Annual Securities Report(The 154th Business Term)
From April 1, 2022 to March 31, 2023

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

Hitachi, Ltd.

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

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

Director, Kanto Local Finance Bureau[Filing Date]

June 21, 2023

[Fiscal Year]

The 154th Business Term (from April 1, 2022 to March 31, 2023)[Company Name]

Kabushiki Kaisha Hitachi Seisakusho[Company Name in English]

Hitachi, Ltd.

[Title and Name of

Keiji Kojima, President & CEO

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

03-3258-1111[Contact Person]

Yuki Fukutani, Manager, Legal Division[Contact Address]

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

03-3258-1111[Contact Person]

Yuki Fukutani, Manager, Legal Division[Place Where Available forTokyo Stock Exchange, Inc.

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

This is an English translation of the Annual Securities Report filed with the Director of the Kanto Local Finance Bureau
via Electronic Disclosure for Investors’ NETwork (“EDINET”) pursuant to the Financial Instruments and Exchange Act ofJapan with some contents including cover page, table of contents and URL of the reference information.
Certain information in “Part I. Information on the Company - II. Business Overview - 3. Risk Factors - Risks Related to
Our American Depositary Shares” is only included in this English translation of the Annual Securities Report for ADSs
holders and not included in the original report.
Certain information in “Part I. Information on the Company - V. Financial Information” in this document incorporates
financial statements prepared in conformity with the International Financial Report Standards (“IFRS”) as issued by theInternational Accounting Standards Board and independent auditor’s report instead of the English translation of the Annual
Securities Report.
The translation of the Internal Control Report, the Independent Auditors’ Report and the Confirmation Letter for theoriginal Annual Securities Report are included at the end of this document.
In this document, the terms “we,” “us,” “our” and “Hitachi” refer to Hitachi, Ltd. and consolidated subsidiaries or, as thecontext may require, Hitachi, Ltd. on a non-consolidated basis and the term “the Company” refers to Hitachi, Ltd. on a nonconsolidated basis.
Unless otherwise stated, in this document, where we present information in millions or hundreds of millions of yen, we
have truncated amounts of less than one million or one hundred million, as the case may be. Accordingly, the total of figures
presented in columns or otherwise may not equal the total of the individual items. We have rounded all percentages to thenearest percent, one-tenth of one percent or one-hundredth of one percent, as the case may be.
References in this document to the “Financial Instruments and Exchange Act” are to the Financial Instruments andExchange Act of Japan and other laws and regulations amending and/or supplementing the Financial Instruments andExchange Act of Japan.
References in this document to the “Companies Act” are to the Companies Act of Japan and other laws and regulations
amending and/or supplementing the Companies Act of Japan.

Part I Information on the Company

1

I.

II.

III.

IV.

Overview of the Company

1

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

1
3
7
10
18

Business Overview

23

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

23
27
34

Property, Plants and Equipment

65

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

65
66
70

Information on the Company

71

45
59
60

1. Information on the Company’s Stock, etc. .……………………………………………………… 71(1) Total number of shares, etc. ..………………………………………………………………… 71(2) Information on the stock acquisition rights, etc. ..…………………………………………… 72(3) Information on moving strike convertible bonds, etc. .……………………………………… 74(4) Changes in the total number of issued shares and the amount of common stock and other … 74
(5) Shareholders composition …………………………………………………………………… 75(6) Major shareholders ...………………………………………………………………………… 76(7) Information on voting rights .………………………………………………………………… 78
2. Information on Acquisition, etc. of Treasury Stock ...…………………………………………… 79
3. Dividend Policy ..………………………………………………………………………………… 81
4. Corporate Governance, etc. ……………………………………………………………………… 82(1) Corporate Governance ..……………………………………………………………………… 82(2) Directors and Senior Management. ..………………………………………………………… 89(3) Audit .………………………………………………………………………………………… 104(4) Compensation to Directors and Executive Officers .………………………………………… 108(5) Information on shareholdings ...……………………………………………………………… 115

V.

Financial Information ...………………………………………………………………………… 121

VI.

Stock-Related Administration for the Company ...………………………………………… 121VII. Reference Information on the Company .…………………………………………………… 122

Part II Information on Guarantors, etc. for the Company

124[Consolidated Financial Statements] ..……………………………………………………………………… F-1
Consolidated Financial Statements. ...……………………………………………………………… F-2
Reports of Independent Registered Public Accounting Firm ....…………………………………… F-75
[Internal Control Report (Translation)] ..…………………………………………………………………… A-1[Independent Auditors’ Report (Translation)] ...…………………………………………………………… A-3[Confirmation Letter (Translation)] ...……………………………………………………………………… A-9

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

Fiscal year
Year end
Revenues
Income before income taxes(Millions of yen, unless otherwise stated)
IFRS
150th
151st
152nd
153rd
154th
business term business term business term business term business term
March 2019
March 2020
March 2021
March 2022
March 2023
9,480,619
8,767,263
8,729,196
10,264,602
10,881,150
516,502180,268

844,443

839,333

819,971

Net income attributable to222,546
87,596501,613583,470649,124
Hitachi, Ltd. stockholders
Comprehensive income
171,140(8,465)838,237
958,008
905,819
attributable to Hitachi, Ltd.
stockholders
Total Hitachi, Ltd.
3,262,603
3,159,986
3,525,502
4,341,836
4,942,854
stockholders’ equity
Total equity
4,414,403
4,266,739
4,458,232
5,355,277
5,335,567
Total assets
9,626,592
9,930,081
11,852,853
13,887,502
12,501,414
Total Hitachi, Ltd.
3,378.81
3,270.43
3,646.46
4,488.91
5,271.97
stockholders’ equity per share(yen)
Earnings per share attributable
230.4790.71
519.29603.75684.55
to Hitachi, Ltd. stockholders,
basic (yen)Earnings per share attributable
230.2590.60
518.51602.96683.89to Hitachi, Ltd. stockholders,
diluted (yen)Total Hitachi, Ltd.
33.9
31.8
29.7
31.3
39.5
stockholders’ equity ratio (%)
Return on equity (%)
6.8
2.7
15.0
14.8
14.0
Price earnings ratio (times)
15.6
34.6
9.6
10.2
10.6
Net cash provided by operating
610,025
560,920
793,128
729,943827,045
activities
Net cash used in investing(162,872)(525,826)(458,840)(1,048,866)
151,063
activities
Net cash provided by (used in)(320,426)
2,837(184,838)
202,739(1,142,966)
financing activities
Cash and cash equivalents at
807,593
812,3311,015,886
968,827
833,283
end of year
Number of employees
295,941
301,056
350,864
368,247
322,525(Notes) 1. Our consolidated financial statements have been prepared in conformity with IFRS.
2. On October 1, 2018, the Company completed the share consolidation of every five shares into one
share for its common stock. The figures for total Hitachi, Ltd. stockholders’ equity per share andearnings per share attributable to Hitachi, Ltd. stockholders, basic and diluted, are calculated on theassumption that the Company conducted this share consolidation at the beginning of the 150th businessterm.
3. The figures of “Income before taxes” before the 152nd business term are measured by “Income fromcontinuing operations, before income taxes.”
4. Average numbers of part-time employees, etc. are not stated since those were less than 10% of thenumber of employees.

1(2) Financial data etc. of the Company
Fiscal year
Year end
Revenues
Ordinary income
Net income
Common stock
Number of issued shares (thousandsof shares)
Total net assets
Total assets
Net assets per share (yen)Dividends per share (yen)[Of the above, interim dividends per
share (yen) ]Net income per share, basic (yen)(Millions of yen, unless otherwise stated)
150th
151st
152nd
153rd
154th
business term business term business term business term business term
March 2019 March 2020 March 2021 March 2022 March 2023
1,927,241
1,793,250
1,678,223
1,623,424
1,631,338
304,069
355,490
305,461
365,049
354,719
174,062
119,409705,511516,115
987,946458,790459,862
460,790
461,731462,817966,692

967,280

967,885

968,234

938,083

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

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

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

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

3,336,637
5,940,498
3,557.49
145[70]

180.26123.59729.77533.63

1,041.20

Net income per share, diluted (yen)Stockholders’ equity ratio (%)
Return on equity (%)
Price earnings ratio (times)
Dividend payout ratio (%)
Number of employees
Total shareholder return (%)[Comparative indicator : TOPIX] (%)

180.09123.49729.18533.301,040.62
39.7
39.4
45.0
45.4
56.1
11.2
7.6
36.9
21.1
33.1
19.9
25.4
6.9
11.6
7.0
50.0
76.9
14.4
23.4
13.9
33,49031,442
29,85029,48528,672
95.4
86.4
137.4
170.7
202.7
[92.7][81.7][113.8][113.4][116.7]
3,925.0
Highest share price (yen)4,693.0
5,515.0
7,460.0
7,463.0[873.7]2,767.5
Lowest share price (yen)2,524.0
2,855.0
4,750.0
5,665.0[692.1](Notes) 1. On October 1, 2018, the Company completed the share consolidation of every five shares into one sharefor its common stock. The figures for net assets per share and net income per share, basic and diluted,
are calculated on the assumption that the Company conducted this share consolidation at the beginningof the 150th business term.
2. On October 1, 2018, the Company completed the share consolidation of every five shares into one sharefor its common stock. 58 yen of dividends per share for the 150th business term is the sum of 8 yen of
the interim dividend per share before the share consolidation and 50 yen of the year-end dividend pershare after the share consolidation.
3. Average number of part-time employees, etc. is not stated since it was less than 10% of the number of
employees.
4. The highest and lowest share prices are market prices on the Prime Market of the Tokyo Stock
Exchange since April 4, 2022 and the highest and lowest share prices before that are market prices on
the first section of the Tokyo Stock Exchange. On October 1, 2018, the Company completed the shareconsolidation of every five shares into one share for its common stock. Regarding the 150th business
term, the figures in the upper row are the highest and lowest prices after the share consolidation and thefigures in brackets in the lower row are those before the share consolidation.
5. Effective from the 153rd business term, the Company adopted the “Accounting Standard for Revenue
recognition” (ASBJ Statement No.29, March 31, 2020). The figures for key financial data from the153rd business term are restated as the standard is applied.

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

2. History
1910

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

Feb.

1920

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

Feb.

1921

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

May

1935

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

May

1937

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

Apr.

1939

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

Sep.

1940

Established Mito Works

Apr.

1942

Established Central Research Laboratory

Sep.

1943

Merged Riken Vacuum Industry and established Mobara Works

Mar.

1944

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

Dec.
Apr.

1947

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

May

1949

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

Feb.

1950

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

May

1955

Established Hitachi Sales Corporation

Oct.

1956

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

Nov.
Jun.

1957

Spun off Kokubu Works from Hitachi Works

Feb.

1959

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

Oct.
Jun.

1960

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

Aug.
Feb.

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

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

Aug.
Aug.

1962

Established Kanagawa Works

Feb.

1963

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

Apr.
Feb.

1966

Established Mechanical Engineering Research Laboratory

Feb.

1968

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

3

Feb.

1969

Established Software Works

Apr.

Established Ome WorksAug.

Established Omika Works

Dec.

Spun off Hitachi Construction Machinery Co., Ltd.

May

1970

Established Hitachi Software Engineering Co., Ltd.

Sep.
Apr.

Established Takasaki Works

1971

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

Jun.
Feb.

1973

Established Systems Development Laboratory

Jun.

1974

Established Tsuchiura Works
Relocated Kameido Works and renamed to Nakajo Works

Nov.
Jun.

1982

Established Hitachi Europe Ltd.

Apr.

1985

Established Advanced Research Laboratory

Feb.

1989

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

Feb.

1991

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

Aug.
Feb.

1992

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

Aug.
Feb.

1993

1994

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

Oct.
Feb.

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

Aug.
Aug.

Integrated Yokohama Works and Tokai Works into AV Products Division

1995

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

Apr.
Apr.

1999

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

Oct.

2000

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

4

Oct.

2001

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

Apr.

2002

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

Oct.

Jan.

2003

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

Apr.

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

Jun.

Adopted committee system as the Company’s corporate governance structure

Oct.

2004

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

Apr.

2006

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

Dec.
Jul.

2007

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

Mar.

2009

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

Jul.

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

Oct.

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

Feb.

2010

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

Apr.

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

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

Oct.

2011

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

5

Mar.

2012

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

Apr.

2013

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

Jul.
Feb.

2014

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

Mar.

Apr.

2015

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

Oct.
Apr.

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

2016

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

Turned Hitachi Transport System, Ltd. into an equity-method
associate of the Company via sale of a part of its shares (ceased to be
an affiliate of the Company in March 2023 due to selling its shares)

Oct.

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

Mar.

2017

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

Jun.

2018

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

Mar.

2019

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

Apr.
Apr.

2020

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

May

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

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

Jan.

2021

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

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

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

July

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

Aug.

2022

Turned Hitachi Construction Machinery Co., Ltd. into an equity-method associate of the Company via saleof a part of its shares

Jan.

2023

Transferred the business of Hitachi Metals, Ltd. (currently Proterial, Ltd.) via share sale of the company

6

Please check out our YouTube channel.
https://www.youtube.com/watch?v=2pTZIJBBNRo

3. Description of Business
As of March 31, 2023, the Hitachi Group, which is comprised of the Company and 963 affiliates (696consolidated subsidiaries and 267 equity-method associates and joint ventures.), positions three sectors:“Digital Systems & Services,” “Green Energy & Mobility,” and “Connective Industries,” as growth areas
and allocates related business units into each sector. “Automotive System” positions alongside the above
three sectors. Ranging over the seven segments from the four sectors to additional two segments as Hitachi
Construction Machinery and Hitachi Metals, and Others, the Hitachi Group engages in a broad range ofbusiness activities, from product development and manufacturing to sales and services.
(Note) Hitachi Construction Machinery Co., Ltd. has ceased to be a consolidated subsidiary of the company
through the partial transfer of shares on August 23, 2022. Hitachi Metals, Ltd. has ceased to be anaffiliate of the Company through the share transfer on January 5, 2023. As a result, Hitachi
Construction Machinery segment and Hitachi Metals segment were abolished on April 1, 2023.
One of the Hitachi’s strengths is the ability to provide solutions that use digital technologies to resolve
issues that customers and society face and our operational technology (OT), which runs equipment andsystems at production sites, and social infrastructure such as railways and power distribution systems in
addition to the high-quality and highly reliable products.

At the present time when society and business continue to generate more data, Hitachi’s Lumada acts
as an engine that creates new value from these data and accelerates innovation. Lumada is a general term forthe solutions, services and technologies that utilize Hitachi’s advanced digital technologies to create value
from customers’ data and accelerate digital innovation. It is derived from the words “illuminate” and “data”
and was created based on the idea of combining the strengths of OT, IT and products cultivated within
Hitachi. Along with the development of IT and the Internet of things (IoT), social and business activities
continue to generate data at an increasing speed. Hitachi has focused on these data as a new source of value
in future society and launched the Lumada business in 2016 with the goal of using large volumes of data tocreate innovation for the world.
Utilizing digital technology such as data analytics and AI, the Lumada business builds a cycle of value
co-creation with customers that involves understanding customers’ management issues, designing,
implementing, operating and maintaining solutions to the issues, and working to solve the next issues.
Specifically, we are promoting the provision of service and solutions such as sophistication of operation andmaintenance through operation monitoring and predictive diagnosis of failures and ticketing and digital
payment utilizing secure data management. Rather than relying merely on product sales, we will strive toexpand the Lumada business by leveraging our strengths in OT x IT x Products, commercializing our
expertise in various industries and operations and shifting to digital solutions that can be provided tomultiple customers in order to build a business model based on value created through the provision ofsolutions, such as fee income profit model.

7

Major business outline for each segment and the positioning of Business Units (BU) of the Company
and principal affiliated companies are described as follows.
Segments
Digital Systems &ServicesGreen Energy &Mobility

Connective Industries

Automotive Systems

Hitachi Construction
Machinery

Hitachi Metals

Main products and services
・Digital Solutions (System Integration,
Consulting, Cloud Services),
・IT Products (Storage, Servers)
・Software・ATMs

・Energy Solutions (Power Grids, Renewable
Energy, Nuclear),・Railway Systems

・Building Systems (Elevators, Escalators),
・Smart Life & Ecofriendly Systems (HomeAppliances, Air Conditioners),
・Measurement and Analytical Systems (Medical
and Bio, Semiconductor, Industry),・Industry & Distribution Solutions,・Water & Environment Solutions
・Industrial Machinery・Powertrain,
・Chassis
・Advanced Driver Assistance,
・Motorcycle Systems
・Hydraulic Excavators
・Wheel Loaders
・Mining Machinery
・Maintenance and Services
・Construction Solutions
・Mine Management Systems
・Specialty Steel Products
・Functional Components and Equipment
・Magnetic Materials and Power Electronics
Materials
・Wires, Cables and Related Products

8(As of March 31, 2023)
BU and principal affiliated companies[BU]
Financial Institutions BU
Social Infrastructure Systems BU
Services & Platforms BU[Consolidated subsidiaries]
Hitachi Information & Telecommunication
Engineering, Ltd.
Hitachi Channel Solutions Corp.
Hitachi Solutions, Ltd.
Hitachi Systems, Ltd.
GlobalLogic Worldwide Holding, Inc.
Hitachi Computer Products (America), Inc.
Hitachi Digital LLC
Hitachi Payment Services Private Limited
Hitachi Vantara LLC[BU]
Power Grids BU
Energy BU
Nuclear Energy BU
Railway Systems BU[Consolidated subsidiaries]
Hitachi-GE Nuclear Energy, Ltd.
Hitachi Plant Construction, Ltd.
Hitachi Power Semiconductor Device, Ltd.
Hitachi Power Solutions Co., Ltd.
Hitachi Energy Ltd
Hitachi Rail Ltd.
[BU]
Building Systems BU
Industrial Digital BU
Water & Environment BU[Consolidated subsidiaries]
Hitachi Building Systems Co., Ltd.
Hitachi Global Life Solutions, Inc.
Hitachi High-Tech Corporation
Hitachi Industrial Equipment Systems Co., Ltd.
Hitachi Industrial Products, Ltd.
Hitachi Industry & Control Solutions, Ltd.
Hitachi Plant Services Co., Ltd.
Hitachi Elevator (China) Co., Ltd.
Hitachi Industrial Holdings Americas, Inc.
JR Technology Group, LLC
Sullair, LLC[Equity-method associates]
Hitachi Kokusai Electric Inc.
Arcelik Hitachi Home Appliances B.V.
Johnson Controls-Hitachi Air Conditioning
Holding (UK) Ltd[Consolidated subsidiaries]
Hitachi Astemo, Ltd.
Hitachi Astemo Americas, Inc.
--

(As of March 31, 2023)
Segments
Main products and services
BU and principal affiliated companies
Others・Optical Disk Drives[Consolidated subsidiaries]
・Property Management
Hitachi-LG Data Storage, Inc.
Hitachi Real Estate Partners, Ltd.
Hitachi America, Ltd.
Hitachi Asia Ltd.
Hitachi (China), Ltd.
Hitachi Europe Ltd.
Hitachi India Pvt. Ltd.
(Notes) 1. Hitachi America, Ltd., Hitachi Asia Ltd., Hitachi (China), Ltd., Hitachi Europe Ltd. and Hitachi India Pvt. Ltd. are the
Hitachi Group’s regional supervising company for Americas, Asia, China, Europe and India, and they sell the HitachiGroup’s products.
2. Services & Platforms BU belonging to Digital Systems & Services Segment was reorganized as Cloud Services Platforms
BU on April 1, 2023. Digital Engineering BU was established in Digital Systems & Services Segment on April 1, 2023.
3. Energy BU belonging to Green Energy & Mobility Segment was abolished on April 1, 2023.
4. Sullair, LLC changed its name to Hitachi Global Air Power US, LLC on April 12, 2023.
5. Hitachi Construction Machinery Co., Ltd. has ceased to be a consolidated subsidiary of the Company and become an
equity-method associate of the Company through the partial transfer of shares on August 23, 2022. Consequently, there isno company which belongs to the Hitachi Construction Machinery segment and Hitachi Construction Machinery Segment
was abolished on April 1, 2023.
6. Hitachi Metals, Ltd. has ceased to be an affiliate of the Company through the share transfer on January 5, 2023.
Consequently, there is no company which belongs to the Hitachi Metals segment and Hitachi Metals Segment was
abolished on April 1, 2023. Hitachi Metals, Ltd. changed its name to Proterial, Ltd. on January 4, 2023.
7. In addition to the table above, the major equity-method associates is Hitachi Construction Machinery Co., Ltd. as of March

31, 2023.

9

4. Information on Affiliates(1) Consolidated subsidiaries(As of March 31, 2023)
Company nameLocation

Ownership
Commonpercentage ofPrincipal businessstock
voting rights(%)

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

1,350

Digital Systems& Services

Hitachi Channel
Solutions, Corp.

Shinagawaku, Tokyo

8,500

Digital Systems& Services

Hitachi Solutions,Ltd.

Shinagawaku, Tokyo

20,000Digital Systems& Services*Hitachi Systems,
Ltd.

Shinagawaku, Tokyo

19,162

Digital Systems& Services*GlobalLogic
Worldwide
Holdings, Inc.

California,
U.S.A.

Hitachi Computer
Products(America), Inc.

Oklahoma,
U.S.A.

(Thousandsof US Digital Systems
dollars) & Services
8,373,504(Thousandsof US Digital Systems
dollars) & Services

14,00010

Relationship

The Company outsources
design, development,
manufacturing, evaluation andvalidation of storages, servers
and telecommunication
100.0 networks equipment, etc. The
Company’s Directors,
Executive Officers or
employees concurrently holdposition of directors orofficers.
The Company purchases
ATMs and other informationequipment. The Company’s
100.0 Directors, Executive Officers
or employees concurrently
hold position of directors orofficers.
The Company outsources
development of information
systems and software, etc. The
Company’s Directors,
100.0
Executive Officers or
employees concurrently holdposition of directors orofficers.
The Company outsources
calculation, development ofsoftware, installation andmaintenance of
telecommunication equipment
100.0 and computers. The
Company’s Directors,
Executive Officers or
employees concurrently holdposition of directors orofficers.
The company operates digitalengineering service business.
The Company’s Directors,[100.0]Executive Officers or
100.0
employees concurrently holdposition of directors orofficers.
The Company supplies partsfor computer peripherals. The[100.0] Company’s Directors,
100.0 Executive Officers or
employees concurrently holdposition of directors orofficers.

(As of March 31, 2023)
Company nameLocation

Ownership
Commonpercentage ofPrincipal businessstock
voting rights(%)(Thousandsof US Digital Systems
dollars) & Services*Hitachi Digital
LLC

California,
U.S.A.

Hitachi Payment
Services Private
LimitedChennai,
India(Thousandsof Indian Digital Systems
rupee) & Services*Hitachi Vantara
LLC

California,
U.S.A.

(Thousandsof US
dollars) Digital Systems

9,918,641

79,158925,000& Services

Hitachi-GE Nuclear Hitachi,
Energy, Ltd.
Ibaraki

5,000Green Energy &Mobility

Hitachi Plant
Construction, Ltd.

Toshimaku, Tokyo

3,000

Green Energy &Mobility

Hitachi Power
Semiconductor
Device, Ltd.

Hitachi,
Ibaraki

450

Green Energy &Mobility

Hitachi Power
Solutions Co., Ltd.

Hitachi,
Ibaraki

4,000

Green Energy &Mobility

11

Relationship

Holding company for Hitachi
Vantara LLC, etc. The
Company’s Directors,
100.0 Executive Officers or
employees concurrently holdposition of directors orofficers.
Offering the Hitachi Group's
payment services for financial
institutions in India. The[58.8] Company’s Directors,
100.0 Executive Officers or
employees concurrently holdposition of directors orofficers.
Sales company for theCompany's storage, etc. The
Company outsources
consulting services. The[100.0]Company's Directors,
100.0
Executive Officers or
employees concurrently holdposition of directors orofficers.
The Company delivers nuclear
power generation equipment,
etc. The Company’s Directors,
80.0 Executive Officers or
employees concurrently holdposition of directors orofficers.
Construction of the Company’s
energy and industrial plants,
etc. The Company’s Directors,
100.0 Executive Officers or
employees concurrently holdposition of directors orofficers.
The Company purchases
semiconductor components.
The Company’s Directors,
100.0 Executive Officers or
employees concurrently holdposition of directors orofficers.
The Company purchases
power plant parts, andoutsources maintenance ofpower generation equipment
and control equipment, etc.
100.0
The Company’s Directors,
Executive Officers or
employees concurrently holdposition of directors orofficers.

(As of March 31, 2023)
Company name

Hitachi Energy Ltd

Location

Zurich,Switzerland

Ownership
Commonpercentage ofPrincipal businessstock
voting rights(%)(Thousandsof Swiss Green Energy &franc) Mobility

100.0

1,250

(Thousandsof Sterling Green Energy &pounds) Mobility
878,181*Hitachi Rail Ltd

London,U.K.

Hitachi Building
Systems Co., Ltd.

Chiyodaku, Tokyo

5,105

Connective
Industries

100.0

Hitachi Global Life Minato-ku,
Solutions, Inc.
Tokyo

20,000Connective
Industries

100.0

Hitachi High-Tech
Corporation

7,938

Connective
Industries

100.0

Minato-ku,
Tokyo

12

100.0

Relationship
Holding company for power
grids business companies fromwhich the Company purchases
power grids devices, etc. The
Company’s Directors,
Executive Officers or
employees concurrently holdposition of directors orofficers.
Manufacturing, sales,
engineering and maintenanceof the Company’s rail systems
products. The Company’s
Directors, Executive Officers
or employees concurrently
hold position of directors orofficers.
Design, manufacturing, sales,
installation and maintenance,
etc. of the elevators andescalators the Company
developed. The Company’s
Directors, Executive Officers
or employees concurrently
hold position of directors orofficers.
Manufacturing and sales of the
Hitachi Group's home
appliances, and sales, systeminstallation and maintenance,
etc. of the Group’s airconditioning and refrigeratingproducts. The Company’s
Directors, Executive Officers
or employees concurrently
hold position of directors orofficers.
The Company sells andpurchases informationequipment and power-relatedparts, etc. through thiscompany. The Company’s
Directors, Executive Officers
or employees concurrently
hold position of directors orofficers.

(As of March 31, 2023)
Company nameLocation

Ownership
Commonpercentage ofPrincipal businessstock
voting rights(%)

Hitachi Industrial
Chiyoda-ku,
Equipment Systems
TokyoCo., Ltd.

10,000Connective
Industries

Hitachi Industrial
Products, Ltd.

Chiyoda-ku,
Tokyo

10,000Connective
Industries

Hitachi Industry& Control
Solutions, Ltd.

Hitachi,
Ibaraki

3,000

Connective
Industries

Hitachi Plant
Services Co., Ltd.

Toshimaku, Tokyo

3,000

Connective
Industries

Hitachi Elevator(China) Co., Ltd.

Guangzhou,
China*Hitachi Industrial
Illinois,
Holdings Americas,
USA.
Inc.

(Thousandsof Chinese Connectiveyuan) Industries

538,806(Thousandsof US Connective
dollars) Industries

2,102,670

13

Relationship

The Company
purchases industrial
equipment. The
Company’s Directors,
100.0
Executive Officers or
employees concurrently
hold position of directors orofficers.
The Company
purchases industrial
equipment. The
Company’s Directors,
100.0
Executive Officers or
employees concurrently
hold position of directors orofficers.
The Company outsources
development of information
control systems, etc. The
Company’s Directors,
100.0
Executive Officers or
employees concurrently holdposition of directors orofficers.
Construction of theCompany’s industrial
and public plants, etc. The
Company outsources theservices for them. The
100.0
Company’s Directors,
Executive Officers or
employees concurrently holdposition of directors orofficers.
Sales, installation andmaintenance, etc. of
the Hitachi Group’s
elevators and escalators in[70.0]
China. The Company’s
70.0
Directors, Executive Officers
or employees concurrently
hold position of directors orofficers.
Holding company for JR
Technology Group LLC and
Sullair, LLC. The Company’s[100.0]
Directors, Executive Officers
100.0
or employees concurrently
hold position of directors orofficers.

(As of March 31, 2023)
Company name

JR Technology
Group, LLC

Sullair, LLC

Location

Michigan,
U.S.A.

Indiana,
U.S.A.

*Hitachi Astemo,Ltd.

Hitachinaka,Ibaraki

Hitachi Astemo
Americas, Inc.

Kentucky,
U.S.A.

Hitachi-LG Data
Storage, Inc.

Hitachi Real
Estate Partners,
Ltd.

*Hitachi America,
Ltd.

Minato-ku,
TokyoChiyoda-ku,
Tokyo

California,
U.S.A.

Ownership
Commonpercentage ofPrincipal businessstock
voting rights(%)-

Connective
Industries-

Connective
Industries

51,500Automotive
Systems(Thousandsof US Automotive
dollars) Systems

171,779

4,800

2,000

OthersOthers(Thousandsof US
Othersdollars)

14,142,946

14

Relationship

Holding company for JR
Automation Technology, LLC,
[100.0] etc. The Company’s Directors,
100.0 Executive Officers or
employees concurrently holdposition of directors or officers.
The Company purchases
industrial equipment.
[100.0] The Company’s Directors,
100.0 Executive Officers or
employees concurrently holdposition of directors or officers.
The Company purchases partsfor railway vehicles, etc. The
Company’s Directors,
66.6
Executive Officers or
employees concurrently holdposition of directors or officers.
Manufacturing and sales[100.0] company in North America for
100.0 the Hitachi Group’s automotive
systems products.

51.0

Development, manufacturing
and sales company for the
Hitachi Group’s optical disk
drives and wireless chargers.
The Company’s Directors,
Executive Officers or
employees concurrently holdposition of directors or officers.

100.0

The Company outsourcesmanagement of welfare
facilities for employees, etc.
The Company’s Directors,
Executive Officers or
employees concurrently holdposition of directors or officers.

100.0

The Hitachi Group’s regional
supervising company inAmericas, and sells the HitachiGroup’s healthcare-related
products, etc., as well as
promotes R&D in Americas.
The Company’s Directors,
Executive Officers or
employees concurrently holdposition of directors or officers.

(As of March 31, 2023)
Company name

Hitachi Asia Ltd.

Location

Singapore

Ownership
Commonpercentage ofPrincipal businessstock
voting rights(%)

The Hitachi Group’s regional
supervising company for Asia,and sells the Hitachi Group’s
industrial machinery andtrain-, healthcare- and100.0 information-related products,
etc. The Company’s Directors,
Executive Officers or
employees concurrently holdposition of directors orofficers.
The Hitachi Group’s regional
supervising company for
China, and sells the HitachiGroup’s plant, industrial
machinery and train-,healthcare- and information100.0
related products, etc. The
Company’s Directors,
Executive Officers or
employees concurrently holdposition of directors orofficers.
The Hitachi Group’s regional
supervising company andpromoting R&D company for
Europe, and sells the HitachiGroup’s industrial machineryand digital media- and
100.0
information-related products,
etc. The Company’s Directors,
Executive Officers or
employees concurrently holdposition of directors orofficers.
The Hitachi Group’s regional
supervising company for India,
and sells the Hitachi Group’s
plants and industrial machinery
related products, etc. The[100.0] Company’s Directors,
100.0 Executive Officers or
employees concurrently holdposition of directors orofficers.

(ThousandsofSingapore Others
dollars)

127,649

Hitachi (China),Ltd.

Beijing,
China(Thousandsof US
Othersdollars)

226,380

Stoke Poges,
Hitachi Europe Ltd.
U.K.

(Thousandsof Sterling
Otherspounds)Hitachi India Pvt.
Ltd.

New Delhi,
India(Thousandsof Indian
Othersrupee)

Others- 661 companies-

253,049

344,000-

Relationship

-

15

-

-

(Notes) 1. The unit of amounts and currency shown in the “Common stock” column are in millions of yen, unlessotherwise specified.
2. The common stock of JR Technology Group, LLC and Sullair, LLC is not shown since they are limited
liability companies under the U.S. law, and do not have the “common stock”.
3. Companies with one asterisk (*) in the “Company name” column are specified subsidiaries.
4. The name of segment in which the companies are classified is shown in the “Principal business”
column.
5. The amounts in brackets in upper row of the “Ownership percentage of voting rights” column represent
the percentage of voting rights owned indirectly by subsidiaries, of the total ownership percentage.
6. Companies with negative net worth are shown below, along with the amount of liabilities in excess ofassets.
Hitachi Power Europe GmbH
137,568 million yen
Hitachi Astemo Netherlands B.V.
16,385 million yen
7. Sullair, LLC changed its name to Hitachi Global Air Power US, LLC on April 12, 2023.
8. Revenues of Hitachi Energy Ltd (excluding intra-group revenue among consolidated companies)
accounts for more than 10% of consolidated revenue.
Key information on profit or loss:
1) Revenues
1,413,872 million yen
2) Income before income taxes
14,676 million yen
3) Net Income
297 million yen
4) Total equity
38,781 million yen5) Total assets
1,483,750 million yen

16

(2) Equity-method associates and joint ventures(As of March 31, 2023)
Company nameLocation

Commonstock

Hitachi Kokusai
Electric Inc.

Minato-ku,
Tokyo

1,000

Arcelik Hitachi
Home Appliances
B.V.

Amsterdam,
Netherlands

10,000Johnson ControlsHitachi Air
Conditioning
Holding (UK) Ltd

Hampshire,
U.K.

**Hitachi
Construction
Machinery Co., Ltd.

Taito-ku,Tokyo

Principal businessConnective
Industries(Euros) Connective

Industries(Thousands of
US dollars) Connective

935,107

Industries

Hitachi
81,576 Construction
Machinery

Ownership
percentage ofvoting rights(%)

Relationship

The Company
purchases
electronic equipment
and parts, etc. The
20.0 Company’s Directors,
Executive Officers or
employees concurrently
hold position of
directors or officers.
Holding company for
operating companies[40.0] for the Hitachi
40.0 Group’s home
appliances business inoverseas market.
Holding company for
air-conditioning
systems business[40.0] companies from40.0 which the HitachiGroup purchases airconditioning systems
devices.
The Company’s
Directors, Executive
Officers or employees
25.4
concurrently holdposition of directors orofficers.

Others- 263 companies(Notes) 1. The unit of amounts and currency shown in the “Common stock” column are in millions of yen, unlessotherwise specified.
2. Companies with two asterisks (**) in the “Company name” column submit Securities Registration
Statement or Annual Securities Report.
3. The name of segment in which the companies are classified is shown in the “Principal business”
column.
4. A Company with negative net worth is shown below, along with the amount of liabilities in excess ofassets.
GE-Hitachi Nuclear Energy Holdings LLC
24,038 million yen

175. Employees(1) Consolidated basis
Name of segment
Digital Systems & Services
Green Energy & Mobility
Connective Industries
Automotive Systems
Hitachi Construction Machinery
Hitachi Metals
OthersCorporate (Head Office and others)
Total(As of March 31, 2023)
Number of employees
100,763[15,386]
60,180[3,869]81,883[3,370]64,372[-][-][-]
12,044[2,764]
3,283[3,283]
322,525[28,672](Note) 1. The number in brackets in the lower row of the “Number of Employees” column is the number of
employees of the Company included in each of the numbers in the upper row.
2. Number of employees of Hitachi Group (the Company and its subsidiaries) decreased by 45,722 during
one year ended March 31, 2023. This is mainly due to the fact that there is no company which belongs to
Hitachi Construction Machinery segment and Hitachi Metals segment as a result of transfer of a part of
the Company’s shares in Hitachi Construction Machinery Co., Ltd. and transfer of its shares in Hitachi
Metals, Ltd., and two companies have ceased to be consolidated subsidiaries of the Company.
(2) The Company
Number of employees
Average age
Average length of service
28,67242.9
19.3 years(Note) Average annual salary includes bonuses and extra wages.

(As of March 31, 2023)
Average annual salary
9,159,908 yen(3) Relationship with labor union
The Company’s labor union, Hitachi Workers Union, is a member of the Japanese ElectricalElectronic & Information Union.
The relationship between management and labor unions in the Hitachi Group is stable andcooperative.
(4) Indicators of diversity
1) Disclosure of indicator under Consolidated basis
Ratio of women workers inmanagerial positions (%)
Note 1,2

The Company and Consolidated subsidiaries

13.0(Notes) 1. Results from FY2022 (April 1, 2022 to March 31, 2023) are listed.
2. Some direct employees (manufacturing workers) and some consolidated subsidiaries are not included in
the calculation because those figures are not counted.
182) Disclosure of indicators under the “Act on the Promotion of Women's Active Engagement inProfessional Life” and “Act on Childcare Leave, Caregiver Leave, and Other Measures for the Welfareof Workers Caring for Children or Other Family Members”(i) The Company

Company name

Ratio of women
workers inmanagerial
positions (%)
Note 1

Hitachi, Ltd.

7.4

Percentage of men
workers taking
childcare leave (%)
Notes 1-5

56.8 (*)

Wage gap between men and women (%)(Ratio of women's wages to men's wages)
Notes 1, 2, 6, 7
All employees

Permanent andfull-time
employees

Part-time orfixed-term
employees

66.4

66.7

55.3

(ii) Consolidated subsidiary

Company name

Ratio of women
workers inmanagerial
positions (%)
Note 1

Percentage of men
workers taking
childcare leave (%)
Notes 1-5

Wage gap between men and women (%)(Ratio of women's wages to men's wages)
Notes 1, 2, 6, 7
All employees

Permanent andfull-time
employees

Part-time orfixed-term
employees

Hitachi Urban Support, Ltd.

11.4

100.0 (*)

84.8

65.1

88.5

Hitachi IE Systems Co., Ltd.

1.2

33.3 (*)

63.6

69.6

48.4

Hitachi ICT Business Services,
Ltd.

7.8

0.0 (*)

69.6

65.0

79.7

Hitachi Academy Co., Ltd.

18.1

100.0

72.9

73.1

78.0

Hitachi Astemo, Ltd.

2.1

66.4 (*)

74.4

74.4

69.0

Hitachi Astemo Ueda, Ltd.

3.0

91.7 (*)

77.4

70.1

121.3

Hitachi Astemo Sendai, Ltd.

0.0

66.7

81.0

81.0

-

Hitachi Astemo High Cast, Ltd.

0.0

0.0

74.7

74.3

79.8

Hitachi Astemo Hanshin, Ltd.

2.2

80.0 (*)

70.3

70.1

91.7

Hitachi Astemo Business
Solutions, Ltd.

4.3

100.0 (*)

62.7

60.5

64.5

Hitachi Astemo Watari, Ltd.

0.0

100.0 (*)

73.9

73.7

78.4

1.5

80.0 (*)

64.1

63.4

96.4

0.0

0.0

63.6

68.1

60.8

3.8

36.4 (*)

74.8

72.5

79.8

5.6

25.0

82.0

82.0

82.0

0.7

59.1 (*)

67.2

68.8

50.5

12.0

38.0 (*)

76.7

78.4

54.4

0.0

75.0 (*)

77.8

77.8

-

Hitachi Advanced Systems
Corporation
Hitachi Appliances Techno
Service, Ltd.
Hitachi Ibaraki Technical
Service Ltd.
Hitachi Pharma Information
Solutions, Ltd.
Hitachi Industrial Products, Ltd.
Hitachi Information
Engineering, Ltd.
Okinawa Hitachi Network
Systems, Ltd.

19

Company name

Ratio of women
workers inmanagerial
positions (%)
Note 1

Percentage of men
workers taking
childcare leave (%)
Notes 1-5

Wage gap between men and women (%)(Ratio of women's wages to men's wages)
Notes 1, 2, 6, 7
All employees

Permanent andfull-time
employees

Part-time orfixed-term
employees

Kanto Hitachi Co., Ltd.

1.0

0.0

71.5

70.4

68.9

Kyushu Hitachi Systems, Ltd.

6.8

66.7 (*)

73.8

75.7

102.5

0.0

8.0 (*)

67.6

67.6

-

1.7

20.2 (*)

67.4

67.8

66.1

Hitachi KE Systems, Ltd.

2.7

20.0 (*)

68.2

65.7

72.4

Hitachi Transportation
Technologies, Ltd.

1.0

9.1 (*)

67.0

68.9

53.7

Hitachi Consulting Co., Ltd.

9.2

80.0 (*)

68.5

69.4

44.9

3.0

49.0 (*)

69.1

69.6

55.2

0.0

33.3

45.5

60.9

28.7

0.0

0.0

70.3

74.8

52.4

2.1

33.3 (*)

68.0

67.1

53.4

Shikoku Hitachi Systems, Ltd.

2.9

20.0

73.1

73.2

79.0

Hitachi Systems, Ltd.

6.3

82.9 (*)

69.4

69.6

44.4

5.1

50.0 (*)

73.6

74.4

68.9

12.4

100.0 (*)

77.0

77.4

21.2

2.6

68.4 (*)

66.2

72.3

62.8

6.4

50.0 (*)

71.6

71.8

43.2

1.7

66.7 (*)

70.5

70.1

59.7

Hitachi Solutions, Ltd.

6.9

105.0 (*)

71.4

70.8

93.2

Hitachi Solutions Create, Ltd.

4.8

66.1 (*)

70.0

69.6

45.9

2.5

100.0 (*)

70.9

69.7

92.6

4.1

69.6 (*)

68.2

67.9

-

4.4

78.6 (*)

72.0

72.0

-

4.9

87.5 (*)

71.4

71.6

48.8

Hitachi Air Conditioning
Solutions, Inc.
Hitachi Global Life Solutions,
Inc.

Hitachi Industrial Equipment
Systems Co., Ltd.
Hitachi Industrial Equipment
Technology Service, Co., Ltd.
Hitachi Industrial Equipment
Drive & Solutions Co., Ltd.
Hitachi Industry & Control
Solutions, Ltd.

Hitachi Systems Engineering
Services, Ltd.
Hitachi Systems PowerServices, Ltd.
Hitachi Systems Field Services,
Ltd.
Hitachi Social Information
Services, Ltd.
Hitachi Information &Telecommunication
Engineering, Ltd.

Hitachi Solutions Technology,
Ltd.
Hitachi Solutions West Japan,
Ltd.
Hitachi Solutions East Japan,
Ltd.
Hitachi Channel Solutions,
Corp.

20

Company name

Hitachi Technologies andServices, Ltd.
Hitachi Document Solutions
Co., Ltd.
Hitachi Nico Transmission Co.,Ltd.

Ratio of women
workers inmanagerial
positions (%)
Note 1

Percentage of men
workers taking
childcare leave (%)
Notes 1-5

Wage gap between men and women (%)(Ratio of women's wages to men's wages)
Notes 1, 2, 6, 7
All employees

Permanent andfull-time
employees

Part-time orfixed-term
employees

0.0

0.0

67.4

66.1

62.5

4.8

41.2 (*)

64.0

66.4

48.7

2.2

44.4

68.5

72.7

58.1

Nichiwa Service, Ltd.

3.0

50.0 (*)

52.5

65.8

68.3

Hitachi Hi-System21 Co., Ltd.

5.0

41.7 (*)

74.0

73.6

88.3

Hitachi High-Tech Corporation

5.2

75.2 (*)

71.4

71.1

87.8

50.0

- (*)

77.3

69.8

96.9

3.3

58.3 (*)

66.7

69.1

37.1

14.3

- (*)

98.6

101.2

69.9

3.0

92.3 (*)

71.0

69.2

87.0

5.3

0.0 (*)

66.4

64.2

56.6

2.1

92.9 (*)

67.1

63.7

93.2

1.3

50.0 (*)

66.2

69.1

76.8

1.4

57.4 (*)

66.5

66.4

56.9

1.0

50.0

67.7

67.7

59.4

1.6

29.3 (*)

63.7

65.4

52.2

1.4

0.0

69.2

74.3

64.9

3.2

100.0 (*)

75.4

78.0

80.5

Hitachi Plant Construction, Ltd.

1.2

53.1 (*)

66.8

72.7

48.2

Hitachi Plant Services Co., Ltd.

0.9

25.0 (*)

63.1

63.7

51.4

1.6

100.0 (*)(**)

60.3

64.3

54.7

Hitachi High-Technologies
Kyushu Corporation
Hitachi High-Tech Science
Corporation
Hitachi High-Tech Support
Corporation
Hitachi High-tech Solutions
Corporation
Hitachi High-Tech Nexus
Corporation
Hitachi High-Tech Fielding
Corporation
Hitachi High-Tech
Manufacturing & Service
Corporation
Hitachi Power Solutions Co.,Ltd.
Hitachi Power Semiconductor
Device, Ltd.
Hitachi Building Systems Co.,Ltd.
Hitachi Building Systems
Engineering Co., Ltd.
Hitachi Building Systems
Business Support Co., Ltd.

Hitachi Plant Mechanics Co.,Ltd.
HITACHI INSURANCESERVICES, LTD.
Hokkaido Hitachi Systems, Ltd.

8.3

0.0

54.0

52.6

61.6

4.3

0.0

70.5

69.1

-

21

Ratio of women
workers inmanagerial
positions (%)
Note 1

Percentage of men
workers taking
childcare leave (%)
Notes 1-5

Hitachi Management Partner
Corp.

11.7

66.7 (*)(**)

Hitachi You and I Co., Ltd.

14.3

Company name-Wage gap between men and women (%)(Ratio of women's wages to men's wages)
Notes 1, 2, 6, 7
All employees

Permanent andfull-time
employees

Part-time orfixed-term
employees

67.3

66.0

57.4

100.7

104.4

88.2

Hitachi Real Estate Partners,
4.2
22.2 (*)
62.9
63.0
27.0
Ltd.
(Notes) 1. Results from FY2022 are listed.
2. If there are no employees required for the calculation, "-" is indicated.
3. The figures are calculated by dividing the number of men workers who took childcare leave, etc. in thecurrent fiscal year by the number of men workers who had a child born in the current fiscal year.
4. For (*), employees taking leave for childcare purposes are included in the numerator.
5. For (**), the rates of childcare leave use by employment management category according to the Act on
the Promotion of Women's Active Engagement in Professional Life are as follows. Employees taking
leave for childcare purposes are not included in the numerator.
Company name

Percentage of men workers taking childcare leave (%)

Management / Professional：50.0
Skilled / General office work：－
Management / Professional：33.3
Hitachi Management Partner Corp.
Skilled / General office work：－
6. "All employees" is the sum of "Permanent and full-time employees" and "Part-time or fixed-term
employees”. The "Permanent and full-time employees" are permanent employees in full-time positions,while the "Part-time or fixed-term employees" are employees who are either part-time or fixed-term
employees.
7. There are no gender-based differences in the employee compensation system. The difference in per capita
wages for men and women is mainly due to higher proportion of men at higher employee grades,
including management positions, and higher proportion of women who work shorter hours. The Company
will analyze not only the categories based on the Act on the Promotion of Women's Active Engagementin Professional Life, but also more detailed categories.
Hitachi Plant Mechanics Co., Ltd.

For details on the initiatives being pursued by the Company and its consolidated subsidiaries on diversity,
equity and inclusion, please see “Section II Business Overview, 2. Sustainability Approach and Initiatives” and the
Hitachi Sustainability Report.

22

II. Business Overview
1. Management Policy, Economic Environment and Challenges Hitachi Group Faces(1) Management Policy
The Hitachi Group ("Hitachi”) aims to achieve further progress by delivering competitive products
and services, thereby creating higher value for customers, following its Mission: to contribute to society
through the development of superior, original technology and products. By taking full advantage of thediverse resources of Hitachi, while at the same time reviewing and restructuring businesses, Hitachi
aims to bolster its competitiveness and achieve growth in global markets. This process will be consistent
with Hitachi’s basic management policy, which is to increase shareholder value by meeting the
expectations of customers, shareholders, employees and other stakeholders.
(2) Economic Environment and Challenges Hitachi Group Faces
1) Hitachi Group
In today’s world, the future is increasingly difficult to foresee. A myriad of changes is taking place,including climate change, resource shortages, aging populations and problems of urbanization. Ukraine
conflict and the acceleration of global inflation is bringing dramatic changes to society and economies
worldwide, with its profound, adverse economic repercussions in each country. On the other hand,innovations to solve increasingly complex social issues are emerging across the globe.
In this economic environment, under the 2024 Mid-term Management Plan set out in April, 2022,
Hitachi aims to "support people's quality of life with data and technology that fosters a sustainable
society." Establishing “Digital,” “Green” and “Innovation” as the three pillars, Hitachi focuses on thefollowing measures to realize such society through global growth with One Hitachi.

i) Strengthening and Expanding the Data-driven Cycle of Value Co-creation with Customers in
Lumada
Hitachi is strengthening the cycle of value co-creation with customers in Lumada byunderstanding customers' management issues, then designing and implementing solutions to thoseissues, and implementing operation and maintenance while tackling solutions to the next issues.
Riding the growing demand for digital transformation (DX) and green transformation (GX) as a
tailwind, Hitachi expands Lumada solutions with every business in Hitachi including energy,transportation and industry.
ii) Aspiring to be an Innovator in Solving Environmental Issues
Through the Social Innovation Business based on collaborative creation with stakeholders,
Hitachi works to both solving environmental issues and improving people’s quality of life (QoL).
Initiatives aimed at decarbonization in particular have picked up speed, Hitachi aims toachieve carbon neutrality at its business sites by Fiscal 2030, and across the entire value chain by
Fiscal 2050 as its long-term environmental targets in “Hitachi Environmental Innovation 2050”.
Hitachi is making progress in reducing CO2 emissions faster than the target and aims to further
reducing CO2 emissions reducing energy consumption and the use of renewable energy. Hitachi
also helps customers reduce their CO2 emissions by providing solutions driven by Hitachi's
efficient, environmentally-conscious products.
iii) Creating Innovation for Growth
Hitachi aims to advance the creation of innovation for global business growth, to expand R&D
investments including cutting-edge research, and to also extend corporate venturing investments tocollaborate with startup companies. Hitachi will achieve sustainable growth that continues to future
generations by exploring the issues faced by society and customers, and devising innovations aimed
at solving them.
23With this approach, Hitachi seeks business growth while tackling cost restructuring bypromoting rationalization that includes site consolidation, thus ensuring its ability to generate cash
in a stable fashion even in an uncertain management environment due to soaring resources priceand ongoing global inflation. While enhancing the ability to generate cash, Hitachi also makes theinvestments necessary for growth in a swift but carefully selected manner, providing stable returns
to shareholders.
2) 3 focused business areas
The following are the operating environment and issues to be addressed in three focal
sectors, Digital Systems & Services, Green Energy & Mobility, and Connective Industries.
(Digital System & Service)
In an uncertain social and economic climate, increasingly complex management issues
require the use of digital technologies and services such as AI and IoT. At the same time,environmental challenges and initiatives to address the SDGs are accelerating against a backdropof serious social issues. In this landscape, the market for DX, which uses digital technology totransform business management and society, continues to grow globally.
In this global DX market, the Digital Systems & Services Sector will leverage the design anddigital engineering capabilities of GlobalLogic Inc., acquired in July 2021, to create value by
combining Hitachi's OT, IT and products, accelerating solutions for customers and society whiledriving the growth of the Lumada business in other sectors of Hitachi. Specifically, the sector will
accelerate the scaling up of Lumada by continuously providing value by deepening co-creation
with customers, the groupwide rollout of high value-added solutions, and the creation of newmarkets through ecosystem building with customers and partners.
The Digital Systems & Services Sector will also work to strengthen its management base by
developing and expanding the digitally minded human resources that will support these initiatives,
while providing continuous value as a partner in solving issues faced by society and customers inJapan and overseas, thereby achieving the sustainable growth of the Lumada business.
(Green Energy & Mobility)
Against the backdrop of climate change and heightened geopolitical risks, energy conversion
has rapidly advanced, and the market is expanding. Specifically, the electrification of mobility
such as buses and rail, and the expansion of the microgrids due to the diversification anddecentralization of the power supply mix, new business opportunities are emerging around theworld, including the transformation of conventional social infrastructure businesses into services,and GX efforts to realize a carbon neutral society.
The Green Energy & Mobility Sector helps to achieve sustainable social infrastructure with
its integration capability and global top-level products range. The sector contributes to improving
QoL through green energy and mobility that are friendly to the global environment. Morespecifically, the Green Energy & Mobility Sector products, services, and solutions leverage thestrengths derived from a combination of OT, IT, and products in power grids, renewable energy
systems, nuclear power generation systems, railway systems, and other businesses. In the energy
business, the sector will expand the delivery of services and solutions that will contribute to theachievement of a carbon neutral society by providing new solutions and promoting clean energy
through the fusion of the power grid technologies of Hitachi Energy and digital technologies using
Lumada. In the railway systems business, the sector connects traffic networks digitally andaccelerates the development of railway operation services and other services utilizing data.
Through these activities, the Green Energy & Mobility Sector helps increase people’s
wellbeing, including the delivery of decarbonization, stable energy supply, and delivery of safe,
secure, and comfortable railway systems, as the business constituting the core of the creation ofgreen value in the three growth areas in the Mid-term Management Plan 2024. In addition,
through Hitachi Energy and the acquisition of Thales' railroad signaling business, the sector will
accelerate its transformation into a highly profitable business by leveraging its global installed
base.

