Annual Securities Report(The 152nd Business Term)
From April 1, 2020 to March 31, 2021

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

Hitachi, Ltd.

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

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

Director, Kanto Local Finance Bureau[Filing Date]

June 23, 2021

[Fiscal Year]

The 152nd Business Term (from April 1, 2020 to March 31, 2021)[Company Name]

Kabushiki Kaisha Hitachi Seisakusho[Company Name in English]

Hitachi, Ltd.

[Title and Name of

Keiji Kojima, President & COO

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

03-3258-1111[Contact Person]

Takahiro Yamada, Manager, Legal Division[Contact Address]

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

03-3258-1111[Contact Person]

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

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

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

Part I Information on the Company

1

I.

Overview of the Company

1

1. Key Financial Data .………………………………………………………………………………
2. History ……………………………………………………………………………………………

1
3

3. Description of Business ..…………………………………………………………………………
4. Information on Affiliates …………………………………………………………………………

7
11

5. Employees ..………………………………………………………………………………………

20

Business Overview

21

II.

III.

IV.

1. Management Policy, Economic Environment and Challenges Hitachi Group Faces ……………

21

2. Risk Factors ………………………………………………………………………………………
3. Management's Discussion and Analysis of Consolidated Financial Condition,

28

Results of Operations and Cash Flows ...…………………………………………………………
4. Material Agreements, etc ...………………………………………………………………………

40
56

5. Research and Development ………………………………………………………………………

58

Property, Plants and Equipment

63

1. Summary of Capital Investment, etc. .……………………………………………………………
2. Major Property, Plants and Equipment ..…………………………………………………………

63
64

3. Plans for Capital Investment, Disposals of Property, Plants and Equipment, etc. .………………

68

Information on the Company

69

1. Information on the Company’s Stock, etc. .………………………………………………………

69(1) Total number of shares, etc. ..…………………………………………………………………
(2) Information on the stock acquisition rights, etc. ..……………………………………………

6970(3) Information on moving strike convertible bonds, etc. .………………………………………
(4) Changes in the total number of issued shares and the amount of common stock and other …

72
72(5) Shareholders composition ……………………………………………………………………
(6) Major shareholders ...…………………………………………………………………………

7374(7) Information on voting rights .…………………………………………………………………
2. Information on Acquisition, etc. of Treasury Stock ...……………………………………………

76
77

3. Dividend Policy ..…………………………………………………………………………………
4. Corporate Governance, etc. ………………………………………………………………………

78
79(1) Corporate Governance ..………………………………………………………………………
(2) Directors and Senior Management. ..…………………………………………………………

7984(3) Audit .………………………………………………………………………………………… 97(4) Compensation to Directors and Executive Officers .………………………………………… 101(5) Information on shareholdings ...……………………………………………………………… 107

V.

Financial Information ...………………………………………………………………………… 112

VI.

Stock-Related Administration for the Company ...………………………………………… 112

VII. Reference Information on the Company .…………………………………………………… 113

Part II Information on Guarantors, etc. for the Company

114[Consolidated Financial Statements] ..……………………………………………………………………… F-1
Consolidated Financial Statements. ...……………………………………………………………… F-2
Reports of Independent Registered Public Accounting Firm ....…………………………………… F-80
[Internal Control Report (Translation)] ..…………………………………………………………………… A-1[Independent Auditors’ Report (Translation)] ...…………………………………………………………… A-3[Confirmation Letter (Translation)] ...……………………………………………………………………… A-9

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

Fiscal year
Year end(Millions of yen, unless otherwise stated)
IFRS
148th
149th
150th
151st
152nd
business term business term business term business term business term
March 2017
March 2018
March 2019
March 2020
March 2021
9,162,264
9,368,614
9,480,619
8,767,263
8,729,196

Revenues
Income from continuing
469,091
638,646
516,502180,268
844,443
operations, before income taxes
Net income attributable to231,261
362,988
222,546
87,596501,613
Hitachi, Ltd. stockholders
Comprehensive income
attributable to Hitachi, Ltd.
299,397382,341
171,140(8,465)838,237
stockholders
Total Hitachi, Ltd.
2,967,085
3,278,024
3,262,603
3,159,986
3,525,502
stockholders’ equity
Total equity
4,096,995
4,511,671
4,414,403
4,266,739
4,458,232
Total assets
9,663,917
10,106,603
9,626,592
9,930,081
11,852,853
Total Hitachi, Ltd.
stockholders’ equity per share
3,072.79
3,395.00
3,378.81
3,270.43
3,646.46(yen)
Earnings per share attributable
to Hitachi, Ltd. stockholders,239.49375.93230.4790.71
519.29basic (yen)Earnings per share attributable
to Hitachi, Ltd. stockholders,239.42375.60230.2590.60
518.51
diluted (yen)Total Hitachi, Ltd.
30.7
32.4
33.9
31.8
29.7
stockholders’ equity ratio (%)
Return on equity (%)
8.1
11.6
6.8
2.7
15.0
Price earnings ratio (times)
12.6
10.3
15.6
34.6
9.6
Net cash provided by operating
629,582
727,168
610,025
560,920
793,128
activities
Net cash used in investing(337,955)(474,328)(162,872)(525,826)(458,840)
activities
Net cash provided by (used in)(209,536)(321,454)(320,426)
2,837(184,838)
financing activities
Cash and cash equivalents at
765,242
697,964
807,593
812,3311,015,886
end of year
Number of employees
303,887
307,275
295,941
301,056
350,864(Notes) 1. Our consolidated financial statements have been prepared in conformity with IFRS.
2. Revenues do not include the consumption tax, etc.
3. On October 1, 2018, the Company completed the share consolidation of every five shares into one
share for its common stock. The figures for total Hitachi, Ltd. stockholders’ equity per share andearnings per share attributable to Hitachi, Ltd. stockholders, basic and diluted, are calculated on theassumption that the Company conducted this share consolidation at the beginning of the 148th
business term.
4. Average numbers of part-time employees, etc. are not stated since those were less than 10% of thenumber of employees.

1(2) Financial data etc. of the Company
Fiscal year
Year end
Revenues(Millions of yen, unless otherwise stated)
148th
149th
150th
151st
152nd
business term business term business term business term business term
March 2017 March 2018 March 2019 March 2020 March 2021
1,906,532
1,930,293
1,927,241
1,793,250
1,678,223

Ordinary income

71,599131,294

304,069

355,490

305,461

Net income
Common stock
Number of issued shares (thousandsof shares)
Total net assets
Total assets
Net assets per share (yen)Dividends per share (yen)[Of the above, interim dividends per
share (yen) ]Net income per share, basic (yen)97,724
458,790

136,117458,790

174,062
458,790

119,409459,862

705,511
460,790

4,833,463

4,833,463

966,692

967,280

967,885

1,497,428
4,070,247
1,550.49

1,536,018
4,017,373
1,589.79

1,563,456
3,934,118
1,617.32

1,579,058
4,004,408
1,631.97

2,243,742
4,982,609
2,318.50

13
[6]

15
[7]

58
[8]

95
[45]

105
[50]

101.20140.97180.26123.59729.77

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

101.17
36.8
6.8
29.8
64.2
35,631116.9[112.3]140.85
38.2
9.0
27.3
53.2
34,925151.7[127.4]123.49
39.4
7.6
25.4
76.9
31,442131.7[104.1]

729.18
45.0
36.9
6.9
14.4
29,850206.4[145.0]Highest share price (yen)

679.5

944.2

4,693.0

5,515.0

Lowest share price (yen)

400.0

566.3

180.09
39.7
11.2
19.9
50.0
33,490144.9[118.1]
3,925.0[873.7]2,767.5[692.1]

2,524.0

2,855.0(Notes) 1. Revenues do not include the consumption tax, etc.
2. Effective from the 150th business term, the Company adopted the “Partial Amendments to AccountingStandard for Tax Effect Accounting” (ASBJ Statement No.28, February 16, 2018) and the“Implementation Guidance on Tax Effect Accounting” (ASBJ Guidance No.28, February 16, 2018).
The figures for total net assets, total assets, net assets per share, stockholders’ equity ratio and returnon equity for the 149th business term are restated as the standard and guidance are applied
retroactively.
3. On October 1, 2018, the Company completed the share consolidation of every five shares into one
share for its common stock. The figures for net assets per share and net income per share, basic anddiluted, are calculated on the assumption that the Company conducted this share consolidation at the
beginning of the 148th business term.
4. On October 1, 2018, the Company completed the share consolidation of every five shares into one
share for its common stock. 58 yen of dividends per share for the 150th business term is the sum of 8
yen of the interim dividend per share before the share consolidation and 50 yen of the year-end
dividend per share after the share consolidation.
5. Average number of part-time employees, etc. is not stated since it was less than 10% of the number of
employees.
6. The highest and lowest share prices are market prices on the first section of the Tokyo Stock Exchange.
On October 1, 2018, the Company completed the share consolidation of every five shares into one
share for its common stock. Regarding the 150th business term, the figures in the upper row are thehighest and lowest prices after the share consolidation and the figures in brackets in the lower row arethose before the share consolidation.

22. History
1910

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

Feb.

1920

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

Feb.

1921

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

May

1935

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

May

1937

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

Apr.

1939

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

Sep.

1940

Established Mito Works

Apr.

1942

Established Central Research Laboratory

Sep.

1943

Merged Riken Vacuum Industry and established Mobara Works

Mar.

1944

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

Dec.
Apr.

1947

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

May

1949

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

Feb.

1950

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

May

1955

Established Hitachi Sales Corporation

Oct.

1956

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

Nov.
Jun.

