
the historical write-off ratio. As for certain receivables such as the ones from the
debtors whose solvency is in doubt and claims provable in bankruptcy, claims
provable in rehabilitation and other, the collectability of each receivable isexamined individually, and the estimated unrecoverable amounts are recognized
as allowance.
(2) Provision for product warranties
A provision for product warranties is provided for the expenditure of productwarranty expenses after the work is performed, and is equal to the estimatedamount of future product warranty expenses based on the past experience.

99

(3) Provision for construction warranties
A provision for construction warranties is provided for the expenditure of guarantee
work expenses after the construction work is performed, and is equal to theindividually estimated amount of future guarantee expenses.
(4) Provision for losses on construction contracts
A provision for losses on construction contracts is provided for the expected total
losses to be realized in the following fiscal years on the construction contracts if (i)those losses are judged to be inevitable at current fiscal year and (ii) the amountof such losses can be reasonably estimated.
With regard to the construction contracts for which this provision is recognized, if
the fiscal year-end balances of their work-in-progress already exceed theirrespective total contract revenues at the end of the fiscal years, the exceeding
portion is recognized as the loss on devaluation of the work-in-progress and,accordingly, is not included in the provision for losses on construction contracts.
(5) Provision for business structure improvement
A provision for business structure improvement is provided for the expenses andlosses in association with business structure improvement at an amount expected
to be incurred.
(6) Provision for losses on disputes
A provision for losses on disputes is provided for possible losses related tolitigation, and is equal to the estimated amount of losses to be incurred.
(7) Provision for stock benefits
A provision for stock benefits is provided in relation to the plan to grant stocks of
MHI to officers and executive management personnel through a trust. The
estimated value of MHI’s stocks corresponding to the Stock Grant Points held by
the eligible persons as at the balance sheet date is recognized.
(8) Provision for losses on guarantees
In order to provide for losses due to contingent liabilities such as guarantees for
subsidiaries and affiliates and others, MHI records losses for the amount deemednecessary, taking into account the financial position and other factors of theguaranteed parties.
(9) Provision for treatment of PCB (Poly Chlorinated Biphenyl) waste
A Provision for the treatment of PCB waste is provided based on the estimatedcosts of treating PCB products and equipment.
(10) Provision for environmental measures
A provision for environmental measures is provided for the estimated amount ofexpenditures to be incurred for the purpose of environmental measures.
(11) Provision for losses on subsidiaries and affiliates
In order to provide for losses related to investments in subsidiaries and affiliates,
MHI records the amount deemed necessary, taking into account the financial
position and other factors of the companies concerned.
(12) Provision for retirement allowance
A provision for retirement allowance is provided for employees’ retirement benefits.
The amounts are based on the balances of retirement benefit obligations andestimated pension fund assets (including a retirement benefit trust) at the end of
the fiscal year.

100When calculating retirement benefit obligations, the benefit formula basis is mainly
used to attribute estimated retirement benefits to the period through the end of thecurrent fiscal year. Past service costs are either expensed as incurred or amortizedby the straight-line method over a period shorter than the average remaining
service period of employees.
Past service costs are expensed as incurred and actuarial gains and losses foreach fiscal year are amortized by the straight-line method, starting in the following
fiscal year of incurrence, over the average remaining service period of employees.
If pension assets to be recognized at the end of the current fiscal year exceed theamount that the unrecognized actuarial gains or losses are deducted from theretirement benefit obligations, the excess amount shall be recorded in investments
and advances as prepaid pension cost.
4. Recognition of revenue and costs
MHI engaged in the sales of products, the performance of construction works andrendering of services. Requirements for revenue recognition of the Group are as
follows.
• Sale of products
For this transaction, MHI typically recognizes revenue at the time of the delivery of
the goods, as the performance obligations in the contracts with customers are
considered to be satisfied principally at the time that the products are delivered andcontrol of the relevant goods is transferred to the customer. Revenue from the sale ofgoods is measured at an amount of consideration promised in the contract with thecustomer less sales returns, discounts, rebates, taxes collected on behalf of third
parties and others.
• Rendering of services and construction contracts
For these transactions, the control of the goods and services included in thecontracts is deemed to be transferred to customers over a certain period specified in
the contract. Therefore, MHI recognizes revenue by estimating total revenue for eachconstruction contract, measuring progress towards completion of the performanceobligation included in the contract with the customer, and calculating the portion of
total revenue corresponding to the progress. The progress is measured by a methodthat depicts the satisfaction of the performance obligation, and principally estimatedbased on the proportion of costs already incurred to satisfy the performanceobligation against the expected total costs to the complete satisfaction of theperformance obligation.