24

(Connective Industries)
In addition to the rapidly increasing uncertainties in the social environment, such as risinggeopolitical risks and an uptick in climate change-driven natural disasters, the rapid advance ofdigital technology has transformed people's lifestyles and business activities in major ways, andthe demand for new DX/GX is greater than ever. This requires interdisciplinary boundary issuesolving between organizations, companies and industries.
The Connective Industries Sector aims to create sustainable value through digitallyconnecting highly competitive products, including elevators/escalators, home appliances,measurement and analysis equipment, medical equipment and industrial equipment, and providingthem as solutions.
More specifically, the sector will reinforce its frontline engineering capabilities to give shape
to objectives and measures based on an analysis of customer business concepts and issues. At thesame time, the sector will utilize Lumada to digitally connect the cyberspace and the physicalworld. This will help solve the "edge" issues that exist between management and workplaces, inthe supply chain and between different industries, while evolving and expanding Total Seamless
Solutions for total optimization, from the industrial sector to the urban, healthcare and green
sectors. The sector will also strengthen its recurring business, which provides value on acontinuous and cyclical basis through after-sales service based on data generated by connected
products, and through deep insight into new issues that the customers need to solve.
Aiming to achieve global growth particularly in the key North America region, in 2022 thesector acquired Flexware Innovation, Inc., which excels in OT areas such as MES (manufacturingexecution system) and SCADA (supervisory control and data acquisition), and Telesis
Technologies Inc., which provides marking and engraving systems in the product sector. In
addition to these businesses, the sector will accelerate the development of Total Seamless
Solutions in North America by strengthening the digital integration of robotics SI from JR
Automation, air compressors from Hitachi Global Air Power (formerly Sullair), as well as
semiconductor manufacturing and measurement equipment, proton therapy systems and so on.
The sector sets out “Connecting data, value, industry, and society” as its purpose and aims tobe “sustainable value creators” through co-creation with customers.
(3) Targets under the mid-term management plan
Under the 2024 Mid-term Management Plan, Hitachi utilizes the following targets tomeasure performance in terms of meeting its strategic and operational goals. Following thedeconsolidation of listed subsidiaries and the planned deconsolidation of Hitachi Astemo, Ltd.,the Company changed its target of core free cash flows (cumulative for 3 years) from 1.4 trillion
yen to 1.2 trillion yen.
Fiscal 2024
TargetReason for selection as indicators

Annual growth rate for revenue
5-7%
Indicator to measure growth(FY 2021-FY 2024 CAGR)(Notes 1, 2)
Adjusted EBITA margin
12%
Indicator to measure profitability(Note 3)
EPS growth rate (FY 2021-FY
Indicator to measure profitability
10-14%
2024 CAGR) (Notes 1, 4,5)
and shareholder’s valueCore free cash flows: cumulative
Indicator to measure ability to
1.2 trillion yen
for 3 years (Note 6)
generate cash
Return on invested capital (ROIC)
Indicator to measure investment
10%(Note 7)
efficiency(Notes) 1. CAGR is presented as compound average growth rate.
2. It is calculated excluding listed subsidiaries.
3. Adjusted EBITA is representing the operating income, adding back the amortization of
intangible assets, etc. recognized upon business combinations, and adding or deducting
25

share of profits (losses) of investments accounted for using the equity method.
Adjusted EBITA margin is the ratio calculated by dividing Adjusted EBITA byrevenue.
4. EPS is presented as earnings per share.
5. Impact of one-time factors is excluded from net income in FY 2021
6. Core free cash flows are cash flows presented as free cash flows excluding cash flows
from M&A and asset sales, etc.
7. ROIC (Return on Invested Capital) = ("NOPAT" + Share of profits (losses) ofinvestments accounted for using the equity method) / “Invested Capital” x 100
NOPAT (Net Operating Profit after Tax) = Adjusted Operating Income x (1 – Taxburden rate)
Invested Capital = Interest-bearing debt + Total equity
In addition to providing the performance targets above, under the 2024 Mid-Term
Management Plan, Hitachi will address the following priority items in order to provide value tocustomers and society through the enhancement of human capital.

26

2. Sustainability Approach and Initiatives
Hitachi practices sustainable management, which positions sustainability as the core of its businessstrategy, and is working toward realizing a sustainable society through the Social Innovation Business.
The following describes Hitachi’s sustainability approach and initiatives.
(1) Governance and Risk Management
In April 2022, Hitachi established the Growth Strategy Meeting, Risk Management Meeting, andHuman Resource Strategy Meeting to deliberate on the following important issues within the Senior
Executive Committee that discusses important topics in Hitachi’s corporate management. The Risk
Management Meeting chaired by the President and assisted by the Chief Risk Management Officer(CRMO) as Vice-chairperson deliberates and makes decisions on important company-wide risks. The
Meeting aims to establish a solid management base linked to growth strategies through a unified andhorizontal understanding of risks. In addition, the Human Capital Strategy Meeting is an advisory bodyto the President dealing with decisions related to the organization and human capital, and is convened asa forum to discuss matters needed to foster an organization and culture aimed at the growth of the
Hitachi Group, and to secure and cultivate human resources.
After discussions at these meeting bodies, important sustainability issues are deliberated on by the
Senior Executive Committee to make decisions, and are submitted to the Board of Directors for further
discussions as necessary.

We are also working to enhance our sustainability management through activities such as meetings
on overall sustainability issues consisting of the Chief Sustainability Officer and the staff withsustainability responsibilities at business units (BUs), principal Group companies and regional
headquarters.
Individual sustainability themes such as carbon neutrality, circular economy, human rights due
diligence (HRDD), diversity, equity, and inclusion (DEI), occupational safety and health, supply chains,
quality assurance, etc. are promoted by meeting bodies consisting of responsible staff at BUs andprincipal Group companies as part of cross-organizational activities in the Hitachi Group, who discuss
measures and share information across the entire Group.
In addition, the levels of achievement of quantitative or qualitative sustainability targets are used as
the appraisal criteria for compensation paid to the Executive Officers.
(2) Initiatives to Address Key Issues
In the 2024 Medium-term Management Plan, we declared our new goal of "supporting people'squality of life with data and technology that fosters a sustainable society."
Hitachi carries out sustainability activities with the aim of solving social challenges for therealization of a future that achieves both the protection of the earth and a society where every individual
is comfortable and active.

27

The following describes Hitachi’s activities addressing carbon neutrality and climate change, andhuman capital, which are important sustainability issues.
i. Activities addressing carbon neutrality and climate change (Disclosure based on TCFD)
In June 2018, Hitachi announced its endorsement of the recommendations by the Financial Stability
Board’s (FSB) Task Force on Climate-related Financial Disclosures (TCFD), and disclosed the key
climate-related financial information in line with the TCFD’s recommendations in the Hitachi
Sustainability Report.
This section is an extract.
(a) Governance
Governance related to climate change is implemented based on the governance and risk
management described in the previous section.
Hitachi sees climate change and other environmental issues as important management issues.
Hitachi Group’s key component issues regarding sustainability strategies including climate change
countermeasures are deliberated on by the Senior Executive Committee to make decisions, and aresubmitted to the Board of Directors for further discussions as necessary. Hitachi Environmental
Innovation 2050, representing the Group’s long-term environmental targets including its CO2 emissions
reduction targets, was developed and announced after being reported to the Board of Directors bothwhen it was establishment and when it was revised.

(b) Strategy
Hitachi established its Environmental Vision in fiscal 2016. Based on this, Hitachi Environmental
Innovation 2050, including Hitachi's long-term environmental targets, was developed considering the
RCP 2.6 scenario and the RCP 8.5 scenario in the IPCC Fifth Assessment Report and using globally
necessary CO2 emissions reduction as a reference, to contribute to the realization of a carbon-neutral
society as it is demanded that global companies do. To help limit the global temperature rise to 1.5°C as
recommended in the subsequent IPCC Global Warming of 1.5°C report, we revised our target to achievecarbon neutrality at Hitachi factories and offices by fiscal 2030 and in our value chain by fiscal 2050.
We set higher goals and strive to achieve the goals in order to contribute to the achievement of a carbonfree society at the global level.
(Note) RCP 2.6 scenario: a Representative Concentration Pathway (RCP) scenario under which, at theend of the 21st century, the increase in global temperatures from preindustrial
levels is kept below 2°C.
RCP 8.5 scenario: the one that assumes that emissions will continue to rise resulting in an
approximately 4°C rise in global temperatures compared to preindustrial
levels.
Climate-related Risks (Hitachi Group)
Risks associated with climate change are categorized into the risk of shifting to a carbon-freesociety (applying mostly to the 1.5°C scenario) and the risk related to the physical impact of climatechange (applying to the 4°C scenario).
(i) Risks related to the transition to a decarbonized economy (applying mostly to the 1.5°C scenario)
The risk of shifting to a carbon-free society is assumed to include a carbon tax, taxes on fuel andenergy expenses, an increase in business cost due to introduction of emissions trading, etc., loss of28

opportunities to sell products and services due to delayed technological development, etc.
In particular, the risk affects businesses unable to survive in a carbon-free society if the current
condition is maintained, which corresponds to the risk of becoming unable to use fossil combustion.
Because many of Hitachi’s current businesses use electricity as an energy source, very few serious
risks caused by shift to a carbon-free society were found.
The risk of delays in product development for a carbon-free society, together with opportunity,
are two sides of the same coin, and can be avoided in operating businesses that contribute to a carbonfree society.
(ii) Risks related to the physical impacts of climate change (applying to the 4°C scenario)
The physical risk associated with climate change may include meteorological disasters likely
caused by climate change, which are, for instance, intensified typhoons, flooding, drought, etc. (acuterisks), and sea level rise, prolonged heat wave, etc. (chronic risks)
Our measure to avoid such risks is to consider location conditions and placement of facilities inview of damage caused by flooding when building a new factory.
Identification and Assessment of Climate-related Opportunities (the Hitachi Group)
The Hitachi Group may find numerous opportunities associated with climate change.
Both the carbon neutrality of business establishments and the reduction of CO2 emissions fromthe use of products and services sold, which are a large part of the emissions from entire value chains,
are important for the achievement of the long-term environmental targets and the CO2 emission
reduction target set in the 2024 Medium-term Management Plan. The development and provision of
products and services that contribute to the reduction of CO2 emissions through energy conservation,etc. is a response to customer needs and contributes to the decarbonization of society. There are also
opportunities to expand businesses that contribute to decarbonization, such as the spread of carbonfree solutions and services through collaborative creation with customers. GX (green transformation)
initiatives are the basis of the Social Innovation Business operated as part of Hitachi’s management
strategies, which creates significant opportunities for short-, medium- and long-term businesses.
The Hitachi Group’s risks and opportunities associated with climate change
As a result of considerations about these risks and opportunities, we did not discover any serious
risks related to climate change at Hitachi at the current stage.
In either scenario of 1.5°C or 4°C, we think that Hitachi has high resilience in a shift to a carbonfree society from a medium- to long-term perspective by focusing on market trends and operating thebusiness flexibly and strategically.
(c) Risk Management
Hitachi reviews and assesses climate change-related risks by assessing the environmental impact
for each BU and Group company. The results of these evaluations are summarized by the Sustainability
Promotion Division, after which the Senior Executive Committee. When there are risks andopportunities perceived as particular important, these will be discussed and decided at the Senior
Executive Committee, and if necessary, deliberated to the Board of Directors.
(d) Indicators and Targets
In its long-term environmental targets, Hitachi Environmental Innovation 2050, Hitachi has set
medium-term targets: achieve carbon neutrality by fiscal 2030 at Hitachi's business sites (factories andoffices) and long-term targets: achieve carbon neutrality in the value chain by fiscal 2050.
Furthermore, to achieve its long-term environmental targets, Hitachi has formulated and ismanaging the progress of its Environmental Action Plan, which sets indicators and targets in line withthe 3-year period of its medium-term management plan.
Among the indicators related to climate change mitigation and adaptation, the targets and results
related to the reduction rate of total CO2 emissions in the factories and offices are as follows.

29Indicator

FY2030(medium-term)

TargetFY2024(short-term)

FY2022

FY2022(Result)

Ratio of reducing total CO2
100% reduction
emissions in the factories and
50% reduction
32% reduction 40% reduction
offices (in comparison to fiscal (Carbon neutrality)
2010)(Note) They are targets of the 2024 Environmental Action Plan. Details will be published in the Sustainability
Report 2023.
CO2 emissions of the Hitachi Group (fiscal 2022)
Scope1 459kt-CO2
Scope2 1,079kt-CO2* Scope 1: Direct emissions from fuel use within the Hitachi Group
Scope 2: Indirect emissions associated with use of electricity and heat purchased by the HitachiGroup* Both Scopes 1 and 2 cover Category A business sites which have a large environmental impact
and automotive parts companies which have a large impact within the Hitachi Group. Based on
the Environmental Management Classification Criteria established by Hitachi, we manage all
Hitachi Group business sites classified into three categories: A, B, and C. In addition, theCompanies belonging to the Hitachi Group as of March 31, 2023 are included in the calculation.

ii. Activities related to human capital and diversity(a) Strategy
Hitachi believes that human capital, i.e., people are the source of value and aims to provide
customers and society with value and contribute to the creation of sustainable society by harnessing thepower of employees around the world.
Various human resources are carrying out operations proactively as one team across the boundaries
of countries, regions and business entities. We seek organizations and human resources capable ofadapting swiftly to an ever-changing world. To this end, we are developing human resources andimproving our internal environment based on the following policies.

30

Promotion of diversity, equity, and inclusion (DEI)
Hitachi is committed to implementing DEI as business driver to achieve sustainable growth.
Hitachi’s DEI strategy respects and values all differences including background, age, gender,
sexuality, family status, disability, race, nationality, ethnicity and religion. Hitachi commits towards
all dimensions of diversity, however we identified three global DEI themes that are common in every
region and business.
Our global DEI themes:
1. Gender-balance: More women across the business, especially within leadership roles
2. Cultural diversity: A team which reflects the global nature of our company
3. Multi-generation: Colleagues are recognized based on competence, not on age

Global human resource management
To promote the Social Innovation Business, it is necessary to explore the issues faced bycustomers and society and pursue collaborative creation with customers on new solutions that havenot previously existed. Under the 2024 Human Resources Strategy formulated based on the 2024
Mid-term Management Plan, we declared our vision to become an employer of choice in the global
market by developing an organization in which human resources oriented toward social contribution
gather and thrive. To realize that vision, we defined a Foundation based upon three strategic pillars:
People, Mindset and Organization.

31

-Development and retention of human resources skilled in digital technologies
Aiming to accelerate the Social Innovation Business with the use of digital technology andachieve expansion of the Lumada business, a growth driver for Hitachi, we are focusing on securing
and cultivating the human resources (Digital talents) who will drive digital transformation (DX). In
addition to acquiring global human resources such as personnel at GlobalLogic, a leading company indigital engineering services, we are also cultivating human resources internally with Hitachi's own DX
training system and development programs based on practical experience, thus accelerating thereinforcement of the digital talents needed for business growth.

*1 Equity gains of Hitachi Construction Machinery are classified into Lumada,those of Hitachi Astemo are classified into Non Lumada*2 Revenues and profits of listed subsidiaries and Hitachi Astemo are subtracted,
and equity in earnings of affiliates are added to results and plans of FY2021-FY2024- Improving employee engagement
Based on the belief that the wellbeing of employees is critical to Hitachi's sustainable growth, aspart of our human capital management we have set improving employee engagement as a KPI. We
monitor employee engagement annually through Hitachi Insights, a global employee survey, and work
to plan and promote human capital measures aimed at making relevant improvements. Specifically,
senior management and managers at each workplace share the survey results for their organizations
with workplace members to identify organizational issues. Actions are then planned and implemented
as countermeasures through the PDCA cycle, leading to improvements. We will continue to utilize theemployee survey to ensure more appropriate management worldwide.
- Management-level Leadership Development
Hitachi takes a medium- to long-term approach to developing managementlevel leadership that will drive transformation with top management and theNominating Committee playing a central role through the Global Leadership
Development Program (GLD).
When developing candidates for appointment in the next and subsequentterm to executive positions including CEO and division heads, several hundred
candidates are selected from the Hitachi Group’s human capital around the world
and given both on-the-job training (OJT), including tough assignments, and offthe-job training (Off-JT) such as external training and coaching.
Additionally, through programs including GT+, a talent pool of candidates
for management leadership, and Future 50, a selection of young and promising
employees, we offer intensive training through assignments that include
management positions and the provision of opportunities to discuss matters
directly with outside directors.
- Putting the right people in the right places with an integrated human capital platform
Hitachi has been building a global integrated human capital management platform to secure,assign and develop the best human resources worldwide. Through the platform, up-to-date humanresource information about employees, such as their skills and career aspirations, is shared via a cloudsystem. The platform enables the centralized management of various processes including searching fortalent and collecting information globally, and is utilized for team management, performance
management, development planning and career development. The platform is gradually being
expanded globally.
32

- Fostering a global Hitachi culture
Hitachi has welcomed approximately 100,000 new employees through several large-scale M&As
in recent years. We share Hitachi’s Mission and Values (Founding Spirit) with these new colleagues,
and are working to foster a global Hitachi culture that achieves growth and innovation by combining
the strengths and advantages of employees. In particular, senior management (the President, the Vice
Presidents, heads of BUs and divisions, presidents of consolidated subsidiaries) continues to hold town
hall meetings with employees to deepen mutual understanding through direct dialogue. In fiscal 2022,
277 town hall meetings in total were held. Toward achieving the 2024 Mid-term Management Plan,
each division will play a central role in driving business strategies.
- Conversion to job-based human resource management in Japan
Hitachi is accelerating the shift to job-based human resource management in Japan. This involves
clarifying the duties and necessary skills and experience, and assigning human resources based on their
desires and abilities to perform the required duties. By assigning the right people to the right jobs
according to their personal abilities and motivations, we aim to maximize the performance ofindividuals and organizations, improve engagement, and develop organizations and people thatgenerate innovations. Specifically, we have adopted a talent review system to consider assignments andtraining based on each employee's aptitude and career aspirations, and have also introduced formal job
descriptions. Additionally, to support proactive career building, since fiscal 2022 we have been
focusing our efforts on both the development of systems and mechanisms and transforming thinking
and behavior, as illustrated with the rollout of new career training and the introduction of a learning
experience platform (LXP).
Ensuring mental and physical health and safety“Health and Safety Always Comes First.” is the basic principle underlining the Hitachi Group
Health and Safety Policy which is shared by all the Hitachi Group companies around the world.
Employees work together with all related companies, including contractors and procurement partners,
to develop a safe, secure, comfortable and healthy workplace for everyone involved in our businessactivities.
Aiming to develop safe workplaces with zero accidents, Hitachi has developed and introduced
occupational health and safety management systems best suited to its business, and conducts regularrisk assessments and audits, while also working to roll out occupational health and safety training
programs and other initiatives worldwide.
(b) Indicators and Targets
Hitachi’s main indicators, targets and results in fiscal 2022 of the activities related to human capitaland diversity are shown in the table below.
In terms of the “Ratio of non-Japanese in executive positions” and the “Positive response rate toquestions about employee engagement in employee surveys”, we were able to achieve our targets aheadof schedule in fiscal 2022. We will continue to strive for further improvement.
Indicators
Targets
FY2022 Results
Ratio of female and non-Japanese in
Ratio of female: 11%i
15% each by fiscal 2024
executive positions (Note 1)
Ratio of non-Japanese: 20%
Number of digital technology humanii
97,000 by fiscal 2024 (Note 2) 83,000
resources
Positive response rate to questions aboutiii
68% by fiscal 2024
69.5%
employee engagement in employee surveys
iv Number of fatal accidents

0 case per year

5 case (s)Total recordable injury frequency rate Half rate of fiscal 2021 by
0.26(TRIFR) (Note 3)
fiscal 2024 (Note 4)(Notes) 1. Targets and results are only for the Company.
2. Excluding Hitachi Astemo
3. Casualties per 200,000 working hours
4. TRIFR in fiscal 2021: 0.27v

33

3. Risk Factors(1) About Risk Management
The Hitachi Group (“Hitachi”) aims to create new revenue opportunities while controlling risk. To dothis, Hitachi maintains a clear understanding and analysis of the business environment changing day by day,taking into account social issues as well as its competitive advantages and management resources andconducting risk management with an eye toward the many risks Hitachi should be prepared for as well as
opportunities for growth.
With respect to such various risks, each department strives to appropriately grasp and respond to risks
and opportunities, and reflects them in reporting to management executives and management strategies.
In April 2022, the Company established Risk Management Meeting (Chairman: President, Vicechairman: CRMO) as one of the new Executive Committees, which deliberates on important matters in
Hitachi’s business management. By centrally and cross-sectionally identifying risks, Hitachi aims to build asolid management base in conjunction with its growth strategy.
(2) Risk Factors
Hitachi conducts business on a global scale across a broad range of business areas and utilize
sophisticated, specialized technologies to carry out its operations. Therefore, Hitachi's business activities areaffected by a wide range of factors. Investment in Hitachi’s securities also involves risks. The factors andmeasures taken for each risk factor are as follows.
The following risks and countermeasures are based on assumptions Hitachi considers reasonable as ofthe date of submission of this report. The countermeasures below will not necessarily eliminate the effectsof the risks and may not effectively mitigate the effects.
1) Risks Related to Economy
Economic Trends
Hitachi’s business is influenced by the global economy, economic and geopolitical conditions incertain regions or countries. Downward economic trends in regions, countries and Japan causes decline in
consumer spending or capital investment. The rising interstate conflicts and tensions, including the situationin Ukraine, could cause restriction or cessation of economic activity in particular regions and subsequently,
partially restrict its products, systems and services or reduced demand for them, which could adversely
affect its business, financial condition, and results of operations.
In response to this risk, Hitachi combines the many different aspects of the Social Innovation Businessin a range of business fields and regions, and it aims to take prompt countermeasures against geopoliticalchanges through risk evaluation, etc.

Currency Exchange Rates Fluctuations
Since Hitachi conducts business in many foreign countries, its business activities are exposed to risks
from fluctuations in foreign currency exchange rates. Hitachi sells products, provides services and purchases
raw materials and components in local currencies. Therefore, fluctuations in foreign currency exchange rates
may result in lower revenues or higher costs in yen to Hitachi and thus affect its results of operations, which
are reported in Japanese yen. Hitachi’s price competitiveness may decline if it seeks to increase prices inlocal currencies to compensate for lower revenues or to increase prices in yen to absorb the higher cost, andthus its results of precautions may be harmed. In addition, since Hitachi holds assets and liabilities
denominated in foreign currencies, fluctuations in foreign currency exchange rates may adversely affect its
financial condition presented in Japanese yen through foreign currency translation.
The table below shows the foreign exchange sensitivity for the fiscal year ending March 31, 2024
(impact of exchange rate fluctuation by one-yen fluctuation from the forecasted rate) estimated as of March
31, 2023.
Foreign exchange sensitivity (billions of yen)
Currency

Forecast
Revenues

Adjusted EBITA

U.S. dollar

130 yen／U.S. dollar

13.5

1.5

Euro

140 yen／Euro

7.0

0.5

34

To mitigate the risk, Hitachi hedges the foreign exchange risks using forward exchange contracts andcurrency swap agreements and promotes its strategy of selling locally produced goods and services.

Access to Liquidity and Long-term Financing
Hitachi’s primary sources of funds are cash flows from operations, borrowings from banks and otherinstitutional lenders, and funding from capital markets, such as offerings of commercial paper and other debt
securities, as well as equity securities. Hitachi needs liquid funds to pay its operating expenses, the principalof and interest on its debt and dividends on its capital stock. Hitachi also needs long-term financing to fund,among other things, capital expenditures and research and development expenses. Hitachi currently believes
its cash flows from operations, borrowings from banks and other institutional lenders and funding from thecapital markets can provide sufficient funding for its operations and other liquidity needs. However, a global
economic downturn could adversely affect its cash flows from operations, business results and financial
condition and may adversely affect its credit ratings. If Hitachi’s ratings are downgraded, its ability to obtain
additional financing on terms it considers favorable may be negatively affected.
Hitachi’s reliance on banks and institutional lenders exposes itself to risks related to rising interest
rates, and Hitachi may need to increase its reliance on external sources of funding. An increased reliance on
debt instruments may adversely affect Hitachi’s credit ratings, which might affect its ability to successfully
obtain additional financing on terms it considers favorable. The inability to successfully obtain suchfinancing may increase Hitachi’s financing costs, and therefore could adversely affect its financial condition
and results of operations. To reduce risks related to rising interest rates, Hitachi enters into interest rate swap
agreements.
Furthermore, failure of one or more of Hitachi’s major lenders or a decision by one or more of them tochange the terms and conditions of their loans or to stop lending to Hitachi could have an adverse effect on
its access to funding.
Marketable Securities Risks
Hitachi invests in securities to maintain or promote its business or other relationships with othercompanies. These securities are exposed to the risk of declining stock prices. Such declines may require that
Hitachi writes down equity securities that it holds. Further, contractual and other obligations may require
Hitachi to maintain its holdings of these securities despite declining share prices and this may lead tomaterial losses.
The table below shows the number of stock names and balance sheet amount of the stocks theCompany owned at the end of the fiscal year ended March 31, 2023.
Number ofstock names(stock names)

Total amount recordedin the balance sheet(millions of yen)

Unlisted stocks

136

21,768Others41

213,017

To deal with those risks, Hitachi, under the basic policy, will not acquire and hold other companies’
shares except for cases where acquiring or holding such shares is necessary in terms of transactions orbusiness relationship. The Company also promotes reducing shares that it already owns unless significanceof holding shares and economic rationales of holding are confirmed. Policy for shareholding andexamination of the reasonableness of holding Equity securities held for purposes other than pure investment
are described in “IV Information on the Company - 4. Corporate Governance, etc. - (5) Information onshareholdings.”
2) Risks related to Supply Chain
Material and Component Procurement
Hitachi’s manufacturing operations relies on procurement partners for supplies of materials, parts,
components and services of adequate quality and quantity, delivered in a timely manner at a reasonable
price. Procurement partners may not have sufficient capacity to meet all of Hitachi’s needs during periods ofexcess demand. Shortages of materials, parts, components and services may cause a sharp rise in theirprices. In addition, prices of certain raw materials, parts and components which Hitachi purchases in local
35

currencies, principally the U.S. dollar and the euro, could be adversely affected by fluctuations in foreign
currency exchange rates. Increases in the market price of petroleum and other materials, such as copper,
steel, synthetic resins, rare metals and rare-earth minerals, can increase Hitachi’s production costs and may
adversely affect its results of operations. Conversely, decreases in commodity prices, such as for raw
materials, parts and components, can result in write-downs of inventory. If natural disasters disrupt theoperations of procurement partners and damage supply chains, it may adversely affect Hitachi’s production.
If there are violations of laws or regulations at procurement partners, including infringements of rights ofworkers such as child labor and forced labor, Hitachi’s reputation as an entity that places orders may decline
and the stable procurement of raw materials or parts from the procurement partners may be hindered, which
may adversely affect Hitachi’s business, financial condition and results of operations.
To deal with those risks, Hitachi establishes close relationships with procurement partners,
appropriately react to changes in demand in different regions, promoting a strategy of selling locally
produced goods and services, formulates a business continuity plan (BCP) at domestic bases and majorbases overseas to strengthen the abilities to deal with business interruption risk and use and strengthen
Hitachi’s procurement function. To prevent violations of laws and regulations at procurement partners,
Hitachi carries out inspections and audits using questionnaires and initiatives to understand.

Credit Risks Arising from Business Transactions
Hitachi makes transactions with diverse customers and procurement partners in Japan and othercountries. Hitachi sells its products to certain customers on credit and pay in advance for products orservices provided by certain procurement partners. Credit deterioration or failure of one or more of them
could adversely affect Hitachi’s financial condition, results of operations and cash flows.
To deal with those risks, Hitachi takes measures to manage counterparty credit risk, such as regularly
monitoring credit conditions of such customers or procurement partners and setting a limit on transaction
amount according to their credit conditions.
3) Risks related to Geopolitics in Overseas Business
Overseas Business Activities
Hitachi seeks to expand its business in overseas markets as part of its business strategy. Through suchoverseas expansion, Hitachi aims to increase its revenues, reduce its costs and improve profitability. In
addition, various factors in foreign countries where Hitachi operates may adversely affect its overseas
business activities. These factors include:・ changes in regulations relating to investments, exports, tariffs, antitrust, anti-bribery, consumer andbusiness taxation, intellectual property, foreign trade and exchange controls, human rights, employment
and labor, environment, resources and energy;
・ differences in commercial and business customs such as terms and conditions of transactions;・ changes in labor relations and practices;・ deterioration of public sentiment against Japan and local residents’ sentiment against Hitachi, andcriticism and campaigns by various organizations;・ expansion and frequent occurrence of interstate/domestic conflicts and the trend of Ukraine
situation;
・ changes in security and foreign policies of countries;
・ tightening economic security policies in countries; and・ other political and social factors and geopolitical risk as well as economic trends and currency
exchange rate fluctuations.
Because of these factors, there can be no assurance that Hitachi will be able to achieve the aims of its
overseas growth strategy. This may adversely affect Hitachi’s business growth prospects and results ofoperations.
To deal with those risks, Hitachi constantly determines global political and economic conditions andanalyze their effects on its businesses. Based on the analysis, Hitachi implements group-wide measures,
including the transfer of overseas risk assets.
4) Risks related to Environment
Tightening of Regulations to Prevent Climate Change (Risks Associated with the Transition to a Carbon36

neutral Society)
An increase in business costs due to carbon taxes, taxes on fuel and energy consumption and/or the
introduction of carbon emission rights trading, etc., loss of selling opportunities due to delays in thedevelopment of technology for products and services, and investors and society's disapproval of Hitachi’s
stance on addressing the issue of climate change may adversely affect Hitachi’s business activities,
management performance and financial condition.
In response to these risks, Hitachi has established its Hitachi Environmental Innovation 2050 long-term
environmental targets, has been implementing an array of activities to achieve carbon neutrality. Hitachi
will accelerate its efforts to achieve its targets. Divisions are aiming to achieve carbon neutrality for own
operations by fiscal 2030. They promote the introduction of energy-efficient equipment and power
generation using renewable energy through the introduction of Hitachi Internal Carbon Pricing, continue tostreamline production and transportation, and promote the use of electric power from non-fossil energy, etc.
to prevent or reduce an increase in carbon taxes and other business costs and to reduce the risk of negative
assessment. Hitachi is targeting carbon neutrality in the value chain by fiscal 2050 and aiming to develop
and increase sales of innovative products and services that will lead to the reduction of CO2 emissions anddevelop energy-efficient products that will help reduce energy consumption.
5) Risk related to Human Capital
Dependence on Specially Skilled Personnel
To remain competitive in Hitachi, Hitachi must continue to recruit and retain the talent it needs toexecute its business. In particular, Hitachi is currently seeking talent that can operate globally, talent that cancapture needs and provide optimal solution services close to customers, and digital talent that will drive DX.
However, excellent talent is limited, and competition to recruit and retain such talent is intensifying. Therecan be no assurance that Hitachi will be able to recruit new talent or retain such talent.
To deal with these risks, Hitachi is working to secure the talent it needs in a timely manner, both
domestically and globally, by promoting DEI (diversity, equity and inclusion), promoting the creation of apleasant workplace and enhancing engagement, securing outstanding global talent through a global humanresources system, and securing and developing outstanding talent through the use of a global humanresources platform and through the implementation of in-house educational programs.
6) Risk related to Technology
Dependence on Information Systems
With the increased importance of information systems to Hitachi’s operating activities, disruptions insuch systems due to computer viruses and other factors could have a negative impact on its operating
activities, results of operations and financial condition. The expansion of remote work is at risk ofgenerating new security risks, including information leakage.
To deal with those risks, Hitachi continuously promotes cybersecurity measures and strictly prescribe
and implement rules, products and procedures that apply to remote work. However, they may not beeffective if unprecedented cyberattacks occur, or there are any vulnerabilities in systems that are not
managed by Hitachi.

Rapid Technological Innovation
New technologies are rapidly emerging in the segments in which Hitachi conducts business, with thepace of technological innovation. The development of new and advanced technologies, the continuous,
timely and cost-effective incorporation of such technologies into products, systems and services and theeffective marketing of such products, etc. are indispensable to remaining competitive. For instance, it isimportant to respond to technological innovations, including automation and electrification using
technologies such as digital and robots and environmentally friendly technologies such as decarbonization
and resource circulation. While introducing such products, etc. requires significant resource commitment toresearch and development, there can be no assurance that Hitachi’s research and development will be
successful. Failure in Hitachi’s endeavors to develop and incorporate such advanced technologies into
products and services in a timely manner, or to achieve market acceptance for such products, etc., may
negatively affect Hitachi’s business, financial condition and results of operations.
To mitigate those risks, Hitachi promotes open innovation involving industry, government and37

academia, recruit and cultivate digitally savvy human resources and strengthens grasp of client needs
through collaborative creation process by Lumada. Through those activities, Hitachi works to create aninnovation ecosystem.
7) Risks related to Pandemic and Natural disasters
COVID-19
Although Hitachi expects progress in normalization from the COVID-19 epidemic and are moving to a
new phase based on the assumption of coexistence, depending on future conditions, the financial condition
and business results may be adversely affected by soaring raw material prices due to supply chain
disruptions, semiconductor shortages, and inflation due to supply constraints.
In response to such risks, Hitachi is taking steps to increase stable earnings by using Lumada tostrengthen its service-based digital business, to continue production activities on the premise of ensuringsafety, to enhance a diverse range of work styles by using remote work and other means to enhance thedigital environment, to strengthen cash management and the supply chain, and to reduce costs by reforming
the business structure.

Physical Impacts by Significant Disasters, Climate Change and Similar Events
Hitachi has many facilities, including its R&D facilities, manufacturing facilities and its headquarters
in Japan. Historically, Japan has experienced numerous natural disasters such as earthquakes, tsunamis andtyphoons. Natural disasters in the future may have a significantly adverse effect on an array of Hitachi’s
corporate activities, from production to sales. Hitachi also has overseas facilities in Asia, the U.S. andEurope, which are also subject to similar natural disasters. Natural disasters in each of areas may cause
damage on certain of Hitachi’s plants and offices and the operations of its suppliers and customers. Due toclimate change, large-scale natural disasters, including drought, rising sea levels, long heat waves andfloods, may become more serious. Such significant natural disasters may directly damage or destroy
Hitachi’s facilities, which could disrupt its operations, delay new production and shipments of existing
inventory or result in costly repairs, replacements or other costs, all of which would result in significant
losses. Furthermore, even if such significant natural disasters do not directly affect Hitachi’s facilities, they
could result in disruptions in distribution channels or supply chains. The spread of infectious diseases andgeopolitical and social instability, such as terrorism, crime, civil disturbance and conflict, etc., may also
disrupt Hitachi’s operations, render its employees unable to work, reduce consumer demand for its products
or disrupt its supply and distribution channels, etc. In addition, Hitachi is not insured against all potential
losses, and even losses that insurance covers may not be fully covered and may be subject to challenges ofor delays in payment, etc. Direct and indirect disruption of Hitachi’s operations as a result of natural
disasters or other events could have a negative impact on its operating activities, results of operations andfinancial condition.
To deal with those risks, Hitachi works to strengthen its ability to deal with business interruption risk
by formulating BCPs. When Hitachi builds a new plant, it determines the layout, taking into consideration
possible floods.
8) Risks related to the others about the whole of company management
Estimates, Fluctuations in Cost and Cancellation of Long-term Projects
Hitachi enters into a substantial number of long-term projects, particularly in connection with theconstruction of infrastructure systems. When the outcome of a construction can be estimated reliably,
Hitachi recognizes revenue and expenses by reference to the stage of completion of the contract activity. In
this case, revenue is recognized mainly based on the progress of the project mostly based on the cost
incurred relative to the estimated total cost. When the outcome of a construction cannot be estimatedreliably, Hitachi recognizes revenue only to the extent of that contract costs incurred will be recoverable,
and recognizes contract costs as expenses in the period in which such costs are incurred. The revenue
recognition for such long-term projects requires Hitachi to make significant assumptions about the estimatedtotal cost, estimated total selling price, contract risks and other factors. However, these estimates are subject
to change. Hitachi regularly reviews these estimates and adjusts them as it deems necessary. While Hitachicharges any anticipated losses on fixed price contracts to operations when it is able to estimate such losses,
these estimates are subject to change. Fluctuations in costs can occur for a variety of reasons, many of which38

are beyond Hitachi’s control. In addition, Hitachi or its counterparties may cancel these contracts. These
factors would require Hitachi to revise its initial assumptions regarding a particular contract, and may
adversely affect its business, financial condition and results of operations.
To deal with those risks, Hitachi aims to identify and manage risks before the execution of contracts,
and its operating division and finance division continue to manage and share identified risks after the
execution of contracts for accurate estimates in a timely manner.

Intense Competition
Hitachi is subject to intense competition in many of the markets in which it operates, and this may
adversely affect its results of operations. Hitachi competes with diverse competitors ranging from huge
global corporations to specialized companies including startups. Advanced products, systems and services
are becoming commoditized. The production and development of them and the provision of services in lowcost regions, and use of the cloud and automation are expanding. As a result, price competition isintensifying. To succeed in this competitive environment, Hitachi believes that its products, etc. must be
price competitive. The commoditization of such products, etc. affects Hitachi’s ability to set prices for its
products, etc. If Hitachi is unable to charge comparable prices to those of its competitors, itscompetitiveness and overall profitability may be harmed. On the other hand, charging comparable prices tothose of Hitachi’s competitors may require it to sell products and services at a loss. Hitachi’s products, etc.
must also be competitive in terms of engineering sophistication, quality and brand value. Hitachi must
introduce its products and services to the markets in a timely manner. There can be no assurance that the
products, etc. that Hitachi offers will be competitive. The failure of such products, etc. to be competitive
may negatively affect Hitachi’s business, financial condition and results of operations.
To deal with those risks, Hitachi promotes enhancing innovation through research and development,
expansion of Lumada business, collaborative creation with customers and strives to produce high valueadded products.
Sharp Decline in Demand
Oversupply in the markets in which Hitachi competes may lead to declines in sales prices, revenues
and profitability. In addition, adjustment to demand may force Hitachi to dispose of excess supply or
obsolete equipment or reduce production, which can result in losses. For example, the imbalance between
supply and demand in information equipment, elevators, semiconductor and automotive equipment
industries and a resultant deterioration in market conditions could negatively affect Hitachi’s businesses,
financial condition and results of operations.
To deal with those risks, Hitachi works to strengthen the competitiveness of its products, etc. andcontrols the supply and inventory of products, etc. based on demand forecasts.
Overhaul of Cost Structure
Hitachi implements “the Hitachi Smart Transformation Project,” which promotes cost reductions in all
activities of its value chain by thoroughly overhauling its cost structure across the group. Hitachi seeks tostabilize earnings and strengthen cash flows by improving its management efficiency through the Project.
The Project may be less successful than Hitachi currently anticipates. Even if the Project is successful, there
is no assurance that Hitachi will be able to sustain or increase profitability.
Strategy to Strengthen the Social Innovation Business
Hitachi’s business strategy seeks to build its business portfolio and achieve a business structure withhigh growth potential and profitability mainly by strengthening the Social Innovation Business, which
supplies advanced social infrastructure supported by information and communication technology. Hitachiplans to devote significant resources including capital expenditures and R&Ds and are making investments
in mergers and acquisitions and in new projects to strengthen the Social Innovation Business. In addition,
Hitachi attempts to design suitable organizational structure for promoting the Social Innovation Businessmore effectively in response to market changes. To implement this strategy, Hitachi has incurred and may
continue to incur considerable expenses. Hitachi’s efforts to implement this strategy may be unsuccessful orless successful than it currently anticipates. Even if these efforts are successful, there is no assurance that
Hitachi will be able to sustain or increase profitability.
39

To deal with those risks, Hitachi works to manage implementation in a phase gate process in eachbusiness unit (BU) and analyze and discuss market trends, trends at competitors, technological trends andpotential risks, among other issues, from a range of perspectives, in the Investment Strategy Committee,
Senior Executive Committee, the Board of Directors and Audit Committee.

Acquisitions, Joint Ventures and Strategic Alliances
In every operating sector, Hitachi depends to some degree on acquisitions of other companies, joint
ventures and strategic alliances with outside partners to design and develop key new technologies andproducts, to strengthen competitiveness by scaling up and to expand into new regions through acquiring
local bases or distribution channels. The matters which may have adverse effects on Hitachi’s financial
condition or profitability are described in “Consolidated Financial Statements - Notes to Consolidated
Financial Statements - (5) Business Acquisitions and Divestitures.” Such transactions are inherently risky
because of the difficulties in integrating operations, technologies, products and personnel and achieving
return of the investment. Integration issues are complex, time-consuming and expensive and, without proper
planning and implementation, could adversely affect Hitachi’s business. Decisions made by or the
performance of alliance partners that Hitachi cannot control or adverse business trends may also negatively
affect the success of its alliances. Hitachi may incur significant acquisition, administrative and other costs inconnection with these transactions, including costs related to integration or restructuring of acquired
businesses. Major financing for these costs may cause deterioration of Hitachi’s financial condition anddecrease capacity to finance. If it is expected that the amount invested is irrecoverable due to a decline in the
profitability of an investee, Hitachi may incur significant losses, including impairment loss for goodwill.
Hitachi recorded goodwill of 1,269,171 million yen in the Digital Systems & Services segment, 589,011
million yen in the Green Energy & Mobility segment and 220,688 million yen in the Connective Industries
segment as of March 31, 2023. The amount of goodwill in each segment is described in “Consolidated
Financial Statements - Notes to Consolidated Financial Statements - (4) Segment Information.” There canbe no assurance that these transactions will be beneficial to Hitachi’s business or financial condition. Even
assuming these transactions are beneficial, there can be no assurance that Hitachi will be able to successfully
integrate acquired businesses or achieve all or any of the initial objectives of these transactions.
To deal with those risks, Hitachi works to manage implementation in a phase gate process in each BU
and analyze and discuss market and industry trends, strategies, purchase prices, PMI (post-merger
integration) processes and potential risks, among other issues, from a range of perspectives, in theInvestment Strategy Committee, Senior Executive Committee, the Board of Directors and Audit Committee.
Business Restructuring
Hitachi’s business strategy seeks to build its business portfolio and achieve a structure with highgrowth potential and profitability in part by:・ closing unprofitable operations;・ divesting the subsidiaries and the affiliated companies;
・ reorganizing production bases and sales networks; and・ selling select assets.
Hitachi’s restructuring efforts may not be implemented in a timely manner or at all, including due togovernmental regulations, employment issues or a lack of demand in the M&A market for businesses it may
seek to sell. Restructuring efforts may also bring about unintended consequences, such as negative customer
or employee perceptions, and in connection with the past business restructuring, have caused and may
continue to cause us to incur significant expenses and other costs, including additional impairment losses on
Hitachi’s fixed assets and intangible assets, write-offs of inventory and losses on the disposal of fixed assets
and losses related to the sale of securities. Current and future restructuring efforts may be unsuccessful orless successful than Hitachi presently anticipates and may adversely affect its business, financial condition
and results of operations.
To deal with those risks, Hitachi analyzes and discusses market and industry trends, strategies, saleprices, processes and potential risks, among other issues, from a range of perspectives, in the Investment
Strategy Committee, Senior Executive Committee, the Board of Directors and Audit Committee.

40

Worsening of Business Performance of Equity-Method Associates and Joint Ventures
Hitachi uses the equity-method to account for a number of associates and joint ventures. If one or moreof such associates or joint ventures, accounted for using the equity-method, records a loss during a given
period, Hitachi must record that loss in a manner proportionate to its ownership interest in its consolidated
financial statements. In addition, if the carrying amount of Hitachi’s equity-method investments inassociates or joint ventures is below the recoverable amount of the investments, Hitachi could be required torecord an impairment loss.
The table below shows investments accounted for using the equity method as of March 31, 2023.
Millions of yen
Segment

March 31, 2023

Digital Systems & Services

51,997

Green Energy & Mobility

88,003Connective Industries

162,248

Automotive Systems

11,406

Hitachi Construction Machinery-

Hitachi Metals-

Others

4,017

Subtotal

317,671

Corporate items and Eliminations

160,949

Total

478,620

To deal with those risks, Hitachi promotes investment income management using Adjusted EBITA(Adjusted Earnings before interest, taxes and amortization) (Note) return on invested capital (ROIC) andconcentrate investment in fields where profitability and growth are high. Hitachi monitors achievement ofbusiness plans and financial position at equity method affiliates in which Hitachi invests and sell businesses
with low profitability and investee companies whose competitiveness it is concerned about.
(Note) Adjusted EBITA is representing the operating income, adding back the amortization of
intangible assets, etc. recognized upon business combinations, and adding or deducting share of
profits (losses) of investments accounted for using the equity method.

Litigation and Regulatory Investigations
Hitachi faces risks of being involved in litigation and alternative dispute resolution and regulatory
investigation and actions in connection with its operations. Lawsuits or any other legal procedures forresolving disputes and regulatory actions may seek payment of large, indeterminate amounts or otherwise
limit Hitachi’s operations, and their existence and magnitude may remain unknown for substantial periodsof time.
In past, Hitachi has been the subject of several investigations of alleged antitrust violations in relation
to certain product markets in Japan, Europe and North America, etc. and received claims for damages fromits customers, etc., which may have adverse effects on its financial condition or profitability. See“Consolidated Financial Statements - Notes to Consolidated Financial Statements - (29) Commitments andContingencies.” These investigations or disputes may result in significant penalties or compensation fordamages, etc. Such substantial legal liability or regulatory action could have an adverse effect on Hitachi’sbusiness, results of operations, financial condition, cash flows, credibility and reputation. Furthermore, evenif legal liability to Hitachi is denied and no regulatory actions or compensation for damages imposed,
Hitachi’s business, results of operations, financial condition, cash flows, credibility and reputation could
have been affected. In addition, response mainly to the regulation of the protection of personal information
may an adverse effect on Hitachi’s business.
In addition, Hitachi’s business activities are subject to various governmental regulations in countries
where it operates, which include investments, exports, tariffs, antitrust, anti-bribery, consumer and businesstaxation, intellectual property, foreign trade and exchange controls, human rights, employment and labor,
environment, resources and energy. These regulations limit, and other new or amended regulations may
41

further limit, Hitachi’s business activities or increase operating costs. In addition, the enforcement of such
regulations, including the imposition of fines or surcharges for violation of such regulations, may adversely
affect Hitachi’s results of operations, financial condition, cash flows, credibility and reputation.
To deal with those risks, Hitachi works to identify operations where regulations are applied, assess
risks, take steps in response to risks and provide education to employees.

Product Quality and Liability
Hitachi increasingly provides products and services utilizing sophisticated technologies. Reliance on
procurement partner reduces Hitachi’s control over quality assurance. The occurrence of defects in Hitachi’s
products and services or inappropriate conduct in respect to quality could negatively affect its reputation for
quality of products and services, expose it to liability for damages caused by such defects and negatively
affect its ability to sell certain products. A significant product defect could adversely affect Hitachi’s resultsof operations, financial condition and future business prospects.
To deal with those risks, Hitachi conducts activities to prevent accidents and comply with technicallaws and regulations, thorough risk assessment, and education on quality, reliability and reactions when
product accidents occur. Furthermore, in response to past inappropriate quality-related practices at
subsidiaries of the Company, Hitachi has made assurance divisions within business divisions independent
from production design divisions and manufacturing divisions in order to create a structure that puts thesafety and security of the customer first and has also independent from business divisions to further
strengthen the independence. In addition, Hitachi has reinforced the report line of the quality assurance
divisions of the Corporate Quality Assurance Group of the Company and established systems for close
information sharing between the two sides.
Management of Confidential Information
Hitachi maintains and manages personal information obtained from its customers, as well as
confidential information of its customers and clients, relating to its technology, research and development,
production, marketing and business operations in various forms. Unauthorized disclosures of suchinformation could subject Hitachi to complaints or lawsuits for damages or could otherwise have a negative
impact on its business, financial condition, results of operations, credibility and reputation.
To deal with those risks, Hitachi establishes and implements rules on the management of confidential
information and implements identity management and access control through encryption and the building ofauthentication infrastructure. Hitachi also examines information security at procurement partners.
Intellectual Property
Hitachi depends in part on proprietary technology and its ability to obtain patents, design right,
trademarks and other forms of intellectual property rights covering its products, product design,
manufacturing processes and software-based services in Japan and other countries. The fact that Hitachiholds such intellectual property rights does not ensure that they will provide a competitive advantage toHitachi. Various parties may challenge, invalidate Hitachi’s patents, design right, trademarks and otherintellectual property rights or circumvent use of them. There can be no assurance that claims allowed on any
future patents will be sufficiently broad to protect Hitachi’s technology. Effective patent, design right,
copyright and trade secret protection may be unavailable or limited in some of the markets in which Hitachi
operates, and its trade secrets may be vulnerable to disclosure or misappropriation by employees,
contractors and other persons.
To deal with those risks, Hitachi searches known examples before applying for intellectual property
rights to increase the probability of obtaining rights and to obtain rights suitable for business. In countries
where intellectual property protection is unavailable or limited, Hitachi strives to curb unauthorized use of
intellectual property primarily through contracts with employees and contractors.
Hitachi designs many of its products to include software or other intellectual property licenses fromthird parties. Competitors may not make their protected technology available to Hitachi, or may make itavailable to Hitachi only on unfavorable terms and conditions. There can be no assurance that Hitachi will
be able to maintain a license for such intellectual property if obtained, for economic or other reasons, or thatsuch intellectual property will give Hitachi the commercial advantages that it desires.
To deal with those risks, Hitachi endeavors to maintain good relations with the third parties through42

contracts and negotiations to exercise intellectual property rights.
From time to time, Hitachi is sued or receive notices regarding patent, design right and otherintellectual property claims. Whether or not these claims have legitimacy, they may require significant
resources to defend against and may divert management attention from Hitachi’s business and operations
and result in harm to its reputation. In addition, a successful infringement claim and Hitachi’s inability toobtain the license for the infringed technology or substitute similar non-infringing technology may
adversely affect its business.
To deal with those risks, Hitachi works to avoid disputes with other companies chiefly by conducting apatent clearance study before selling a new product or providing a new service and by changing the designof products or services if necessary.

Employee Retirement Benefits
Hitachi has a significant amount of employee retirement benefit costs that it derives from actuarial
valuations based on a number of assumptions. Inherent in these valuations are actuarial assumptions used inestimating pension costs including mortality, withdrawal and retirement rates, changes in wages and thediscount rate. Hitachi is required to make judgments regarding the actuarial assumptions by taking into
account various factors including personnel demographics, market conditions and expected trends in interest
rates. Although management believes that its actuarial assumptions are reasonable in light of the various
underlying factors, there can be no assurance that the actuarial assumptions will correspond to actual results.
If Hitachi’s actuarial assumptions differ from actual results, the consequent deviation of actual pension costs
from estimated costs may have an adverse effect on Hitachi’s financial condition and results of operations.
A decrease in the discount rate may result in an increase in the amount of projected benefit obligations. In
addition, Hitachi may change these actuarial assumptions, such as the discount rate. Changes in key
assumptions may also have an adverse effect on Hitachi’s financial condition and results of operations.
To mitigate the risk, on April 1, 2019, Hitachi has promoted to change the corporate pension plan for
its current employees participating in the Hitachi Pension Fund from the defined benefit pension plan to therisk-sharing corporate pension plan. On April 1, 2022, newly 43 subsidiaries have introduced the risksharing corporate pension plan, and now the revision of Hitachi group pension plan managed by the Hitachi
Pension Fund has been almost completed. The revision can reduce asset management risks of the Company
and subsidiaries participating in the Hitachi Pension Fund by fixing the Company’s premium payments, and
it is also possible to reduce the risk of an adverse effect on Hitachi’s financial condition and results ofoperations by discontinuing recognition of liabilities related to retirement benefits.

