2021/05/20 19:40:49 / 20731340_株式会社日立製作所_招集通知（Ｃ）(Securities Identification Code : 6501)[Translation]

THE

152

nd

Notice of Annual
General Meetingof Shareholders
Date and Time ： Wednesday, June 23, 2021

at 10:00 a.m.
Location ：Tokyo Dome City Hall
(East side of Tokyo Dome Hotel)
3-61, Koraku 1-chome, Bunkyo-ku, Tokyo

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

Note: This English translation incorporates, from page 46 to page 70, the materials that are provided to theshareholders for their review by posting on the Company’s website pursuant to the provisions of the Articles
of Incorporation of the Company and the relevant laws and regulations.

From the standpoint of preventing the spread of
COVID-19, safeguarding and securing theshareholders, we request the exercise of voting
rights in advance in writing or via the internet asmuch as possible and refraining from visiting theAnnual General Meeting of Shareholders on the day.

Cover2021/05/20 19:40:49 / 20731340_株式会社日立製作所_招集通知（Ｃ）

Dear Shareholders:June 1, 2021

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

Hitachi, Ltd.
E x e c u t i v e
C h a i r m a n ,President & CEO Toshiaki Higashihara
and Director

Notice of the 152nd Annual General Meeting of Shareholders

The 152nd Annual General Meeting of Shareholders of Hitachi, Ltd. is to be held as follows:

Date and Time

Wednesday, June 23, 2021 at 10:00 a.m. (Reception Start: 9:00 a.m.)
3-61, Koraku 1-chome, Bunkyo-ku, Tokyo

Location

Tokyo Dome City Hall (East side of Tokyo Dome Hotel)
Report on the Business Report, Financial Statements, and Consolidated
Reporting

Financial Statements for the 152nd Business Term (from April 1, 2020 to March

Matter31, 2021), and the results of the audit on the Consolidated Financial Statements
by the Accounting Auditors and the Audit Committee

A g e n d a
Matter to Be
Resolved

Item

Election of 13 Directors due to expiration of the term of office of all Directors● The following materials or items are provided to the shareholders for their review by posting on the Company’s website pursuant to the provisions of the Articles ofIncorporation of the Company and the relevant laws and regulations:(a) “Structures and Other Things to Ensure Adequacy of Business Operations (Internal Control System) and Operation of the Internal Control System”,“Fundamental Policy on the Conduct of Persons Influencing Decision on the Company’s Financial and Business Policies” and "Information on the stockacquisition rights, etc." in the Business Report, (b) "Consolidated Statements of Changes in Equity" and "Notes to Consolidated Financial Statements" of theConsolidated Financial Statements, (c) "Unconsolidated Statement of Changes in Net Assets" and "Notes to Unconsolidated Financial Statements" of the
Unconsolidated Financial Statements, and (d) Transcript of Accounting Auditors’ Audit Report on Consolidated Financial Statements.

The Audit Committee and the accounting auditor have audited the materials to be audited including the above.
In addition, the Company website also posts Consolidated Statements of Comprehensive Income and Consolidated Statements of Cash Flows as supplementary
information.
● This notice is also posted on the Company’s website.
● In the event the Business Report, Financial Statements, Consolidated Financial Statements or Reference Documentation for the Annual General Meeting of
Shareholders need to be modified in the period from the dispatch of this notice to the preceding day of the Annual General Meeting, the Company will post suchmodification on its website as below.

https://www.hitachi.com/smeet-e/index.html

1Annual General2021/05/20 19:40:49 / 20731340_株式会社日立製作所_招集通知（Ｃ）

Reference Documentation

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

item

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

The list of nominees
No

Name

Current Position and Responsibilities at the Company

1

Katsumi Ihara

RE

OD

ID

Independent Director■ Audit Committee ■ Compensation Committee

2

Ravi Venkatesan

RE

OD

ID

Independent Director

3

Cynthia Carroll

RE

OD

ID

Independent Director■ Nominating Committee4

Joe Harlan

RE

OD

ID

Independent Director

5George Buckley

RE

OD

ID

Independent Director

6

Louise Pentland

RE

OD

ID

Independent Director

7

Harufumi Mochizuki

RE

OD

ID

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

8

Takatoshi Yamamoto

RE

OD

ID

Independent Director■ Audit Committee ■ Compensation Committee

9

Hiroaki Yoshihara

RE

OD

ID

Independent Director■ Nominating Committee

10

Helmuth Ludwig

RE

OD

ID

Independent Director

11

Keiji Kojima

NEW

Representative Executive Officer, Executive Vice President

12

Hideaki Seki

RE

Director■ Audit Committee

13

Toshiaki HigashiharaRE

Representative Executive Officer, Executive Chairman, President & CEO
and Director■ Compensation CommitteeRE: Re-selected nominee

OD: Outside Director nominee as provided by the Companies Act of JapanID: Independent Director as provided by Japanese stock exchanges where the Company is listed

2

The first item rist ２パターン目■ Audit Committee (Chair)

2021/05/20 19:40:49 / 20731340_株式会社日立製作所_招集通知（Ｃ）

No

1

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

RE

OD

Term of office as Independent Director

Share Ownership

Three years

900

ID

Brief Biography
5/19816/2005

Attendance for fiscal 2020
Board of Directors meetings
9 out of 9 days (100%)
Audit Committee
17 out of 17 days (100%)Compensation Committee
4 out of 4days (100%)

4/20096/20096/20106/20114/20156/20166/2018Joined Sony Corporation
Executive Deputy President, Representative Corporate Executive Officer, Member of the Board, Sony
Corporation
Executive Deputy President, Corporate Executive, Sony Corporation
Executive Vice President, Representative Director, Sony Financial Holdings Inc.
President, Representative Director, Sony Financial Holdings Inc.
President, Representative Director, Sony Life Insurance Co., Ltd.
Chairman, Director, Sony Life Insurance Co., Ltd. (Retired in June 2017)
Chairman, Director, Sony Financial Holdings Inc. (Retired in June 2017)
Director, Hitachi, Ltd. (currently in office)

Other Principal Positions Held
Outside Director, Benesse Holdings, Inc.
Reason for selection as Independent Director nominee and his expected roles
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 was selected as anindependent director nominee, since he was 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 andproposals regarding the general management of the Company and supervising the execution of duties by
Executive Officers and others from an independent perspective.

No

2

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

RE

OD

Position and Responsibilities at the Company

Term of office as Independent Director

Share Ownership

Independent Director

11 months

200

ID

Brief Biography
7/19991/20044/2011

Attendance for fiscal 2020
Board of Directors meetings
6 out of 6 days (100%)

4/20138/20159/20187/2020Chairman of the Board of Directors, Cummins India Ltd. (India) (Retired in March 2004)
Chairman, Microsoft India Pvt. Ltd. (India) (Retired in September 2011)
Independent Director, Infosys Ltd. (India) (Retired in May 2018, served as Co-Chairman from April 2017
to August 2017)
Venture Partner, Unitus Ventures LLC. (India) (currently in office)
Chairman (Non-Executive), Bank of Baroda (India) (Retired in August 2018)
Special Representative for Young People & Innovation, UNICEF (currently in office)Director, Hitachi, Ltd. (currently in office)

Other Principal Positions Held
Venture Partner, Unitus Ventures LLC. (India)
Special Representative for Young People & Innovation, UNICEF
Reason for selection as Independent Director nominee and his expected roles
Mr. Venkatesan has rich experience and insight in the area of global corporate management, digital business andemerging markets. He was selected as an independent director nominee, since he was expected to leverage such
experience and insight to reinforce the supervisory and decision making functional aspects of the Company’s Boardof Directors by offering opinions and proposals regarding the general management of the Company from a global
viewpoint and supervising the execution of duties by Executive Officers and others from an independent
perspective .

3

The first item ２パターン目

2021/05/20 19:40:49 / 20731340_株式会社日立製作所_招集通知（Ｃ）

No

3

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

RE

OD

Position and Responsibilities at the Company

Term of office as Independent Director

Share Ownership

Independent Director
Member of Nominating Committee

Eight years

1,400

ID

Brief Biography
10/1991
1/1996
10/1998
1/20023/20076/2013General Manager, Foil Products, Alcan Inc. (Canada)
Managing Director, Aughinish Alumina Ltd., Alcan Inc.
President, Bauxite, Alumina and Specialty Chemicals, Alcan Inc.
President & CEO, Primary Metal Group, Alcan Inc.
CEO, Anglo American plc. (UK) (Retired in April 2013)
Director, Hitachi, Ltd. (currently in office)Attendance for fiscal 2020
Board of Directors meetings
9 out of 9 days (100%)
Nominating Committee
8 out of 8 days (100%)

Other Principal Positions Held
Director, Baker Hughes Company (USA)*
Director, Pembina Pipeline Corporation (Canada)*
Director, Glencore plc (Switzerland)*Reason for selection as Independent Director nominee and her expected roles
Ms. Carroll has rich experience and insight as the top executive of major global companies in the mining industry.
She was selected as an independent director nominee, since she was expected to leverage such experience andinsight 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 andsupervising the execution of duties by Executive Officers and others from an independent perspective.

No

4

Joe Harlan(Date of Birth: May 5, 1959)

RE

OD

Position and Responsibilities at the Company

Term of office as Independent Director

Share Ownership

Independent Director

Three years

900

ID

Brief Biography
9/19999/2001
11/2002
10/2004
10/2009
9/20119/2012
Attendance for fiscal 2020
Board of Directors meetings
9 out of 9 days (100%)

10/2014
10/2015
6/2018Vice President and Chief Financial Officer, Lighting Business, General Electric Company (USA)Vice President, Corporate Financial Planning and Analysis, 3M Company (USA)President and Chief Executive Officer, Sumitomo 3M Ltd.
Executive Vice President, Electro and Communications Business, 3M Company (USA)
Executive Vice President, Consumer and Office Business, 3M Company (USA)
Executive Vice President, Performance Materials, The Dow Chemical Company (USA)
Executive Vice President, Chemicals, Energy and Performance Materials, The Dow Chemical Company(USA)
Chief Commercial Officer and Vice Chairman, Market Business, The Dow Chemical Company (USA)Vice Chairman and Chief Commercial Officer, The Dow Chemical Company (USA) (Retired in August
2017)
Director, Hitachi, Ltd. (currently in office)Reason for selection as Independent Director nominee and his expected roles
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 was selected as anindependent director nominee, since he was 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 andproposals regarding the general management of the Company from a global viewpoint and supervising theexecution of duties by Executive Officers and others from an independent perspective.

4

The first item ２パターン目

2021/05/20 19:40:49 / 20731340_株式会社日立製作所_招集通知（Ｃ）

No

5

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

RE

OD

Position and Responsibilities at the Company

Term of office as Independent Director

Share Ownership

Independent Director

Nine years

6,600

ID

Brief Biography

Attendance for fiscal 2020

2/1993
9/1994
7/19974/20006/200012/2005
2/20126/2012

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

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

Other Principal Positions Held
Chairman, Smiths Group plc (UK)*
Chairman of the Board, Stanley Black & Decker, Inc. (USA)*
Reason for selection as Independent Director nominee and his expected roles
Mr. Buckley has rich experience and insight as the top executive of major global companies conducting diversified
businesses globally. He was selected as an independent director nominee, since he was expected to leveragesuch 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 the Company from a
global viewpoint and supervising the execution of duties by Executive Officers and others from an independent
perspective.

No

6

Louise Pentland(Date of Birth: Apr. 11, 1972)

RE

OD

Position and Responsibilities at the Company

Term of office as Independent Director

Share Ownership

Independent Director

Six years

1,000

ID

Brief Biography

Attendance for fiscal 2020
Board of Directors meetings
9 out of 9 days (100%)

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

Admitted as a Solicitor (UK)
Senior Legal Counsel, Nokia Networks, Nokia Corporation (Finland)
Vice President, Acting Chief Legal Officer and Head of IP Legal, Nokia Corporation (Finland)
Senior Vice President and Chief Legal Officer, Nokia Corporation (Finland)
Admitted to New York State Bar Association
Executive Vice President and Chief Legal Officer, Nokia Corporation (Finland) (Retired in May, 2014)
General Counsel, PayPal, eBay Inc. (USA)
Director, Hitachi, Ltd. (currently in office)Senior Vice President and Chief Legal Officer, PayPal Holdings, Inc. (USA)
Executive Vice President, Chief Business Affairs and Legal Officer, PayPal Holdings, Inc. (USA)(currently in office)

Other Principal Positions Held
Executive Vice President, Chief Business Affairs and Legal Officer, PayPal Holdings, Inc. (USA)
Reason for selection as Independent Director nominee and her expected roles
Ms. Pentland has deep insight into corporate legal matters and corporate governance gained through her richexperience as the chief legal officer of major global companies. She was selected as an independent director
nominee, since she was 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 general management of the Company from a global viewpoint and supervising the execution of duties
by Executive Officers and others from an independent perspective as well as reflecting her global viewpoint.

5

The first item ２パターン目

2021/05/20 19:40:49 / 20731340_株式会社日立製作所_招集通知（Ｃ）

No

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

RE

OD

Term of office as Independent Director

Share Ownership

Nine years

4,700

ID

Brief Biography
4/19737/2002
Attendance for fiscal 2020
Board of Directors meetings
9 out of 9 days (100%)
Nominating Committee
8 out of 8 days (100%)
Audit Committee
17 out of 17 days (100%)Compensation Committee
4 out of 4 days (100%)

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

Other Principal Positions Held
President and Representative Director, Tokyo Small and Medium Business Investment & Consultation Co., Ltd.
Reason for selection as Independent Director nominee and his expected roles
Mr. Mochizuki has rich experience and insight in the area of public administration, etc. gained through leading
positions at government agencies. He was selected as an independent director nominee, since he was expected toleverage such experience and insight to reinforce the supervisory and decision making functional aspects of theCompany’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.

No

8

Takatoshi Yamamoto(Date of Birth: Oct. 20, 1952)

RE

OD

Position and Responsibilities at the Company

Term of office as Independent Director

Share Ownership

Independent Director
Member of Audit Committee
Member of Compensation Committee

Five years

11,200ID

Brief Biography

Attendance for fiscal 2020
Board of Directors meetings
9 out of 9 days (100%)
Audit Committee
17 out of 17 days (100%)Compensation Committee
4 out of 4days (100%)

4/1975
4/198912/1995
6/19997/20056/20096/20116/2016

Joined Nomura Research Institute, Ltd.
Joined Morgan Stanley Japan Limited
Managing Director, Morgan Stanley Japan Limited
Managing Director and Vice Chairman, Tokyo Branch, Morgan Stanley Japan Limited
Managing Director and Vice Chairman, UBS Securities Japan Co., Ltd.
Managing Director, CASIO COMPUTER CO., LTD.
Advisor, CASIO COMPUTER CO., LTD. (Retired in June 2012)
Director, Hitachi, Ltd. (currently in office)

Other Principal Positions Held
Outside Director, Murata Manufacturing Co., Ltd.
Reason for selection as Independent Director nominee and his expected roles
Mr. Yamamoto has broad range of insight in business and management gained through his experience in the areaof corporate analysis and global corporate management. He was selected as an independent director nominee,
since he was 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 generalmanagement of the Company and supervising the execution of duties by Executive Officers and others from an
independent perspective.

6

The first item ２パターン目

2021/05/20 19:40:49 / 20731340_株式会社日立製作所_招集通知（Ｃ）

No

9

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

RE

OD

Term of office as Independent Director

Share Ownership

Seven years

2,500

ID

Brief Biography
11/1978
7/1996
10/1997
10/20036/2014
Attendance for fiscal 2020
Board of Directors meetings
9 out of 9 days (100%)
Nominating Committee
8 out of 8 days (100%)
Audit Committee
17 out of 17days (100%)

No

10

Joined Peat Marwick Mitchell & Co.
National Managing Partner, the Pacific Rim Practice, KPMG LLPThe Board Member, KPMG LLP
Vice Chairman and Global Managing Partner, KPMG International (Retired in April 2007)
Director, Hitachi, Ltd. (currently in office)

Other Principal Positions Held
Outside Director, HOYA CORPORATION
Reason for selection as Independent Director nominee and his expected roles
Mr. Yoshihara has rich experience and insight in the area of global corporate management and accounting. He wasselected as an independent director nominee, since he was expected to leverage such experience and insight toreinforce the supervisory and decision making functional aspects of the Company’s Board of Directors by offering
opinions and proposals regarding the general management of the Company from a global viewpoint andsupervising the execution of duties by Executive Officers and others from an independent perspective.

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

RE

OD

Position and Responsibilities at the Company

Term of office as Independent Director

Share Ownership

Independent Director

11 months

1,900

ID

Brief Biography
6/20018/20028/2007
10/2010
10/2011
10/2014
Attendance for fiscal 2020
Board of Directors meetings
6 out of 6 days (100%)

10/2016
1/20207/2020President, Software and System House Division, Siemens AG (Germany)
President, Systems Engineering Division, Automation and Drives Group, Siemens AG (Germany)
President, Siemens PLM Software, Inc. (USA)Global Head of Communications, Industry Automation, Siemens Corp. (USA)President and CEO, Industry Sector, North America, Siemens Industry, Inc. (USA)
Executive Vice President and Chief Digital Officer, Digital Factory Division, Product Lifecycle
Management, Siemens Corp. (USA)
Chief Information Officer, Siemens AG (Germany) (Retired in December, 2019)
Professor of Practice in Strategy and Entrepreneurship, Cox School of Business, Southern Methodist
University (USA) (currently in office)Director, Hitachi, Ltd. (currently in office)

Other Principal Positions Held
Chairperson of the Board, Circor International, Inc. (USA)*
Professor of Practice in Strategy and Entrepreneurship, Cox School of Business, Southern Methodist University(USA)
Reason for selection as Independent Director nominee and his expected roles
Mr. Ludwig has rich experience and insight in the area of global corporate management and digital business. He
was selected as an independent director nominee, since he was expected to leverage such experience and insightto 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 andsupervising the execution of duties by Executive Officers and others from an independent perspective.

7

The first item ２パターン目

2021/05/20 19:40:49 / 20731340_株式会社日立製作所_招集通知（Ｃ）

No

11

Keiji Kojima(Date of Birth: Oct. 9, 1956)

NEW

Share Ownership

Position and Responsibilities at the Company
Representative Executive Officer,
Executive Vice President

52,400Brief Biography
4/19824/20114/20124/20164/2018Joined Hitachi, Ltd.
General Manager, Hitachi Research Laboratory
Vice President and Executive Officer
Senior Vice President and Executive Officer
Representative Executive Officer, Executive Vice President (currently in office)Reason for selection as Director nominee and his expected roles
Mr. Kojima has rich experience and a proven performance record, having been engaged in R&D and business
management in the digital business both at the Company and at Group companies as well as in global promotion of
Lumada business, and currently he serves as Executive Vice President managing the Smart Life sector. After theconclusion of this Annual General Meeting of Shareholders, Mr. Kojima will be appointed as President & COO. Mr.
Kojima was selected as a director nominee, since he was expected to continue to promote information sharing anddraw on his rich experience and performance record to reinforce the decision-making function of the Board of
Directors as a member of the Board.

No

12

Hideaki Seki

(Date of Birth: Mar. 10, 1957)

Position and Responsibilities at the Company
Director
Member of Audit Committee

RE

Share Ownership
11,400Brief Biography

Attendance for fiscal 2020
Board of Directors meetings
6 out of 6 days (100%)
Audit Committee
10 out of 10 days (100%)

4/19794/20114/20134/20144/20154/20164/20184/20207/2020Joined Hitachi, Ltd.
Board Director, Hitachi Automotive Systems, Ltd.
Vice President, Board Director, Hitachi Automotive Systems, Ltd.
Executive Vice President, Board Director, Hitachi Automotive Systems, Ltd.
President & COO, Representative Director, Hitachi Automotive Systems, Ltd.
President & CEO, Representative Director, Hitachi Automotive Systems, Ltd. (Retired in March, 2018)
Senior Vice President and Executive Officer, Hitachi, Ltd.
President, Representative Director, Hitachi Building Systems Co., Ltd. (Retired in March, 2020)
Associate, Hitachi, Ltd.
Director, Hitachi, Ltd. (currently in office)Reason for selection as Director nominee and his expected roles
Mr. Seki has rich experience and a proven performance record, having been engaged in business management in
the fields of Elevator & Escalator Business and Automotive Systems Business, both at the Company and at Group
companies, as well as in the promotion of the global development of the businesses. Mr. Seki was selected as adirector nominee, since he was expected to reinforce the supervisory functions of the Company's Board of
Directors by supervising the execution of duties by Executive Officers and others based on his rich experience anda proven performance record.