101

Notes on Accounting Estimates
Items whose amounts were recorded based on accounting estimates on the nonconsolidated financial statements for the fiscal year ended March 31, 2024, and could
have a material impact on the non-consolidated financial statements for the fiscal year
ending March 31, 2025, are as follows.
1. Impairment of PPE and intangibles assets• Amount recorded in the non-consolidated financial statements for the fiscal year
ended March 31, 2024:
Total of PPE and Intangible assets:¥ 527,428 million• Other information that contributes to users of the non-consolidated financial
statements to understand the content of accounting estimates:
With regard to assets (or asset groups) identified any indication of impairment, theamount of undiscounted future cash flows is estimated and compared with thecarrying amount of the relevant assets (or asset groups), and if the amount of theundiscounted future cash flow is less than the carrying amount, an impairment loss
is recognized.
An asset group determined for impairment test is the smallest unit that generates
cash flows that are largely independent of cash flows from other assets (or asset
groups). The undiscounted future cash flows are calculated based on the businessplans approved by management, reflecting historical experience and external
information and the growth rate. MHI establishes the business plans consist of the
key points such as trends of future revenue and the reduction of fixed costs, which
would have significant impacts on the projection. These are based on factors
considered reasonable by management.
2. Recoverable amount of investment securities, investments in shares of subsidiaries andaffiliates, and investments in capital of subsidiaries and affiliates• Amount recorded in the non-consolidated financial statements for the fiscal year
ended March 31, 2024:
Investment securities:¥ 317,631 million
Investments in shares of subsidiaries and affiliates:¥ 698,934 million
Investments in capital of subsidiaries and affiliates:¥
46,388 million• Other information that contributes to users of the non-consolidated financial
statements to understand the content of accounting estimates:
For securities other than shares that do not have a market value, MHI uses suchprice as the balance sheet amount. When a significant decline in such price is noted,
MHI recognizes the valuation difference as a loss in the current fiscal year, unless
it is deemed to be recoverable.
For shares and other securities without market price, such as investments in nonlisted subsidiaries and affiliates, MHI uses the acquisition cost as the balance sheet
amount. However, when a significant decline in net asset value is noted due to a
deterioration in the financial position of the issuer of the shares, MHI records anappropriate reduction in the balance sheet amount and recognizes the valuationdifference as a loss in the current fiscal year, except for when sufficient evidence
supports the possibility of recovery.
At the end of the fiscal year ended March 31, 2024, the recoverability of the sharesof subsidiaries and affiliates for which the net asset value had declined significantly
was assessed based on the business plan.
As a result, for the shares of subsidiaries and affiliates, which were determined that
there was sufficient evidence that the net asset value of the relevant shares would
be recoverable, no revaluation losses have been recognized.
The business plan includes key factors such as trends of future revenue andreduction in outsourcing expenses through in-house production of replacement
parts.

102

3. Provisions• Amount recorded in the non-consolidated financial statements for the fiscal year
ended March 31, 2024:
Allowance for doubtful accounts¥ 650,995 million
Provision for product warranties¥
15,571 million
Provision for construction warranties¥
34,064 million
Provision for losses on construction contracts¥
48,429 million
Provision for business structure improvement¥
5,566 million
Provision for stock benefits¥
2,787 million
Provision for losses on subsidiaries and affiliates¥
425 million
Provision for losses on guarantees¥
10,015 million
Provision for treatment of PCB waste¥
1,607 million
Provision for environmental measures¥
7,260 million• Other information that contributes to users of the non-consolidated financial
statements to understand the content of accounting estimates:
For details, refer to Significant Accounting Policies, (3) Allowance and provision.
The aforementioned provision includes a provision for losses on construction contracts
on long-term service agreements associated with the plant facilities that were deliveredin the past fiscal year. MHI recognizes the provision based on the reasonable estimatesof compensation for loss during the non-operational period and costs necessary to
fulfill the long-term service agreements.
4. Measurement of defined benefit obligations• Amount recorded in the non-consolidated financial statements for the fiscal year
ended March 31, 2024:
Prepaid pension cost:¥
13,355 million
Provision for retirement benefits:¥
6,578 million• Other information that contributes to users of the non-consolidated financial
statements to understand the content of accounting estimates:
The details of estimates are omitted as they are the same as for the Notes to theConsolidated Financial Statements.
5. Recognition and measurement of revenue• Amount recorded in the non-consolidated financial statements for the fiscal year
ended March 31, 2024:
Sales:¥ 1,729,653 million• Other information that contributes to users of the non-consolidated financial
statements to understand the content of accounting estimates:
The details of estimates are omitted as they are the same as for the Notes to theConsolidated Financial Statements.
6. Recoverability of deferred tax assets• Amount recorded in the non-consolidated financial statements for the fiscal year
ended March 31, 2024:
Deferred tax assets:¥ 281,599 million• Other information that contributes to users of the non-consolidated financial
statements to understand the content of accounting estimates:
The details of estimates are omitted as they are the same as for the Notes to theConsolidated Financial Statements.