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

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

44

4. Management’s Discussion and Analysis of Consolidated Financial Condition, Results of Operations andCash Flows(1) Progress of Management Plan
1) Status of Key Indicators laid out as Strategic and Operational Targets
Under the "2024 Mid-term Management Plan," the key indicators to measure performances in termsof meeting our strategic and operational goals are as follows.
Year ended March 31, 2023
(Fiscal 2022)

Fiscal 2024 Target

7,638.2 billion yen(CAGR from Fiscal 2021 to
Fiscal 2024)
5%-7%

Adjusted EBITA margin (Note1)

9.5%

12%

Return on invested capital (ROIC)(Note2)

7.6%

10%

Revenues (Note1)

EPS (Note2)
Core free cash flows (Note2)

684 yen(Fiscal 2022) 416.4 billion yen(CAGR from Fiscal 2021 to
Fiscal 2024)
10%-14%(Cumulative for three years)
1.2 trillion yen(Notes) 1.They are presented as the consolidated total excluding the total number of Automotive Systems,
Hitachi Construction Machinery and Hitachi Metals segments.
2.They are calculated based on the consolidated total.
2) Global Business Expansion
In the current fiscal year, as the first year of the “2024 Mid-term Management Plan,” seeking global
growth with the three pillars, “Digital,” “Green” and “Innovation,” Hitachi chiefly pursued the following
initiatives and move ahead with the shift to growth mode.
‒ Global Growth of the Digital Business in Response to Rising DX (digital transformation) and GX (green
transformation) Demand
To accelerate digital business in the global
market experiencing growing DX demand, Hitachi
established Hitachi Digital LLC in North America.
Hitachi Digital has played a central role in advancing
a digital strategy spanning the Hitachi Group with
Lumada and other solutions, and in response to rising
GX demand, Hitachi Energy Ltd, Hitachi Rail Ltd.
and other Group entities have secured expanded
orders.
In addition, GlobalLogic Inc., which
continues to grow, has also set up a site in Japan and isapplying its development techniques to Hitachi's
projects in Japan. In anticipation of further growth,
GlobalLogic acquired digital engineering companies
in Romania and Uruguay in order to establish apresence in Europe and Latin America and to acquire
new bases, customers and human resources.
‒ Global Risk Management Supporting Growth
Amid ongoing uncertainty in the business environment, Hitachi has developed a system to centrally
monitor global risk information and proactively respond to risks in response to risks that increase withbusiness growth. We strive to ascertain the risks that could impact the Hitachi Group, including soaring
prices of goods, geopolitical risks and large-scale disaster risks, and after quickly identifying priority
risks, Hitachi tries to respond ahead of the rapidly changing business environment.
45

‒ Reorganization of the Automotive Systems BusinessTo achieve the sustainable growth and enhanced corporate value of Hitachi Astemo, Ltd. in theautomobile and motorcycle industry undergoing a period of dramatic change, Hitachi decided to
implement a partial transfer of shares in Hitachi Astemo. Through this transaction, Hitachi Astemo will
become an equity-method associate of the Company. Hitachi will continue the collaboration with thegrowing Hitachi Astemo gaining a new joint partner, particularly in the areas of electrification andautonomous driving, enabling each company to grow together.
(2) Analysis of Results of Operations
1) Analysis of Statement of Operations

Revenues increased 6% from the year ended March 31,2022 (fiscal 2021), came to 10,881.1 billion
yen. Revenues increased due mainly to strong results of the power grids business and the railway
systems business, revenue growth in Hitachi Astemo, Ltd. resulting from the production recovery ofOEMs, and revenue growth in GlobalLogic, as well as the impact of foreign exchange rate, despite thefactors decreasing profits associated with selling a part of shares of Hitachi Construction Machinery Co.,
Ltd. and selling shares of Hitachi Metals, Ltd. (Currently Proterial, Ltd.).
Cost of sales increased 6% to 8,192.0 billion yen, as compared with fiscal 2021, and the ratio of
cost of sales to revenues was 75%, the same level as for fiscal 2021. Gross profit increased 5% to
2,689.0 billion yen, as compared with fiscal 2021.
Selling, general and administrative expenses came to 1,940.9 billion yen, up 7% year on year. The
ratio of selling, general and administrative expenses to revenues was 18%, which was the same level as
for fiscal 2021.
Adjusted operating income (presented as revenues less cost of sales as well as SG&A) increased
9.9 billion yen year on year and reached 748.1 billion yen.
Share of gains (losses) of investments accounted for using the equity method increased 12.3 billion
yen year on year to the gains of 52.8 billion yen.
As a result of the foregoing, adjusted EBITA (defined as Adjusted Earnings before Interest, Taxes
and Amortization, and representing the operating income, adding back the amortization of intangible
assets, etc. recognized upon business combinations, and adding or deducting share of profits (losses) ofinvestments accounted for using the equity method) increased 29.2 billion yen to 884.6 billion yen, as
46

compared with fiscal 2021.
Other income increased 173.8 billion yen to 302.1 billion yen and other expenses increased 161.0
billion yen to 245.0 billion yen, as compared with fiscal 2021, respectively. The main components are as
follows;- Net gain on sales and disposal of property, plant and equipment decreased 15.7 billion yen to 2.2
billion yen, as compared with fiscal 2021.
- Impairment losses increased 94.8 billion yen to 129.8 billion yen, as compared with fiscal 2021.
This mainly reflected a posting of goodwill impairment losses due to positioning on-premise
ERP business as non-focused business area in Digital Systems & Services sector, as well as
posting of goodwill impairment losses on Hitachi Energy owning to the rise in discount rate
following the significant rise in interest rates, etc.
- Net gain on business reorganization and others increased 195.2 billion yen year on year to 297.3
billion yen due mainly to posting of net gain from the sale of shares of Hitachi Transport
System, Ltd. and Hitachi Metals, Ltd.
- Special termination benefits increased 0.5 billion yen to 9.3 billion yen, as compared with fiscal
2021.
- 51.1 billion yen was posted as other losses due to expenses by shifting to risk-sharing corporate
pension.
Financial income (excluding interest income) decreased 20.0 billion yen to 7.8 billion yen andfinancial expenses (excluding interest charges) increased 20.3 billion yen to 20.4 billion yen, as
compared with fiscal 2021, respectively.
EBIT (the earnings before interest and taxes) decreased 5.3 billion yen to 845.6 billion yen, as
compared with fiscal 2021.
Interest income increased 10.1 billion yen to 25.6 billion yen, as compared with fiscal 2021 andinterest charges increased 24.2 billion yen to 51.3 billion yen, as compared with fiscal 2021.
Income before income taxes decreased 19.3 billion yen to 819.9 billion yen, as compared withfiscal 2021.
Income taxes decreased 52.3 billion yen to 116.1 billion yen as compared with fiscal 2021.
Net income increased 33.0 billion yen to 703.8 billion yen, as compared with fiscal 2021.
Net income attributable to non-controlling interests decreased 32.6 billion yen to 54.7 billion yen,
as compared with fiscal 2021.
As a result of the foregoing, net income attributable to Hitachi, Ltd. stockholders increased 65.6
billion yen to 649.1 billion yen, as compared with fiscal 2021.
2) Operations by Segment
The following is an overview of results of operations by segment. Effective from the fiscal year
ending March 31, 2023, the Company reclassified its reportable segment in seven segments: Digital
Systems & Services, Green Energy & Mobility, Connective Industries, Automotive systems, Hitachi
Construction Machinery, Hitachi Metals and Others. Accordingly, the amounts previously reported forfiscal 2021 have been restated in conformity with the new segments. The numbers within each chart
represent the results of the main businesses, etc. in each segment and revenues for each segment include
intersegment transactions, so the sum of these numbers in some segments does not correspond to thetotal results in the segments.

47

(Digital Systems & Services)*

Figures for information control systems business, which were included in Services & Platforms until the previous fiscal year, are included in
Front Business from the fiscal year ending March 31, 2023. The year-over-year comparison for Digital Systems & Services segment reflects thischangeRevenues increased year on year due mainly to strong results of the Lumada business andGlobalLogic and the impact of foreign exchange.
Adjusted EBITA increased due mainly to increased revenues.
(Green Energy & Mobility)* Related costs include PMI related costs of the power grids business

Revenues increased year on year due mainly to strong results of Hitachi Energy and Railway
Systems business, as well as the impact of foreign exchange.
Adjusted EBITA increased year on year due mainly to increased revenues and improved
profitability in Railway Systems business, despite decreased profits due to cost increase in a certain
project in Energy business.

48

(Connective Industries)

Revenues increased year on year due mainly to strong results of Measurement and Analytical
Systems business, which increased sales in semiconductor manufacturing equipment, clinical chemistry,
and immunochemistry analyzers, etc., and Building systems business, which expanded the building
services business, as well as the impact of foreign exchange.
Adjusted EBITA increased year on year due mainly to increased revenues, despite the impact ofsoaring materials prices in Smart Life & Ecofriendly System business and increased investment andsales expenses associated with promotion activities in Industrial Digital business.
(Automotive Systems)

Revenues increased year on year due mainly to the impact of foreign exchange and moderate
production recovery of OEMs, despite the factors decreasing revenues such as the continuous
semiconductor shortage and supply chain disruptions in China.
Adjusted EBITA increased year on year thanks primarily to increased revenues.

(Hitachi Construction Machinery)

Revenues decreased year on year due mainly to conversion of Hitachi Construction Machinery Co.,
Ltd., which was included in Hitachi Construction Machinery segment, to an equity-method associate of
the Company as a result of selling a part of shares of Hitachi Construction Machinery Co., Ltd. inAugust 2022.
Adjusted EBITA decreased year on year due mainly to the impact of selling a part of shares ofHitachi Construction Machinery Co., Ltd. as described above.
49

(Hitachi Metals)

Revenues decreased year on year due mainly to deconsolidation of Hitachi Metals, Ltd., which was
included in Hitachi Metals segment, as a result of selling shares of Hitachi Metals, Ltd. in January 2023.
Adjusted EBITA increased year on year due mainly to improved profitability owing to cost
reduction measures, despite the impact of selling shares of Hitachi Metals, Ltd. as described above.
(Others)
Revenues increased 4% to 473.0 billion yen.
Adjusted EBITA decreased 8.0 billion yen to 15.5 billion yen, as compared with fiscal 2021.
3) Revenues by Geographic Area
The following is an overview of revenues attributed to geographic areas based on customer location.

(Note) The number in brackets in “Revenues by Market” is the percentage of revenues in each market to total revenues.

Japan
Revenues in Japan decreased from fiscal 2021. This was due mainly to the decreased revenues
owning to selling a part of shares of Hitachi Construction Machinery Co., Ltd. and selling shares ofHitachi Metals, Ltd. The decrease was partially offset by increased revenues in Automotive Systems
owning to a gradual recovery in production of OEMs, and increased revenues of Hitachi Systems,
Ltd. and Hitachi Channel Solutions, Corp. in Digital Systems & Services sector, as well as increased
revenues in Connective Industries sector.
Overseas
Revenues in Overseas increased compared with fiscal 2021, and the ratio to total revenues was
62%, a rise of 3% compared with fiscal 2021. Revenues in each area are as follows;(North America)
Revenues in North America increased from fiscal 2021, attributable mainly to increased revenues
in Automotive Systems owning to a recovery of market conditions, increased revenues of the power
grids business in Green Energy & Mobility sector, and increased revenues in Digital Systems &Services sector resulting from the acquisition of GlobalLogic. The increase was partially offset bydecreased revenues due mainly to selling a part of shares of Hitachi Construction Machinery Co., Ltd.

50

(Europe)
Revenues in Europe increased from fiscal 2021, due mainly to increased revenues of the power
grids business and the railway systems business in Green Energy & Mobility sector and themeasurement and analytical systems business in Connective Industries sector. The increase waspartially offset by decreased revenues due mainly to selling a part of shares of Hitachi Construction
Machinery Co., Ltd.
(Asia)
Revenues in Asia composed of China and ASEAN, India and other areas increased from fiscal
2021, due mainly to increased revenues in Automotive Systems owning to a recovery of market
conditions, increased revenues of the building systems business and the measurement and analyticalsystems business in Connective Industries sector, and increased revenues in Digital Systems &Services sector. The increase was partially offset by decreased revenues due mainly to selling a part ofshares of Hitachi Construction Machinery Co., Ltd. and selling shares of Hitachi Metals, Ltd.
(Other Areas)
Revenues in other areas increased from fiscal 2021, due mainly to increased revenues of thepower grids business and the railway systems business in Green Energy & Mobility sector, and in
Automotive Systems. The increase was partially offset by decreased revenues due mainly to selling apart of shares of Hitachi Construction Machinery Co., Ltd.

51

(3) Analysis of Financial Condition and Cash Flows
1) Liquidity and Capital Resources
Policies for Financing Activities
We consider maintaining an appropriate level of liquidity and securing adequate funds for current
and future business operations to be important financial objectives. Through efficient management ofworking capital, we are working to optimize the efficiency of capital utilization throughout our business
operations. We endeavor to improve our group cash management by centralizing such management
among us and our overseas financial subsidiaries.
We introduced ROIC as a management indicator and are promoting the improvement of capitalefficiency and the growth of highly profitable businesses through our management. ROIC is an indicatorthat evaluates returns generated by invested capital calculated by dividing business profit after taxes byinvested capital. To increase returns, ROIC needs to exceed the weighted average cost of capital(WACC), which is the cost of raising invested capital.

In fiscal 2022, we have changed the key indicator of profitability from the conventional adjusted
operating income to adjusted EBITA (representing the operating income, adding back the amortizationof intangible assets, etc. recognized upon business combinations, and adding or deducting share of
profits (losses) of investments accounted for using the equity method).
We will aim for adjusted EBITA margin of 12% and ROIC of 10% and ensure disciplined
investment judgments using adjusted EBITA margin and ROIC as the criteria, which are also used forassessing investments in the acquisition of businesses, in an effort to further increase profitability andthe efficiency of business assets.
Trends in the Funding Demands
Our major uses of funds are M&A for growth, investment in human resources, capital
investments, research and development (R&D) investments and shareholder returns. We plan to use cash
income from core free cash flows and the sale-off of assets for investments in future growth and forshareholder returns with good balance.
The major transactions of M&As, etc. are described in “Consolidated Financial Statements Notes to Consolidated Financial Statements - (5) Business Acquisitions and Divestitures.” The results
and plan of the capital investments are described in “III. Property, Plants and Equipment.” The policy
and results of shareholder returns are described in “ IV. Information on the Company - 3. Dividend
Policy.”52

Capital Resources
Our internal sources of funds include cash flows generated by operating activities and cash andcash equivalents. Our management also considers short-term investments to be an immediately available
source of funds. In addition, we raise funds both in the capital markets and from Japanese andinternational commercial banks in response to our capital requirements. Our management’s policy forcapital investment and M&A is to finance capital expenditures primarily by internally generated funds
and to a lesser extent by funds raised through the issuance of debt and equity securities in domestic andforeign capital markets.
When procuring funds through borrowing, our financial discipline policy is to maintain theappropriate financial condition by considering the financial indicators such as a D/E ratio and an interest
bearing debt/EBITDA ratio. In order to flexibly access funding, we registered our shelf registration withthe maximum outstanding balance of 300.0 billion yen.
We maintain commitment line agreements with a number of domestic banks under which we may
borrow in order to ensure efficient access to necessary funds. These commitment line agreements
generally provide for a one-year term, renewable upon mutual agreement between us and each of thelending banks, as well as another commitment line agreement with a contract term of three years endingon July 29, 2025. As of March 31, 2023, our unused commitment lines totaled 513.0 billion yen,including those of 505.0 billion yen which the Company maintained.
We receive debt ratings from Moody’s Japan K.K. (Moody’s), S&P Global Rating Japan Inc.
(S&P), as well as Rating and Investment Information, Inc. (R&I). Our debt ratings as of March 31, 2023
were as follows.
Rating Company
Long-term
Short-term
Moody’s
A3
P-2
S&P
A
A-1
R&I
AAa-1+
With our current ratings, we believe that our access to the global capital markets will remain
sufficient for our financing needs. We seek to improve our credit ratings in order to ensure financial
flexibility for liquidity and capital management, and to continue to maintain access to sufficient funding
resources through the capital markets.
2) Cash Flows(Cash Flows from Operating Activities)
Net income in fiscal 2022 increased by 33.0 billion yen, as compared with fiscal 2021. Net cash
outflow from a change in trade receivables and contract assets increased by 27.3 billion yen, as
compared with fiscal 2021. Net cash inflow from a change in trade payables decreased by 112.5 billion
yen, as compared with fiscal 2021. However, net cash outflow from a change in inventories decreased
by 85.8 billion yen, and income tax payment decreased by 77.6 billion yen, as compared with fiscal
2021, respectively.
As a result of the foregoing, net cash provided by operating activities was 827.0 billion yen in
fiscal 2022, an increase of 97.1 billion yen compared with fiscal 2021.
(Cash Flows from Investing Activities)
Net amount of investments related to property, plant and equipment* was 355.0 billion yen in
fiscal 2022 and this net sum increased by 24.9 billion yen compared with fiscal 2021. Purchase ofinvestments in securities and other financial assets (including investments in subsidiaries andinvestments accounted for using the equity method) in fiscal 2022 decreased by 827.1 billion yen, as
compared with fiscal 2021, due mainly to the purchase of shares of GlobalLogic Worldwide Holdings,
Inc. in fiscal 2021. Proceeds from sale of investments in securities and other financial assets (including
investments in subsidiaries and investments accounted for using the equity method) in fiscal 2022
increased by 447.4 billion yen, as compared with fiscal 2021, due mainly to the sale of shares of Hitachi
Construction Machinery Co., Ltd., Hitachi Metals, Ltd. and Hitachi Transport System, Ltd.
As a result of the foregoing, net cash provided by investing activities was 151.0 billion yen in
fiscal 2022, as compared with 1,048.8 billion yen of net cash outflow in fiscal 2021.
53

* The sum of the purchase of property, plant and equipment and the purchase of intangible assets,less the proceeds from sale of property, plant and equipment, and intangible assets.
(Cash Flows from Financing Activities)
Net cash outflow related to long-term debt** in fiscal 2022 decreased by 52.4 billion yen, as
compared with fiscal 2021. However, net cash outflow from a change in short-term debt in fiscal 2022
was 277.6 billion yen, as compared with 653.2 billion yen of net cash inflow in fiscal 2021 and net cash
outflow from acquisition of common stock for treasury in fiscal 2022 increased by 199.9 billion yen, as
compared with fiscal 2021.
As a result of the foregoing, net cash used in financing activities was 1,142.9 billion yen in fiscal
2022, as compared with 202.7 billion yen of net cash inflow in fiscal 2021.
** The proceeds from long-term debt, less the payments on long-term debt.
As a result of the foregoing, cash and cash equivalents as of March 31, 2023 were 833.2 billion
yen, a decrease of 135.5 billion yen from March 31, 2022. Free cash flows, the sum of cash flows fromoperating and investing activities, were an inflow of 978.1 billion yen in fiscal 2022, an increase of
1,297.0 billion yen compared with fiscal 2021.
3) Assets, Liabilities and Equity
As of March 31, 2023, total assets amounted to 12,501.4 billion yen, a decrease of 1,386.0 billion
yen from March 31, 2022. This was attributable to conversion of Hitachi Construction machinery Co.,
Ltd. to an equity-method associate of the Company and deconsolidation of Hitachi Metals, Ltd., despite
increased assets resulting from the impact of foreign exchange. Cash and cash equivalents as of March
31, 2023 amounted to 833.2 billion yen, a decrease of 135.5 billion yen from the amount as of March 31,2022.
As of March 31, 2023, total interest-bearing debt, the sum of short-term debt and long-term debt
including current portion of long-term debt, amounted to 2,213.3 billion yen, a decrease of 913.3 billion
yen from March 31, 2022. As of March 31, 2023, short-term debt, consisting mainly of borrowings frombanks and commercial paper, amounted to 777.6 billion yen, a decrease of 456.4 billion yen from March
31, 2022. As of March 31, 2023, the current portion of long-term debt amounted to 141.8 billion yen, adecrease of 194.5 million yen from March 31, 2022. As of March 31, 2023, long-term debt (excluding
current portion), consisting mainly of debentures, and loans principally from banks and insurancecompanies, amounted to 1,293.8 billion yen, a decrease of 262.3 billion yen from March 31, 2022.
As of March 31, 2023, total Hitachi, Ltd. stockholders’ equity amounted to 4,942.8 billion yen, an
increase of 601.0 billion yen from March 31, 2022. As a result, the ratio of total Hitachi, Ltd.
stockholders’ equity to total assets as of March 31, 2023 was 39.5%, compared with 31.1% as of March
31, 2022.
Non-controlling interests as of March 31, 2023 was 392.7 billion yen, a decrease of 620.7 billion yen
from March 31, 2022.
Total equity as of March 31, 2023 was 5,335.5 billion yen, a decrease of 19.7 billion yen fromMarch 31, 2022. The ratio of interest-bearing debt to total equity was 0.41, an decrease of 0.17 pointfrom March 31, 2022.
(4) Production, Order Received and Sales
The Hitachi Group does not present production and orders received in amount or volume terms foreach segment since it produces and sells a wide variety of products, there are variety of specifications insame kinds of products and certain products are mass-produced. The balance of unsatisfied performanceobligations for the segments that have contracts under which revenues are recognized over a long periodof time is described in “Consolidated Financial Statements － Notes to Consolidated Financial
Statements － (20) Revenues.” Regarding sales, see “(2) Analysis of Results of Operations.”(5) Important Accounting Policies and Estimates
The preparation of the consolidated financial statements in conformity with IFRS requires ourmanagement to make estimates and assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Management considers that certain
54

accounting estimates to be critical, and that their significance to the financial statements and thepossibility that future events affecting the estimate may differ significantly from management’s current
assumptions could have a material impact on the presentation of our financial condition, changes infinancial condition or results of operations. First, the estimates require us to make assumptions about
matters that are highly uncertain at the time the accounting estimates are made. Second, there could be
different estimates that we reasonably could have used for the accounting estimate in the current period,or changes in the accounting estimate that are reasonably likely to occur as time proceeds. Importantaccounting policies that require management to make estimates and assumptions are as follows.
Estimates, Fluctuations in Cost and Cancellation of Long-term Projects
We enter into a substantial number of long-term projects, particularly in connection with theconstruction of infrastructure systems. For a performance obligation satisfied over time, we measure its
progress towards complete satisfaction of that performance obligation based on the costs incurred, or theperiod of services being provided in consideration of the nature of the goods and services for the
purpose of recognizing revenue. When we cannot reasonably measure the progress, revenue isrecognized only to the extent of the costs incurred. The revenue recognition for such long-term projects
requires us to make significant assumptions about the estimated total cost, estimated total selling price,contract risks and other factors. However, these estimates are subject to change. We charge any
anticipated losses on fixed price contracts to operations when we are able to estimate such losses. While
we employ our best judgment based on available information, these estimates are subject to change. We
regularly review these estimates and adjust them as we deem necessary. Fluctuations in costs can occur
for a variety of reasons, many of which are beyond our control. In addition, we or our counterparties
may cancel these contracts. These factors would require us to revise our initial assumptions regarding aparticular contract, and may adversely affect our business, financial condition and results of operations.
Business Combinations
Business combinations are accounted for using the acquisition method. In addition to tangible
assets of the acquiree, intangible assets such as technologies, brands, and customer lists are valuated atfair value. In these valuations, estimates are made based on appropriate assumptions and future
projections according to each case. Independent external experts are usually involved in the valuation
process, but significant estimates and assumptions in the valuation include inherent uncertainty. We
consider the estimates of the key assumptions to be reasonable, but actual results may differ.
Impairment of Assets
We review the carrying amounts of assets that it owns and uses whenever events or changes incircumstances indicate that the carrying amounts may be unrecoverable, to determine whether there is
any indication of impairment. If the carrying amount of an asset is judged to be impaired, the amountthat exceeds the recoverable amount is recognized as an impairment loss. We measure the recoverable
amount of an asset or a CGU (or a group of CGUs) as the higher of fair value less costs of disposal andvalue in use.
In measuring fair values, we primarily use the income approach (present value technique) based on
the estimated future cash flows expected to result from the use of the asset and its eventual disposal or
the market approach to derive reasonable estimates of values in orderly market transactions, such ascomparisons of similar public companies and the current gross value of the asset. Value in use iscalculated using the estimated future cash flows based on business plans approved by management,
discounted at the discount rate, which is derived from the weighted average cost of capital. It is based on
certain assumptions that it is considered reasonable as of the filing date of this report, but actual results
may differ significantly depending on market risks, business environment risks, and so forth. The
discount rate used to calculate the value in use is affected by stock market trends and interest rate
fluctuations. We believe that the estimates of future cash flows and value in use are reasonable, butchanges in estimates resulting from unpredictable changes in the business environment that lead todecreases in future cash flows or value in use can adversely affect the valuation of assets. We
appropriately employ external experts depending on the complexity of calculating fair value and value inuse.
55

Goodwill is the source of excess earning power based on the market competitiveness acquired
through business acquisition, and the difference between the net assets of the acquiree and theconsideration for acquisition is recorded as goodwill except for the amount recorded as intangible assets,etc. Goodwill is not amortized in accordance with IFRS. Irrespective of any indicators of impairment,
we test assets for impairment annually, mainly in the fourth quarter, by estimating the recoverable
amount of each CGU or a group of CGUs to which such assets are allocated. We continuously monitor
the comparison between the initial estimate and the most recent estimate, and conduct impairment tests
if there are signs that the value will fall below the original estimate and the carrying amount will not berecoverable, due to changes in events or circumstances such as in business strategies or in the market
environment. Such changes in the events or circumstances include crises in the global economy andfinancial markets, and if the carrying amount of each CGU or a group of CGUs to which such assets areallocated exceeds the recoverable amount, the excess amount is recognized as an impairment loss.
The breakdowns of impairment and goodwill by segment are described in “Consolidated Financial
Statements ― Notes to Consolidated Financial Statements ― (4) Segment Information.” The maincontent is described in “Consolidated Financial Statements ― Notes to Consolidated Financial
Statements ― (9) Property, Plant and Equipment and (10) Goodwill and Other Intangible Assets."
Deferred Tax Assets
Deferred tax assets are the amounts of taxes that will be recovered in future periods. In assessing
the realizability of deferred tax assets, we consider whether it is more likely than not that some portionor all of the deferred tax assets will not be realized. Although realization is not assured, we consider thescheduled reversals of deferred tax liabilities and projected future taxable income when assessing
realizability. The outlook for future performance, which is the basis for estimating future taxable
income, may differ from the actual one due to unforeseen events such as economic trends, supply anddemand trends in markets, sales prices of products and services, procurement prices of raw materials andparts, fluctuations in exchange rates, and rapid technological innovations, and may be corrected in the
future. As a result, the amounts of deferred tax assets that are determined to be recognizable may be
adversely affected. The realizability of deferred tax assets is evaluated for each tax payment in each tax
jurisdiction, and even if running similar businesses, the evaluations can differ depending on the productand the tax jurisdiction. The ultimate realization of deferred tax assets is dependent upon the generationof future taxable income in specific tax jurisdictions during the periods in which these deductible
differences become deductible. Based on these factors, we consider it is more likely than not it willrealize the benefits of these deducible differences as of March 31, 2023. However, the actual times andamounts of taxable income occurrence may differ from the estimates.
Employee Retirement Benefits
We have a significant amount of employee retirement benefit costs that we derive from actuarial
valuations based on a number of assumptions. Inherent in these valuations are a number of actuarial
assumptions used in estimating employee retirement benefit costs including mortality, withdrawal andretirement rates, changes in wages and the discount rate. We are required to make judgments regarding
the actuarial assumptions by taking into account various factors including personnel demographics,
market conditions and expected trends in interest rates. Although management believes that its actuarial
assumptions are reasonable in light of the various underlying factors, there can be no assurance that theactuarial assumptions will correspond to actual results. If our actuarial assumptions differ from actual
results, the consequent deviation of actual employee retirement benefit costs from estimated costs may
have an adverse effect on our financial condition and results of operations. A decrease in the discountrate may result in an increase in the amount of projected benefit obligations. In addition, we may changethese actuarial assumptions, such as the discount rate. Changes in actuarial assumptions may also havean adverse effect on our financial condition and results of operations. Details of the evaluation of
employee retirement benefits are described in “Consolidated Financial Statements ― Notes toConsolidated Financial Statements ― (3) Summary of Significant Accounting Policies ― (k)Retirement and Severance Benefits.”

56

(6) Forward-Looking Statements
Certain statements found in “1. Management Policy, Economic Environment and Challenges
Hitachi Group Faces,” “2. Sustainability Approach and Initiatives,” “3. Risks Factors” and “4.
Management's Discussion and Analysis of Consolidated Financial Condition, Results of Operations andCash Flows” and other descriptions in this report may constitute “forward-looking statements” asdefined in the U.S. Private Securities Litigation Reform Act of 1995. Such “forward-looking statements”
reflect management’s current views with respect to certain future events and financial performance andinclude any statement that does not directly relate to any historical or current fact. Words such as“anticipate,” “believe,” “expect,” “estimate,” “forecast,” “intend,” “plan,” “project” and similar
expressions which indicate future events and trends may identify “forward-looking statements.” Suchstatements are based on currently available information and are subject to various risks and uncertainties
that could cause actual results to differ materially from those projected or implied in the “forwardlooking statements” and from historical trends. Certain “forward-looking statements” are based uponcurrent assumptions of future events which may not prove to be accurate. Undue reliance should not be
placed on “forward-looking statements,” as such statements speak only as of the date of this report.
Factors that could cause actual results to differ materially from those projected or implied in any“forward-looking statement” and from historical trends include, but are not limited to:• economic conditions, including consumer spending and plant and equipment investment in Hitachi’smajor markets, as well as levels of demand in the major industrial sectors Hitachi serves;• exchange rate fluctuations of the yen against other currencies in which Hitachi makes significant
sales or in which Hitachi’s assets and liabilities are denominated;• uncertainty as to Hitachi’s ability to access, or access on favorable terms, liquidity or long-term
financing;• uncertainty as to general market price levels for equity securities, declines in which may require
Hitachi to write down equity securities that it holds;• fluctuations in the price of raw materials including, without limitation, petroleum and othermaterials, such as copper, steel, aluminum, synthetic resins, rare metals and rare-earth minerals, orshortages of materials, parts and components;• credit conditions of Hitachi’s customers and suppliers;• general socioeconomic and political conditions and the regulatory and trade environment ofcountries where Hitachi conducts business, particularly Japan, Asia, the United States and Europe,
including, without limitation, direct or indirect restrictions by other nations on imports anddifferences in commercial and business customs including, without limitation, contract terms andconditions and labor relations;• uncertainty as to Hitachi’s ability to response to tightening of regulations to prevent climate change• uncertainty as to Hitachi’s ability to maintain the integrity of its information systems, as well as
Hitachi’s ability to protect its confidential information or that of its customers;• uncertainty as to Hitachi’s ability to attract and retain skilled personnel;• uncertainty as to Hitachi’s ability to continue to develop and market products that incorporate newtechnologies on a timely and cost-effective basis and to achieve market acceptance for suchproducts;• exacerbation of social and economic impacts of the spread of COVID-19;• the possibility of disruption of Hitachi’s operations by natural disasters such as earthquakes andtsunamis, the spread of infectious diseases, and geopolitical and social instability such as terrorism
and conflict;• estimates, fluctuations in cost and cancellation of long-term projects for which Hitachi uses thepercentage-of-completion method to recognize revenue from sales;• increased commoditization of and intensifying price competition for products;• fluctuations in demand of products, etc. and industry capacity;• uncertainty as to Hitachi’s ability to implement measures to reduce the potential negative impact offluctuations in demand of products, etc., exchange rates and/or price of raw materials or shortages ofmaterials, parts and components;• uncertainty as to the success of cost structure overhaul;• uncertainty as to Hitachi’s ability to achieve the anticipated benefits of its strategy to strengthen its
Social Innovation Business;57• uncertainty as to the success of acquisitions of other companies, joint ventures and strategic alliances
and the possibility of incurring related expenses;• uncertainty as to the success of restructuring efforts to improve management efficiency by divestingor otherwise exiting underperforming businesses and to strengthen competitiveness;• the potential for significant losses on Hitachi’s investments in equity-method associates and joint
ventures;• uncertainty as to the outcome of litigation, regulatory investigations and other legal proceedings ofwhich the Company, its subsidiaries or its equity-method associates and joint ventures have become
or may become parties;• the possibility of incurring expenses resulting from any defects in products or services of Hitachi;• uncertainty as to Hitachi’s access to, or ability to protect, certain intellectual property; and• uncertainty as to the accuracy of key assumptions Hitachi uses to evaluate its employee benefitrelated costs.

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

58

5. Material Agreements, etc.
Cross License Agreement
Party

Party

Country

Item undercontract

Contract
description

U.S.A.

Information
handling
systemsCrosslicense ofpatents

Hitachi, Ltd.
(The Company)

International
Business
Machines Corp.

Hitachi, Ltd.
(The Company)

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

Crosslicense ofpatents

Hitachi, Ltd.
(The Company)

EMC
Corporation

U.S.A.

Information
handling
systemsCrosslicense ofpatents

U.S.A.

NuclearreactorsystemsCrosslicense ofpatents andtechnology

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

59

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

6. Research and Development(1) Research goals and major issues
The Hitachi Group (Hitachi Ltd. and its consolidated subsidiaries) aims to further evolve its Social
Innovation Business with Digital, Green and Innovation as growth drivers. We have set "Strengthen initiative
to create innovation with digital contributing to global growth" as our R&D mission. By allocating R&D
resources to prioritize innovations that revolutionize the customer experience and address the essential issues
facing society, we will strive to ensure business continuity, achieve future growth and solve the social issues
our customers face, thereby maintaining a society that does not exceed planetary boundaries, in balance withensuring the wellbeing of each employee.
To strengthen the competitiveness of our business activities and achieve future growth, we are developing
growth scenarios for our customers by giving shape to the Lumada Growth Cycle and realizing customer
experience-driven DX (digital transformation) through One Hitachi. We are also driving the creation of
disruptive innovations based on back-casting from 2050 under a global framework. To this end, we are
expanding our digital technology base and strengthening our overseas research resources. We will also
accelerate the evolution of the Social Innovation Business in collaboration with Hitachi Digital, the Global
Environment Business Group, and Innovation Growth Strategy Division, which lead the growth strategy
across the Group, and with related companies such as GlobalLogic Inc., and Hitachi Energy, Ltd.
(2) Research and development scheme
The Hitachi Group is striving to improve the efficiency of R&D through close coordination between the
R&D divisions of the Company and those of its group companies. It has been expanding collaboration with
universities and other research institutions both in Japan and abroad. In addition to collaborations with
universities and research institutions in Japan and overseas, in April 2019 the R&D Group Kokubunji Siteopened the "Kyōsō-no-Mori" R&D center, to accelerate open collaborative creation with customers andpartners. The Corporate Venturing Office was established at the same time, and through two funds that havebeen formed so far, we have invested in a total of 21 startup companies, providing value to our customers
while supporting the growth of each company through collaboration with Hitachi's businesses, andcontributing to DX, decarbonization and wellbeing in the process.
To accelerate global growth through the Social Innovation Business, we reorganized our R&D Group in
April 2022. The Global Center for Social Innovation, which has been responsible for the development ofvalue-driven innovations in tandem with Hitachi's front-line operations, and the Technology Innovation
Center, which has been responsible for the development of world-leading technologies supporting value
creation, have been integrated into the Center for Digital Services and the Center for Sustainability, tostrengthen value creation through DX and GX (green transformation). The Center for Exploratory Research,which is responsible for setting the stage for the future, together with our overseas R&D centers in North
America, Europe, China, Asia, and India, are working together to innovate on a global scale.
(3) Investment in Innovation
To achieve further growth of the Hitachi Group, we
will increase our investment in innovation groupwide.
The third fund of corporate venturing investment wasformed in April 2023 with a size of $300 million, whichis twice the size of the first and second funds
established previously. We will make strategic
investments in startups driving the latest digital trends
including Web3, the Metaverse and generative AI
technologies. Also, we will invest a cumulative 100
billion yen in cutting-edge research over the three-year
period of the 2024 Mid-term Management Plan.
Through these investments, we aim to create disruptive
innovations to solve future social issues and contributeto the Hitachi Group's growth by achieving the Lumada
growth cycle.

60

(4) R&D expenditures
The Hitachi Group’s R&D expenditures for the fiscal year ended March 31, 2023 were 316.2 billion yen,
2.9％ of revenues. R&D expenses by segment and R&D expenses trends are shown below.
(Billions of yen)Segment

Fiscal Year ended
March 31, 2023

Digital Systems & Services

52.7

Green Energy & Mobility

53.3

Connective Industries

84.6

Automotive Systems

76.4

Hitachi Construction Machinery

9.5

Hitachi Metals

9.1

Others3.5

Corporate items & Eliminations

26.7

Total

316.2

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

(5) R&D achievements
Notable R&D achievements in the fiscal year ended March 31, 2023 are as follows.
(i) Launched collaborative creation using advanced digital technology to promote MI in materials
development (Digital Systems & Services segment)
Aiming to accelerate the development of new materials and make material development morestreamlined and sophisticated, we worked to promote Materials Informatics (MI), which enables theefficient discovery of material properties and knowledge in a short period of time through the use ofmaterial-related data and digital technologies such as AI. By applying "CMOS annealing," which
simulates a quantum computer, to the development of a model for predicting material performance, wehave improved the prediction accuracy of the machine learning model and made material development
times that are around 20% faster a possibility. Going forward, we will aim to commercialize thistechnology as a Lumada material development solution. (a result of collaborative activities with SEKISUICHEMICAL CO., LTD.)(ii) Launched collaboration on the issuance of "Wholesale Digitally Tracked Green Bond," Japan's firstenvironmental bond using a digital mechanism (Digital Systems & Services segment)
We launched a collaboration to issue Japan's first publicly submitted "Wholesale Digitally Tracked
Green Bond" using a bond-type security token scheme based on blockchain infrastructure provided by
BOOSTRY Co., Ltd. Under the collaboration, part of the "Sustainable Finance Platform" developed by
Hitachi is used as a platform for recording and managing various environmental data. By sharing thelessons learned and issues identified through this initiative, we aim to contribute to the carbon neutralityof society as a whole. (collaboration with Japan Exchange Group, Inc., Nomura Securities Co., Ltd., and
BOOSTRY Co., Ltd.)(iii) Received the MEXT Minister’s Award at the 52nd Japan Industrial Technology Awards for thedevelopment of an AI video analysis solution (Digital Systems & Services segment)
We received the MEXT (Ministry of Education, Culture, Sports, Science and Technology) Minister’sAward at the 52nd Japan Industrial Technology Awards hosted by THE NIKKAN KOGYO SHIMBUN,
LTD. for "Development of AI Video Analysis Solution to Support the Development of a Safe and Secure
Society. The AI Video Analysis Solution utilizes Hitachi's AI video analysis technology and features"high-speed search" to find a target person or object in approximately one second by quickly identifying
characteristics such as appearance and behavior from video data of tens of thousands of people, and "realtime tracking" to track movement routes from numerous security cameras using location information andrecording times. The solution will support highly efficient security operations in large public spaces. Last
year, we developed a new AI technology that captures changes in the posture of people in video images
and the ownership relationship between people and objects, and began offering a solution with expanded
capabilities for early detection of suspicious behavior and abandoned packages. (jointly awarded with61

Hitachi Industry & Control Solutions, Ltd.)(iv) Hitachi launched Lumada Inspection Insights to support the inspection, monitoring, and optimization offacilities for electric utilities and other companies (Green Energy & Mobility segment, Digital Systems &Services segment)
Lumada Inspection Insights was released as a digital solution to inspect, monitor and optimize key
facilities such as power transmission networks for power utilities and other companies. Lumada
Inspection Insights was jointly developed by Hitachi Energy and Hitachi Vantara, and incorporates AI
technology developed by Hitachi. By using AI to analyze still images and video including satellite
imagery, LiDAR (a remote sensing technology) output and temperature distribution, we can help
customers automate facility inspections, improve safety, reduce weather-related risks and environmental
impacts from wildfires, and achieve sustainability goals.
(v) Received the 69th Okochi Memorial Production Prize and the METI Minister's Prize at the 9th
Monodzukuri Nippon Grand Awards, for the development and improved precision of the CG7300 SEM
for semiconductor length measurement (Connective Industries segment)
For developing and improving the precision of the CG7300, an extreme ultraviolet lithography era
SEM for semiconductor length measurement SEM, we received the 69th Okochi Memorial Production
Prize sponsored by the Okochi Memorial Foundation and the METI (Ministry of Economy, Trade andIndustry) Minister's Prize at the 9th Monodzukuri Nippon Grand Awards sponsored by the METI. For thecommercialization of the CG7300, we developed an objective lens that enables high-precision focus
adjustment, electron beam shaking suppression technology, and electron beam shape correction digitalprocessing technology in order to measure the dimensions of extremely small circuit patterns at thenanometer level. As a result, we succeeded in improving the accuracy of pattern size measurement
differences (machine error) between individual devices by approximately 10% (machine error: 0.10 nm orless level) compared with conventional models, establishing the world's highest level of semiconductor
pattern inspection technology. In the future we will continue to contribute to the sustainable developmentof the industry that supports cutting-edge manufacturing and Digital Society. (jointly awarded with
Hitachi High-Tech Corporation)

CD-SEM CG7300

62

(vi) Five Hitachi Brand home appliance products won the Good Design Awards 2022 and two were
simultaneously selected for the higher level Good Design Gold Award in a first for the Hitachi Group(Connective Industries segment).
Five Hitachi Brand home appliance products won the Good Design Awards 2022, which are sponsoredby the Japan Institute of Design Promotion, and two of these products were selected for the Good Design
Gold Award. The Good Design Gold Award went to the Power Boost Cyclone PV-BH900SK cordlessstick vacuum cleaner, which uses more than 40% recycled plastic, and the Chiiil refrigerator, a newconcept of refrigerator whose use can be tailored to a user's lifestyle and preferences. This is the first time
for the Hitachi Group to achieve a double win of Good Design Gold Awards. The core design value that
Hitachi home appliances should provide is a balance of "usability as a practical product" and "beauty that
does not interfere with daily life." We will continue to be a part of people's lives and contribute toimproving the quality of life each consumer. (jointly awarded with Hitachi Global Life Solutions, Inc.)63

(vii) Developed thin inverter technology for EVs that is both compact and energy-efficient (Automotive
Systems segment)
As a power inverter for EVs (hereinafter “inverter”), we have developed the base technologies for athin inverter that is both energy efficient and compact. By integrating the power semiconductors that
control the power supply with the printed circuit board, the power wiring has been simplified and theenergy loss generated when the power semiconductors are switched is reduced by 30% compared withconventional products. The size of the device has also been roughly halved. In addition, the new structure
eliminates the need for welding processes for power semiconductors and power wiring, reducing thenumber of parts and the processes required for assembly, thereby reducing CO2 emissions throughout thelife cycle of the inverter, including the production process. We will continue to work toward the practicalapplication of this technology, utilizing the Green Innovation Fund project promoted by NEDO (New
Energy and Industrial Technology Development Organization), and contribute to the realization of acarbon-neutral society (co-developed with Hitachi Astemo, Ltd.).

(viii) Accelerated collaboration with academia to realize a decarbonized society and circular economy(Corporate Items)
We have partnered with Imperial College London to create a new research centre for decarbonisationand natural climate solutions. Rapid decarbonisation is essential to mitigate the impacts of climatechange, which will require a transformation of industry sectors and lifestyles. Natural environment
systems must also be protected as they provide essential services, such as provisioning food and cleanwater and removing CO2 from the atmosphere. In response, the centre will focus on two key areas:
decarbonisation and climate repair, where initial projects will evaluate pathways for reducing CO2
emissions through direct air capture (DAC) and optimising nature conservation so as to identify thenecessary transition to be made by society.
We also established the Hitachi-AIST Circular Economy Cooperative Research Laboratory, a joint
research center with the National Institute of Advanced Industrial Science and Technology (AIST), withthe aim of realizing a circular economy-based society. Experts in life cycle assessment, resource recovery,
manufacturing, service engineering and other fields will come together to promote joint research on theideal society, necessary rules, and solutions for a circular economy-based society in which resources areused efficiently throughout the entire value chain across industry.
We will accelerate its collaboration with universities and research institutions in Japan and overseas,
aiming to realize a sustainable society and contribute to decarbonization.

64III. Property, Plants and Equipment
1. Summary of Capital Investment, etc.
The Hitachi Group (the Company and consolidated subsidiaries) selectively invests in R&D andproduct fields expected to grow over the long term, and it also invests to streamline manufacturing process,etc. and to improve the reliability of its products and services.
Capital investment (based on the amount recorded as tangible fixed assets and the investment property)
in the fiscal year ended March 31, 2023 was 349.7 billion yen. A breakdown of capital investment bysegment is as follows.

Segment

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

Main purpose of investment

Digital Systems &Services

64.9

101

Product development,
Maintenance and renewal of data center
equipment

Green Energy & Mobility

72.5

109

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

Connective Industries

61.2

98

Manufacturing facilities for industrial
products,
Increase development and production ofsemiconductor processing and inspection
equipment, and measurement and analyticalsystems,
Facility of production for building systems,
Streamline development and production ofother products

Automotive Systems

66.6

77

Increase production of automotive equipment

Hitachi Construction
Machinery

29.8

69

Hitachi Metals

20.1

60

Others21.1

123Streamline of production for construction
machineryStreamline production of specialty steel
products and functional components andequipment,
Increase production of magnetic materials,
power electronics materials and applications,wires, cables and related products, etc.,
Renovate offices, R&D facilities

Corporate Items &12.9
86
Eliminations
Total
349.7
90
(Notes) 1. The figures in the above table include the amount of the right-of-use assets and the investment property
each of which is recorded as tangible fixed assets and other non-current assets, respectively.
2. These investments were mostly financed with the Hitachi Group’s own capital.

65

2. Major Property, Plants and Equipment
The Hitachi Group (the Company and consolidated subsidiaries) engages in diverse business operationsin Japan and overseas. It discloses information on major property, plants and equipment represented inbreakdown by segment and major facilities of the Company and consolidated subsidiaries.
The situation at the end of the fiscal year ended March 31, 2023 is as follows.
(1) Breakdown by Segment(As of March 31, 2023)
Book value (Millions of yen)Segment

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

Other

Constructionin progress

Total

Number of
employees

Digital Systems &Services

7,015
[735]

60,61936,86642,96885,812

12,272

2,995

248,547

100,763

Green Energy &35,385[12,253]

110,193

118,236

31,03353,64048

61,417409,952

60,18035,451[5,066]

154,171

57,88742,07544,243-

14,711

348,538

81,88352,231[9,948]125,679

277,526

27,51023,092

12

49,310555,360

64,372

[-]

-

-

-

-

-

-

-

-

[-]

-

-

-

-

-

-

-

-

21,666[1,448]52,0182,759

10,83934,444-

1,124

122,850

12,044

151,748[29,450]

502,680493,274

154,425

241,231

12,332

129,557

1,685,247

319,242(10,455)[1,016]

20,110

121

3,643

1,701

-

104

15,224

3,283

141,293[30,466]

522,790493,395

158,068

242,932

12,332

129,661

1,700,471

322,525

Mobility
Connective
Industries
Automotive Systems
Hitachi Construction
Machinery
Hitachi Metals
OthersSubtotal
Corporate Items &Eliminations
Total

66

(2) The Company(As of March 31, 2023)
Book value (Millions of yen)
Details ofLand
Tools,
major facilities [Area in Buildings Machinery furniture Right-ofandanduse
and equipment thousands
andstructures vehicles
Assets2
fixturesof m ]

Other

Constructionin progress

Total

Number of
employees

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

Systemdevelopment
facilities,
manufacturing
facilities forservers,
mainframes, etc.

607
[40]

30,254115

16,096

22,565

7,077

1,062

77,77810,705

Head Office(Chiyoda-ku,
Tokyo)

Corporate

Other facilities

5,225
[963]

10,274

112

1,963

21,694-

10

39,2801,187

Research &Development
Group(Kokubunji,
Tokyo)

Others

R&D facilities

6,063
[776]

18,427

964

3,124

2,144

-

204

30,9292,231

Railway Systems
Business Unit
(Kudamatsu,
Yamaguchi)

Manufacturing
Green Energy & facilities for
Mobility
railway
vehicles, etc.

1,013
[666]

14,033

4,855

649

3,876

-

852

25,281

2,707

Nuclear Energy
Manufacturing
Business Unit andfacilities forGreen Energy &Energy Business
power
Mobility
Unit
generating(Hitachi, Ibaraki)equipment, etc.

9,143
[3,057]

5,164

41

939

1,173

-

353

16,816

994

63
[53]

10,549

7

1,502

33

-

94

12,251

1,825

521
[202]

6,647

563

2,183

1,898

0

307

12,122

4,358

[-]

1,431

0

5,150

-

-

107

6,689

502

Facility(Main location)

Segment

Corporate Hospital
Corporate
Group(Hitachi, Ibaraki)

Medicalfacilities

Manufacturing
facilities forindustrial
machinery andServices &plants,Platforms Business Digital Systems switchboards& Services
Unitand calculation(Hitachi, Ibaraki)
controlequipment,
systemdevelopment
facilities
IT Strategy &SystemDigital Integration
Othersdevelopment
Division
facilities(Chiyoda-ku,
Tokyo)
Healthcare
Business Division Connective
Industries(Minato-ku,
Tokyo)

Manufacturing
facilities for
medicalequipment

1,024
[10]

703

157

708

1,418

-

951

4,963

678

Building Systems
Connective
Business Unit
Industries(Hitachinaka,Ibaraki)

Facility of
production forbuilding systems

43
[476]

3,206

49

23

-

-

-

3,322

237

67

(3) Domestic subsidiaries(As of March 31, 2023)
Book value (Millions of yen)
Details ofLand
Tools,
major facilities [Area in Buildings Machinery furniture Right-ofandanduse
and equipment thousands
andstructures vehicles
Assets2
fixturesof m ]

Facility(Main location)

Segment

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

Manufacturing
facilities forautomotive
equipment

20,841[3,335]42,03370,966

7,221

6,389

Hitachi HighTech Corporation,
Connective
Naka Area
Industries(Hitachinaka,Ibaraki)

Manufacturing
facilities forsemiconductor
processing
equipment andtest andmeasurement
equipment, etc.

2,116
[241]

27,1697,893

12,858Hitachi Global
Life Solutions,Inc., Taga Works(Hitachi, Ibaraki)

Connective
Industries

Manufacturing
facilities forHomeappliances

339
[649]

4,330

4,595

Hitachi Building
Systems Co., Ltd.,
Connective
Head Office
Industries(Chiyoda-ku,
Tokyo)

Other facilities

3,980
[54]

5,643

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

Manufacturing
facilities forautomotive
equipment[-]

Hitachi Real
Estate Partners,
Ltd., Hitachi
Rectship Totsuka(Yokohama,
Kanagawa)

OthersRent officeHitachi HighTech Corporation,
Connective
Kasado Area
Industries(Kudamatsu,
Yamaguchi)

Manufacturing
facilities forsemiconductor
processing
equipment, etc.

HitachiInformation
Engineering, Ltd.,
Digital Systems
Data center
Systemplaza& Services
Yokohama(Yokohama,
Kanagawa)

Constructionin progress

Total

Number of
employees

-

4,419

151,869

16,133

808

-

903

51,747

3,232

4,532

6

-

581

14,386

1,122

341

1,092

-

-

164

11,621

1,495

881

10,434

167

3

-

3

11,488373[-]

10,967

24

260

-

-

-

11,251

-

321
[15]

2,136

5,588

2,105

239

-

682

11,071

604

[-]

5,449

-

113

4,877

-

3

10,443420

Other

Hitachi Astemo
Hanshin, Ltd.
(Sanda, Hyogo)

Automotive
Systems

Manufacturing
facilities forautomotive
equipment

1,959
[67]

2,959

3,126

321

12

-

158

8,535

340

Hitachi Astemo
Ueda, Ltd.
(Ueda, Nagano)

Automotive
Systems

Manufacturing
facilities forautomotive
equipment

1,104
[792]

2,088

3,347

123

1,688

-

86

8,436

640

68

(4) Overseas subsidiaries(As of March 31, 2023)
Book value (Millions of yen)
Subsidiary(Main location)

Segment

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

Other

Constructionin progress

Total

Number of
employees

Hitachi Energy
Ltd(Zurich,Switzerland)

Manufacturing
Green Energy & facilities for
Mobility
power gridproducts, etc.

15,879[2,338]62,933

105,618

14,50741,305-50,109290,351

39,995

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

Digital Systems
Other facilities& Services[-]-

18,794

14,551

20,7792,001-

56,125

13,933

Hitachi Astemo
Americas, Inc.
(Kentucky,
U.S.A.)

Automotive
Systems

Manufacturing
facilities forautomotive
equipment

569[1,320]

10,202

14,675

1,109

770

-

7,667

34,992

4,149

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

Manufacturing
facilities forautomotive
equipment

3,712
[426]

5,679

23,616

930

-

-

1,043

34,980

4,033

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

Automotive
Systems

Manufacturing
facilities forautomotive
equipment

[-]

8,053

15,456

1,263

1,327

-

6,638

32,737

5,811(Note) The figures for Hitachi Energy Ltd, Hitachi Vantara LLC and Hitachi Astemo Netherlands B.V. are presented in consolidated
basis of each company.

69

3. Plans for Capital Investment, Disposals of Property, Plants and Equipment, etc.
The Hitachi Group (the Company and consolidated subsidiaries) engages in diverse operations in Japanand overseas, and has not decided on specific plans to newly install or expand each of facilities as of the endof the fiscal year. Therefore, it discloses amounts of capital investment by segment.
The amount of capital investment for the fiscal year ending March 31, 2024 will be 310.0 billion yen(new installation and expansions, based on the amount recorded as tangible fixed assets and the investment
property), and a breakdown by segment is as follows.
Segment

Amount(Billions of yen)

Main purpose of investment

Digital Systems & Services

67.0

Product development, data center maintenance andupdates

Green Energy & Mobility

99.0

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

Connective Industries

80.0

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

Automotive Systems

40.0

Increase production of automotive equipment

Others22.0

Renovate offices, R&D facilities

Corporate Items &Eliminations

2.0

-

310.0

-

Total

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

70

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

Total number of shares authorized to
be issued (shares)

Common stock

2,000,000,000

Total

2,000,000,0002) Issued shares

Class

Commonstock
Total

Number of sharesissued as of the end of
fiscal year (shares)(March 31, 2023)

Number of sharesissued as of thefiling date (shares)(Note)(June 21, 2023)

Stock exchange on which
the Company is listed

Description

The number of shares per
938,083,077

938,241,277

Tokyo, Nagoya

938,083,077

938,241,277-

one unit of shares is 100
shares.
-(Note) The "Number of shares issued as of the filing date" does not include shares issued upon exercise of stock acquisition rightsfrom June 1, 2023 to the filing date.

71

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

The First Stock
Acquisition Rights ofHitachi, Ltd.
(Note 1)The Second Stock
Acquisition Rights ofHitachi, Ltd.
(Note 1)The Third Stock
Acquisition Rights ofHitachi, Ltd.
(Note 1)

June 29, 2016

April 6, 2017

April 11, 2018

31 Executive Officers of
the Company
42 Corporate Officers of
the Company

33 Executive Officers of
the Company
37 Corporate Officers of
the Company

33 Executive Officers of
the Company
35 Corporate Officers of
the Company

6,570[5,994]

7,018[6,508]7,279[6,879]Common stock
131,400 shares[119,880 shares](Note 2)

Common stock
140,360 shares[130,160 shares](Note 2)

Common stock
145,580 shares[137,580 shares](Note 2)

¥1 per share¥1 per share¥1 per share

From July 15, 2016
to July 14, 2046

From April 27, 2017
to April 26, 2047

From April 27, 2018
to April 26, 2048

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

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

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

Acquisition of stockacquisition rights throughtransfer shall be subject
to the approval of theBoard of Directors.

Acquisition of stockacquisition rights throughtransfer shall be subject
to the approval of theBoard of Directors.

Acquisition of stockacquisition rights throughtransfer shall be subject
to the approval of theBoard of Directors.