8

The first item ２パターン目

2021/05/20 19:40:49 / 20731340_株式会社日立製作所_招集通知（Ｃ）

13

No

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

RE

Share Ownership
135,900

Brief Biography

Attendance for fiscal 2020
Board of Directors meetings
9 out of 9 days (100%)Compensation Committee
4 out of 4 days (100%)

4/19774/20074/20084/20106/20104/20114/20134/20146/20144/20165/2021Joined Hitachi, Ltd.
Vice President and Executive Officer
President, Hitachi Power Europe GmbH
Representative Executive Officer, President and Chief Executive Officer, Hitachi Plant Technologies, Ltd.
President and Representative Director, Hitachi Plant Technologies, Ltd.
Vice President and Executive Officer, Hitachi, Ltd.
Senior Vice President and Executive Officer, Hitachi, Ltd.
Representative Executive Officer and President & COO, Hitachi, Ltd.
Representative Executive Officer, President & COO and Director, Hitachi, Ltd.
Representative Executive Officer, President & CEO and Director, Hitachi, Ltd.
Representative Executive Officer, Executive Chairman, President & CEO and Director, Hitachi, Ltd.
(currently in office)Reason for selection as Director nominee and his expected roles
Mr. Higashihara has rich experience and a proven performance record, having been engaged in business
management in a broad range of fields, including social infrastructure business and power systems business, bothat the Company and at Group companies, as well as in the promotion of the Group’s global business development.
He has been engaged in the management of the Company as President since April 2014 and he will continue toserve as Chairman & CEO after the General Meeting of Shareholders. Mr. Higashihara was selected as a director
nominee, since he was expected to continue to promote information sharing and draw on his rich experience andperformance record to reinforce the decision-making function of the Board of Directors as a member of the Board.

Notes:
1.

2.

3.

4.

5.

6.
7.

8.

Messrs. Katsumi Ihara, Ravi Venkatesan, Joe Harlan, George Buckley, Harufumi Mochizuki, Takatoshi Yamamoto, Hiroaki
Yoshihara and Helmuth Ludwig and Mses. Cynthia Carroll and Louise Pentland are nominees who fulfill the qualification
requirements to be outside director nominees as provided for in Article 2, Paragraph 3, Item 7 of the Enforcement Regulationsof the Companies Act. The Company has reported all of them as independent directors to the Japanese stock exchanges
where the Company is listed.
The Company maintains a limited liability agreement (hereinafter referred to as “Agreement”) with Messrs. Katsumi Ihara, Ravi
Venkatesan, Joe Harlan, George Buckley, Harufumi Mochizuki, Takatoshi Yamamoto, Hiroaki Yoshihara, Helmuth Ludwig and
Hideaki Seki and Mses. Cynthia Carroll and Louise Pentland. The general intent of the Agreement is to limit the liability of
Directors provided for in Article 423, Paragraph 1 of the Companies Act to the aggregate amount of each item stipulated under
Article 425, Paragraph 1 of the Companies Act. The Agreement will be renewed should the aforementioned individuals be reelected at this Meeting.
The Company currently has a Directors' and Officers' Liability Insurance Agreement, which is stipulated in Article 430-3
paragraph 1 of Companies Act, nominating each of its director candidates as an insured person with an insurance company.
The content of the Insurance Agreement is stated in page 31. Upon the approval of director election, each director will continue
to be an insured person of the insurance agreement. The Company plans to renew the agreement with the same terms andconditions during the tenure of each director.
ITOCHU Corporation, where Mr. Harufumi Mochizuki serves as an outside director (retirement scheduled in June this year),
was issued cease and desist orders and a surcharge payment order related to breaches of Antimonopoly Act by the Japan Fair
Trade Commission in 2018. Mr. Mochizuki has been constantly expressing his opinions for the importance of compliance at thecompany's Board of Directors, etc. After the aforementioned facts were found, Mr. Mochizuki has proactively expressedsuggestions for taking preventive measures and enhancing the compliance management system.
SUBARU CORPORATION, where Mr. Takatoshi Yamamoto had served as an outside corporate auditor from June 2012 toJune 2016, identified certain incidents of improper conduct regarding final vehicle inspections. The Ministry of Land,
Infrastructure, Transport and Tourism made recommendation with respect to preventive measures and issued administrativefines in accordance with the Road Transport Vehicle Act. In March 2019, the Tokyo District Court imposed the fines and thecompany paid them. Mr. Yamamoto had constantly expressed his opinions for the importance of compliance at the company's
Board of Directors, etc. even though he was not aware of the incidents during his terms of office.
Mr. Hiroaki Yoshihara served as Non-Executive Director (a similar position to outside director under the Companies Act) at theCompany’s overseas subsidiaries from September 2008 to March 2012.
In the event this agenda is approved, the members and the chair of the committees are expected to be as follows:
Nominating Committee:Harufumi Mochizuki (Chair), Cynthia Carroll, Hiroaki Yoshihara, Toshiaki Higashihara
Audit Committee:Hiroaki Yoshihara (Chair), Katsumi Ihara, Harufumi Mochizuki, Takatoshi Yamamoto,
Helmuth Ludwig, Hideaki Seki
Compensation Committee :Harufumi Mochizuki (Chair), Katsumi Ihara, Joe Harlan, Takatoshi Yamamoto, Keiji Kojima
The Company has no transactions with Unitus Ventures LLC., where Mr. Venkatesan is currently serving as Venture Partner,with UNICEF, where Mr. Venkatesan is currently serving as Special Representative for Young People & Innovation, with
PayPal Holdings, Inc., where Ms. Louise Pentland is currently serving as Executive Vice President, Chief Business Affairs andLegal Officer, with Tokyo Small and Medium Business Investment & Consultation Co., Ltd., where Mr. Harufumi Mochizuki iscurrently serving as President and Representative Director and with Southern Methodist University, where Mr. Ludwig iscurrently serving as Professor of Practice.

9

The first item ２パターン目

2021/05/20 19:40:49 / 20731340_株式会社日立製作所_招集通知（Ｃ）

9.

The Company has no transactions whose volume is more than 1% of the Company's consolidated revenues or eachcompany's respective consolidated revenues with Sony Financial Holdings Inc. (including its operating companies such as
Sony Insurance Co., Ltd.), where Mr. Katsumi Ihara had served as Chairman and Director (retired in June 2017), The Dow
Chemical Company (currently Dow Inc., etc.), where Mr. Joe Harlan had served as Vice Chairman and Chief Commercial
Officer (retired in August 2017) and Siemens AG, where Mr. Helmuth Ludwig had served as Chief Information Officer (retired in
December 2019).
10. Mr. Hiroaki Yoshihara served as Vice Chairman of KPMG International until April 2007. However, the Accounting Auditors of
the Company do not belong to the KPMG Group. In addition, there is no contractual relationship between Mr. Yoshihara andthe Company in relation to accounting and other professional services or consulting services, etc.
11. The positions with * in “Other Principal Positions Held” of each nominee are similar positions in each of the foreign corporations
to outside director under the Companies Act.

(Reference) Matters considered by the Nominating Committee in nominating a director candidate
Size of the Board
Given the need for diversity of the Board views and efficiency of the Board, the number of directors shall be no morethan 20.
The Nominating Committee shall consider the optimal size of the Board following the policy described above indeciding the matters relating to a proposal concerning election and removal of directors to be submitted to the General
Meeting of Shareholders.
Composition of the Board
In nominating a director candidate, the Nominating Committee shall consider:
1. diversity in the experience and expertise, etc. possessed by the director candidates, the composition ratio between
independent directors and other directors (directors concurrently serving as executive officers and non-executive
directors from within the Hitachi Group), and other such matters in order to ensure the effectiveness of the
management supervision and decision-making functions of the Board;
2. that to maintain the continuity of the Board, new candidates do not constitute all or almost all of the nominees; and3. the period of time since the candidate's assumption of office as the Company's director and the candidate's age tokeep bringing fresh ideas and viewpoints regularly to the Board.
In principle, a person will not be nominated as a director candidate after his or her 75th birthday. However, in special
circumstances, a person over 75 years old may be nominated as a director candidate if the Nominating Committee
approves. Also, in principle, the Nominating Committee will not nominate a person as an independent director
candidate if a person has reached 10 years of total tenure. However, in special circumstances, a person with the total
tenure of 10 years or more may be nominated as an independent director candidate, but even in this case, a personwith the total tenure of 12 years or more can no longer be nominated as an independent director candidate.
Qualification for Directors
In nominating a director candidate, the Nominating Committee shall consider that:
1. such nominee has the highest personal and professional ethics, integrity and insight; and2. such independent director nominee has distinguished records of leadership or experience at policy making levels inbusiness, law, administration, accounting or education, etc., in addition to satisfying the criteria for independency asprovided in this Guideline.
Criteria for Independency of Directors
The Nominating Committee considers director to be independent unless:
1. his or her immediate family member* is, or has been within the last three years, a director or an executive officer of
the Company or any of its subsidiaries;
2. he or she is currently an executive director, an executive officer or an employee of a company that has madepayments to, or received payments from, the Company for property or services in an amount which, in any of the last
three fiscal years, exceeds 2% of any of the companies' consolidated gross revenues;
3. he or she has received during any of the last three fiscal years more than 10 million yen in direct compensation for
his or her service as a specialist in law, accounting or tax, or as a consultant from the Company, other than director
compensations; or
4. he or she serves as an executive officer or director of a not-for-profit organization, and the Company's discretionary
charitable contributions to the organization in any of the last three fiscal years are more than 10 million yen and 2% ofthat organization's annual gross revenues.
* An "immediate family member" includes a person's spouse, parents, children, siblings, grand-parents, grandchildren, mothers and fathers-in-law, sons and daughters-in-law, spouses of siblings, grand-parents-in-law, grandchildren-in-law, and brothers and sisters-in-law.
Source: Corporate Governance Guidelines of Hitachi, Ltd. (Article 2 to 5)
https://www.hitachi.com/IR-e/corporate/governance/guidelines.html

10

The first item ２パターン目

2021/05/20 19:40:49 / 20731340_株式会社日立製作所_招集通知（Ｃ）

Business Report (from April 1, 2020 to March 31, 2021)(1) Business Overview and Results of Hitachi Group
Business Results
The Hitachi Group secured revenues of 8,729.1 billion yen and adjusted operating income of 495.1 billion yen,mainly reflecting achievements in its business portfolio reforms, in addition to the overall support by the IT sector, which
achieved a record-high adjusted operating income by addressing demand for digital transformation (DX), despite thesevere business environment due to the COVID-19 pandemic. Earnings before interest and taxes (EBIT) was 850.2
billion yen mainly due to the posting of gains from the sale of Hitachi Chemical and diagnostic imaging-related business,
and net income attributable to Hitachi, Ltd. stockholders was 501.6 billion yen, a record high.
Regarding funds, cash flows from operating activities increased about 230 billion yen from the previous fiscal
year, to about 800 billion yen due to strengthened cash management, and the cash flow margin from operating activities(ratio of cash flows from operating activities to revenues) was 9.1%, a record high.
As the Hitachi Group has established a foundation that enables itself to maintain the profitability and ability togenerate cash even under the difficult business environment, the Group increased the amount of its annual dividend 10
yen to 105 yen (with an interim dividend of 50 yen and a year-end dividend of 55 yen).
Measures Taken and Aims
‒ Evolution into a Social Innovation Company that leads the DX of social infrastructure
In March 2021, Hitachi decided to acquire GlobalLogic Inc. in the United States to facilitate the global DX ofsocial infrastructure. Headquartered in Silicon Valley, GlobalLogic is a leading company in the digital engineering market
which continues to grow rapidly. Hitachi will be able to strengthen the following two points through synergy between
GlobalLogic and Hitachi's existing strengths in "OT x IT x Products."
One is Hitachi's ability of co-creation with customer. GlobalLogic owns design centers for co-creation all over
the world and has achieved the fast development of applications and services through co-creation with customers in awide range of areas including telecommunications, financial services, automobiles, healthcare and industry. Focusing on
developing the core systems that are indispensable in its customers' businesses, Hitachi will leverage the resources of
GlobalLogic to strengthen and expand its co-creation activities globally across a broader range of industries.
In addition, the acquisition of GlobalLogic's technical capabilities will secure the system for comprehensive
digital engineering to address development at all levels from Chip to Cloud (from the on-site level to the cloud level).
Hitachi will evolve into a company that can promptly and efficiently resolve the challenges faced by customers thatemerge in the process of the co-creation with end-to-end solutions from Chip to Cloud.
Resolutely, Hitachi has made a crucial decision, and it will survive the competition in a rapidly changing worldand become a global leader achieving digital transformation of social infrastructure by leveraging synergies with
GlobalLogic.
‒ Establishment of a business foundation for growth
Hitachi has also worked to establish a business foundation to grow into a global leader. Hitachi has continued
reforms of its business portfolio, including the sale of Hitachi Chemical and the diagnostic imaging-related business while
launching Hitachi ABB Power Grids Ltd. and Hitachi Astemo, Ltd. (former Hitachi Automotive Systems, Ltd) In addition,
under the COVID-19 pandemic, Hitachi put the top priority on the health and safety of its employees, their families and its
customers and took measures to maintain social infrastructure and secure a system to support customers and promoted
new workstyles to make remote work as the standard.
Thus, Hitachi has established a system to achieve further growth even in the new normal.

11

Business Results

2021/05/20 19:40:49 / 20731340_株式会社日立製作所_招集通知（Ｃ）

Consolidated Financial Results for Fiscal 2020 (Billions of yen)

Revenues

Adjusted operating income

8,729.1
495.1(Adjusted operating income ratio)(

Year over year

100%

Year over year

75%

5.7%)

Earnings before interest andtaxes (EBIT)

850.2

Year over year463%

Net income attributable to
Hitachi, Ltd. Stockholders

501.6

Year over year

573%

Year over year

-3.0

Return on invested capital(ROIC)
Notes: 1.
2.
3.
4.

6.4%

The consolidated financial statements of the Company have been prepared in conformity with the International Financial Reporting Standards (IFRS).
"Adjusted operating income" is presented as revenues less cost of sales as well as selling, general and administrative expenses.
"EBIT" is presented as income from continuing operations, before income taxes less interest income plus interest charges.
ROIC = ("NOPAT" + Share of profits (losses) of investments accounted for using the equity method) / "Invested Capital" × 100
NOPAT (Net Operating Profit after Tax) = Adjusted Operating Income × (1 - Tax burden rate)
Invested Capital = Interest-bearing debt + Total equity

Billions of yen
Others

449.0
(5%)*

IT

2,048.7(21%)*

Hitachi Metals

761.6
(8%)*

Energy1,107.9(12%)*

Industry

830.1
(9%)*

Mobility

1,199.6(13%)*

Revenues
HitachiConstruction Machinery

Smart Life

813.3
(8%)*

8,729.1

2,240.3(24%)** Percentage to total revenues
Note: Revenues by segment include intersegment transactions.

12

Business Results

2021/05/20 19:40:49 / 20731340_株式会社日立製作所_招集通知（Ｃ）

Results by Segment (Billions of yen)

IT
Main Products and Services(As of March 31, 2021)

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

Revenues
Adjusted
operatingincomeEBIT
ROIC

2,048.7 billion yen(－) Decline in overseas sales, mainly in North America(－) Reactionary decrease (including project for one-time demand in
the preceding fiscal year) in IT service business

98% of the preceding fiscal year

269.4 billion yen

Achieved a record-high (adjusted operating income ratio of 13.2%)(＋) Secured profitability by improved cost structure(－) Decrease in revenues

108% of the preceding fiscal year

244.8 billion yen(＋) Increase in adjusted operating income(＋) Decrease in structural reform expenses

114% of the preceding fiscal year

17.8%
―

Decrease of 0.6 points
from the preceding fiscal year

* (＋) means main factor of increase while (－) means main factor of decrease.

[Business Strategy]
The IT sector will meet the expectations of both of its
domestic and global customers and realize a sustainable
society leveraging the power of digital technologies,
including Lumada, as it aims to become the world's top
tier solution provider. By fulfilling the need for DX
promotion, the IT sector will work to enhance social value
through the provision of advanced digital solutions in thefields of finance and social infrastructure and also create
environmental value through its efforts to improve

Data analytics-related solutions

environmental efficiency throughout the entire life cycleof products and services. The IT sector will also
accelerate global development of Lumada and expand its
social innovation business through utilization of
GlobalLogic, which Hitachi has decided to acquire.

13

Results by Segment

2021/05/20 19:40:49 / 20731340_株式会社日立製作所_招集通知（Ｃ）

EnergyMain Products and Services(As of March 31, 2021)

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

Revenues
Adjusted
operatingincomeEBIT
ROIC

1,107.9 billion yen(＋) Effect of the acquisition of ABB's Power Grids business(－) Decrease in energy business

278% of the preceding fiscal year(－) Acquisition-related amortization(－) Strengthening measures for some projects in renewable energy
business, etc.
(＋) Increase in revenues- 47.7 billion yen- of the preceding fiscal year

- 55.5 billion yen(－) Decrease in adjusted operating income(＋) Loss for the settlement on the South Africa projects recorded in
the preceding fiscal year

- of the preceding fiscal year

-2.7%
―

Decrease of 9.1 points
from the preceding fiscal year

[Business Strategy]
Leveraging its strengths in "OT x IT x Products," theEnergy sector is contributing to the stable supply ofenergy, efficient equipment management, the reductionof CO2 emissions and the realization of a decarbonizedsociety by providing energy solutions through co-creation
with its customers and partners. The Energy sector willcontribute to the achievement of the SDGs through thedevelopment of its social innovation business as neededin each region, including the development of new

Ultra-high voltage gas insulated switching equipment

solutions and stronger resilience through the utilization ofdigital technologies, by combining the global
competitiveness of Hitachi ABB Power Grids and thetechnologies and knowledge of Hitachi.

14

Results by Segment

2021/05/20 19:40:49 / 20731340_株式会社日立製作所_招集通知（Ｃ）

Industry
Main Products and Services(As of March 31, 2021)

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

Revenues
Adjusted
operatingincomeEBIT
ROIC

830.1 billion yen
99% of the preceding fiscal year

45.5 billion yen
83% of the preceding fiscal year

42.3 billion yen
73% of the preceding fiscal year(－) Decrease in industrial products business(＋) Effect of acquisition of JR Automation(－) Decrease in revenues(＋) Profit increase from acquisition of JR Automation and expansionof digital solution business(－) Decrease in adjusted operation income(－) Decrease in profit of an equity-method associate, etc.

6.1%―

Decrease of 2.5 points
from the preceding fiscal year

[Business Strategy]
The Industry sector will leverage its strengths in "OT x IT
x Products" and Lumada to enhance and expand its total
seamless solutions that connect management,
workplaces and supply chains to achieve total
optimization. It also accelerates its global development
such as the acquisition of JR Automation in the U.S.
With these strategies, the Industry sector aims tobecome the best solution partner for its customers in theindustry area.

Robot system integration business of JR Automation

15

Results by Segment

2021/05/20 19:40:49 / 20731340_株式会社日立製作所_招集通知（Ｃ）

Mobility
Main Products and Services(As of March 31, 2021)

Building Systems (Elevators, Escalators), Railway Systems

Revenues
Adjusted
operatingincome
EBIT
ROIC

1,199.6 billion yen(＋) Expansion of Chinese business in building systems business(－) Decrease in railway systems business

105% of the preceding fiscal year

74.7 billion yen(－) Decrease in revenues of railway systems business(＋) Increase in revenues and profitability improvement due to cost
reduction, etc. in building systems business

81% of the preceding fiscal year

129.0 billion yen(＋) Gains from selling a part of Agility Trains East stocks(－) Decrease in adjusted operating income

115% of the preceding fiscal year

8.9%―

Decrease of 2.4 points
from the preceding fiscal year

[Business Strategy]
In the building systems business, the Mobility sector willmeet the needs present in the new normal, such as the
reduction of the risks presented by infectious diseases,
the improvement of disaster resilience and the promotionof workstyle reforms in building management operations
by widely leveraging cutting-edge digital technologies forthe development of products and services and providing
a variety of Lumada solutions for elevators andescalators, and buildings that support safe, secure andHigh-speed trains "Frecciarossa 1000"

comfortable urban lives. In the railway systems
business, the Mobility sector will actively promote
investment in the Americas, in addition to Japan andEurope, and accelerate its growth by working to tap intobusiness opportunities such as large-scale projects while
utilizing its existing manufacturing bases and presence inthe maintenance and services markets.

Standard type elevator

16

Results by Segment

2021/05/20 19:40:49 / 20731340_株式会社日立製作所_招集通知（Ｃ）

Smart Life
Main Products and Services(As of March 31, 2021)

Smart Life & Ecofriendly Systems (Home Appliances, Air Conditioners),
Measurement and Analytical Systems (Medical and Bio, Semiconductor,
Industry), Automotive Systems (Powertrain, Chassis, Advanced Driver
Assistance, Motorcycle)

Revenues
Adjusted
operatingincomeEBIT
ROIC2,240.3 billion yen(＋) Effect of Hitachi Astemo integration(－) COVID-19 impact

103% of the preceding fiscal year

114.1 billion yen(－) Profitability decrease in diagnostic imaging related business(＋) Profitability improvement in home appliances business

96% of the preceding fiscal year

206.5 billion yen(＋) Gains from selling diagnostic imaging-related business(－) Impairment loss on fixed assets in automotive systems business

229% of the preceding fiscal year

5.9%―

Decrease of 2.1 points
from the preceding fiscal year

Note: Effective from April 1, 2020, Hitachi High-Tech was reclassified in this segment due to making Hitachi High-Tech
Corporation a wholly-owned subsidiary of Hitachi, Ltd. in May 2020. Figures shown above, including thenumbers for the preceding fiscal year, have been restated on the basis of the reclassification.