1957

Spun off Kokubu Works from Hitachi Works

Feb.

1959

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

Oct.
Sep.

1960

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

Aug.
Feb.

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

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

Aug.
Aug.

1962

Established Kanagawa Works

Feb.

1963

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

Apr.
Feb.

1966

Established Mechanical Engineering Research Laboratory

Feb.

1968

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

3

Feb.

1969

Established Software Works

Apr.

Established Ome WorksAug.

Established Omika Works

Dec.

Spun off Hitachi Construction Machinery Co., Ltd.

May

1970

Established Hitachi Software Engineering Co., Ltd.

Sep.
Apr.

Established Takasaki Works

1971

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

Jun.
Feb.

1973

Established Systems Development Laboratory

Jun.

1974

Established Tsuchiura Works
Relocated Kameido Works and renamed to Nakajo Works

Nov.
Jun.

1982

Established Hitachi Europe Ltd.

May

1985

Established Advanced Research Laboratory

Feb.

1989

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

Feb.

1991

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

Aug.
Feb.

1992

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

Aug.
Feb.

1993

1994

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

Oct.
Feb.

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

Aug.
Aug.

Integrated Yokohama Works and Tokai Works into AV Products Division

1995

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

Apr.
Apr.

1999

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

Oct.

2000

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

4

Oct.

2001

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

Apr.

2002

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

Oct.

Jan.

2003

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

Apr.

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

Jun.

Adopted committee system as the Company’s corporate governance structure

Oct.

2004

Merged TOKICO, Ltd. and Hitachi Unisia Automotive, Ltd.;
Split Mechatronics System Division, centering on ATMs, via company split and established HitachiOmron Terminal Solutions, Corp.

Apr.

2006

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

Dec.
Jul.

2007

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

Mar.

2009

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

Jul.

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

Oct.

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

Feb.

2010

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

Apr.

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

Oct.

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

Oct.

2011

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

5

Mar.

2012

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

Apr.

2013

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

Jul.
Feb.

2014

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

Mar.

Apr.

2015

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

Oct.
Apr.

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

2016

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

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

Oct.

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

Mar.

2017

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

Jun.

2018

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

Mar.

2019

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

Apr.
Apr.

2020

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

May

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

Acquired the power grids business from ABB, Ltd, and commenced operations as Hitachi ABB Power
Grids Ltd.

Jan.
Mar.

2021

Merged Hitachi Automotive Systems, Ltd. with Keihin Corporation, Showa Corporation and Nissin Kogyo
Co., Ltd. and changed its name to Hitachi Astemo, Ltd.
Split the diagnostic imaging-related business via company split and transferred to FUJIFILM Healthcare
Corporation and sold the business via share sale of the company

Please check out our YouTube channel.
https://www.youtube.com/watch?v=mclBcKeywTY&list=PLB8uh3iEDoy4sZ5TbV2bBRfTfu5TT0RKn&index=56

3. Description of Business
As of March 31, 2021, the Hitachi Group, which is comprised of the Company and 1,216 affiliates(871 consolidated subsidiaries and 345 equity-method associates and joint ventures.), positions five sectors:“IT,” “Energy,” “Industry,” “Mobility” and “Smart Life,” as growth areas and allocates related business
units into each sector. Ranging over the eight segments from the five sectors to additional two listed
subsidiary groups as Hitachi Construction Machinery and Hitachi Metals, and Others, the Hitachi Group
engages in a broad range of business activities, from product development and manufacturing to sales andservices.
(Note) From April 1, 2021, the Company newly positioned “Automotive System” as a business alongside
the five sectors and the Hitachi Group has nine segments.
One of the Hitachi’s strengths is the ability to provide solutions that use digital technologies to resolve
issues facing customers and society through our cutting-edge information technology (IT) and ouroperational technology (OT), which runs equipment and systems at production sites, and social
infrastructure such as railways and power plants in addition to the high-quality and highly reliable
products. By providing these solutions, we will simultaneously improve three areas of customer value,
namely social value (solving social issues), environmental value (reducing the impact on the environment)
and economic value (improving business performance), and raise peoples' Quality of Life (QoL) andcustomers' corporate value.

At the present time when society and business continue to generate more data, Hitachi’s Lumada acts
as an engine that creates new value from these data and accelerates innovation. Lumada is a general term
for the solutions, services and technologies that utilize Hitachi’s advanced digital technologies to create
value from customers’ data and accelerate digital innovation. It is derived from the words “illuminate” and“data” and was created based on the idea of combining the strengths of OT, IT and products cultivatedwithin Hitachi. Along with the development of IT and the Internet of things (IoT), social and businessactivities continue to generate data at an increasing speed. Hitachi has focused on these data as a newsource of value in future society and launched the Lumada business in 2016 with the goal of using large
volumes of data to create innovation for the world. With Lumada as a common platform, we will create
new value and establish an advanced cyber-physical system that links cyber spaces (digital) and real spaces(physical items) sophisticatedly and in real time.

7The Lumada business provides value by analyzing business issues and combining Hitachi’s digitaltechnologies to solve customer problems with the minimum customization. Rather than relying merely on
product sales, we will strive to expand the Lumada business by leveraging our strengths in OT x IT x
Products, commercializing our expertise in various industries and operations and shifting to digitalsolutions that can be provided to multiple customers in order to build a profit model based on value createdthrough the provision of solutions, such as income from fees.

Please check out our YouTube channel.
https://www.youtube.com/watch?v=FYQbxo3n_x4&list=PLB8uh3iEDoy6TPRqSqwgdpAr5J5rIxWQY&index=28

Major business outline for each segment and the positioning of Business Units (BU) of the Company
and principal affiliated companies are described as follows.
(As of March 31, 2021)
Main products and services
IT

Digital Solutions (Consulting,
Software, Cloud Services, System
Integration, Control Systems), IT
Products (Storage, Servers), ATMsBU and principal affiliated companies
BU
Financial Institutions BU
Social Infrastructure Systems BU
Services & Platforms BU

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

Nuclear Energy BU
Energy BU

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

Industry & Distribution BU
Water & Environment BU

Mobility
Building Systems (Elevators,
Escalators), Railway Systems

Building Systems BU
Railway Systems BU

Smart Life
Smart Life & Ecofriendly Systems(Home Appliances, Air
Conditioners), Measurement andAnalytical Systems (Medical andBio, Semiconductor, Industry),
Automotive Systems (Powertrain,
Chassis, Advanced Driver
Assistance, Motorcycle)
Hitachi Construction Machinery
Hydraulic Excavators, Wheel
Loaders, Mining Machinery,
Maintenance and Services,
Construction Solutions, MineManagement Systems
Hitachi Metals
Specialty Steel Products,
Functional Components andEquipment, Magnetic Materials
and Power Electronics Materials,
Wires, Cables and Related
Products
Others
Optical Disk Drives, Property
Management--

Affiliated companies[Consolidated subsidiaries]
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[Consolidated subsidiaries]
Hitachi-GE Nuclear Energy, Ltd.
Hitachi Plant Construction, Ltd.
Hitachi Power Semiconductor Device, Ltd.
Hitachi Power Solutions Co., Ltd.
Hitachi ABB Power Grids Ltd[Consolidated subsidiaries]
Hitachi Industrial Equipment Systems Co., Ltd.
Hitachi Industrial Products, Ltd.
Hitachi Industry & Control Solutions, Ltd.
Hitachi Plant Services Co., Ltd.
Hitachi Industrial Holdings Americas, Inc.
JR Technology Group, LLC
Sullair, LLC[Equity-method associates]
Hitachi Kokusai Electric Inc.
[Consolidated subsidiaries]
Hitachi Building Systems Co., Ltd.
Hitachi Elevator (China) Co., Ltd.
Hitachi Rail Ltd.
[Consolidated subsidiaries]
Hitachi Astemo, Ltd.
Hitachi Global Life Solutions, Inc.
Hitachi High-Tech Corporation
Hitachi Astemo Americas, Inc.
Hitachi Consumer Products (Thailand), Ltd.
[Equity-method associates]
Johnson Controls-Hitachi Air Conditioning
Holding (UK) Ltd[Consolidated subsidiaries]
Hitachi Construction Machinery Co., Ltd.

-[Consolidated subsidiaries]
Hitachi Metals, Ltd.

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

9

(Notes) 1. Hitachi America, Ltd., Hitachi Asia Ltd., Hitachi (China), Ltd., Hitachi Europe Ltd. and Hitachi India Pvt. Ltd. are the
Hitachi Group’s regional supervising company for Americas, Asia, China, Europe and India, and they sell the HitachiGroup’s products.
2. Hitachi Global Digital Holdings Corporation changed its name to Hitachi Global Digital Holdings LLC on April 1, 2021.
3. Hitachi Astemo, Ltd., Hitachi Astemo Americas, Inc. and their businesses are classified in the Automotive Systems
segment, which was newly established on April 1, 2021.
4. In addition to the table above, the major equity-method associates are Hitachi Capital Corporation and Hitachi Transport
System, Ltd. as of March 31, 2021. Hitachi Capital Corporation merged with Mitsubishi UFJ Lease & Finance Company
Limited (currently Mitsubishi HC Capital Inc.) and ceased to be an equity-method affiliate of the Company on April 1,
2021.

10

4. Information on Affiliates(1) Consolidated subsidiaries(As of March 31, 2021)
Company nameLocation

Commonstock

Principal business

Ownership
percentage ofvoting rights(%)

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

1,350

IT

100.0

Hitachi-Omron
Terminal Solutions,Corp.

Shinagawaku, Tokyo

8,500

IT

100.0

Hitachi Solutions,Ltd.