－

－

－

(Note 7)(Note 7)(Note 7)(Notes) 1. The information is that as of the end of fiscal year (March 31, 2023). The number of stock acquisition rights and the numberof shares to be issued upon exercise of stock acquisition rights in brackets in the lower row is information as of the end of
the last month ended before the filing date (May 31, 2023). With regard to the other items, there is no change from theinformation as of the end of fiscal year.
2. If the Company implements a stock split (including gratis allotment of shares of common stock; the same shall apply toreferences to a stock split hereinafter) or a reverse stock split with respect to common stock of the Company after the date ofallotment of the stock acquisition rights, the Number of Shares to be Issued with respect to the stock acquisition rights not
exercised at that time will be adjusted in accordance with following formula:
Number of Shares to be Issued
Number of Shares to be
Ratio of stock split or=×after adjustment
Issued before adjustment
reverse stock split

72

In addition, if there is an unavoidable ground requiring an adjustment of the Number of Shares to be Issued, the Number of
Shares to be Issued may be adjusted to the extent necessary by a resolution of the Board of Directors.
Any fractions of less than one share resulting from the adjustment will be rounded down.
3. Issue price for shares issued upon exercise of stock acquisition rights is the sum of the amount to be paid in upon exercise ofeach of the stock acquisition rights (¥1 per share) and the fair value of each of the stock acquisition right as calculated at thedate of allotment.
4. The amount of common stock to be increased upon issuing shares through the exercise of stock acquisition rights shall be
one half of the maximum amount of common stock, etc. to be increased calculated in accordance with Article 17, Paragraph
1 of the Ordinance on Company Accounting. Any fractions of less than one yen resulting from the calculation shall be
rounded up to the nearest yen.
5. A holder of stock acquisition rights may exercise all the stock acquisition rights together only within 10 days (in case thelast day is not a business day, the following business day) from the day immediately following the date on which he/sheceases to be an Executive Officer, a Director or a Corporate Officer of the Company.
6. The number of stock acquisition rights which a holder of stock acquisition rights may exercise shall be determined based on
the ratio of (i) the total shareholder return for shares of Hitachi for three years from the beginning of the fiscal year in which
the date of allotment of the stock acquisition rights falls to (ii) the growth rate of TOPIX (Tokyo Stock Price Index) for thesame period (the “TSR/TOPIX Growth Rate Ratio”), in accordance with the stock price conditions:a. In case the TSR/TOPIX Growth Rate Ratio is 120% or more
All the stock acquisition rights allotted (the “Allotted Rights”) may be exercised.
b. In case the TSR/TOPIX Growth Rate Ratio is 80% or more but less than 120%
Only a part of the Allotted Rights may be exercised according to the degree of the TSR/TOPIX Growth Rate Ratio(*).
*Number of stock acquisition
Number of
TSR/TOPIX=×{(× 1.25) – 0.5}
rights exercisable
Allotted Rights
Growth Rate Ratio
Any fraction less than one stock acquisition right will be rounded down.
c. In case the TSR/TOPIX Growth Rate Ratio is less than 80%
No Allotted Rights may be exercised.
7. In the event that the Company engages in a merger (only if the Company is to be dissolved as a result of the merger), an
absorption-type company split or incorporation-type company split (in each case, only if the Company is to be a split
company), or share exchange or share transfer (in each case, only if the Company is to be a wholly-owned subsidiary)(hereafter all of which are collectively referred to as “Corporate Reorganization”), then stock acquisition rights for theentities specified under Article 236, Paragraph 1, Item 8 (a) through (e) of the Companies Act (such entity hereinafterreferred to as the “Reorganized Company”) shall be issued to the Stock Acquisition Right Holders holding stock acquisitionrights remaining in effect (the “Remaining Stock Acquisition Rights”) immediately prior to the effective date of the
Corporate Reorganization (hereinafter respectively referring to an effective date of absorption-type merger in case of anabsorption-type merger, a date of incorporation of a company incorporated through a consolidation-type merger in case of aconsolidation-type merger, an effective date of absorption-type company split in case of an absorption-type company split, adate of incorporation of a company incorporated through an incorporation-type company split in case of an incorporationtype company split, an effective date of a share exchange in case of a share exchange, or a date of incorporation of a wholly
owning parent company incorporated through share transfer). However, these stock acquisition rights shall be granted only
if provisions for issuing the stock acquisition rights of the Reorganized Company in accordance with the following
conditions are included in an absorption-type merger agreement, a consolidation-type merger agreement, an absorption-typecompany split agreement, an incorporation-type company split plan, a share exchange agreement, or a share transfer plan.
(1) The number of stock acquisition rights of the Reorganized Company to be issued
The number of stock acquisition rights equal to the number of Remaining Stock Acquisition Rights held byrespective Stock Acquisition Right Holders shall be issued.
(2) The class of shares of the Reorganized Company to be issued upon exercise of stock acquisition rights
Common shares of the Reorganized Company shall be issued.
(3) The number of shares of the Reorganized Company to be issued upon exercise of stock acquisition rights
The number shall be determined in accordance with terms and conditions of Remaining Stock Acquisition Rights,
taking into account the conditions and other factors concerning Corporate Reorganization.
(4) Amount of assets to be contributed upon the exercise of stock acquisition rights
The amount of assets contributed upon the exercise of stock acquisition rights to be issued shall be amount derived
by multiplying the amount to be paid in per share to be delivered upon exercise of stock acquisition rights of theReorganized Company (the “Post-reorganization Exercise Price”) prescribed below by the number of shares of theReorganized Company to be issued determined in accordance with paragraph (3) of this section. The PostReorganization exercise price shall be one yen.
(5) Exercise period of stock acquisition rights
The exercise period of stock acquisition rights shall be from the later of the first day of the exercise period of stockacquisition rights or the effective date of the Corporate Reorganization to the expiration date of the exercise period ofstock acquisition rights.
(6) Matters concerning common stock and capital reserve to be increased due to the issuance of shares upon the exerciseof stock acquisition rights
The matters shall be determined in accordance with terms and conditions of Remaining Stock Acquisition Rights.
(7) Restrictions on acquisition of stock acquisition rights through transfer
The acquisition of stock acquisition rights through transfer shall be subject to the approval of the ReorganizedCompany.
(8) Conditions for the exercise of stock acquisition rights
The matters shall be determined in accordance with terms and conditions of Remaining Stock Acquisition Rights.
(9) Matters concerning the acquisition of stock acquisition rights
The matters shall be determined in accordance with terms and conditions of Remaining Stock Acquisition Rights.

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

Date

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

(Note 1)

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

(Note 2)

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

(Note 3)

From April 1, 2021
to March 31, 2022

Balance of thetotal number ofissued shares(shares)

Change incommonstock(Millionsof yen)Balance ofcommonstock(Millionsof yen)Change incapitalreserve(Millionsof yen)Balance ofcapitalreserve(Millionsof yen)-966,692,677-

458,790-

176,757

587,800

967,280,477

1,072

459,862

1,072

177,828-

967,280,477-

459,862-

177,828

604,800

967,885,277

928

460,790928

178,756-

967,885,277-

460,790-

178,756

349,600

968,234,877

941

461,731941

179,697-

968,234,877-

461,731-

179,697

June 15, 2021

(Note 4)

337,000

968,571,877

1,086

462,817

1,086

180,783

December 14, 2021

(Note 5)(30,488,800)

938,083,077-

462,817-

180,783-

938,083,077-

462,817-

180,783

From April 1, 2022
to March 31, 2023

(Notes) 1. This increase is due to the issuance of new shares as restricted stock compensation.
Issue price: 3,647 yen per share
Amount by which stated capital is to be increased: 1,823.5 yen per share
Allottees: 37 Executive Officers of the Company and 34 Corporate Officers of the Company
2. This increase is due to the issuance of new shares as restricted stock compensation.
Issue price: 3,067 yen per share
Amount by which stated capital is to be increased: 1,533.5 yen per share
Allottees: 31 Executive Officers of the Company and 33 Corporate Officers of the Company
3. This increase is due to the issuance of new shares as restricted stock compensation.
Issue price: 5,384 yen per share
Amount by which stated capital is to be increased: 2,692 yen per share
Allottees: 31 Executive Officers of the Company and 35 Corporate Officers of the Company
4. This increase is due to the issuance of new shares as restricted stock compensation.
Issue price: 6,448 yen per share
Amount by which stated capital is to be increased: 3,224 yen per share
Allottees: 35 Executive Officers of the Company, 34 Corporate Officers of the Company and 5 Directors of theconsolidated subsidiaries.
5. The change in the total number of issued shares is due to the cancellation of treasury stock.
6. The Company issued its new shares on May 31, 2023. The total number of issued shares, common stock and capitalreserve increased 158,200 shares, 600 million yens and 600 million yens respectively.

74

(5) Shareholders composition(As of March 31, 2023)
Status of shares (one unit of stock: 100 shares)
Class ofGovernment
shareholders
andmunicipality
Number ofshareholdersFinancial
institution

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

Total

Number ofsharesless than one
unit (shares)

3

179

66

2,234

1,139

151

213,906

217,678-

110

3,186,976

250,814

117,951

4,324,784

1,570

1,476,105

9,358,310

2,252,077

0.00

34.06

2.68

1.26

46.21

0.02

15.77

100.00-Shareownership(units)Ownership
percentageof shares(%)(Notes) 1. Of 510,830 shares of treasury stock, 5,108 units are included in the “Individuals and others” column,
while 30 shares are included in the “Number of shares less than one unit” column.
2. Of the shares registered in the name of Japan Securities Depository Center, Incorporated (account for
managing stocks whose shareholders have not transferred titles), 53 units are included in the “Other
institution” column and 65 shares are included in the “Number of shares less than one unit” column.

75

(6) Major shareholders

Name

Address

The Master Trust Bank of Japan, Ltd.

11-3, Hamamatsucho 2-chome, Minato-ku,(Trust Account)Tokyo

Custody Bank of Japan, Ltd.
(Trust Account)
State Street Bank and Trust
Company 505223(Standing proxy: Mizuho Bank, Ltd.)
GOVERMENT OF NORWAY(Standing proxy: Citibank, N.A.)

Share
Ownership(shares)(As of March 31, 2023)
Ownership
percentage to thetotal number ofissued shares(excluding treasury
stock) (%)

170,613,800

18.20

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

62,533,350

6.67

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

24,766,482

2.64

24,582,891

2.62

Bankplassen 2,0107 Oslo 1 Oslo 0107 NO(27-30, Shinjuku 6-chome, Shinjuku-ku,
Tokyo)

Nippon Life Insurance Company

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

20,000,099

2.13

Hitachi Employees' Shareholding
Association

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

19,674,086

2.10

One Lincoln Street, Boston MA USA 02111(11-1, Nihombashi 3-chome, Chuo-ku,
Tokyo)

19,566,283

2.09

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

17,331,942

1.85

State Street Bank West Client Treaty 505234(Standing Proxy: Mizuho Bank, Ltd.)

1776 Heritage Drive, North Quincy, MA
02171, U.S.A.
(15-1, Konan 2-chome, Minato-ku, Tokyo)

17,147,487

1.83

London, E14 5JP, United Kingdom(15-1, Konan 2-chome, Minato-ku, Tokyo)

14,748,517

1.57

-

390,964,937

41.70

SSBTC CLIENT OMNIBUS
ACCOUNT(Standing proxy: The Hongkong andShanghai Banking Corporation
Limited)JP Morgan Chase Bank 385632(Standing proxy: Mizuho Bank, Ltd.)
Total

25 Bank Street, Canary Wharf,(Notes) 1. NATS CUMCO is the nominee name of the depositary bank, Citibank, N.A., for the aggregate of theCompany’s American Depositary Receipts (ADRs) holders.
2. Some reports on substantial shareholdings regarding the Company under the Financial Instruments andExchange Act are available for public inspection. However, the information in the reports is not describedin the above table since the Company does not confirm the actual status of shareholdings as of March 31,
2023. The major contents of the reports are as follows. On October 1, 2018, the Company completed theshare consolidation of every five shares into one share for its common stock. The reports whose date on
which the duty to file report is prior to the effective date of the share consolidation show the number ofshares before the share consolidation.

76

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

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

77

(7) Information on voting rights
1) Issued shares(As of March 31, 2023)
Classification

Number of voting
rightsNumber of shares (shares)

Description

Shares without voting right

－

－

－

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

－

－

－

Shares with restricted voting right (others)

－

－

－

－

－

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

Common stock

541,900

Shares with full voting right (others)

Common stock

935,289,100

Shares less than one unit

Common stock

2,252,077－－

938,083,077－－

Number of issued shares
Total number of voting rights

9,352,891

9,352,891－－－(Note) The “Shares with full voting right (others)” column includes 5,300 shares registered in the name of Japan
Securities Depository Center, Incorporated (account for managing stocks whose shareholders have nottransferred titles) and 53 voting rights for those shares.
2) Treasury stock, etc.
(As of March 31, 2023)

Name ofshareholder

Address

Number ofshares held
under own name(shares)Number ofshares held
under thenames ofothers(shares)

Total shares
held (shares)

Ownership
percentage tothe total
number ofissued shares(%)

Hitachi, Ltd.

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

510,800－

510,800

0.05

SAITA KOUGYOU
CO., LTD.

5-3, Takinogawa 5-chome, Kitaku, Tokyo

17,600－17,6000.00

Nitto Jidosha
Kiki K.K.

3268, Nagaoka, Ibarakimachi,
Higashiibaraki-gun, Ibaraki

10,500－10,5000.00

Mizuho Co., Inc.

28-8, Honkomagome 2-chome,
Bunkyo-ku, Tokyo

3,000

－

3,000

0.00

－

541,900－

541,900

0.06

Total

78

2. Information on Acquisition, etc. of Treasury StockClass of shares
Acquisition of common stock under Article 155, Item 3, 7 and 13 of the Companies Act(1) Acquisition of treasury stock resolved at the general meeting of shareholders
Not applicable.
(2) Acquisition of treasury stock resolved at the Board of Directors meetings
Acquisition of common stock under Article 155, Item 3Classification
Number of shares (shares)
Total amount (yen)Resolution details on Board of
Directors（April 28,2022）(Note)
50,000,000(maximum)
200,000,000,000(maximum)(Acquisition period From May 2, 2022
to March 31, 2023）
Treasury stock acquired before the－－fiscal year
Treasury stock acquired during the29,983,800
199,999,720,349
fiscal year
Total number and total value of
20,016,200
279,651
remaining shares to be acquired by the
resolution
Unexercised rate as of the end of the
40.0
0.0
fiscal year (%)
Treasury stock acquired during the－－current period
Unexercised rate as of the filing date
40.0
0.0
(%)
(Note) The Board of Directors has resolved that the method of acquisition would be market purchase on the Tokyo
Stock Exchange.
Classification
Number of shares (shares)
Total amount (yen)Resolution details on Board of
Directors（April 27,2023）(Note 1)
20,000,000(maximum)
100,000,000,000(maximum)(Acquisition period From April 28,
2023 to March 31, 2024）
Treasury stock acquired before the－－fiscal year
Treasury stock acquired during the－－
fiscal year
Total number and total value of
20,000,000
100,000,000,000
remaining shares to be acquired by the
resolution
Unexercised rate as of the end of the
100.0
100.0
fiscal year (%)
Treasury stock acquired during the828,700
6,731,348,789
current period (Note 2)
Unexercised rate as of the filing date
95.9
93.3
(%)
(Notes) 1. The Board of Directors has resolved that the method of acquisition would be market purchase on theTokyo Stock Exchange.
2. The number of treasury stock acquired due to requests to purchase stock less than one unit shares from
June 1, 2023 to the filing date is not included.
79

(3) Details of acquisition of treasury stock not based on the resolutions of the general meeting ofshareholders or the Board of Directors meetings
Acquisition of common stock under Article 155, Item 7 (Note 1)
Classification

Number of shares (shares)

Total amount (yen)Treasury stock acquired during the
31,761
213,739,197
fiscal year ended March 31, 2023
Treasury stock acquired during the
4,914
37,683,285
current period (Note 2)(Notes) 1. Acquisition of stock less than one unit shares due to purchase requests from shareholders under Article
192, Paragraph 1 of the Companies Act.
2. The number of treasury stock acquired due to requests to purchase stock less than one unit shares from
June 1, 2023 to the filing date is not included.

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

Number of shares (shares)

Total amount (yen)Treasury stock acquired during the69,200fiscal year ended March 31, 2023
Treasury stock acquired during the
19,400current period(Note) Acquisition without consideration of a part of common stock allotted to the Company’s Executive Officers
and Corporate Officers as restricted stock compensation (Article 27, Paragraph 1 of the Order for
Enforcement of the Companies Act).

(4) Status of the disposition and holding of acquired treasury stock
Fiscal year ended March 31, 2023
Classification
Acquired treasury stock which wasoffered to subscribers
Acquired treasury stock which wascanceled
Acquired treasury stock which wastransferred due to merger, shareexchange, share delivery or company
split

Current period (Note)

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

-

-

-

30,488,800 199,417,789,272

-

-

-

-

-

-

Others (Acquired treasury stock
which was transferred upon exerciseof stock acquisition rights, andwhich was sold due to requests fromshareholders holding shares less than
one unit shares to sell additional
shares)83,852

258,208,117

29,792

206,436,630

Total number of treasury stock held

510,830-

1,334,052-(Note) The followings are not included: the number of treasury stock which was transferred upon exercise of stockacquisition rights from June 1, 2023 to the filing date; the number of treasury stock which was sold due torequests from shareholders holding less than one unit shares to sell additional shares from June 1, 2023 to
the filing date; the number of treasury stock acquired due to resolution at the Board of Directors meetingsfrom June 1, 2023 to the filing date; and the number of treasury stock acquired due to purchase requests
from shareholders holding stock less than one unit shares from June 1, 2023 to the filing date.
80

3. Dividend Policy
The Company views the return of profits to shareholders through enhancing corporate value frommid- to long-term perspective and paying dividends and repurchase of its shares as an importantmanagerial issue.
The policy of the Company regarding dividends is to aim for stable payment of dividends while also
securing funds necessary for investment, and the dividends are determined by comprehensively taking into
account factors such as financial performance trends, the financial situation, and the dividend payout ratio.
The Company flexibly conducts repurchase of its shares depending on factors such as capital needs
and the business environment.
In accordance with mid- to long-term management strategy, the Company utilize undistributed profits
in areas such as M&A, research and development, and capital expenditure, in order to securecompetitiveness and aim for growth of the business as global enterprise.
Based on the above policy, annual dividends of 145.0 yen per share were paid for the fiscal year
ended March 31, 2023. It was resolved to pay interim dividends of 70.0 yen per share at the Board of
Directors meeting held on October 28, 2022, resulting in the total amount of interim dividends of 66,277
million yen. In addition, it was resolved to pay year-end dividends of 75.0 yen per share at the Board of
Directors meeting held on May 12, 2023, resulting in the total amount of year-end dividends of 70,317
million yen.

81

4. Corporate Governance, etc.
(1) Corporate governance1) Basic policy about corporate governance
The Company considers growth of profits for shareholders and investors from long-term
perspective as one of its important managerial objectives. As there are wide range of stakeholders for
the Company and the Hitachi Group from shareholders and investors to customers and clients, theCompany realizes that building good relationships with such stakeholders forms an important part of its
corporate value.
The Company is a company with Nominating Committee, etc. under the Companies Act, aiming
to establish a framework for quick business operation and to realize highly transparent management byseparating responsibilities for management oversight and those for execution of business operations.
The Company attempts to have appropriate composition of the Board of Directors aiming to ensure theeffectiveness of management oversight function in addition to reflect global and various perspective tothe management. The Company set the Corporate Governance Guidelines as basic framework of its
corporate governance including functions of the Board of Directors.
In addition, the Company set the Hitachi Group Codes of Conduct as behavior disciplines to beshared among the Hitachi Group to generate common values for the Hitachi group and promote
understanding of social responsibilities to be fulfilled by the Company.
Corporate Governance System of the Company

2) Outline of corporate organizations
Board of Directors
The Board of Directors approves basic management policy for the Hitachi Group and supervises
the execution of the duties of Executive Officers and Directors in order to sustainably enhance
corporate value and the shareholders’ common interests. The basic management policy includes
medium-term management plan and annual budget compilation. The Board of Directors focuses on
strategic issues related to the basic management policy as well as other items to be resolved that areprovided in laws, regulations, the Articles of Incorporation and Board of Directors Regulations.
With regard to the number of Directors and their election, the Company stipulates in its Articles
of Incorporation that the Company shall have no more than 20 Directors. With regard to the adoptionof resolution for the election of Directors, the Company stipulates in its Articles of Incorporation thatthe presence of shareholders representing one-third or more of the voting, that resolutions for theelection of Directors shall be approved by attending shareholders possessing one-third or more of all82

voting rights of the shareholders who are entitled to exercise their votes, and that the resolution shallnot be made by cumulative voting. As of June 21, 2023, the Board of Directors was made up of 12
Directors, and 9 of whom are Independent Directors* and two concurrently serve as Executive
Officers.
* The "Independent Directors" in this report are the directors who fulfill the qualification requirements
to be outside directors as provided by the Companies Act of Japan and also meet the independence
criteria defined by the Company and those as provided by Japanese stock exchanges where theCompany is listed, unless otherwise stated.
Within the Board of Directors, there are three statutory committees of the Nominating
Committee, the Audit Committee and the Compensation Committee with Independent Directors
accounting for the majority of members of each committee. The members of each committee aredescribed in "(2) Directors and Senior Management - 1) Lists of directors and senior management - (a)Directors."
The Board of Directors meetings were held 9 days during the fiscal year ended March 31, 2023
(fiscal 2022). The attendance record of each Director during fiscal 2022 is as follows.

Katsumi Ihara

Attendance / Number of days held
the Board of Directors meetings(Note 1)9 days / 9 days

Ravi Venkatesan

9 days / 9 days

100%

Name

Attendance rate (Note 1)
100%

Cynthia Carroll

9 days / 9 days

100%

Ikuro Sugawara (Note 2)

7 days / 7 days

100%

Joe Harlan

9 days / 9 days

100%

George Buckley (Note 3)

2 days / 2 days

100%

Louise Pentland

9 days / 9 days

100%

Harufumi Mochizuki (Note 3)

2 days / 2 days

100%

Takatoshi Yamamoto

9 days / 9 days

100%

Hiroaki Yoshihara

9 days / 9 days

100%

Helmuth Ludwig

9 days / 9 days

100%

Toshiaki Higashihara

9 days / 9 days

100%

Keiji Kojima

9 days / 9 days

100%

Hideaki Seki

9 days / 9 days

100%

(Notes) 1. They are based on the days held the Board of Directors meetings during each member's term of office.
2. Mr. Sugawara was appointed on June 22, 2022.
3. Mr. Buckley and Mr. Mochizuki resigned on June 22, 2022.

During fiscal 2022, in addition to management plans and business strategies, the Board of
Directors extensively discussed and deliberated on how to respond to group-wide risks, including thesituation in Ukraine. In order to promote more lively discussion, the Board of Directors spends moretime exchanging views on agenda items than explaining them.
In addition, the Company hold the Board of Directors meeting in countries closely related to the
Hitachi Groups’ business on an annual basis. In December 2022, the Company held the Board of
Director meeting in California, U.S.A. At the meeting, which was held outside Japan for the first timein three years due to the COVID-19 pandemic, Directors discussed issues relevant to the region, as
well as invited local experts to discuss the latest trends in infrastructure investment and human capitalin the U.S.A. as a side event.
The Company is working to improve the effectiveness of the Board of Directors by enhancing
opportunities to share information with Independent Directors through individual meetings, site visits,
and other activities.
Furthermore, in order to assist with the duties of each Committee and the Bord of Directors, theCompany organizes the Board of Directors Office. The Office is staffed with employees who
exclusively serve the Office and are not subject to orders and instructions by Executive Officers. Partof them is allocated as the full-time auditors auditing the governance and risk management, etc. in
83

Digital Systems & Services, Green Energy & Mobility and Connective Industries sectors, as well as
Automotive Systems business.
The Nominating Committee
The Nominating Committee has the authority to determine particular proposals submitted to thegeneral meeting of shareholders for the election and dismissal of Directors, and consists of four
Directors, three of whom are Independent Directors.
The Nominating Committee meetings were held 10 days during fiscal 2022. The attendance
record of each member of the Nominating Committee during fiscal 2022 is as follows.

Katsumi Ihara (Note 2)

Attendance / Number of days held
the Nominating Committee (Note 1)
8 days / 8 days

Cynthia Carroll

9 days / 10 days

90%

Harufumi Mochizuki (Note 3)

2 days / 2 days

100%

Hiroaki Yoshihara

10 days / 10 days

100%

Toshiaki Higashihara

10 days / 10 days

100%

Name

Attendance rate (Note 1)
100%(Notes) 1. They are based on the days held the Nominating Committee during each member's term of office.
2. Mr. Ihara was appointed on June 22, 2022.
3. Mr. Mochizuki resigned on June 22, 2022.

During fiscal 2022, the Nominating Committee decided on the details of the proposal for theelection of Directors to be submitted to the general meeting of shareholders, and received and confirmeda preliminary report on the structure of Executive Officers for fiscal 2023. In addition, in order todevelop management-level leadership candidates, the members of the Nominating Committee madediscussion and one-on-one interviews with leadership candidates.
The Audit Committee
The Audit Committee has the authority to audit the execution of duties of Directors andExecutive Officers and to determine on proposals submitted to the general meeting of shareholders forthe election and dismissal of accounting auditors, and consists of five Directors, including four
Independent Directors and one standing Audit Committee member.
The members and activities of the Audit Committee are described in "(3) Audit - 1) Audit by the
Audit Committee."
The Compensation Committee
The Compensation Committee has the authority to determine remuneration policies for Directors
and Executive Officers and remuneration for individuals based on them. The Compensation Committee
consists of four Directors, three of whom are Independent Directors.
The Compensation Committee were held 8 days during fiscal 2022. The attendance record ofeach member of the Compensation Committee during fiscal 2022 is as follows.

Katsumi Ihara

Attendance / Number of days held
the Compensation Committee(Note 1)8 days / 8 days

Joe Harlan

8 days / 8 days

100%

Harufumi Mochizuki (Note 2)

2 days / 2 days

100%

Takatoshi Yamamoto

8 days / 8 days

100%

Keiji Kojima

8 days / 8 days

100%

Name

Attendance rate (Note 1)
100%(Notes) 1. They are based on the days held the Compensation Committee during each member’s term of office.
2. Mr. Mochizuki resigned on June 22, 2022.

During fiscal 2022, based on policies for determining compensation for Directors and Executive84Officers, the Compensation Committee determined amounts of remuneration for Directors andExecutive Officers individually including short-term incentive compensation of Executive Officers inconjunction with which the Compensation Committee confirmed and reviewed the process and detailsof performance and individual target evaluations. In addition, in order to further strengthen links
between global business growth and increase in medium- to long-term corporate value andcompensation, the Compensation Committee re-examined the executive compensation system anddecided on the policy for determining remuneration for Directors and Executive Officers’
compensation. Details of compensation to Directors and Executive Officers of the Company aredescribed in "(4) Compensation to Directors and Executive Officers."
Executive Officers
Executive Officers decide on matters delegated to them by the Board of Directors and execute
the Company’s business affairs within the scope of assignments determined by the Board of Directors.
As of June 21, 2023, the Company has 38 Executive Officers (See “(2) Directors and Senior
Management - 1) Lists of directors and senior management - (b) Executive Officers.”)
The Company stipulates in its Articles of Incorporation that the Company shall have no morethan 40 Executive Officers.
Senior Executive Committee
The Senior Executive Committee is a council to ensure that President deliberately decides onimportant managerial matters, which may affect the Company or the Hitachi Group business, throughdiscussing from diverse viewpoints. It consists of 9 regular attendees as of June 21, 2023; President &CEO (Keiji Kojima), four Executive Vice President and Executive Officers (Masakazu Aoki,
Yoshihiko Kawamura, Alistair Dormer and Toshiaki Tokunaga), three Senior Vice President andExecutive Officers (Hidenobu Nakahata, Masahiko Hasegawa and Mamoru Morita) and one Vice
President and Executive Officer (Kohei Kodama), and other attendees designated by the President.
In April 2022, the Company established the Growth Strategy Meeting, the Risk Management
Meeting and Human Resource Strategy Meeting within the Senior Executive Committee. The Growth
Strategy Meeting discusses and decides on matters related to the Hitachi Group’s management strategy
and accelerates the formulation of strategies necessary for its growth. The Risk Management Meeting
discusses and decides on important matters related to group-wide risks, and aims to realize a solidmanagement foundation in coordination with growth strategies through a centralized and crosssectional understanding of risks. The Human Resource Strategy Meeting discusses and decides onmatters necessary to foster the Hitachi Group's organization and culture as well as to secure anddevelop human resources, thereby supporting its further growth through the enhancement of humancapital.
Summary of a limited liability agreement the directors' and officers' liability insurance agreement
The Company maintains a limited liability agreement stipulated in Article 427, Paragraph 1 of
the Companies Act with each director (excluding Director who concurrently serves as an Executive
Officer) The general intent of the agreement is to limit the liability of Directors to the aggregate
amount stipulated in each item under Article 425, Paragraph 1 of the Companies Act.
In addition, the Company maintains a directors' and officers' liability insurance agreement
stipulated in Article 430-3, Paragraph 1 of the Companies Act. The coverage of insured persons andoutline of the insurance agreement are as follows.
i) Coverage of insured persons
The Company's Directors, Executive Officers and employees who work as officers at thecompany to which they are assigned and some domestic subsidiaries' directors, executive officers,
corporate auditors and employees (including employees who work as officers at the company to which
they are assigned).
ii) Outline of the insurance agreement
The agreement compensates damages, litigation costs, etc. incurred by an insured person as aresult of a claim for damages due to an act or omission of the insured person as an executive of acompany. However, the Company has taken measures to ensure that the appropriateness of theexecution of duties by officers is not impaired by excluding compensation for intentional negligence of85

duties, illegal acquisition of private benefits, and damages resulting from criminal acts. The entire
insurance costs are borne by the Company or its subsidiaries holding the insurance agreement.
3) Matters determined by resolution of the Board of Directors without resolution at the general meeting ofshareholders pursuant to the provisions of the Articles of Incorporation
The Company stipulates in the Articles of Incorporation that it may, unless otherwise provided in
the applicable laws, determine on matters specified in each item of Article 459, Paragraph 1 of theCompanies Act by the resolution of the Board of Directors, without resolution at the general meeting ofshareholders.
For the repurchase of the company’s own shares (Article 459, Paragraph 1, Item 1 of theCompanies Act), the Board of Directors shall determine on the matter in order to enable timely
implementation of capital strategies.
Regarding reduction of capital reserve or earned surplus reserve (Article 459, Paragraph 1, Item
2 of the Companies Act), appropriation of surplus (excluding dividends of surplus and disposal of theproperty of the Company) (Article 459, Paragraph 1, Item 3 of the Companies Act) and dividends ofsurplus (Article 459, Paragraph 1, Item 4 of the Companies Act), since the Company was a company
with committees as of the date of enforcement of the Companies Act, it was deemed that its Articles ofIncorporation had stipulations that the Board of Directors was able to decide the above matters without
resolution at the general meeting of shareholders and that it should not stipulate that such matters shallbe resolved at the resolution of the general meeting of shareholders, in accordance with Article 57 of
the Act on Arrangement of Relevant Acts Incidental to Enforcement of the Companies Act (July 26,
2005, Act No. 87). Even after the enforcement of the Companies Act, the Company has made it a rule
to timely decide on these important business judgments by the Board of Directors to enhance theshareholders’ common interests.
The Company has stipulated in its Articles of Incorporation that it may, by resolution of theBoard of Directors, exempt any Director (including former Director) and Executive Officer (including
former Executive Officer) from liabilities as provided Article 423, Paragraph 1 of the Companies Act
to the extent as provided in laws or regulations.
4) Requirement for special resolution of the general meeting of shareholders
To enable to securely meet the quorum of the general meeting of shareholders under Article 309,
Paragraph 2 of the Companies Act, the Company stipulates in its Articles of Incorporation that any
resolution as provided in Article 309, Paragraph 2 of the Companies Act shall be adopted at a general
meeting of shareholders where shareholders representing one-third or more of the voting rights of all
the shareholders shall be present, by a majority of two-thirds or more of the voting rights of theshareholders who are present in such meeting and are entitled to vote.
5) Internal control system and risk management system
Outlines of the internal control system and the risk management system of the Company are as
follows. In addition, these systems were resolved by the Board of Directors as the basic policy forinternal control system under the Companies Act.
i) The following measures shall be taken to ensure the effectiveness of audits by the Audit Committee.
(a) When necessary, the Board of Directors may appoint one or more director(s), who does not serve
concurrently as an executive officer, as a director responsible for assisting with the duties of the
Audit Committee. In addition, the Board of Directors’ Office (the “Office”) shall be establishedspecifically to assist with the duties of each Committee and the Board of Directors.
(b) In order to ensure the independence of the Office personnel from Executive Officers and theeffect of instructions by the Audit Committee, the Office is staffed with personnel who work
only for the Office and are not subject to orders and instructions of Executive Officers, and the
Audit Committee shall be informed in advance of planned transfers of the Office personnel.
(c) Executive Officers and employees shall report without delay to the members of the Audit
Committee significant matters affecting the Company and its subsidiaries, results of internal
audits, and the implementation status of reporting under the internal reporting system. It shall be
provided for in the company regulation that reporters using the internal reporting system, which86

is common for the Group, shall not receive disadvantageous treatment for reason of having
made a report, and the secretariat of the system shall thoroughly administer this provision.
(d) The Office shall be in charge of payment for the expenses incurred in connection with theexecution of the duties of the Audit Committee members and other administrative duties, andshall promptly process the payment for the expense or debt except in the case where the expense
or debt of the claim is clearly found to be unnecessary to the execution of the duties of them.
(e) Standing Committee member(s) shall be appointed to the Audit Committee, and activity plans of
the Audit Committee shall be prepared in coordination with the audit plans of Internal Auditing
Office.
ii) The following measures shall be effective to ensure the adequacy of business operations within the
Company and the Hitachi Group.
(a) Such fundamental policies as the emphasis of the social responsibilities of business enterprises
shall be shared with the subsidiaries of the Company.
(b) Each subsidiary of the Company shall develop systems to ensure the appropriateness ofoperations corresponding to its size and other characteristics, basic framework of which issimilar to ones employed in the Company. In order to ensure development of such systems ineach subsidiary, directors and auditors shall be sent from the Company to its subsidiary, andregular audits shall be conducted for the subsidiary.
(c) A reporting system to Directors shall be established to ensure that the execution of duties by
Executive Officers of the Company is in compliance with laws, regulations, and the Articles ofIncorporation.
(d) Information pertaining to the execution of duties by Executive Officers of the Company shall be
prepared and maintained in accordance with internal rules.
(e) A structure shall be established in which each relevant department shall establish regulations andguidelines, conduct training, prepare and distribute manuals, and carry out other such measureswith respect to various risks. Efforts shall be made to identify possible new risks through suchthings as progress reports on business operations and, should it become necessary to respond to
a new risk, an Executive Officer responsible for responding thereto shall be appointed promptly.
(f) Efficient performance of duties of the Executive Officers of the Company, and Directors andExecutive Officers of the subsidiaries shall be ensured through the following business
management systems.
- The Senior Executive Committee shall be established in order to deliberate on and facilitate
the formulation of decisions based on due consideration of diverse factors regarding
important issues that affect the Company and/or the Hitachi Group.
- Based on the management policy, medium-term business plans and annual budgets, on which
performance management is based, shall be prepared in order to operate business in a plannedand efficient manner.
- Internal audits of the Company and its subsidiaries shall be conducted to monitor and identify
the status of their business operations and to facilitate improvements.
- The Audit Committee shall receive the audit plans of the accounting auditors in advance, andthe prior approval of the Audit Committee shall be required with respect to the fees to be paid
to the accounting auditors.
- Documented business processes for matters to be reflected in financial reports shall be
executed at the Company and its subsidiaries, and internal and external auditors shall examine
said processes in order to ensure the reliability of financial reports.
- A structure for the adequate and efficient conduct of business operations common to the
Hitachi Group companies shall be established.
(g) Continuous maintenance of a legal and regulatory compliance structure shall be ensured throughthe following business management systems.
- Internal audits shall be conducted, and various committees shall be established for legal andregulatory compliance activities. Furthermore, an internal reporting system common for theGroup shall be established and education on legal and regulatory compliance shall be
provided.
- Various policies and rules on compliance with laws shall be established, aiming to ensure that87

the employees are aware of the internal control systems overall and that the systems are
effective.
(h) A system shall be established, in which the subsidiaries report on important issues and theprogress in measures for operations to the Company through the Company’s Senior Executive
Committee, medium-term business plans and the budget system.
(i) The policy on transactions within the Hitachi Group is to trade fairly based on market prices.
6) Fundamental Policy on the Conduct of Persons Influencing Decision on the Company’s Financial andBusiness Policies
We invest a great deal of business resources in fundamental research and in the development ofmarket-leading products and businesses that will bear fruit in the future, and realizing the benefits fromthese management policies requires that they be continued for a set period of time. For this purpose, theCompany keeps its shareholders and investors well informed of not just the business results for eachperiod but also of the Company’s business policies for creating value in the future.
The Company does not deny the significance of the vitalization of business activities andperformance that can be brought about through a change in management control, but it recognizes thenecessity of determining the impact on company value and the interests of all shareholders of the buying
activities and buyout proposals of parties attempting to acquire a large share of stock of the Company ora Group company by duly examining the business description, future business plans, past investment
activities, and other necessary aspects of such a party.
There is no party that is currently attempting to acquire a large share of the Company’s stocks nor
is there a specific threat, neither does the Company intend to implement specified so-called anti-takeovermeasures in advance of the appearance of such a party, but the Company does understand that it is oneof the natural duties bestowed upon it by the shareholders and investors to continuously monitor thestate of trading of the Company’s stock and then to immediately take what the Company deems to be thebest action in the event of the appearance of a party attempting to purchase a large share of theCompany’s stock. In particular, together with outside experts, the Company will evaluate the buyout
proposal of the party and hold negotiations with the buyer, and if the Company deems that said buyout
will not maintain the Company’s value and is not in the best interest of the shareholders, then the
Company will quickly determine the necessity, content, etc., of specific countermeasures and prepare to
implement them. The same response will also be taken in the event a party attempts to acquire a large
percentage of the shares of a Group company.

88

(2) Directors and Senior Management
1) Lists of directors and senior management
Men: 44 persons, Women: 4 persons(Women’s percentage to total number of Directors and Senior Management: 8%)
The Company is a company with Nominating Committee, etc. pursuant to the Companies Act. The
information on its Directors and Executive Officers is as follows.
(a) Directors

Katsumi Ihara

Louise Pentland

Ravi Venkatesan

Cynthia Carroll

Ikuro Sugawara

Joe Harlan

Takatoshi Yamamoto Hiroaki Yoshihara

Helmuth Ludwig

Keiji Kojima

Mitsuaki Nishiyama Toshiaki Higashihara
Position andResponsibility

Chairman of the
Board
Member of
Nominating
Committee(Chair), Audit
Committee andCompensation
Committee

Director

Name

Katsumi Ihara

Ravi Venkatesan

Date ofbirth

Business experience, including experiencein Hitachi, and functions

Term ofofficeShareownership(shares)

Sept. 24,1950

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

(Note 1)1,300

7/1999 Chairman of the Board of Directors,
Cummins India Ltd. (Retired in March
2004)
1/2004 Chairman, Microsoft India Pvt. Ltd.
(Retired in September 2011)
4/2011 Independent Director, Infosys Ltd. (Retired
in May 2018, served as Co-Chairman from
April 2017 to August 2017)
4/2013 Venture Partner, Unitus Ventures LLC.
(Currently in office)8/2015 Chairman (Non-Executive), Bank of
Baroda (Retired in August 2018)
9/2018 Special Representative for Young People& Innovation, UNICEF (Retired in
September 2022)
7/2020 Director, Hitachi, Ltd.

(Note 1)500

Jan. 12,
1963

89

Position andResponsibility

NameDate ofbirth

Director
Member of
Nominating
Committee

Cynthia Carroll

Nov. 13,1956

Director
Member of Audit
Committee

Ikuro Suagawara

Mar. 6,1957

Director
Member ofCompensation
Committee

Joe Harlan

May 5,
1959

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

90

Term ofofficeShareownership(shares)(Note 1)1,600

(Note 1)400(Note 1)1,300

Position andResponsibility

NameDate ofbirth

Director

Louise Pentland

Apr. 11,1972

Director
Member ofCompensation
Committee(Chair)Takatoshi
Yamamoto

Oct. 20,1952

Director
Member of
Nominating
Committee andAudit Committee(Chair)Hiroaki Yoshihara

Feb. 9,1957

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

91

Term ofofficeShareownership(shares)(Note 1)

1,200

(Note 1)

14,100(Note 1)

3,400

Position andResponsibility

NameDate ofbirth

Director
Member of
Audit Committee

Helmuth Ludwig

Sept. 19,1962

Director
Member ofCompensation
Committee

Keiji Kojima

Oct. 9,1956

Director
Member of Audit
Committee(Standing)

MitsuakiNishiyama

Sep. 25,
1956

Business experience, including experiencein Hitachi, and functions
6/2001 President, Software and System House
Division, Siemens AG
8/2002 President, Systems Engineering Division,
Automation and Drives Group, Siemens
AG
8/2007 President, Siemens PLM Software, Inc.
10/2010 Global Head of Communications, Industry
Automation, Siemens Corp.
10/2011 President and CEO, Industry Sector, North
America, Siemens Industry, Inc.
10/2014 Executive Vice President and Chief Digital
Officer, Digital Factory Division, Product
Lifecycle Management, Siemens Corp.
10/2016 Chief Information Officer, Siemens AG(Retired in December 2019)
1/2020 Professor of Practice in Strategy and
Entrepreneurship, Cox School of Business,
Southern Methodist University (Currently
in office)7/2020 Director, Hitachi, Ltd.
4/1982 Joined Hitachi, Ltd.
4/2011 General Manager, Hitachi ResearchLaboratory
4/2012 Vice President and Executive Officer
4/2016 Senior Vice President and Executive
Officer
4/2018 Executive Vice President and Executive
Officer
6/2021 President & COO and Director
4/2022 President & CEO and Director
4/1979 Joined Hitachi, Ltd.
4/2008 General Manager, Finance Department Ⅰ
4/2011 Executive Officer, Hitachi Cable, Ltd.
6/2012 Executive Officer, Board Director, Hitachi
Cable, Ltd.
4/2013 Vice President and Executive Officer,
Board Director, Hitachi Cable, Ltd.
7/2013 Vice President and Managing Officer,
Hitachi Metals, Ltd. (currently Proterial,Ltd.)
4/2014 Vice President and Executive Officer,
Hitachi Metals, Ltd. (Retired in March2015)
4/2015 Vice President and Executive Officer,
Hitachi, Ltd.
4/2016 Representative Executive Officer, SeniorVice President and Executive Officer,
Hitachi, Ltd.
4/2020 Representative Executive Officer,
Chairperson and CEO, Hitachi Metals, Ltd.
6/2020 Representative Executive Officer,
Chairperson, President and CEO, Hitachi
Metals, Ltd.
Representative Executive Officer,
Chairperson, President and CEO, andDirector, Hitachi Metals, Ltd.
1/2023 Representative Director, Executive
Chairman, Proterial, Ltd. (Retired in March2023)
4/2023 Associate, Hitachi, Ltd.
6/2023 Director, Hitachi, Ltd.

92

Term ofofficeShareownership(shares)(Note 1)4,400

(Note 1)

113,600(Note 1)

26,660Position andResponsibility

Executive
ChairmanMember of
Nominating
Committee(Notes)Name

ToshiakiHigashihara

Date ofbirthFeb. 16,
1955

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

Term ofofficeShareownership(shares)(Note 1)

207,900

376,360

1. The term of office of the Directors starts upon the election at the Annual General Meeting of
Shareholders on June 21, 2023 and expires at the close of the Annual General Meeting of Shareholders
for the fiscal year ending March 31, 2024.
2. Messrs. Katsumi Ihara, Ravi Venkatesan, Ikuro Sugawara, Joe Harlan, Takatoshi Yamamoto, Hiroaki
Yoshihara and Helmuth Ludwig and Mses. Cynthia Carroll and Louise Pentland are directors who
fulfill the qualification requirements to be outside directors as provided for in Article 2, Item 15 of theCompanies Act.

93

(b) Executive Officers
Position and Responsibility

Name

Representative Executive
Toshiaki
Officer, Executive
Higashihara
Chairman
GeneralRepresentative Executive
Keiji Kojima
Officer, President & CEO
Overall management
Representative Executive
Officer, Executive Vice
President and Executive
Officer
Assistant to the President(business for industrial
digital, water &environment business,
Masakazu Aoki
industrial products business,
industrial equipment
systems business, building
systems business, smart life
& ecofriendly systems
business, measurement andanalytical systems businessand healthcare business)

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

Date ofbirth

Business experience, including
experience in Hitachi, and functions

Term ofofficeShareownership(shares)Feb. 16,1955

See “(a) Directors”(Note 2)

207,900

Oct. 9,1956

See “(a) Directors”(Note 2)

113,600(Note 2)80,100(Note 2)

61,600Jun. 23,
1954

Aug. 20,1956

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

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

94

Position and Responsibility

Representative Executive
Officer, Executive Vice
President and Executive
Officer
Assistant to the President(railway systems business,
nuclear energy business,
energy business, power
grids business)

Name

Alistair Dormer

Representative Executive
Officer, Executive Vice
President and Executive
Officer
Assistant to the President(cloud services platforms
business, digital engineering
Toshiakibusiness, business for
Tokunagafinancial institutions,business for government,
public corporation andsocial infrastructure
systems, defense systems
business, social innovation
business promotion anddigital strategies)

Date ofbirthAug. 29,
1963

Mar. 15,
1967

Senior Vice President andExecutive Officer
Cloud services platforms
business

Jun AbeJun. 14,1961

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

LorenaDellagiovanna

Apr. 15,
1969

Business experience, including
experience in Hitachi, and functions
2/2001 Director of Business
Development, Alstom Transport
U.K. Ltd.
6/2003 Joined Hitachi Europe Ltd.
10/2009 Managing Director, Hitachi RailEurope Ltd.
9/2012 Executive Chairman and CEO,
Hitachi Rail Europe Ltd.
4/2014 Global CEO of Rail Systems
business, Hitachi, Ltd.
4/2015 Vice President and Executive
Officer, Hitachi, Ltd.
4/2016 Senior Vice President andExecutive Officer, Hitachi, Ltd.
4/2019 Executive Vice President andExecutive Officer, Hitachi, Ltd.
4/2021 Executive Vice President andExecutive Officer, Hitachi, Ltd.
Chairman of the Board, Hitachi
Europe Ltd.
4/2022 Chairman of the Board, Hitachi
Europe Ltd.
1/2023 Executive Vice President andExecutive Officer, Hitachi, Ltd.
4/1990 Joined Hitachi, Ltd.
4/2017 President, Hitachi Appliances,Inc.
4/2018 General Manager, Smart Life &Ecofriendly Systems Division,
Hitachi, Ltd.
4/2019 Vice President and Executive
Officer, Hitachi, Ltd.
4/2020 Senior Vice President andExecutive Officer, Hitachi, Ltd.
4/2021 Executive Vice President andExecutive Officer, Hitachi, Ltd.

4/1984 Joined Hitachi, Ltd.
4/2016 Senior General Manager, Control
System Platform Division,
Services & Platforms Business
Unit
4/2018 Vice President and Executive
Officer
4/2021 Senior Vice President andExecutive Officer
10/1988 Joined Hitachi Europe GmbH
4/2020 Chief Diversity & Inclusion
Officer, Hitachi, Ltd.
(Currently in office)4/2021 Vice President and Executive
Officer, Hitachi, Ltd.
4/2023 Senior Vice President andExecutive Officer, Hitachi, Ltd.

95

Term ofofficeShareownership(shares)(Note 2)33,000(Note 2)60,700(Note 2)45,400(Note 2)

5,700

Position and Responsibility

NameDate ofbirth

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

Aug. 30,
1958

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

Jan. 24,
1961

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

Masahiko
Hasegawa

Sept. 17,1964

Senior Vice President andExecutive Officer
Power grids business

Claudio Facchin

Jun. 26,
1965

Senior Vice President andExecutive Officer
Railway systems business

Giuseppe Marino

Apr. 5,1964

Senior Vice President andExecutive Officer
Management strategies

Mamoru Morita

Apr. 12,
1959

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

4/1987 Joined Hitachi, Ltd.
4/2018 General Manager of Kansai Area
Operation
4/2020 Vice President and Executive
Officer
4/2022 Senior Vice President andExecutive Officer
1/2016 President, Power Grids business,
ABB Ltd.
7/2020 CEO, Hitachi ABB Power Grids
Ltd (Currently Hitachi EnergyLtd) (Currently in office)4/2021 Senior Vice President andExecutive Officer, Hitachi, Ltd.
9/2005 Vice President Operating Europe& Middle East, Ingersoll Rand
Security Technologies
11/2009 Senior Vice President & COO,
AnsaldoBreda S.p.A. (Currently
Hitachi Rail STS S.p.A.)
11/2015 Senior Vice President & COO,
Hitachi Rail Italy S.p.A.
4/2018 Group COO Rolling Stock,
Hitachi Rail Europe Ltd.
(Currently Hitachi Rail Ltd.)
4/2019 COO Rolling Stock, Railway
Systems Business Unit, Hitachi,
Lid.
10/2019 CEO, Ansaldo Energia S.p.A.
4/2023 Senior Vice President andExecutive Officer, Hitachi, Lid.
4/1983 Joined Hitachi, Ltd.
4/2015 General Manager of Strategy
Planning Division
4/2016 Vice President and Executive
Officer
4/2020 Senior Vice President andExecutive Officer

96

Term ofofficeShareownership(shares)(Note 2)

41,200(Note 2)58,700(Note 2)

31,700(Note 2)

12,100(Note 2)0(Note 2)53,200Position and Responsibility

NameDate ofbirth

Vice President andExecutive Officer
Regional strategies (China)

Atsuhiro Aketa

Apr. 8,
1965

Vice President andExecutive Officer
Railway systems business

Noriharu Amiya

Feb. 1,
1969

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

Oct. 14,
1960

Vice President andExecutive Officer
Government & external
relations

Hitoshi Ito

Feb. 19,
1959

Vice President andExecutive Officer
Nuclear energy businessYasunori Inada

Sep. 9,1966

Vice President andExecutive Officer
Business for financial
institutions

Tatsuro Ueda

Oct. 9,1964

Vice President andExecutive Officer
Energy business

Kenji Urase

Jun. 18,
1961

Business experience, including
experience in Hitachi, and functions
4/1988 Joined Hitachi, Ltd.
4/2022 CMO for Energy, Corporate
Sales & Marketing Group,
General Manager of Energy
Sales & Marketing Division
4/2023 Vice President and Executive
Officer
4/1992 Joined Hitachi, Ltd.
4/2018 COO and CDO (Chief
Digitalization Officer) of
Railway Systems Business Unit
10/2019 General Manager ofManagement Planning Office,Strategy Planning Division
4/2022 Vice President and Executive
Officer
4/1985 Joined Hitachi, Ltd.
4/2021 President of Hitachi High-Tech
Corporation (Currently in office)4/2022 Vice President and Executive
Officer, Hitachi, Ltd.
4/1982 Joined Ministry of International
Trade and Industry
8/2011 Councilor, Cabinet Secretariat
1/2013 Director-General, Reconstruction
Agency7/2014 Commissioner, Japan Patent
Office10/2016 Advisor, Tokio Marine &Nichido Fire Insurance Co., Ltd.
1/2018 Joined Hitachi, Ltd.
4/2018 Vice President and Executive
Officer
4/1992 Joined Hitachi, Ltd.
4/2017 General Manager of Nuclear
Engineering Procurement
Division, Hitachi-GE Nuclear
Energy, Ltd.
4/2019 Vice President and Director,
Hitachi Plant Construction, Ltd.
4/2020 President and Representative
Director, Hitachi Plant
Construction, Ltd.
4/2023 Vice President and Executive
Officer
4/1987 Joined Hitachi, Ltd.
4/2019 COO, Financial Institutions
Business Unit
4/2021 Vice President and Executive
Officer
4/1986 Joined Hitachi, Ltd.
3/2015 President and Representative
Director, Hitachi Power
Solutions Co., Ltd.
4/2017 Vice President and Executive
Officer, Hitachi, Ltd.

97

Term ofofficeShareownership(shares)(Note 2)

1,700

(Note 2)

15,100(Note 2)

6,500

(Note 2)30,900(Note 2)

1,900

(Note 2)

19,700(Note 2)

34,000Position and Responsibility

NameDate ofbirth

Vice President andExecutive Officer
Finance strategies andcorporate pension system

Tomomi Kato

Oct. 13,
1963

Vice President andExecutive Officer
Supply chain management(manufacturing strategies
and quality assurance),
environmental strategies
and safety and healthmanagement

Tadashi Kume

Jan. 4,
1963

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

Kohei Kodama

May 24,1961

Vice President andExecutive Officer
Marketing & sales strategies Takashi Saito(business for connective
industries)

Jan. 6,
1964

Vice President andExecutive Officer
Human capital strategies

Kenichi Tanaka

Jul. 9,1961

Vice President andExecutive Officer
Jun Taniguchi
Digital strategies and digitalengineering business

Dec 3,
1972

Vice President andKojin Nakakita
Executive Officer
Regional strategies (APAC)

Sept. 28,
1963

Vice President andExecutive Officer
Water & environment
business

May. 10,1967

Hideshi Nakatsu

Business experience, including
experience in Hitachi, and functions
4/1986 Joined Hitachi, Ltd.
4/2018 General Manager of Financial
Strategy Division, FinanceGroup, and General Manager ofAsset Management Office,Investment Strategy Division
4/2022 Vice President and Executive
Officer
4/1986 Joined Hitachi, Ltd.
4/2019 COO, Nuclear Energy Business
Unit
4/2020 Vice President and Executive
Officer

4/1987 Joined Hitachi, Ltd.
4/2017 Chief Business Risk management
Officer, Systems & Services
Business Division
4/2018 Vice President and Executive
Officer
4/1987 Joined Hitachi, Ltd.
4/2020 General Manager of Kansai Area
Operation
4/2022 Vice President and Executive
Officer
4/1985 Joined Hitachi, Ltd.
4/2018 General Manager of Secretarial
Office4/2022 Vice President and Executive
Officer
4/1995 Joined Hitachi, Ltd.
4/2018 General Manager of Information
Control Systems Division 3,
Control System Platform
Division, Services & Platforms
Business Unit
4/2019 President of Hitachi Global Life
Solutions, Ltd.
4/2022 Vice President and Executive
Officer of Hitachi, Ltd.
10/1988 Joined Hitachi, Ltd.
4/2017 Chairman of Hitachi Asia Ltd.
(Currently in office)6/2017 Chairman of Hitachi India Pvt.
Ltd. (Currently in office)4/2019 Vice President and Executive
Officer, Hitachi, Ltd.
10/1997 Joined Hitachi Metals, Ltd.
4/2016 President and Representative
Director, Hitachi Plant Services
Co., Ltd. (Retired in March
2020)
4/2019 CEO, Water & Environment
Business Unit, Hitachi, Ltd.
4/2021 Vice President and Executive
Officer, Hitachi, Ltd.