[Business Strategy]
The Smart Life sector will actively invest in thestrengthening of its products that retain the largest
market shares using digital technologies and in
expansion of service businesses through co-creation with
its customers. The Smart Life sector will contribute to therealization of a smart life that improves the QoL (Qualityof Life) of people by creating competitive solutions in
Particle therapy system (Osaka Heavy Ion Therapy Center)growing markets, including the integration of medicalcare and biotechnology, the quality improvement ofsemiconductors that support digitalization and 5G, theapplication of AI and robots in households, andadvanced driver assistance for automobiles, while
utilizing Lumada's data analysis technologies.

17

Results by Segment

2021/05/20 19:40:49 / 20731340_株式会社日立製作所_招集通知（Ｃ）

Hitachi Construction
Machinery

87% of the preceding fiscal year

Adjusted
operatingincome31.6 billion yen
42% of the preceding fiscal year

27.6 billion yen

EBIT

39% of the preceding fiscal year

EBIT

761.6 billion yen- 4.9 billion yen- of the preceding fiscal year

- 49.1 billion yen- of the preceding fiscal year

Specialty Steel Products, Functional Components and Equipment,
Magnetic Materials and Power Electronics Materials, Wires, Cables
and Related Products(－) Decrease in demand forautomobiles(－) Decrease in revenues
Recorded impairment loss inthe magnetic materials
business(－) Decrease in adjusted
operating income(＋) Decrease in structuralreform expenses

Clad metals for lithium-ion batteries

Optical Disk Drives, Property Management(As of March 31, 2021)

449.0 billion yen Adjusted
operatingincome93% of the preceding
fiscal year

21.2 billion yen
95% of the preceding
fiscal year

18

Results by Segment

Ultra-large hydraulic excavator and rigid
dump truck for mining(－) Decrease in adjusted
operating income

Main Products andServices

Others

Revenues(－) Decrease in revenues(－) Change in model mix ofvalue chain business andother model mix(＋) Profitability improvement
due to cost reduction, etc.

(As of March 31, 2021)

86% of the preceding fiscal year

Hydraulic Excavators, Wheel Loaders, Mining Machinery,
Maintenance and Services, Construction Solutions, MineManagement Systems(－) COVID-19 impact(－) Impact of foreign exchange

Main Products andServices

Hitachi Metals

Adjusted
operatingincome(As of March 31, 2021)

813.3 billion yen

Revenues

Revenues

Main Products andServices

EBIT

25.3 billion yen
81% of the preceding
fiscal year

2021/05/20 19:40:49 / 20731340_株式会社日立製作所_招集通知（Ｃ）(2) Five-year Summary of Assets and Results of Operation of Hitachi Group
1) Consolidated Basis(Billions of yen)
Fiscal Year

2016

2017

2018

2019

2020

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

9,162.2
587.3
475.1
469.0

9,368.6
714.6
644.2
638.6

9,480.6
754.9
513.9
516.5

8,767.2
661.8
183.6
180.2

8,729.1
495.1
850.2
844.4

231.2

362.9

222.5

87.5

501.6

9,663.9

10,106.6

9,626.5

9,930.0

11,852.8

2016

2017

2018

2019

2020

1,906.5
(9.8)
71.5
97.7
4,070.2

1,930.2
59.0
131.2
136.1
4,040.8

1,927.2
93.0
304.0
174.0
3,934.1

1,793.2
108.0
355.4
119.4
4,004.4

1,678.2
39.0
305.4
705.5
4,982.6

2) Unconsolidated Basis(Billions of yen)
Fiscal Year

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

Note: In Fiscal 2020, operating income and ordinary income decreased from the previous fiscal year due to the pandemic of
COVID-19, partially offset by the IT sector keeping its high profitability. Net income was achieved the record-high due to theextraordinary income resulted from the sale of Hitachi Chemical shares and diagnostic imaging related business.

Reference (Consolidated Basis)

Overseas Revenues Trends

Revenues by Market (Fiscal 2020)(Billions)¥10,000

Japan 48%

Overseas Revenues 52%

9,162.2

9,368.6

9,480.6

8,767.2

8,729.1

8,000

Asia 22%6,000

4,404.5(48%)

4,725.5(50%)

4,816.0(51%)

4,238.1(48%)

4,574.3
(52%)

4,000

North America 13%

2,000Europe 11%

0

2017
2016
2018
2019
2020 (FY)
Note: The blue parts show overseas revenues and the red parts show
domestic revenues. The number in parenthesis is the percentage ofoverseas revenues to total revenues.

Other Areas 6%

19

Five-year Summary of Assets and Results of Operation of Hitachi Group2021/05/20 19:40:49 / 20731340_株式会社日立製作所_招集通知（Ｃ）(3) Course of Actions to Take Considering Challenges for Hitachi Group
Under the 2021 Mid-term Management Plan, Hitachi will improve three types of customer value: social value(solving social issues), environmental value (reducing the impact on the environment) and economic value (improving
business performance), and contribute to the realization of a human-centered society.
Hitachi will focus on the following measures to establish an unshakable position as a global leader that will growsustainably.
- Further initiatives to enhance customer value
Hitachi will resolve social issues andimprove people's QoL (Quality of Life) by focusing
on Social Innovation Business in the three areas of
the Environment, Resilience and Security &Safety. To achieve these objectives, Hitachi will
work on evolution and global expansion of Lumada,leveraging the digital engineering capabilities andco-creation bases of GlobalLogic as growthengines, and strengthen our cyber-physical systemusing our expertise in “OT x IT x Products.” Hitachi
will also realize the creation of customer value
oriented businesses through co-creation andalliances with partners.
- Continued efforts to strengthen the management foundation
To realize these strategies, Hitachi will establish a business structure with a view toward the next mid-term
management plan by having building the business structure that can fully utilize GlobalLogic, the restructured
Hitachi ABB Power Grids and Hitachi Astemo and deciding the sale of Hitachi Metals as the culmination of reformsof its business portfolio during the 2021 Mid-term Management Plan.
In addition, Hitachi will continue to strengthen its profitability and ability to generate cash by adding cost
reduction measures that take into account our response to the new normal and by further promoting investment
return management using return on invested capital (ROIC), under the cost structure reform through thedevelopment of operations utilizing digital technologies and data preparation and integration, which are being
implemented across the Group.
While the future outlook for the global economy is still uncertain, Hitachi will work on cocreation with customers
and new value creation around the world by transforming itself into a company that resolves the social issues andchallenges faced by its customers.

20

Challenges Facing Hitachi Group2021/05/20 19:40:49 / 20731340_株式会社日立製作所_招集通知（Ｃ）

Measures for Improving Environmental Value
Hitachi's Corporate Philosophy has been to "contribute to society through the development of superior,independent technologies and products" since its foundation. And it is Hitachi's mission to continue to provide
solutions to social and environmental challenges in order to achieve a sustainable society.

“Environmental Vision” and “Hitachi Environmental Innovation 2050”
Hitachi promotes its environmental strategy by establishing its goals and plans as follows.
"Hitachi will resolve environmental issues and achieve

Environmental Visionboth a higher quality of life and a sustainable society
through its Social Innovation Business in collaborative
creation with its stakeholders."
A set of long-term environmental targets looking

Hitachi Environmental

toward 2030 and 2050
- Targets set for achievement of “a decarbonized

Innovation 2050

society,” “a resource eﬃcient society,” and “aharmonized society with nature”
Action plans, which is updated every three years, toEnvironmental Action Plan

achieve Hitachi Environmental Innovation 2050

From April 2021, we will adopt an assessment KPI that linked to environmental value into our executive
remuneration.

Hitachi Carbon Neutrality 2030
Toward the goal of a decarbonized society in particular, we promote
Hitachi Carbon Neutrality 2030 aiming for carbon neutrality at ourbusiness sites (factories and offices) by fiscal 2030.
Hitachi Hitech Fine Systems
Factory achieved carbon neutral by switching all electricity to renewable in
2020

21

Measures for Improving Environmental Value

2021/05/20 19:40:49 / 20731340_株式会社日立製作所_招集通知（Ｃ）

Participation in COP26 (Principal Partner) and External Assessment
As a principal partner of COP26*, which will be held in the UK in November 2021,
we will further increase our commitment to decarbonization and contribution to the society.

*COP26: United Nations Climate Change Conference

Hitachi achieved SBT** accreditation, one of the greenhouse gas reduction target indicators, in December
2020 and has received external recognition for these environmental actions.
**SBT: Science Based Targets

Environmental Strategies Presentation
Alistair Dormer, Executive Vice President and Executive Officer, who were also appointed as Chief
Environmental Officer on April 1, 2021, explained Hitachi’s environmental strategy on web conference. The
content of the presentation can be viewed at the following URL.
https://www.youtube.com/watch?v=1p4czsjGNQU&t=2s

22

Measures for Improving Environmental Value

2021/05/20 19:40:49 / 20731340_株式会社日立製作所_招集通知（Ｃ）(4) Borrowings and Financing Activity of Hitachi Group
Major Financing Activities
The Company procured funds through syndicated loan agreements, etc. in order to allocate funds for theacquisition of ABB Ltd’s power grid business, etc.
There is no material financing by issuance of stock and corporate bonds for fiscal 2020.
Major Borrowings (As of March 31, 2021)
Name of Company

The Company
Hitachi Metals, Ltd.

Creditor

Balance of Borrowings

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

135.0 billion yen
30.0 billion yen
20.0 billion yen
35.5 billion yen

Note: In addition to the figures shown above, the Company owes 521.3 billion yen of long-term borrowings by means of syndicatedloan agreements.

(5) Capital Investment of Hitachi Group
During fiscal 2020, the Hitachi Group carried out capital investment of 359.8 billion yen for further global
business expansion. However, the total investment decreased 39.7 billion yen from the preceding fiscal year mainly due
to sell-out of Hitachi Chemical Company, Ltd., and strictly-selected capital investment at Hitachi Metals and Hitachi
Construction Machinery. A breakdown of capital investment by segment is shown below.

Segment
IT
EnergyIndustry
Mobility
Smart Life
Hitachi Construction Machinery
Hitachi Metals
OthersCorporate Items & Eliminations
Total(Billions of yen)Amount
78.1
35.8
19.7
20.5
115.9
34.7
27.8
30.6
(3.5)
359.8

Capital Investment Trends(%)(Billions)

10.0

¥500
400

377.5

414.7
374.9

399.6
359.8

300
200

6.0

(4.1%)(4.0%)(4.4%)(4.6%)(4.1%)

4.0
2.0

100
0

8.0

2016

2017

2018

2019

2020 (FY)0.0

Note: The number in parentheses is the percentage of capital investment
to total revenues.

(6) Research and Development of Hitachi GroupThe Hitachi Group has been conducting R&D to contribute to society, environment and economic value and QoLof people by strengthening its core technology such as Artificial Intelligence, electrification, security, 5G, robotics anddata science and working on quantum and regenerative medicine as future disruptive technology.
Expenses on research and development during fiscal 2020 amounted to 293.5 billion yen. A breakdown by
segment is shown below.

Segment
IT
EnergyIndustry
Mobility
Smart Life
Hitachi Construction Machinery
Hitachi Metals
OthersCorporate Items
Total(Billions of yen)Amount
54.8
31.4
10.5
28.6
105.9
24.7
14.4
4.6
18.2
293.5

Research and Development Expenses Trends(%)(Billions)

8.0

¥400

323.9

332.9

323.1

300

200

(3.5%)(3.6%)(3.4%)

293.7(3.4%)

293.5(3.4%)

4.0

2.0

100

0

6.0

2016

2017

2018

2019

2020 (FY)0.0

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

23

Borrowings and Financing Activity of Hitachi Group、Capital Investment of Hitachi Group、Research and Development of Hitachi Group2021/05/20 19:40:49 / 20731340_株式会社日立製作所_招集通知（Ｃ）(7) Employees of Hitachi Group (As of March 31, 2021)
Segment

Number of Employees

Change from the End of
the Preceding Year71,80543,97523,41953,51789,88324,06528,58912,412
3,199
350,864
29,850 )-1,194+35,099-796+6,670+33,558-209-1,088-478+98+49,808-1,592 )IT
EnergyIndustry
Mobility
Smart Life
Hitachi Construction Machinery
Hitachi Metals
OthersCorporate (Head Office and others)
Total(the Company)((

Note: In addition to the figures shown above, the average number of part-time employees (the average of the numbers as of the endof each quarter) during fiscal 2020 at the Hitachi Group was 23,656 (of which, 1,348 worked at the Company).

(8) Major Facilities of Hitachi Group (As of March 31, 2021)
Major Facilities of the Company
Location

Head Office
R&D
Manufacturing,
Design andEngineering
Sales andArea Operations

Tokyo (Chiyoda-ku)
Tokyo (Kokubunji), Ibaraki (Hitachi, Hitachinaka), Saitama (Hatoyama), Kanagawa (Yokohama)Tokyo (Minato-ku, Chiyoda-ku, Shinagawa-ku, Taito-ku, Mitaka), Ibaraki (Hitachi, Hitachinaka),
Kanagawa (Kawasaki, Yokohama, Hadano), Yamaguchi (Kudamatsu)
Tokyo (Chiyoda-ku, Taito-ku, Shinagawa-ku, Minato-ku), Hokkaido Area Operation (Chuo-ku,
Sapporo), Tohoku Area Operation (Aoba-ku, Sendai), Kanto Area Operation (Chiyoda-ku, Tokyo),
Hokuriku Area Operation (Toyama), Chubu Area Operation (Naka-ku, Nagoya), Kansai Area
Operation (Kita-ku, Osaka), Chugoku Area Operation (Naka-ku, Hiroshima), Shikoku Area
Operation (Takamatsu), Kyushu Area Operation (Sawara-ku, Fukuoka)

Major Facilities of Consolidated Subsidiaries of the Company
Major consolidated subsidiaries of the Company and their locations are as stated in “(9) Major Hitachi Group
Companies.”

24

Employees of Hitachi Group、Major Facilities of Hitachi Group2021/05/20 19:40:49 / 20731340_株式会社日立製作所_招集通知（Ｃ）(9) Major Hitachi Group Companies (As of March 31, 2021)
Name of Company

Location

Ratio of Voting
Rights (%)

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

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

100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
80.0
100.0
100.0
100.0
80.1
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
70.0
100.0
66.6
100.0
100.0
100.0
84.1

Hitachi Construction Machinery Co., Ltd.

Taito-ku, Tokyo

51.5

Hitachi Metals, Ltd.

Minato-ku, Tokyo

53.4

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.

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

51.0
100.0
100.0
100.0
100.0
100.0
100.0

Segment■

IT■

Energy■Industry■

Mobility■

Smart Life

HitachiConstruction
Machinery
Hitachi■
Metals■■Others

Notes: 1. The total number of consolidated subsidiaries is 871.
2. The number of equity-method affiliates is 345. The major equity-method affiliates are Hitachi Kokusai Electric Inc., Johnson
Controls-Hitachi Air Conditioning Holding (UK) Ltd, Hitachi Capital Corporation and Hitachi Transport System, Ltd. Hitachi
Capital Corporation merged with Mitsubishi UFJ Lease & Finance Company Limited (currently Mitsubishi HC Capital Inc.) andceased to be an equity-method affiliate of the Company on April 1, 2021.
3. The companies marked with * are holding companies; their major operating companies are located in the United States.
4. Hitachi Global Digital Holdings Corporation changed its name to Hitachi Global Digital Holdings LLC on April 1, 2021.
5. Ratio of voting rights includes indirect ownership.

25

Major Hitachi Group Companies

2021/05/20 19:40:49 / 20731340_株式会社日立製作所_招集通知（Ｃ）(10) Directors and Executive Officers
1) Directors
Name, Position and Responsibilities, etc. (As of March 31, 2021)
Name

Katsumi Ihara
Ravi Venkatesan

Cynthia Carroll

Joe Harlan
George BuckleyLouise Pentland
Harufumi Mochizuki

Takatoshi Yamamoto
Hiroaki Yoshihara
Helmuth Ludwig

PositionIndependent
Director
Independent
Director
Independent
Director
Independent
Director
Independent
Director
Independent
Director
Independent
Director

Independent
Director
Independent
Director
Independent
Director

Committee Membership

Other Principal Positions Held

Audit Committee
Compensation Committee

Outside Director, Benesse Holdings, Inc.
Venture Partner, Unitus Ventures LLC. (India)
Special Representative for Young People & Innovation,
UNICEF
Director, Baker Hughes Company (USA)*
Director, Pembina Pipeline Corporation (Canada)*
Director, Glencore plc (Switzerland)*-Nominating Committee--

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

Chairman, Smiths Group plc (UK)*
Chairman of the Board, Stanley Black & Decker, Inc. (USA)*
Executive Vice President, Chief Business Affairs and Legal
Officer, PayPal Holdings, Inc. (USA)President and Representative Director, Tokyo Small andMedium Business Investment & Consultation Co., Ltd.
Outside Director, ITOCHU Corporation

Outside Director, Murata Manufacturing Co., Ltd.
Outside Director, HOYA CORPORATION
Chairperson of the Board, Circor International, Inc. (USA)*
Professor of Practice in Strategy and Entrepreneurship, Cox
School of Business, Southern Methodist University (USA)--

Hideaki Seki
Hiroaki Nakanishi

Director
Audit Committee
Executive
Nominating Committee
Chairman, Japan Business Federation
ChairmanToshiaki Higashihara Director
Compensation Committee
Notes: 1. Mr. Hiroaki Yoshihara, Director (Audit Committee (Chair)), has considerable knowledge of finance and accounting based on
his long experience at KPMG Group with businesses related to accounting, etc.
2. The Company has appointed Director Hideaki Seki as a Standing Committee member of the Audit Committee. The
Company strives to improve the audit and supervisory functions of the Audit Committee by appointing a Standing
Committee member and creating a system where the Audit Committee can discuss and make its decisions based on
coordination with the internal auditing division and others, along with a timely grasp of accurate information throughattendance to important internal meetings, etc. and information-sharing with other Committee members.
3. All of Independent directors of the Company have been reported as independent directors to the Japanese stock
exchanges where the Company is listed.
4. The positions with * in “Other Principal Positions Held” are similar positions in each of the foreign corporations to outside
director under the Companies Act.
5. The Company has transactions, including the sales of products and services and purchase of products and services, with,
Murata Manufacturing Co., Ltd. and HOYA CORPORATION. The volume of transactions with each of the companies andcorporations is negligible in comparison to the total business volume of the Company and to the total business volume of
the corresponding entity (less than 1% of either party's consolidated revenues).

Resigned Directors
Name

Toyoaki Nakamura
Hiroaki Nakanishi

Position

Committee Membership

Other Principal Positions Held

Resignation dateDirector
Executive
Chairman

Audit Committee
Nominating Committee

Chairman, Japan Business Federation

June 30, 2020
May 12, 2021

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

26

Directors and Executive Officers

2021/05/20 19:40:49 / 20731340_株式会社日立製作所_招集通知（Ｃ）【Major Activities of Independent Directors】
Each Independent Director attended the Board meetings and relevant Committee meetings, stated opinions and madeproposals proactively, conducted analyses from various perspectives, and discussed openly and effectively.
Name
Katsumi Ihara

Attendance
Board of Directors meetings:
9 out of 9 days
Audit Committee:
17 out of 17 days
Compensation Committee:
4 out of 4 days

Ravi Venkatesan

Board of Directors meetings:
6 out of 6 days

Mr. Venkatesan stated his opinions and proposals with respect togeneral management of the Group such as management policies
and business strategies mainly focusing on digital business froma global viewpoint based on his rich experience and insight in thearea of digital business and emerging markets.

Cynthia Carroll

Board of Directors meetings:
9 out of 9 days
Nominating Committee:
8 out of 8 days

Ms. Carroll stated her opinions and made proposals with respect
to general management of the Group such as management
policies and business strategies from a global viewpoint as well
as a perspective of diversity & inclusion based on her richexperience and insight as the top executive of major global
companies.

Joe Harlan

Board of Directors meetings:
9 out of 9 days

Mr. Harlan stated his opinions and made proposals with respect
to general management of the Group such as management
policies and business strategies from a global business
management viewpoint based on his rich corporate management
experience and insight gained through the involvement inmanagement at major companies conducting diversified
businesses globally.

George Buckley

Board of Directors meetings:
9 out of 9 days

Mr. Buckley stated his opinions and made proposals with respect
to general management of the Group such as management
policies and business strategies from a global business
management viewpoint based on his rich management
experience and insight with a major global manufacturer.

Louise Pentland

Board of Directors meetings:
9 out of 9 days

Ms. Pentland stated her opinions and made proposals withrespect to general management of the Group such as
management policies and business strategies mainly from acompliance and risk management viewpoint based on her richexperience and insight as chief legal officer at major global
companies.