Shinagawaku, Tokyo

20,000IT

100.0

Hitachi Systems, Ltd.

Shinagawaku, Tokyo

19,162

IT

100.0

11

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

(As of March 31, 2021)
Company name

Hitachi Computer
Products (America),
Inc.

Location

Commonstock

Principal business

Ownership
percentage ofvoting rights(%)

Relationship

The Company supplies
parts for computer
peripherals. The[100.0] Company’s Directors,
100.0 Executive Officers or
employees concurrently
hold position of
directors or officers.

ofOklahoma, (Thousands
US dollars) IT
U.S.A.
14,000**Hitachi Global
Digital Holdings
Corporationof
California, (Thousands
US dollars) IT
U.S.A.
1,442,641

Hitachi Payment
Services Private
LimitedChennai,
India**Hitachi Vantara LLC

ofCalifornia, (Thousands
US dollars)
U.S.A.
925,000 IT

Hitachi-GE Nuclear
Energy, Ltd.

Hitachi,
Ibaraki

5,000 Energy

Hitachi Plant
Construction, Ltd.

Toshimaku, Tokyo

3,000 Energy(Thousands ofIndian rupee) IT

79,158

12

Holding company for
Hitachi Vantara LLC,
etc. The Company’s
Directors, Executive
100.0
Officers or employees
concurrently holdposition of directors orofficers.
Offering the HitachiGroup's payment
services for financial
institutions in India.
[58.8] The Company’s
100.0 Directors, Executive
Officers or employees
concurrently holdposition of directors orofficers.
Sales company for theCompany's storage, etc.
The Company
outsources consulting
services. The[100.0]Company's Directors,
100.0
Executive Officers or
employees concurrently
hold position of
directors or officers.
The Company delivers
nuclear power
generation equipment,
etc. The Company’s
80.0 Directors, Executive
Officers or employees
concurrently holdposition of directors orofficers.
Construction of theCompany’s power andindustrial plants, etc.
The Company’s
100.0 Directors, Executive
Officers or employees
concurrently holdposition of directors orofficers.

(As of March 31, 2021)
Company nameLocation

Commonstock

Ownership
percentage ofPrincipal businessvoting rights(%)

Hitachi Power
Semiconductor
Device, Ltd.

Hitachi,
Ibaraki

450 Energy

100.0

Hitachi Power
Solutions Co., Ltd.

Hitachi,
Ibaraki

4,000 Energy

100.0

Hitachi ABB Power
Grids Ltd(Thousands ofZurich,Swiss franc) Energy
Switzerland
1,250

80.1

Hitachi Industrial
Equipment Systems
Co., Ltd.

Chiyodaku, Tokyo

100.0

10,000 Industry

Hitachi Industrial
Products, Ltd.

Chiyodaku, Tokyo

10,000 Industry

100.0

Hitachi Industry& Control Solutions,Ltd.

Hitachi,
Ibaraki

3,000 Industry

100.0

13

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

(As of March 31, 2021)
Company nameLocation

Hitachi Plant Services
Co., Ltd.

Toshimaku, Tokyo**Hitachi Industrial
Holdings Americas,
Inc.

Illinois,U.SA.

JR Technology Group, Michigan,
LLC
U.S.A.

Sullair, LLC

Indiana,
U.S.A.

Hitachi Building
Systems Co., Ltd.

Chiyodaku, Tokyo

Commonstock

Principal business

3,000 Industry(Thousands of
US dollars) Industry

1,967,670- Industry- Industry

5,105 Mobility

14

Ownership
percentage ofvoting rights(%)

Relationship

Construction of theCompany’s industrial
and public plants, etc.
The Company
outsources the services
100.0 for them. The
Company’s Directors,
Executive Officers or
employees concurrently
hold position of
directors or officers.
Holding company for
JR Technology Group
LLC and Sullair, LLC.
The Company’s[100.0]
Directors, Executive
100.0
Officers or employees
concurrently holdposition of directors orofficers.
Holding company for
JR Automation
Technology, LLC, etc.
The Company’s[100.0]
Directors, Executive
100.0
Officers or employees
concurrently holdposition of directors orofficers.
The Company
purchases industrial
equipment. The[100.0] Company’s Directors,
100.0 Executive Officers or
employees concurrently
hold position of
directors or officers.
Design, manufacturing,sales, installation andmaintenance, etc. ofthe elevators andescalators theCompany developed.
100.0
The Company’s
Directors, Executive
Officers or employees
concurrently holdposition of directors orofficers.

(As of March 31, 2021)
Company nameLocation

Commonstock

Principal business

Hitachi Elevator(China) Co., Ltd.

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

London,U.K.

(Thousandsof Sterlingpounds) Mobility

878,181**Hitachi Astemo, Ltd.

Hitachinaka,Ibaraki

51,500 Smart Life

Hitachi Global Life
Solutions, Inc.

Minato-ku,
Tokyo

20,000 Smart Life

Hitachi High-Tech
Corporation

Minato-ku,
Tokyo7,938 Smart Life

Hitachi Astemo
Americas, Inc.

Kentucky,
U.S.A.

(Thousands of
US dollars) Smart Life

86,27815

Ownership
percentage ofvoting rights(%)

Relationship

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

(As of March 31, 2021)
Company nameLocation

Commonstock

Principal business

Hitachi Consumer
Products (Thailand),Ltd.

of
Prachinburi, (Thousands
Thai Baht) Smart Life
Thailand
2,472,000***Hitachi Construction
Machinery Co., Ltd.

Taito-ku,
Tokyo

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

Minato-ku,
Tokyo26,283 Hitachi Metals

Hitachi-LG Data
Storage, Inc.

Minato-ku,
Tokyo

4,800 Others

Hitachi Real Estate
Partners, Ltd.

Chiyoda-ku,
Tokyo

2,000 Others

16

Ownership
percentage ofvoting rights(%)

Relationship

Manufacturing andsales company for the[84.1] Hitachi Group’s
84.1 refrigerators andwashing machines,
etc. in Thailand.
The Company’s
Directors, Executive
Officers or employees
51.5
concurrently holdposition of directors orofficers.
The Company
purchases specialty
steel products,
functional components
and equipment,
magnetic materials andpower electronics
53.4 materials and wires,
cables, and related
products. The
Company’s Directors,
Executive Officers or
employees concurrently
hold position of
directors or officers.
Development,
manufacturing andsales company for the
Hitachi Group’s
optical disk drives.
51.0 The Company’s
Directors, Executive
Officers or employees
concurrently holdposition of directors orofficers.
The Company
outsourcesmanagement ofwelfare facilities, etc.
The Company’s
100.0
Directors, Executive
Officers or employees
concurrently holdposition of directors orofficers.

(As of March 31, 2021)
Company name**Hitachi America,
Ltd.

Hitachi Asia Ltd.

Location

California,
U.S.A.

Singapore

Commonstock

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

100.0(Thousandsof Singapore
dollars) Others

100.0(Thousands of
US dollars) Others

100.0(Thousandsof Sterlingpounds) Others

100.0

5,531,947

127,649

Hitachi (China), Ltd.

Beijing,
China

Hitachi Europe Ltd.

Maidenhead,
U.K.

226,380

253,049

17

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

(As of March 31, 2021)
Company name

Hitachi India Pvt. Ltd.

Location

Commonstock

Principal businessof
New Delhi, (Thousands
Indian rupee) Others
India
344,000

Ownership
percentage ofvoting rights(%)

Relationship

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

Others- 834 companies(Notes) 1. The unit of amounts and currency shown in the “Common stock” column are in millions of yen, unlessotherwise specified.
2. The common stock of JR Technology Group, LLC and Sullair, LLC is not shown since they are limited
liability companies under the U.S. law, and do not have the “common stock”.
3. Companies with two asterisks (**) in the “Company name” column are specified subsidiaries.
4. Companies with one asterisk (*) in the “Company name” column submit Securities Registration
Statement or Annual Securities Report.
5. The name of segment in which the companies classified is shown in the “Principal business” column.
6. The amounts in brackets in upper row of the “Ownership percentage of voting rights” column represent
the percentage of voting rights owned indirectly by subsidiaries, of the total ownership percentage.
7. Companies with negative net worth are shown below, along with the amount of liabilities in excess ofassets.
Hitachi Power Europe GmbH
119,782 million yen
Chassis Brakes International B.V.
11,874 million yen
8. Hitachi Global Digital Holdings Corporation changed its name to Hitachi IGlobal Digital Holdings
LLC on April 1, 2021.
9. Hitachi Astemo, Ltd. and Hitachi Astemo Americas, Inc. are classified in the Automotive Systems
segment, which was newly established on April 1, 2021.

18

(2) Equity-method associates and joint ventures(As of March 31, 2021)
Company nameLocation

Commonstock

Principal business

Hitachi Kokusai
Electric Inc.

Minato-ku,
Tokyo

Johnson ControlsHitachi Air
Conditioning
Holding (UK) Ltdof
Hampshire, (Thousands
US dollars) Smart Life
U.K.
935,107*Hitachi Capital
Corporation

Minato-ku,
Tokyo*Hitachi Transport
System, Ltd.

Chuo-ku,
Tokyo

1,000

9,983

Industry

General leasing,installment sales,
and other financial
services

16,802 Logistics services

Ownership
percentage ofvoting rights(%)

Relationship

The Company
purchases
electronic equipment
and parts, etc. The
20.0 Company’s Directors,
Executive Officers or
employees concurrently
hold position of
directors or officers.
Holding company for
air-conditioning
systems business[40.0] companies from40.0 which the HitachiGroup purchases airconditioning systems
devices.
Leases manufacturing
equipment, industrial
equipment, officeequipment, etc. to theCompany, andengages in leasing andinstallment sales of the
33.4
Company’s businessequipment, etc. The
Company’s Directors,
Executive Officers or
employees concurrently
hold position of
directors or officers.