98

Term ofofficeShareownership(shares)(Note 2)

17,600(Note 2)

26,300(Note 2)28,800(Note 2)

14,100(Note 2)

19,000(Note 2)6,800

(Note 2)30,800(Note 2)

19,700Position and Responsibility

NameDate ofbirth

Vice President andExecutive Officer
Research & development

Itaru Nishizawa

Jul. 2,
1967

Vice President andExecutive Officer
Information technology
strategies

Seiichiro Nukui

Jan. 3,
1965

Vice President andAndrew Barr
Executive Officer
Regional strategies (EMEA)

Jan. 9,1973

Vice President andExecutive Officer
Cloud services platformbusiness

Feb. 5,
1965

Yoshinori Hosoya

Vice President andExecutive Officer
Marketing & sales strategies
Chie Mashima(business for digital systems(Note 3)& services) and social
innovation businesspromotion

May. 20,
1966

Vice President andExecutive Officer
Urban business strategies
and building systems
business

Shinya Mitsudomi

Jul. 5,
1958

Vice President andExecutive Officer
Cost structure reform andinformation security
management

Masashi
Murayama

Dec. 23,
1961

Business experience, including
experience in Hitachi, and functions

Term ofoffice4/1996 Joined Hitachi, Ltd.
4/2022 General Manager, Center for
Digital Services, Research &(Note 2)Development Group
4/2023 Vice President and Executive
Officer
4/1988 Joined Accenture, Ltd. (Japan)
2/2010 Vice President of Company
Executive, and General Mangerof Communication, Electric,
Media and High-tech Industry,Power & Industrial Equipment
Division, Accenture Ltd. (Japan)(Note 2)4/2015 Joined Hitachi, Ltd.
Executive IT Strategist, Hitachi,
Ltd.
4/2017 Urban Mobility Project Leader,
Future Investment Division,
Hitachi, Ltd.
4/2019 Vice President and Executive
Officer, Hitachi, Ltd.
1/2002 Engineering Manager, Rolling
Stock, UK Government Strategic
Rail Authority
1/2005 Head of Maintenance Delivery [RailBusiness], Hitachi Europe Ltd.
(Note 2)1/2014 COO, Hitachi Rail Europe Ltd.
5/2016 CEO, Ansaldo STS S.p.A.
(Currently Hitachi Rail STS S.p.A.)
4/2019 Vice President and Executive
Officer, Hitachi, Ltd.
4/1988 Joined Hitachi, Ltd.
4/2021 COO, Social Infrastructure Systems(Note 2)Business Unit
4/2023 Vice President and Executive
Officer
4/1989 Joined Hitachi, Ltd.
4/2022 General Manager of Social
Innovation Business Division,(Note 2)
Digital Systems & Services
Division
4/2023 Vice President and Executive
Officer
4/1982 Joined Hitachi, Ltd.
4/2017 Group Head of Sales and Managing
Director, Japan / Asia Pacific,(Note 2)
Railway Systems Business Unit
4/2018 Vice President and Executive
Officer
4/1985 Joined Hitachi, Ltd.
4/2016 CPO and General Manager, Value(Note 2)
Chain Integration Division
4/2019 Vice President and Executive
Officer99

Shareownership(shares)

5,900

30,30016,60018,80014,90031,10032,300Position and Responsibility

Vice President andExecutive Officer
Business for industrial
digitalName

Kazunobu Morita

Vice President andExecutive Officer
Takashi Yoda
Marketing & sales strategies(business for energy)

Date ofbirth

May. 12,
1966

Aug. 22,
1966

Business experience, including
experience in Hitachi, and functions
4/1991 Joined Mitsubishi PetrochemicalCo., Ltd.
3/2004 Joined Hitachi, Ltd.
4/2019 CSO, Industry Business
Division, Hitachi, Ltd.
4/2021 Vice President and Executive
Officer, Hitachi, Ltd.
4/1990 Joined Hitachi, Ltd.
4/2018 General Manager of Energy
Business Co-Creation &Promotion Division, Power andEnergy Business Administration
Division
4/2019 Vice President and Executive
Officer

Total

Term ofofficeShareownership(shares)(Note 2)

19,700(Note 2)30,5001,277,900(Notes) 1. The “Position and Responsibility” column describes positions and matters delegated to each of the
Executive Officers by the Board of Directors.
2. The term of office of the Executive Officers expires on March 31, 2024.
3. The Executive Officer, Chie Mashima’s name in the family register is Chie Aihara.

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

Katsumi Ihara

Ravi Venkatesan

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

101

Name

Cynthia Carroll

Ikuro Sugawara

Joe Harlan

Louise Pentland

Takatoshi Yamamoto

Hiroaki Yoshihara

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

102

Name

Helmuth Ludwig

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

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

103

(3) Audit
1) Audit by the Audit Committee
The Audit Committee consists of five Directors, including four Independent Directors and one
standing Audit Committee member.
Mr. Hiroaki Yoshihara, the Chair of the Audit Committee, has considerable knowledge of financeand accounting based on his long experience at KPMG Group with businesses related to accounting, etc.
Mr. Mitsuaki Nishiyama, the member of Audit Committee who has been appointed on June 21, 2023, hasconsiderable knowledge of finance and accounting based on his long experience as a chief of finance andaccounting department and an Executive Officer in charge of finance and accounting department.
The Audit Committee conducts audits for whether corporate administration by Directors andExecutive Officers are properly carried out under appropriate internal control systems.
The Audit Committee develops the audit policy and the audit plan, and periodically receives reports
or conducts hearing for execution of duties from Directors and Executive Officers. In addition, themembers of the Audit Committee, who are in charge of internal inspection, examine business units of theCompany and receive reports from subsidiaries in order to check whether business transaction andproperty management are properly carried out, and then report the results to the Audit Committee.
Furthermore, such members of the Audit Committee attend the important meetings including the budget
meeting, the Senior Executive Committee and the Disclosure Committee, inspect audit reports frominternal audit division, and provide internal audit division with instructions about divisions to be subject
to auditing and items to be focused, if necessary.
The Audit Committee receives reports and explanations about the audit plan and results of the audit
from the accounting auditor, and based on the reports, verifies results of financial audits and internal
control audits. In addition, the Audit Committee receives reports and explanations of quality control
systems of the accounting auditor. Furthermore, the Company makes it a rule to obtain the prior approvalof the Audit Committee for remuneration to the accounting auditor.
The attendance record of each member of the Audit Committee during fiscal 2022 is as follows.

Katsumi Ihara

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

Ikuro Sugawara (Note 2)

9 days / 9 days

100%

Name

Attendance rate (Note 1)
93%

Harufumi Mochizuki (Note 3)

6 days / 6 days

100%

Takatoshi Yamamoto (Note 3)

6 days / 6 days

100%

Hiroaki Yoshihara

15 days / 15 days

100%

Helmuth Ludwig

15 days / 15 days

100%

Hideaki Seki
15 days / 15 days
100%
(Notes) 1. They are based on the days held the Audit Committee during each member's term of office.
2. Mr. Sugawara was appointed on June 22, 2022.
3. Mr. Mochizuki and Mr. Yamamoto resigned on June 22, 2022.

During fiscal 2022, the Audit Committee engaged in a variety of activities as a whole Hitachi Groupand by each business segment to study priority matters such as strengthening of collaboration and thefacilitation of information sharing under a “tripartite audit” (audit by the Audit Committee, internal audit
and audit by accounting auditors), and auditing of the establishment and operation of internal control
systems from the perspective of risk management and validity of execution of duties. In addition, astanding committee member worked to obtain information as needed in a timely and accurate manner,
mainly by collaborating with the Internal Auditing Office, among other departments, and attending
important internal meetings such as the Senior Executive Committee, and facilitated information sharing
with other committee members.
2) Internal audit
The Internal Auditing Office is in charge of internal audit within the Hitachi Group and audits
business units, corporate divisions of headquarters and subsidiaries and affiliates. The number of staff ofthe Internal Auditing Office is 42 as of March 31, 2023.
The Internal Auditing Office monitors and assesses whether overall business operations, including
marketing, personnel management, labor management, compliance, procurement transactions, production
control, environment, disaster prevention, export regulations, information system, accounting and104

financing activities, and property management of the Hitachi Group are properly carried out pursuant toaudit standards established by the Company, and points out items required to be improved based on the
results of auditing and follows up their improvements. The Internal Auditing Office reports in advance its
internal audit plan to the Audit Committee, and reports results of auditing to the President and the Audit
Committee. Furthermore, relating to the internal control over financial reporting, the internal control
division in the Internal Audit Office promotes to establish and maintain the internal control systems
pursuant to the Company’s guideline, assesses its effectiveness, and reports the results to the President
and the Audit Committee.
3) Accounting audit(a) Name of accounting auditor
Ernst & Young ShinNihon LLC(b) Consecutive term of service of the certified public accountants
The Fukase accounting firm of certified public accountants carried out an accounting audit of theCompany in 1970 and, subsequently, accounting audits were conducted by Musashi Audit
Corporation, which was established by Fukase certified public accountant etc., from 1971, Century
Audit Corporation, into which Musashi Audit Corporation was merged, from 1986 and Ota Showa
Century Audit Corporation, into which Century Audit Corporation was merged, from 2000, andcurrently Ernst & Young ShinNihon LLC, which was renamed from Ota Showa Century Audit
Corporation, conducts the accounting audits of the Company. Since 2003 when Ernst & Young(“EY”) has become the network firm partnering with the accounting auditor, Hitachi Group
companies, including overseas companies, have selected EY as the accounting auditor uniformly on a
global basis and the Company has been striving to ensure that the accounting auditor performs its
duties properly from an independent standpoint, maintaining a proper degree of tension with theCompany through mutual assessment between the Company’s finance division and internal audit
division and the accounting auditor and the Audit Committee’s strong cooperation with theaccounting auditor and examination of selection of an accounting auditor and reappointment of theaccounting auditor.
At Ernst & Young ShinNihon LLC, engagement partners are rotated and no engagement partners
are involved in accounting audits of the same company for more than seven consecutive fiscal years.
No lead engagement partner is involved in accounting audits of the same company for more than fiveconsecutive fiscal years. If an engagement partner is involved in accounting audits of the same
company for seven consecutive years, he or she will be involved in accounting audits of that company
only after an interval of five fiscal years. No lead engagement partner who is involved in accounting
audits of the same company for five consecutive fiscal years will be involved in accounting audits ofthat company again.
(c) Certified public accountants (CPAs) who executed accounting audit
Koji Fujima, Yasuhiro Ozeki, Shinya Yoshida(d) Assistants for audit works
44 CPAs and 89 staffs belonging to Ernst & Young ShinNihon LLC assist execution of
accounting audit works as instructed by the three CPAs mentioned in (c).
(e) Policy and reason for the selection of accounting auditors
With a view to ensuring the appropriate execution of duties by accounting auditors, the Audit
Committee selects accounting auditors by considering such factors as quality control systems foraccounting auditors, implementation systems for auditing and the level of audit fees.
In addition, the Audit Committee has prepared the following policies with respect to “policies fordetermination of removal and non-reappointment of accounting auditors” set forth in Item 4 of Article
126 of the Ordinance for Enforcement of the Companies Act.
- In the event the Audit Committee determines that the causes provided for in each item of
Paragraph 1 of Article 340 of the Companies Act apply to an accounting auditor and theaccounting auditor needs to be removed immediately, the Audit Committee shall remove theaccounting auditor by unanimity. Should this occur, the Audit Committee member selected by
the Audit Committee shall give a report on the removal of the accounting auditor and the reason
therefor at the first general meeting of shareholders to be convened after the said removal.
- Besides the case above, it is determined that an accounting auditor should be replaced for suchreason as the difficulty of ensuring an adequate performance of duties by the accounting auditor,
the Audit Committee shall determine the contents of the agenda item on the non-retention of the105accounting auditor to be submitted to the general meeting of shareholders.
The Audit Committee comprehensively evaluated and examined Ernst & Young ShinNihon LLC
from the perspectives of its history, business size, past performance of auditing and efforts to facilitatecommunication with the Audit Committee and other internal divisions, among other factors. As aresult, the Audit Committee decided to select Ernst & Young ShinNihon LLC as the accounting
auditor since the Audit Committee judged that none of the abovementioned policies applies to Ernst& Young ShinNihon LLC and therefore adequate performance of duties by Ernst & Young
ShinNihon LLC is continuously secured.
(f) Evaluation for accounting auditor by the Audit Committee
The Audit Committee evaluated the appropriateness and relevance of auditing conducted byaccounting auditor from the perspectives of the effectiveness of initiatives to facilitate communication
with the Audit Committee and the top management in particular, the details and implementation ofaudit systems and auditing manuals and remuneration for auditing in accordance with evaluation
criteria the Audit Committee formulated in advance. For evaluating the accounting auditor, the Audit
Committee gathered information on matters such as the independence of the accounting auditor, audit
systems and the implementation of audits and audit quality thereof from the Accounting Control
Department and the Internal Auditing Office. The Audit Committee also received reports from theaccounting auditor regarding compliance with laws and regulations, including the accounting
auditor’s independence, methods for evaluating risks with respect to the acceptance and continuationof audit services, audit and inspection systems and quality control systems, and detailed audit plans
based on the accounting auditor’s evaluations for risks pertaining to the Company, as well as results ofaudits and details of and progress on plans for improving business operations and auditing efficiency
at the time of the completion of quarterly reviews and annual audits. Based on such reports, the Audit
Committee concluded that the accounting auditor conducted highly transparent audits and its activities
were appropriate and relevant.
4) Audit Fees(a) Fees to accounting auditor
Fiscal year ended March 31, 2023
Category

Fees for audit
services(Millions of yen)

Fiscal year ended March 31, 2022

Fees for non-audit
services(Millions of yen)

Fees for audit
services(Millions of yen)

Fees for non-audit
services(Millions of yen)

The Company

579 (Note)46

566 (Note)

39

Consolidated
subsidiaries

792 (Note)16

986 (Note)

14

Total

1,371

62

1,552

53

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

106

(b) Audit fees (excluding the amount mentioned in (a)) to the Company’s accounting auditor, Ernst &Young ShinNihon LLC Group (including EY and its group firms which belong to the same
network as Ernst & Young ShinNihon LLC)
Fiscal year ended March 31, 2023
Category

Fees for audit
services(Millions of yen)

Fiscal year ended March 31, 2022

Fees for non-audit
services(Millions of yen)

Fees for audit
services(Millions of yen)

Fees for non-audit
services(Millions of yen)

The Company- (Note 1)

79- (Note 1)

68

Consolidated
subsidiaries

4,801 (Note 2)594

4,553 (Note 2)

797

4,801

673

4,553

865

Total

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

107

(4) Compensation to Directors and Executive Officers
1) Policy on the determination of Compensation of Directors and Executive Officers[Method of Determination of Policy]
The Company’s Compensation Committee sets forth the Policy for Determining Individual
Compensation of Directors and Executive Officer pursuant to applicable provisions of the Companies
Act.
[Basic Policy]
Compensation for Directors and Executive Officers shall be determined in accordance with thefollowing key policy.
- Compensation shall be commensurate with roles and responsibilities of each Director andExecutive Officer.
- Compensation for Directors shall be such that it enables them to exercise functions of supervisionof management effectively.
- Compensation for Executive Officers shall be reflected by considering the following factors;(Alignment with the 2024 Mid-Term Management Plan)
In the Short-term incentive compensation and Long-term incentive compensation, set
performance metrics toward the Mid-term Management Plan as Key Performance Indicator(“KPI”) to encourage executives to achieve them.
(Establishment of compensation program and corporate performance program that foster agrowth mindset)
Pursue an optimal balance between short and medium- to long-term performance about"growth," "improving profitability" and "cash generation", aiming for improvement of shortterm performance and medium to long-term growth in corporate value.
Establish a compensation program that significantly rewards performance by setting
stretched goals and commensurate compensation levels.
(Setting indicators to promote sustainable management)
Develop specific indicators and goals related to "Environments,” “Business with
Integrity” and “Quality of life” under its sustainability strategy, and encourage theirimplementation.
(Expansion of stock compensation that rewards growth in corporate value over the medium- tolong- term)
Expand stock compensation to better align with medium to long-term corporate value.
- Competitive compensation levels with a global perspective
Ensure competitive compensation levels to attract and retain key executives in global
market, regardless of their residence or origin, who lead global management of globalorganization.
- Compensation benchmarking with objectivity and transparency
Reference to the benchmarks in the US and European markets in addition to thebenchmarks in the Japanese market for analysis and level-setting from multiple perspectives.
- Transparency and objectivity through enhanced compensation disclosure and shareholder
engagement
Endeavor to gain investors' understanding and support through sufficient disclosure of thecompensation program with a global perspective and ongoing shareholder engagement, andcontinuously improve the program based on the insights gained through the engagement.
[Compensation Structure](i) Matters relating to Directors
Compensation for Directors is basic remuneration as fixed pay. The amount of basic
remuneration is decided by adjusting a basic amount to reflect full-time or part-time status, committee
membership and position, and travel from place of residence, etc. A Director concurrently serving as
an Executive Officer is not paid compensation as a Director.
(ii)Matters relating to Executive Officers
Compensation for Executive Officers consists of basic remuneration as fixed pay and short-term
incentive compensation & long-term incentive compensation as variable pay. The basic amount ofbasic remuneration, short-term incentive compensation, and medium- and long-term incentive
108

compensation is set based on the ratio of 1:1.2:2.0 as the standard, taking into account the compositionof executive compensation for major global companies including the U.S. and European companies, inorder to improve corporate value through the growth of global businesses. The higher position
Executive Officers holds, the higher proportion of variable pay is set to the total annual compensation.
The method of determination of each type of compensation is as follows.
Basic remuneration- The amount of basic remuneration is decided by adjusting a basic amount set in accordance with therelevant position to reflect the results of an assessment.
Short-term incentive compensation- The amount of short-term incentive compensation is decided within the range of 0 to 200% of abasic amount set according to the relevant position by adjusting that amount to reflect financial
results and individual performance. Evaluation items and proportion of evaluation item are asshown in the following table.
Proportion of evaluation item
President(CEO)

Executive
officers
in charge ofbusiness

Executive
officers
in charge ofcorporate affairs

Corporate

70%

30%

40%

Division

－

30%

－

Individual goals

10%

20%

40%

Sustainability measurement

20%

20%

20%

Evaluation items

Financial
Performance- The amount of the financial performance linked component varies according to the evaluation of
corporate performance and division performance.
- Corporate performance is evaluated using consolidated revenues, profit index and cash
flaw in order to measure the level of achievement of consolidated financial forecasts
disclosed to stakeholders, including shareholders and investors.
- Division performance is evaluated using consolidated revenues, profit index and cash flaw
in order to measure the level of achievement of targets under the Mid-term Management
Plan and the annual budgets for divisions.
- The amount of the individual goals linked component varies according to the evaluation of the levelof achievement of individual target for each Executive Officer determined based on his/her
responsibility.
- The amount of the sustainability measurement linked component varies according to the degree ofachievement of the numerical goals about materiality which is established on the sustainability
strategy.

Medium- and Long-term incentive compensation- The target amount (Medium- and Long-term incentive compensation target ( “LTI target”)) are
decided based on the positions of Executive Officers, and the shares of Restricted Stock ("RS”)
compensation with incumbency condition and Performance-linked Restricted Stock ("Performancelinked RS”) compensation are granted in order to propel management from a long-term perspective
and to provide incentives to bring about a sustainable increase in enterprise value by further
promoting senior management’s shared values with shareholders through the holding of shares
during their term of office. The conditions, the grant ratio to LTI target and grant date of RS and
Performance-Linked RS compensation are as follows;109Type of stockcompensation

Condition

The grant
ratio toLTI target

Restricted Stock
Compensation

Incumbency condition

30%

Every Fiscal Year70%

After the end of the threefiscal years beginningwith the base fiscal year

Stock price condition
Performancelinked Restricted
Stock

Conditions forachievement of Midterm Management
Plan targets

ROIC

10%

Sustainability
targets

10%

Grant date ofRestricted Stock

After the end of the final
fiscal year of the Medterm Management Plan
period- In RS compensation, the shares of RS equivalent to 30% of the LTI target are granted and therestriction on the shares is lifted depending on the tenure of each executive over the three fiscal years
from the beginning of the fiscal year when the RS is granted.
- In Performance-linked RS compensation, the shares of Performance-linked RS Compensation will be
granted depending on the degree of achievement of the evaluation KPI during a certain evaluation
period, and restriction on transfer will be lifted upon retirement. Performance-linked RS
compensation compromises of compensation with stock price condition and with conditions forachievement of Mid-term Management Plan targets.
- In stock compensation with stock price condition, Performance Share Units (“PSUs”)
equivalent to 70% of the LTI target are granted, and the shares of restricted stock equivalent
to 0 ~ 200% of the PSUs are granted in accordance with the results of comparing the Total
Shareholder Return growth rate of the Company stock with the TOPIX growth rate and withthe stock price growth rates of comparable companies in global competition as determinedby the Compensation Committee for the three fiscal years beginning at the beginning of the
fiscal year to which the PSUs are granted.
- In stock compensation with conditions for achievement of Mid-term Management Plan
targets, PSUs equivalent to 20% of the LTI target are granted. The shares of restricted stock
equivalent to the PSUs are granted when the target of ROIC and sustainability indicators
during the period of Mid-term Management Plan covering the fiscal year when the PSUs are
granted are achieved.
- If it is deemed to be inappropriate to grant the shares of restricted stock due to laws and regulations in
the country of residence, etc., cash award based on the value of the Company’s share price shall be
substituted for restricted stock.
- From Fiscal 2019, shares of restricted stock have been granted in place of the stock options as stockbased compensation the Company has granted until then. From Fiscal 2023, the medium- and long-termcompensation described above is granted.

If it is found that an executive officer has been engaged in misconduct during his/her term of office,compensation for Executive Officers that has been already paid shall be returned to the Company.
With regard to persons who are hired externally such as foreign persons, a compensation package could
be individually determined based on the level of compensation in a job market which is considered forcompensation benchmarking while referring the above policy. The Company grants restricted stock
units to non-Japanese Executive Officers as long-term incentive compensation. One third of vested
restricted stock units are delivered in the form of shares of common stock of the Company and cash
each fiscal year over three years from the beginning of the fiscal year containing the day on which
restricted stock units are granted.

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

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

Variable pay

NumberofMedium- andOthers persons
Short-termlong-term
incentive
incentivecompensationcompensation

Directors(excluding
60
60
1
－
－
－
Independent
Directors)
Independent
420
420
11
－
－
－
Directors
Executive
4,849
1,726
1,693
1,429
33
－
Officers
Total
5,330
2,207
1,693
1,429
45
－
(Notes) 1. The number of Directors indicated excludes two Directors who serve or served concurrently
as Executive Officers.
2. Fixed pay and short-term incentive compensation consist of monetary compensation, andmedium- and long-term incentive compensation consists of non-monetary compensationand monetary compensation.

Performance indicators referred to in company performance evaluations for short-term incentive
compensation are as follows.
(Unit: billions of yen)
Fiscal year ended March 31, 2023
Indicators
TargetResults
Revenues
9,500.0
10,881.1
Adjusted Operating Income

700.0

748.1

EBIT
Net income attributable to
Hitachi, Ltd. stockholders

890.0

845.6

600.0

649.1

The TSR/TOPIX Growth Rate Ratios defined in conditions for exercising stock option as stockbased compensation (stock acquisition rights) and in conditions for lifting transfer restrictions ofrestricted stock issued as medium- and long-term incentive compensation are as follows.
Total shareholder return
Name
Term
/ TOPIX Growth Rate Ratio
The First Stock Acquisition
From April 1, 2016125.8%
Rights of Hitachi, Ltd.
to March 29, 2019The Second Stock Acquisition
From March 31, 2017121.6%
Rights of Hitachi, Ltd.
to March 31, 2020
The Third Stock Acquisition
From March 30, 2018120.5%
Rights of Hitachi, Ltd.
to March 31, 2021
Restricted Stocks issued in May
From April 1, 2019146.7%
2019
to March 31, 2022
Restricted Stocks issued in May
From April 1, 2020
167.2%
2020
to March 31, 2023
Restricted Stocks issued in May
From April 1, 2021
149.1%
2021
to March 31, 2023 (Note)
Restricted Stocks issued in May
From April 1, 2022
117.6%
2022
to March 31, 2023 (Note)(Note) The ratios are calculated to determine the number of stock acquisition rights that can be
exercised by persons who retire from Executive Officers, Directors or Corporate Officers on
March 31, 2023.

111

In addition, Directors or Executive Officers whose compensation from the Company and its
subsidiaries is not less than ¥100 million and the amount of their compensation are as follows:
Total amount of each type (Millions of yen)
Variable pay
Total amount ofMedium andcompensation,
Name
Company
Category Fixed Short-termLong-term Others
etc.
incentivepay
incentive (Note 3) (Millions of yen)compensationcompensation(Note 1)
(Note 2)
Executive
Toshiaki
Hitachi, Ltd.
102
116
185
404
Officer－
Higashihara (The Company)(Note 4)
Executive
Keiji
Hitachi, Ltd.
150
168
122
440
Officer－
Kojima(The Company)(Note 4)
Hitachi, Ltd.
Executive
50
89
77
－
(The Company)
Officer
Hitachi Global Life
Solutions, Inc.
Director
4
3－－
Masakazu (Consolidated
233
Aoki
subsidiary)
Hitachi High-Tech
Corporation
Chairman
4
3－－(Consolidated
subsidiary)
Hitachi, Ltd.
Executive
55
67
59
－
(The Company)
Officer
Yoshihiko
189
Hitachi Astemo, Ltd.
Kawamura
Chairman
4
3(Consolidated－－
subsidiary)
Hitachi, Ltd.
Executive
161－－－(The Company)
Officer
Alistair
Hitachi Europe Ltd.
317
Dormer(Consolidated
Chairman
49
79
20
5
subsidiary)(Note 5)
Toshiaki
Hitachi, Ltd.
Executive
60
83
53
196
－
Tokunaga(The Company)
Officer
Hitachi, Ltd.
Executive
45
66
43
－
(The Company)
Officer
Hitachi Information
Jun Abe158& Telecommunicati2
1
on Engineering, Ltd. Director－－(Consolidated
subsidiary)
Katsuya
Hitachi, Ltd.
Executive
48
67
43
158
－
Nagano(The Company)
Officer
Hidenobu
Hitachi, Ltd.
Executive
48
57
50
155
－
Nakahata(The Company)
Officer
Hitachi, Ltd.
Executive
44
52
35
－
(The Company)
Officer
Masahiko
Hitachi High-Tech
137
Hasegawa Corporation
Director
3
2－－(Consolidated
subsidiary)
Claudio
Hitachi, Ltd.
Executive
366
239
55
661
－
Facchin(The Company)
Officer112

Total amount of each type (Millions of yen)

Name

Company

Category

Variable pay
Total amount ofcompensation,
Medium andFixed Short-termetc.
Long-term Others
incentivepay
incentive (Note 3) (Millions of yen)compensationcompensation(Note 1)
(Note 2)

Hitachi, Ltd.
Executive
44
54
50
－
(The Company)
Officer
Mamoru152
Hitachi Metals, Ltd.
MoritaDirector
3(Consolidated－－－
subsidiary) (Note 6)
Tadashi
Hitachi, Ltd.
Executive
36
41
28
106
－
Kume
(The Company)
Officer
Hitachi Digital LLC
Jun
CEO,(Consolidated
53
40
29
123
－
Taniguchi
Director
subsidiary)(Note 5)
Hitachi, Ltd.
Executive
123
56
42
－
(The Company)
Officer
Lorena
Hitachi Industrial
226
Dellagiovan- Equipment Systems
naDirector
2
1
Co., Ltd.
－－(Consolidated
subsidiary)
Hitachi, Ltd.
Executive
3－－－(The Company)
Officer
Kojin
Hitachi Asia Ltd.
131
Nakakita
Chairman of(Consolidated
68
30
29
－
the Board
subsidiary)(Note 5)
Hideshi
Hitachi, Ltd.
Executive
36
41
23
100
－
Nakatsu(The Company)
Officer
Hitachi Rail Ltd.
(Consolidated
Andrew Barr
Director
81
97
105
5
289
subsidiary)(Note 5)
Hitachi, Ltd.
Executive
15
19
28
－
(The Company)
Officer
Hitachi Building
President
18
20－－
ShinyaSystems Co., Ltd.
and Director
106
Mitsudomi Hitachi Global Life
Solutions, Inc.
Director
2
1－－(Consolidated
subsidiary)
Kazunobu
Hitachi, Ltd.
Executive
35
44
23
103
－
Morita(The Company)
Officer(Notes) 1. Compensations from the Company and consolidated subsidiaries paid depending on financial results andindividual performances in the short term are collectively called.
2. Medium- and long-term incentive compensation is restricted stock compensation, restricted stock units
or cash award based on the value of the Company's share price.
3. The "Others" column shows the fringe benefit equivalent, etc.
4. Although concurrently serving as Director for the fiscal year ended March 31, 2023, Messrs. Toshiaki
Higashihara and Keiji Kojima did not receive compensation as Director.
5. The amount of the remuneration, etc. from foreign subsidiaries shows yen equivalent.
6. Hitachi Metals, Ltd. has ceased to be an affiliate of the Company through the share transfer on January
5, 2023. Hitachi Metals, Ltd. changed its name to Proterial, Ltd. on January 4, 2023.

113

3) Authorities, roles and activities of the Compensation Committee
The Compensation Committee, which was established under the Companies Act, includes
Independent directors that have majority in the number of committee members, holds the legal
authority to determine remuneration for Directors and Executive Officers, and strives to ensure theobjectivity, transparency and fairness of the remuneration determination processes. The Compensation
Committee has the authority to determine remuneration policies and the details of remuneration(amount of compensation, etc.) of Directors and Executive Officers individually based on the policies.
To determine the details of remuneration individually, the Committee confirms and reviews processes
and details with respect to the assessment of basic remuneration amounts, evaluation of performanceand individual targets related to short-term incentive compensation.
The members and activities of the Compensation Committee are described in “(1)Corporate
governance - 2) Outline of corporate organizations”.

114

(5) Information on shareholdings(a) Criteria for classification of investment securities
The Company classifies investment securities that it holds into two types. If investment securities
are held for the purpose of receiving benefits exclusively through stock price fluctuations or dividends,
those are classified as investment securities for pure investment and the rest of investment securities areclassified as investment securities owned for other purposes than pure investment.
(b) Equity securities held for purposes other than pure investment(i) Policy for shareholding and examination of the reasonableness of holding
Under the basic policy, the Company will not acquire and hold other companies’ shares except
for cases where acquiring or holding such shares is necessary in terms of transactions or business
relationship. The Company will promote reducing shares that it already owns unless significance ofholding shares and economic rationales of holding are confirmed.
The Board of Directors verifies whether it is appropriate to hold shares for all stock the Company
owns ever year. In such verification, each individual stock is re-examined as to the purpose of holding
the shares and whether benefits from holding shares are in line with target level of capital efficiency.
As the result of verification, the Company promotes the sales of shares for which significance ofholding shares and economic rationale are not confirmed. Details of shares sold in the fiscal year ended
March 31, 2023, are presented in (ii) below.
(ii) Number of stock names and balance sheet amount
Number ofstock names(stock names)

Total amount recordedin the balance sheet(millions of yen)

Unlisted stocks

136

21,768Others41

213,017<Stocks increased in the fiscal year ended March 31, 2023>
Number ofstock names(stock names)

Total purchase price forthe shares increased(millions of yen)

Reasons of increase
Purchasing for strengthening andUnlisted stocks

2160

Others--<Stocks decreased in the fiscal year ended March 31, 2023>
Number ofstock names

Total selling price forthe shares decreased(stock names)(millions of yen)

Unlisted stocks

9

3,195

Others984,017115

maintaining relationship for business andbusiness transactions-

(iii) The number and the amount recorded in the balance sheet, etc. of specified investment securities
Specified investment securities
Fiscal year ended Fiscal year ended
March 31, 2023 March 31, 2022
(Note 1)
(Note 1)
Stock nameRenesas Electronics
Corporation

Mitsubishi HC CapitalInc.

Western Digital
Corporation

Central Japan Railway
Company

DAIICHI SANKYOCOMPANY,
LIMITED

East Japan Railway
Company

Number ofshares(shares)Number ofshares(shares)

Balance sheet
amount(Millions of yen)

Balance sheet
amount(Millions of yen)

61,990,548

61,990,548

118,618

88,77057,688,280

167,678,580

39,45895,5763,125,000

3,125,000

15,55618,989900,000

900,000

14,22914,368900,000

900,000

4,339

2,412

406,200

406,200

2,979

2,888

3,000,000

3,269,000

2,565

2,370

597,600

597,600

2,034

1,378

1,286,900

1,286,900

The Chiba Bank, Ltd.

Sapporo Holdings
Limited

Seibu Holdings Inc.

Ono PharmaceuticalCo., Ltd.

1,748

1,636

600,000

600,000

1,658

1,839

116

Purpose of holdings, thesummary of business allianceand reasons for increases(Note 2)

Holding
shares of
Hitachi, Ltd.

Acquired in relation to thereorganization, etc. of Renesas
Technology Corp. which was anaffiliate of the Company

No

Acquired in relation to thereorganization, etc. of Hitachi Capital
Corp. which was an affiliate of theCompanyNo

Acquired in relation to thereorganization, etc. of Hitachi Global
Storage Technologies, Inc. which wasa subsidiary of the Company

No

Maintaining and enhancing business
transactions of selling products andproviding services in Railway Systems
business

No

Maintaining and enhancing business
transactions of selling products andproviding services in Industrial Digitalbusiness

No

Maintaining and enhancing business
transactions of selling products andproviding services in Railway Systems
business

No

Maintaining and enhancing business
transactions of selling products andproviding services in Financial
Information Systems business

Yes

Maintaining and enhancing business
transactions of selling products andproviding services in Industrial Digitalbusiness

Yes(Note 3)

Maintaining and enhancing business
transactions of selling products andproviding services in Railway Systems
business

No

Maintaining and enhancing business
transactions of selling products andproviding services in Industrial Digitalbusiness

YesFiscal year ended Fiscal year ended
March 31, 2023 March 31, 2022
(Note 1)
(Note 1)
Stock nameWest Japan Railway
Company

Electric Power
Development Co., Ltd.

Number ofshares(shares)Number ofshares(shares)

Balance sheet
amount(Millions of yen)

Balance sheet
amount(Millions of yen)

215,000

215,000

1,173

1,094

523,280523,280

1,115

914

206,574

206,574

959

988

830,320

830,320

843

1,057

394,016

394,016694

627

100,000

100,000

625

535

328,500

328,500

590

595

104,291

104,291444

365

121,927

121,927421

367

375,000

375,000

352

308

550,275

550,275

Keio Corporation

Seiko Electric Co., Ltd.

TOKYUCORPORATIONThe Bank of Kyoto,Ltd.

Tosoh Corporation

Kintetsu Group
Holdings Co., Ltd.

Keihan Holdings Co.,Ltd.

euglena Co., Ltd.

The Keiyo Bank, Ltd.
311

272

117

Purpose of holdings, thesummary of business allianceand reasons for increases(Note 2)

Holding
shares of
Hitachi, Ltd.

Maintaining and enhancing business
transactions of selling products andproviding services in Railway Systems
business

No

Maintaining and enhancing business
transactions of selling products andproviding services in Energy Business

Yes

Maintaining and enhancing business
transactions of selling products andproviding services in Railway Systems
business

Yes

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

Yes

Maintaining and enhancing business
transactions of selling products andproviding services in Railway Systems
business

Yes(Note 3)

Maintaining and enhancing business
transactions of selling products andproviding services in Financial
Information Systems business

No

Maintaining and enhancing business
transactions of selling products andproviding services in Industrial Digitalbusiness

No

Maintaining and enhancing business
transactions of selling products andproviding services in Railway Systems
business

No

Maintaining and enhancing business
transactions of selling products andproviding services in Railway Systems
business

No

Maintaining and enhancing
cooperative relationship in the area of
R&D in Water & Environment
business

No

Maintaining and enhancing business
transactions of selling products andproviding services in Financial
Information Systems business

YesFiscal year ended Fiscal year ended
March 31, 2023 March 31, 2022
(Note 1)
(Note 1)
Stock nameTOMONY Holdings,
Inc.

Taragaon Regency
Hotel

INNORULES CO.,LTD.

Nippon Yakin Kogyo
Co., Ltd.

Number ofshares(shares)Number ofshares(shares)

Balance sheet
amount(Millions of yen)

Balance sheet
amount(Millions of yen)

679,200

679,200

239

222

508,030

508,030

239

187

150,000

150,000

179

31

40,42540,425172

113

74,112－Aichi Financial Group,Inc.

Kita-Nippon Bank,Ltd.

ANA HOLDINGS
INC.

159

－

73,50073,500145

115

50,00050,000143

128513,150

513,150

Tochigi Bank, Ltd.
140

113

300,000

300,000

129

178

73,62373,623116

108

Daido Signal Co., Ltd.

San ju San Financial
Group, Inc.

118

Purpose of holdings, thesummary of business allianceand reasons for increases(Note 2)

Holding
shares of
Hitachi, Ltd.

Maintaining and enhancing business
transactions of selling products andproviding services in Financial
Information Systems business

Yes(Note 3)Acquired as a result of substituteperformance for past accounting
receivables in Industrial Digitalbusiness

No

Maintaining and enhancing
cooperative relationship in the area of
R&D in Financial Information
Systems business (Note 4)No

Maintaining and enhancing business
transactions of selling products andproviding services in Industrial Digitalbusiness

No

Maintaining and enhancing business
transactions of selling products andproviding services in Financial
Information Systems business(Note 5)

No

Maintaining and enhancing business
transactions of selling products andproviding services in Financial
Information Systems business

Yes

Acquired as a result of substituteperformance for accounting
receivables in Industrial Digitalbusiness

No

Maintaining and enhancing business
transactions of purchasing raw
materials and components, etc. in
Financial Information Systems
business

No

Maintaining and enhancing business
transactions of selling products andproviding services in Railway Systems
business

Yes

Maintaining and enhancing business
transactions of selling products andproviding services in Financial
Information Systems business

NoFiscal year ended Fiscal year ended
March 31, 2023 March 31, 2022
(Note 1)
(Note 1)
Stock name

THE SHIGA BANK，
LTD．

Cybertrust Japan Co.,Ltd.

THE TAIKO BANK，LTD．

Tokyo Kiraboshi
Financial Group, Inc.

Senshu Ikeda
Holdings, Inc.

THE DAITO BANK,LTD.

THE BANK OF
KOCHI, LTD.

Number ofshares(shares)Number ofshares(shares)

Balance sheet
amount(Millions of yen)

Balance sheet
amount(Millions of yen)

40,00040,000107

88

64,00064,000100

240

88,00088,00097

122

30,00030,0007852315,327

315,32773

54

110,000

110,000

70

75

69,90069,90047

52

30,00030,000

30

31

6,000

6,000

Tomato bank, Ltd.

Nishi-Nippon Railroad
Co., Ltd.
14

16

5,211

－

Procrea Holdings, Inc.
10

－

119

Purpose of holdings, thesummary of business allianceand reasons for increases(Note 2)

Holding
shares of
Hitachi, Ltd.

Maintaining and enhancing business
transactions of selling products andproviding services in Financial
Information Systems business

No

Maintaining and enhancing business
transactions of selling products andproviding services in Cloud Services
Platform Business

No

Maintaining and enhancing business
transactions of selling products andproviding services in Financial
Information Systems business

No

Maintaining and enhancing business
transactions of selling products andproviding services in Financial
Information Systems business

Yes(Note 3)

Maintaining and enhancing business
transactions of selling products andproviding services in Financial
Information Systems business

No

Maintaining and enhancing business
transactions of selling products andproviding services in Financial
Information Systems business

No

Maintaining and enhancing business
transactions of selling products andproviding services in Financial
Information Systems business

No

Maintaining and enhancing business
transactions of selling products andproviding services in Financial
Information Systems business

No

Maintaining and enhancing business
transactions of selling products andproviding services in Social
Infrastructure Systems business

No

Maintaining and enhancing business
transactions of selling products andproviding services in Financial
Information Systems business(Note 6)No

Fiscal year ended Fiscal year ended
March 31, 2023 March 31, 2022
(Note 1)
(Note 1)
Stock name

Number ofshares(shares)Number ofshares(shares)

Balance sheet
amount(Millions of yen)

Balance sheet
amount(Millions of yen)

Shin-Etsu ChemicalCo., Ltd.

－521,000－

9,789

Resonac Holdings
Corporation－

400,000－

972－

801,500－

963－

16,250－73－

20,000－31－

30,000－18－

11,330

－

10

－

6,900

－

8

Maxell, Ltd.

The Aichi Bank, Ltd.

THE CHUKYOBANK, Ltd.

Jimoto Holdings, Inc.

The Michinoku Bank,Ltd.
THE NAGANOBANK, LTD.

Purpose of holdings, thesummary of business allianceand reasons for increases(Note 2)

Holding
shares of
Hitachi, Ltd.

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

Yes

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

No

Held for Maintaining and enhancing
business relationshipNo

Held for Maintaining and enhancing
business transactions of selling
products and providing services(Note 5)
Held for Maintaining and enhancing
business transactions of selling
products and providing services(Note 5)No

No

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

No

Held for Maintaining and enhancing
business transactions of selling
products and providing services(Note 6)No

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

No(Notes) 1. Since the number of stock which the Company owned as of March 31, 2022 and March 31, 2023 isless than 60, all of the stocks are listed.
2. Since it is hard to state quantitative effects of holding the investment securities, such effects are notdescribed. Regarding the way to verify significance and relations of holding shares are described in"(i) Policy for shareholding and examination of the reasonableness of holding."
3. Shareholding by major subsidiaries of the issuers of each stock is included.
4. The classification in accounting was changed to specified investment securities due to its newlisting in the fiscal year ended March 31, 2023.
5. Aichi Financial Group, Inc. stock was allotted in return for The Aichi Bank, Ltd. stock and THE
CHUKYO BANK, Ltd. stock through share transfer.
6. Procrea Holdings, Inc. stock was allotted in return for The Michinoku Bank, Ltd. stock throughshare transfer.
(c) Equity securities held for pure investment
None.

120

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

From April 1 to March 31

Annual General Meetingof Shareholders

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

Record date

End of every fiscal year

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

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

Forward office-

Purchasing and selling fee

Free of charge

Method of public notice

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

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

121VII. Reference Information on the Company
1. Information on a Parent Company, etc. of the Company
The Company has no parent company.
2. Other Reference Information
The Company filed the following documents during the period from the commencing date of the fiscal
year ended March 31, 2023 to the filing date of this Annual Securities Report.
(1) Annual Securities Report and documents attached, and Confirmation
Letter(The 153rd business term (from April 1, 2021 to March 31, 2022))

Filed with the Director of the
Kanto Local Finance Bureau
on June 22, 2022

(2) Internal Control Report

Filed with the Director of the
Kanto Local Finance Bureau
on June 22, 2022

(3) Quarterly Report and Confirmation Letter
The First Quarter of the 154th business term (from April 1, 2022 toJune 30, 2022)
The Second Quarter of the 154th business term (from July 1, 2022 toSeptember 30, 2022)
The Third Quarter of the 154th business term (from October 1, 2022 to
December 31, 2022)(4) Extraordinary Report
Extraordinary Report pursuant to Article 19, Paragraph 2, Item 9-2 of
the Cabinet Office Ordinance Concerning Disclosure of Corporate
Affairs, etc.

Filed with the Director of the
Kanto Local Finance Bureau
on August 9, 2022
Filed with the Director of the
Kanto Local Finance Bureau
on November 11, 2022
Filed with the Director of the
Kanto Local Finance Bureau
on February 9, 2023
Filed with the Director of the
Kanto Local Finance Bureau
on June 23, 2022

Extraordinary Report pursuant to Article 19, Paragraph 2, Item 9 of the Filed with the Director of the
Cabinet Office Ordinance Concerning Disclosure of Corporate Affairs, Kanto Local Finance Bureau
on December 14, 2022
etc.
Extraordinary Report pursuant to Article 19, Paragraph 2, Item 3 and 12 Filed with the Director of the
Kanto Local Finance Bureauof the Cabinet Office Ordinance Concerning Disclosure of Corporate
on March 30, 2023
Affairs, etc.
(5) Amended Extraordinary Report
Amendment to Extraordinary Report filed on June 23, 2022

Filed with the Director of the
Kanto Local Finance Bureau
on June 24, 2022

(6) Report for Share Repurchase

Filed with the Director of the
Kanto Local Finance Bureau
on July 7, 2022
August 8, 2022
September 7, 2022
October 7, 2022
November 8, 2022
December 8, 2022
January 13, 2023
February 9, 2023
March 8, 2023
April 10, 2023
May 12, 2023 andJune 8, 2023

(7) Securities Registration Statement and documents attached

Filed with the Director of the
Kanto Local Finance Bureau
on April 27, 2023

122

(8) Amended Securities Registration Statement(Amendment to Securities Registration Statement filed on April 27,
2023)

Filed with the Director of the
Kanto Local Finance Bureau
on May 12, 2023

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

Filed with the Director of the
Kanto Local Finance Bureau
on April 28, 2022
June 20, 2022
June 23, 2022
June 24, 2022
December 14, 2022 andMarch 30, 2023

123

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

124Consolidated Financial Statements
Page
NumberConsolidated Financial Statements of Hitachi, Ltd. and Subsidiaries:
Consolidated Statement of Financial Position as ofMarch 31, 2023 and 2022

F-2

Consolidated Statement of Profit or Loss andConsolidated Statement of Comprehensive Income for the years ended
March 31, 2023 and 2022

F-3

Consolidated Statement of Changes in Equity for the years ended
March 31, 2023 and 2022

F-4

Consolidated Statement of Cash Flows for the years ended
March 31, 2023 and 2022

F-5

Notes to Consolidated Financial Statements

F-6

Reports of Independent Registered Public Accounting Firm

F-1

F-75

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

25
6,20,25
7
11,25

Non-current assets
Investments accounted for using the equity method
Investments in securities and other financial assets
Property, plant and equipment
Goodwill
Other intangible assets
Other non-current assets
Total non-current assets
Total assets

5,8
11,25
9
5,10
5,10
12

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

25
25
25
13
20
14

25
15
8,12,14,25

16,19
5,16,19,25
16,18
17
16

Non-controlling interests

5,25

March 31, 2023

March 31, 2022

833,2832,874,987
1,646,188
346,916
227,161

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

5,928,535

6,599,431

478,620496,8971,700,471
2,165,350
1,244,688
486,853

411,201
584,806
2,478,901
2,153,706
1,257,128
402,329

6,572,879

7,288,071

12,501,414

13,887,502

777,650
141,861
263,748
1,548,497
720,961
1,241,366
472,095

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

5,166,178

5,854,066

1,293,837
323,264
382,568

1,556,175
414,839
707,145

1,999,669

2,678,159

7,165,847

8,532,225

462,817
3,637,184
846,392(3,539)461,731
46,1193,197,725
639,263(3,002)

4,942,854

4,341,836

392,713

1,013,441

Total equity

5,335,567

5,355,277

Total liabilities and equity

12,501,414

13,887,502

See accompanying notes to consolidated financial statements.

F-2

Consolidated Statement of Profit or Loss
Years ended March 31, 2023 and 2022

Millions of yen

Revenues
Cost of sales
Gross profit
Selling, general and administrative expenses
Other income
Other expenses
Financial income
Financial expenses
Share of profits (losses) of investments accounted for using the equity
methodEBIT (Earnings before interest and taxes)
Interest income
Interest charges
Income before income taxes
Income taxes
Net income
Net income attributable to:
Hitachi, Ltd. stockholders
Non-controlling interests
Earnings per share attributable to Hitachi, Ltd. stockholders
Basic
Diluted

Note
20

5,21
5,15,21
22
22
8

12

2023
10,881,150(8,192,063)
2,689,087(1,940,943)
302,196(245,016)
7,878(20,417)2022
10,264,602(7,705,981)
2,558,621(1,820,385)
128,354(83,965)
27,938(97)

52,84740,485

845,632
25,652(51,313)819,971(116,101)
703,870

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

649,124
54,746

583,470
87,394684.55683.89Yen
603.75602.9623

Consolidated Statement of Comprehensive Income
Years ended March 31, 2023 and 2022

Millions of yen
Note

Net income
Other comprehensive income (OCI)
Items not to be reclassified into net income
Net changes in financial assets measured at fair value through OCI
Remeasurements of defined benefit plans
Share of OCI of investments accounted for using the equity method
Total items not to be reclassified into net income
Items that can be reclassified into net income
Foreign currency translation adjustments
Net changes in cash flow hedges
Share of OCI of investments accounted for using the equity method
Total items that can be reclassified into net income
Other comprehensive income (OCI)
Comprehensive income
Comprehensive income attributable to:
Hitachi, Ltd. stockholders
Non-controlling interests

See accompanying notes to consolidated financial statements.

F-3

2023
703,8702022
670,864

21,48440,202
1,511
63,197(11,224)
30,795(403)
19,168232,360
7,265
14,595254,220

391,489
8,172
41,207440,868

317,417
1,021,287

460,036
1,130,900

905,819
115,468

958,008
172,89217

Consolidated Statement of Changes in Equity

Year ended March 31, 2023

Millions of yen
2023

Commonstock(note 16)

Capitalsurplus(notes 5
and 16)

Retainedearnings(notes 16
and 18)

Accumulated
othercomprehensive
income(note 17)461,731

46,1193,197,725

639,263

Reclassified into retained earnings--

72,970Net income--

Other comprehensive income--

Dividends to Hitachi, Ltd. stockholders-

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

Balance at beginning of year

Treasurystock,
at cost(note 16)

Total
Hitachi, Ltd.
stockholders’equityNoncontrollinginterests(note 5)

Total equity(3,002)

4,341,836

1,013,441

5,355,277(72,970)

-

-

-

-

649,124--

649,124

54,746

703,870-

256,695-

256,695

60,722

317,417-(129,148)--(129,148)-(129,148)

-

-

-

-

-

-

(34,828)(34,828)

-

-

-

-

(200,212)(200,212)-(200,212)

-

(94)

-

-

258

164

-

164

Changes in equity

Cancellation of treasury stock-(199,417)--

199,417

-

-

-

1,086

1,086

-

-

-

2,172

-

2,172

-

153,487(153,487)

-

-

-

-

-

-

(1,181)-

23,404-22,223(701,368)(679,145)

Total changes in equity

1,086(46,119)

439,459

207,129(537)

601,018(620,728)(19,710)

Balance at end of year

462,817-

3,637,184

846,392(3,539)4,942,854

392,713

5,335,567

Issuance of new shares (note 19)
Transfer to capital surplus fromretained earnings
Changes in non-controlling interests

Year ended March 31, 2022

Millions of yen
2022

Commonstock(note 16)

Capitalsurplus(notes 16
and 25)Retainedearnings(notes 16
and 18)

Accumulated
othercomprehensive
income(note 17)

460,790

84,0402,710,604

273,561(3,493)

Reclassified into retained earnings--

14,861(14,861)

-

-

-

-

Net income--

583,470--

583,470

87,394

670,864

Other comprehensive income

-

-

-

374,538-

374,538

85,498460,036

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

Dividends to non-controlling interests

-

-

-

-

-

-

(63,647)(63,647)

Acquisition of treasury stock

-

-

-

-

(251)

(251)

-

(251)

Balance at beginning of year

Treasurystock,
at cost(note 16)

Total
Hitachi, Ltd.
stockholders’equityNoncontrollinginterests(note 25)

Total equity

3,525,502

932,730

4,458,232

Changes in equity

Sales of treasury stock

-

(291)

-

-

742

451

-

451

941

941

-

-

-

1,882

-

1,882

-

(38,571)

-

6,025

-

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

Total changes in equity

941(37,921)487,121

365,702491

816,334

80,711

897,045

Balance at end of year

461,731

46,1193,197,725

639,263(3,002)

4,341,836

1,013,441

5,355,277

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

See accompanying notes to consolidated financial statements.

F-4

Consolidated Statement of Cash Flows
Years ended March 31, 2023 and 2022

Millions of yen
Note

2023

2022

703,870

670,864

526,310
129,894
116,101(52,847)
18,204(297,351)(2,465)(60,673)(244,346)
43,96436,82649,93528,182995,604
25,675
26,419(49,770)(170,883)
827,045

540,252
35,091
168,469(40,485)(2,012)(102,135)(21,066)(33,292)(330,187)
156,475
9,679(29,122)(52,596)
969,935
16,372
18,824(26,698)(248,490)
729,943(252,638)(157,947)
55,580(296,968)(142,893)
109,836(106,069)(933,200)

616,317(4,180)151,063

168,892
45,467(1,048,866)(277,685)
80,062(288,795)
310(129,005)(52,217)(200,212)
164(274,687)(901)(1,142,966)

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

Effect of exchange rate changes on cash and cash equivalents
Change in cash and cash equivalents

29,314(135,544)

69,125(47,059)

Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year

968,827
833,283

1,015,886
968,827

Cash flows from operating activities:
Net income
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization
Impairment losses
Income taxes
Share of (profits) losses of investments accounted for using the equity method
Financial income and expenses
Net (gain) loss on business reorganization and others(Gain) loss on sale of property, plant and equipment
Change in trade receivables and contract assets
Change in inventories
Change in trade payables
Change in accrued expenses
Change in retirement and severance benefits
Other
SubtotalInterest received
Dividends received
Interest paid
Income taxes paid
Net cash provided by (used in) operating activities

24

Cash flows from investing activities:
Purchase of property, plant and equipment
Purchase of intangible assets
Proceeds from sale of property, plant and equipment, and intangible assets
Purchase of investments in securities and other financial assets(including investments in subsidiaries and investments accounted for using the equity method)
Proceeds from sale of investments in securities and other financial assets(including investments in subsidiaries and investments accounted for using the equity method)Other
Net cash provided by (used in) investing activities
Cash flows from financing activities:
Change in short-term debt, net
Proceeds from long-term debt
Payments on long-term debt
Proceeds from payments from non-controlling interests
Dividends paid to Hitachi, Ltd. stockholders
Dividends paid to non-controlling interests
Acquisition of common stock for treasury
Proceeds from sales of treasury stock
Purchase of shares of consolidated subsidiaries from non-controlling interests
Other
Net cash provided by (used in) financing activities

See accompanying notes to consolidated financial statements.