103

Notes to the Non-Consolidated Balance Sheet
1. Accumulated depreciation
Accumulated depreciation of PPE¥ 1,492,499 million

2. Guarantee obligations(1) Guarantee obligations on such debts as borrowings from financial institutions
Mitsubishi Power Europe GmbH¥
19,438 million
Employees (Residence fund loan, etc.)¥
8,213 million
MHI RJ Aviation ULC¥
5,813 million
CBC INDUSTRIAS PESADAS S.A.
¥
3,882 million
Others¥18,999 million
Total¥
56,346 million(2) Guarantee obligations related to advance received which subsidiaries received from
customers
Mitsubishi Heavy Industries Asia Pacific Pte. Ltd.
¥1,706 million
Mitsubishi Heavy Industries Compressor Corporation ¥1,635 million
Mitsubishi Heavy Industries Marine Machinery & Equipment Co., Ltd¥
493 million
Mitsubishi Shipbuilding Co., Ltd.
¥405 million
Others¥403 million
Total¥
4,644 million
3. Monetary receivables from / payables to subsidiaries and affiliated companies
Short-term monetary receivables¥ 184,911 million
Long-term monetary receivables¥ 650,971 million
Short-term monetary payables¥ 401,412 million
Long-term monetary payables¥
292 million

104Notes to the Non-Consolidated Statement of Income
1. Transactions with subsidiaries and affiliated companies
Sales
Purchases
Transactions other than operating transactions¥ 265,410 million¥ 317,277 million¥
82,488 million

2. Losses on revaluation of investment securities
Losses on revaluation of investment securities include 8,801 million yen of losses on
the revaluation of shares of subsidiaries and affiliates and 10,120 million yen of losseson the revaluation of capital of subsidiaries and affiliates.
3. Gains on sales of PPEWith respect to owned property, such as land, gains on sales of PPE are recorded inconnection with sales to third parties.
Notes to the Non-Consolidated Statement of Changes in Net Assets
The number of treasury stock
Common stock
428,426 shares* On April 1, 2024, MHI executed a ten-for-one stock split of its common shares. The
number of shares before the stock split was disclosed as of March 31, 2024.
Notes on Tax Effect Accounting
Deferred tax assets are principally caused by temporary differences with allowance for
doubtful accounts. Deferred tax liabilities are principally caused by reserve for advanced
depreciation of non-current assets.
MHI has applied the Group Tax Sharing System. The accounting treatment anddisclosure of corporate tax, local corporation tax and tax effect accounting are inaccordance with the "Practical Solution on the Accounting and Disclosure Under theGroup Tax Sharing System" (Practical Solution No. 42, August 12, 2021).
Notes on Revenue Recognition
MHI engages in the sale of products as well as the execution of construction works andrendering of services. For details, refer to Significant Accounting Policies, 4. Recognitionof revenue and costs.

105

Notes on Related Party Transactions
Subsidiaries and affiliated companies
Category

Name

Percentage
of Voting Relation with Contents ofRights held the RelatedthePartiesby theTransactions
IssuerSubsidiary MSJ Asset
DirectManagemen 94.98%
t Company

Lending offunds

Claim foroutstanding
receivables,
etc.
Funds lending(*1)(*2)

Transaction
Amounts

Account

Ending Balance¥ 65,778 million Claims¥ 641,386 million
provable inbankruptcy,
claims¥ 5,300 million provable inrehabilitationand other

Subsidiary MHI Holding
Denmark
Aps

Direct100.0%

Interlocking
officers

Funds
borrowing(*3)¥ 8,730 million Short-termborrowings¥ 61,590 million

Subsidiary Mitsubishi
Power, Ltd.