39.9

The Company
outsources
transportation andstorage of products.

Others- 341 companies(Notes) 1. The unit of amounts and currency shown in the “Common stock” column are in millions of yen, unlessotherwise specified.
2. Companies with one asterisk (*) in the “Company name” column submit Securities Registration
Statement or Annual Securities Report.
3. The names of segment in which Hitachi Kokusai Electric Inc. and Johnson Controls-Hitachi Air
Conditioning Holding (UK) Ltd are classified are shown in the “Principal business” column.
4. Companies with negative net worth are shown below, along with the amount of liabilities in excess ofassets.
Agility Trains East (Holdings) Limited
67,522 million yen
Agility Trains West (Holdings) Limited
52,962 million yen
GE-Hitachi Nuclear Energy Holdings LLC
15,686 million yen
5. Hitachi Capital Corporation merged with Mitsubishi UFJ Lease & Finance Company Limited(currently Mitsubishi HC Capital Inc.) and ceased to be an equity-method affiliate of the Company on
April 1, 2021.

19

5. Employees(1) Consolidated basis
Name of segment
IT
EnergyIndustry
Mobility
Smart Life
Hitachi Construction Machinery
Hitachi Metals
OthersCorporate (Head Office and others)
Total(As of March 31, 2021)
Number of employees
71,805[15,773]
43,975[1,289]23,419[2,587]53,517[2,867]89,883[993]
24,065[-]28,589[-]12,412[3,142]
3,199[3,199]350,864[29,850](Note) 1. The number in brackets in the lower row of the “Number of Employees” column is the number of
employees of the Company included in each of the numbers in the upper row.
2. The number of employees of Hitachi Group (the Company and its subsidiaries) increased by 49,808
persons during one year ended March 31, 2021, due mainly to the acquisition of the power grids businessof ABB Ltd in the Energy segment and the management integration of Hitachi Astemo, Ltd. in the Smart
Life segment.
(2) The Company
Number of employees
Average age
Average length of service
29,85042.6
19.2 years(Note) Average annual salary includes bonuses and extra wages.

(As of March 31, 2021)
Average annual salary
8,902,877 yen(3) Relationship with labor union
The Company’s labor union, Hitachi Workers Union, is a member of the Japanese ElectricalElectronic & Information Union.
The relationship between management and labor unions in the Hitachi Group is stable and smooth.

20

II. Business Overview
1. Management Policy, Economic Environment and Challenges Hitachi Group Faces(1) Management Policy
The Hitachi Group aims to achieve further development by delivering competitive products andservices, thereby creating higher value for customers, following its Mission: to contribute to society
through the development of superior, original technology and products. By taking full advantage of thediverse resources of the Hitachi Group, while at the same time reviewing and restructuring businesses,
Hitachi aims to bolster its competitiveness and achieve growth in global markets. This process will beconsistent with Hitachi’s basic management policy, which is to increase shareholder value by meetingthe expectations of customers, shareholders, employees and other stakeholders.
(2) Economic Environment and Challenges Hitachi Group Faces
1) Hitachi Group
In today’s world, the future is increasingly difficult to foresee. Myriad changes are taking place,including climate change, resource shortages, aging populations and problems of urbanization. The
spread of COVID-19 (the new coronavirus infection) is bringing dramatic changes to society andeconomies worldwide, with its profound, adverse economic repercussions in each country. On the other
hand, innovations to solve social issues caused by these changes are emerging across the globe.
In this economic environment, Under the 2021 Mid-term Management Plan, Hitachi will improvethree types of customer value: social value (solving social issues), environmental value (reducing theimpact on the environment) and economic value (improving business performance), and contribute to
the realization of a human-centered society.
We will focus on the following policies in particular.
i) Further initiatives to enhance customer value
Hitachi will resolve social issues and improve people's QoL by focusing on Social Innovation
Business in the three areas of the Environment, Resilience and Security & Safety. To achieve theseobjectives, Hitachi will work on evolution and global expansion of Lumada, leveraging the digitalengineering capabilities and co-creation bases of the U.S. company, GlobalLogic Inc.
(GlobalLogic) which Hitachi announced to acquire in March 2021 as growth engines, andstrengthen our cyber-physical system using our expertise in “OT x IT x Products.” Hitachi will
also realize the creation of customer value oriented businesses through co-creation and allianceswith partners.

21ii) Continued efforts to strengthen the management foundation
To realize these strategies, Hitachi will establish a business structure with a view toward thenext mid-term management plan by having building the business structure that can fully utilize
GlobalLogic, the restructured Hitachi ABB Power Grids Ltd and Hitachi Astemo, Ltd. anddeciding the sale of Hitachi Metals, Ltd. as the culmination of reforms of its business portfolio
during the 2021 Mid-term Management Plan.
In addition, Hitachi will continue to strengthen its profitability and ability to generate cash byadding 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 the development of operations utilizing digital technologies anddata preparation and integration, which are being implemented across the Group.

iii) Measures for Improving Environmental Value“Environmental Vision” and “Hitachi Environmental Innovation 2050”
Hitachi Group promotes its environmental strategy by establishing its goals and plans asfollows.

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

22

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

Participation in COP26 (Principal Partner) and External Assessment
As a principal partner of COP26 (Note 1), which will be held in the UK in November
2021, we will further increase our commitment to decarbonization and contribution to thesociety.

Hitachi achieved SBT (Note 2) accreditation, one of the greenhouse gas reduction target
indicators, in December 2020 and has received external recognition for these environmental
actions.
(Notes) 1. COP26: The 26th United Nations Climate Change Conference
2. SBT: Science Based Targets

2) 6 focused business areas
Economic environment and challenges which five focused sectors as IT, Energy, Industry,
Mobility and Smart Life, and Automotive Systems face are as follows.
(IT)
A great deal of attention is focused on digital transformation (DX), an initiative aimed attransformation of every corporate economic activity, business models that underpin these
activities and their organizations, cultures and systems by leveraging digital technologies such as
AI, IoT, robotics and next generation network standard, 5G, from the perspective of responding tomarket environment digitization. Following the onset of the COVID-19 pandemic in 2020,
businesses concepts, including their ideas of value, particularly as they pertain to consumer
activities and supply chains, have hit a critical turning point globally, while people's workstyles
and lifestyles have undergone significant change. In this new normal era, DX has continued toaccelerate amid growing needs for remote solutions, contactless solutions, and automation toachieve goals such as the elimination or reduction of labor.
In the IT sector, we will meet the expectations of our customers in Japan and overseas andwork to realize a sustainable society by leveraging the power of digital technology, including
Lumada, as we aim to become the world's premier solution provider. While companies may becautious about investing in IT due to the COVID-19 pandemic, the DX of corporate management
and business models is continuing to steadily progress in all industries globally, and in North23

America and Europe in particular, even in this unstable economic environment. We will fulfil
these needs, work to enhance social value through our business providing advanced digitalsolutions in the fields of finance and social infrastructure, and also create environmental value
through our efforts to improve environmental efficiency throughout the entire life cycle ofproducts and services.
The IT sector leads all of our business areas as the core of the Lumada business. During theperiod of the 2021 Mid-term Management Plan, Lumada solutions made progress in stages,
advancing into wide-ranging markets and transforming the IT sector while aiming for growth.
The Lumada business will accelerate its globalization through the acquisition of GlobalLogicscheduled to be completed until the end of July 2021, increase and develop our human capital for
digital solutions, and develop advanced digital technologies to grow into a business entity
supporting the DX of customers and society on a global scale.
(Energy)
Demand for energy is growing globally against the background of social innovation such as
the increase of the size of data centers, industrial electrification, and the increase of applications
for electric vehicles (EV), in addition to the increase of the population and economic growth.
Given the need for measures to address climate change, the movement toward the reduction of
CO2 emissions and de-carbonization is accelerating globally. Japan has declared a goal ofachieving carbon neutrality by 2050, and the Act on Promotion of Global WarmingCountermeasures and the Basic Energy Plan is currently being revised. The COVID-19 pandemic
has triggered change (digitization) in the structure of industry due to the slowdown of theeconomy and decrease of capital expenditures, the promotion of economic recovery policies
linked to environmental protection (Green Policy), the acceleration of reforms to address the newnormal era and SDGs management. To address environmental issues and challenges related toenergy, we seek to provide energy solutions that leverage our advantage, “OT x IT x Products,”
in a range of business areas, including renewable energy and power grids.
In the Energy sector, we will provide energy solutions through Collaborative Creation withour customers and partners leveraging “OT x IT x Products” in areas such as power grids,
renewable power generation systems, and nuclear power generation systems to contribute to thestable supply of energy, efficient facility management, the reduction of CO2 emissions, and thecreation of a low-carbon society. The Energy sector plays a central role in our Social Innovation
Business and it will continue to contribute to the achievement of the SDGs.
It will develop advanced energy management systems by developing more sophisticatedmanagement of and streamlining maintenance and inspection at energy-related facilities using
Lumada and leveraging the expertise and digital technologies which we have accumulated. The
Energy sector will also increase the presence of the Social Innovation Business globally throughthe development of new solutions combining the global competitiveness of Hitachi ABB Power
Grids Ltd and Lumada-based digital technologies and contribute to the improved QoL including
the establishment of a low-carbon society and the stable supply of energy as a leader in theenergy industry.
(Industry)Markets in industies have been changing more rapidly and complexly than ever due to adecrease in the working-age population, the intensification of global competition, climate change
and resource shortages. Moreover, people’s lifestyles and corporate activities are changing
significantly due to the COVID-19 pandemic, resulting in growing new demand for DX using
technologies such as AI, IoT, and robotics in a variety of areas.
The Industry sector aims to be the best solution partner for its customers in industrial
businesses by leveraging our unique “OT x IT x Products.” We will aid customers from the
manufacturing and distribution industries to “implement production and provide services more
efficiently” by offering solutions that contribute to the enhancement of productivity and quality,“create a secure and safe water environment” for 70 million people per day globally by improving
the water supply and sewerage infrastructure and using seawater desalination technologies, and24