Harufumi Mochizuki

Board of Directors meetings:
9 out of 9 days
Nominating Committee:
8 out of 8 days
Audit Committee:
17 out of 17 days
Compensation Committee:
4 out of 4 days
Board of Directors meetings:
9 out of 9 days
Audit Committee:
17 out of 17 days
Compensation Committee:
4 out of 4 days

Takatoshi Yamamoto

Hiroaki Yoshihara

Board of Directors meetings:
9 out of 9 days
Nominating Committee:
8 out of 8 days
Audit Committee:
17 out of 17 days

Helmuth Ludwig

Board of Directors meetings:
6 out of 6 days

Activities
Mr. Ihara stated his opinions and made proposals with respect togeneral management of the Group such as management policies
and business strategies from a business management viewpoint
based on his rich corporate management experience and insightgained through the involvement in management at major
companies conducting diversified businesses globally.

Mr. Mochizuki stated his opinions and made proposals withrespect to general management of the Group such as
management policies and business strategies based on his richexperience and insight in such areas as public administration. He
also led discussion as Chairperson at the Board meetings, theCompensation Committee and the Nominating Committee
respectively.
Mr. Yamamoto stated his opinions and made proposals withrespect to general management of the Group such as
management policies and business strategies from investor's
viewpoints focusing on the one regarding IR/information
disclosure and corporate value based on his rich experience andinsight in the area of corporate analysis and global corporate
management.
Mr. Yoshihara stated his opinions and made proposals withrespect to general management of the Group such as
management policies and business strategies based on his richexperience and insight in the area of global corporate
management and accounting. He also led discussion as
Chairperson at the Audit Committee.
Mr. Ludwig stated his opinions and proposals with respect togeneral management of the Group such as management policies
and business strategies mainly focusing on the digital businessfrom a global viewpoint based on his rich experience and insightin the area of global corporate management and digital business.

27

Directors and Executive Officers

2021/05/20 19:40:49 / 20731340_株式会社日立製作所_招集通知（Ｃ）

2) Executive Officers
Name, Position and Responsibilities, etc. (As of March 31, 2021)
Name

Position*Toshiaki Higashihara President*Masakazu Aoki

*Ryuichi Kitayama*Keiji Kojima*Keiichi Shiotsuka*Alistair Dormer*Toshikazu Nishino
Atsushi Oda*Yoshihiko Kawamura

Toshiaki Tokunaga*Hidenobu Nakahata

Mamoru Morita
Keiichi Akino

Jun AbeHitoshi Ito

Responsibilities

Overall management-

Executive Vice President Assistant to the President (businessand Executive Officer
for industry & distribution sectors,
water & environment business andindustrial products business)
Executive Vice President Assistant to the President (marketing &and Executive Officer
sales and regional strategies),
marketing & sales and regional
strategies
Executive Vice President Assistant to the President (smart life &and Executive Officer
ecofriendly systems business,
automotive systems business andhealthcare business) and smart life &
ecofriendly systems business
Executive Vice President Assistant to the President (systems &and Executive Officer
services business and defense
systems business), systems &services business, defense systems
business and social innovation
business promotion
Executive Vice President Assistant to the President (building
and Executive Officer
systems business and railway systems
business) and environmental strategy
Executive Vice President Assistant to the President (nuclear
and Executive Officer
energy business and energy business)
Senior Vice President
Nuclear energy business and energy
and Executive Officer
business
Senior Vice President
Finance, corporate pension system
and Executive Officer
and investment strategies
Senior Vice President
Services & platforms business
Chairman of the Board,and Executive Officer
Hitachi Vantara LLC
Senior Vice President
Corporate communications, corporate
and Executive Officer
auditing, corporate export regulationand human capital
Senior Vice PresidentManagement strategies and strategies
Director, Hitachi Metals, Ltd.
and Executive Officer
for next generation business
Vice President andMarketing & sales (business for
Executive Officer
financial institutions, government,
public corporation and social
infrastructure systems and defense
systems business)
Vice President andBusiness for industry & distribution
Executive Officer
sectors
Vice President andGovernments & external relations andExecutive Officer
CSR & environmental strategy

28

Directors and Executive Officers

Other Principal Positions Held2021/05/20 19:40:49 / 20731340_株式会社日立製作所_招集通知（Ｃ）

Name

Kenji Urase
Ryuichi Otsuki
Tadashi Kume
Kohei Kodama
Norihiro Suzuki
Yoji Takeuchi

Koujin Nakakita
Katsuya Nagano

Position

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

Vice President andExecutive Officer
Vice President andExecutive Officer

Seiichiro Nukui

Vice President andExecutive Officer
Yasushi Nomura
Vice President andExecutive Officer
Andrew BarrVice President andExecutive Officer
Masahiko Hasegawa Vice President andExecutive Officer
Kentaro Masai
Vice President andExecutive Officer
Shinya Mitsudomi
Vice President andExecutive Officer
Masashi Murayama
Tsugio Yamamoto
Takashi Yoda
Hiroaki Nakanishi

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

Responsibilities

Energy business
Investment strategies
Nuclear energy business
Legal matters, risk management andcorporate auditing
Research & development

Other Principal Positions Held-

Marketing & sales (business forindustry & distribution sectors, water &environment business, building
systems business, railway systems
business and healthcare business)
Regional strategies (APAC)
Chairman, Hitachi Asia Ltd.
Business for government, public
corporation and social infrastructure
systems, and defense systems
business
One Hitachi actions promotion
Information technology strategies
Railway systems business--Director, Hitachi Rail Ltd

Marketing & sales and regional
Director, Hitachi Capital
strategies (Japan)
Corporation
Supply chain management(MONOZUKURI and quality assurance)
Building systems businessPresident and Director,
Hitachi Building Systems,
Co., Ltd.
Cost structure reform and information
security management
Business for financial institutions-

Regional strategies (China)
GeneralChairman, Hitachi (China), Ltd.
Chairman, Japan Business
Federation

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

29

Directors and Executive Officers

2021/05/20 19:40:49 / 20731340_株式会社日立製作所_招集通知（Ｃ）

New Executive Officers
The Company changed its Executive Officers as of April 1 and May 12, 2021 as follows.
Name*Toshiaki Higashihara*Masakazu Aoki

*Ryuichi Kitayama*Keiji Kojima*Alistair Dormer*Toshiaki Tokunaga*Toshikazu Nishino
Jun Abe*Yoshihiko Kawamura
Katsuya Nagano*Hidenobu Nakahata**Claudio Facchin
Mamoru Morita
Hitoshi Ito**Tatsuro Ueda
Kenji Urase
Tadashi Kume
Kohei Kodama
Norihiro Suzuki
Yoji Takeuchi

Position

Responsibilities

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

30

Directors and Executive Officers

2021/05/20 19:40:49 / 20731340_株式会社日立製作所_招集通知（Ｃ）

Name

Position**Lorena Dellagiovanna Vice President and Executive
Officer
Kojin Nakakita
Vice President and Executive
Officer**Hideshi Nakatsu
Vice President and Executive
Officer
Seiichiro Nukui
Vice President and Executive
OfficerAndrew BarrVice President and Executive
Officer
Masahiko Hasegawa Vice President and Executive
Officer**Tatsuro Hoshino
Vice President and Executive
Officer
Kentaro Masai
Shinya Mitsudomi
Masashi Murayama**Kazunobu Morita
Takashi Yoda

Responsibilities

Diversity & inclusion strategy, government & external relations
and environmental strategy
Regional strategies (APAC)
Water & environment businessInformation technology strategies
Railway systems business
Marketing & sales and regional strategy (Japan)

Marketing & sales (business for financial institutions,
government, public corporation and social infrastructure
systems and defense systems business)
Vice President and Executive Supply chain management (manufacturing strategy and quality
Officer
assurance)
Vice President and Executive Building systems business
Officer
Vice President and Executive Cost structure reform
Officer
Vice President and Executive Business for industry & distribution sectors
Officer
Vice President and Executive Regional strategy (China)
Officer

Notes: 1. The Executive Officers marked with * are the Representative Executive Officers.
2. The Executive Officers marked with** are newly appointed.

2) Contents of Directors' and Officers' Liability Insurance Agreement(i) Coverage of Insured Persons
The Company's Directors, Executive Officers and employees who work as officers at the company to which they
are assigned, and some domestic subsidiaries' directors, executive officers, corporate auditors and 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 a result of a claim
for damages due to an act or omission of the insured person as an executive of a company. However, the Company hastaken measures to ensure that the appropriateness of the execution of duties by officers is not impaired by excluding
compensation for intentional negligence of duties, illegal acquisition of private benefits or benefits, and damages resulting
from criminal acts. The entire insurance costs are beard by the Company or its subsidiaries holding the insurance
agreement.

31

Directors and Executive Officers

2021/05/20 19:40:49 / 20731340_株式会社日立製作所_招集通知（Ｃ）

4) Compensation for Directors and Executive Officers
Regarding the compensation for Directors and Executive Officers, the Company’s Compensation Committee
determines the policy on the determination of compensation of Directors and Executive Officers (the "Compensation
Policy") as well as the amount of compensation, etc. of each Director and Executive Officer as follows.
Compensation Policy[Method of Determination of Policy]
The Company’s Compensation Committee sets forth the policy on the determination of the amount ofcompensation, etc. of each Director and Executive Officer pursuant to applicable provisions of the Companies Act.
[Basic Policy]- Compensation shall be such that it enables the company to attract necessary personnel to achieve an
improvement in corporate value through global business growth.
- Compensation shall be commensurate with roles and responsibilities of each Director and Executive Officer.
- Compensation for Directors shall be such that it enables them to exercise functions of supervision ofmanagement effectively.
- Compensation for Executive Officers shall be such that it enables them to contribute to sustained
improvement in corporate value through the execution of business and employs an appropriate balance
between short-term performance and medium- and long-term performance.
- The level of compensation shall be determined taking into account compensation levels at other companies
as well as economic and market trends.
- The Compensation Committee utilizes external experts to gain expert advice and an objective viewpoint, if
necessary, for considering the details and amounts of compensation.
[Compensation Structure](i) Matters relating to Directors
Compensation for Directors is basic remuneration as fixed pay. The amount of basic remuneration is decided
by adjusting a basic amount to reflect full-time or part-time status, committee membership and position, and travel fromplace of residence, etc. A Director concurrently serving as an Executive Officer is not be paid compensation as a
Director.
(ii) Matters relating to Executive Officers
Compensation for Executive Officers consists of basic remuneration as fixed pay and short-term incentive
compensation & medium- and long-term incentive compensation as variable pay. The basic amount of basic
remuneration, short-term incentive compensation, and medium- and long-term incentive compensation is set based on
the ratio of 1:1:1 as the standard, taking into account the composition of executive compensation for major global
companies, in order to improve corporate value through the growth of global businesses. The higher position Executive
Officers holds, the higher proportion of variable pay is set to the total 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 the relevant
position to reflect the results of an assessment.
Short-term incentive compensation- The amount of short-term incentive compensation is decided within the range of 0 to 200% of a basic amount
set according to the relevant position by adjusting that amount to reflect financial results and individual
performance. Evaluation items and proportion of evaluation item are as shown in the following table.
Proportion of evaluation item
Executive Officers that
Evaluation items
constitute the Senior
Other Executive Officers
Executive Committee (Note)80％30％
Performance-linked Company performancecomponent
Division performance－
50％
Individual target-linked component
20％
20％
Note: In case that an "Executive Officers that constitute the Senior Executive Committee" is in charge of sectors orbusiness units, the same proportion of evaluation item as for "Other Executive Officers" is used.

32

Directors and Executive Officers

2021/05/20 19:40:49 / 20731340_株式会社日立製作所_招集通知（Ｃ）- The amount of the performance-linked component varies according to the evaluation of company performanceand division performance.
- Company performance is evaluated using consolidated revenues and line items for income or earnings inorder to measure the level of achievement of consolidated financial forecasts disclosed to stakeholders,
including shareholders and investors.
- Division performance is evaluated using performance indicators determined as optimal ones to measure thelevel of achievement of targets under the Mid-term Management Plan and the annual budgets for divisions.
- The amount of the individual target-linked component varies according to the evaluation of the level ofachievement of individual target for each Executive Officer determined based on his/her responsibility.
Medium- and Long-term incentive compensation- The shares of restricted stock are granted in order to propel management from a medium- and long-term
perspective and to provide incentives to bring about a sustainable increase in enterprise value by further
promoting senior management’s shared values with shareholders through the holding of shares during theirterm of office.
- The restriction on transfer shall be lifted if executive officers resign from all of the positions of the Company’s
executive officer, director, and corporate officer.
- With regard to one-half of granted shares of restricted stock, the number of shares whose transfer restriction
is lifted shall be determined after ex-post evaluation in which the total shareholder return of Hitachi stock("TSR") is compared to growth rate of TOPIX.
- Lifting of transfer restrictions shall apply to all granted shares if the TSR/TOPIX Growth Rate Ratio is 120%or more.
- Lifting of transfer restrictions shall apply to part of granted shares if the TSR/TOPIX Growth Rate Ratio is
between 80% or more but less than 120% (*).
- Transfer restrictions shall not be lifted for any shares if the TSR/TOPIX Growth Rate Ratio is less than 80%.
* Number of shares whose transfer restrictions are lifted= Number of granted shares × {(TSR/TOPIX Growth Ratio × 1.25) − 0.5}
Shares whose transfer restrictions are not lifted shall be acquired by the Company without consideration.
- If it is deemed to be inappropriate to grant shares of restricted stock due to laws and regulations in the countryof residence, etc., cash award based on the value of the Company’s share price shall be substituted for
restricted stock.
- From Fiscal 2019, shares of restricted stock have been granted in place of the stock options as stock-based
compensation the Company has granted previously.
If it is found that an executive officer has been engaged in misconduct during his/her term of office,compensation for Executive Officers that has been already paid shall be returned to the Company.
With regard to persons who are hired externally such as foreign persons, a compensation package could be
individually determined based on the level of compensation in a job market which is considered for compensation
benchmarking while referring the above policy. The Company grants restricted stock units to non-Japanese Executive
Officers as medium- and long-term incentive compensation. One third of vested restricted stock units are delivered in theform of shares of common stock of the Company and cash each fiscal year over three years from the beginning of the
fiscal year containing the day on which restricted stock units are granted.
(iii) Miscellaneous- It was decided at the Compensation Committee meetings held on December 18, 2007 and March 26, 2008
that the compensation structure for Directors and Executive Officers will be re-examined starting with thecompensation for fiscal 2008 and that the retirement allowance will be abolished. The payment of retirement
allowance to Directors and Executive Officers due to the abolition of the retirement allowance system will be in
an amount determined by the Compensation Committee at the time of the retirement of a relevant Director or
Executive Officer based on his/her position and term of office, etc.

33

Directors and Executive Officers

2021/05/20 19:40:49 / 20731340_株式会社日立製作所_招集通知（Ｃ）

Total Amount of Compensation to and the Number of Directors and Executive Officers in Fiscal 2020
Total amount of each type(Millions of yen)
Total amount of
Variable pay
compensation,
Number ofCategoryetc.
persons
Medium- andFixed pay
Short-term
Others(Millions of yen)long-term
incentive
incentivecompensationcompensation
Directors(excluding Independent
53
53
－
－
－
2
Directors)
Independent Directors
356
356
－
－
－
10
1,545
0
Executive Officers
4,059
1,218
1,295
32
1,954
1,218
1,295
0
44
Total
4,468
Notes: 1. The number of Directors indicated excludes two Directors who serve concurrently as Executive Officers.
2. The compensation to Directors (excluding outside Directors) includes the basic remuneration of a Director who retired due
to expiration of his term of office on June 30, 2020.
3. Fixed pay and short-term incentive compensation consist of monetary compensation, and medium- and long-term incentive
compensation consists of non-monetary compensation and monetary compensation.
4. "Others" shows the amount of rewards for inventions.

Performance Indicators Used to Calculate Performance-linked Compensation
Regarding the short-term incentive compensation, "Company performance" was evaluated referring toconsolidated revenues, adjusted operating income, EBIT, and net income attributable to Hitachi, Ltd. stockholders inorder to measure the level of achievement of consolidated financial forecasts disclosed to stakeholders, including
shareholders and investors. "Division performance" was evaluated referring to adjusted operating income and operating
cash flows in each division, among other indicators, to measure the level of achievement of targets under the Mid-termManagement Plan and the annual budgets for divisions.
Please refer to (1) Business Overview and Results of Hitachi Group" in this report regarding the business resultsin Fiscal 2020.
The TSR/TOPIX Growth Rate Ratios defined in conditions for exercising stock option as stock-based
compensation (stock acquisition rights) and in conditions for lifting transfer restrictions of restricted stock issued as
medium- and long-term incentive compensation are as follows.
Name

Term

Total Shareholder return.
TOPIX Growth Rate Ratio

The First Stock Acquisition Rights of Hitachi, Ltd.

From April 1, 2016 to March 29, 2019The Second Stock Acquisition Rights of Hitachi, Ltd.

From March 31, 2017 to March 31, 2020

125.8%
121.6%The Third Stock Acquisition Rights of Hitachi, Ltd.

From March 30, 2018 to March 31, 2021

120.5%

Restricted Stocks issued in May 2019

From April 1, 2019 to March 31, 2021 (Note )117.2%

Restricted Stocks issued in May 2020

From April 1, 2020 to March 31, 2021 (Note )114.8%

Note: The ratios are calculated to determine the number of shares whose transfer restricted are lifted for persons who retired from
Executive Officers, Directors or Corporate Officers on March 31, 2021.

Reasons Why the Compensation Committee Judged that the Respective Amount of Compensation, etc. of Each
Director and Executive Officer in Fiscal 2020 was in Line with the Compensation Policy
The Compensation Committee judged that the respective amount of compensation, etc. of each Director andExecutive Officer was in line with the Compensation Policy, because it determined the "Compensation Structure" which isa specific criteria, based on the "Basic Policy," and determined the specific amount of compensation in accordance withthe "Compensation Structure."34

Directors and Executive Officers

2021/05/24 20:54:39 / 20731340_株式会社日立製作所_招集通知（Ｃ）(11) Matters Concerning the Company’s Stock (As of March 31, 2021)
1)

Authorized

2)

Issued3)

Number of Shares per Unit

4)

10 Largest Shareholders

2,000,000,000 shares
967,885,277 shares
100 shares
Name

The Master Trust Bank of Japan, Ltd. (Trust Account)
Custody Bank of Japan, Ltd. (Trust Account)Hitachi Employees’ Shareholding Association
STATE STREET BANK AND TRUST COMPANY 505223
Nippon Life Insurance Company
NATS CUMCOSSBTC CLIENT OMNIBUS ACCOUNTSTATE STREET BANK AND TRUST COMPANY 505001
JP MORGAN CHASE BANK 385632
STATE STREET BANK WEST CLIENT - TREATY 505234

Share Ownership
Shares
91,166,600
59,465,400
20,606,840
20,578,060
20,000,099
18,702,358
16,715,255
16,698,514
16,563,302
15,549,487

Shareholding Ratio
%
9.43
6.15
2.13
2.13
2.07
1.93
1.73
1.73
1.71
1.61

Notes: 1. NATS CUMCO is the nominee name of the depositary bank, Citibank, N.A., for the aggregate of the Company's
American Depositary Receipts (ADRs) holders.
2. Treasury stock (1,055,799 shares) is not included in the calculation of "Shareholding Ratio."

5)

Shareholders Composition

Status of shares
Number of
Foreign corporations,sharesFinancial
Class of Government
etc.
less thanFinancial instruments
Other
Individuals
shareholders
Total
and
one
institution business institution
and others
Nonmunicipality
Individuals
unit (shares)
operator
individuals
Number of
3
205
62
2,308
1,087
125
222,379
226,169
shareholders
Shareownership
95 3,200,291
434,021
144,379 4,298,023
763 1,577,468 9,655,040 2,381,277(units)Ownership
percentage
0.00
33.15
4.50
1.50
44.52
0.01
16.34
100.00of shares (%)
Note: Of 1,055,799 shares of treasury stock, 10,557 units are included in the “Individuals and others” column, while 99 sharesare included in the “Number of shares less than one unit” column.

6)

Shares Issued to the Executive Officers, etc. of the Company as Compensation
The Company issued 475,800 of new shares to 31 Executive Officers and 129,000 of new shares to 33
Corporate Officers (the executive positions next to Executive Officers), respectively, as restricted stockcompensation, the medium- and long-term incentive compensation mentioned at Page 33 of this report, on May
27, 2020.

35

Matters Concerning the Company’s Stock2021/05/20 19:40:49 / 20731340_株式会社日立製作所_招集通知（Ｃ）(12) Matters Concerning Accounting Auditor
1)

Name of accounting auditor

2)

Fees to accounting auditor in Fiscal 2020

Ernst & Young ShinNihon LLC(Millions of yen)
Category
Fees etc. by the Company and its subsidiaries
Fees etc. by the Company

Fees foraudit services*
1,484
525

AmountFees fornon-audit services
118
101

Total
1,602
626

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

3)

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

4)

Subsidiaries whose financial statements are audited by certified public accountants, etc. other than the
Company’s accounting auditors
Of the major Hitachi Group companies (listed in (9) Major Hitachi Group Companies), overseas
subsidiaries have certified public accountants (“CPA”) or auditing firms, etc. of the network firms that Ernst &Young ShinNihon LLC belongs audit their financial statements.