Direct100.0%

Interlocking
officers

Deals as anagent under
the Service
Agreement,etc.(*4)¥ 2,121 million Tradeaccounts
receivable¥ 47,423 million

Contract
liabilities¥ 38,230 million

Subsidiary Mitsubishi
DirectHeavy
100.0%
Industries
Engineering,Ltd.

Entrustment Company splitof business, (*5)
etc.
Split assets
Split liabilities

Subsidiary Mitsubishi
Heavy
Industries
America,
Inc.

Interlocking
officers

Direct100.0%

Investment inkind (*6)¥ 112,449 million ¥ 52,412 million --¥ 72,420 million --Terms and conditions of the transaction and the policy for determining terms and conditions*1. During the fiscal year ended March 31, 2024, provision of allowance for doubtful accounts of 65,993
million yen was recognized. The total amount of provision of allowance for doubtful accounts was
640,640 million yen as of March 31, 2024. As a result of offsetting of provision of allowance for doubtful
accounts with transaction amounts in the table, the impact on the Non-Consolidated Statement of
Income is immaterial.
*2. The interest rate is reasonably decided reflecting market interest rates.
*3. The interest rate is reasonably decided reflecting market interest rates.
*4. Prices and other transaction terms and conditions are determined based on, among other factors, thenature of the services and associated expenses for execution.
*5. For details, refer to Other notes, 2. Business combination.
*6. Shares of subsidiaries were invested.

Per Share Information
Book value per share
Net income per share¥ 345.85¥ 45.55* On April 1, 2024, MHI executed a ten-for-one stock split of its common shares. The
book value per share and net income per share were calculated assuming that thestock split was conducted at the beginning of the fiscal years ended March 31, 2024.

106

Significant Subsequent Events
On February 6, 2024, the Company’s Board of Directors approved a stock split to be
executed on April 1, 2024. The details of the stock split executed on April 1, 2024 were
set out below:(1) Purpose of the stock split
To facilitate investment in MHI by decreasing share unit price, thereby expanding
investor base.
(2) Details of the stock splita) Method of the stock split
MHI executed a stock split on the record date of March 31, 2024 (effectively March
29, 2024 due to the shareholder registry administrator’s holiday falls on March 31,2024), at a ratio of ten shares for one share of its common stock held byshareholders listed or recorded in the shareholder registry as of the end of that day.
b) Number of shares to be increased by the stock split
・Total Number of shares Issued before the stock split
337,364,781 shares
・Number of shares to be increased by the stock split
3,036,283,029 shares・Total Number of shares Issued after the stock split
3,373,647,810 shares・Total Number of Authorized shares after the stock split 6,000,000,000 sharesc) Schedule of the split
Date of public notice of the record date
Record Date
Effective Date

March 8, 2024
March 31, 2024
April 1, 2024

(3) Impact on per share information
The impact on per share information is described in the relevant section.
(4) Others
There will be no change in the amount of stated capital as a result of this stock split.

107

Other notes
1. Major lawsuits
There was a temporary dispute between a consortium composed of MHI and Daewoo
Engineering & Construction Co., Ltd. (“the Company, etc.”) and El Sharika El-Djazairia
El-Omania Lil Asmida SPA (“AOA”) regarding a chemical fertilizer plant construction
contract in Algeria whose orders had been received by the Company, etc., but asettlement was reached in 2017 (the “Settlement Agreement”), and the consortium
delivered the plant to AOA. However, AOA subsequently refused to make some of theoutstanding payment under the Settlement Agreement. Therefore, the Company, etc.
filed for arbitration against AOA and one of its shareholders, Societe Nationale pour la
Recherche, la Production, le Transport, la Transformation et la Commercialisation desHydrocarbures SPA (“SONATRACH”). In March 2021, the Company, etc. received acounterclaim from AOA which mainly consists of the cancellation of the Settlement
Agreement and the refund of the payment already made under the Settlement
Agreement. In October 2022, the decision was made by the arbitral tribunal to remove
SONATRACH as a party to the arbitration. The Company, etc. will assert that there are
no reasonable grounds for AOA’s refusal to make the outstanding payment and that thecounterclaim should be dismissed.
2. Business combination
MHI succeeded to the businesses such as engineering business, of its consolidated
subsidiary, Mitsubishi Heavy Industries Engineering, Ltd. by absorption-type company
split. The details are as follows. *(1) Purpose of Absorption-Type Company Split
In order to further accelerate the Energy Transition which serves as the growthengine of MHI’s group, MHI succeeded to the businesses such as engineeringbusiness of Mitsubishi Heavy Industries Engineering, Ltd. by way of an absorptiontype company split on April 1, 2023.
(2) Absorption-Type Split company, Method of Absorption-Type Company Split
It is an absorption-type company split in which MHI is a succeeding company and
Mitsubishi Heavy Industries Engineering, Ltd. is a splitting company.
(3) Details of Allotment relating to the Absorption-Type Company Split
Since Mitsubishi Heavy Industries Engineering, Ltd. is a wholly owned subsidiary of
MHI, any of its shares, cash and other assets were not allotted.
(4) Name of Absorption-Type Split company, Details of Business
Trade Name: Mitsubishi Heavy Industries Engineering, Ltd.
Details of Business: Engineering, manufacturing, procurement, construction,marketing and after-sale servicing of chemical plants, transportation systems andproducts, and environmental products(5) Schedule of Absorption-Type Company Split
April 1, 2023
(6) Other
In conjunction with the Merger, “Gain on extinguishment of tie-in shares” of 9,256