“reduce CO2 emissions” by facilitating product energy-saving to create social value,environmental value and economic value.
To meet these goals, the Industry sector is enhancing and expanding its total seamlesssolutions that resolve the challenges that lie between management and workplaces and in supply
chains and achieve total optimization by digitally connecting cyberspace and the physical worldusing Lumada. In addition, the sector is accelerating its global expansion by aiming to expand
business with the fusion of robotics SI and digital technologies through the purchase of JR
Technology Group, LLC. which operates a robotics SI business in the U.S. in 2019 and thereorganization of Hitachi Industrial Holdings Americas, Inc., the Industry business managementcompany in North America, in 2020.
(Mobility)
In the building systems business, demand for maintenance and renovation services andexpectations for new solutions that enhance buildings’ added value through the use of digitaltechnologies are rising, in addition to demand for the installation of new elevators and escalators.
In the railway systems business, long-term market growth is expected as a means of low-carbon
mobility amid the increasing global population, urbanization, and climate change.
In the Mobility sector, we provide solutions that will be part of clean and highly efficient
smart cities to people around the world, including faster, more ecofriendly movement between
cities, reduction of the level of dependency on vehicles in cities and smart solutions to organize
the flow of people in high-rise buildings. We provide social value through safe, secure, andcomfortable mobility services and products and services that solve the issues that arise in urban
areas, including buildings. In addition, we work to create environmental value, including the
reduction of CO2 emissions, by developing mobility services with low environmental load.
In particular, in the building systems business, the Mobility sector provides reliable elevatorsand escalators and high-quality services such as remote surveillance that support safe, secure, andcomfortable urban living and Lumada-based solutions for buildings leveraging our strong digitaltechnology resources including IoT and AI. Through this, the sector will meet consumers' needsin the new normal such as the increased efficiency of building management, increased
convenience for building users, reduced risk of infection, and greater disaster resilience.
In the railway systems business, the Mobility sector will use Lumada to increase the value
added by its maintenance services by analyzing the data collected from railway vehicles toprovide safe, secure, and comfortable mobility services and contributing to total solutions such as
the management of operations and unmanned autonomous driving. In addition, the sector will
actively promote investment in the Americas as well as Japan and Europe, and accelerate growth
by working to tap into large project business opportunities while utilizing its existing
manufacturing bases and its presence in the maintenance and service markets.
The Mobility sector continues to grow despite the severe environment created by the
COVID-19 pandemic and it will achieve the transformation of its business in anticipation of apost-pandemic world.
(Smart Life)
Expectations for “smart living” that improves consumers’ QoL by, for instance, extending
people's healthy life expectancies and reducing the burdens of housework using digitaltechnologies such as IoT and AI are on the rise. The Smart Life sector contributes to theestablishment of smart living through its healthcare, semiconductor manufacturing andexamination equipment, and life and ecosystem businesses as it creates social value,environmental value, and economic value.
There is significant unmet consumer need and rapid development in scientific fields in thebiomedical and life science market in which the measurement and analysis system business led by
Hitachi High-Tech Corporation operates. This suggests significant potential for growth in themarket. Hitachi High-Tech’s semiconductor manufacturing and examination equipment business,
which supports 5G and digitization, is continuously growing due to the growing demand forsemiconductors. In the home appliance and air-conditioning market, in which the life andecosystem business led by Hitachi Global Life Solutions, Inc. operates, demand for connected25home appliances that support more comfortable living is growing amid an increase in consumers’
time spent at home due to the COVID-19 pandemic.
In addition to these market changes and developments, the Smart Life sector aims to expand
its businesses in the four growth areas of healthcare, semiconductors, home appliances, and EVs
to improve its efforts to address environmental issues which are of increasing concern globally.
More specifically, the sector will use digital technology to enhance its products that retain thelargest market shares and expand its service businesses through Collaborative Creation with its
customers. The Smart Life sector uses Lumada's data analysis technologies to create competitive
solutions in growth markets, including contributing to the extension of a healthy life expectancy
through the combination of innovative technologies for in-vitro diagnosis and AI, the accelerationof 5G and digitization by improving semiconductor performance, contributing to achieving
fulfilling lives through the use of household AI and robots, and reducing the number of accidents
through the application of self-driving technology and advanced driving support. The sector aims
to continue to improve the quality of consumer life. The sector will also work to reduce
environmental burdens by providing environmental solutions such as the optimization of EV
operations management, EV battery management, and air-conditioner operation.
(Automotive Systems)
The automobile and motorcycle industries, in which Hitachi Astemo, Ltd. operates anautomotive systems (AMS) business, is purportedly entering a once-in-a-century revolution due
to the growing needs of society for things such as the reduction of environmental burdens, theincrease of comfort, and the reduction of traffic accidents through the enhanced safety.
Competition continues to intensify in electrification, internet connectivity, self-driving, and othertechnologies that are becoming the core of automobile development.
Against this background, the AMS business will contribute to a sustainable society and theimprovement of QoL by meeting customer needs and providing advanced mobility solutions thatlead the world based on its portfolio, which includes five businesses: powertrain and safetysystems, chasses, motorcycles, software, and aftermarket services. More specifically, the sector
will create environmental value that contributes to the improvement of the global environment
using high-efficiency electrification products and technologies to reduce GHG emissions while
creating social value by improving safety, comfort, and QoL through self-driving systems,
advanced driver-assistance systems, and advanced chassis technologies. The sector will work toaccelerate the creation of synergy among the four companies that were combined into Hitachi
Astemo, Ltd. to strengthen its management base and corporate structure and increase revenue
with an the goal of achieving the 2025 financial targets of creating economic value including
sales revenue of approximately 2 trillion yen and an EBITDA ratio of approximately 15%.
The sector will leverage Lumada to provide cutting-edge digital solutions and meetincreasingly sophisticated customer needs, and also improve its ability to develop software to
respond to the future shift to software-defined vehicles whose functions will be operated throughsoftware applications.

26

(3) Targets under the mid-term management plan
Under the "2021 Mid-term Management Plan," the Hitachi Group utilizes the following
targets to measure performance in terms of meeting its strategic and operational goals:
Fiscal 2021
TargetReason for selection as indicators

Over 3%

Indicator to measure growthOver 10%

Indicator to measure profitability

Annual growth rate for revenues
Adjusted operating income margin(Note 1)
Operating cash flow: cumulative
for 3 years
Return on invested capital (ROIC)(Note 2)
Overseas revenue ratio

Over 2.5 trillion yen
Over 10%
Over 60%

Indicator to measure ability togenerate cash
Indicator to measure investment
efficiency
Indicator to measure globalization(Notes) 1. Adjusted operating income is presented as revenues less cost of sales as well as
selling, general and administrative expenses. Adjusted operating income margin is theratio calculated by dividing adjusted operating income by revenues.
2. ROIC (Return on Invested Capital) = ("NOPAT" + Share of profits (losses) ofinvestments accounted for using the equity method) / “Invested Capital” x 100
NOPAT (Net Operating Profit after Tax) = Adjusted Operating Income x (1 – Taxburden rate)
Invested Capital = Interest-bearing debt + Total equity
In addition to providing the economic value described above, under its Mid-Term
Management Plan the Group aims to provide social value, including safe and comfortable mobile
services, a safe and secure water environment and support for accelerating innovation, as well as
environmental value, including a reduction in CO2 emissions in the value chain, an improvement
in water-use efficiency and an improvement in resource-use efficiency.

27

2. Risk Factors(1) About Risk Management
We aim to create new revenue opportunities while controlling risk. To do this, we maintain a clear
understanding and analysis of the business environment changing day by day, taking into account social
issues as well as our competitive advantages and management resources and conducting risk managementwith an eye toward the many risks the Company should be prepared for as well as opportunities for growth.
With respect to such various risks, each department strives to appropriately grasp and respond to risks
and opportunities, and reflects them in reporting to management executives and management strategies.
As a major, we have the following initiatives:
Risks related to investments, etc.
In order to accelerate the global social innovation business under the situation of structuralchanges and uncertainties in the global economy, it is increasingly important to understand the risks
and opportunities of investments, etc. such as M&A and large-volume project orders and to respond
appropriately.
While we make flexible decision-making by transferring authority according to the importancesuch as the scale of the project, we deliberate and make decisions about the risks and opportunities forinvestments, etc. in the Senior Executive Committee and Board of Directors, based on the report ofInvestment Strategy Committee.
After the execution of investments, etc., we monitor the situation such as achievement of the
purpose, business growth, improvement of asset efficiency, etc. In addition, we have established"EXIT rules" to determine business investment destinations that may have an important impact onmanagement due to the expression of risk events, and to improve capital efficiency by managing
business continuity including withdrawal.
Through the above process, we are striving to further strengthen asset profitability and risk
tolerance, while grasping the risks before and after execution of investments.
Risks related to sustainability
Social and environmental issues, including climate change, resource depletion, the curtailment ofbusiness activity due to significant disasters, and social instability due to growing inequality, arehaving a substantial impact on corporate value creation and business models. And such a drasticchange in the business environment, companies must have a clear understanding of opportunities andrisks and take appropriate measures if they are to achieve sustainable growth over the long term.
The company is able to gain a clear understanding of sustainability-related risks, and accordingly
take appropriate action, thanks to the efforts of the Executive Sustainability Committee and otherrelated committees. We remain actively engaged in promoting our own sustainable growth while
contributing to the realization of a sustainable society by seeking out business opportunities
contributing to the resolution of important domestic and overseas issues, including those relevant to
the UN Sustainable Development Goals (SDGs) and Society 5.0., which is a human-centered societythat balances economic advancement with the resolution of social problems by a system that highly
integrates cyberspace and physical space.
(2) Risk Factors
We conduct business on a global scale across a broad range of business areas and utilize sophisticated,
specialized technologies to carry out our operations. Therefore, we are exposed to risks attributable to theeconomic environment, risks inherent in individual industrial sectors and business lines and risks related toour operations. Investment in our securities also involves risks.
The following risks and countermeasures are based on assumptions we consider reasonable as of thedate of submission of this report. The countermeasures below will not necessarily eliminate the effects of
the risks and may not effectively mitigate the effects.