5)

Removal and non-retention policy on accounting auditors
In the event the Audit Committee determines that the causes provided for in each item of Paragraph 1 of
Article 340 of the Companies Act apply to an accounting auditor and the accounting auditor needs to be removed
immediately, the Audit Committee shall remove the accounting auditor by unanimity. Should this occur, the Audit
Committee member selected by the Audit Committee shall give a report on the removal of the accounting auditor
and the reason therefor at the first general meeting of shareholders to be convened after the said removal.
Besides the case above, it is determined that an accounting auditor should be replaced for such reason
as the difficulty of ensuring an adequate performance of duties by the accounting auditor, the Audit Committee
shall determine the contents of the agenda item on the non-retention of the accounting auditor to be submitted to
the general meeting of shareholders.

36

Matters Concerning Accounting Auditor

2021/05/20 19:40:49 / 20731340_株式会社日立製作所_招集通知（Ｃ）(13) Policy on Determination of Distribution of Surplus etc.
The Company views the return of profits to shareholders through enhancing corporate value from mid- to longterm perspective and paying dividends continuously as an important managerial issue.
The policy of the Company regarding dividends is to aim for stable growth of dividends while also securing funds
necessary for investment, and the dividends are determined by comprehensively taking into account factors such as
financial performance trends, the financial situation, and the dividend payout ratio.
To complement its dividends, the Company flexibly conducts repurchase of its shares depending on factors
such as capital needs and the business environment.
In accordance with mid- to long-term management strategy, the Company utilize undistributed profits in areas
such as M&A, research and development, and capital expenditure, in order to secure competitiveness and aim for growthof the business as global enterprise.

[Reference] Corporate Governance System and Internal Control System (As of March 31, 2021)
The Company is a company with Nominating Committee, etc. under the Companies Act, aiming to establish a framework forquick business operation and to realize highly transparent management by separating responsibilities for management oversightand those for execution of business operations.
The Board of Directors, which is responsible for the oversight of management, determines basic policies for management, etc.
and also monitor business executions by executive officers while significantly delegating authorities to executive officers

General Meetingof Shareholders
Appointment
Appointment / OversightSenior Executive Committee

Board of Directors

President & CEO
Nominating Committee

Executive Officers

Compensation Committee
Report

Audit

Audit Committee

ReportInternal Auditing Office

Each department

Audit
ReportAccounting Auditors

Audit

Structures and Other Things to Ensure Adequacy of Business Operations (Internal Control Systems) and Operation of theInternal Control Systems is posted on the Company's website (https://www.hitachi.co.jp/smeet-e/index.html).

37

Policy on Determination of Distribution of Surplus etc.、【ご参考】コーポレートガバナンス体制と内部統制システムについて

2021/05/20 19:40:49 / 20731340_株式会社日立製作所_招集通知（Ｃ）

Consolidated Financial Statements
Consolidated Statement of Financial Position
Fiscal 2019 (Reference)(As of March 31, 2020)

Fiscal 2020
(As of March 31, 2021)(Millions of yen)
(Assets)
Current assets
Cash and cash equivalents
Trade receivables and contract assets
Inventories
Investments in securities and other financial assets
Other current assets
Non-current assets
Investments accounted for using the equity method
Investments in securities and other financial assets
Property, plant and equipment
Goodwill
Other intangible assets
Other non-current assets
Total assets

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

5,943,300
1,015,886
2,734,476
1,653,395
328,153
211,3905,909,553
472,105
534,324
2,408,887
1,161,210
964,830
368,197
11,852,853(Liabilities)
Current liabilities
Short-term debt
Current portion of long-term debt
Other financial liabilities
Trade payables
Accrued expenses
Contract liabilities
Other current liabilities
Non-current liabilities
Long-term debt
Retirement and severance benefits
Other non-current liabilities
Total liabilities

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

4,596,930
416,635
274,392
288,973
1,515,954
698,553
933,844468,579
2,797,691
1,706,329
433,954
657,408
7,394,621(Equity)
Hitachi, Ltd. stockholders’ equity
Common stock
Capital surplus
Retained earnings
Accumulated other comprehensive income
Treasury stock, at costNon-controlling interests
Total equity
Total liabilities and equity

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

3,525,502
460,790
84,0402,710,604
273,561(3,493)
932,730
4,458,232
11,852,853

38

2. Consolidated Statements of Financial Position

2021/05/20 19:40:49 / 20731340_株式会社日立製作所_招集通知（Ｃ）

Consolidated Statement of Profit or Loss
Years ended March 312020 (Reference)

2021(Millions of yen)
8,767,263(6,396,895)

8,729,196(6,533,890)

2,370,368(1,708,485)
51,992(570,635)
5,768(9,033)

2,195,306(1,700,126)
476,137(172,407)
13,969(1,456)

43,63938,864

Earnings before interest and taxes (EBIT)

183,614

Interest income
Interest charges

20,638(23,984)

850,287
16,934(22,778)

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

Income from continuing operations, before income taxes

180,268

Income taxes(51,246)

844,443(325,247)

Income from continuing operations
Loss from discontinued operations

129,022(1,776)519,196(686)

Net income

127,246

518,510Net income attributable to:
Hitachi, Ltd. stockholders
Non-controlling interests

87,59639,650501,613
16,89739

3. Consolidated Statements of Profit or Loss

2021/05/20 19:40:49 / 20731340_株式会社日立製作所_招集通知（Ｃ）

Unconsolidated Financial Statements
Unconsolidated Balance Sheet
Fiscal 2019 (Reference)
Fiscal 2020
(As of March 31, 2020)(As of March 31, 2021)(Millions of yen)
(Assets)
Current assets

1,573,421

1,229,016

Cash

144,370

149,933

3,819

3,923

Accounts receivable

678,447

623,879

Finished goods

24,46815,716

Semi-finished goods

19,77917,886

Raw materials

31,25020,346Work in process

153,684

147,165

Advances paid

31,627

34,105

Short-term loan receivables

316,537

113,377

Others178,099

114,054

Notes receivable(8,664)(11,371)2,430,987

3,753,592

228,572

216,678

115,257

112,722

Structures

6,812

6,351

Machinery

10,358

7,957

Allowance for doubtful receivables
Fixed assets
Tangible fixed assets
Buildings

160

154

Tools and equipment

44,64642,018Land

40,56436,235

Lease assets

7,154

7,426

VehiclesConstruction in progress
Intangible fixed assets

3,618

3,812

96,07092,901Patents

37

57

Software88,511

86,318

Railway and public utility installation

306

293

Lease assets

72

75

OthersInvestments and others
Affiliated companies’ common stock
Other securities of affiliated companies

7,143

6,157

2,106,344

3,444,013

1,601,494

2,707,316

884

3,457

Investments in affiliated companies

34,53933,308Investments in securities

144,150

206,755

Long-term loan receivables

56,613392,080

Deferred tax assets

229,135

64,621

Prepaid pension cost

5,516

-

Others34,01736,700(8)(227)

4,004,408

4,982,609

Allowance for doubtful receivables
Total assets

40

4. Unconsolidated Balance Sheets2021/05/20 19:40:49 / 20731340_株式会社日立製作所_招集通知（Ｃ）

Fiscal 2019 (Reference)
Fiscal 2020
(As of March 31, 2020)(As of March 31, 2021)(Millions of yen)
(Liabilities)
Current liabilities

1,637,039

1,579,915

Electronically recorded obligations

24,097

15,566

Trade accounts payable

314,624

275,216

Short-term debt

52,483

210,340

Lease liabilities

1,621

1,773

Other accounts payable

35,65967,770Accrued expenses

344,044

178,682

Advances received from customers

182,761

199,509

Deposits received

627,609579,149

Provision for product warranties

1,389

492

Provision for loss on construction contracts

44,90647,456

7,840

3,956

Noncurrent liabilities

788,310

1,158,951

Debentures

250,000

250,000

Long-term debt

318,369

683,408

OthersLease liabilities

6,386

6,185

Accrued pension liability

68,33470,389Provision for retirement benefits for senior executives

111

111

Provision for loss on business of affiliated companies

124,035

129,884

Deferred tax liabilities for land revaluation

1,111

1

Asset retirement obligations

9,548

11,649Others10,414

7,322

Total liabilities

2,425,350

2,738,866

1,536,931

2,147,865

Common stock

459,862

460,790

Capital surplus(Net assets)
Stockholders’ equity

450,746

451,579

Capital reserve

177,828

178,756

Others272,917272,823

630,1311,238,988

630,1311,238,988

1,246

1,133

Retained Earnings
OthersReserve for advanced depreciation of fixed assets

628,885

1,237,855

Treasury stock(3,809)(3,492)

Valuation and translation adjustments

39,92193,732

Unrealized holding gains on securities

29,76390,885

Deferred profit or loss on hedges

10,291

2,843

(133)

2

Retained earnings carried forward

Revaluation reserve for land

2,204

2,144

Total net assets

1,579,058

2,243,742

Total liabilities and net assets

4,004,408

4,982,609

Subscription rights to shares41

4. Unconsolidated Balance Sheets2021/05/20 19:40:49 / 20731340_株式会社日立製作所_招集通知（Ｃ）

Unconsolidated Statement of Operations
Years ended March 312020 (Reference)

2021(Millions of yen)
Revenues

1,793,250

1,678,223

Cost of sales

1,290,371

1,252,642

Gross profit on sales

502,878425,580

Selling, general and administrative expenses

394,830

386,495

Operating income

108,048

39,085

Other income

277,836

303,028

Interest and dividends

263,773

290,349

Others

14,062

12,67930,39336,652

2,918

5,460

Other deductions
Interest
Others27,47531,191

Ordinary income

355,490

305,461

Extraordinary gain

34,857

638,025

8,087

603,305-

33,398

5,208

1,096

-

179

Gain on sale of affiliated companies’ common stock
Compensation income
Gain on sale of investments in securities
Gain on sale of investments in capital of affiliatedcompanies
Gain on sale of real property

21,561

45

400,132

26,540

Impairment loss on affiliated companies’ common stock

3,804

12,980Loss on impairment of assets

8,934

8,688

2,236

3,499

411

1,372

Extraordinary loss

Impairment loss on investments in capital of affiliatedcompanies
Impairment loss on investments in securities

384,744-(9,783)916,946

Current

29,11459,088Deferred(158,308)

152,346

Net Income

119,409705,511

Loss due to the settlement of the South African project
Income (loss) before income taxes
Income taxes

42

5. Unconsolidated Statements of Operations

2021/05/20 19:40:49 / 20731340_株式会社日立製作所_招集通知（Ｃ）

Transcript of Accounting Auditors’ Audit Report on Unconsolidated Financial Statements
REPORT OF INDEPENDENT AUDITORSMay 10, 2021
Mr. Toshiaki Higashihara, President & CEO
Hitachi, Ltd.
Ernst & Young ShinNihon LLC
Tokyo Office, Japan
Takashi Ouchida
Designated Engagement Partner
Certified Public Accountant
Koji Fujima
Designated Engagement Partner
Certified Public Accountant
Takuya Tanaka
Designated Engagement Partner
Certified Public Accountant
Shinya Yoshida
Designated Engagement Partner
Certified Public Accountant

OpinionPursuant to Article 436, Paragraph 2, Item 1 of the Companies Act, we have audited the accompanying
financial statements, which comprise the balance sheet, the statement of operations, the statement of changes in
net assets, the notes to the financial statements and the related supplementary schedules of Hitachi, Ltd. (the“Company”) applicable to the 152nd fiscal year from April 1,2020 to March 31,2021.
In our opinion, the accompanying financial statements and the related supplementary schedules present
fairly, in all material respects, the financial position and results of operations of the Company, applicable to thefiscal year ended March 31, 2021, in accordance with accounting principles generally accepted in Japan.
Basis for Opinion
We conducted our audit in accordance with auditing standards generally accepted in Japan. Our
responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the
Financial Statements and the Related Supplementary Schedules section of our report. We are independent of theCompany in accordance with the ethical requirements that are relevant to our audit of the financial statements inJapan, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believethat the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Responsibilities of Management and Audit Committee for the Financial Statements and the Related Supplementary
Schedules
Management is responsible for the preparation and fair presentation of these financial statements and therelated supplementary schedules in accordance with accounting principles generally accepted in Japan, and forsuch internal control as management determines is necessary to enable the preparation of financial statements andthe related supplementary schedules that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements and the related supplementary schedules, management is responsible
for assessing the Company's ability to continue as a going concern and disclosing, as required by accounting
principles generally accepted in Japan, matters related to going concern.
Audit Committee is responsible for overseeing the Company’s financial reporting process.

43

6. Transcript of Accounting Auditors’ Audit Report on Unconsolidated Financial Statements

2021/05/20 19:40:49 / 20731340_株式会社日立製作所_招集通知（Ｃ）

Auditor’s Responsibilities for the Audit of the Financial Statements and the Related Supplementary Schedules
Our objectives are to obtain reasonable assurance about whether the financial statements and the related
supplementary schedules as a whole are free from material misstatement, whether due to fraud or error, and toissue an auditor’s report that includes our opinion. Misstatements can arise from fraud or error and are consideredmaterial if, individually or in the aggregate they could reasonably be expected to influence the economic decisionsof users taken on the basis of these financial statements and the related supplementary schedules.
As part of an audit in accordance with auditing standards generally accepted in Japan, we exercise
professional judgment and maintain professional skepticism throughout the audit. We also:- Identify and assess the risks of material misstatement of the financial statements and the related
supplementary schedules, whether due to fraud or error, design and perform audit procedures responsive
to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our
opinion.
- In making those risk assessments, we consider internal control relevant to the audit in order to design
audit procedures that are appropriate in the circumstances, while the purpose of the audit of the financial
statements and the related supplementary schedules is not expressing an opinion on the effectiveness of
the Company’s internal control.
- Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by management.
- Conclude on the appropriateness of management’s use of the going concern basis of accounting and,based on the audit evidence obtained, whether a material uncertainty exists related to events orconditions that may cast significant doubt on the Company’s ability to continue as a going concern. If weconclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to therelated disclosures in the financial statements and the related supplementary schedules or, if suchdisclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence
obtained up to the date of our auditor’s report. However, future events or conditions may cause theCompany to cease to continue as a going concern.
- Evaluate the overall presentation, structure and content of the financial statements and the related
supplementary schedules, including the disclosures, and whether the financial statements and the related
supplementary schedules represent the underlying transactions and events in a manner that achieves fairpresentation in accordance with accounting principles generally accepted in Japan.
We communicate with the Audit Committee regarding, among other matters, the planned scope and timingof the audit and significant audit findings, including any significant deficiencies in internal control that we identify
during our audit.
We also provide the Audit Committee with a statement that we have complied with the ethical requirements
regarding independence that are relevant to our audit of the financial statements in Japan, and to communicate
with them all relationships and other matters that may reasonably be thought to bear on our independence, andwhere applicable, related safeguards.
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 tobe disclosed pursuant to the provisions of the Certified Public Accountants Act of Japan.
(Note)
This is an English translation of the Japanese language Report of Independent Auditors issued by Ernst&Young ShinNihon LLC in connection with the audit of the unconsolidated financial statements of the Company,
prepared in Japanese, for the fiscal year ended March 31, 2021. Ernst & Young ShinNihon LLC has not audited theEnglish language version of the unconsolidated financial statements for the above-mentioned year.

44

6. Transcript of Accounting Auditors’ Audit Report on Unconsolidated Financial Statements

2021/05/20 19:40:49 / 20731340_株式会社日立製作所_招集通知（Ｃ）

Transcript of Audit Committee’s Audit Report
AUDIT REPORT
We, the Audit Committee of the Company, audited the performance by Directors and Executive Officers of theirduties during the 152nd business term (from April 1, 2020 to March 31, 2021). We hereby report as follows on themethod and results thereof:
1. Method of Audit
1) We received periodical reports, obtained required explanations, and clarified opinions regarding the state of
implementation and operation of the contents of the resolutions of the Board of Directors concerning the matters aslisted in Article 416, Paragraph 1, Item 1 (ro) and (ho) of the Companies Act, and the status of the systems (internal
control systems) established thereunder.
2) In accordance with the audit policy, assignment of audit duties, etc., as determined by the Audit Committee, and, in
collaboration with the relevant departments, we attended important meetings, received reports or heard from the
Directors, Executive Officers, etc. on matters concerning the execution of their duties, requested explanations asnecessary, inspected important decision documents, etc., and made investigation into the state of activities andproperty at the head office and principal business offices of the Company.
3) As regards subsidiaries, we sought to communicate and exchange information with the Directors, Executive
Officers, Auditors, and others of the subsidiaries, received reports on their business operations, requested
explanations as necessary, and conduct interviews and other tasks for their Head Offices and principal businessoffices by visiting to the offices or using the Internet, etc.
4) We examined the contents of the fundamental policy on the conduct of persons influencing decision on the
Company’s financial and business policies set forth in the business report giving due consideration to such things as
the circumstances of deliberations by the Board of Directors and others.
5) Further, we monitored and examined whether the Accounting Auditors maintained their independence andperformed their auditing duties adequately, as well as received reports from the Accounting Auditors on theperformance status of their duties and requested explanations as necessary.
6) We also received a notice from the Accounting Auditors to the effect that “structures for ensuring that duties areappropriately performed” (matters stipulated in each item under Article 131 of the Regulations of Companies’
Financial Statements) were being developed pursuant to the “Quality Management Standards for Auditing”(Business Accounting Council, October 28, 2005) and requested explanations as necessary.
We examined the business report and its supplementary schedules, the unconsolidated financial statements(the unconsolidated balance sheet, the unconsolidated statement of operations, the unconsolidated statement ofchanges in net assets, and the notes to unconsolidated financial statements) and their supplementary schedules, aswell as consolidated financial statements (the consolidated statements of financial position, the consolidated
statements of profit or loss, the consolidated statement of changes in equity, and the notes to consolidated financial
statements) for this business term in accordance with the foregoing method.
2. Results of Audit(1) Results of Audit on Business Report etc.
We are of the opinion:
1) that the business report and its supplementary schedules fairly present the state of the Company in accordancewith the laws, regulations and the Articles of Incorporation;2) that, in connection with the performance by Directors and Executive Officers of their duties, no dishonest act ormaterial fact of violation of laws, regulations or the Articles of Incorporation exists;
3) that the contents of the resolution by the Board of Directors concerning internal control systems are appropriate.
Further, there is nothing to note with respect to the performance by Directors and Executive Officers of their duties
and description of the business report related to said internal control systems;4) that the fundamental policy on the conduct of persons influencing decision on the Company’s financial andbusiness policies set forth in the business report are appropriate.
(2) Results of Audit on Unconsolidated Financial Statements and Their Supplementary Schedules
We are of the opinion that the method and results of the audit made by the Company’s Accounting Auditors,
Ernst & Young ShinNihon LLC are appropriate.
(3) Results of Audit on Consolidated Financial Statements
We are of the opinion that the method and results of the audit made by the Company’s Accounting Auditors,
Ernst & Young ShinNihon LLC are appropriate.
May 12, 2021
Audit Committee, Hitachi, Ltd.
Hiroaki Yoshihara
Hideaki Seki (Standing)
Katsumi Ihara
Harufumi Mochizuki
Takatoshi Yamamoto
Note: Messrs. Katsumi Ihara, Harufumi Mochizuki, Takatoshi Yamamoto and Hiroaki Yoshihara are outside Directors pursuant to Article
2, Item 15 and Article 400, Paragraph 3 of the Companies Act.

45

7. Transcript of Audit Committee’s Audit Report on Unconsolidated Financial Statements

2021/05/20 19:40:49 / 20731340_株式会社日立製作所_招集通知（Ｃ）

The 152nd Annual General Meeting of Shareholders of Hitachi, Ltd.
Materials Disclosed via the Internet
Hitachi, Ltd.

Contents
1. Structures and Other Things to Ensure Adequacy of Business Operations (Internal Control System) andOperation of the Internal Control System
2. Fundamental Policy on the Conduct of Persons Influencing Decision on the Company’s Financial andBusiness Policies

3. Information on the stock acquisition rights, etc.
4. Consolidated Statements of Changes in Equity
5. Notes to Consolidated Financial Statements
6. Consolidated Statements of Comprehensive Income (Supplementary Information)
7. Consolidated Statements of Cash Flows (Supplementary Information)
8. Unconsolidated Statement of Changes in Net Assets
9. Notes to Unconsolidated Financial Statements
10. Transcript of Accounting Auditors’ Audit Report on Consolidated Financial Statements

Note: The aforementioned materials are provided to the shareholders for their review by posting on the
Company’s website pursuant to the provisions of the Articles of Incorporation of the Company and therelevant laws and regulations.

46

Contents

2021/05/20 19:40:49 / 20731340_株式会社日立製作所_招集通知（Ｃ）

1. Structures and Other Things to Ensure Adequacy of Business Operations (Internal Control System) andOperation of the Internal Control System
1) Summary of resolution of Board of Directors on enhancing the internal control systema. The following measures shall be taken to ensure the effectiveness of audits by the Audit Committee.
(i)When necessary, the Board of Directors may appoint one or more director(s), who does not serve
concurrently as an executive officer, as a director responsible for assisting with the duties of the Audit
Committee. In addition, the Board of Directors Office (the “Office”) shall be established specifically to assist
with the duties of each Committee and the Board of Directors.