108

million yen was recorded as “Extraordinary gain” for the fiscal year ended March 31,
2024 in the financial results of MHI on a non-consolidated basis.
* Mitsubishi Heavy Industries Engineering, Ltd. changed its company name to MHIEngineering, Ltd. as of April 1, 2023.
3. Transfer of fixed asset
On February 28, 2024, our Board of Directors approved an ownership transfer of one ofits fixed assets as described below.
(1) Reasons for the transfer
To make effective use of management resources and strengthen its financial
position.
(2) Asset designated for transfer
Description Plant land (a part of the Honmoku Plant)
Location 38-8, Nishikicho, Naka-ku, Yokohama, Kanagawa(3) Transfer schedule
Contract signed
February 29, 2024
Transfer date(planned)
September 30, 2024 and March 31, 2025 ** MHI plans to set up a trust for the transferred asset and transfer the trust
beneficiary right based on the trust. The transfer date is the date of the transfer of
the trust beneficiary right for the transferred asset. The assets will be transferredin two parts.
(4) Impact of the transfer on financial results
As a result of the transfer of the fixed asset cited, approximately 50 billion yen ofgain on sale of non-current assets will be recognized for the fiscal year ending
March 31, 2025.

109

Independent Auditor’s Report

May 21, 2024

Mr. Seiji Izumisawa
President
Mitsubishi Heavy Industries, Ltd.
KPMG AZSA LLC
Tokyo Office, Japan
Hirotaka Tanaka
Designated Limited Liability Partner
Engagement Partner
Certified Public Accountant
Kentaro Maruta
Designated Limited Liability Partner
Engagement Partner
Certified Public Accountant
Masataka Kunimoto
Designated Limited Liability Partner
Engagement Partner
Certified Public Accountant
OpinionWe have audited the consolidated financial statements, which comprise the consolidated statement offinancial position, the consolidated statement of profit or loss, the consolidated statement of changes inequity and the related notes of Mitsubishi Heavy Industries, Ltd. (“the Company”) and its consolidated
subsidiaries (collectively referred to as “the Group”), as at March 31, 2024 and for the year from April 1,
2023 to March 31, 2024 in accordance with Article 444-4 of the Companies Act.
In our opinion, the consolidated financial statements referred to above present fairly, in all material
respects, the consolidated financial position and the results of operations of the Group for the period, forwhich the consolidated financial statements were prepared, in accordance with the latter part of Article 1201 of the Rules of Corporate Accounting that prescribes some omissions of disclosure items required underInternational Financial Reporting Standards.
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 inaccordance with the ethical requirements that are relevant to our audit of the consolidated financial
statements in Japan, and we have fulfilled our other ethical responsibilities in accordance with theserequirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide abasis for our opinion.
Other Information
The other information comprises the business report and its supplementary schedules. Management is
responsible for the preparation and presentation of the other information. The Audit and Supervisory
Committee is responsible for overseeing the directors’ performance of their duties with regard to the110