F-5

24

Notes to Consolidated Financial Statements(1) Nature of Operations
Hitachi, Ltd. (the Company) is a corporation domiciled in Japan, whose shares are listed on the Tokyo Stock Exchange. The
accompanying consolidated financial statements comprise the Company, its subsidiaries and the Company’s interests in associates
and joint ventures. The Company’s and its subsidiaries’ businesses are global and diverse, and include manufacturing and services
in seven segments consisting of Digital Systems & Services, Green Energy & Mobility, Connective Industries, Automotive
Systems, Hitachi Construction Machinery, Hitachi Metals and Others.
(2) Basis of Presentation
As the Company meets the requirements of a “Specified Company applying Designated International Financial ReportingStandards” pursuant to Article 1-2 of the Ordinance on Terminology, Forms and Preparation Methods of Consolidated Financial
Statements (Ordinance of the Ministry of Finance of Japan No. 28 of 1976), the consolidated financial statements of the Company
have been prepared in accordance with International Financial Reporting Standards (IFRS) issued by the International AccountingStandards Board (IASB), as permitted by the provision of Article 93 of the Ordinance. The Company’s fiscal year begins on April 1
and ends on March 31 of the following calendar year.
The Company’s consolidated financial statements have been prepared on a historical cost basis, except for derivative assets andliabilities, financial assets and liabilities measured at fair value through profit or loss, financial assets measured at fair value throughother comprehensive income and assets and liabilities associated with defined benefit plans.
The consolidated financial statements are presented in millions of Japanese yen, the functional currency of the Company.
Management of the Company has made a number of judgments, estimates and assumptions relating to the application of accounting
policies, reporting of revenues and expenses and assets and liabilities in the preparation of these consolidated financial statements.
Actual results could differ from those estimates.
Estimates and assumptions are continually evaluated. The effect of a change in accounting estimates, if any, is recognized in thereporting period in which the change was made and in future periods.
The information regarding judgments used in applying accounting policies that could have a material effect on the Company’s
consolidated financial statements is included in the following notes:
・note 3. (a) Basis of Consolidation・note 3. (d) Financial Instruments and note 25. Financial Instruments and Related Disclosures
The information regarding uncertainties arising from assumptions and estimates that could result in material adjustments in thesubsequent consolidated financial statements is included in the following notes:
・note 3. (j) Impairment of Non-financial Assets, note 9. Property, Plant and Equipment and note 10. Goodwill and Other
Intangible Assets
・note 3. (k) Retirement and Severance Benefits and note 15. Employee Benefits
・note 3. (l) Provisions, note 3. (n) Revenue Recognition, note 14. Provisions and note 20. Revenues
・note 3. (o) Income Taxes and note 12. Deferred Taxes and Income Taxes

F-6

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

F-7

Notes to Consolidated Financial Statements(d) Financial Instruments(i) Non-derivative Financial Assets
The Company initially recognizes trade and other receivables on the date such receivables arise. All other financial assets are
initially recognized at the transaction date, on which the Company becomes a party to the agreement.
The Company derecognizes financial assets when contractual rights to cash flows from the financial assets expire or when thecontractual rights to receive cash flows from the financial assets are transferred in transactions where the risks and economic
rewards of owning the financial assets are substantially transferred. In transactions where the risks and economic rewards ofowning the financial assets are neither substantially transferred nor retained, the Company continues to recognize the financial
assets to the extent of its continuing involvement and derecognizes such financial assets only if its control is transferred.
The classification and measurement model of non-derivative financial assets is summarized as follows:
Financial Assets Measured at Amortized Cost
Financial assets are subsequently measured at amortized cost in case they meet the following requirements:
・The financial asset is held within a business model with the objective of collecting contractual cash flows.
・The contractual terms of the financial asset provide cash flows on specified dates that are solely payments of principal andinterest on the principal amount outstanding.
Financial assets measured at amortized cost are initially measured at fair value (including direct transaction costs). The
carrying amount of financial assets measured at amortized cost is subsequently measured using the effective interest method.
Interest accrued on financial assets measured at amortized cost is included in Interest income in the consolidated statement of
profit or loss.
Financial assets measured at fair value through other comprehensive income
The Company holds certain equity instruments with the purpose of expanding its revenue base by maintaining andstrengthening business relations with the investees. These equity instruments are classified as Financial assets measured at fairvalue through other comprehensive income by designation. They are initially and subsequently measured at fair value(including direct transaction costs), and the changes in fair value are recognized in OCI. The cumulative amount of OCI isrecognized in equity as AOCI. Dividends on equity instruments designated as fair value through other comprehensive income
are recognized in profit or loss, except where they are considered to be a return of the investment.
Financial assets measured at fair value through profit or loss
Equity instruments not designated as Financial assets measured at fair value through other comprehensive income and debt
instruments not classified as financial assets measured at amortized cost are classified as Financial assets measured at fairvalue through profit or loss. These instruments are subsequently measured at fair value (including direct transaction costs) andthe changes in fair value are recognized in profit or loss.
Impairment of Financial Assets
On a regular basis, but no less frequently than at the end of each quarterly reporting period, the Company evaluates theallowance for doubtful receivables based on expected credit losses on trade receivables, contract assets, and other receivables
depending on whether the credit risk has increased significantly since initial recognition.
If the credit risk has increased significantly since initial recognition, the allowance for doubtful receivables is measured at theamount equal to the lifetime expected credit losses on the financial assets. If the credit risk has not increased significantly
since initial recognition, the allowance for doubtful receivables is measured at the amount equal to 12-month expected credit
losses. However, for trade receivables, contract assets, and lease receivables, allowance for doubtful receivables is always
measured at the amount equal to the lifetime expected credit losses.
Whether credit risk has increased significantly is determined based on changes in the risk of default. Default is defined as thestate in which a critical problem with debtor’s payment of contractual cash flows has been identified and there are no
reasonable expectations of recovering the financial asset in its entirety or a portion. To determine whether there have been any
changes in the risk of default, external credit ratings, past due information and other factors are mainly taken into
consideration.

F-8

Notes to Consolidated Financial Statements

Expected credit losses are measured by taking the probability weighted average of the discounted present values ofdifferences between the total amount of the contractual cash flows and the total amount of cash flows expected to be received
in the future from the financial assets. If one or more events occur, such as overdue payments, extended payment terms,
negative evaluation by third party credit rating agencies, and/or a deterioration in financial position and operating results,
including capital deficit, the financial assets are individually assessed as credit-impaired financial assets and expected credit
losses are measured based mainly on historical credit loss experience, future collectible amounts and other factors. The
expected credit losses on the financial assets that are not credit-impaired are measured through collective assessment based
mainly on provision rates depending on historical credit loss experience adjusted by the current and future economic situationand other factors, if necessary.
For the expected credit losses on trade receivables, contract assets, and other receivables, the allowances for doubtfulreceivables are recorded instead of directly reducing the carrying amounts. Changes in expected credit losses are recognizedin profit or loss as impairment losses and are included in Selling, general and administrative expenses in the consolidated
statement of profit or loss. For financial assets, after all means of collection have been exhausted and the potential forrecovery is considered remote, it is determined that there are no longer any reasonable expectations of recovering the financial
assets in their entirety or a portion and the carrying amounts are generally written off.
(ii) Non-derivative Financial Liabilities
The Company initially recognizes debt instruments on the date of issuance. All other financial liabilities are initiallyrecognized at the transaction date, on which the Company becomes a party to the agreement.
The Company derecognizes financial liabilities if extinguished, or if the obligation in the contract is redeemed or the liability
is discharged, cancelled or expires.
Non-derivative financial liabilities the Company holds include bonds, debts, trade payables and other financial liabilities.
They are initially measured at fair value (less direct transaction costs), and bonds and long-term debt are subsequently
measured at amortized cost using the effective interest method. Interest accrued on these financial liabilities is included inInterest charges in the consolidated statement of profit or loss.
(iii) Derivatives and Hedge Accounting
The Company uses derivative instruments including forward exchange contracts, cross currency swaps and interest rate swaps
in order to hedge foreign currency exchange risks and interest rate risks. All derivatives are measured at fair value irrespectiveof the objective and intent of holding them.
The Company accounts for hedging derivatives as follows:・Fair value hedge: a hedge of the fair value of a recognized asset or liability or of an unrecognized firm commitment. Thechanges in fair value of the recognized assets or liabilities or unrecognized firm commitments and the related derivatives
are both recorded in profit or loss if the hedge is considered effective.
・Cash flow hedge: a hedge of a forecast transaction or of the variability of cash flows to be received or paid related to arecognized asset or liability. The changes in fair value of the derivatives designated as cash flow hedges are recorded inother comprehensive income (OCI) if the hedge is considered effective. This treatment continues until profit or loss isaffected by the variability of cash flows or the unrecognized firm commitment of the designated hedged item, whenchanges in fair value of the derivative are recognized in profit or loss. If a non-financial asset or a non-financial liability isrecognized due to a hedged forecast transaction, the changes in the fair value of the derivative recognized in OCI are
included directly in the acquisition cost or other carrying amount of the asset or liability when the asset or liability isrecognized.
The Company follows the documentation requirements as prescribed by IFRS 9 “Financial Instruments”, which includes therisk management objective and strategy for undertaking various hedge transactions. In addition, a formal assessment is madeat the hedge’s inception and subsequently on a periodic basis, as to whether the derivative used in hedging activities iseffective in offsetting changes in fair values or cash flows of the hedged items. Hedge accounting is discontinued if a hedge
becomes ineffective.

F-9

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

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

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

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

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

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

F-11

Notes to Consolidated Financial Statements
trends and fluctuations in interest rates.
If the carrying amount of the asset or the CGU (or the group of CGUs) exceeds its recoverable amount, an impairment loss isrecognized at the excess amount.
For an asset or a CGU (or a group of CGUs) other than goodwill, its recoverable amount is subsequently estimated if there is asignificant change in facts and circumstances and there is an indication that an impairment loss previously recognized on theasset may no longer exist or has decreased. If the estimated recoverable amount exceeds the carrying amount, the impairment
loss recognized previously is reversed to the extent of the carrying amount that would have been recorded, net of depreciation oramortization, if impairment had not been recognized previously.
(k) Retirement and Severance Benefits
The Company and certain subsidiaries have defined benefit pension plans, severance lump-sum payment plans and defined
contribution plans to provide retirement and severance benefits to employees.
(i) Defined Benefit Plans
Defined benefit pension plans include defined benefit pension plans and severance lump-sum payment plans. The present valueof defined benefit obligations and retirement benefit costs are measured based on the projected unit credit method. The present
value of defined benefit obligations and the fair value of plan assets are remeasured as of the end of reporting period. Actuarial
differences arising during the year and changes in fair value of plan assets (excluding interest income) are recognized in OCI and
are not subsequently reclassified into profit or loss. Any prior service cost, which arises at the time of a plan amendment, isrecognized immediately in profit or loss when such an amendment occurs. The present value of defined benefit obligations lessthe fair value of plan assets is presented as the net amount of defined benefit liability or asset in non-current liabilities or assets.
The measurement of a significant amount of employee retirement benefit costs is derived from actuarial valuations containing a
number of actuarial assumptions including mortality, withdrawal and retirement rates, changes in wages and the discount rate.
The Company and its subsidiaries make judgments regarding the actuarial assumptions used by taking into account various
factors including personnel demographics, market conditions and expected trends in interest rates. Actuarial assumptions are
determined based on the best estimates and judgments, but may be affected by variance of uncertain economic conditions in the
future or by amendments or issuance of related laws.
(ii) Defined Contribution Plans
Defined contribution pension plans are post-employment benefit plans in which the employer pays a certain amount of premiums
to the third-party asset manager but has no legal or constructive obligation to pay in excess of such contributions. Contributions
to the defined contribution plans are recognized in profit or loss in the period when the service is provided by the employees.
(l) Provisions
The Company recognizes provisions if it has a present obligation (legal or constructive) as a result of past events, it is probablethat an outflow of resources embodying economic benefits will be required to settle the obligation, and the amount of obligation
can be reliably estimated. Provisions may be affected by unexpected events or changes in circumstances, and actual payments
may differ from the estimates.
In case that the time to settle an obligation is expected to be long, and thus the time value of money is material, the amount of aprovision is measured at the present value of the amount of expenditures expected to be required to settle the obligation.
(m) Contingencies
The Company discloses contingent liabilities in accordance with International Accounting Standards (IAS) 37 “Provisions,Contingent Liabilities and Contingent Assets” if an obligation does not meet the recognition criteria of provisions prescribedabove in (l) Provisions, excluding those where the possibility of an outflow of resources is remote.
The Company and its subsidiaries have financial guarantee contracts that require them to make payments to compensate theholder for a loss it incurs if a specified debtor defaults on payment based on the terms of a debt instrument.

F-12

Notes to Consolidated Financial Statements(n) Revenue Recognition
The Company recognizes revenue in accordance with the following five-step approach.
Step 1: Identify the contract(s) with a customer
Step 2: Identify the performance obligations in the contract
Step 3: Determine the transaction price
Step 4: Allocate the transaction price to the performance obligations in the contract
Step 5: Recognize revenue when (or as) the Company satisfies a performance obligation
The Company offers multiple solutions to meet its customers’ needs which may involve the delivery or performance of multiple
elements, such as goods or services. When the Company enters into multiple contracts for providing the goods or services,
related contracts are combined based on interdependencies between each contract’s consideration and the time the Company
entered into such contracts, and the transaction price is allocated to each performance obligation on the basis of the relative
stand-alone selling prices of each distinct goods or services for the purpose of recognizing revenue.
In estimating the stand-alone selling price, the Company considers various factors such as market conditions, entity-specificfactors and information about the customer or situation of customer.
The transaction price is the amount of consideration to which the Company expects to be entitled in exchange for transferringpromised goods or services to a customer. Variable consideration, such as discounts and rebates, is included in the transaction
price only to the extent that it is highly probable that a significant reversal in the amount of cumulative revenue recognized will
not occur when the uncertainty associated with the variable consideration is subsequently resolved. The promised amount ofconsideration does not include a significant financing component.
For a performance obligation satisfied over time, the Company measures its progress towards complete satisfaction of that
performance obligation based on the costs incurred or the period of services being provided in consideration of the nature of thegoods and services for the purpose of recognizing revenue. When the Company cannot reasonably measure the progress, revenue
is recognized only to the extent of the costs incurred.
The Company recognizes the incremental costs of obtaining a contract with a customer and the costs directly related to fulfillinga contract as an asset if those costs are expected to be recovered, and those assets are amortized based on the methods used torecognize revenue of the goods or services to which the assets relate. The Company recognizes the incremental costs of obtaining
a contract as an expense when incurred if the amortization period of the asset is less than one year.
Revenue recognition under long-term projects requires significant assumptions about the estimated total cost, estimated total
selling price, risk associated with the contract, and other factors. These estimates are subject to variance of uncertain economic
conditions in the future and may vary due to a variety of reasons beyond our control. The Company reviews these estimates on
an ongoing basis and reflects them in accounting practices.
(o) Income Taxes
Deferred tax assets and liabilities resulting from temporary differences and others are accounted for based on a liability method.
Deferred tax liabilities are not recognized for temporary differences arising from goodwill, temporary differences arising from anasset or liability in a transaction other than a business combination, which at the time of transaction affects neither accounting
nor taxable income and future taxable difference arising from investments in subsidiaries, associates and joint ventures wherethat the Company is able to control the timing of reversal of the temporary difference while it is probable that the temporary
difference will not reverse in the foreseeable future. Deferred tax assets are recognized to the extent that it is probable that futuretaxable income will be available against which unused tax loss carryforwards, unused tax credits and future deductible temporary
differences can be utilized. A certain amount of negative impact caused by soaring material prices and a shortage ofsemiconductors is included in estimates of future taxable income. The timing and amounts of taxable income may be affected byfluctuations due to uncertain economic conditions in the future, and the actual timing and amounts may differ from the estimates.
Current tax and deferred tax on items recognized in OCI are also recognized in OCI.
Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in whichthose temporary differences are expected to be reversed. The effect on deferred tax assets and liabilities of a change in tax rates
is recognized in profit or loss and OCI in the period that includes the enactment date.

F-13

Notes to Consolidated Financial Statements
The Company has applied the exception to recognizing and disclosing information about deferred tax assets and liabilities related
to income taxes arising from tax law enacted or substantively enacted to implement the Pillar Two model rules published by theOrganization for Economic Co-operation and Development in accordance with IAS 12 "Income taxes" amended prior to theapproval date of the consolidated financial statements.
(p) Earnings per Share
Basic earnings per share (EPS) for net income attributable to Hitachi, Ltd. stockholders is calculated based on the weighted
average number of ordinary shares outstanding during the period. Diluted EPS for net income attributable to Hitachi, Ltd.
stockholders is calculated based on the sum of weighted average number of ordinary shares outstanding during the period and theconversion of securities with dilutive effects or the number of authorized shares.
(q) Business Combinations
Business combinations are accounted for using the acquisition method. The Company determines, on a transaction by transaction
basis, whether to measure non-controlling interests at fair value or by the appropriate share in the fair value of identifiable net
assets of the acquiree. Acquisition related costs are expensed in the period in which the costs are incurred.
(r) New Accounting Standards not yet Adopted by the Company
The impact of adopting the principal new accounting standards and interpretations issued or amended prior to the approval dateof the consolidated financial statements that are not yet adopted by the Company as of the reporting date on the Company’s
financial position and business performance will not be material.

F-14

Notes to Consolidated Financial Statements(4) Segment Information
Business Segments
The operating segments of the Company are the components for which separate financial information is available and which isevaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance.
The Company discloses its business in seven reportable segments, corresponding to categories of activities classified primarily by
the similarities for the nature of markets, products and services, and economic characteristics. Several operating segments areaggregated into Green Energy & Mobility and Connective Industries for financial reporting purposes so that users of the financial
statements better understand the Company’s financial position and business performance. The Company aggregates operating
segments based on the similarities of economic characteristics mainly using the segment profit (loss) margin ratio of operating
segments. The primary products and services included in each segment are as follows:
Digital Systems & Services:
Digital solutions (System integration, Consulting, Cloud services), IT products (Storage, Servers), Software, and ATMs
Green Energy & Mobility:
Energy solutions (Power grids, Renewable energy, Nuclear), and Railway systems
Connective Industries:
Building systems (Elevators, Escalators), Smart life & ecofriendly systems (Home appliances, Air conditioners), Measurement andanalytical systems (Medical and Bio, Semiconductor, Industry), Industry & distribution solutions, Water & environment solutions,and Industrial machinery
Automotive Systems:
Powertrain, Chassis, Advanced driver assistance, and Motorcycle systems
Hitachi Construction Machinery:Hydraulic excavators, Wheel loaders, Mining machinery, Maintenance and services, Construction solutions, and Mine management
systems
Hitachi Metals:
Specialty steel products, Functional components and equipment, Magnetic materials and power electronics materials, and Wires,
cables and related products
Others:
Optical disk drives, Property management and others
Effective from April 1, 2022, the Company changed its business structure in order to realize further evolution and growth of theSocial Innovation Business and aims to realize a sustainable society. Accordingly, the Company reclassified its reportable segments
in seven segments as Digital Systems & Services, Green Energy & Mobility, Connective Industries, Automotive Systems, Hitachi
Construction Machinery, Hitachi Metals, and Others. Figures for the year ended March 31, 2022 have been restated on the basis of
the reclassification.
In addition, from the year ended March 31, 2023, segment profit (loss), previously presented based on EBIT, is changed andpresented on an Adjusted EBITA basis, as a measure of profit (loss) used by the chief operating decision maker mainly in deciding
how to allocate resources and in assessing performance. Adjusted EBITA is defined as Adjusted Earnings before Interest, Taxes
and Amortization. Adjusted EBITA represents profit (loss) calculated by deducting selling, general and administrative expenses
from gross profit, adding back amortization of intangible assets, etc. recognized upon business combinations, and adding or
deducting share of profits (losses) of investments accounted for using the equity method.

F-15

Notes to Consolidated Financial Statements
In August 2022, the Company sold a certain number of shares of Hitachi Construction Machinery Co., Ltd. (Hitachi Construction
Machinery). As a result, Hitachi Construction Machinery and its subsidiaries, which were included in the Hitachi Construction
Machinery segment, became equity-method associates of the Company. Accordingly, the Hitachi Construction Machinery segment
ceased to be a business segment, and from the second quarter of this fiscal year, the Company includes its share of profits (losses)
of investments accounted for using the equity method of Hitachi Construction Machinery and its subsidiaries after the transfer ofshares in Corporate items and Eliminations.
In January 2023, the Company sold all shares of Hitachi Metals, Ltd. (currently Proterial, Ltd.). As a result, Hitachi Metals, Ltd.
was deconsolidated. Accordingly, Hitachi Metals segment ceased to be a business segment from the fourth quarter of this fiscal
year.
The following tables show business segment information for the years ended March 31, 2023 and 2022.
Millions of yen
March 31, 2023
Segment
Green Energy
Connective& Mobility
Industries

Digital Systems& Services
Revenues
Revenues from External Customers
Revenues from Intersegment Transactions
Total Revenues
Segment Profit (Loss)
Total Assets
Other items
Depreciation and Amortization
Impairment Losses
Share of Profits (Losses) of Investments
Accounted for Using the Equity Method
Investments Accounted for Using theEquity Method
Goodwill
Capital Expenditures

Automotive
Systems

2,217,973
171,1222,389,095
293,729
3,140,933

2,432,204
60,3182,492,522
132,737
3,788,025

2,759,660
215,6122,975,272
312,183
3,552,848

1,915,254
4,813
1,920,067
73,447
1,687,076

129,741
52,163

117,870
49,70778,5303,502

105,040
24,1602,597

10,12019,855706

51,99788,003

162,248

11,406

1,269,171
132,754589,011
118,254

220,688
75,451

86,48087,916
Millions of yen

March 31, 2023
Segment
Subtotal

Corporate
items andEliminations

Total

238,631234,384
473,015
15,553
2,121,718

10,863,478
709,333
11,572,811
913,929
14,290,600

17,672(709,333)(691,661)(29,323)(1,789,186)

10,881,150
10,881,150
884,606
12,501,414

27,90374

32,240195

516,988
129,894

9,322-

526,310
129,894

1,171

1,265

169

35,883

16,964

52,847

-

-

4,017

317,671

160,949

478,620

32,372

20,76333,073

2,165,350
500,583

7,459

2,165,350
508,042

HitachiConstruction
Machinery
Revenues
Revenues from External Customers
Revenues from Intersegment Transactions
Total Revenues
Segment Profit (Loss)
Total Assets
Other items
Depreciation and Amortization
Impairment Losses
Share of Profits (Losses) of Investments
Accounted for Using the Equity Method
Investments Accounted for Using theEquity Method
Goodwill
Capital Expenditures

Hitachi
MetalsOthers474,168946
475,11443,226-

825,588
22,138
847,726
43,054-25,66493

F-16

Notes to Consolidated Financial Statements

Millions of yen
March 31, 2022
Segment
Green Energy
Connective& Mobility
Industries

Digital Systems& Services
Revenues
Revenues from External Customers
Revenues from Intersegment Transactions
Total Revenues
Segment Profit (Loss)
Total Assets
Other items
Depreciation and Amortization
Impairment Losses
Share of Profits (Losses) of Investments
Accounted for Using the Equity Method
Investments Accounted for Using theEquity Method
Goodwill
Capital Expenditures

Automotive
Systems

1,988,339
165,286
2,153,625
281,4032,987,359

1,991,566
59,4572,051,023
92,312
3,327,198

2,521,695
231,2032,752,898
257,8083,456,161

1,591,093
6,625
1,597,718
62,346
1,612,438

118,080
20,575

109,649
1,766

73,451
5,508

93,933
4,594

2,286

6,403

18,943526

50,397

74,848

154,600

10,271

1,137,719
122,789573,763
108,977

194,427
78,291

97,154
100,006
Millions of yen

March 31, 2022
Segment

Revenues
Revenues from External Customers
Revenues from Intersegment Transactions
Total Revenues
Segment Profit (Loss)
Total Assets
Other items
Depreciation and Amortization
Impairment Losses
Share of Profits (Losses) of Investments
Accounted for Using the Equity Method
Investments Accounted for Using theEquity Method
Goodwill
Capital Expenditures

Subtotal

Corporate
items andEliminations

Total

223,401
232,904
456,305
23,623
2,058,239

10,254,137
725,094
10,979,231
848,360
15,954,094

10,465(725,094)(714,629)
7,020(2,066,592)

10,264,602
10,264,602
855,380
13,887,502

46,531
1,009

32,8571,865

531,050
35,513

9,202
(422)

540,252
35,091

6,224

1,152

134

35,6684,817

40,485

26,661

11,611

3,778

332,166

79,035411,201

55,367
49,11995,27634,35422,722

2,153,706
516,258

15,7692,153,706
532,027

HitachiConstruction
Machinery

Hitachi
MetalsOthers

1,022,793
2,168
1,024,961
100,163
1,440,674

915,250
27,451
942,70130,705
1,072,025

56,549196

Segment profit (loss) is measured by Adjusted EBITA. Intersegment transactions are generally recorded at the same prices used inarm’s length transactions. Corporate items include corporate expenses not allocated to individual business segments, such as
expenditures for advanced R&D, a part of net gain (loss) on share of profits (losses) of investments accounted for using the equity
method, and others.
Corporate assets mainly consist of investments in securities and other financial assets.
Depreciation consists of that of property, plant and equipment and investment properties.
Impairment losses mainly consist of those recognized on property, plant and equipment, goodwill and other intangible assets.
Capital expenditures represent additions to property, plant and equipment, investment properties and other intangible assets.

F-17

Notes to Consolidated Financial Statements
Adjustments to income before income taxes from segment profit are as follows.
Millions of yen
2023
Segment Profit (Loss)
Amortization of Intangible assets, etc.
recognized upon business combinations
Other income
Other expenses
Financial income
Financial expenses
EBIT (Earnings before interest and taxes)
Interest income
Interest charges
Income before income taxes

F-18

2022
884,606

855,380(83,615)(76,659)

302,196(245,016)
7,878(20,417)845,632
25,652(51,313)819,971

128,354(83,965)
27,938(97)
850,951
15,492(27,110)
839,333

Notes to Consolidated Financial Statements
Geographic Information
The following table shows revenues attributed to geographic areas based on the location of the customers for the years ended March
31, 2023 and 2022.
Millions of yen
2023

2022

Japan

4,118,244

4,187,077

Asia
North America
EuropeOther Areas

2,635,114
1,877,992
1,535,948
713,852

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

Overseas Revenues Subtotal

6,762,906

6,077,525

Total Revenues

10,881,150

10,264,602

Revenues in China for the years ended March 31, 2023 and 2022 were 1,345,223 million yen and 1,331,618 million yen,respectively. Revenues in the U.S.A. for the years ended March 31, 2023 and 2022 were 1,732,535 million yen and 1,411,681
million yen, respectively. Revenues from external customers attributable to any individual country and region other than Japan,
China and the U.S.A. were not material for the years ended March 31, 2023 and 2022.
The following table shows the balances of property, plant and equipment, investment properties, goodwill and other intangible
assets for each geographic area as of March 31, 2023 and 2022.
Millions of yen
March 31, 2023

March 31, 2022

Japan
Asia
North America
EuropeOther Areas

1,097,816
520,213
1,896,359
1,501,367
137,077

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

Subtotal
Corporate items and Eliminations

5,152,832(5,606)

5,923,033
7,756

Total

5,147,226

5,930,789

The balances of property, plant and equipment, investment properties, goodwill and other intangible assets in the U.S.A. as ofMarch 31, 2023 and 2022 were 1,886,723 million yen and 1,880,653 million yen, respectively. The balances of property, plant andequipment, investment properties, goodwill and other intangible assets in the Swiss Confederation as of March 31, 2023 and 2022
were 1,065,498 million yen and 1,124,510 million yen, respectively. The balances of property, plant and equipment, investment
properties, goodwill and other intangible assets in any individual country and region other than Japan, the U.S.A. and the Swiss
Confederation were not material as of March 31, 2023 and 2022.
Significant Customer Information
There was no concentration of revenues from a specific customer for the years ended March 31, 2023 and 2022.

F-19

Notes to Consolidated Financial Statements(5) Business Acquisitions and Divestitures
The following are the main Business Acquisitions and Divestitures for the year ended March 31, 2023, including the period up to
the approval date of the consolidated financial statements.
(a)Sale of shares of Hitachi Astemo, Ltd. (hereinafter “Hitachi Astemo”)
On March 30, 2023, the Company entered into the following two agreements regarding the transfer of a part of the shares ofHitachi Astemo, a consolidated subsidiary of the Company in the Automotive Systems segment, to Hitachi Astemo and Honda
Motor Co., Ltd. (hereinafter “Honda”) and for inviting JIC Capital, Ltd. (hereinafter “JICC”) as a new joint partner.
(i) Share Subscription Agreement with JICC-01 Limited Partnership (hereinafter “JICC-01”) managed by JICC-01 G.K.,
which is a wholly owned subsidiary of JICC including that Hitachi Astemo issues Class shares to JICC-01, and Hitachi
Astemo purchases a part of shares of its common stocks held by the Company, using a portion of the funds raised throughthe issuance of Class shares(ii) Agreement for investment in kind and share transfer with Honda including that Hitachi Astemo issues common stocks to
Honda in exchange for Honda to invest the shares of Hitachi Astemo Electric Motor Systems, Ltd. in kind and theCompany transfers a part of shares of Hitachi Astemo’s common stocks to Honda
The consideration is expected to be approximately 158.0 billion yen.
Assuming the series of transactions based on the agreements is settled, it is expected that the Company’s ownership ratio ofshares of Hitachi Astemo will decrease from 66.6% to 40%, and Hitachi Astemo will turn into an equity-method associate of theCompany.
An expected gain on the sale of Hitachi Astemo shares in the amount of approximately 107.0 billion yen will be recognized in
Other income in the consolidated statement of profit or loss for the year ending March 31, 2024. Furthermore, non-controllinginterests in Hitachi Astemo will decrease approximately 258.0 billion yen in the consolidated statement of changes in equity forthe year ending March 31, 2024.
(b) Sale of all shares of Hitachi Transport System, Ltd. (hereinafter “Hitachi Transport System”)
On April 28, 2022, the Company entered into an agreement regarding the following three points, etc. for the common stocks of
Hitachi Transport System (hereinafter “Hitachi Transport System Shares”), an equity-method associate of the Company inCorporate items of segment information, with HTSK Co., Ltd. (hereinafter “Offeror”), a wholly owned subsidiary of HTSK
Holdings Co., Ltd. (hereinafter “Offeror Parent”), all equity interests which are currently owned by HTSK Investment L.P.,
which is indirectly held and operated by Kohlberg Kravis Roberts & Co. L.P.
(i) Offeror will launch a tender offer (hereinafter “Tender Offer”) for Hitachi Transport System Shares and the Company will
not tender any of its shares of Hitachi Transport System (hereinafter “Shares to Be Sold by the Company”) in Tender Offer.
(ii) The Company will sell Shares to Be Sold by the Company in accordance with the share repurchase to be conducted by
Hitachi Transport System.
(iii) The Company obtains 10.0 billion yen worth of Offeror Parent’s shares with voting rights (equivalent to 10% of the total
voting rights).
Offeror commenced Tender Offer on October 28, 2022, and Tender Offer was completed on November 29, 2022.
On March 1, 2023, the Company sold Shares to Be Sold by the Company in accordance with the share repurchase to be
conducted by Hitachi Transport System. The Company’s consideration was 221,983 million yen.
As a result of the transaction, Hitachi Transport System ceased to be an equity-method associate. A gain on the sale of Hitachi
Transport System Shares in the amount of 140,293 million yen was recognized in Other income in the consolidated statement of
profit or loss for the year ended March 31, 2023.
On April 1, 2023, Hitachi Transport System changed its name to LOGISTEED, Ltd.
(c) Sale of all shares of Hitachi Metals, Ltd. (hereinafter “Hitachi Metals”)
On April 28, 2021, the Company entered into an agreement regarding the following four points for the common stocks of
Hitachi Metals (hereinafter “Hitachi Metals Shares”), a consolidated subsidiary of the Company in the Hitachi Metals segment,with K. K. BCJ-52 (hereinafter “Tender Offeror”), a wholly owned company of G.K. BCJ-51, the outstanding shares of which
are indirectly owned by investment funds which Bain Capital Private Equity, LP and its group provide with investment advice.
(i) Tender Offeror will launch a tender offer (hereinafter “Tender Offer”) for Hitachi Metals Shares, when conditions for thecommencement of Tender Offer are satisfied, and the Company will not apply for Tender Offer with regard to all of the
Hitachi Metals Shares held by the Company (hereinafter “Shares to Be Sold by the Company”).
(ii) In the event Tender Offer is enacted and Tender Offeror is unable to acquire all of the Hitachi Metals Shares (excluding
treasury stock held by Hitachi Metals and Shares to Be Sold by the Company) in Tender Offer, Tender Offeror and theCompany will request convening of a general meeting of shareholders on the matter of items required for implementation

F-20

Notes to Consolidated Financial Statementsof share consolidation (hereinafter “Share Consolidation”) on Hitachi Metals and exercise approval right for the proposal.
(iii) As promptly as practically possible after Tender Offeror and the Company become holders of all shares of Hitachi Metals(excluding treasury stock held by Hitachi Metals) as a result of Share Consolidation, capital reduction and other measures(hereinafter “Capital Reduction”) will be performed for Hitachi Metals in order to secure distributable amount required for
acquisition of treasury stock by Hitachi Metals (hereinafter “Share Repurchase”).
(iv) Immediately after Capital Reduction takes effect, Shares to Be Sold by the Company will be transferred to Hitachi Metals
as a result of Share Repurchase.
Tender Offeror commenced Tender Offer on September 27, 2022, and Tender Offer was completed on October 25, 2022.
Following the completion of Tender Offer, the above related transactions, such as Share Consolidation of Hitachi Metals shares,
took place and Shares to Be Sold by the Company were transferred on January 5, 2023. The Company’s consideration was
382,042 million yen.
As a result of the transaction was settled, the Company’s ownership ratio of Hitachi Metals Shares decreased from 53.4% to 0%,
and Hitachi Metals was deconsolidated. A gain on the sale of Hitachi Metals Shares in the amount of 95,324 million yen wasrecognized in Other income in the consolidated statement of profit or loss for the year ended March 31, 2023.
Furthermore, changes in non-controlling interests in the consolidated statement of changes in equity include derecognition of
non-controlling interest in Hitachi Metals as a result of its deconsolidation.
On January 4, 2023, Hitachi Metals changed its name to Proterial, Ltd.

F-21

Notes to Consolidated Financial Statements
The following table shows the assets, liabilities, and equity of Hitachi Metals as of March 31, 2022.
Millions of yen
100,936
187,264
227,615
44,821
9,028
569,664
11,612
9,885
334,603
95,276
23,61027,375502,361
1,072,025

Cash and cash equivalents
Trade receivables and contract assets
Inventories
Investments in securities and other financial assets
Other current assets
Total current assets
Investments accounted for using the equity method
Investments in securities and other financial assets
Property, plant and equipment
Goodwill
Other intangible assets
Other non-current assets
Total non-current assets
Total assets
Short-term debt
Current portion of long-term debt
Other financial liabilities
Trade payables
Accrued expenses
Contract liabilities
Other current liabilities
Total current liabilities
Long-term debt
Retirement and severance benefits
Other non-current liabilities
Total non-current liabilities
Total liabilities

100,316
21,907
26,121200,659
41,161
787
3,849
394,800
74,686
63,775
3,045
141,506
536,306

Total Hitachi, Ltd. stockholders’ equity
Non-controlling interests
Total equity
Total liabilities and equity

284,484
251,235
535,719
1,072,025(d) Additional acquisition of shares of Hitachi Energy Ltd (hereinafter “Hitachi Energy”)
On September 30, 2022, the Company signed an agreement with ABB Ltd (hereinafter “ABB”) to acquire the remaining 19.9%of the shares of Hitachi Energy, a consolidated subsidiary of the Company in the Green Energy & Mobility segment, owned by
ABB by exercising a call option, owned by the Company.
As a result of the additional acquisition of shares on December 28, 2022, the Company’s ownership ratio of shares of Hitachi
Energy increased from 80.1% to 100% and Hitachi Energy has become a wholly owned subsidiary of the Company. The
consideration was 1,679 million U.S. dollars (243,200 million yen).
The Company derecognized the non-controlling interests and recognized the difference between the consideration and noncontrolling interests in capital surplus.

F-22

Notes to Consolidated Financial Statements(e) Sale of shares of Hitachi Construction Machinery Co., Ltd. (hereinafter “Hitachi Construction Machinery”)
On January 14, 2022, the Company entered into an agreement regarding the transfer of a part of the shares of Hitachi
Construction Machinery, a consolidated subsidiary of the Company in the Hitachi Construction Machinery segment, with HCJI
Holdings G.K., a special purpose company which is jointly invested by HCJ Holdings Ltd., a special purpose company wholly
owned by a fund that Japan Industrial Partners, Inc. manages, operates, and provides information, and Citrus Investment LLC, aspecial purpose company wholly owned by ITOCHU Corporation. In accordance with this agreement, a certain number ofshares of Hitachi Construction Machinery common stocks owned by the Company were transferred to HCJI Holdings G.K., on
August 23, 2022.
As a result of this transfer of shares, the Company’s ownership ratio of shares of Hitachi Construction Machinery decreased
from 51.4% to 25.4%, and Hitachi Construction Machinery turned into an equity-method associate of the Company. The
Company’s consideration was 182,457 million yen.
A gain on the sale of Hitachi Construction Machinery shares in the amount of 39,211 million yen was recognized in Other
income in the consolidated statement of profit or loss for the year ended March 31, 2023.
Furthermore, changes in non-controlling interests in the consolidated statement of changes in equity include derecognition of
non-controlling interest in Hitachi Construction Machinery as a result of its deconsolidation.
The following table shows the assets, liabilities, and equity of Hitachi Construction Machinery as of March 31, 2022.
Millions of yen
87,583
237,792368,267
62,193
8,421
764,256
26,662
63,197442,904
55,36758,967
29,321
676,418
1,440,674

Cash and cash equivalents
Trade receivables and contract assets
Inventories
Investments in securities and other financial assets
Other current assets
Total current assets
Investments accounted for using the equity method
Investments in securities and other financial assets
Property, plant and equipment
Goodwill
Other intangible assets
Other non-current assets
Total non-current assets
Total assets
Short-term debt
Current portion of long-term debt
Other financial liabilities
Trade payables
Accrued expenses
Contract liabilities
Other current liabilities
Total current liabilities
Long-term debt
Retirement and severance benefits
Other non-current liabilities
Total non-current liabilities
Total liabilities

103,320
81,731
51,239144,531
37,965
9,967
24,893453,646
229,487
17,62250,607
297,716
751,362

Total Hitachi, Ltd. stockholders’ equity
Non-controlling interests
Total equity
Total liabilities and equity

318,069
371,243689,3121,440,674

F-23

Notes to Consolidated Financial Statements
The following are the main Business Acquisitions and Divestitures for the year ended March 31, 2022.
(a) Acquisition of GlobalLogic Inc. (hereinafter “GlobalLogic”)
On March 31, 2021, the Company decided to acquire GlobalLogic, a leading U.S.-headquartered digital engineering service
company, in order to strengthen the digital portfolio of “Lumada” and the definitive agreement was signed among Hitachi
Global Digital Holdings LLC (hereinafter “HGDH”) which is a subsidiary located in the U.S., MergeCo H Global Inc.
(hereinafter “SPC”) which was established by HGDH for the acquisition and GlobalLogic Worldwide Holdings, Inc.
(hereinafter “GlobalLogic Worldwide Holdings”) which is the parent company of GlobalLogic.
On July 13, 2021, HGDH acquired 100% of the outstanding shares of GlobalLogic Worldwide Holdings and GlobalLogic
Worldwide Holdings and GlobalLogic have become wholly owned subsidiaries of the Company, as a result of the transaction,
including the merger of SPC with and into GlobalLogic Worldwide Holdings, which is the surviving company.
The following table summarizes the fair value of the consideration paid for GlobalLogic and the amounts of the assets acquired,liabilities assumed and goodwill recognized as of the acquisition date.
Millions of yen
11,39130,266
2,692
4,324

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

822,173
231,130
1,101,976

Current liabilities
Non-current liabilities
Total

134,272
45,454
179,726

Cash paid for the acquisition

922,250

The goodwill mainly comprises excess earning power and expected synergies arising from the acquisition.
Other intangible assets include the intangible asset representing customer relationships in the amount of 227,424 million yen.
The intangible asset representing customer relationships is measured based on assumptions such as revenue growth rates,
EBITDA ratios, revenue growth rate for existing customers, attrition rate of existing customers, and discount rate.
Acquisition related costs included in Other expenses in the consolidated statement of profit or loss for the year ended March 31,
2022 were 3,874 million yen.
In addition to this acquisition, Hitachi America Capital, Ltd. which is a subsidiary located in the U.S., repaid 1,074 million U.S.
dollars (118,554 million yen) of certain loans owed by GlobalLogic.
The operating results of GlobalLogic for the period from the acquisition date to March 31, 2022 were not material.
On a pro forma basis, revenues and net income using an assumed acquisition date for GlobalLogic of April 1, 2021 would not
differ materially from the amounts reported in the consolidated financial statements for the year ended March 31, 2022.
On April 1, 2022, HGDH changed its name to Hitachi Digital LLC.

F-24

Notes to Consolidated Financial Statements(b) Reorganization of the Global Home Appliances Business (excluding Japan)
On December 16, 2020, Hitachi Global Life Solutions, Inc. (hereinafter “Hitachi GLS”), a consolidated subsidiary of theCompany in the Connective Industries segment, and Arçelik A.S. (hereinafter “Arçelik”) signed a share purchase agreement toestablish a new joint venture company.
Based on the agreement, Hitachi GLS established a new company and transferred its global home appliances business outside ofJapan into the new company on July 1, 2021, and Hitachi GLS transferred 60% of the shares of common stock of the newcompany to Arçelik. The consideration is 350 million U.S. dollars (38,797 million yen). As a result, Hitachi GLS’s ownership
ratio of shares of the new company decreased from 100% to 40%, and the new company turned into an equity-method associateof the Company.
The following is a material Business Acquisition other than the above.
(a) Acquisition of Thales’ ground transportation systems business
On August 3, 2021, Hitachi Rail Ltd.(hereinafter “Hitachi Rail”), a consolidated subsidiary of the Company in the Green
Energy & Mobility segment, signed an agreement with Thales S.A.(hereinafter “Thales”) to acquire the ground transportation
systems business in order to expand the rail signalling systems business globally. Based on the agreement, Hitachi Rail will
acquire Thales’ ground transportation systems business which will be carved out from Thales. The transaction is subject to theusual conditions including regulatory and antitrust clearances and is expected to be completed by the second half of 2023.
Hitachi Rail agreed on an enterprise value of 1,660 million euro (approximately 241.8 billion yen) and the final purchase pricewill be determined after certain adjustments. The effects of this transaction on the Company’s consolidated financial statements
are currently being evaluated.

F-25

Notes to Consolidated Financial Statements(6) Trade Receivables and Contract Assets
The components of trade receivables and contract assets are as follows:
Millions of yen
March 31, 2023
Accounts receivable

March 31, 2022

1,972,168

2,210,590

804,500

623,766

Contract assets
Others98,319143,793

Total

2,874,987

2,978,149

Trade receivables and contract assets are stated as net of the allowance for doubtful receivables.
Others include notes receivable and electronically recorded monetary claims.
(7) Inventories
The components of inventories are as follows:
Millions of yen
March 31, 2023

March 31, 2022

Finished goods

469,770

713,421

Semi-finished goods and work in process

592,860

772,881

Raw materials

583,558

556,130

1,646,188

2,042,432

Total

For the years ended March 31, 2023 and 2022, the amounts of inventories expensed and included as cost of sales were 6,560,038
million yen and 6,398,165 million yen, respectively, and the write-downs of inventories were 60,278 million yen and 54,615
million yen, respectively.
(8) Investments Accounted for Using the Equity Method
The aggregated carrying amounts of investments accounted for using the equity method as of March 31, 2023 and 2022, and theCompany and certain subsidiaries’ share of total comprehensive income of equity-method associates and joint ventures for theyears ended March 31, 2023 and 2022 are as follows:
Millions of yen
Associates
Carrying amount of investments

Joint ventures

March 31, 2023

March 31, 2022

March 31, 2023

March 31, 2022

396,626

342,190

81,99469,011

As of March 31, 2023 and 2022, the Company and certain subsidiaries’ interests in certain joint ventures operating at a loss havethe cumulative loss exceeding the Company and certain subsidiaries’ investments, and thus the negative amounts of 1,126 million
yen and 17,067 million yen, respectively, were recognized in Other non-current liabilities.
Millions of yen
Associates
2023

Joint ventures
2022

Net income

40,911Other comprehensive income(5,857)

Total comprehensive income

35,054F-26

2023
34,576

2022

9,887

11,936
21,963

5,909
30,91744,46333,89936,826

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

Right-of-use
assetsOther

Constructionin progress

Total

Land

Buildings Machineryandandstructures
vehicles278,114718,181664,173

187,459

303,327

121,552

136,0812,408,887

2,184

8,471

34,21318,924

98,7881,879

224,288388,747(1,024)

48,10791,49840,279(1,849)6,439(183,450)-(20,441)(15,460)(5,441)(2,814)(11,634)(16,676)(1,907)(74,373)-(55,337)(137,659)(67,363)(98,514)(21,722)-(380,595)(3,858)(2,313)(5,231)(1,595)(3,254)(46)(1,093)(17,390)(1,497)(2,597)(688)(3,971)

(709)

3,837

(366)

(5,991)

Currency translation effect

3,720

26,462

37,617

5,805

15,324

3,806

10,929103,663

Other

(806)

(2,447)

852

7,097

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

256,392

723,067

679,334

183,821

312,420

148,474

175,3932,478,901

Additions

376

7,000

29,963

19,573

98,585

3,270

190,979

349,746

Transfers between
accounts

178

42,212

116,644

37,064(4,163)

7,319(199,254)-

Sales and disposals(4,536)(9,584)(4,366)(2,641)(7,020)(11,355)(3,305)(42,807)-(50,060)(135,592)(66,387)(91,971)(12,794)-(356,804)

Impairment losses(788)(7,643)(9,618)(1,339)

(371)

(50)

(1,846)(21,655)

Acquisitions anddivestitures(113,663)(202,652)(209,118)(25,091)(73,035)(142,155)(33,616)(799,330)

2,868

15,55925,234

3,838

6,992

(428)

4,028

58,091

466

4,891

914

9,230

1,495

20,051(2,718)34,329141,293522,790493,395

158,068

242,932

12,332

129,661

1,700,471

Net carrying amountMarch 31, 2021
Additions
Transfers between
accounts
Sales and disposals
Depreciation
Impairment losses
Acquisitions anddivestitures

March 31, 2022

Depreciation

Currency translation effect
Other
March 31, 2023

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

F-27

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

Right-of-use
assetsOther

Constructionin progress

Total

Land

Buildings Machineryandandstructures
vehiclesMarch 31, 2021

359,702

1,822,715

2,861,627

996,172

615,323

207,058

305,835

7,168,432

March 31, 2022

329,445

1,852,873

3,024,650

1,001,685

657,010

246,691

353,891

7,466,245

March 31, 2023

210,288

1,302,106

2,186,968

865,630

526,665

26,543

313,586

5,431,786

March 31, 2021

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

March 31, 2022

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

March 31, 2023

(68,995)(707,562)(283,733)(14,211)(183,925) (3,731,315)

Gross carrying amount

Accumulated depreciationand impairment losses(779,316) (1,693,573)

Impairment Losses Recognized for the Year Ended March 31, 2023:
The Green Energy & Mobility segment recognized impairment losses of 11,292 million yen, mainly attributable to the lower than
expected future revenue at the factory of rolling stocks in the U.K., recognizing impairment losses of 5,834 million yen on
Buildings and structures, 4,548 million yen on Machinery and vehicles and 190 million yen on Land, respectively.
Impairment Losses Recognized for the Year Ended March 31, 2022:
The IT segment (currently the Digital Systems & Services segment) recognized impairment losses of 4,071 million yen, mainly
attributable to determination of disposal of land and other assets relating to the consolidation of bases at a domestic subsidiary in
the Services & Platforms business.
The Industry segment (currently the Connective Industries segment) recognized impairment losses of 4,406 million yen, mainly
attributable to right-of-use assets relating to withdrawal from some businesses in the Industry & Distribution Solutions business.
The Automotive Systems segment recognized impairment losses of 4,362 million yen, mainly attributable to the lower than
expected future revenue on business assets of machineries at some of factories of foreign subsidiaries.

F-28

Notes to Consolidated Financial Statements(10) Goodwill and Other Intangible Assets
The following table shows the changes in the net carrying amounts of Goodwill and Other intangible assets.
Millions of yen
Other intangible assets
Software for Software for Customer
Goodwill
Technology
internal use
sale
relationships

Other

Total

1,161,210

134,770

44,819459,211

119,567

206,463

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

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

(37,244)
227,424
62,262-(14,384)739
11,250-78,65733,415(68,700)(36,802)(3,940)(780)
1,783
14,057(216)

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

154,808

49,558711,653

117,172

223,937

1,257,128(84,126)(87,966)
183,736-

24,833
4,167
56,620(51,787)(10,886)(1,696)(20,229)2,522
492

10,51586
15,141(21,052)(6,164)
(30)
(322)
1,707
11

(45,687)(15,534)
53,253-(15,703)(6,426)
10,105-88,57330,112(71,761)(33,669)(6,694)(1,865)(14,927)
12,139
1,716

123,92134,365(167,898)(23,744)(3,591)(57,438)
79,726
2,219

2,165,350

158,844

49,450703,685

105,148

227,561

1,244,688

Net carrying amountMarch 31, 2021
Internal developments
Purchases
Transfers between accounts
Amortization
Impairment losses
Disposals
Acquisitions and divestitures
Currency translation effect
Other
March 31, 2022
Internal developments
Purchases
Transfers between accounts
Amortization
Impairment losses
Disposals
Acquisitions and divestitures
Currency translation effect
Other
March 31, 2023

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

F-29

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

Software for Software for Customer
Technology
internal use
sale
relationships

Other

Total

Gross carrying amountMarch 31, 2021

1,218,173

650,657

569,118

526,285

140,995

551,304

2,438,359

March 31, 2022

2,210,512

696,925

602,142801,610

149,743

636,4712,886,891

March 31, 2023

2,229,739

699,414621,620

815,503

145,470

524,418

2,806,425

March 31, 2021

(56,963)(515,887)(524,299)(67,074)(21,428)(344,841) (1,473,529)

March 31, 2022

(56,806)(542,117)(552,584)(89,957)(32,571)(412,534) (1,629,763)

March 31, 2023

(64,389)(540,570)(572,170)(111,818)(40,322)(296,857) (1,561,737)

Accumulated amortization andimpairment losses

The Company writes off goodwill from gross carrying amount and impairment losses if it has been fully impaired.
Impairment Losses Recognized for the Year Ended March 31, 2023:
The Digital Systems & Services segment recognized impairment losses of 52,036 million yen, mainly consisting of the effect ofrepositioning the ERP on-premise business as a non-focal area, recognizing impairment losses of 31,917 million yen on goodwill,
and the lower than expected future revenue recognizing impairment losses of 9,599 million yen on software for internal use, and6,164 million yen on software for sale as a result of changes in market trends, respectively.
The Green Energy & Mobility segment recognized impairment losses of 38,411 million yen, mainly consisting of 38,394 million
yen in impairment losses on goodwill in the power grids business in the second quarter of fiscal year 2022 due to the rise indiscount rate following the significant rise in interest rates, etc. The recoverable amount was determined on the basis of value in
use, which was measured at 10,600 million U.S. dollars (1,534,986 million yen) as of September 30, 2022, the date on which
impairment losses were recognized. The calculation of the value in use, estimated future cash flows was discounted at the discountrate (before tax) of 13.2% derived from the weighted average cost of capital. Estimated future cash flows was based on businessplan for five years and beyond the period covered by the business plan were calculated taking into account growth rate of 2.8%.
The significant assumptions were revenue growth rates and gross profit ratios which reflected past experience and external
information. The growth rate was set taking into account long-term inflation rate announced by an external research organizationand the impact of interest rates incorporated in the discount rate at the time of the annual impairment test of the goodwill.
Impairment Losses Recognized for the Year Ended March 31, 2022:
The IT segment (currently the Digital Systems & Services segment) recognized impairment losses of 16,503 million yen, mainly
due to the lower than expected future revenue on goodwill and software for sale as a result of changes in market trends.
The carrying amounts of other intangible assets with indefinite useful lives as of March 31, 2022 amounted to 23,530 million yen.
The main components of such assets are acquired brands. They are assessed to have indefinite useful lives because there is noforeseeable limit to the period over which such assets are expected to generate net cash inflows for the entity.
Expenditures on research activities aimed at obtaining new scientific or technical knowledge or understanding are expensed whenincurred. Expenditures on development activities for a new or major improvement of production plan or design prior to thebeginning of commercial production or use are capitalized as an internally generated intangible asset only when such expenditures
attributable to the intangible asset can be reliably measured, it is feasible for the Company to complete the development, and it ishighly probable that the Company will obtain the future economic benefit. Otherwise, the expenditures are recognized as an
expense when incurred.
The carrying amounts of internally generated other intangible assets (at cost less accumulated amortization and impairment losses)
as of March 31, 2023 and 2022 amounted to 286,839 million yen and 260,189 million yen, respectively. These assets are mainly
included in software for internal use or software for sale.