(ii)

In order to ensure the independence of the Office personnel from Executive Officers and the effect of
instructions by the Audit Committee, the Office is staffed with personnel who work only for the Office and are
not subject to orders and instructions of Executive Officers, and the Audit Committee shall be informed inadvance of planned transfers of the Office personnel.

(iii) Executive Officers and employees shall report without delay to the members of the Audit Committee
significant matters affecting the Company and its subsidiaries, results of internal audits, and theimplementation status of reporting under the internal reporting system. It shall be provided for in thecompany regulation that reporters using the internal reporting system common to the Hitachi Group shall notreceive disadvantageous treatment for reason of having made a report, and the secretariat of the systemshall thoroughly administer this provision.
(iv) The Office shall be in charge of payment for the expenses incurred in connection with the execution of theduties of the Audit Committee members and other administrative duties, and shall promptly process thepayment for the expense or debt except in the case where the expense or debt of the claim is clearly foundto be unnecessary to the execution of the duties of them.
(v) Standing Committee member(s) shall be appointed to the Audit Committee, and activity plans of the Audit
Committee shall be prepared in coordination with the audit plans of Internal Auditing Office.
b. The following measures shall be effective to ensure the adequacy of business operations within the Company andthe Hitachi Group.
(i)

Such fundamental policies as the emphasis of the social responsibilities of business enterprises shall be(ii)

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

shared with the subsidiaries of the Company.
corresponding to its size and other characteristics, basic framework of which is similar to ones employed in
the Company. In order to ensure development of such systems in each subsidiary, directors and auditors
shall be sent from the Company to its subsidiary, and regular audits shall be conducted for the subsidiary.
(iii) A reporting system to Directors shall be established to ensure that the execution of duties by Executive
Officers of the Company is in compliance with laws, regulations, and the Articles of Incorporation.
(iv) Information pertaining to the execution of duties by Executive Officers of the Company shall be prepared andmaintained in accordance with internal rules.

47

1. Structures and Other Things to Ensure Adequacy of Business Operations (Internal Control System) and Operation of the Internal Control
System2021/05/20 19:40:49 / 20731340_株式会社日立製作所_招集通知（Ｃ）(v) A structure shall be established in which each relevant department shall establish regulations andguidelines, conduct training, prepare and distribute manuals, and carry out other such measures with respect
to various risks. Efforts shall be made to identify possible new risks through such things as progress reports
on business operations and, should it become necessary to respond to a new risk, an Executive Officer
responsible for responding thereto shall be appointed promptly.
(vi) Efficient performance of duties of the Executive Officers of the Company, and Directors and Executive
Officers of the subsidiaries shall be ensured through the following business management systems.
- The Senior Executive Committee shall be established in order to deliberate on and facilitate the formulationof decisions based on due consideration of diverse factors regarding important issues that affect theCompany and/or the Hitachi Group.
- Based on the management policy, medium-term business plans and annual budgets, on which performance
management is based, shall be prepared in order to operate business in a planned and efficient manner.
- Internal audits of the Company and its subsidiaries shall be conducted to monitor and identify the status of
their business operations and to facilitate improvements.
- The Audit Committee shall receive the audit plans of the accounting auditors in advance, and the priorapproval of the Audit Committee shall be required with respect to the fees to be paid to the accounting
auditors.
- Documented business processes for matters to be reflected in financial reports shall be executed at theCompany and its subsidiaries, and internal and external auditors shall examine said processes in order toensure the reliability of financial reports.
- A structure for the adequate and efficient conduct of business operations common to the Hitachi Group
companies shall be established.
(vii) Continuous maintenance of a legal and regulatory compliance structure shall be ensured through thefollowing business management systems.
- Internal audits shall be conducted, and various committees shall be established for legal and regulatorycompliance activities. Furthermore, the internal reporting system common to the Hitachi Groupshall be established and education on legal and regulatory compliance shall be provided.
- Various policies and rules on compliance with laws shall be established, aiming to ensure that theemployees are aware of the internal control systems overall and that the systems are effective.
(viii) A system shall be established, in which the subsidiaries report on important issues and the progress inmeasures for operations to the Company through the Company’s Senior Executive Committee, medium-termbusiness plans and the budget system.
(ix) The policy on transactions within the Hitachi Group is to trade fairly based on market prices.
2) Summary of status of operation of the internal control system
Audit Committee- A standing committee member has been appointed to grasp information in a timely and accurate manner
through attendance to important internal meetings, such as the Senior Executive Committee, and promote
information-sharing with other Committee members.
- The Audit Committee receives reports on audit plans of the accounting auditor and the Internal Auditing
Office in advance and proposes changes in such plans, if necessary, and closely coordinate with theaccounting auditor and the Internal Auditing Office through exchanging information and opinions on a regularbasis.
Board of Directors Office- In order to assist with the duties of each Committee and the Board of Directors, the Office is staffed with 11
employees (as of March 31, 2021) who exclusively serve the Office and are not subject to orders andinstructions of Executive Officers. Five of them are allocated as the full-time auditors auditing thegovernance and risk management, etc. in each sector of IT, Energy, Industry, Mobility, and Smart Life.

48

1. Structures and Other Things to Ensure Adequacy of Business Operations (Internal Control System) and Operation of the Internal Control
System2021/05/20 19:40:49 / 20731340_株式会社日立製作所_招集通知（Ｃ）

Senior Executive Committee- The Senior Executive Committee meets twice a month, in principle, to deliberate on specific importantmatters concerning the Company or its subsidiaries and the annual business plan.
- The Senior Executive Committee makes efforts to identify potential signal of new risks through such means
as progress reports on business operations of the Company and its subsidiaries, on a regular basis.
Business Performance Management- The Company has formulated business strategies, measures to be taken and financial targets as themedium-term business plan and annual budget, and manages business performance based on these plans.
Establishment of Internal Regulations and Training, etc.
- With respect to risks related to compliance, information security, environment, disasters, quality, andinvestment activities, etc., the Company establishes and amends regulations and guidelines, conducts
training, and prepares and distributes manuals to ensure risk management.
Whistleblowing System- The Company has established and operates the whistleblowing system common to the Hitachi Group.
- The Company has also established and operates a reporting system to directors for suspicion of illegal acts,
etc. of Executive Officers of the Company.
Internal Audit- The Internal Auditing Office has conducted internal audits of the Company and its subsidiaries to monitor
and improve their business operations, as well as to confirm the status of their compliance and prevent
illegal acts.
- The Internal Auditing Office has reported the results of its internal auditing for the Company and its
subsidiaries to the Audit Committee members without delay.

49

1. Structures and Other Things to Ensure Adequacy of Business Operations (Internal Control System) and Operation of the Internal Control
System2021/05/20 19:40:49 / 20731340_株式会社日立製作所_招集通知（Ｃ）

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

50

2. Fundamental Policy on the Conduct of Persons Influencing Decision on the Company's Financial and Business Policies

2021/05/20 19:40:49 / 20731340_株式会社日立製作所_招集通知（Ｃ）

3. Information on the stock acquisition rights, etc.
(Stock Acquisition Rights Held by Senior Managements) (As of March 31, 2021)
The First Stock
The Second Stock
Acquisition Rights ofAcquisition Rights ofName of stock acquisition rights(Date of resolution)
Hitachi, Ltd.
Hitachi, Ltd.
(June 29, 2016)(April 6, 2017)Class and number of shares to
Common stock 214,300
Common stock 228,680
be issued upon exercise of stock
sharessharesacquisition rights
Amount to be paid in upon
¥1 per share¥1 per share
exercise of stock acquisitionrightsExercise period of stock
From July 15, 2016 to
From April 27, 2017 toacquisition rights
July 14, 2046
April 26, 2047
Conditions for the exercise of(Note 1, 2)(Note 1, 2)
stock acquisition rights
22 Executive Officers of
21 Executive Officers of
the Company
the Company
Stock acquisition rights held by
10,715 of stock
11,434 of stock
senior managements
acquisition rights
acquisition rights(Note 3)(Note 3)

The Third Stock
Acquisition Rights ofHitachi, Ltd.
(April 11, 2018)
Common stock 208,280
shares¥1 per share
From April 27, 2018 toApril 26, 2048
(Note 1, 2)
26 Executive Officers of
the Company
10,414 of stockacquisition rights(Note 3)

Notes:1. A holder of stock acquisition rights may exercise all the stock acquisition rights together only within 10 days(in case the last day is not a business day, the following business day) from the day immediately following
the date on which he/she ceases to be an Executive Officer, a Director or a Corporate Officer of theCompany.
2. The number of stock acquisition rights which a holder of stock acquisition rights may exercise shall be
determined based on the ratio of (i) the total shareholder return for shares of Hitachi for three years from the
beginning of the fiscal year in which the date of allotment of the stock acquisition rights falls to (ii) the growthrate of TOPIX (Tokyo Stock Price Index) for the same period (the “TSR/TOPIX Growth Rate Ratio”), in
accordance with the stock price conditions:a. In case the TSR/TOPIX Growth Rate Ratio is 120% or more
All the stock acquisition rights allotted (the “Allotted Rights”) may be exercised.
b. In case the TSR/TOPIX Growth Rate Ratio is 80% or more but less than 120%
Only a part of the Allotted Rights may be exercised according to the degree of the TSR/TOPIX Growth
Rate Ratio (*).
*Number of stock acquisition
Number of
TSR/TOPIX=×{(× 1.25) – 0.5}
rights exercisable
Allotted Rights
Growth Rate Ratio
Any fraction less than one stock acquisition right will be rounded down.
c. In case the TSR/TOPIX Growth Rate Ratio is less than 80%
No Allotted Rights may be exercised.
3. The number of Executive Officers includes two Executive Officers who concurrently serve as Directors.

51

1. Information on the stock acquisition rights, etc

2021/05/20 19:40:49 / 20731340_株式会社日立製作所_招集通知（Ｃ）

4. Consolidated Statement of Changes in Equity (April 1, 2020 to March 31, 2021)(Millions of yen)
Commonstock
Balance at beginning of year

459,862

Capitalsurplus464,795

Accumulated
othercomprehensive
incomeRetainedearnings
2,296,208(57,070)9,436(9,436)

Treasurystock, atcost(3,809)

Total
Hitachi, Ltd.
stockholders’equityNoncontrollinginterests

Total equity

3,159,986

1,106,753

4,266,739

Changes in equity
Reclassified into retained
earnings
Net income-

501,613

Other comprehensive
income336,624

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

16,897

518,510336,624

79,547416,171-

Acquisition of treasury
stock

Issuance of new shares

501,613(96,653)

Dividends to noncontrolling interests

Sales of treasury stock

108
928

Changes in non-controllinginterests(96,653)(41,076)(41,076)

(159)

(159)

(159)

475

583

583

1,856

1,856

928
(381,791)

-

3,443

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

Total changes in equity

928(380,755)

414,396

330,631316

365,516(174,023)

191,493

Balance at end of year

460,790

84,0402,710,604

273,561(3,493)

3,525,502

932,730

4,458,232

52

2. Consolidated Statements of Changes in Equity

2021/05/20 19:40:49 / 20731340_株式会社日立製作所_招集通知（Ｃ）

5. Notes to Consolidated Financial Statements(Notes on Important Matters for Basis of Presentation of Consolidated Financial Statements)
1. Basis of presentation
The consolidated financial statements presented herein, under Article 120, Paragraph 1 of the Regulations ofCompanies’ Financial Statements, have been prepared in conformity with International Financial ReportingStandards (hereinafter “IFRS”). However, under the second sentence of the above provision, some descriptions
and notes required under IFRS are omitted.
2.

Scope of consolidation and application of equity method
The number of consolidated subsidiaries is 871 and the number of equity-method affiliates is 345.

3.

Financial assets
The Company has adopted IFRS 9 “Financial Instruments” (amended in October 2017).
Financial assets measured at amortized cost
Financial assets are subsequently measured at amortized cost when they meet the following requirements:- The financial asset is held within a business model the objective of which is to hold the asset to collectcontractual cash flows.
- The contractual terms of the financial asset provide cash flows on specified dates that are solely payments
of principal and interest on the principal amount outstanding.
Financial assets measured at amortized cost are initially measured at fair value (including direct transaction
costs). The carrying amount of financial assets measured at amortized cost is subsequently measured using
the effective interest method.
FVTOCI financial assets(financial assets measured at fair value through other comprehensive income)
The Company holds certain equity instruments with the purpose of expanding its revenue base bymaintaining and strengthening business relations with the investees. These equity instruments are classified
as FVTOCI financial assets by designation. They are initially and subsequently measured at fair value, andthe changes in fair value are recognized in OCI. The cumulative amount of OCI is recognized in equity as
AOCI. Dividends on equity instruments designated as FVTOCI are recognized in profit or loss, except where
they are considered to be a return of the investment.
FVTPL financial assets(financial assets measured at fair value through profit or loss)
Equity instruments not designated as FVTOCI financial assets and debt instruments not classified as financial
assets measured at amortized cost are classified as FVTPL financial assets. These instruments aresubsequently measured at fair value and the changes in fair value are recognized in profit or loss.
Impairment of financial assets
The Company evaluates allowance for doubtful receivables depending on whether the credit risk has
increased significantly since initial recognition, if the credit risk has increased significantly since initialrecognition, the allowance for doubtful receivables is measured at the amount equal to the lifetime expectedcredit losses on the financial assets, if the credit risk has not increased significantly since initial recognition,
the allowance for doubtful receivables is measured at the amount equal to 12-month expected credit losses.
However, for trade receivables, contract assets, and lease receivables, allowance for doubtful receivables isalways measured at the amount equal to the lifetime expected credit losses. Whether credit risk has
increased significantly is determined based on changes in the risk of default and changes in expected credit
losses are recognized in profit or loss as impairment losses.

4.

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

5.

Property, plant and equipment, Goodwill and Other intangible assets
Property, plant and equipment
Property, plant and equipment are measured using the cost model and stated at the cost less accumulated
depreciation and accumulated impairment losses. Each asset is depreciated mainly using the straight-line
method over its estimated useful lives. Right-of-use asset is depreciated from the commencement date of thelease to the earlier of the end of the useful life of the underlying asset or the end of the lease term on astraight-line basis.
Goodwill and Other intangible assets
Other intangible assets with finite useful lives are measured using the cost model and stated at the cost lessaccumulated amortization and accumulated impairment losses. Each asset is amortized mainly using thestraight-line method over its estimated useful lives.
Goodwill and Other intangible assets with indefinite useful lives are stated at the cost less accumulated
impairment losses.

53

3. Notes to Consolidated Financial Statements、Notes on Important Matters for Basis of Presentation(Basis of presentation)、Notes on
Important Matters for Basis of Presentation(Scope of consolidation and application of equity method)、Notes on Important Matters for Basisof Presentation(Financial assets)、Notes on Important Matters for Basis of Presentation(Inventories)、Notes on Important Matters for Basisof Presentation(P.P.& E. and intangible assets)

2021/05/20 19:40:49 / 20731340_株式会社日立製作所_招集通知（Ｃ）

Impairment losses
For each non-financial asset, the Company reviews the carrying amount and tests for impairment when there
are events or circumstances indicating an asset’s carrying amount may not be recoverable. For an asset that
does not generate cash flows that are largely independent of the cash flows from other assets, the Company
considers indicators of impairment based on a cash generating unit (CGU) or a group of CGUs. Irrespectiveof any indicators of impairment, the Company tests Goodwill and Other intangible assets with indefinite-lives
for impairment annually by estimating the recoverable amount of each CGU (or group of CGUs) to whichsuch assets are allocated.
6.

Accounting methods for retirement and severance benefits
The Company and certain subsidiaries have defined benefit pension plans, severance lump-sum payment plansand defined contribution pension plans to provide retirement and severance benefits to employees.
(1) Defined Benefit Plans
Defined benefit plans include defined benefit pension plans and severance lump-sum payment plans. The
present value of defined benefit obligations and retirement benefit costs are measured based on the projected
unit credit method. The present value of defined benefit obligations and the fair value of plan assets are
remeasured as of the end of reporting period. Actuarial differences arising during the year and changes in fairvalue of plan assets (excluding interest income) are recognized in OCI and are not subsequently reclassified
into profit or loss. Any prior service cost, which arises at the time of a plan amendment, is recognized
immediately in profit or loss when such an amendment occurs.
The present value of defined benefit obligations less the fair value of plan assets is presented as the net amountof defined benefit liability or asset in non-current liabilities or assets.
(2) Defined Contribution Plans
Defined contribution pension plans are post-employment benefit plans in which the employer pays a certain
amount of premiums to a third-party asset manager but has no legal or constructive obligation to pay in excess
of such contributions. Contributions to the defined contribution plans are recognized in profit or loss in the period
when the service is provided by the employees.
The risk-sharing corporate pension plan introduced by the Company and its subsidiary in April 2019 is classified
as a defined contribution pension plan because the Company effectively has no further obligation to makeadditional contributions.

(Notes on Accounting Estimates)
1. Impairment of Property, Plant and Equipment, Goodwill and Other Intangible Assets (Impairment losses of(109,009) million yen)
The calculation method used in determining impairment of property, plant and equipment, goodwill and otherintangible assets are described in note 5 in the “Notes on Important Matters for Basis of Presentation ofConsolidated Financial Statements”. The Company measures the recoverable amount of an asset or a CGU (ora group of CGUs) as the higher of fair value less costs of disposal and value in use. In measuring fair value, theCompany and its subsidiaries primarily use the income approach (present value technique) based on theestimated future cash flows expected to result from the use of the asset and its eventual disposal or the market
approach to derive reasonable estimates of values in orderly market transactions, such as comparisons ofsimilar public companies and the current gross value of the asset. Value in use is calculated by the estimatedfuture cash flows based on business plans approved by management, discounted at the discount rate which isderived from the weighted average cost of capital. The business plan used is based on external information,reflects historical experiences, and generally has a maximum of five years. Estimated cash flows beyond theperiod covered by the business plan are calculated using the estimated growth rate not exceeding the long-term
average growth rate of the market to which the asset belongs. The business plan reflects the decrease indemand in certain businesses in the short term due to the impact of the slowdown in the global economy
caused by the spread of COVID-19. It may be affected by risks related to market or economic environment, andactual result may differ from the estimates. In addition, the discount rate used to calculate the value in use isaffected by stock market trends and fluctuations in interest rates.
As of March 31, 2021, the group of CGUs to which a significant proportion of goodwill was allocated was thepower grid business in the Energy segment, and the carrying amount of goodwill allocated to the power grids
business was 480,006 million yen. The recoverable amount used in the impairment test of goodwill of the power
grid business for the year ended March 31, 2021 was calculated based on value in use. Cash flows were
projected over five years, and the primary assumptions used to calculate cash flows were revenue growth rate
and gross margin ratio. For the year ended March 31, 2021, there were no impairment losses recognized
related to goodwill.
For goodwill allocated to each CGU (or group of CGUs), the Company considers the recoverable amount may
be less than the carrying amount if the primary assumptions used in the impairment test of goodwill change
significantly.

54

Notes on Important Matters for Basis of Presentation(P.P.& E. and intangible assets)、Notes on Important Matters for Basis of
Presentation(Retirement and Severance Benefits)、Notes on Accounting Estimates(Impairment of Non-Financial Assets - P.P.& E. and Intangible
Assets)、Notes on Accounting Estimates(Impairment of Non-Financial Assets - Goodwill)2021/05/20 19:40:49 / 20731340_株式会社日立製作所_招集通知（Ｃ）

2.

3.

4.

Employee Retirement Benefits (The ending balance of Retirement and severance benefits of 433,954 million
yen)Calculation methods for employee retirement benefits are described in the note 6 in the “Notes on Important
Matters for Basis of Presentation of Consolidated Financial Statements”.
The measurement of a significant amount of employee retirement benefit costs is derived from actuarial
valuations containing a number of actuarial assumptions including mortality, withdrawal and retirement rates,changes in wages and the discount rate. The Company and its subsidiaries make judgements regarding theactuarial assumptions used by taking into account various factors including personnel demographics, market
conditions and expected trends in interest rates. Actuarial assumptions are determined based on the best
estimates and judgements but may be affected by variance of uncertain economic conditions in the future or byamendments or issuance of related laws.
Long-term projects (The ending balance of Provisions for expected losses on construction contracts of 104,275
million yen)
The Company is engaged in long-term projects to provide goods and services according to customers’
specifications over a specified period of time, and revenue is recognized mainly based on the pattern of the costaccrual (the progress of the project mostly based on the cost incurred relative to the estimated total cost) andprovisions for expected losses on construction contracts are recognized based on future estimated losses when
there is a possibility of incurring losses in the future. For long-term projects, the total estimated revenue iscalculated to the extent that is highly probable that a significant reversal in the amount of cumulative revenue
recognized will not occur when uncertainty associated with the total estimated revenue is subsequently
resolved. In addition, the total estimated costs are estimated considering contract risks and other factors. The
Company regularly reviews these estimates and reflects them in its accounting treatment. The amount ofrevenue recognized based on the pattern of the cost accrual is 1,389,409 million yen.
Deferred tax assets (The ending balance of Deferred tax assets of 143,126 million yen)
Deferred tax assets are recognized to the extent that it is probable that future taxable income will be available
against which unused tax loss carryforwards, unused tax credits and future deductible temporary differences
can be utilized. Future taxable income reflects the decrease in demand in the short term in part of the businessdue to the impact of the slowdown in the global economy caused by the spread of COVID-19. In assessing therealizability of deferred tax assets, the Company considers whether it is more likely than not that some portionor all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent
upon the generation of future taxable income in specific tax jurisdictions during the periods in which thesedeductible differences become deductible. 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 thebenefits of these deductible differences as of March 31, 2021. However, the times and amounts of taxable
income occurrence may be affected by variance of uncertain economic conditions in the future, and the actual
times and amounts may differ from the estimates.