281) Risks Related to COVID-19
The spread of COVID-19 has caused restrictions on movement, including lockdowns on cities and stay-at-home orders and requests, closures of business establishments, restrictions on production activities,
decreases in consumer spending and capital expenditure, supply chain disruptions, sporadic violent
fluctuations on capital markets worldwide and deterioration in the financing environment. As aconsequence, it has caused economic deterioration of the world and had adverse effects on the Group’sbusinesses, financial position and operating results. The COVID-19 may have additional adverse effects
depending on its future course.
Effects on results of operations in the fiscal year ended March 31, 2021 are described in “3.
Management’s Discussion and Analysis of Consolidated Financial Condition, Results of Operations andCash Flows.” Accounting estimates policy is described in “Consolidated Financial Statements ― Notes toConsolidated Financial Statements ― (3) Summary of Significant Accounting Policies ― (j) Impairment of
Non-Financial Assets and (o) Income taxes.”
In response to those risks, we are continuing manufacturing activities as far as safety is ensured,bringing in diverse ways of working, including remote work, while enhancing the digital environment,
strengthening cash management, and cutting cost by changing the business structure.
2) Risks Related to Market
Economic Trends
Our business is influenced by the global economy and economic conditions in certain regions orcountries. We are affected by downward economic trends in regions, countries and Japan. Such economic
conditions could cause decline in consumer spending or capital investment and subsequently reduced
demand for our products, systems and services, which could adversely affect our business, financial
condition, and results of operations.
In response to this risk, we combine the many different aspects of the Social Innovation Business in arange of business fields and regions.
Currency Exchange Rates Fluctuations
Since we conduct business in many foreign countries, our business activities are exposed to risks fromfluctuations in foreign currency exchange rates. We sell products, provide services and purchase raw
materials and components in local currencies. Therefore, fluctuations in foreign currency exchange rates
may result in lower revenues or higher costs in yen to us and thus affect our results of operations, which arereported in Japanese yen. Our price competitiveness may decline if we seek to increase prices in local
currencies to compensate for lower revenues or to increase prices in yen to absorb the higher cost, and thus
our results of precautions may be harmed. In addition, since we hold assets and liabilities denominated inforeign currencies, fluctuations in foreign currency exchange rates may adversely affect our financial
condition presented in Japanese yen through foreign currency translation.
The table below shows the foreign exchange sensitivity for the fiscal year ending March 31, 2022
(impact of exchange rate fluctuation by one-yen fluctuation from the forecasted rate) estimated as of March
31, 2021.
Foreign exchange sensitivity (Billions of yen)
Currency

Forecast

Revenues

Adjusted Operating Income

U.S. dollar

105 yen／U.S. dollar

19.0

2.0

Euro

125 yen／Euro

7.0

1.0

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

29

Access to Liquidity and Long-term Financing
Our primary sources of funds are cash flows from operations, borrowings from banks and otherinstitutional lenders, and funding from capital markets, such as offerings of commercial paper and otherdebt securities, as well as equity securities. We need liquid funds to pay our operating expenses, theprincipal of and interest on our debt and dividends on our capital stock. We also need long-term financing
to fund, among other things, capital expenditures and research and development expenses. We currently
believe our cash flows from operations, borrowings from banks and other institutional lenders and funding
from the capital markets can provide sufficient funding for our operations and other liquidity needs.
However, a global economic downturn could adversely affect our cash flows from operations, businessresults and financial condition and may adversely affect our credit ratings. If our ratings are downgraded,
our ability to obtain additional financing on terms we consider favorable may be negatively affected.
Our reliance on banks and institutional lenders exposes us to risks related to rising interest rates, andwe may need to increase our reliance on external sources of funding. An increased reliance on debt
instruments may adversely affect our credit ratings, which might affect our ability to successfully obtain
additional financing on terms we consider favorable. The inability to successfully obtain such financing
may increase our financing costs, and therefore could adversely affect our financial condition and results ofoperations. To reduce risks related to rising interest rates, we enter into interest rate swap agreements.
Furthermore, failure of one or more of our major lenders or a decision by one or more of them tochange the terms and conditions of their loans or to stop lending to us could have an adverse effect on ouraccess to funding.
Marketable Securities Risks
We invest in securities to maintain or promote our business or other relationships with othercompanies. These securities are exposed to the risk of declining stock prices. Such declines may requirethat we write down equity securities that we hold. Further, contractual and other obligations may require us
to maintain our holdings of these securities despite declining share prices and this may lead to material
losses.
The table below shows the number of stock names and balance sheet amount of the stocks theCompany owned at the end of the fiscal year ended March 31, 2021.
Number of

Total amount recorded

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

Unlisted stocks

167

24,534

Others50

176,521

To deal with those risks, we, under the basic policy, will not acquire and hold other companies’
shares except for cases where acquiring or holding such shares is necessary in terms of transactions orbusiness relationship. The Company also promotes reducing shares that it already owns unless significanceof holding shares and economic rationales of holding are confirmed. Policy for shareholding andexamination of the reasonableness of holding Equity securities held for purposes other than pure investment
are described in “Ⅳ. Information on the Company - 4. Corporate Governance, etc. - (5) Information onshareholdings.”

303) Risks Related to Business Environment
Material and Component Procurement
Our manufacturing operations rely on external suppliers for supplies of materials, parts, components
and services of adequate quality and quantity, delivered in a timely manner at a reasonable price. External
suppliers may not have sufficient capacity to meet all of our needs during periods of excess demand.
Shortages of materials, parts, components and services may cause a sharp rise in their prices. In addition,
prices of certain raw materials, parts and components which we purchase in local currencies, principally the
U.S. dollar and the euro, could be adversely affected by fluctuations in foreign currency exchange rates.
Increases in the market price of petroleum and other materials, such as copper, steel, synthetic resins, rare
metals and rare-earth minerals, can increase our production costs and may adversely affect our results ofoperations. Conversely, decreases in commodity prices, such as for raw materials, parts and components,
can result in write-downs of inventory. If natural disasters disrupt the operations of our suppliers anddamage supply chains, it may adversely affect our production. If there are violations of laws or regulations
at suppliers, including infringements of rights of workers such as child labor and forced labor, ourreputation as an entity that places orders may decline and the stable procurement of raw materials or parts
from the suppliers may be hindered, which may adversely affect our business, financial condition andresults of operations.
To deal with those risks, we establish close relationships with suppliers, appropriately react tochanges in demand in different regions, promoting a strategy of selling locally produced goods andservices, formulates a business continuity plan (BCP) at domestic bases and major bases overseas tostrengthen the abilities to deal with business interruption risk and use and strengthen the procurement
function of our entire group. To prevent violations of laws and regulations at suppliers, we carry out
inspections and audits using questionnaires and initiatives to promote their understanding.
Estimates, Fluctuations in Cost and Cancellation of Long-term Projects
We enter into a substantial number of long-term projects, particularly in connection with theconstruction of infrastructure systems. When the outcome of a construction can be estimated reliably, we
recognize revenue and expenses by reference to the stage of completion of the contract activity. In this case,revenue is recognized mainly based on the progress of the project mostly based on the cost incurred relative
to the estimated total cost. When the outcome of a construction cannot be estimated reliably, we recognize
revenue only to the extent of contract costs incurred that it is probable will be recoverable, and recognize
contract costs as expenses in the period in which such costs are incurred. The revenue recognition for suchlong-term projects requires us to make significant assumptions about the estimated total cost, estimatedtotal selling price, contract risks and other factors. However, these estimates are subject to change. We
regularly review these estimates and adjust them as we deem necessary. We charge any anticipated losses
on fixed price contracts to operations when we are able to estimate such losses. While we employ our best
judgment based on available information, these estimates are subject to change. Fluctuations in costs canoccur for a variety of reasons, many of which are beyond our control. In addition, we or our counterparties
may cancel these contracts. These factors would require us to revise our initial assumptions regarding aparticular contract, and may adversely affect our business, financial condition and results of operations.
To deal with those risks, we aim to identify and manage risks before the execution of contracts, andour operating division and finance division continue to manage and share identified risks after the executionof contracts for accurate estimates in a timely manner.