design, implementation and maintenance of the reporting process for 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 theconsolidated financial statements or our knowledge obtained in the audit, or otherwise appears to bematerially 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 and Supervisory Committee for the Consolidated
Financial Statements
Management is responsible for the preparation and fair presentation of the consolidated financial statementsin accordance with the latter part of Article 120-1 of the Rules of Corporate Accounting that prescribes
some omissions of disclosure items required under International Financial Reporting Standards, and forsuch internal control as management determines is necessary to enable the preparation of consolidated
financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, management is responsible for assessing the Group’s
ability to continue as a going concern, disclosing, as applicable, matters related to going concern inaccordance with the latter part of Article 120-1 of the Rules of Corporate Accounting that prescribes someomissions of disclosure items required under International Financial Reporting Standards.
The Audit and Supervisory Committee is responsible for overseeing the directors’ performance of theirduties with regard to the design, implementation and maintenance of the Group’s financial reporting
process.
Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as awhole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s reportthat includes our opinion. Misstatements can arise from fraud or error and are considered material if,
individually or in the aggregate, they could reasonably be expected to influence the economic decisions ofusers taken on the basis of these consolidated financial statements.
As part of our audit in accordance with auditing standards generally accepted in Japan, we exercise
professional judgment and maintain professional skepticism throughout the audit. We also:

Identify and assess the risks of material misstatement of the consolidated financial statements, whether
due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit
evidence that is sufficient and appropriate to provide a basis for our opinion. The selection andapplication of audit procedures depends on the auditor’s judgement.

Obtain an understanding of internal control relevant to the audit in order to design audit proceduresthat are appropriate in the circumstances, while the objective of the audit is not to express an opinion
on the effectiveness of the Group’s internal control.

Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by management.

Conclude on the appropriateness of management’s use of the going concern basis of accounting andbased on the audit evidence obtained, whether a material uncertainty exists related to events orconditions that may cast significant doubt on the Group’s ability to continue as a going concern. If weconclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to
the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to111

modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of ourauditor’s report. However, future events or conditions may cause the Group to cease to continue as agoing concern.


Evaluate whether the presentation and disclosures in the consolidated financial statements are inaccordance with the latter part of Article 120-1 of the Rules of Corporate Accounting that prescribes
some omissions of disclosure items required under International Financial Reporting Standards, theoverall presentation, structure and content of the consolidated financial statements, including thedisclosures, and whether the consolidated financial statements represent the underlying transactions
and events in a manner that achieves fair presentation.

Obtain sufficient appropriate audit evidence regarding the financial information of the entities orbusiness activities 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 and Supervisory Committee regarding, among other matters, the planned
scope and timing of the audit, significant audit findings, including any significant deficiencies in internal
control that we identify during our audit.
We also provide the Audit and Supervisory Committee with a statement that we have complied with
relevant ethical requirements regarding independence, and communicate with them all relationships andother matters that may reasonably be thought to bear on our independence, and where applicable, actions
taken to eliminate threats or safeguards applied.
Interest required to be disclosed by the Certified Public Accountants Act of Japan
Our firm and its designated engagement partners do not have any interest in the Company and its
subsidiaries which are required to be disclosed pursuant to the provisions of the Certified Public
Accountants Act of Japan.
Notes to the Reader of Independent Auditor’s Report:
The Independent Auditor’s Report herein is the English translation of the Independent Auditor’s Report as
required by the Companies Act for the conveniences of the reader.

112

Independent Auditor’s Report

May 21, 2024

Mr. Seiji Izumisawa
President
Mitsubishi Heavy Industries, Ltd.
KPMG AZSA LLC
Tokyo Office, Japan
Hirotaka Tanaka
Designated Limited Liability Partner
Engagement Partner
Certified Public Accountant
Kentaro Maruta
Designated Limited Liability Partner
Engagement Partner
Certified Public Accountant
Masataka Kunimoto
Designated Limited Liability Partner
Engagement Partner
Certified Public Accountant
OpinionWe have audited the financial statements, which comprise the non-consolidated balance sheet, the nonconsolidated statement of income, the non-consolidated statement of changes in net assets and the related
notes, and the accompanying supplementary schedules (“the financial statements and the accompanying
supplementary schedules”) of Mitsubishi Heavy Industries, Ltd. (“the Company”) as at March 31, 2024 andfor the year from April 1, 2023 to March 31, 2024 in accordance with Article 436-2-1 of the Companies
Act.
In our opinion, the financial statements and the accompanying supplementary schedules referred to above
present fairly, in all material respects, the financial position and the results of operations of the Company
for the period, for which the financial statements and the accompanying supplementary schedules wereprepared, in accordance with accounting principles generally accepted in Japan.
Basis for Opinion
We conducted our audit in accordance with auditing standards generally accepted in Japan. Our
responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of
the Financial Statements and the Accompanying Supplementary Schedules section of our report. We are
independent of the Company in accordance with the ethical requirements that are relevant to our audit of
the financial statements in Japan, and we have fulfilled our other ethical responsibilities in accordance withthese requirements. We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our opinion.
Other Information
The other information comprises the business report and its supplementary schedules . Management is
responsible for the preparation and presentation of the other information. The Audit and Supervisory113