F-30

Notes to Consolidated Financial Statements
Research and development expenditures recognized as an expense for the years ended March 31, 2023 and 2022 were 316,280
million yen and 317,383 million yen, respectively, and they are included in Cost of sales and Selling, general and administrative
expenses in the consolidated statement of profit or loss.
The Company tests goodwill acquired through business combinations for impairment by comparing the carrying amount and therecoverable amount per CGU (or group of CGUs).
The following are the group of CGUs with a significant proportion of goodwill allocated for the year ended March 31, 2023.
As of March 31, 2023, the group of CGUs with a significant proportion of goodwill allocated was the power grids business in theGreen Energy & Mobility segment, and the carrying amount of goodwill allocated to the power grids business was 524,951
million yen. Impairment losses on the goodwill of Hitachi Energy were recognized in the second quarter of fiscal year 2022.
Details of the impairment losses are described in Impairment Losses Recognized for the Year Ended March 31 2023 above.
Furthermore, the Company performed the annual impairment test of the goodwill of the power grids business in the fourth quarterof fiscal year 2022. The recoverable amount used in the annual impairment test of goodwill of the power grids business wascalculated based on the value in use and in calculation of the value in use, estimated future cash flows was discounted at thediscount rate (before tax) of 13.2% derived from the weighted average cost of capital. Estimated future cash flows was based on
business plan for five years and beyond the period covered by the business plan were calculated taking into account growth rate of
2.9%. The key assumptions were revenue growth rates and gross profit ratios which reflected past experience and external
information. The growth rate was set taking into account long-term inflation rate announced by an external research organizationand the impact of interest rates incorporated in the discount rate at the time of the annual impairment test of the goodwill.
Additional impairment losses were not recognized as the result of the annual impairment test.
As of March 31, 2023, the group of CGUs with a significant proportion of goodwill allocated was the Services & Platforms
business unit in the Digital Systems & Services segment, and the carrying amount of goodwill allocated to the Services &Platforms business unit was 1,238,239 million yen. The recoverable amount used in the impairment test of goodwill of theServices & Platforms business unit was calculated based on the value in use and in calculation of the value in use, estimated future
cash flows was discounted at the discount rate (before tax) of 11.1% derived from the weighted average cost of capital. Estimatedfuture cash flows was based on business plan for eight years and beyond the period covered by the business plan were calculated
taking into account growth rate of 2.9%. The key assumptions were revenue growth rates and EBIT ratios which reflected pastexperience and external information. The Company considered that it is appropriate to reflect the medium- to long-term growthrate, which is specific to main business of the Services & Platforms business unit, to business plan and set the period of thebusiness plan for eight years.
The following are the group of CGUs with a significant proportion of goodwill allocated for the year ended March 31, 2022.
As of March 31, 2022, the group of CGUs with a significant proportion of goodwill allocated was the power grids business in the
Energy segment (currently the Green Energy & Mobility segment), and the carrying amount of goodwill allocated to the power
grids business was 513,616 million yen. The recoverable amount used in the impairment test of goodwill of the power grids
business for the year ended March 31, 2022 was calculated based on the value in use and in calculation of the value in use,estimated future cash flows was discounted at the discount rate (before tax) of 10.6% derived from the weighted average cost ofcapital. Estimated future cash flows was based on business plan for five years and beyond the period covered by the business plan
were calculated taking into account growth rate of 2.3%. The key assumptions were revenue growth rates and gross profit ratios
which reflected past experience and external information.
As of March 31, 2022, the group of CGUs with a significant proportion of goodwill allocated was the Services & Platforms
business unit in the IT segment (currently the Digital Systems & Services segment), and the carrying amounts of goodwill
allocated to the Services & Platforms business unit was 1,107,575 million yen. The recoverable amount used for the impairment
test of goodwill of the Services & Platforms business unit for the year ended March 31, 2022 was calculated based on the fairvalue less costs of disposal. The fair value less costs of disposal was calculated by the market approach based on EV/EBITDA
valuation multiples of similar companies that were comparable to the Services & Platforms business unit. The fair value hierarchyclassification was level 3 measured by unobservable inputs.
The Company considers it unlikely for the carrying amount of each CGU (or group of CGUs), together with allocated goodwill,
would exceed the respective recoverable amounts of the CGU (or group of CGUs) even if the key assumptions used for the
impairment test changed within a reasonable range.

F-31

Notes to Consolidated Financial Statements(11) Leases(a) Lessee
The Company and certain subsidiaries use leased facilities and equipment, including buildings, machinery and equipment andvehicles.
The following table shows the carrying amount of right-of-use assets at the end of March 31, 2023 and 2022 by class ofunderlying asset.
Millions of yen
Class of underlying asset
Buildings
andstructures

Tools,
furnitureandfixtures

Machineryandvehicles

Land

Total

Other

March 31, 2022

224,393

32,01916,09439,492

1,081

313,079

March 31, 2023

179,878

22,20016,813

22,4682,001

243,360

The following table shows the expenses relating to leases and cash outflow for the years ended March 31, 2023 and 2022.
Millions of yen
2023

2022

Depreciation for right-of-use assets
Buildings and structures

74,22976,495

Machinery and vehicles

9,449

12,194Tools, furniture and fixtures

6,928

7,382

Land

1,328

2,389

Other

284

220

92,21898,680Total
Interest charges on lease liabilities

5,151

5,606

Expense relating to short-term leases, etc.

26,192

26,416

Expenses relating to leases

123,561

130,702
Millions of yen

2023
Total cash outflow for leases

2022
128,590

Additions of right-of-use assets for the years ended March 31, 2023 and 2022 are disclosed in note 9.
Maturity analysis of lease liabilities at the end of March 31, 2023 and 2022 are disclosed in note 25.

F-32

141,292

Notes to Consolidated Financial Statements(b) Lessor
The Company and certain subsidiaries lease certain assets such as buildings, machines, and equipment under finance andoperating lease arrangements.
The following table shows lease income for the years ended March 31, 2023 and 2022.
Millions of yen
2023

2022

Lease income from finance leases

718

1,021

Lease income from operating leases

32,46055,777

Total lease income

33,17856,798

A significant component of lease income from finance leases represents finance income on the net investment in the lease.
(i) Finance leases
The following table shows the maturity analysis of the finance lease payments receivable as of March 31, 2023 and 2022.
Millions of yen
March 31, 2023

March 31, 2022

Undiscounted lease payments to be received
Within 1 year

10,05543,007After 1 year but not more than 5 years

10,09032,237More than 5 years

6,225

3,871

Total

26,37079,115

Unearned finance income relating to the lease payments receivable(3,087)(5,231)

Net investment in finance leases

23,28373,884(ii) Operating leases
The following table shows the maturity analysis of the undiscounted operating lease payments to be received as of March 31,
2023 and 2022.
Millions of yen
March 31, 2023

March 31, 2022

Within 1 year

198

2,554

After 1 year but not more than 5 years

24

3,040

More than 5 years

-

178

222

5,772

Total

F-33

Notes to Consolidated Financial Statements(12) Deferred Taxes and Income Taxes
The components of income taxes recognized in the consolidated statement of profit or loss and deferred taxes recognized in the
consolidated statement of comprehensive income are as follows:
Millions of yen
2023

2022

Income taxes
Current tax expense

280,420

158,988(76,126)

89,603

Deferred tax expense
Temporary differences originated and reversed
Changes in realizability of deferred tax assets
Total(88,193)(80,122)

116,101

168,469

13,528(5,834)

Deferred taxes recognized in OCI
Net changes in financial assets measured at fair value through
OCI
Remeasurements of defined benefit plans(23,224)

9,466

Net changes in cash flow hedges

3,899

5,254

Foreign currency translation adjustments(2,782)

3,702

Total

(8,579)12,588The Company and its Japanese subsidiaries were subject to a national corporate tax, an inhabitant tax and business tax, for theyears ended March 31, 2023 and 2022, which in the aggregate resulted in a combined statutory income tax rate of approximately
30.5%.
The Company and a part of Japanese subsidiaries has applied a group tax sharing system from the year ended March 31, 2023. A
part of foreign subsidiaries file consolidated income tax returns in certain jurisdictions.
Changes in realizability of deferred tax assets for the year ended March 31, 2022 includes the decrease of 37,136 million yen due
to recognition of deferred tax assets mainly for the unused tax loss carryforwards related to the acquisition of GlobalLogic. And,
as a result of the reevaluation of a realizability of deferred tax assets in line with an improvement of long-term forecast related tofuture taxable income of the Company and its Japanese subsidiaries which apply the group tax sharing system, for the year ended
March 31, 2023, the Company and its Japanese subsidiaries recognized deferred tax assets on a part of deductible temporary
differences which had previously been unrecognized.

F-34

Notes to Consolidated Financial Statements
Reconciliations between the combined statutory income tax rate and the effective income tax rate are as follows:
2023

2022

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

30.5%

30.5%

(2.0)

(1.5)

0.9

2.6

(9.4)

(0.6)

1.2
3.1
(9.1)
(3.1)
2.1

0.7
0.2
(9.5)
(3.1)
0.8

14.2%

20.1%

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

Changes in deferred tax assets and liabilities are as follows:
Millions of yen
March 31, 2023

March 31, 2022

Deferred tax assets, net at beginning of year

(44,897)

10,879

Recognized in profit or loss
Recognized in OCI
Acquisitions, divestitures and others

164,319
8,579(11,614)(9,481)(12,588)(33,707)

Deferred tax assets, net at end of year

116,387(44,897)

Significant components of the deferred tax assets and liabilities are as follows:
Millions of yen
Consolidated statement offinancial position
March 31,2023
Deferred tax assets
Retirement and severance benefits
Accrued expenses
Depreciation of property, plant andequipment
Net operating loss carryforwards
Net intercompany profits oninventories, P.P.E. and others
Deferred revenues
Other

March 31,2022

Consolidated statement of
profit or loss
2023

2022

65,082
180,488

19,537
142,349

45,642
43,833(15,959)
10,192

12,253

5,868

2,290

(4,546)

62,981

74,316(4,478)24,69423,95525,3403,221

602

22,91757,964

17,74561,928

4,379
20,6691,449
16,424

Total deferred tax assets

425,640

347,083

115,556

32,856

Deferred tax liabilities
Accelerated depreciation of P.P.E.
Investments in securities
Intangible assets
Other(1,489)(102,897)(196,534)(8,333)(6,480)(152,766)(213,715)(19,019)90
33,423
19,114(3,864)

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

Total deferred tax liabilities(309,253)(391,980)

48,763(42,337)

Net deferred tax assets

116,387(44,897)

164,319(9,481)F-35

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

Other non-current assets
Other non-current liabilities
Total

March 31, 2023
271,567(155,180)

Millions of yen
March 31, 2022
128,347(173,244)

116,387(44,897)

Deferred tax liabilities are not recognized for excess amounts over the tax basis of investments in subsidiaries and investments
accounted for using the equity method that are considered to be reinvested indefinitely, for such differences will unlikely reversein the foreseeable future. The temporary differences related to undistributed earnings of subsidiaries for which deferred tax
liabilities are not recognized were 849,240 million yen and 853,870 million yen, respectively, as of March 31, 2023 and 2022.
In assessing the realizability of deferred tax assets, the Company considers whether it is more likely than not that some portion or
all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generationof future taxable income in specific tax jurisdictions during the periods in which these deductible differences become deductible.
Although realization is not assured, the Company carries out an assessment of the scheduled reversals of deferred tax liabilities
and projected future taxable income, including the execution of certain available tax strategies if needed. Based on these factors,
the Company considers it is more likely than not it will realize the benefits of these deductible differences as of March 31, 2023.
Deductible temporary differences and net operating loss carryforwards for unrecognized deferred tax assets are as follows:
Millions of yen
March 31, 2023

March 31, 2022

Deductible temporary differences

1,012,587

1,472,491

Net operating loss carryforwards

623,273

639,614

1,635,860

2,112,105

Total

Net operating loss carryforwards for unrecognized deferred tax assets will expire as follows:
Millions of yen
March 31, 2023

March 31, 2022

Within 5 years

119,265

148,530

After 5 years but not more than 10 years

201,007

195,641More than 10 years or do not expire

303,001

295,443

Total

623,273

639,614

F-36

Notes to Consolidated Financial Statements(13) Trade Payables
The components of trade payables are as follows:
Millions of yen
March 31, 2023

March 31, 2022

1,463,971

1,606,006

Others84,526

148,627

Total

1,548,497

1,754,633

Accounts payable

Others include electronically recorded monetary claims and notes payable.
(14) Provisions
Changes in the balance and components of provisions for the year ended March 31, 2023 are as follows:
Millions of yen

March 31, 2022

Provisions for
Provisions related
Asset retirement
Product warranty expected losses on
to restructuring
obligations
provisions
construction(structural reform)
contracts
32,6858,182
69,64790,758

Other
provisions
132,388

Additions

2,406

9,323

24,74670,71526,964

Utilized(1,547)(10,211)(19,666)(68,113)(26,646)

Acquisitions and divestitures(3,293)(31)(3,924)-(5,794)Currency translation effects,
and others

(208)

659

537

1,592

3,544

March 31, 2023

30,043

7,922

71,34094,952

130,456

Current

1,429

7,582

59,734

93,412

115,800

Non-current

28,614340

11,606

1,540

14,656

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

F-37

Notes to Consolidated Financial Statements(15) Employee Benefits(a) Retirement and Severance Benefits
The Company and certain subsidiaries have defined benefit pension plans and severance lump-sum payment plans, as well as
defined contribution pension plans to provide retirement and severance benefits to substantially all employees.
The principal defined benefit pension plan is a corporate pension plan based on the Japanese Defined Benefit Corporate
Pension Plan Act (the Act). Additionally, certain corporate pension plans adopt cash balance plans. Benefits under cash
balance plans are calculated per each plan participant with a notional account balance, based on the contribution credits per
salary level and interest credits based on market interest rate trends.
Pursuant to the Act, the Company has an obligation to make contributions to the Hitachi Pension Fund (the Fund) thatmanages the corporate pension plans. The directors of the Fund are responsible for faithfully executing operations incompliance with laws and regulations, and any orders issued by the Minister of Health, Labor and Welfare, and the directorgenerals of Regional Bureaus of Health and Welfare based on laws and regulations, as well as the rules of the Fund and theresolution of the Board of Representatives. The Fund prohibits the directors from acts that constitute conflicts of interests inthe management and operation of the funds contributed for benefit payments (the contributions). If breached, the board
members are jointly and severally held responsible.
The Fund is legally independent from the Company. The Board of Representatives comprises an equal number ofrepresentatives selected by the company and certain subsidiaries and representatives from the employee side. The proceedingsof a Board of Representatives are decided by a majority vote of the members attending. In case of a tied vote, the chairman has
the power to decide, except for exceptionally significant matters.
The actual management of the contributions is conducted by trustees in accordance with rules approved by the Board ofRepresentatives. The Fund is responsible for managing the contributions to safely and efficiently manage the contributions by
establishing the basic management policy of the contributions and preparing the management guidance in line with the policy
submitted to the trustees.
The Company has future obligations to make contributions as defined by the Fund. The amount of contribution is periodicallyreviewed to the extent allowed by law.
Since the Company and a consolidated subsidiary of the Company introduced a risk-sharing corporate pension plan on April 1,
2019, for current employees participating in the defined benefit pension plan managed by the Hitachi Pension Fund, the samehas been promoted to the other subsidiaries that participate in pension plan managed by the Hitachi Pension Fund. On April 1,
2022, newly 43 subsidiaries have changed their pension plans for current employees from defined benefit pension plan to risksharing corporate pension plan, and now the revision of Hitachi group pension plan managed by the Hitachi Pension Fund has
been almost completed. Under this plan, a risk reserve contribution is determined in advance in accordance with the rules
governing the plan, and the pension benefits are adjusted annually based on the financial position of the plan to maintainbalanced finance.
The risk-sharing corporate pension plan introduced by the Company and Hitachi Industrial Products, Ltd., is a mechanism inwhich management and labor unions share risks. At the time of the transfer to this system, the employer bears certain risks bymaking fixed contributions, including contributions to the risk-sharing corporate pension plan, in accordance with agreements
between management and labor unions. In the event of a financial imbalance, the plan participants also bear certain risks byadjusting benefits. Under the previous defined benefit pension plan, employers were required to make additional contributionsin the event of a funding shortfall. The risk-sharing corporate pension plan, however, measures the risks that may arise in the
future, and sets contributions to the risk-sharing corporate pension plan within the scope of the agreement between
management and labor unions in advance to balance contributions. The amount equivalent to the contributions made to risksharing corporate pension plan determined based on the level of the fiscal deterioration risk, which is calculated at the time oftransfer, shall be contributed to the plan on a straight-line basis over five years from the date of transfer, and no additional
contributions are required.

F-38

Notes to Consolidated Financial Statements
In terms of the corresponding accounting treatment for retirement benefits, risk-sharing corporate pension plans, for which anentity accepts contribution obligations to the extent stipulated in the rules but has no further obligations to make any additional
contributions, are classified as defined contribution plans. The risk-sharing corporate pension plans managed by the Hitachi
Pension Fund impose no additional contribution obligations, so the risk-sharing corporate pension plans are also classified as
defined contribution plans. Therefore, since 43 subsidiaries have newly introduced the risk-sharing corporate pension plans on
April 1, 2022, the difference between the defined benefit obligations related to the portion transferred to the revised plan andthe amount of assets transferred to the revised plan corresponding to the decrease in defined benefit obligations, 51,185
million yen, was recognized as a settlement loss in Other expenses in the consolidated statement of profit or loss. In addition,in the consolidated statement of financial position, Other non-current assets decreased by 49,334 million yen, and Retirement
and severance benefits increased by 1,851 million yen, respectively. Excluding the settlement loss in above, the impacts ofchanging pension plans on profit or loss for the fiscal year ended March 31, 2023 are not material.
The severance lump-sum payment plans provide a lump-sum payment at the time of retirement, and the benefit is calculated
based on factors such as the salary level at retirement and the years of service. The Company and certain subsidiaries have an
obligation to pay benefits directly to beneficiaries.
Defined contribution plans require companies to make contributions over a participation period, and plan participants
themselves are responsible for the management of plan assets. Benefits are paid by the trustee, and the Company and certain
subsidiaries’ responsibility is limited to making contributions.

F-39

Notes to Consolidated Financial Statements
Changes in the present value of defined benefit obligations and the fair value of plan assets for the years ended March 31,
2023 and 2022 are as follows:
Millions of yen
March 31, 2023

March 31, 2022

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

1,879,432
33,847
10,629(85)(32,352)(89,487)(272,034)(3,114)(3,901)(498,477)
29,112
1,053,570

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

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

1,598,966
7,845(15,176)
14,265
3,580(66,084)(208,104)(830)(3,886)(549,662)
19,150800,064

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

8,186

8,692

261,692

289,158

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

The components of actuarial gain or loss are as follows:
Millions of yen
March 31, 2023
Arising from changes in financial assumptions
Arising from changes in demographic assumptions
Other

35,015140(2,803)

March 31, 2022
33,091(2,799)4,931

The Company and certain subsidiaries remeasure the defined benefit obligations and plan assets at the end of the fiscal year.
The discount rates used in actuarial calculation of defined benefit obligations are as follows:
Percentage
March 31, 2023
Discount rate

1.2

F-40

March 31, 2022
0.8

Notes to Consolidated Financial Statements
If, at March 31, 2023, the discount rate rose by 0.5%, the defined benefit obligations would decrease by 44,496 million yen,
and if the discount rate decreased by 0.5%, the defined benefit obligations would increase by 48,584 million yen.
The sensitivity analysis is based on an assumption that all other variables other than the one analyzed are held constant; inreality, changes in other assumptions may impact the outcome of the analysis.
The Fund’s plan asset management is based on the safe and efficient management of the contributions, diversified investments
and determination of the investment ratio that should be sustained over the long term. The Fund seeks to maintain current
value of assets sufficient for future obligations. A target rate of return is established to ensure a stable long term rate of returnon assets. A diversified investment strategy is carried out while a target asset allocation is established to achieve the target rateof return. The target asset allocation is based on the expected rate of return by each class of asset, the standard deviation of therate of return and the correlation coefficient among the assets. If market values fluctuate exceeding certain levels, theinvestment ratio is adjusted to the target allocation ratio in order to control risks.
In selecting trustees or asset management companies, the Fund takes into account appropriate quantitative and qualitativeevaluations. The Fund also presents its management policies to the trustees or asset management companies, and periodicallyreceives asset management reports.
The fair values of plan assets invested as of March 31, 2023 and 2022 are as follows:
Millions of yen
March 31, 2023

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

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

1,178

168

1,346

3,203
30,694
3,085
38,160200
5,783
23,426
13,96379,720604,746
33,898
761,904

3,403
5,783
23,426
13,96330,69479,720604,746
36,983800,064

Total

Millions of yen
March 31, 2022

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

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

10,631

339

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

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

F-41

Total

Notes to Consolidated Financial Statements
As of March 31, 2023, investments in equity were allocated to approximately 10% in stocks listed in Japan and 90% in stocks
listed in foreign markets. As of March 31, 2022, investments in equity were allocated to approximately 40% in stocks listed inJapan and 60% in stocks listed in foreign markets.
As of March 31, 2023, Japanese government bonds made up approximately 2% of the government bonds and municipal debt
securities, the majority of which were Japanese national bonds. As of March 31, 2022, Japanese government bonds made up
approximately 1% of the government bonds and municipal debt securities, the majority of which were Japanese nationalbonds. Foreign public bonds, as of March 31, 2023, took approximately 98%, the majority of which were foreign nationalbonds, and as of March 31, 2022, foreign public bonds took approximately 99%, the majority of which were foreign nationalbonds.
As of March 31, 2023, investments in corporate bonds and other debt securities were allocated to 100% in foreign corporate
bonds and debt instruments. As of March 31, 2022, investments in corporate bonds and other debt securities were allocated toapproximately 4% in Japanese corporate bonds and debt instruments, and 96% in foreign corporate bonds and debt
instruments.
Hedge funds primarily consist of investments in relative value strategy funds, event driven funds, equity long or short funds,
and macroeconomic and Commodity Trading Advisor (CTA) funds.
Securitization products primarily consist of investments in equity of Japanese real estate funds, and debt and equity ofcollateralized loan obligations (CLO).
Commingled funds represent pooled institutional investments. As of March 31, 2023 and 2022, commingled funds wereallocated to 30% in listed stocks, 40% in government bonds, 10% in corporate bonds and other debt securities, 10% in cash
and cash equivalents and 10% in other assets.
Funding by the Fund is conducted by taking into account various factors such as funded status and actuarial calculations. For
the purpose of maintaining balanced finance into the future, the bylaws of the Fund require recalculation of the contribution
amounts at the end of fiscal year every five years. Basic assumptions (expected interest rates, mortality rates, withdrawal rate,etc.) are reviewed to recalculate the appropriate level of contribution.
The amount of contributions expected to be paid by the Company and its subsidiaries to the plan assets for the year ending
March 31, 2024 is 11,742 million yen.
The weighted average duration (expected average maturity) of defined benefit obligations as of March 31, 2023 and 2022
were 9.8 years and 12.1 years, respectively.
Contributions made to defined contribution plans and expensed in profit or loss in the years ended March 31, 2023 and 2022
were 44,087 million yen and 44,123 million yen, respectively.
In addition, contributions made to the risk-sharing corporate pension plan and expensed in profit or loss in the years ended
March 31, 2023 and 2022 were 39,629 million yen and 18,011 million yen, respectively. The amount of the contributions to
the risk-sharing corporate pension plan expected to be paid by the Company and its subsidiaries for the year ending March 31,
2024 is 12,308 million yen.
(b) Employee Benefit Expenses
The aggregated amounts of employee benefit expenses including salary recognized in the consolidated statement of profit orloss for the years ended March 31, 2023 and 2022 were 2,937,094 million yen and 2,742,701 million yen, respectively.

F-42

Notes to Consolidated Financial Statements(16) Equity(a) Common Stock
Number of shares
March 31, 2023
Total number of authorized shares

March 31, 2022

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

2,000,000,000
Capital amount(Millions of yen)March 31, 2021

967,885,277

460,790

March 31, 2022

968,234,877

461,731

March 31, 2023

938,083,077

462,817

Note: For the year ended March 31, 2022, the Company issued new shares as restricted stock compensation, and the total number
of issued shares increased by 349,600 shares on June 15, 2021.
For the year ended March 31, 2023, the Company issued new shares as restricted stock compensation, and the total number
of issued shares increased by 337,000 shares on June 15, 2022, meanwhile the Company cancelled treasury stock, and thetotal number of issued shares decreased by 30,488,800 shares on December 14, 2022 to 938,083,077 shares.
Shares issued by the Company are non-par value common stock. The issued shares above include treasury stock. The changes
in treasury stock for the years ended March 31, 2023 and 2022 are as follows:
Treasury stock(Number of shares)
March 31, 2021

1,055,799(Millions of yen)
3,493

Acquisition of treasury stock

178,413

251

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

998,7213,002

30,084,761

200,212

March 31, 2022
Acquisition of treasury stock
Sales of treasury stock
Cancellation of treasury stock
March 31, 2023

(83,852)(258)(30,488,800)(199,417)

510,830

3,539

The number of shares of the Company held by the Company’s associates as of March 31, 2023 and 2022 were 31,100 sharesand 33,200 shares, respectively.
(b) Surplus(i) Capital Surplus
The Companies Act of Japan mandates that at least half of paid-in capital be appropriated as common stock and the rest be
appropriated as legal reserve within capital surplus.
The changes in capital surplus include the effect of changes in the Company’s ownership interest in its consolidated
subsidiaries and cancellation of treasury stock. For the year ended March 31, 2022, the changes in capital surplus weremainly the decrease due to a put option on non-controlling interests recognized by the Company and its subsidiaries.
For the year ended March 31, 2023, the changes in capital surplus were mainly the decrease due to the cancellation oftreasury stock.
In the event that the balance of capital surplus at the end of a period is negative, the Company transfers from retained
earnings to ensure a capital surplus is maintained.
(ii) Retained Earnings
The Companies Act of Japan requires that ten percent of retained earnings appropriated for dividends be retained until the
total amount of earned reserves included in capital reserve and retained earnings reaches a quarter of the nominal value ofcommon stock. Earned reserves may be available for dividends by resolution at the shareholders’ meeting.

F-43

Notes to Consolidated Financial Statements(17) Accumulated Other Comprehensive Income (AOCI) and Other Comprehensive Income (OCI)
Components of AOCI, net of related tax effects, presented in the consolidated statement of changes in equity, and changes in eachcomponent for the years ended March 31, 2023 and 2022 are as follows:
Millions of yen
2023

2022

Foreign currency translation adjustments
Balance at beginning of year

444,651

110,727

OCI, net of reclassification

166,238

322,062

Net transfer of non-controlling interests

24,371

11,862

Balance at end of year

635,260

444,651

Balance at beginning of year

105,675

80,300OCI

38,25426,092Remeasurements of defined benefit plans

Net transfer of non-controlling interests

41

264

Reclassified into retained earnings(56,003)(981)

Balance at end of year

87,967

105,675

Balance at beginning of year

110,109

135,022

OCI

22,260(11,461)

(47)

428

Net changes in financial assets measured at fair value through OCI

Net transfer of non-controlling interests
Reclassified into retained earnings(16,967)(13,880)

Balance at end of year

115,355

110,109

Balance at beginning of year

(21,172)(52,488)

OCI, net of reclassification

Net changes in cash flow hedges
29,94337,845

Others(961)(6,529)Balance at end of year

7,810

(21,172)

Balance at beginning of year

639,263

273,561

OCI, net of reclassification

256,695

374,538

Net transfer of non-controlling interests

24,365

12,554

Reclassified into retained earnings(72,970)(14,861)

Total AOCIOthersBalance at end of year

F-44

(961)

(6,529)846,392

639,263

Notes to Consolidated Financial Statements
The following shows a reconciliation of OCI, including non-controlling interests, to profit or loss items and deferred income tax
effect per components of OCI during the years ended March 31, 2023 and 2022.
Millions of yen
2023
Before tax

Tax effect

After tax

OCI arising during the year:
Foreign currency translation adjustments

308,396(2,276)306,120

Remeasurements of defined benefit plans

16,97823,22440,202

Net changes in financial assets measured at fair value through OCI

35,012(13,528)

21,484

Net changes in cash flow hedges(4,584)

6(4,578)

Share of OCI of investments accounted for using the equity method

27,996(6,747)

21,249

Total

383,798

679

384,477

Foreign currency translation adjustments(78,818)

5,058(73,760)

Net changes in cash flow hedges

15,748(3,905)

11,843

Share of OCI of investments accounted for using the equity method(5,150)7(5,143)

Total(68,220)

1,160(67,060)

Foreign currency translation adjustments

229,5782,782

232,360

Remeasurements of defined benefit plans

16,97823,22440,202

Net changes in financial assets measured at fair value through OCI

35,012(13,528)

21,484

Net changes in cash flow hedges

11,164(3,899)7,265

Share of OCI of investments accounted for using the equity method

22,846(6,740)

16,106

Total

315,578

1,839

317,417

Reconciliation of OCI to profit or loss:

OCI, net of reclassification adjustments:

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

58,178Remeasurements of defined benefit plans

2,627

Net changes in financial assets measured at fair value through OCI
Net changes in cash flow hedges

56
(139)

Total

60,722

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

174,182

Remeasurements of defined benefit plans

37,575

Net changes in financial assets measured at fair value through OCI

21,428Net changes in cash flow hedges

7,404

Share of OCI of investments accounted for using the equity method

16,106

Total

256,695

F-45

Notes to Consolidated Financial Statements

Millions of yen
2022
Before tax

Tax effect

After tax

OCI arising during the year:
Foreign currency translation adjustments

396,113(3,702)392,411

Remeasurements of defined benefit plans

40,261(9,466)30,795

Net changes in financial assets measured at fair value through OCI(17,058)

5,834(11,224)

Net changes in cash flow hedges

13,426(5,213)

8,213

Share of OCI of investments accounted for using the equity method

32,730(2,881)

29,849

Total

465,472(15,428)450,044

(922)

-

(922)

0

(41)

(41)

Share of OCI of investments accounted for using the equity method

12,126(1,171)

10,955

Total

11,204(1,212)

9,992

Foreign currency translation adjustments

395,191(3,702)

391,489

Remeasurements of defined benefit plans

40,261(9,466)30,795

Net changes in financial assets measured at fair value through OCI(17,058)

5,834(11,224)

Net changes in cash flow hedges

13,426(5,254)

8,172

Share of OCI of investments accounted for using the equity method

44,856(4,052)40,804

Total

476,676(16,640)

460,036

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

OCI, net of reclassification adjustments:

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

81,063Remeasurements of defined benefit plans

4,595

Net changes in financial assets measured at fair value through OCI(58)

Net changes in cash flow hedges

(102)

Total

85,498

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

310,426

Remeasurements of defined benefit plans

26,200Net changes in financial assets measured at fair value through OCI(11,166)

Net changes in cash flow hedges

8,274

Share of OCI of investments accounted for using the equity method

40,804

Total

374,538

F-46

Notes to Consolidated Financial Statements(18) Dividends
Dividends paid on the Company’s common stock for the years ended March 31, 2023 and 2022 are as follows:
Cash dividends(millions of yen)

Appropriation from

Cash dividends
per share (yen)The Board of Directors
on October 28, 2022

66,277Retained earnings

The Board of Directors
on May 13, 2022

62,870

The Board of Directors
on October 27, 2021
The Board of Directors
on May 12, 2021

Decision

Record date

Effective date

70.0

September 30, 2022

November 29, 2022

Retained earnings

65.0

March 31, 2022

June 2, 2022

58,035Retained earnings

60.0

September 30, 2021

November 29, 2021

53,175Retained earnings

55.0

March 31, 2021

June 2, 2021

The dividends on the Company’s common stock whose record date falls in the year ended March 31, 2023 and the effective datefalls in the next fiscal year is as follows:

Decision
The Board of Directors
on May 12, 2023

Cash dividends(millions of yen)

Appropriation from

Cash dividends
per share (yen)70,317Retained earnings

75.0

F-47

Record date

Effective date

March 31, 2023

June 2, 2023

Notes to Consolidated Financial Statements(19) Stock-based Compensation
The Company introduced a restricted stock compensation plan as stock-based compensation in place of the stock option plan andgrants shares of restricted stock in place of the existing stock options as stock-based compensation from the year ended March 31,
2020. In addition, the Company introduced a restricted stock unit plan and grants restricted stock units from the year ended March
31, 2021.
Stock-based compensation expenses recognized for the years ended March 31, 2023 and 2022 were 1,699 million yen and 1,404
million yen, respectively.
(a) Restricted stock compensation plan
In accordance with the restricted stock compensation plan (hereinafter “Plan”) to be introduced by the Company, Executive
Officers and Corporate Officers of the Company or any of its subsidiaries (hereinafter “Eligible Persons”) will receive shares ofcommon stock to be newly issued or disposed by the Company by making contributions in kind of the monetary compensation
claims which are granted in order to allot the shares of restricted stock to the Eligible Persons. In addition, with respect to theissuance or disposition of shares of common stock of the Company under the Plan, the Company and each Eligible Person
executes an agreement on allotment of restricted stock (hereinafter “Allotment Agreement”).
Outline of the Allotment Agreement(1) Transfer restriction period
From the payment date relating to the issuance or disposition of the shares of restricted stock to the date on which the Eligible
Person ceases to be an Executive Officer, Director or Corporate Officer of the Company or any of its subsidiaries.
(2) Acquisition by the Company without consideration
If certain events set out in the Allotment Agreement occur, the Company will acquire the shares without any consideration
promptly on or after a date notified to Eligible Persons. The Company will also acquire the shares for which the transfer
restrictions are definitely not lifted at the time of such determination, without any consideration.
The outlines of issuance for the years ended March 31, 2023 and 2022 are as follows.
March 31, 2023

March 31, 2022

Issuance dateJune 15, 2022

June 15, 2021

Number of shares

303,000 shares

332,000 shares

6,448 yen

5,384 yen

Issue price per share [1] [2][1] The issue price for the year ended March 31, 2023 is the closing price per share for the Company’s common stock on May 10,2022 (preceding business day of the date upon the decision by the President regarding the issuance of new shares) in the Prime
Market of the Tokyo Stock Exchange, Inc.
[2] The issue price for the year ended March 31, 2022 is the closing price per share for the Company’s common stock on May 17,
2021 (preceding business day of the date upon the decision by the President regarding the issuance of new shares) in the firstsection of the Tokyo Stock Exchange, Inc.
(b) Restricted stock unit (hereinafter “RSU”) plan
In accordance with the RSU plan to be introduced by the Company, the Company’s non-Japanese Executive Officers andCorporate Officers (hereinafter “Eligible Persons”) will be granted restricted stock units (hereinafter “RSUs”) corresponding to
the number of shares of the Company’s common stock (hereinafter “Shares to be Delivered”) set in advance for each Eligible
Person and, over three fiscal years after granting, one-third of the RSUs will become vested after the end of each fiscal year andthe Shares to be Delivered and cash for the vested RSUs will be delivered.
The Eligible Persons will receive shares of common stock to be newly issued or disposed by the Company by making
contributions in kind of the monetary compensation claims which are granted after the end of each fiscal year in order to allot
the Shares to be Delivered to the Eligible Persons.
If the Eligible Persons retire due to expiration of their term of office, death or other legitimate reasons recognized by theCompany’s Compensation Committee, they will receive the Shares to be Delivered and cash corresponding to the portion of
RSUs granted reflecting the period from the granting date until such retirement.

F-48

Notes to Consolidated Financial Statements(c) Stock option plan
Under the Company’s stock option plan, Executive Officers and Corporate Officers are granted the right to purchase shares ofcommon stock of the Company (hereinafter “Stock Acquisition Rights”).
Details of the Company’s stock option plan for the years ended March 31, 2023 and 2022 are as follows.
Fiscal Year of Issuance and Name

Grant Date

Exercise period

April 11, 2018

From April 27, 2018
to April 26, 2048

April 6, 2017

From April 27, 2017
to April 26, 2047

June 29, 2016

From July 15, 2016
to July 14, 2046

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

Conditions for the exercise of Stock Acquisition Rights(1) During the above exercise period, a holder of Stock Acquisition Rights may exercise all the Stock Acquisition Rights
determined in accordance with the provisions of paragraph (2) or (3) below in a lump sum only within ten days (in case thelast day is not a business day, the following business day) from the day immediately following the date on which he/sheceases to be an Executive Officer, a Director or a Corporate Officer of the Company.
(2) The number of Stock Acquisition Rights that a holder of Stock Acquisition Rights may exercise, shall be determined basedon the ratio of (i) the total shareholder return (hereinafter “TSR”) for shares of the Company for three years from the
beginning of the fiscal year in which the date of allotment of the Stock Acquisition Rights falls (hereinafter “Waiting
Period”) to (ii) the growth rate of TOPIX (Tokyo Stock Price Index) for the same period (hereinafter “TSR/TOPIX Growth
Rate Ratio”): market condition.
(3) The number of Stock Acquisition Rights, that a holder of Stock Acquisition Rights who has left his/her position in the
Company before the end of the Waiting Period (hereinafter “Resignee”) may exercise, shall be determined by reducing thenumber of Stock Acquisition Rights allotted to him/her in proportion to the term of office of the Resignee in the Waiting
Period, and applying the TSR/TOPIX Growth Rate Ratio for the period from the beginning of the fiscal year in which thedate of allotment of the Stock Acquisition Rights falls to the time of resignation in accordance with the provision ofparagraph (2) above.
A summary of stock option activity for the years ended March 31, 2023 and 2022 is as follows. The number of stock options istranslated into their equivalent number of shares (20 shares per stock option).

Outstanding at beginning of year

2023
2022
Weighted average
Weighted average
Number of shares
Number of shares
exercise priceexercise price(shares)(shares)
(yen)
(yen)
731,540
499,000
1
1

Granted

-

-

-

1

-

-

(60)

(81,660)

1(232,480)

1

-

-

-

-

Outstanding at end of year

417,3401

499,000

1

Exercisable at end of year

-

-

-

-

Forfeited [1]Exercised
Expired[1] Including the Stock Acquisition Rights which became non-exercisable because of the market condition.
The weighted average share prices at the date of exercise for the years ended March 31, 2023 and 2022 were 5,849.0 yen and
5,358.5 yen.
The range of exercise price as of March 31, 2023 and 2022 was 1 yen. The weighted average remaining contractual lives of stock
options outstanding as of March 31, 2023 and 2022 were 24.2 years and 25.2 years, respectively.

F-49

Notes to Consolidated Financial Statements(20) Revenues(a) Disaggregation of revenue
The Company derives revenues primarily from contracts with customers. The following table shows the disaggregation ofrevenue attributable to each reportable segment and geographic area.
Effective from April 1, 2022, the Company reclassified its reportable segments. Accordingly, figures for the year ended March
31, 2022 have been restated on the basis of the reclassification. Details of the reclassification are described in note 4.
Millions of yen
2023
Overseas
Revenues
Subtotal

Total
Revenues

53,102

833,887

2,389,095

829,339

346,127

2,048,023

2,492,522

259,907

201,80337,8691,494,330

2,975,272

699,256455,255

161,012

118,770

1,434,293

1,920,067

80,64083,04094,67180,460136,303

394,474

475,114

Hitachi Metals

323,193

181,280

283,606

41,547

18,100524,533

847,726

Others391,886

62,748

6,121

8,140

4,120

81,129473,015

Subtotal

4,762,142

2,671,097

1,880,534

1,544,647

714,391

6,810,669

11,572,811

Corporate items and Eliminations(643,898)(35,983)(2,542)(8,699)(539)(47,763)(691,661)

Total

4,118,244

2,635,114

1,877,992

1,535,948

713,852

6,762,906

10,881,150

Japan

Asia

North
America

Europe

Other
Areas

Digital Systems & Services

1,555,208

236,443

321,996

222,346

Green Energy & Mobility

444,499

413,579

458,978

Connective Industries

1,480,942

994,751

Automotive Systems

485,774

Hitachi Construction Machinery

Millions of yen
2022
Overseas
Revenues
Subtotal

Total
Revenues

41,065625,968

2,153,625

656,925

246,958

1,631,003

2,051,023

211,039

132,692

56,8771,303,718

2,752,898

606,321316,216130,01289,887

1,142,436

1,597,718

216,922

195,722

196,425

162,798

253,094

808,039

1,024,961

Hitachi Metals

402,155

204,913274,458

42,26818,907

540,546

942,701

Others384,058

53,768

6,749

8,076

3,654

72,247456,305

Subtotal

4,855,274

2,546,892

1,560,088

1,306,535

710,442

6,123,957

10,979,231

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

Total

4,187,077

2,514,843

1,555,142

1,299,413

708,127

6,077,525

10,264,602

Japan

Asia

North
America

Europe

Other
Areas

Digital Systems & Services

1,527,657

180,128

231,011

173,764

Green Energy & Mobility

420,020

402,930

324,190

Connective Industries

1,449,180

903,110

Automotive Systems

455,282

Hitachi Construction Machinery

The Digital Systems & Services segment consists of Front Business, IT Services, and Services & Platforms, for which revenue
amounted to 982,541 million yen, 898,298 million yen and 938,130 million yen for the year ended March 31, 2023 and 948,031
million yen, 842,733 million yen and 776,391 million yen for the year ended March 31, 2022, respectively (includingintersegment transactions). Front Business and IT Services are operated mainly in Japan, and Services & Platforms is operated
mainly in Japan, North America and Europe.

F-50

Notes to Consolidated Financial Statements
The Company’s revenues include revenue recognized based on the pattern of the cost accrual arising from long-term projects.
Of the revenue recognized during the fiscal years ended March 31, 2023 and 2022, the amount of revenue recognized based on
the pattern of the cost accrual arising from long-term projects was 1,805,588 million yen and 1,578,613 million yen,respectively.
(b) Information about satisfaction of performance obligations
The following is information about satisfaction of performance obligations related to major goods and services of eachreportable segment.
(Digital Systems & Services)
Front Business and IT Services primarily provide goods and services such as system integration, consulting and cloud service.
Services & Platforms primarily provides IT products and software.
These long-term projects in system integration, consulting and cloud service businesses provide goods and services according
to customers’ specifications over a specified period of time, and revenue is recognized mainly based on the pattern of the costaccrual (the progress of the project mostly based on the cost incurred relative to the estimated total cost) or the passage of time
as performance obligations are satisfied over time. Many of the contracts require payments based on milestones, and in somecases, payments are made before performance obligations are satisfied.
In IT products and software businesses, revenue is recognized when control over the goods is transferred to customers as
performance obligations are satisfied at the point in time upon the completion or upon delivery of the goods. Mostly, payment
terms stipulate that the consideration is received within one year after the performance obligation is satisfied, and there are no
significant transactions in which payment terms include deferred payments, etc.
(Green Energy & Mobility and Connective Industries)
The Green Energy & Mobility segment includes revenue from businesses such as energy solutions and railway systems. Theenergy solutions business is operated mainly in Asia, North America, and Europe. The railway systems business is operated
mainly in Europe. The Connective Industries segment includes revenue from businesses such as building systems, smart life
& ecofriendly systems, measurement and analytical systems, and industry & distribution solutions. The building systems
business is operated mainly in China, the smart life & ecofriendly systems business is operated mainly in Japan, themeasurement and analytical systems business is operated mainly in Japan, Asia, North America, and Europe, and the industry& distribution solutions business is operated mainly in Japan.
Long-term projects related to contracts such as construction in these segments involve manufacturing and providing goods
based on customers’ specifications over a specified period of time. As performance obligations are satisfied over time,revenue is recognized mainly based on the pattern of the cost accrual (the progress of the project mostly based on the cost
incurred relative to the estimated total cost). In addition, these segments provide certain services promised in the contracts
such as maintenance throughout the duration of the contract, and recognize revenue over time based on the passage of time.
Many of the contracts require payments based on milestones, and, in some cases, payments are made before performanceobligations are satisfied.
Further, in the sale of elevators, home appliances, measurement and analytical systems, industrial equipment, etc. included in
the Connective Industries segment, revenue is recognized when control over the goods is transferred to customers as
performance obligations are satisfied at the point in time upon the completion or upon delivery of the goods. Mostly, payment
terms stipulate that the consideration is received within one year after the performance obligation is satisfied, and there are no
significant transactions in which payment terms include deferred payments, etc.
(Other)In the Automotive Systems, Hitachi Construction Machinery, and Hitachi Metals segments, performance obligations are
generally satisfied at a point in time upon completion or upon delivery of the goods, and revenue is recognized when control
over goods is transferred to customers. Mostly, payment terms stipulate that the consideration is received within one year after
the performance obligation is satisfied, and there are no significant transactions in which payment terms include deferredpayments, etc.
These segments provide certain services promised in the contracts such as maintenance throughout the duration of thecontract, and they recognize revenue over time based on the passage of time. Mostly, payment terms stipulate that theconsideration is received within one year after the performance obligation is satisfied, and there are no significant transactions
in which payment terms include deferred payments, etc.

F-51

Notes to Consolidated Financial Statements(c) Information about contract balances
The following table shows the beginning and ending balances of Trade receivables, Contract assets and Contract liabilities fromcontracts with customers for the fiscal years ended March 31, 2023 and 2022.
Millions of yen
2023
March 31, 2023
Trade receivables

2022
April 1, 2022

2,072,238

2,381,832

March 31, 2022

April 1, 2021

2,381,832

2,115,973

Contract assets

849,402665,627

665,627

676,524

Contract liabilities

1,314,799

1,150,592

1,150,592

1,016,207

Of the revenue recognized during the fiscal years ended March 31, 2023 and 2022, the amount included in Contract liabilities atthe beginning of the fiscal years was 745,452 million yen and 604,800 million yen, respectively. And the amount related toperformance obligations satisfied in the past periods was not material.
(d) Transaction price allocated to remaining performance obligations
The following table shows the balance of unsatisfied performance obligations by reportable segment for the fiscal years ended
March 31, 2023 and 2022.
Millions of yen
March 31, 2023
Intersegment
transactions

March 31, 2022

Balance of unsatisfied
performance obligations

Intersegment
transactions

Balance of unsatisfied
performance obligations

Digital Systems & Services

52,481

1,253,318

58,982

1,141,343

Green Energy & Mobility

45,801

7,554,950

37,2085,909,221

Connective Industries

106,653

1,825,227

102,790

1,682,357

Segments of the Company and its subsidiaries that have contracts under which revenue is recognized over a long period of time
are primarily the Digital Systems & Services segment, Green Energy & Mobility segment and Connective Industries segment.
The estimated timing of unsatisfied performance obligations at the fiscal year ended March 31, 2023 is as follows.
Approximately 90% of the balance of unsatisfied performance obligations of the Digital Systems & Services segment was
expected to be satisfied within three years and approximately 10% after three years but no more than five years.
Approximately 60% of the balance of unsatisfied performance obligations of the Green Energy & Mobility segment was
expected to be satisfied within three years and approximately 40% after three years but no more than five years.
Approximately 90% of the balance of unsatisfied performance obligations of the Connective Industries segment was expected tobe satisfied within three years.
The estimated timing of unsatisfied performance obligations at the fiscal year ended March 31, 2022 is as follows.
Approximately 90% of the balance of unsatisfied performance obligations of the Digital Systems & Services segment was
expected to be satisfied within three years and approximately 10% after three years but no more than five years.
Approximately 60% of the balance of unsatisfied performance obligations of the Green Energy & Mobility segment was
expected to be satisfied within three years and approximately 10% after three years but no more than five years.
Approximately 90% of the balance of unsatisfied performance obligations of the Connective Industries segment was expected tobe satisfied within three years.
The remaining segments have contracts whose initial expected terms are generally one year or less. Accordingly, related
information is excluded from this disclosure in accordance with the practical expedient.
(e) Assets recognized from the costs incurred for obtaining or fulfilling contracts with customers
The Company and its subsidiaries recognize the costs incurred for obtaining or fulfilling contracts with customers as an asset tothe extent those costs are expected to be recovered. Such costs recognized as an asset as of March 31, 2023 and 2022 were notmaterial.

F-52

Notes to Consolidated Financial Statements(21) Other Income and Expenses
The main components of other income and expenses for the years ended March 31, 2023 and 2022 are as follows:
Millions of yen
2023
Net gain (loss) on sales and disposals of fixed assets

2022
2,285

18,068

Impairment losses(129,894)(35,091)

Net gain (loss) on business reorganization and others

297,351

102,135

Special termination benefits(9,323)(8,770)

Impairment losses are mainly recognized on property, plant and equipment, goodwill and other intangible assets. Net gain (loss)
on business reorganization and others includes gains and losses related to obtaining and losing control of investees and gains andlosses related to obtaining and losing significant influence over investees.
Impairment losses for the year ended March 31, 2023 include 52,163 million yen in the Digital Systems & Services segment and
49,707 million yen in the Green Energy & Mobility segment. Details are described in note 9 and note 10.
Restructuring charges (structural reform expenses) included in Other expenses for the years ended March 31, 2023 and 2022 were139,217 million yen and 43,861 million yen, respectively. Restructuring charges (structural reform expenses) include impairment
losses and special termination benefits. In addition, the settlement loss of 51,185 million yen recognized for the year ended March
31, 2023 due to the change to the risk-sharing corporate pension plan introduced by subsidiaries on April 1, 2022, is included in
Other expenses for the year ended March 31, 2023. Details of this transaction are described in note 15.
(22) Financial Income and Expenses
The main components of financial income and expenses for the years ended March 31, 2023 and 2022 are as follows:
Millions of yen
2023

2022

Dividends received

7,878

6,454

Exchange gain (loss)(11,911)

11,870

Dividends received for the years ended March 31, 2023 and 2022 are from financial assets measured at fair value through othercomprehensive income.

F-53

Notes to Consolidated Financial Statements(23) Earnings Per Share (EPS) Information
The calculations of basic and diluted EPS attributable to Hitachi, Ltd. stockholders are as follows:
Number of shares
2023
Weighted average number of shares on which basic EPS is calculated

2022

948,247,986

966,413,255

Stock options

417,340

512,108

Restricted stock

493,790715,736

Effect of dilutive securities

Restricted stock units
Number of shares on which diluted EPS is calculated

5,419

37,232

949,164,535

967,678,331
Millions of yen

2023

2022

Net income attributable to Hitachi, Ltd. stockholders
Basic
Effect of dilutive securities
Diluted649,124

583,470--649,124

583,470
Yen

2023

2022

EPS attributable to Hitachi, Ltd. stockholders
Basic684.55603.75

Diluted683.89602.96

F-54

Notes to Consolidated Financial Statements(24) Supplementary Cash Flow Information(a) Liabilities from financing activities
Changes in liabilities from financing activities for the years ended March 31, 2023 and 2022 are as follows:
Millions of yen
Short-term debt

Bonds

Long-term
borrowings

Lease liability

Total

March 31, 2021

416,635

365,959

1,295,609

319,153

2,397,356

Cash flows

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

392,099---

99,17599,175Acquisitions and divestitures

118,554

-

2,344

(704)

120,194

Currency translation effect and others

45,686

1,617

46,11324,472

117,888

Non-cash changes
Finance lease liability incurred

March 31, 2022

1,234,119

357,548

1,207,825

327,220

3,126,712

Cash flows(277,685)(108,918)

2,583(102,398)(486,418)

Non-cash changes
Finance lease liability incurred
Acquisitions and divestitures
Currency translation effect and others
March 31, 2023

-

-

-

98,92598,925(205,217)(89,787)(230,229)(76,455)(601,688)

26,433

1,157

42,815

5,412

75,817

777,650

160,000

1,022,994

252,704

2,213,348(b) Income taxes paid
The cash flows regarding the sale of shares of Hitachi Metals and Hitachi Transport System after deducting the withholding
tax on deemed dividend were recognized as Proceeds from sale of investments in securities and other financial assets(including investments in subsidiaries and investments accounted for using the equity method) in cash flows from investing
activities.
Income taxes paid including the withholding tax was 284,265 million yen for the year ended March 31, 2023.

F-55

Notes to Consolidated Financial Statements(25) Financial Instruments and Related Disclosures(a) Capital Management
The Company manages its capital under the policy of maintaining appropriate level of assets, liabilities and capital for current
and future business operations, as well as optimizing the efficiency of capital utilization throughout the business operations.
The Company uses the total Hitachi, Ltd. stockholders’ equity ratio as an important indicator in capital management and it isregularly monitored. The total Hitachi, Ltd. stockholders’ equity ratio as of March 31, 2023 and 2022 were 39.5% and 31.3%,
respectively.
The Company is not subject to any capital requirements except for the general rules such as the Japanese Company Law.
(b) Financial Risks
The Company is engaged in business activities world-wide, and constantly exposed to various risks such as market risks(mainly currency exchange risk and interest rate risk), credit risk and liquidity risk. The Company implements risk
management policies to avoid or mitigate these financial risks.
(i) Currency Exchange Risk
The Company and its subsidiaries hold assets and liabilities exposed to currency exchange risk. In order to hedge this risk,
the management uses forward exchange contracts or cross currency swaps.
For trade receivables and payables denominated in foreign currencies, the Company and its subsidiaries measure the future
cash flows per currency on a monthly basis, and enter into forward exchange contracts using a constant ratio with the
purpose of fixing the future cash flows arising from receivables and payables and forecasted transactions denominated inforeign currencies. The terms of forward exchange contracts are largely within one year. If necessary, the Company and its
subsidiaries establish a risk control policy and a risk management approach specific to each transaction by reviewing thebusiness characteristics, the structure of income and expenditure, and conditions of the contract. The Company and its
subsidiaries hedge the risk exposure arising from specific transactions based on the risk control policy and the risk
management approach.
To fix cash flows from long-term debt denominated in foreign currencies, the Company and its subsidiaries enter into crosscurrency swap agreements with the same maturities as the underlying debt. The hedging relationship between the forward
exchange contracts or cross currency swaps and the underlying hedged items is highly effective in offsetting the impact
from changes in foreign currency exchange rates.
The sensitivity analysis for currency exchange rates shown below indicates the impact on income before income taxes, in
the Company’s consolidated statement of profit or loss, if the Japanese yen depreciated by 1% on the foreign-currencydenominated financial instruments held by the Company and its subsidiaries as of March 31, 2023 and 2022, while all othervariables are held constant.
Millions of yen
Currency
Impact on income before income taxes

US Dollar
Euro

F-56

2023

2022
2,447

2,852

16

76

Notes to Consolidated Financial Statements(ii) Interest Rate Risk
The Company and its subsidiaries are exposed to interest rate risk related principally to long-term debt obligations. In orderto minimize this risk, the Company and its subsidiaries enter into interest rate swap agreements to control fluctuation risk ofcash flows. The interest rate swaps entered into are mainly receive-variable, pay-fixed interest rate swaps. Under theinterest rate swaps, the Company and its subsidiaries receive variable interest rate payments on long-term debt and makefixed interest rate payments, thereby creating fixed interest rate long-term debt.
Certain financing subsidiaries raise funds by issuing long-term debt with a fixed interest rate and lending it at variableinterest rates, creating interest rate risk. In order to minimize this risk, interest rate swaps are used to convert, in effect, thefixed rate to a variable rate to manage fluctuations in fair value resulting from interest rate risk. The hedging relationshipbetween the interest rate swaps and the underlying hedged items is highly effective in offsetting the impact from changes incash flows and fair value resulting from interest rate risk.
The sensitivity analysis for interest rate shown below indicates the impact on income before income taxes, in the
consolidated statement of profit or loss, if interest rates increased by 1% on the financial instruments (floating-interest
financial assets and liabilities measured at amortized cost, financial assets and liabilities measured at fair value throughprofit or loss and derivatives) held by the Company and its subsidiaries as of March 31, 2023 and 2022, while all othervariables are held constant.
Millions of yen
2023
Impact on income before income taxes

2022(5,662)(11,722)(iii) Credit Risk
Trade receivables and contract assets, and other receivables resulting from operating activities of the Company and its
subsidiaries are exposed to credit risk of the customers. Investments in debt securities held for managing cash surplus andequity instruments held for strategic purposes are exposed to credit risk of the issuers. Derivative transactions entered into
in order to lower market risks are exposed to credit risk of the counter-party financial institutions.
For credit risk of customers, the Company conducts periodic credit checks as appropriate for the products sold and thecustomers’ financial conditions and credit ratings. A credit limit is set according to the credit risk. For cash surplus,
investment is restricted to low risk debt securities, and derivative transactions are entered into with financial institutions
with high credit rating only.
No significant concentration of credit risk is present in a particular region or a customer, as the Company and its
subsidiaries are engaged in diverse industries worldwide.