(Notes to Consolidated Statement of Financial Position)
1. The components of Trade receivables and contract assets: Accounts receivable of 1,948,569 million yen,Contract assets of 634,318 million yen, and Others of 151,589 million yen.
Trade receivables and contract assets are stated as net of the allowance for doubtful receivables. Others
include notes receivable and electronically recorded monetary claims.
2. Accumulated other comprehensive income: Foreign currency translation adjustments of 110,727 million yen,remeasurements of defined benefit plans of 80,300 million yen, net changes in financial assets measured at
FVTOCI of 135,022 million yen, and net changes in cash flow hedges of (52,488) million yen.
3. Collateralized assets: Trade receivables and contract assets of 4,990 million yen, inventories of 9,103 million
yen, investments in securities and other financial assets of 333 million yen, and property, plant and equipment of
61,099 million yen.
Secured debts: 53,584 million yen
4. Allowance deducted directly from assets: 62,686 million yen from trade receivables and contract assets, and4,331 million yen from other receivables.
5. Property, plant and equipment include land of 278,114 million yen and buildings and structures of 718,181
million yen.
Accumulated depreciation and impairment losses of property, plant and equipment are (4,759,545) million yen.
Other intangible assets include software of 179,589 million yen.
6. Guarantees: 69,005 million yen

55

Notes on Accounting Estimates(Retirement and Severance Benefits)、Notes on Accounting Estimates(Revenue Recognition)、Notes on Accounting
Estimates(Income Taxes)、BS Note 1：Trade Receivables and Contract Assets、BS Note 2：OCI、BS Note 3：Collateralized assets、BS Note 4：
Allowance deducted directly from assets、BS Note 5：P.P.& E. and intangible assets、BS Note 6：Guarantees

2021/05/20 19:40:49 / 20731340_株式会社日立製作所_招集通知（Ｃ）(Notes to Consolidated Statement of Profit or Loss)
1. Other income
Other income of 476,137 million yen mainly consists of net gain or loss on business reorganization and others of
452,422 million yen. It includes a gain on the sale of shares of Hitachi Chemical in the amount of 278,839 million
yen, and on the sale of Diagnostic Imaging-related Business in the amount of 118,320 million yen.
2. Other expenses
Other expenses of (172,407) million yen mainly consists impairment losses on property, plant and equipment
and goodwill and other intangible assets of (109,009) million yen.
3. Income taxes
Income taxes of (325,247) million yen includes current tax expense of (220,305) million yen and deferred tax
expense of (104,942) million yen.
(Notes to Consolidated Statement of Changes in Equity)
1. Class and number of issued shares and treasury stocks at end of year
(1) Issued shares
Common stock
967,885,277 shares(2) Treasury stocks Common stock
1,055,799 shares
2. Cash dividends
Total amount of cash dividends
96,653 million yen
3. Class and number of shares to be issued upon exercise of stock acquisition rights at end of year
Common stock
731,540 shares(Notes on Financial Instruments)
1. Status of Financial Instruments
The Company and its subsidiaries, in an endeavor to optimize the capital efficiency of their business activities
through efficient management of operating funds, include highly liquid short-term investments, which mature
within three months of the date of acquisition and pose very little risk of fluctuation in value, in “cash equivalents”
as immediately available financial resources.
Customer credit risk regarding receivables is managed based mainly on the current economic conditions,inherent risks, the financial position of the relevant customer and the past record.
Investments in securities and other financial assets mainly comprise equity financial instruments, which aremanaged by constantly monitoring the fair value.
Short-term debt and long-term debt are mainly used to fund business operations and capital expenditures.
2.

Fair Value, etc. of Financial Instruments
Information on the fair value of financial instruments as of March 31, 2021 is as follows. Financial instruments
measured at fair value in the consolidated statements of financial position and financial instruments, whosecarrying amounts and book value are approximately equal, are not included in the following table.

Carrying amounts(Millions of yen)
Fair Values

AssetsInvestments in securities and otherfinancial assets
Lease receivables
90,044
91,483
Debt securities
55,71455,716Long-term loans receivable
21,10322,409Liabilities
Long-term debt [1]Bonds
365,959
367,537
Long-term debt
1,295,609
1,296,373[1] Long-term debt is included in current portion of long-term debt and long-term debt in the consolidated statementsof financial position.

56

PL Note 1-2：Other Income and Expenses、PL Note 3：Other Income and Expenses、Notes to Consolidated Statement of Changes in Equity、Notes on
Financial Instruments

2021/05/20 19:40:49 / 20731340_株式会社日立製作所_招集通知（Ｃ）

The following methods and assumptions are used to measure the fair value of financial assets and liabilities.
Cash and cash equivalents, Trade receivables, Short-term loans receivable, Other accounts receivable, Short-term
debt, Other accounts payable and Trade payables
The carrying amount approximates the fair value because of the short maturity of these instruments.
Investments in securities and other financial assets and Other financial liabilities
The fair value of lease receivables is based on the present value of lease payments receivable calculated for eachgroup of years to maturity using discount rates that reflect the time to maturity and credit risk.
Investment securities with quoted market prices are estimated using the quoted share prices. In the absence of anactive market for investment securities, quoted prices for similar investment securities, quoted prices associated withtransactions that are not distressed for identical or similar investment securities or other relevant information including
market interest rate curves, referenced credit spreads or default rates, are used to determine fair value. If significant
inputs of fair value measurement are unobservable, the Company uses price information provided by financial
institutions to evaluate such investments. The information provided is corroborated by the income approach using its
own valuation model, or the market approach using comparisons with prices of similar securities.
The fair value of long-term loans receivable is estimated based on the present value of future cash flows using theinterest rate applicable to an additional loan of the same type.
Derivative assets and derivative liabilities are measured at fair value based on quoted prices associated withtransactions that are not distressed, prices in inactive markets, or based on models using interest rate curves andforward and spot prices for currencies and commodities. If significant inputs are unobservable, the Company mainly
uses the income approach or the market approach to corroborate relevant information provided by financial
institutions and other available information.
Long-term debt
The fair value of long-term debt is estimated based on quoted market prices or the present value of future cash flows
using the market interest rates applicable to the same contractual terms.
(Note on Per Share Information)
Hitachi, Ltd. stockholders’ equity per share
Net income from continuing operations, attributable to Hitachi, Ltd. stockholders per share
Net loss from discontinued operations, attributable to Hitachi, Ltd. stockholders per share
Net income attributable to Hitachi, Ltd. stockholders per share

3,646.46yen
520.00 yen(0.71) yen
519.29 yen(Notes on Major Subsequent Events)
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, whenconditions for the commencement 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 the Company will request convening of a general meeting of shareholders on the matter of
items required for implementation of 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 ofHitachi 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 tosecure 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.
The consideration is expected to be approximately 382.0 billion yen.
Assuming the transaction is settled, it is expected that the Company will transfer Shares to Be Sold by theCompany. As a result, the Company's ownership ratio of Hitachi Metals Shares will decrease from 53.4% to 0%,
and Hitachi Metals will be deconsolidated. An expected gain on the sale of Hitachi Metals Shares in the amountof approximately 114.0 billion yen will be recognized in Other income in the consolidated statement of profit orloss. Furthermore, non-controlling interest in Hitachi Metals will decrease approximately 230.0 billion yen in the
consolidated statement of changes in equity as a result of its deconsolidation.

57

Notes on Financial Instruments、Note on Per Share Information、Notes on Major Subsequent Events

2021/05/20 19:40:49 / 20731340_株式会社日立製作所_招集通知（Ｃ）(Other Notes)
1. Acquisition of ABB's power grids business
On December 17, 2018, the Company decided to acquire the power grid business of ABB Ltd (hereinafter“ABB”) and signed an acquisition agreement with ABB in order to strengthen and expand energy solution
business globally. Pursuant to this agreement, the Company invested 80.1% in Hitachi ABB Power Grids Ltd(hereinafter “Hitachi ABB Power Grid”), which was spun off from ABB, and the acquisition was completed on
July 1, 2020. As a result, Hitachi ABB Power Grid became a subsidiary of the Company.
The fair value of the consideration paid for Hitachi ABB Power Grid was 722,062 million yen. The amounts of theassets acquired, liabilities assumed, goodwill and non-controlling interests recognized as of the acquisition datewere 1,377,244 million yen, 1,024,910 million yen, 448,977 million yen and 79,249 million yen, respectively.
The results of operations of Hitachi ABB Power Grid from the date of acquisition to March 31, 2021 (prior toelimination of intercompany transactions) included in the consolidated statement of profit or loss are Revenuesof 722,351 million yen, EBIT of (32,233) million yen, and Net income of (27,507) million yen. EBIT and Net
income include depreciation and amortization of 52,459 million yen on Other intangible assets and PP&E thatwere recognized as a result of this acquisition.
2.

Acquisition of GlobalLogic Inc.
On March 31, 2021, the Company decided to acquire GlobalLogic Inc. (hereinafter “GlobalLogic”), a leading
U.S.-headquartered digital engineering service company, in order to strengthen the digital portfolio of “Lumada.”
The acquisition is based on the definitive agreement among Hitachi Global Digital Holdings LLC (hereinafter“HGDH”) which is a subsidiary located in the U.S., MergeCo H Global Inc. (hereinafter “SPC”) which wasestablished by HGDH for the acquisition and GlobalLogic Worldwide Holdings, Inc. (hereinafter “GlobalLogic
Worldwide Holdings”) which is the parent company of GlobalLogic. The transaction is subject to customary
conditions and regulatory approvals and expected to be completed by the end of July 2021.
The total acquisition cost, including repayment of GlobalLogic’s interest-bearing debt, is expected to be 9.6
billion U.S. dollars (approximately 1,036.8 billion yen). SPC will be merged with and into GlobalLogic Worldwide
Holdings, which will be the surviving company. As a result, GlobalLogic Worldwide Holdings and GlobalLogic will
become wholly owned subsidiaries of the Company.

58

Other Notes

2021/05/20 19:40:49 / 20731340_株式会社日立製作所_招集通知（Ｃ）

6. Consolidated Statement of Comprehensive Income (Supplementary Information)
Years ended March 31
2020

2021

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

59

4. Consolidated Statements of Comprehensive Income

127,246

518,510(17,207)(8,396)(963)

69,362
88,736
2,151(26,566)

160,249(111,323)
13,173(13,609)

191,8215,346
58,755(111,759)(138,325)(11,079)

255,922416,171934,681(8,465)(2,614)

838,237
96,444

2021/05/20 19:40:49 / 20731340_株式会社日立製作所_招集通知（Ｃ）

7. Consolidated Statement of Cash Flows (Supplementary Information)
Years ended March 31
2020

2021
(Millions of yen)

Cash flows from operating activities
Net income
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization
Impairment losses
Income taxes
Share of (profits) losses of investments accounted for using the equity method
Financial income and expenses
Net (gain) loss on business reorganization and others(Gain) loss on sale of property, plant and equipment
Change in trade receivables and contract assets
Change in inventories
Change in trade payables
Change in accrued expenses
Change in retirement and severance benefits
Other
SubtotalInterest received
Dividends received
Interest paid
Income taxes paid
Net cash provided by (used in) operating activities
Cash flows from investing activities
Purchase of property, plant and equipment
Purchase of intangible assets
Proceeds from sale of property, plant and equipment, and intangible assets
Purchase of investments in securities and other financial assets(including investments in subsidiaries and investments accounted for using theequity method)
Proceeds from sale of investments in securities and other financial assets(including investments in subsidiaries and investments accounted for using theequity method)Other
Net cash provided by (used in) investing activities
Free cash flows
Cash flows from financing activities
Change in short-term debt, net
Proceeds from long-term debt
Payments on long-term debt
Proceeds from payments from non-controlling interests
Dividends paid to Hitachi, Ltd. stockholders
Dividends paid to non-controlling interests
Acquisition of common stock for treasury
Proceeds from sales of treasury stock
Purchase of shares of consolidated subsidiaries from non-controlling interests
Other
Net cash provided by (used in) financing activities
Effect of exchange rate changes on cash and cash equivalents
Change in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year60

5. Consolidated Statements of Cash Flows

127,246

518,510433,158
136,993
51,244(43,639)870(19,650)(30,370)
185,935(143,072)(115,086)(47,575)(22,483)
224,378
737,949
23,607
13,362(24,885)(189,113)
560,920491,663
109,009325,247(38,864)
1,337(452,422)(16,976)
89,722(47,937)(31,811)32,693(29,239)
11,322962,254
21,64820,560(22,368)(188,966)
793,128(322,894)(98,382)
82,539(254,750)(118,195)
83,483(237,172)(861,035)

57,624682,408(7,541)(525,826)
35,0949,249(458,840)
334,288

80,849334,919(279,446)
5,004(91,699)(43,926)(166)
139(2,345)(492)
2,837(33,193)
4,738

199,679
523,467(230,488)
5,190(96,611)(40,687)(159)
583(545,790)(22)(184,838)
54,105203,555

807,593
812,331

812,3311,015,886

2021/05/20 19:40:49 / 20731340_株式会社日立製作所_招集通知（Ｃ）

8. Unconsolidated Statement of Changes in Net Assets (April 1, 2020 to March 31, 2021)(Millions of yen)
Stockholders’ equity
Capital surplus

Retained earnings

Stockholders’ equity

OthersCommonstock

Balance at beginning of year

Capitalreserve

459,862

177,828

928

928

Reserve for
Total capital advanced
surplusdepreciation

Others272,917450,746of
fixed assets

Retainedearnings(losses)carriedforward1,246

628,885

Total retained
earnings

630,131

Treasurystock(3,809)Total
stockholders’equity1,536,931

Change during year
Issuance of new shares

928

Reversal of reserve foradvanced depreciation of
fixed assets

1,856
(113)

113

-

-

Distribution of surplus(96,653)(96,653)(96,653)

Net income

705,511705,511705,511

Acquisition of treasury
stock
Disposition of treasury
stock

(94)

(94)

(159)

(159)

475

380

(Net) Change in items
other than stockholders’equity during year
Total change during year
Balance at end of year

928

928

(94)

833

(113)

608,970

608,857316

610,933

460,790

178,756

272,823

451,579

1,133

1,237,855

1,238,988(3,492)

2,147,865

Valuation and translation adjustments

Balance at beginning of year

Unrealized
holding gains
on securities

Deferred
profitor loss onhedges

Revaluation
reserve forland

29,763

10,291

(133)

Total
Subscription
valuationrights toandsharestranslation
adjustments
39,921

2,204

Total net
assets1,579,058

Change during year
Issuance of new shares

1,856

Reversal of reserve foradvanced depreciation of
fixed assets-

Distribution of surplus(96,653)

Net income

705,511

Acquisition of treasury
stock

(159)

Disposition of treasury
stock

380

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

61,122(7,447)

135

53,810Total change during year

61,122(7,447)

135

53,810(59)

664,684

Balance at end of year

90,8852,843

293,7322,144

2,243,742

61

6. Unconsolidated Statement of Changes in Net Assets(59)

53,7502021/05/20 19:40:49 / 20731340_株式会社日立製作所_招集通知（Ｃ）

9. Notes to Unconsolidated Financial Statements(Notes on Important Accounting Policy)
1. Inventories
Finished goods, semi-finished goods and work in process: Stated at cost. Cost is determined by the specificidentification method or the moving average method. (The figures shown in the Balance Sheet have been
calculated in accordance with the write-down approach based on decline in profitability.)
Raw materials: Stated at cost. Cost is determined by the moving average method. (The figures shown in the
Balance Sheet have been calculated in accordance with the write-down approach based on decline inprofitability.)
2. Securities
Affiliated companies’ common stock and investments in affiliated companies are stated at cost. Cost isdetermined by the moving average method.
Other securities which had readily determinable fair values are stated at fair value. The difference between
acquisition cost and carrying cost of other securities is recognized in “Unrealized holding gains on securities.”
The cost of other securities sold is computed based on the moving average method.
Other securities which did not have readily determinable fair values are stated at cost determined by the moving
average method.
3. Derivatives
Derivatives are stated at fair value.
4. Depreciation of tangible fixed assets (excluding lease assets)
Straight-line method.
5. Depreciation of intangible fixed assets (excluding lease assets)
Selling, leasing, or otherwise marketing software: Depreciated based on expected gross revenues ratably.
Other intangible fixed assets: Straight-line method.
6. Depreciation of lease assets
Financial leases other than those that are deemed to transfer the ownership of the leased property to the lessee:
Depreciation is calculated by the straight-line method with no residual value, using the lease term as useful life.
Of the financial leases other than those that are deemed to transfer the ownership of the leased property to thelessee, leases commencing on or before March 31, 2008 are accounted for based on accounting methods
applied to ordinary lease transactions.
7. Allowances and Provisions
Allowance for doubtful receivables:
Estimated uncollectible amounts are accounted for based on loan loss ratios in the case of general receivables
and based on case-by-case examination of collectability in the case of specific receivables including doubtfulreceivables.
Provision for product warranties:
In order to prepare for expenditures related to after-sales product services, estimated in-warranty service costs
are accounted for based on past records.
Provision for loss on construction contracts:
In order to provide for losses relating to construction contracts and made-to-order software, an estimated loss
for subsequent fiscal years is accounted for.
Accrued pension liability:
Accrued pension liability is provided for employees’ retirement and severance benefits. Such liability isdetermined based on projected benefit obligation and expected plan assets as of the end of this fiscal year. The
projected benefit obligation is determined by attributing the expected retirement and severance benefits to eachyear by the benefit formula basis.
Prior service cost is amortized by the straight-line method over the estimated average remaining service yearsof employees.
Unrecognized actuarial gain or loss is amortized by the straight-line method mainly over the estimated averageremaining service years of employees from the next fiscal year.
Provision for retirement benefits for senior executives:
In order to provide for the payment of retirement benefits to senior executives, corporate officers, and the like,the Company accounted for the amount of payment required as of the end of this fiscal year according to the
stipulations in the Company’s internal rules.
Decisions were made at the Compensation Committee meetings held on December 18, 2007 and March 26,
2008 to abolish the retirement allowance system and to pay the retirement allowance for the applicable period tosenior executives, corporate officers, and the like at the time of their retirement, subject to resolutions of theCompensation Committee following decisions on their retirement.
Provision for loss on business of affiliated companies:
In order to provide for losses relating to the business of affiliated companies, the amount the Company is
expected to bear in excess of the amounts invested in and loaned to for such companies is accounted for.

62

7. Notes to Unconsolidated Financial Statements

2021/05/20 19:40:49 / 20731340_株式会社日立製作所_招集通知（Ｃ）

8.