31

Intense Competition
We are subject to intense competition in many of the markets in which we operate, and this may
adversely affect our results of operations. We compete with diverse competitors ranging from huge global
corporations to specialized companies including startups. Advanced products, systems and services are
becoming general use products. The production and development of them and the provision of services in
low-cost regions, and use of the cloud and automation are expanding. As a result, price competition isintensifying. To succeed in this competitive environment, we believe that our products, etc. must be pricecompetitive. The commoditization of such products, etc. affects our ability to set prices for our products,
etc. If we are unable to charge comparable prices to those of our competitors, our competitiveness andoverall profitability may be harmed. On the other hand, charging comparable prices to those of ourcompetitors may require us to sell products and services at a loss. Our products, etc. must also becompetitive in terms of engineering sophistication, quality and brand value. We must introduce our
products and services to the markets in a timely manner. There can be no assurance that the products, etc.
that we offer will be competitive. The failure of such products, etc. to be competitive may negatively affectour business, financial condition and results of operations.
To deal with those risks, we promote enhancing innovation through research and development,
expansion of digital solutions with Lumada, collaborative creation with customers and strives to produce
high value-added products.
Dependence on Specially Skilled Personnel
We believe recruiting and retaining additional people who are highly skilled in connection with ouroperations is indispensable to remaining competitive. We look particularly for human resources who canwork globally, those who can identify customer needs, working near them, and provide optimal solutions
and services and those who can take the lead in digital transformation. However, the number of skilled
personnel is limited and the competition for attracting and maintaining such personnel is intense. We cannot
ensure that we will be able to successfully attract new or maintain our current skilled personnel.
To deal with the risk, we expand overseas direct recruitment of digitally savvy human resources to hire
human resources needed in Japan and overseas in a timely manner. We create employee-friendly
workplaces where diverse human resources work and employs excellent global human resources in a
globally common personnel system. Using a group-wide, globally common learning management system
and an in-house education program, we aim to maintain and cultivate excellent human resources.
Rapid Technological Innovation
New technologies are rapidly emerging in the segments in which we conduct business, with the paceof technological innovation. The development of new and advanced technologies, the continuous, timely
and cost-effective incorporation of such technologies into products, systems and services and the effective
marketing of such products, etc. are indispensable to remaining competitive. It is important to respond totechnological innovations, including 5G, automation and electrification using the technologies such as AI,
the IoT and robots, remote and non-contact technologies and environmentally friendly technologies. While
introducing such products, etc. requires significant resource commitment to research and development,
there can be no assurance that our research and development will be successful. Failure in our endeavors todevelop and incorporate such advanced technologies into products and services in a timely manner, or toachieve market acceptance for such products, etc., may negatively affect our business, financial condition
and results of operations.
To mitigate those risks, we promote open innovation involving industry, government and academia,
recruit and cultivate digitally savvy human resources and strengthens Lumada. Through those activities, wework to create an innovation ecosystem.

32

Supply and Demand Balance
Oversupply in the markets in which we compete may lead to declines in sales prices, revenues andprofitability. In addition, adjustment to demand may force us to dispose of excess supply or obsolete
equipment or reduce production, which can result in losses. For example, the imbalance between supply
and demand in information systems, construction machinery and automotive equipment industries and a
resultant deterioration in market conditions could negatively affect our businesses, financial condition andresults of operations.
To deal with those risks, we work to strengthen the competitiveness of our products, etc. and control
the supply and inventory of products, etc. based on demand forecasts.
Credit Risks Arising from Business Transactions
We make transactions with diverse customers and suppliers in Japan and other countries. We sell our
products to certain customers on credit and pay in advance for products or services provided by certain
suppliers. Credit deterioration or failure of one or more of them could adversely affect our financial
condition, results of operations and cash flows.
To deal with those risks, we take measures to manage counterparty credit risk, such as regularly
monitoring credit conditions of such customers or suppliers and setting a limit on transaction amountaccording to their credit conditions.
4) Risks Related to Management Policy and Strategy
Our Strategy to Strengthen Our Social Innovation BusinessOur business strategy seeks to build our business portfolio and achieve a stable and profitable businessstructure mainly by strengthening our Social Innovation Business, which supplies advanced social
infrastructure supported by information and communication technology. We plan to devote significant
resources including capital expenditures and R&Ds and are making investments in mergers and acquisitions
and in new projects to strengthen our Social Innovation Business. In addition, we attempt to design suitableorganizational structure for promoting our Social Innovation Business more effectively in response tomarket changes. To implement this strategy, we have incurred and may continue to incur considerable
expenses. Our efforts to implement this strategy may be unsuccessful or less successful than we currently
anticipate. Even if these efforts are successful, there is no assurance that we will be able to sustain or
increase profitability.
To deal with those risks, we work to manage implementation in a phase gate process in each business
unit (BU) and analyze and discuss market trends, trends at competitors, technological trends and potential
risks, among other issues, from a range of perspectives, in the Investment Strategy Committee, Business
Strategy Committee, Senior Executive Committee, the Board of Directors and Audit Committee.
Acquisitions, Joint Ventures and Strategic Alliances
In every operating sector, we depend to some degree on acquisitions of other companies, joint venturesand strategic alliances with outside partners to design and develop key new technologies and products, tostrengthen competitiveness by scaling up and to expand into new regions through acquiring local bases or
distribution channels. The matters which may have adverse effects on our financial condition or
profitability are described in “Consolidated Financial Statements - Notes to Consolidated Financial
Statements - (5) Business Acquisitions and Divestitures.” Such transactions are inherently risky because of
the difficulties in integrating operations, technologies, products and personnel and achieving return of theinvestment. Integration issues are complex, time-consuming and expensive and, without proper planningand implementation, could adversely affect our business. Decisions made by or the performance of alliancepartners that we cannot control or adverse business trends may also negatively affect the success of ouralliances. We may incur significant acquisition, administrative and other costs in connection with thesetransactions, including costs related to integration or restructuring of acquired businesses. If it is expectedthat the amount invested is irrecoverable due to a decline in the profitability of an investee, we may incur
significant losses, including impairment loss for goodwill. There can be no assurance that these transactions
will be beneficial to our business or financial condition. We recorded goodwill of 480,006 million yen in
the Energy segment, 214,280 million yen in the IT segment and 155,240 million yen in the Industry
33

segment as of March 31, 2021. The amount of goodwill in each segment is described in “Consolidated
Financial Statements - Notes to Consolidated Financial Statements - (4) Segment Information.” Even
assuming these transactions are beneficial, there can be no assurance that we will be able to successfully
integrate acquired businesses or achieve all or any of the initial objectives of these transactions.
To deal with those risks, we work to manage implementation in a phase gate process in each BU
and analyze and discuss market trends, strategies, purchase prices, PMI (post-merger integration) processes
and potential risks, among other issues, from a range of perspectives, in the Investment Strategy
Committee, Senior Executive Committee, the Board of Directors and Audit Committee.
Restructuring of Our BusinessOur business strategy seeks to build our business portfolio and achieve a stable and profitable businessstructure in part by:・ closing unprofitable operations;・ divesting our subsidiaries and affiliated companies;
・ reorganizing production bases and sales networks; and・ selling select assets.
Our restructuring efforts may not be implemented in a timely manner or at all, including due togovernmental regulations, employment issues or a lack of demand in the M&A market for businesses wemay seek to sell. In addition, we have listed subsidiaries and from time to time the interests of these listed
subsidiaries’ shareholders may conflict with our interests. Such conflicts of interest may result indifficulties in timely implementing group-wide policies, including mergers, company splits and othersimilar transactions to which the listed subsidiaries are parties. Restructuring efforts may also bring about
unintended consequences, such as negative customer or employee perceptions, and have caused and may
continue to cause us to incur significant expenses and other costs, including additional impairment losses on
our fixed assets and intangible assets, write-offs of inventory and losses on the disposal of fixed assets andlosses related to the sale of securities. Current and future restructuring efforts may be unsuccessful or lesssuccessful than we presently anticipate and may adversely affect our business, financial condition andresults of operations.
To deal with those risks, we analyze and discuss market trends, strategies, sale prices, processes andpotential risks, among other issues, from a range of perspectives, in the Investment Strategy Committee,
Senior Executive Committee, the Board of Directors and Audit Committee.
Our Overseas Growth Strategies
We seek to expand our business, including our Social Innovation Business, in overseas markets as partof our business strategy. Through such overseas expansion, we aim to increase our revenues, reduce ourcosts and improve profitability. In many of these markets, we face barriers in the form of long-standing
relationships between our potential customers and their local suppliers. In addition, various factors inforeign countries where we operate may adversely affect our overseas business activities. These factors
include:・ changes in regulations relating to investments, exports, tariffs, antitrust, anti-bribery, consumer andbusiness taxation, intellectual property, foreign trade and exchange controls, human rights, employment
and labor, environmental and recycling requirements;
・ differences in commercial and business customs such as contract terms and conditions;・ changes in labor relations and practices;
・ public sentiment against Japan and local residents’ sentiment against us, various groups’ criticism ofus; and・ other political and social factors as well as economic trends and currency exchange rate fluctuations.
Because of these factors, there can be no assurance that we will be able to achieve the aims of ouroverseas growth strategy. This may adversely affect our business growth prospects and results of operations.
To deal with those risks, we constantly determine global political and economic conditions andanalyze their effects on our businesses. Based on the analysis, we take group-wide steps.