Committee is responsible for overseeing the directors’ performance of their duties with regard to the design,
implementation and maintenance of the reporting process for the other information.
Our opinion on the financial statements and the accompanying supplementary schedules does not cover theother information and we do not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements and the accompanying supplementary schedules,
our responsibility is to read the other information and, in doing so, consider whether the other information
is materially inconsistent with the financial statements and the accompanying supplementary schedules 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 and Supervisory Committee for the Financial
Statements and the Accompanying Supplementary Schedules
Management is responsible for the preparation and fair presentation of the financial statements and theaccompanying supplementary schedules in accordance with accounting principles generally accepted inJapan, and for such internal control as management determines is necessary to enable the preparation offinancial statements and the accompanying supplementary schedules that are free from material
misstatement, whether due to fraud or error.
In preparing the financial statements and the accompanying supplementary schedules, management is
responsible for assessing the Company’s ability to continue as a going concern, disclosing, as applicable,
matters related to going concern in accordance with accounting principles generally accepted in Japan.
The Audit and Supervisory Committee is responsible for overseeing the directors’ performance of theirduties with regard to the design, implementation and maintenance of the Company’s financial reporting
process.
Auditor’s Responsibilities for the Audit of the Financial Statements and the Accompanying
Supplementary Schedules
Our objectives are to obtain reasonable assurance about whether the financial statements and theaccompanying supplementary schedules as a whole are free from material misstatement, whether due tofraud or error, and to issue an auditor’s report that includes our opinion. Misstatements can arise from fraud
or error and are considered material if, individually or in the aggregate, they could reasonably be expected
to influence the economic decisions of users taken on the basis of these financial statements and theaccompanying supplementary schedules.
As part of our audit in accordance with auditing standards generally accepted in Japan, we exercise
professional judgment and maintain professional skepticism throughout the audit. We also:

Identify and assess the risks of material misstatement of the financial statements and the accompanying
supplementary schedules, whether due to fraud or error, design and perform audit procedures
responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis
for our opinion. The selection and application of audit procedures depends on the auditor’s judgment.

Obtain an understanding of internal control relevant to the audit in order to design audit proceduresthat are appropriate in the circumstances, while the objective of the audit is not to express an opinion
on the effectiveness of the Company’s internal control.

Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by management.

Conclude on the appropriateness of management’s use of the going concern basis of accounting andbased on the audit evidence obtained, whether a material uncertainty exists related to events orconditions that may cast significant doubt on the Company’s ability to continue as a going concern. If114we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s reportto the related disclosures in the financial statements and the accompanying supplementary schedulesor, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit
evidence obtained up to the date of our auditor’s report. However, future events or conditions may
cause the Company to cease to continue as a going concern.


Evaluate whether the presentation and disclosures in the financial statements and the accompanying
supplementary schedules are in accordance with accounting standards generally accepted in Japan, theoverall presentation, structure and content of the financial statements and the accompanying
supplementary schedules, including the disclosures, and whether the financial statements and theaccompanying supplementary schedules represent the underlying transactions and events in a mannerthat achieves fair presentation.

We communicate with the Audit and Supervisory Committee regarding, among other matters, the planned
scope and timing of the audit, significant audit findings, including any significant deficiencies in internal
control that we identify during our audit.
We also provide the Audit and Supervisory Committee with a statement that we have complied with
relevant ethical requirements regarding independence, and communicate with them all relationships andother matters that may reasonably be thought to bear on our independence, and where applicable, actions
taken to eliminate threats or safeguard sapplied.
Interest required to be disclosed by the Certified Public Accountants Act of Japan
Our firm and its designated engagement partners do not have any interest in the Company which arerequired to be disclosed pursuant to the provisions of the Certified Public Accountants Act of Japan.
Notes to the Reader of Independent Auditor’s Report:
This is an English translation of the Independent Auditor’s Report as required by the Companies Act ofJapan for the conveniences of the reader.