F-57

Notes to Consolidated Financial Statements
The changes in the balance of allowance for doubtful receivables for trade receivables, contract assets and otherreceivables, and the changes in the gross carrying amounts of trade receivables and contract assets, and other receivables
corresponding to the allowance for doubtful receivables for the years ended March 31, 2023 and 2022 are as follows. Other
receivables mainly consist of lease receivables and financial assets measured at amortized cost such as short-term loans
receivable, other accounts receivable, debt securities measured at amortized cost and long-term loans receivable.
Millions of yen
Trade receivables and contract
assetsAllowance for doubtful receivables
Collective
assessment

Individual
assessment

March 31, 2021

33,233

Change, net

3,476

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

Total

Collective
assessment

Individual
assessment

Total

29,45362,686

2,713,379

141,804

2,855,183

18,90722,383

246,931(49,651)

197,280(1,252)

1,252-(8,962)

8,962-(7,934)(2,534)(10,468)(47,996)(3,069)(51,065)

Other [3]

1,437

4,907

6,344

117,741

9,265

127,006

March 31, 2022

28,96051,98580,9453,021,093

107,311

3,128,404

Change, net

5,091

6,930

12,021

321,035

2,716

323,751

Credit-impairment [1]

(350)

350

-

(2,226)

2,226-

Write-off [2](2,182)(2,274)(4,456)(50,896)(2,520)(53,416)

Other [3](3,219)(1,450)(4,669)(390,525)(2,733)(393,258)

March 31, 2023

28,30055,541

83,841

2,898,481

107,000

3,005,481

F-58

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

Collective
assessment

Individual
assessment

March 31, 2021

301

4,030

Change, net

Gross carrying amountCollective
assessment

Individual
assessment

4,331

405,468

35,823441,291

Total

Total

(26)

539

513

56,193(25,432)

30,761Credit-impairment [1]

-

-

-

(1,253)

1,253-

Write-off [2]

(1)

(1)

(2)

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

Other [3]

18

165

183

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

March 31, 2022

292

4,733

5,025

418,932

9,136

428,068

Change, net

77

567

644

38,6501,462

40,112Credit-impairment [1]

-

-

-

(137)

137

-

Write-off [2](1)(1,296)(1,297)(3,557)(1,398)(4,955)

Other [3]21

(2,592)(2,571)(85,440)(6,970)(92,410)

March 31, 2023

389

1,412

1,801

368,448

2,367

370,815[1] The Company measures the allowance for doubtful receivables relating to credit-impaired financial assets based on
individual assessment and, therefore, transfers them from collective assessment.
[2] The Company generally writes off and derecognizes the corresponding carrying amount when it has no reasonable
expectations of recovering the financial asset in its entirety or a portion.
[3] Other mainly includes the impact of acquisitions and divestitures and currency translation effect.
The maximum exposure to the credit risk equals the financial assets’ carrying amount, net of allowance for doubtfulreceivables, in the consolidated statement of financial position, if collateral held is not included. The maximum exposure to
the credit risk from loan commitments is disclosed in note 29. The maximum exposure to the credit risk from guarantee
obligations is disclosed in note 29.

F-59

Notes to Consolidated Financial Statements(iv) Liquidity Risk
Trade payables and financial liabilities, such as long-term debts, held by the Company and its subsidiaries are exposed toliquidity risk. With respect to this risk, the Company and its subsidiaries try to optimize capital efficiency through efficientmanagement of working capital, and maintain cash control through a centralized cash management system. They are alsoable to raise funds, as necessary, from capital markets through the issuance of debt and equity securities, and fromcommercial banks through borrowings and commitment lines. The total unused commitment lines as of March 31, 2023 aredisclosed in note 29.
The following tables present the maturities of non-derivative financial liabilities. Trade payables are not included in thetables since the carrying amounts agree with the contractual cash flows and they all mature in less than one year.
Millions of yen
March 31, 2023
Contractual
cash flows

Within 1 year

After 1 year
but not morethan 5 years

777,650

778,586

778,586--

252,704

265,01780,785

149,329

34,903160,000

163,843

30,811

22,236

110,796

1,022,994

1,063,672

45,657

940,611

77,404

Carrying
amountShort-term debt

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

Millions of yen
March 31, 2022
Contractual
cash flows

Within 1 year

After 1 year
but not morethan 5 years

1,234,119

1,236,688

1,236,688--

Lease liabilities

327,220

346,010

93,799177,561

74,650

Bonds

357,548

363,858

119,021

123,449

121,388

1,207,825

1,224,628

134,319

1,060,944

29,365

268,851

274,701-

274,701-

Carrying
amountShort-term debt

More than 5
yearsLong-term debt

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

The weighted average interest rate for short-term debt is 3.6%, and the weighted average interest rate for long-termborrowings is 1.3% with maturities ranging from 2023 to 2039.

F-60

Notes to Consolidated Financial Statements
The details on each bond issued are provided below.
Millions of yen
MatureinIssuerName of bondIssuedMarch 31,2023

The Company

Unsecureddebenture #16

2013

30,00030,000 Unsecured

0.8

2023

The Company

Unsecureddebenture #17

2013

20,00020,000 Unsecured

1.4

2028

The Company

Unsecureddebenture #18

2020

-

90,000 Unsecured

0.1-

The Company

Unsecureddebenture #19

2020

20,00020,000 Unsecured

0.2

2027

The Company

Unsecureddebenture #20

2020

90,00090,000 Unsecured

0.3

2030

2017
2021

-

107,548--

160,000

357,548

Subsidiaries

Unsecureddebentures

Total

March 31,2022

Interest
rates(%)

Security-

The following table shows the maturities of the main types of derivatives, expressed in gross amounts, even though they are
net settlement derivatives.
Millions of yen
March 31, 2023

Forward exchange contracts
Cross currency swaps
Interest rate swaps

Within 1 year

After 1 year
but not morethan 5 years

In

21,367

4,806-

26,173

Out

24,765

13,775-38,540In

6,031

24,531-

30,562

Out

9,251

495

-

9,746

In

128

19,702-

19,830

Out

8

-

-

8

More than 5
years

Total

Millions of yen
March 31, 2022

Forward exchange contracts
Cross currency swaps
Interest rate swaps

Within 1 year

After 1 year
but not morethan 5 years

In

4,670

1,684

-

6,354

Out

19,491

847-

20,338In

408

19,916-

20,324

Out

783

3,224

-

4,007

In

564

13,772-

14,336

Out

79

18

-

97

F-61

More than 5
years

Total

Notes to Consolidated Financial Statements(c) Fair Value of Financial Instruments(i) Fair Value Measurements
The following methods and assumptions are used to measure the fair value of financial assets and liabilities.
Cash and cash equivalents, Trade receivables, Short-term loans receivable, Other accounts receivable, Short-term
debt, Other accounts payable and Trade payables
The carrying amount approximates the fair value because of the short maturity of these instruments.
Investments in securities and other financial assets
The fair value of lease receivables is based on the present value of lease payments receivable calculated for each group ofyears to maturity using discount rates that reflect the time to maturity and credit risk.
Investment securities with quoted market prices are estimated using the quoted share prices. In the absence of an active
market for investment securities, quoted prices for similar investment securities, quoted prices associated with transactions
that are not distressed for identical or similar investment securities or other relevant information including market interest
rate curves, referenced credit spreads or default rates, are used to determine fair value. If significant inputs of fair value
measurement are unobservable, the Company uses price information provided by financial institutions to evaluate suchinvestments. The information provided is corroborated by the income approach using its own valuation model, or themarket approach using comparisons with prices of similar securities.
The fair value of long-term loans receivable is estimated based on the present value of future cash flows using the interest
rate applicable to an additional loan of the same type.
Derivative assets are measured at fair value based on quoted prices associated with transactions that are not distressed,
prices in inactive markets, or based on models using interest rate curves and forward and spot prices for currencies andcommodities. If significant inputs are unobservable, the Company mainly uses the income approach or the market approachto corroborate relevant information provided by financial institutions and other available information.
Long-term debt
The fair value of long-term debt is estimated based on quoted market prices or the present value of future cash flows using
the market interest rates applicable to the same contractual terms.
Other financial liabilities
Derivative liabilities are measured at fair value based on quoted prices associated with transactions that are not distressed,
prices in inactive markets, or based on models using interest rate curves and forward and spot prices for currencies andcommodities. If significant inputs are unobservable, the Company uses mainly the income approach or the market approachto corroborate relevant information provided by financial institutions and other available information.

F-62

Notes to Consolidated Financial Statements(ii) Financial Instruments Measured at Amortized Cost
The carrying amounts and estimated fair values of the financial instruments measured at amortized cost as of March 31,
2023 and 2022 are as follows.
The fair value estimated for financial assets and liabilities measured at amortized cost is classified in Level 2 of the fairvalue hierarchy.
Millions of yen
March 31, 2023
Carrying amounts

March 31, 2022

Estimated
fair values

Carrying amounts

Estimated
fair values

AssetsInvestments in securities and otherfinancial assets
Lease receivables

22,85822,85870,22771,648Debt securities

46,72946,72955,05755,058

385

385

1,650

1,650

Long-term loans receivable
Liabilities
Long-term debt [1]BondsLong-term borrowings

160,000

159,250

357,548

357,468

1,022,994

1,022,130

1,207,825

1,207,727[1] Long-term debt is included in Current portion of long-term debt and Long-term debt in the consolidated statement offinancial position.
(iii) Financial Instruments Measured at Fair Value
Financial instruments measured at fair value on a recurring basis after the initial recognition are classified into three levelsof the fair value hierarchy based on the measurement inputs’ observability as follows:
Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active markets
Level 2: Valuations measured by direct or indirect observable inputs other than Level 1
Level 3: Valuations measured by significant unobservable inputs
When several inputs are used for a fair value measurement, the level is determined based on the input that is significant
with the lowest level in the fair value measurement as a whole.
Transfers between levels are deemed at the beginning of each quarter period.

F-63

Notes to Consolidated Financial Statements
The following tables present the assets and liabilities that are measured at fair value on a recurring basis as of March 31,
2023 and 2022.
March 31, 2023
Class of financial instruments

Millions of yen
Level 1

Level 2

Level 3

Total

Financial assets measured at fair value
through profit or loss:
Investments in securities and otherfinancial assets
Equity securities

335-

28,352

28,687

Debt securities

8,684

4,145

4,959

17,788-78,327-78,327234,175-

104,445

338,620

243,194

82,472

137,756

463,422-

49,385-49,385-49,385-49,385Derivatives
Financial assets measured at fair value
through other comprehensive income:Investments in securities and otherfinancial assets
Equity securities
Total financial assets at fair value
Financial liabilities measured at fair value
through profit or loss:
Other financial liabilities
Derivatives
Total financial liabilities at fair value
March 31, 2022
Class of financial instruments

Millions of yen
Level 1

Level 2

Level 3

Total

Financial assets measured at fair value
through profit or loss:
Investments in securities and otherfinancial assets
Equity securities

1,364

-

17,591

18,955

Debt securities

9,521

4,692

5,686

19,899-63,596-

63,596

282,0252,144

106,041

390,210

292,91070,432

129,318

492,660-

47,145-47,145-47,145-47,145Derivatives
Financial assets measured at fair value
through other comprehensive income:Investments in securities and otherfinancial assets
Equity securities
Total financial assets at fair value
Financial liabilities measured at fair value
through profit or loss:
Other financial liabilities
Derivatives
Total financial liabilities at fair value

F-64Notes to Consolidated Financial Statements
The following tables present the changes in Level 3 instruments measured on a recurring basis for the years ended March
31, 2023 and 2022.
2023

Millions of yen
Level 3 financial assets

Balance at beginning of year
Gain in profit or loss [1]Loss in OCI [2]Purchases
Sales and redemption
Acquisitions and divestitures
Other
Balance at end of year

Equitysecurities

Debt
securities

Derivatives

Total

123,632
777(1,213)33,762(13,513)(13,964)
3,316
132,797

5,686
96
529
(521)
(846)
15
4,959

-

129,318873(1,213)34,291(14,034)(14,810)3,331
137,756

766

96

-

862

Unrealized gain relating tofinancial assets held at end of year [4]2022Millions of yen
Level 3 financial assets

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

Equitysecurities

Debt
securities

Derivatives

Total

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

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

87
(87)
-

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

3,780

294

-

3,987

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

F-65

Notes to Consolidated Financial Statements
Equity instruments held with the objective of maintaining and strengthening business relations with the issuers areclassified as Financial assets measured at fair value through other comprehensive income. The following is a list ofprincipal equity instruments designated as fair value through other comprehensive income and their fair values.
March 31, 2023
Principal Financial assets measured at fair value
through other comprehensive income
Renesas Electronics Corporation

Millions of yen
Fair value
118,619

Mitsubishi HC Capital Inc.

39,459JECC Corporation

22,298Western Digital Corporation

15,556

Central Japan Railway Company

14,229Nippon Steel Kowa Real Estate Co., Ltd.

9,810

Honda Motor Co., Ltd.

7,020

Nippon Tochi-Tatemono Co., Ltd.

5,438

Invivoscribe, Inc.

5,341

Daiichi Sankyo Co., Ltd.

4,340

March 31, 2022
Principal Financial assets measured at fair value
through other comprehensive income
Mitsubishi HC Capital Inc.

Millions of yen
Fair value
95,577

Renesas Electronics Corporation

88,770JECC Corporation

21,591

Western Digital Corporation

18,990Central Japan Railway Company

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

12,405

Nippon Steel Kowa Real Estate Co., Ltd.

11,749Honda Motor Co., Ltd.

6,974

Nippon Tochi-Tatemono Co., Ltd.

5,241

Dalian Hi-Think Computer Technology Corporation

3,849

See note 22 for dividends received from investment securities classified as Financial assets measured at fair value throughother comprehensive income.
Accumulated gains and losses on valuation of Financial assets measured at fair value through other comprehensive income
are reclassified into retained earnings when derecognized during the fiscal year. The net gains reclassified, net of taxes, forthe years ended March 31, 2023 and 2022 were 16,967 million yen and 13,880 million yen, respectively. These financial
assets were derecognized upon disposal of shares after reviewing particular business relations, or acquisitions anddivestitures.
The information on Financial assets measured at fair value through other comprehensive income that were derecognized forthe years ended March 31, 2023 and 2022 is as follows:
Millions of yen
2023

2022

Fair value at the time of derecognition

111,441

80,722

Accumulated gains at the time of derecognition

23,754

22,339F-66

Notes to Consolidated Financial Statements(d) Derivatives and Hedging Activities(i) Fair Value Hedge
Changes in the fair value of recognized assets and liabilities, and of derivatives designated as a fair value hedge of theseassets and liabilities are recognized in profit or loss for the period in which the changes occur. Derivatives designated as afair value hedge include forward exchange contracts associated with operating transactions, cross currency swaps
agreements and interest rate swaps associated with financing transactions.
(ii) Cash Flow Hedge
Foreign Currency Risk
A portion determined as an effective hedge with respect to changes in the fair value of forward exchange contracts
designated as an effective cash flow hedge of forecasted foreign-currency-denominated transactions are recognized in OCI.
AOCI is subsequently reclassified into profit or loss when the hedged items affect profit or loss for the period. If a nonfinancial asset or a non-financial liability is recognized due to a hedged forecast transaction, the changes in the fair value ofthe derivative recognized in OCI are included directly in the acquisition cost or other carrying amount of the asset or
liability at which point the asset or liability is recognized.
Interest Rate Risk
A portion determined as an effective hedge with respect to changes in the fair value of interest rate swaps designated as ahedge of the variability of cash flows associated with long-term debt are recognized in OCI. AOCI is subsequently
reclassified to interest charges over the period in which the interest on the debt affects profit or loss.
When applying hedge accounting, the Company assesses hedge effectiveness through a qualitative assessment of whether
the critical terms of the hedged item and the hedging instrument match or are closely aligned and whether changes in thefair value or cash flows of the hedging instrument offset changes in the fair value or cash flows of the hedged item in order
to confirm that an economic relationship exists between the hedged item and the hedging instrument. The Company also
sets appropriate hedge ratios based on the economic relationship between the hedged item and the hedging instrument andthe Company’s risk management policies. For the years ended March 31, 2023 and 2022, hedge ineffectiveness recognizedin profit or loss were not material.
The notional amounts and carrying amounts of hedging instruments as of March 31, 2023 and 2022 are as follows. The
carrying amount of hedging instruments is included in Investments in securities and other financial assets and Other
financial liabilities or Other non-current liabilities in the consolidated statement of financial position.
March 31, 2023
Hedging instruments

Millions of yen
Notional amount

Carrying amountMore than 1 year

AssetsLiabilities

Fair value hedge
Foreign currency risk

196,38876,30325,192

553

Interest rate risk

41,12027,7671,048-

Foreign currency risk

234,313

31,136

8,375

5,561

Interest rate risk

173,589

173,589

18,765-645,410

308,795

53,3806,114

Cash flow hedge

Total
March 31, 2022
Hedging instruments

Millions of yen
Notional amount

Carrying amountMore than 1 year

AssetsLiabilities

Fair value hedge
Foreign currency risk

363,354

75,154

17,67012,552

Interest rate risk

93,271

38,0711,137

70Foreign currency risk

313,575

163,392

4,538

6,990

Interest rate risk

179,107

159,107

13,19910949,307435,724

36,544

19,622

Cash flow hedge

Total

F-67

Notes to Consolidated Financial Statements
The carrying amounts of hedged items related to fair value hedges as of March 31, 2023 and 2022 are as follows.
March 31, 2023

Millions of yen

Hedged items related tofair value hedges

Carrying amount

Recognized in statement offinancial position

AssetsLiabilities

Trade receivables and contract assets,
Foreign currency risk

Investments in securities and other financial assets,

58,872

137,516

41,120-99,992

137,516

Trade payables and Long-term debt
Interest rate risk

Investments in securities and other financial assets

Total
March 31, 2022

Millions of yen

Hedged items related tofair value hedges

Carrying amount

Recognized in statement offinancial position

AssetsLiabilities

Trade receivables and contract assets,
Foreign currency risk

Interest rate risk

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

Total

231,838

131,51675,524

17,747

307,362

149,263

For the years ended March 31, 2023 and 2022, changes in the fair value of hedging instruments and hedged items related tofair value hedges and the accumulated amount of fair value hedge adjustments on hedged items included in the carrying
amount of the hedged items were not material.
For the years ended March 31, 2023 and 2022, changes in the fair value of hedging instruments related to cash flow hedges
recorded in Accumulated other comprehensive income are as follows.
Millions of yen

April 1,
2022

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

March 31,2023

Foreign currency risk

(7,939)(10,150)(1,322)

15,729(3,682)

Interest rate risk

13,180

5,566

-

19

18,765

Total

5,241

(4,584)(1,322)

15,74815,083
Millions of yen

April 1,2021

Foreign currency risk

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

March 31,2022

Interest rate risk

(2,209)
3,336

3,679
9,747

(9,312)-(97)
97(7,939)13,180

Total

1,127

13,426(9,312)

0

5,241

F-68

Notes to Consolidated Financial Statements[1] In the consolidated statement of profit or loss, the amount reclassified to profit or loss is included mainly in Revenues
and Financial expenses for hedges of foreign currency risk and mainly in Interest charges for hedges of interest raterisk.
(e) Securitization of Financial Assets
For the purpose of providing diversified and stable financing, the Company and certain subsidiaries securitize certain financial
assets, and transfer trade and lease receivables through certain third-party financial institutions or structured entities formed bythese financial institutions. The Company does not consolidate such structured entities used for securitization purposes since it
has been determined that they are not controlled by the Company.
These unconsolidated structured entities used for securitization purposes are operated in the ordinary course of business of thefinancial institutions, and they procure funds by issuing commercial paper and other borrowings. Basically, investors in thesestructured entities only have recourse to the assets owned by the entity itself, but not to any other assets held by the Company
or its subsidiaries. The amount of assets transferred by the Company and certain subsidiaries is considerably small comparedto the total assets of the structured entities sponsored by the financial institutions that purchase a large amount of assets fromentities other than the Company and certain subsidiaries. The Company and certain subsidiaries have only limited exposure to
the risks borne by these structured entities. The majority of the involvement with these structured entities used for
securitization purposes by the Company and certain subsidiaries concerns the servicing of assets. The Company and certain
subsidiaries do not provide any non-contractual support to the structured entities and have not made any implicit support
arrangements with them.
For the securitizations of financial assets by the Company and certain subsidiaries, which resulted in derecognizing thefinancial assets in their entirety, the Company and certain subsidiaries retain no significant continuing involvement. For othersecuritizations of financial assets, the Company and certain subsidiaries do not derecognize the financial assets in their entirety
when they retain substantially all credit risks and economic value related to the transferred financial assets through holding
subordinated interests, and the carrying amounts of these financial assets are not material.
(26) Pledged Assets
As a general contractual term for long-term and short-term debt, banks may demand collateral and guarantees for present andfuture obligations, and retain rights to offset the liabilities with bank deposits when repayment is overdue or any breach of contract
occurs.
Per trustee agreements of secured bonds and particular secured or unsecured loan agreements, trustees or lenders generally havethe right to pre-approve profit distributions including dividend payments and new stock issues, as well as the right to demand
additional collateral or mortgage.
The Company and its subsidiaries pledged a portion of their assets as collateral primarily for bank loans as follows:
Millions of yen
March 31, 2023
Trade receivables and contract assets
Inventories
Investments in securities and other financial assets
Land
Buildings and structures
Machinery and other property, plant and equipment
Total

F-69

March 31, 2022
349

7,205

-

12,529

319

327

2,002

1,951

2

5

-

62,717

2,672

84,734

Notes to Consolidated Financial Statements(27) Principal Subsidiaries
The Company’s consolidated financial statements include the following subsidiaries listed below.

Reporting segment

Name of subsidiaryBusiness location

Ownership
percentage
of votingrights (%)

Digital Systems & Services

Hitachi Information & Telecommunication
Engineering, Ltd.

Yokohama, Kanagawa

100.0

Digital Systems & Services

Hitachi Channel Solutions, Corp.

Shinagawa-ku, Tokyo

100.0

Digital Systems & Services

Hitachi Solutions, Ltd.

Shinagawa-ku, Tokyo

100.0

Digital Systems & Services

Hitachi Systems, Ltd.

Shinagawa-ku, Tokyo

100.0

Digital Systems & Services

GlobalLogic Worldwide Holdings, Inc.

California,

100.0

U.S.A.
Digital Systems & Services

Hitachi Computer Products (America), Inc.

Oklahoma,
U.S.A.

100.0

Digital Systems & Services

Hitachi Digital LLC

California,

100.0

U.S.A.
Digital Systems & Services

Hitachi Payment Services Private Limited

Chennai,
India

100.0

Digital Systems & Services

Hitachi Vantara LLC

California,
U.S.A.

100.0

Green Energy & Mobility

Hitachi-GE Nuclear Energy, Ltd.

Hitachi, Ibaraki

80.0Green Energy & Mobility

Hitachi Plant Construction, Ltd.

Toshima-ku, Tokyo

100.0

Green Energy & Mobility

Hitachi Power Semiconductor Device, Ltd.

Hitachi, Ibaraki

100.0Green Energy & Mobility

Hitachi Power Solutions Co., Ltd.

Hitachi, Ibaraki

100.0Green Energy & Mobility

Hitachi Energy Ltd

Zurich,Switzerland

100.0Green Energy & Mobility

Hitachi Rail Ltd.

London,

100.0

U.K.
Connective Industries

Hitachi Building Systems Co., Ltd.

Chiyoda-ku, Tokyo

100.0

Connective Industries

Hitachi Global Life Solutions, Inc.

Minato-ku, Tokyo

100.0

Connective Industries

Hitachi High-Tech Corporation

Minato-ku, Tokyo

100.0

Connective Industries

Hitachi Industrial Equipment Systems Co., Ltd.

Chiyoda-ku, Tokyo

100.0

Connective Industries

Hitachi Industrial Products, Ltd.

Chiyoda-ku, Tokyo

100.0

Connective Industries

Hitachi Industry & Control Solutions, Ltd.

Taito-ku, Tokyo

100.0

F-70

Notes to Consolidated Financial Statements

Reporting segment

Name of subsidiaryBusiness location

Ownership
percentage
of votingrights (%)

Connective Industries

Hitachi Plant Services Co., Ltd.

Toshima-ku, Tokyo

100.0

Connective Industries

Hitachi Elevator (China) Co., Ltd.

Guangzhou,

70.0

Connective Industries

Hitachi Industrial Holdings Americas, Inc.

Illinois,
U.S.A.

100.0

Connective Industries

JR Technology Group, LLC

Michigan,
U.S.A.

100.0

Connective Industries

Sullair, LLC

Indiana,

100.0

China

U.S.A.
Automotive Systems

Hitachi Astemo, Ltd.

Hitachinaka, Ibaraki

66.6

Automotive Systems

Hitachi Astemo Americas, Inc.

Kentucky,
U.S.A.

100.0

OthersHitachi-LG Data Storage, Inc.

Minato-ku, Tokyo

51.0

OthersHitachi Real Estate Partners, Ltd.

Chiyoda-ku, Tokyo

100.0

OthersHitachi America, Ltd.

California,
U.S.A.

100.0

OthersHitachi Asia Ltd.

Singapore

100.0

OthersHitachi (China), Ltd.

Beijing,
China

100.0

OthersHitachi Europe Ltd.

Stoke Poges,
U.K.

100.0

OthersHitachi India Pvt. Ltd.

New Delhi,
India

100.0

-

Other 661 companies

F-71

-

-

Notes to Consolidated Financial Statements(28) Related Party Transactions(a) Related Party Transactions
The Company’s and its subsidiaries’ receivable and payable balances with associates and joint ventures are as follows:
Millions of yen
With associates

March 31, 2023

March 31, 2022

Trade receivables and contract assets

39,762

42,146

Trade payables

40,39849,997

Contract liabilities

20,078588
Millions of yen

With joint ventures

March 31, 2023

Trade receivables and contract assets

59,742

March 31, 2022
35,160

Revenue and purchase transactions of the Company and its subsidiaries with associates and joint ventures are as follows:

With associates

Millions of yen
2022

2023

Revenues

164,164

232,811Purchases

270,287

267,364

With joint ventures

Millions of yen
2022

2023

Revenues

76,98056,969Purchases

9,534

9,035

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

2023
Basic remuneration, year-end allowance andperformance-linked compensation
Medium and long-term incentive compensation(Stock options as stock-based compensation,
etc.)
Total

F-72

3,687

3,221

1,279

1,195

4,967

4,417

Notes to Consolidated Financial Statements(29) Commitments and Contingencies(a) Loan Commitments(i) Loan Commitments to Associates and Others
The Company provides loan commitments to associates and others. The outstanding balance of loan commitments as ofMarch 31, 2023 is as follows:
Millions of yen
March 31, 2023
Total commitments available

130

Less amount utilized-

Balance available

130

Since some loan commitments require credit approval before execution, the amount of total commitments available may
not be necessarily utilized in full.
(ii) Commitments with Financial Institutions
The Company and certain subsidiaries have line of credit arrangements with banks in order to secure efficient financing forbusiness operations. The total unused line of credit as of March 31, 2023 amounted to 513,012 million yen, primarily
belonging to the Company. The Company has commitment line agreements with a number of banks and pays commitment
fees as consideration. These commitment agreements generally provide a one year term with renewal at the end of theterm. The unused line of credit under these arrangements as of March 31, 2023 amounted to 305,000 million yen. The
Company also maintains other commitment line agreements with several financial institutions, with terms of three years
ending in July 2025. The unused line of credit under these arrangements as of March 31, 2023 amounted to 200,000
million yen.
(b) Commitments for Acquisition of Assets
As of March 31, 2023, outstanding commitments made to purchase property, plant and equipment were 57,578 million yen.
(c) Guarantee Obligations
The Company and certain subsidiaries provide debt guarantees to third parties. As of March 31, 2023, the balance of theguarantee obligations was 11,337 million yen.
(d) Litigation
In November 2017, a subsidiary in Japan received a complaint that was filed against three companies, namely a construction
company of a condominium complex, the subsidiary and a secondary subcontractor, by a contractee in Japan seeking
approximately 45.9 billion yen in compensation for expenses allegedly incurred arising from concerns over partial deficienciesof piling work during the construction phases of the condominium complex, which the subsidiary contracted as the primary
subcontractor. The compensation claim against these three companies was amended to approximately 51.0 billion yen in July
2018 and to approximately 50.5 billion yen in September 2022 by the contractee.
In relation to the aforementioned lawsuit, in April 2018, the subsidiary in Japan received a complaint that was filed against thesubsidiary and the secondary subcontractor, by the construction company of the condominium complex seeking approximately
49.6 billion yen in compensation for expenses allegedly incurred arising from the aforementioned lawsuit. In July 2018, thecompensation claim against these two companies was amended to approximately 54.8 billion yen by the construction companyof the condominium complex. Although the subsidiary in Japan will address these claims and explain its position, there can be
no assurance that it will not be held liable for any amounts claimed.
In December 2017, a subsidiary in Europe received a complaint filed by a customer in Europe seeking compensation forconsequential losses of 263 million euro (38,331 million yen) and interest allegedly incurred by performance defects of apower plant. As of March 31, 2023, the amount of compensation claimed by the customer was changed to 270 million euro
(39,349 million yen). Although the subsidiary in Europe will vigorously defend itself against this lawsuit, there can be noassurance that it will not be held liable for any amounts claimed.

F-73

Notes to Consolidated Financial Statements
The Company and its subsidiaries execute a number of business reorganizations, including mergers, acquisitions anddivestitures. Contracts for these reorganizations include clauses for transaction price adjustments subsequent to thereorganizations. There is a possibility products or services provided by the Company and its subsidiaries contain defects. As
the result of price adjustments, or in compensation for defects in products or services etc. there is a possibility that theCompany pays for any amounts.
Depending upon the outcome of the above legal proceedings, there may be an adverse effect on the consolidated financial
position or results of operations. Currently, the Company is unable to estimate the adverse effect, if any, of many of theseproceedings. The actual amount of fines, surcharge payments or any other payments resulting from these legal proceedings
may be different from the accrued amounts.
In addition to the above, the Company and its subsidiaries are subject to legal proceedings and claims which have arisen in theordinary course of business and have not been finally adjudicated. These actions when ultimately concluded and determined
will not, in the opinion of management, have a material adverse effect on the consolidated financial statements of theCompany and subsidiaries.
(30) Subsequent Events(a) Repurchase of Shares of Common Stock
The Board of Directors decided to repurchase shares of the Company’s own common stock pursuant to Article 459, Paragraph
1 of the Companies Act of Japan and Article 32 of the Company’s Articles of Incorporation, as follows.
(i) Reason for repurchase
The Company views the return of profits to shareholders through enhancing corporate value from mid- and long-term
perspective and paying dividends continuously as an important managerial issue. The Company has decided to repurchaseits own shares this time, taking into consideration its financial condition and the price of its common stock as well as the
progress of the review of the business portfolio.
(ii) Outline of the Repurchase1) Class of shares to be repurchased
Common stock of the Company
2) Aggregate number of shares to be repurchased
Up to 20 million shares(2.13% of the number of outstanding shares (excluding treasury stocks))
3) Aggregate amount of repurchase
Up to 100 billion yen
4) Period of the repurchase
From April 28, 2023 to March 31, 2024
5) Method of repurchase
Expected open market purchase through the Tokyo Stock Exchange(31) Approval of Consolidated Financial Statements
The consolidated financial statements were approved on June 21, 2023 by Keiji Kojima, President and CEO of the Company.

F-74

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

OpinionWe have audited the accompanying consolidated financial statements of Hitachi, Ltd. and its subsidiaries (theGroup), which comprise the consolidated statement of financial position as at March 31, 2023, and the consolidated
statements of profit or loss, comprehensive income, changes in equity, and cash flows for the year then ended, andnotes to the consolidated financial statements.
In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, theconsolidated financial position of the Group as at March 31, 2023, and its consolidated financial performance andits consolidated cash flows for the year then ended in accordance with International Financial Reporting Standards(IFRSs).
Basis for Opinion
We conducted our audit in accordance with auditing standards generally accepted in Japan. Our responsibilities
under those standards are further described in the Auditor’s Responsibilities for the Audit of the Consolidated
Financial Statements section of our report. We are independent of the Group in accordance with the ethicalrequirements that are relevant to our audit of the consolidated financial statements in Japan, and we have fulfilled
our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we haveobtained is sufficient and appropriate to provide a basis for our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of theconsolidated financial statements of the current period. These matters were addressed in the context of the audit of
the consolidated financial statements as a whole, and in forming the auditor’s opinion thereon, and we do notprovide a separate opinion on these matters.
Measurement of recoverable amount of group of cash-generating units containing goodwill related to the power
grids business
Description of Key Audit Matter
Hitachi, Ltd. (the Company) recognized goodwill in the amount of 524,951 million yen related to the power grids
business (See Note (10) Goodwill and Other Intangible Assets). Such goodwill represents 24% of total goodwill
and 4% of total assets of the Group. In the second quarter of the year ended March 31, 2023, the Company recorded
an impairment loss in the amount of 38,394 million yen on the related goodwill due to an increase in the discountrate used following the significant rise in interest rates, etc. (See Note (10) Goodwill and Other Intangible Assets).
In addition, in the fourth quarter of the year ended March 31, 2023, the Company performed an annual impairment
test on the group of cash-generating units containing the goodwill.
The Company measured the recoverable amount based on value in use in the two impairment tests of the group of
cash-generating units containing the goodwill. Value in use is determined using discounted future cash flows and isaffected by estimates of future cash flows and the discount rate. Future cash flows are estimated based on the fiveyear business plan and the growth rate beyond the period covered by the business plan is taken into consideration.
Key assumptions used for the business plan are revenue growth rates and gross profit ratios. The following growth
rates beyond the period covered by the business plan and discount rates were used by the Company.

F-75

Second quarter of the year
ended March 31, 2023

Fourth quarter of the year
ended March 31, 2023

2.8%

2.9%

13.2%

13.2%

Growth rates beyond the period
covered by the business plan
Discount rates (before taxes)

In the year ended March 31, 2023, orders received in the power grids business increased due to the expansion ofenvironment-related investments in the market. On the other hand, there were changes in the business environment
such as increases in material prices. Management judgements on the feasibility of measures such as revising sales
prices to address the changes in the business environment are required to estimate the revenue growth rates andgross profit ratios. In addition, the growth rate beyond the period covered by the business plan is determined basedon the long-term inflation rate forecast released by an external research institution and considering the effect of theinterest rate incorporated in the discount rate at the time of the impairment test. Management judgements on theeffect of the interest rate are necessary to estimate the growth rate beyond the period covered by the business planand the discount rate.
We determined that the measurement of the recoverable amount is a key audit matter because of the significance ofthe balance of goodwill and the significant impact on the consolidated financial statements from the management
judgements related to the key assumptions.

Auditor’s Response
We primarily performed the following procedures regarding the measurement of each recoverable amount of thegroup of cash-generating units containing the goodwill.
・We obtained an understanding of the business plan by examining related business planning materials.
・We assessed the effectiveness of the business planning process by comparing the business plan from the priorfiscal year with the corresponding operating results and the business plan at the time of the impairment test.
・We involved valuation specialists from a network firm in assessing the valuation method of value in use, thegrowth rate beyond the period covered by the business plan and the discount rate.
・We made inquiries of management about status of orders and measures to achieve the business plan such asrevising selling prices to address the changes in the business environment such as increases in material prices
and compared revenue growth rates and gross profit ratios with actual operating results and available external
data such as market research reports related to market growth rates.
・We analyzed the trend of the interest rate and assessed the level of growth rate beyond the period covered by thebusiness plan.
・We made inquiries of management about the risks reflected in the discount rate and assessed their consistency
with the risks reflected in future cash flows.
・ We performed sensitivity analyses assuming reasonably possible changes in key assumptions, assessing theeffect on the recoverable amount.
Estimation of total cost of long-term projects
Description of Key Audit Matter
The Group has long-term projects involving the manufacture and provision of goods in accordance with customer
specifications that are completed over specified periods of time to customers in a broad range of business areas
across the world.
The Group recognizes revenues from long-term projects in the amount of 1,805,588 million yen by measuring the
progress of the project mostly based on the cost incurred relative to the estimated total cost to satisfy theperformance obligations (See Note (20) Revenues, (a) Disaggregation of revenue, (b) Information about satisfactionof performance obligations). Furthermore, the Group recognizes provisions for expected losses on construction
contracts in the amount of 94,952 million yen based on the estimated amount of losses associated with fulfilling the
project requirements (See Note (14) Provisions).
Estimations of total cost of long-term projects affect the corresponding amounts of revenues and provisions. Eachof the Group’s long-term projects is distinct in terms of customer requirements, such as detailed specifications andscheduling, and therefore estimations of total cost depend on management judgement. Estimations of total cost are
particularly complex in relation to large-scale projects.

F-76

We determined that the estimation of total cost of long-term projects is a key audit matter because auditing
estimations of total cost of long-term projects requires consideration of various factors affecting such estimations
corresponding to each project as a result of the nature of the Group’s long-term projects.

Auditor’s Response
We obtained an understanding of the project management systems utilized by the Group as well as its processes for
estimating total cost, and tested the relevant internal controls, including the approval of initial and revised operating
budgets that serve as the basis of estimating total cost.
We selected samples of long-term projects, such as those projects whose total contract value exceeded certain
materiality thresholds and projects subject to various qualitative risks, including delays in the progress of the
project, and, on a quarterly basis, performed selected procedures from the following considering the status of eachproject:
・ We obtained an understanding of the significant factors influencing the estimates related to customer
specifications on goods and the timing of delivery and the effects of estimation uncertainty inherent in thosesignificant factors influencing the estimates by examining contracts and project management materials andmaking inquiries of management and compared specific line items in the estimated total cost with corresponding
quotations from suppliers.
・We assessed the management’s judgements on the necessity of revising estimates of total cost considering thestatus of each project based on inquiries of management and by examining project management materials.
・We assessed the effectiveness of the processes for estimating total cost by comparing initial and previous period
estimates with the actual total cost for completed projects and previous period estimates with the latest estimatesfor projects in progress.
・ We additionally made separate inquiries to project managers for projects that were considered particularly
significant to corroborate management explanations of their status.
Other Information
The other information comprises the information included in the annual report (Yukashoken Hokokusho) that
contains audited consolidated financial statements but does not include the consolidated financial statements,
financial statements and our audit report thereon. Management is responsible for preparation and disclosure of theother information. The Audit Committee is responsible for overseeing the Group’s reporting process of the otherinformation.
Our opinion on the consolidated financial statements does not cover the other information and we do not express
any form of assurance conclusion thereon.
In connection with our audit of the consolidated financial statements, our responsibility is to read the otherinformation and, in doing so, consider whether the other information is materially inconsistent with theconsolidated financial statements or our knowledge obtained in the audit or otherwise appears to be materially
misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this otherinformation, we are required to report that fact.
We have nothing to report in this regard.

F-77

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

F-78

Interest Required to Be Disclosed by the Certified Public Accountants Act of Japan
Our firm and its designated engagement partners do not have any interest in the Group which is required to bedisclosed pursuant to the provisions of the Certified Public Accountants Act of Japan.
Ernst & Young ShinNihon LLC
Tokyo, Japan
June 21, 2023

/s/ Koji Fujima
Designated Engagement Partner
Certified Public Accountant/s/ Yasuhiro Ozeki
Designated Engagement Partner
Certified Public Accountant/s/ Shinya Yoshida
Designated Engagement Partner
Certified Public Accountant

F-79

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

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

Director, Kanto Local Finance Bureau[Filing Date]

June 21, 2023

[Company Name]

Kabushiki Kaisha Hitachi Seisakusho[Company Name in English]

Hitachi, Ltd.

[Name and title of

Keiji Kojima, President & CEO

Representative][Name and title of CFO]

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

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

1. Matters Related to Basic Framework of Internal Control over Financial Reporting
Mr. Keiji Kojima, President & CEO, and Mr. Yoshihiko Kawamura, Executive Vice President andExecutive Officer, are responsible for establishing and maintaining internal control over financial reporting of
Hitachi, Ltd. (the “Company”) and have established and maintained internal control over financial reporting inaccordance with the basic framework for internal control set forth in the “On the Revision of the Standards andPractice Standards for Management Assessment and Audit concerning Internal Control Over Financial Reporting(Council Opinions)” published by the Business Accounting Council.
The internal control over financial reporting is designed to achieve its objectives to the extent reasonablethrough the effective function and combination of its basic elements. Therefore, there is a possibility that internal
control over financial reporting may not completely prevent or detect misstatements.
2. Matters Related to Scope of Assessment, Record Date, and Assessment Procedure
We assessed the effectiveness of our internal control over financial reporting on the record date as of March
31, 2023. We made this assessment in accordance with assessment standards for internal control over financial
reporting generally accepted in Japan.
In making this assessment, we evaluated internal control which may have a material effect on the entire
financial reporting on a consolidated basis (“company-level controls”) and based on the result of this assessment,
we appropriately selected business processes to be evaluated, analyzed these selected business processes,
identified key controls that may have a material impact on the reliability of our financial reporting, and assessed
the design and operation of these key controls. These procedures have allowed us to evaluate the effectiveness of
our internal controls.
We determined the required scope of assessment of internal control over financial reporting for theCompany, as well as its consolidated subsidiaries, equity-method associates and joint ventures, from theperspective of the materiality that may affect the reliability of our financial reporting. The materiality that may
affect the reliability of our financial reporting is determined taking into account the materiality of quantitativeand qualitative impacts. We confirmed that we had reasonably determined the scope of assessment of internal
controls over business processes in light of the results of assessment of company-level controls conducted for theCompany, its consolidated subsidiaries, equity-method associates and joint ventures. We did not include a part ofconsolidated subsidiaries, equity-method associates and joint ventures which do not have any quantitatively or
qualitatively material impact on the consolidated financial statements in the scope of assessment of companylevel controls.
Regarding the scope of assessment of internal control over business processes, we accumulated business
units in descending order of total revenues (after elimination of intercompany transactions) for the previous fiscal
year, and those business units whose combined amount of revenues reaches approximately 70% of total revenues
on a consolidated basis were selected as “significant business units.” In addition, some of our equity-method
associates and joint ventures which have a significant effect to our consolidated financial statements wereselected as “significant business units.” At the selected significant business units, we included, in the scope ofassessment, those business processes leading to revenues, accounts receivables and inventories and thosebusiness processes relating to greater likelihood of material misstatements and significant account involving
estimates or forecasts as significant accounts that may have a material impact on our business objectives. Further,not only at selected significant business units, but also at other business units, we added to the scope ofassessment, as business processes having greater materiality considering their impact on the financial reporting,those business processes relating to businesses or operations dealing with high-risk transactions.
3. Matters Related to Results of Assessment
As a result of the assessment above, we concluded that our internal control over financial reporting was
effective as of March 31, 2023.
4. Supplementary Matters
None.
5. Special Notes
None.

A-2

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

Independent Auditor’s Report(filed under the Financial Instruments and Exchange Act of Japan)
June 21, 2023
Mr. Keiji Kojima, President & CEO
Hitachi, Ltd.

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

Koji Fujima

Designated Engagement Partner,
Certified Public Accountant:

Yasuhiro Ozeki

Designated Engagement Partner,
Certified Public Accountant:

Shinya Yoshida[Financial Statements Audit]
OpinionPursuant to Article 193-2, Section 1 of the Financial Instruments and Exchange Act of Japan, we have audited theaccompanying consolidated financial statements, which comprise the consolidated statement of financial position,
the consolidated statement of profit or loss, the consolidated statement of comprehensive income, the consolidated
statement of changes in equity, the consolidated statement of cash flows and the notes to the consolidated financial
statements of Hitachi, Ltd. and its consolidated subsidiaries (the Group) applicable to the fiscal year from April 1,
2022 to March 31, 2023.
In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, theconsolidated financial position, results of operations and cash flows of the Group applicable to the fiscal year ended
March 31, 2023, in accordance with International Financial Reporting Standards (IFRSs) under Article 93 of theRegulation on Terminology, Forms, and Preparation Methods of Consolidated Financial Statements.

A-3

Basis for Opinion
We conducted our audit in accordance with auditing standards generally accepted in Japan. Our responsibilities
under those standards are further described in the Auditor’s Responsibilities for the Audit of the Consolidated
Financial Statements section of our report. We are independent of the Group in accordance with the ethicalrequirements that are relevant to our audit of the consolidated financial statements in Japan, and we have fulfilled
our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we haveobtained is sufficient and appropriate to provide a basis for our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of theconsolidated financial statements of the current period. These matters were addressed in the context of the audit of
the consolidated financial statements as a whole, and in forming the auditor’s opinion thereon, and we do notprovide a separate opinion on these matters.

Measurement of recoverable amount of group of cash-generating units containing goodwill related to the power
grids business
Description of Key Audit Matter
Hitachi, Ltd. (the Company) recognized goodwill in the amount of 524,951 million yen related to the power grids
business (See Note (10) Goodwill and Other Intangible Assets). Such goodwill represents 24% of total goodwill
and 4% of total assets of the Group. In the second quarter of the year ended March 31, 2023, the Company recorded
an impairment loss in the amount of 38,394 million yen on the related goodwill due to an increase in the discountrate used following the significant rise in interest rates, etc. (See Note (10) Goodwill and Other Intangible Assets).
In addition, in the fourth quarter of the year ended March 31, 2023, the Company performed an annual impairment
test on the group of cash-generating units containing the goodwill.
The Company measured the recoverable amount based on value in use in the two impairment tests of the group of
cash-generating units containing the goodwill. Value in use is determined using discounted future cash flows and isaffected by estimates of future cash flows and the discount rate. Future cash flows are estimated based on the fiveyear business plan and the growth rate beyond the period covered by the business plan is taken into consideration.
Key assumptions used for the business plan are revenue growth rates and gross profit ratios. The following growth
rates beyond the period covered by the business plan and discount rates were used by the Company.

Growth rates beyond the period
covered by the business plan
Discount rates (before taxes)

Second quarter of the year
ended March 31, 2023

Fourth quarter of the year
ended March 31, 2023

2.8%

2.9%

13.2%

13.2%

In the year ended March 31, 2023, orders received in the power grids business increased due to the expansion ofenvironment-related investments in the market. On the other hand, there were changes in the business environment
such as increases in material prices. Management judgements on the feasibility of measures such as revising sales
prices to address the changes in the business environment are required to estimate the revenue growth rates andgross profit ratios. In addition, the growth rate beyond the period covered by the business plan is determined basedon the long-term inflation rate forecast released by an external research institution and considering the effect of theinterest rate incorporated in the discount rate at the time of the impairment test. Management judgements on theeffect of the interest rate are necessary to estimate the growth rate beyond the period covered by the business planand the discount rate.
We determined that the measurement of the recoverable amount is a key audit matter because of the significance ofthe balance of goodwill and the significant impact on the consolidated financial statements from the management
judgements related to the key assumptions.

A-4

Auditor’s Response
We primarily performed the following procedures regarding the measurement of each recoverable amount of thegroup of cash-generating units containing the goodwill.
・We obtained an understanding of the business plan by examining related business planning materials.
・We assessed the effectiveness of the business planning process by comparing the business plan from the priorfiscal year with the corresponding operating results and the business plan at the time of the impairment test.
・We involved valuation specialists from a network firm in assessing the valuation method of value in use, thegrowth rate beyond the period covered by the business plan and the discount rate.
・We made inquiries of management about status of orders and measures to achieve the business plan such asrevising selling prices to address the changes in the business environment such as increases in material prices
and compared revenue growth rates and gross profit ratios with actual operating results and available external
data such as market research reports related to market growth rates.
・We analyzed the trend of the interest rate and assessed the level of growth rate beyond the period covered by thebusiness plan.
・We made inquiries of management about the risks reflected in the discount rate and assessed their consistency
with the risks reflected in future cash flows.
・We performed sensitivity analyses assuming reasonably possible changes in key assumptions, assessing theeffect on the recoverable amount.
Estimation of total cost of long-term projects
Description of Key Audit Matter
The Group has long-term projects involving the manufacture and provision of goods in accordance with customer
specifications that are completed over specified periods of time to customers in a broad range of business areas
across the world.
The Group recognizes revenues from long-term projects in the amount of 1,805,588 million yen by measuring the
progress of the project mostly based on the cost incurred relative to the estimated total cost to satisfy theperformance obligations (See Note (20) Revenues, (a) Disaggregation of revenue, (b) Information about satisfactionof performance obligations). Furthermore, the Group recognizes provisions for expected losses on construction
contracts in the amount of 94,952 million yen based on the estimated amount of losses associated with fulfilling the
project requirements (See Note (14) Provisions).
Estimations of total cost of long-term projects affect the corresponding amounts of revenues and provisions. Eachof the Group’s long-term projects is distinct in terms of customer requirements, such as detailed specifications andscheduling, and therefore estimations of total cost depend on management judgement. Estimations of total cost are
particularly complex in relation to large-scale projects.
We determined that the estimation of total cost of long-term projects is a key audit matter because auditing
estimations of total cost of long-term projects requires consideration of various factors affecting such estimations
corresponding to each project as a result of the nature of the Group’s long-term projects.

A-5

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

A-6

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

A-7

[Internal Control Audit]
OpinionPursuant to Article 193-2, Section 2 of the Financial Instruments and Exchange Act of Japan, we have audited theaccompanying Management’s Report on Internal Control Over Financial Reporting for the financial statements as
at March 31, 2023 of Hitachi, Ltd. and its consolidated subsidiaries ("Management's Report").
In our opinion, Management's Report referred to above, which represents that the internal control over financial
reporting as at March 31, 2023 of Hitachi, Ltd. and its consolidated subsidiaries (the Group) is effective, presents
fairly, in all material respects, the result of management's assessment of internal control over financial reporting inaccordance with standards for assessment of internal control over financial reporting generally accepted in Japan.
Basis for Opinion
We conducted our internal control audit in accordance with auditing standards on internal control over financial
reporting generally accepted in Japan. Our responsibilities under those standards are further described in the
Auditor’s Responsibilities for the Audit of Internal Control section of our report. We are independent of the Groupin accordance with the ethical requirements that are relevant to our audit of the financial statements in Japan, andwe have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Responsibilities of Management and the Audit Committee for the Management’s ReportManagement is responsible for designing and operating internal control over financial reporting, and for the
preparation and fair presentation of Management's Report in accordance with standards for assessment of internal
control over financial reporting generally accepted in Japan.
The Audit Committee is responsible for monitoring and verifying the design and operation of internal control overfinancial reporting.
Internal control over financial reporting may not prevent or detect misstatements completely.
Auditor’s Responsibilities for the Audit of Internal Control
Our objectives are to obtain reasonable assurance about whether Management's Report is free from material
misstatement, and to issue an auditor’s report that includes our opinion from an independent standpoint.
As part of an audit in accordance with auditing standards on internal control generally accepted in Japan, we
exercise professional judgment and maintain professional skepticism throughout the audit. We also:・ Perform audit procedures to obtain audit evidence relating to the result of management's assessment of internal
control over financial reporting in Management's Report. The design and performance of audit procedures forinternal control audits is based on our judgement in consideration of the materiality of the effect on thereliability of financial reporting.
・ Consider the overall presentation of Management's Report with regards to the scope, procedures, and result of
the assessment of internal control over financial reporting including descriptions by management.
・ Obtain sufficient appropriate audit evidence regarding the result of management's assessment of internal control
over financial reporting in Management's Report. We are responsible for the direction, supervision, andperformance of the audit of Management's Report.
We communicate with the Audit Committee regarding, among other matters, the planned scope and timing of theinternal control audit, the results of the internal control audit, any significant deficiencies in internal control that we
identify, and the results of corrective measures for such significant deficiencies.
We also provide the Audit Committee with a statement that we have complied with the ethical requirements
regarding independence that are relevant to our audit of internal control in Japan, and to communicate with them all
relationships and other matters that may reasonably be thought to bear on our independence, and where applicable,
related safeguards.
Interest Required to Be Disclosed by the Certified Public Accountants Act of Japan
Our firm and its designated engagement partners do not have any interest in the Group which is required to bedisclosed pursuant to the provisions of the Certified Public Accountants Act of Japan.

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

A-8

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

Confirmation Letter[Applicable Law]

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

Director, Kanto Local Finance Bureau[Filing Date]

June 21, 2023

[Company Name]

Kabushiki Kaisha Hitachi Seisakusho[Company Name in English]

Hitachi, Ltd.

[Name and title of

Keiji Kojima, President & CEO

Representative][Name and title of CFO]

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

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

1. Matters Related to Adequacy of Statements Contained in the Annual Securities Report
Mr. Keiji Kojima, President & CEO, and Mr. Yoshihiko Kawamura, Executive Vice President andExecutive Officer, confirmed that statements contained in the Annual Securities Report for the 154th fiscal year
(from April 1, 2022 to March 31, 2023) were adequate under the Financial Instruments and Exchange Act.
2. Special Notes
None.

A-10