Accounting standard for income and expenses
Accounting standard for income on construction contracts and made-to-order software:
Income is accounted for on the percentage of completion basis for progress made by the end of the relevant
fiscal year, if said progress is deemed certain to yield results (as a general rule, the estimated percentage ofprogress is obtained by the cost-to-cost method). Income is accounted for on the completion basis in all othercases.
9. Consumption tax
Consumption tax is accounted for based on the tax segregated method, under which consumption tax is
excluded from presentation of revenues, cost of sales and expenses.
10. Hedge accounting
Deferral hedge accounting is employed.
11. Application of tax effect accounting for the transition from the consolidated taxation system to the group tax
sharing system
As for items involving the transition from the consolidated taxation system to the group tax sharing system,
which has been newly included in the 2020 tax reform, and related items under the single taxation system,
which were revised accordingly, the Company recorded deferred tax assets and deferred tax liabilities on thebasis of the provisions of the Corporation Tax Act of Japan in effect prior to the 2020 tax reform in accordancewith Paragraph 3 of “Practical Solution on the Treatment of Tax Effect Accounting for the Transition from theConsolidated Taxation System to the Group Tax Sharing System” (ASBJ PITF No.39, March 31, 2020), which
stipulates that the application of Paragraph 44 of “Implementation Guidance on Tax Effect Accounting” (ASBJ
Guidance No. 28, February 16, 2018) is not mandatory.
(Note on Change in Presentation)
From fiscal 2020, the Company adopted the “Accounting Standard for Disclosure of Accounting Estimates”(ASBJ Statement No. 31, March 31, 2020). Based on this statement, the Company indicates 'Notes on
Accounting Estimates'.
(Notes on Accounting Estimates)
1. Valuation of affiliated companies’ common stock and investments in affiliated companies(1) Amounts recorded in the financial statements of this fiscal year
The ending balance of Affiliated companies’ common stock and investments in affiliated companies, withoutmarket value: 2,612,026 million yen(2) Information that contributes to understanding of accounting estimates
Affiliated companies’ common stock without market value is evaluated by considering possibility of recovery
based on the performance according to the business plan of those companies if the real value of the stock
has declined significantly as compared to the purchase price. A part of affiliated companies’ common stock isevaluated based on the real value which includes the excess earning power calculated by enterprise value
measurement at the time of the acquisition of the company concerned. Necessity of impairing the excess
earning power is determined by the possibility of achieving the future business plan.
Business plans are estimated based on revenue growth rate and gross margin ratio, and other factors. In
addition, this business plan reflects the decrease in demand in certain businesses in the short term due tothe impact of the slowdown in the global economy caused by the spread of COVID-19.
Significant changes in primary assumptions of the business plan could result in the real value being less thanthe purchase price.
2. Loss on impairment of Fixed Assets(1) Amounts recorded in the financial statements of this fiscal year
The ending balance of Tangible fixed assets: 216,678 million yen
The ending balance of Intangible fixed assets (excluding selling, leasing, or otherwise marketing software):
68,673 million yen(2) Information that contributes to understanding of accounting estimates
This note is omitted as the same content is stated in ‘5. Property, plant and equipment, Goodwill and Other
intangible assets’ under ‘Notes on Important Matters for Basis of Presentation of Consolidated Financial
Statements’ in the Notes to Consolidated Financial Statements.
3. Provision for loss on business of affiliated companies(1) Amounts recorded in the financial statements of this fiscal year
The ending balance of Provision for loss on business of affiliated companies: 129,884 million yen(2) Information that contributes to understanding of accounting estimates
This note is omitted as the same content is stated in ‘7. Allowances and Provisions’ under ‘Notes on
Important Accounting Policy’ in the Notes to Unconsolidated Financial Statements.
4. Provision for retirement benefits for senior executives(1) Amounts recorded in the financial statements of this fiscal year
The ending balance of Provision for retirement benefits for senior executives: 70,389 million yen(2) Information that contributes to understanding of accounting estimates
This note is omitted as the same content is stated in ‘7. Allowances and Provisions’ under ‘Notes on
Important Accounting Policy’ in the Notes to Unconsolidated Financial Statements and ‘2. Employee
Retirement Benefits’ under ‘Notes on Accounting Estimates’ in the Notes to Consolidated Financial
Statements.

63

7. Notes to Unconsolidated Financial Statements

2021/05/20 19:40:49 / 20731340_株式会社日立製作所_招集通知（Ｃ）

5.

6.

Provision for loss on construction contracts(1) Amounts recorded in the financial statements of this fiscal year
The ending balance of Provision for loss on construction contracts: 47,456 million yen(2) Information that contributes to understanding of accounting estimates
This note is omitted as the same content is stated in ‘7. Allowances and Provisions’ under ‘Notes on
Important Accounting Policy’ in the Notes to Unconsolidated Financial Statements and ‘3. Long-term
projects’ under ‘Notes on Accounting Estimates’ in the Notes to Consolidated Financial Statements.
Deferred tax assets(1) Amounts recorded in the financial statements of this fiscal year
The ending balance of Deferred tax assets: 64,621 million yen(2) Information that contributes to understanding of accounting estimates
This note is omitted as the same content is stated in ‘4. Deferred tax assets’ under ‘Notes on Accounting
Estimates’ in the Notes to Consolidated Financial Statements.

(Notes to Unconsolidated Balance Sheet)
1. Collateralized assets

2.

3.

Type of asset
Affiliated companies’ common
stock
Investments in securities

Year-end book value

Long-term loan receivables

51

46
8

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

Total
105
Accumulated depreciation of tangible fixed assets
Buildings
177,763 million yen
Structures
24,978 million yen
Machinery
88,730 million yen
Vehicles
862 million yen
Tools and equipment
146,361 million yen
Lease assets
4,730 million yen
Land revaluation
Effective on April 1, 2016, the Company succeeded "Revaluation reserve for land" of Hitachi Medical
Corporation in conjunction with the absorption-type company split. As of March 31, 1998, in accordance with the"Act on Revaluation of Land" (Act No.34, promulgated on March 31, 1998), land owned by Hitachi Medical
Corporation for business use was revalued. The unrealized gains on the revaluation were included in net assets
as "Revaluation reserve for land", net of deferred taxes. The deferred taxes on the unrealized gains were
included in liabilities as "Deferred tax liabilities for land revaluation".
(1) Method of revaluation
The fair value of land was determined based on the assessed value of fixed assets stipulated in Article 2-3 of
the Ordinance Implementing the Act on Revaluation of Land (Article 119 of 1998 Cabinet Order, promulgatedon March 31, 1998). Reasonable adjustments are made to the assessed value of fixed assets.
(2) Date of revaluation
March 31, 2002
(3) Difference between the fair value of land subject to the revaluation and the book value as of March
31, 2021(4) million yen

64

7. Notes to Unconsolidated Financial Statements

2021/05/20 19:40:49 / 20731340_株式会社日立製作所_招集通知（Ｃ）

4

5.

Guarantees
The Company guarantees borrowings from financial institutions, etc. as follows.
(Millions of yen)
Guarantee
Year-end balance
Hitachi ABB Power Grids Ltd
309,244
Hitachi Rail STS S.p.A.
148,667
Hitachi Rail S.p.A.
133,615
Hitachi America Capital, Ltd.
55,355
Hitachi International (Holland) B.V.
32,450
Hitachi International Treasury Ltd.
16,052
ABB Power Grids Switzerland AG
3,339
Kawasaki Heavy Industries, Ltd.
1,600
ABB Power Grids Canada Inc.
1,583
Other
1,236
Total
703,145
In addition to the foregoing, the Company has entered into an agreement with each of thefollowing overseas affiliated companies on maintaining their finances in a sound condition,etc., mainly to enhance their credit in order to support their financing activities:
Hitachi America Capital, Ltd., Hitachi International (Holland) B.V., Hitachi International
Treasury Ltd., Hitachi (China) Finance Co., Ltd. and Hitachi Power Europe GmbH
Short-term receivables from affiliated companies
360,850 million yen
Long-term receivables from affiliated companies
404,336 million yen
Short-term payables to affiliated companies
816,460 million yen
Long-term payables to affiliated companies
2,883 million yen(Notes to Unconsolidated Statement of Operations)
1. Compensation income
Compensation income of 33,398 million yen is a compensation received from Honda Motor Co., Ltd. inaccordance with a basic agreement regarding management integration of subsidiaries, concluded on October30, 2019 between the Company and Honda Motor Co., Ltd.
2.

Loss on impairment of assets(1) Summary of the assets or asset groups for which impairment loss was recognizedClassification
Description
Category
Location
Software relating toAssets to be held
service business for
Softwareand usedfinancial institutions
Hitachi, Ibaraki
Idle assets
Tool and equipment, etc.
(2) Reason to recognize impairment loss
The Company recognized the impairment loss for assets to be held and used since amounts invested in theabove assets are expected to be irrecoverable due to decline in their profitability. The Company also
recognized the impairment loss for idle assets since they are expected to have no future use and the capital
invested thereon is unlikely to be recovered mainly due to the changes in the business plan.
(3) Amounts of impairment loss
Buildings
268 million yen
Structures
260 million yen
Machinery
695 million yen
Tool and equipment
750 million yen
Software
6,652 million yen
Others61 million yen
Total
8,688 million yen(4) Method of grouping assets
Although the grouping of assets is principally based on business divisions or places of business, someassets and asset groups are grouped as a separate unit that generates cash flows independently of otherasset groups.
(5) Calculation of recoverable amounts
For assets to be held and used, calculation is based on the higher of net sales price and value in use, andnet sales price is calculated by deducting the estimated cost of disposal from real estate appraisal value. Idle
assets, as these are considered not to be recoverable, their book values were reduced to their memorandum
values.

65

7. Notes to Unconsolidated Financial Statements

2021/05/20 19:40:49 / 20731340_株式会社日立製作所_招集通知（Ｃ）

3.

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

426,234 million yen
819,383 million yen
59,931 million yen(Note to Unconsolidated Statement of Changes in Net Assets)
Matters related to Class and Number of Treasury Stock(Shares)Class
Common stock

At beginning of year
1,050,741

Number of shares
Increase during year Decrease during year
136,523
131,465

At end of year
1,055,799(Summary of Reason for Change)
The increase during this fiscal year by 136,523 shares is due to the acquisition of 97,000 shares without
consideration in accordance with the restricted stock compensation plan, and the purchase of 39,523 shares fromless-than-one unit shareholders at their request. The decrease during this fiscal year by 131,465 shares is due tothe disposition of 126,560 shares as a result of the exercise of stock acquisition rights, and the sale of 4,905
shares to less-than-one unit shareholders at their request.
(Note on Accounting for Deferred Taxes)
The major causes of deferred tax assets were accrued pension liability and accrued bonuses to employees.
(Note on Leased Fixed Assets)
In addition to the capitalized fixed assets, as significant equipment, the Company utilizes cogeneration facilities
under lease arrangements.
(Note on Transactions with Related Parties)(Millions of yen)
% of voting
rights held

Description of
Attributetransaction
In-kindSale of thecontribution
Subsidiary Hitachi America, Ltd. Direct: 100.0%
Company's products*(Note 1)Name of company
etc.

Relationship with therelated parties

Transaction
amountClassification

160,197--

77,222--

Manufacturing of the
Loan (Note 2)Company's products *44,329

Short-term
loan
receivables

57,764

Loan (Note 2)(9,000)Long-term loan
receivables

51,500Loan (Note 3)(119,713)

Short-term
loan
receivables-

Guarantee

55.355--

Loan (Note 3)(78,305)

Short-term
loan
receivables-

Loan (Note 3)

332,130

Long-term loan
receivables

332,130(116,682)

Depositreceived

78,49650,068Depositreceived

63,515

5,285

Depositreceived

63,3596,969

Depositreceived

54,449Underwriting of
capital increase
Subsidiary Hitachi Astemo, Ltd.

Hitachi America
Subsidiary
Capital, Ltd.

Subsidiary Hitachi Rail Ltd.
Subsidiary

ABB Power Grids
Finance AG

Direct:Indirect: 100.0% *Direct: 100.0%

Hitachi High-Tech
Corporation

Direct:Subsidiary

Hitachi Global Life
Solutions, Inc.

Direct:Subsidiary Hitachi Systems, Ltd. Direct:

Hitachi Solutions,
Ltd.

Manufacturing, sale,engineering andmaintenance of theGroup's products *Indirect: 80.1% Loans

Subsidiary

Subsidiary

66.6%

Direct:Sale of the
Deposit received
100.0% Company's products,(Note 2)etc.
Manufacturing, sale
Deposit received
100.0% and maintenance of(Note 2)the Group's products *Outsourcing of theCompany's softwaredevelopment,
outsourcing of
Deposit received
100.0%
maintenance of the(Note 2)Company's
telecommunications
equipment *Outsourcing of theCompany's
Deposit received
100.0% information systems(Note 2)and softwaredevelopment *66

7. Notes to Unconsolidated Financial Statements

Year-endbalance2021/05/20 19:40:49 / 20731340_株式会社日立製作所_招集通知（Ｃ）(Millions of yen)
Attribute

Name of company
etc.

% of voting
rights held

Relationship with the
Description ofrelated parties
transaction
Purchase of Hitachi
Deposit received
53.4%
Metals' products *(Note 2)

Subsidiary Hitachi Metals, Ltd.

Direct:Subsidiary

Hitachi ABB Power
Grids Ltd

Direct:Subsidiary

Hitachi Rail STS
S.p.A.

Indirect: 100.0%

Subsidiary Hitachi Rail S.p.A.

80.1% *

Guarantee

Manufacturing, sale,engineering andGuarantee
maintenance of theGroup's products, etc.
Manufacturing, sale,engineering andIndirect: 100.0%
Guarantee
maintenance of theGroup's products *Transaction
amountClassification

Year-endbalance51,190

Depositreceived

309,244--

148,667--

133,615--

51,190* The Company’s Directors, Executive Officers or employees concurrently hold position of directors or officers at thesubsidiary and the affiliate.
Notes: 1. The shares of Hitachi America, Ltd. were acquired in exchange for the in-kind contribution of the shares ofHitachi Global Digital Holdings Corporation and Hitachi Particle Engineering and Services Inc.
Hitachi Global Digital Holdings Corporation changed its company name to Hitachi Global Digital Holdings
LLC on April 1, 2021.
2. These are loans or deposits made based on the pooling system wherein the funds of affiliated companies
are concentrated at the Company to be loaned to affiliated companies who have financing needs. Theinterest rates on loans and deposits are determined with due consideration to market interest rates. The
transaction amount indicates the increase or decrease from the balance at the beginning of the fiscal year,
including interest received and paid.
3. The interest rate was determined with due consideration to market interest rates. The transaction amountof the loans indicates the change from the balance at the beginning of the fiscal year.
(Note on Per Share Information)
Net assets per share
2,318.50 yen
729.77 yen
Net income per share(Note on Major Subsequent Events)
Exchange of shares
On April 1, 2021, the absorption-type merger between Mitsubishi UFJ Lease & Finance Co., Ltd. (hereinafter“Mitsubishi UFJ Lease”) as a surviving company and Hitachi Capital Corporation (hereinafter “Hitachi Capital”) as amerged company was conducted, and the Company received 5.10 shares of Mitsubishi UFJ Lease’s common stock
for one share of Hitachi Capital’s common stock held by the Company and revaluated the shares at the market priceas of the same date.
As a result, the Company plans to post an extraordinary gain of approximately 121.8 billion yen in gain on valuationof securities in the unconsolidated statement of operations for the fiscal year ending March 31, 2022 (from April 1,
2021 to March 31, 2022). Mitsubishi UFJ Lease changed its name to Mitsubishi HC Capital Inc. as of April 1, 2021.
Transfer of subsidiary's shares
On April 28, 2021, the Company entered into an agreement regarding the following four points for the common
stocks of Hitachi Metals, Ltd. (hereinafter “Hitachi Metals Shares”), a consolidated subsidiary of the Company, withK. K. BCJ-52 (hereinafter “Tender Offeror”), a wholly owned company of G.K. BCJ-51, the outstanding shares ofwhich are indirectly owned by investment funds which Bain Capital Private Equity, LP and its group provide withinvestment advice.
(i)Tender Offeror will launch a tender offer (hereinafter “Tender Offer”) for Hitachi Metals Shares, when conditions forthe commencement 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, Ltd. (hereinafter “Hitachi Metals”) and Shares to Be Sold by theCompany) in Tender Offer, Tender Offeror and the Company will request convening of a general meeting ofshareholders on the matter of items required for implementation of 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 andother 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.
The consideration is expected to be approximately 382.0 billion yen.
Assuming the transaction is settled, it is expected that the Company will transfer Shares to Be Sold by the Company.
As a result, the Company plans to post an extraordinary gain of approximately 328.0 billion yen in gain on sale ofaffiliated companies' common stock in the unconsolidated statement of operations for the fiscal year ending March
31, 2022 (from April 1, 2021 to March 31, 2022).

67

7. Notes to Unconsolidated Financial Statements

2021/05/20 19:40:49 / 20731340_株式会社日立製作所_招集通知（Ｃ）(Additional Information)
Acquisition of shares
On March 31, 2021, the Company decided to acquire GlobalLogic Inc. (hereinafter “GlobalLogic”), a leading U.S.headquartered digital engineering service company, in order to strengthen the digital portfolio of “Lumada.” Theacquisition is based on the definitive agreement 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. The transaction is subject to customary conditions and regulatory
approvals and expected to be completed by the end of July 2021.
The total acquisition cost, including repayment of GlobalLogic’s interest-bearing debt, is expected to be 9.6 billion
U.S. dollars (approximately 1,036.8 billion yen). SPC will be merged with and into GlobalLogic Worldwide Holdings,
which will be the surviving company. As a result, GlobalLogic Worldwide Holdings and GlobalLogic will become
wholly owned subsidiaries of the Company.

68

7. Notes to Unconsolidated Financial Statements

2021/05/20 19:40:49 / 20731340_株式会社日立製作所_招集通知（Ｃ）

10. Transcript of Accounting Auditors’ Audit Report on Consolidated Financial Statements
REPORT OF INDEPENDENT AUDITORSMay 10, 2021
Mr. Toshiaki Higashihara, President & CEO
Hitachi, Ltd.
Ernst & Young ShinNihon LLC
Tokyo Office, Japan
Takashi Ouchida
Designated Engagement Partner
Certified Public Accountant
Koji Fujima
Designated Engagement Partner
Certified Public Accountant
Takuya Tanaka
Designated Engagement Partner
Certified Public Accountant
Shinya Yoshida
Designated Engagement Partner
Certified Public Accountant
OpinionPursuant to Article 444, Paragraph 4 of the Companies Act, we have audited the accompanying
consolidated financial statements, which comprise the consolidated statement of financial position, the consolidated
statement of profit or loss, the consolidated statement of changes in equity, and the notes to the consolidated
financial statements of Hitachi, Ltd. and its consolidated subsidiaries (the Group) applicable to the fiscal year from
April 1, 2020 to March 31, 2021.
In our opinion, the accompanying consolidated financial statements present fairly, in all material respects,
the consolidated financial position and results of operations of the Group applicable to the fiscal year ended March
31, 2021, in accordance with International Financial Reporting Standards with certain disclosure items omitted
pursuant to the second sentence of Article 120, Paragraph 1 of the Regulation on Corporate Accounting.
Basis for Opinion
We conducted our audit in accordance with auditing standards generally accepted in Japan. Our
responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of theConsolidated Financial Statements section of our report. We are independent of the Group in accordance with the
ethical requirements that are relevant to our audit of the consolidated financial statements in Japan, and we havefulfilled 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 Audit Committee for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of these consolidated financial
statements in accordance with International Financial Reporting Standards with certain disclosure items omitted
pursuant to the second sentence of Article 120, Paragraph 1 of the Regulation on Corporate Accounting, and forsuch internal control as management determines is necessary to enable the preparation of consolidated financial
statements that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, management is responsible for assessing the Group's
ability to continue as a going concern and disclosing, as required by International Financial Reporting Standards
with certain disclosure items omitted pursuant to the second sentence of Article 120, Paragraph 1 of the Regulation
on Corporate Accounting, matters related to going concern.
Audit Committee is responsible for overseeing the Group’s financial reporting process.

69

8. Transcript of Accounting Auditors’ Audit Report on Consolidated Financial Statements

2021/05/20 19:40:49 / 20731340_株式会社日立製作所_招集通知（Ｃ）

Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as
a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Misstatements can arise from fraud or error and are considered material if, individually or in
the aggregate they could reasonably be expected to influence the economic decisions of users taken on the basisof these consolidated financial statements.
As part of an audit in accordance with auditing standards generally accepted in Japan, we exercise
professional judgment and maintain professional skepticism throughout the audit. We also:- Identify and assess the risks of material misstatement of the consolidated financial statements, whether
due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit
evidence that is sufficient and appropriate to provide a basis for our opinion.
- In making those risk assessments, we consider internal control relevant to the audit in order to design
audit procedures that are appropriate in the circumstances, while the purpose of the audit of theconsolidated financial statements is not expressing an opinion on the effectiveness of the Group’s internal
control.
- Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by management.
- Conclude on the appropriateness of management’s use of the going concern basis of accounting and,based on the audit evidence obtained, whether a material uncertainty exists related to events orconditions that may cast significant doubt on the Group’s ability to continue as a going concern. If weconclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to therelated disclosures in the consolidated financial statements or, if such disclosures are inadequate, tomodify our opinion. Our conclusions are based on the audit evidence obtained up to the date of ourauditor’s report. However, future events or conditions may cause the Group to cease to continue as agoing concern.
- Evaluate the overall presentation, structure and content of the consolidated financial statements, including
the disclosures, and whether the consolidated financial statements represent the underlying transactions
and events in a manner that achieves fair presentation in accordance with International Financial
Reporting Standards with certain disclosure items omitted pursuant to the second sentence of Article 120,
Paragraph 1 of the Regulation on Corporate Accounting.
- Obtain sufficient appropriate audit evidence regarding the financial information of the entities or businessactivities within the Group to express an opinion on the consolidated financial statements. We areresponsible for the direction, supervision and performance of the group audit. We remain solely
responsible for our audit opinion.
We communicate with the Audit Committee regarding, among other matters, the planned scope and timingof the audit and significant audit findings, including any significant deficiencies in internal control that we identify
during our audit.
We also provide the Audit Committee with a statement that we have complied with the ethical requirements
regarding independence that are relevant to our audit of the financial statements in Japan, and to communicate
with them all relationships and other matters that may reasonably be thought to bear on our independence, andwhere applicable, related safeguards.
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 tobe disclosed pursuant to the provisions of the Certified Public Accountants Act of Japan.
(Note)
This is an English translation of the Japanese language Report of Independent Auditors issued by Ernst&Young ShinNihon LLC in connection with the audit of the consolidated financial statements of the Company,
prepared in Japanese, for the fiscal year ended March 31, 2021. Ernst & Young ShinNihon LLC has not audited theEnglish language version of the consolidated financial statements for the above-mentioned year.

70

8. Transcript of Accounting Auditors’ Audit Report on Consolidated Financial Statements