115

Audit Report of the Audit and Supervisory Committee
AUDIT REPORTThe Audit and Supervisory Committee of the Company has audited the Directors’ execution of theirduties during the 2023 fiscal year, from April 1, 2023, to March 31, 2024. The Committee hereby
reports the methods and results of the audit as follows:
1. Methods of the Audit and Details Thereof(1) The Audit and Supervisory Committee received reports regularly from Directors, employees,
etc. on the resolutions of the Board of Directors concerning the matters listed in Article 39913, paragraph (1), items (i)(b) and (i)(c) of the Companies Act as well as the development
and operation status of the system that has been put in place based on said resolutions(internal control system), requested explanation as necessary and expressed its opinion. The
Committee also received reports from Directors, etc. and KPMG AZUSA LLC on the statusof the evaluation and audit of internal controls over financial reporting under the Financial
Instruments and Exchange Act and requested explanation as necessary.
(2) In accordance with the audit policy, audit plan, etc., established by the Audit and Supervisory
Committee, the Committee, in coordination with the internal auditing department and otherdepartments concerned, attended important meetings, received reports from Directors,
employees, etc. on the status of their execution of duties, requested explanation as necessary,
inspected important documents, etc., and conducted investigations regarding the status of
the business operations and properties of the Company at Head Office and Works, etc.
Regarding the Company’s subsidiaries, the Audit and Supervisory Committee sought tofacilitate communication and exchange information with directors, statutory auditors andothers of the Company’s subsidiaries and, when necessary, received reports from thesesubsidiaries on the status of their businesses.
(3) The Audit and Supervisory Committee monitored and examined whether the financial
auditor maintained its independence and carried out its audits in an appropriate manner,received reports from the financial auditor on the status of the execution of its duties and,
when necessary, attended its audits and requested explanations.
(4) The Audit and Supervisory Committee received a notification from the financial auditor thatit has established the “system for ensuring appropriate execution of duties” (mattersspecified in the items under Article 131 of the Regulations on Corporate Accounting) inaccordance with the “Quality Control Standards Relating to Auditing” (Business Accounting
Council) and other standards, and requested explanations when necessary.
Based on the foregoing methods, the Audit and Supervisory Committee examined the Business
Report and the related supplementary schedules for the 2023 fiscal year, non-consolidated financial
statements for the same fiscal year (non-consolidated balance sheet, non-consolidated statement ofincome, non-consolidated statement of changes in net assets, and notes to the non-consolidated
financial statements) and the related supplementary schedules as well as consolidated financial
statements for the same fiscal year (consolidated statement of financial position, consolidated
statement of profit or loss, consolidated statement of changes in equity, and notes to the consolidated
financial statements).

116

2. Results of audit:(1) Result of audit of the Business Report, etc.
In our opinion:a. the Business Report and the related supplementary schedules fairly represent theconditions of the Company in accordance with the applicable laws and ordinances andwith the Company’s Articles of Incorporation;b. with respect to the Directors’ execution of their duties, there are no fraudulent acts ormaterial facts of violation of applicable laws and ordinances or of the Company’s
Articles of Incorporation; andc. the contents of the resolutions of the Board of Directors regarding internal control
systems are appropriate. Furthermore, there are no matters that we should point out
regarding the contents of the Business Report and Directors’ execution of their duties
related to internal control systems, including internal control systems over financial
reporting.
(2) Result of audit of the non-consolidated financial statements and the related supplementaryschedules
In our opinion, the methods and results of the audit conducted by the financial auditor,
KPMG AZUSA LLC, are appropriate.
(3) Result of audit of the consolidated financial statements
In our opinion, the methods and results of the audit conducted by the financial auditor,
KPMG AZUSA LLC, are appropriate.
May 24, 2024

The Audit and Supervisory Committee
Mitsubishi Heavy Industries, Ltd.
Setsuo Tokunaga(seal)
Full-time Audit and Supervisory Committee
MemberRyutaro Takayanagi(seal)
Full-time Audit and Supervisory Committee
MemberHiroo Unoura(seal)
Audit and Supervisory Committee Member
Noriko Morikawa(seal)
Audit and Supervisory Committee Member
Masako Ii(seal)
Audit and Supervisory Committee Member(Note)
Mr. Hiroo Unoura, Ms. Noriko Morikawa and Ms. Masako Ii are outside directors as defined in
Article 2, item (xv) and Article 331, paragraph (6) of the Companies Act.
(End)

117