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

March 31, 2021

IT48,471

Energy43,546

Industry

21,504

Mobility

24,899Smart Life

86,617

Hitachi Construction Machinery

30,486

Hitachi Metals

11,494

Others4,893

Subtotal

271,910

Corporate items and Eliminations

200,195

Total

472,105

To deal with those risks, we promote investment income management using return on invested
capital (ROIC) and concentrate investment in fields where profitability and growth are high. We monitor
achievement of business plans and financial position at equity method affiliates in which we invest and sellbusinesses with low profitability and investee companies whose competitiveness we are concerned about.
Overhaul of Cost Structure
We implement “the Hitachi Smart Transformation Project,” which promotes cost reductions in all
activities of our value chain by thoroughly overhauling our cost structure across our group. We seek tostabilize earnings and generate strengthen cash flows by improving our management efficiency through the
Project. The Project may be less successful than we currently anticipate. Even if the Project is successful,there is no assurance that we will be able to sustain or increase profitability.
5) Other Risks Affecting the Overall Management
Significant Disasters, climate change and Similar Events
We have many facilities, including our R&D facilities, manufacturing facilities and our headquarters
in Japan. Historically, Japan has experienced numerous natural disasters such as earthquakes, tsunamis andtyphoons. Natural disasters in the future may have a significantly adverse effect on an array of ourcorporate activities, from production to sales. We also have overseas facilities in Asia, the U.S. and Europe,
which are also subject to similar natural disasters. Natural disasters in each of the areas may cause damage
on certain of our plants and offices and the operations of our suppliers and customers. Due to climatechange, large-scale natural disasters, including drought, rising sea levels, long heat waves and floods, may
become more serious. Such significant natural disasters may directly damage or destroy our facilities,
which could disrupt our operations, delay new production and shipments of existing inventory or result incostly repairs, replacements or other costs, all of which would result in significant losses. Furthermore,even if such significant natural disasters do not directly affect our facilities, they could result in disruptions35

in distribution channels or supply chains. The spread of infectious diseases (see “1) Risks Related to
COVID-19”) and geopolitical and social instability, such as terrorism, crime, civil disturbance and conflict,etc., may also disrupt our operations, render our employees unable to work, reduce consumer demand forour products or disrupt our supply and distribution channels. In addition, we are not insured against all
potential losses, and even losses that insurance covers may not be fully covered and may be subject tochallenges of or delays in payment. Direct and indirect disruption of our operations as a result of natural
disasters or other events could have a negative impact on our operating activities, results of operations andfinancial condition.
To deal with those risks, we work to strengthen its ability to deal with business interruption risk byformulating BCPs. When we build a new plant, we determine the layout, taking into consideration possible
floods.
Litigation and Regulatory Investigations
We face risks of being involved in litigation and alternative dispute resolution and regulatory
investigation and actions in connection with our operations. Lawsuits or any other legal procedures forresolving disputes and regulatory actions may seek payment of large, indeterminate amounts or otherwise
limit our operations, and their existence and magnitude may remain unknown for substantial periods oftime.
In past, we have been the subject of several investigations of alleged antitrust violations in relation tocertain product markets in Japan, Europe and North America, etc. and received claims for damages fromour customers, etc., which may have adverse effects on our financial condition or profitability. See“Consolidated Financial Statements - Notes to Consolidated Financial Statements - (30) Commitments andContingencies.” These investigations or disputes may result in significant penalties or compensation fordamages, etc. Such substantial legal liability or regulatory action could have an adverse effect on ourbusiness, results of operations, financial condition, cash flows, reputation and credibility.
In addition, our business activities are subject to various governmental regulations in countries where
we operate, which include investments, exports, tariffs, antitrust, anti-bribery, consumer and businesstaxation, intellectual property, foreign trade and exchange controls, human rights, employment and labor,
environmental and recycling requirements. These regulations limit, and other new or amended regulations
may further limit, our business activities or increase operating costs. In addition, the enforcement of such
regulations, including the imposition of fines or surcharges for violation of such regulations, may adversely
affect our results of operations, financial condition, cash flows, reputation and credibility. For example,
environmental regulations in response to climate change and tax related to carbon emissions for shifting toa no-carbon and low carbon society and energy consumption tax could adversely affect, our business andresults of operations chiefly by increases in operating costs due to tax and emissions trading and losses ofopportunities due to delays in technology development for environmentally friendly products and services.
Regulations for protecting personal data also could adversely affect our business.
To deal with those risks, we work to identify operations where regulations are applied, assess risks,
take steps in response to risks and provide education to employees. Responding to environmental
regulations, we work to improve efficiency in production and promotes use of no-carbon and low-carbon
energy and strive to develop and expand sales of innovative products and services that will reduce CO2
emissions.
Product Quality and Liability
We increasingly provide products and services utilizing sophisticated technologies. Reliance on
external suppliers reduces our control over quality assurance. The occurrence of defects in our products andservices could negatively affect our reputation for quality of products and services, expose us to liability fordamages caused by such defects and negatively affect our ability to sell certain products. A significant
product defect could adversely affect our results of operations, financial condition and future businessprospects.
To deal with those risks, in addition to strengthening our quality assurance system, we conduct
activities to prevent accidents and comply with technical laws and regulations. We provide education on
thorough risk assessment, quality, reliability and reactions when product accidents occur.
36

Dependence on Information Systems
With the increased importance of information systems to our operating activities, disruptions in such
systems due to computer viruses and other factors could have a negative impact on our operating activities,
results of operations and financial condition. The expansion of remote work is at risk of generating new
security risks, including information leakage.
To deal with those risks, we continuously promote cybersecurity measures and strictly prescribe andimplement rules, products and procedures that apply to remote work. However, they may not be effective if
unprecedented cyberattacks occur, such as cyberattacks targeting the Tokyo Olympic and Paralympic
Games planned in 2021, or there are any vulnerabilities in systems that are not managed by us.
Management of Confidential Information
We maintain and manage personal information obtained from our customers, as well as confidential
information relating to our technology, research and development, or R&D, production, marketing andbusiness operations and those of our customers and clients, in various forms. Unauthorized disclosures ofsuch information could subject us to complaints or lawsuits for damages or could otherwise have a negative
impact on our business, financial condition, results of operations, reputation and credibility.
To deal with those risks, we establish and implement rules on the management of confidential
information and implement identity management and access control through encryption and the building ofauthentication infrastructure. We also examine information security at suppliers.
Intellectual Property
We depend in part on proprietary technology and our ability to obtain patents, design right, trademarks
and other forms of intellectual property rights covering our products, product design, manufacturing
processes and software-based services in Japan and other countries. The fact that we hold such intellectual
property rights does not ensure that they will provide a competitive advantage to us. Various parties may
challenge, invalidate or circumvent our patents, design right, trademarks and other intellectual property
rights. There can be no assurance that claims allowed on any future patents will be sufficiently broad toprotect our technology. Effective patent, design right, copyright and trade secret protection may be
unavailable or limited in some of the markets in which we operate, and our trade secrets may be vulnerable
to disclosure or misappropriation by employees, contractors and other persons.
To deal with those risks, we search known examples before applying for intellectual property rights toincrease the probability of obtaining rights and to obtain rights suitable for business. In countries whereintellectual property protection is unavailable or limited, we strive to curb unauthorized use of intellectual
property primarily through contracts with employees and contractors.
We design many of our products to include software or other intellectual property licenses from third
parties. Competitors may not make their protected technology available to us, or may make it available tous only on unfavorable terms and conditions. There can be no assurance that we will be able to maintain alicense for such intellectual property if obtained, for economic or other reasons, or that such intellectual
property will give us the commercial advantages that we desire.
To deal with those risks, we endeavor to maintain good relations with the third parties throughcontracts and negotiations to exercise intellectual property rights.
From time to time, we are sued or receive notices regarding patent, design right and other intellectual
property claims. Whether or not these claims have merit, they may require significant resources to defend
against and may divert management attention from our business and operations and result in harm to our
reputation. In addition, a successful infringement claim and our inability to obtain the license for the
infringed technology or substitute similar non-infringing technology may adversely affect our business.
To deal with those risks, we work to avoid disputes with other companies chiefly by conducting apatent clearance study before selling a new product or providing a new service and by changing the designof products or services if necessary.

37

Employee Retirement Benefits
We have a significant amount of employee retirement benefit costs that we derive from actuarial
valuations based on a number of assumptions. Inherent in these valuations are key assumptions used inestimating pension costs including mortality, withdrawal and retirement rates, changes in wages and thediscount rate. We are required to make judgments regarding the key assumptions by taking into accountvarious factors including personnel demographics, market conditions and expected trends in interest rates.
Although management believes that its key assumptions are reasonable in light of the various underlying
factors, there can be no assurance that the key assumptions will correspond to actual results. If our key
assumptions differ from actual results, the consequent deviation of actual pension costs from estimatedcosts may have an adverse effect on our financial condition and results of operations. A decrease in the
discount rate may result in an increase in the amount of projected benefit obligations. In addition, we may
change these key assumptions, such as the discount rate. Changes in key assumptions may also have an
adverse effect on our financial condition and results of operations.
To mitigate the risk, on April 1, 2019, we changed the corporate pension plan for employees of theCompany from a defined contribution plan to a risk-sharing corporate pension plan to fix the Company’s
premium payments and reduce investment risks.

386) Risks Related to Our American Depositary Shares
Rights of ADS holders
The rights of shareholders under Japanese law to take actions, including voting their shares, receiving
dividends and distributions, bringing derivative actions, examining our accounting books and records andexercising appraisal rights are available only to shareholders of record. Because the depositary, through its
custodian agents, is the record holder of the shares underlying the American Depositary Shares, or ADSs,
only the depositary can exercise those rights in connection with the deposited shares. The depositary will
make efforts to vote the shares underlying ADSs in accordance with the instructions of ADS holders andwill pay dividends and distributions collected from us as and to the extent provided in the deposit
agreement. However, ADS holders will not be able to bring derivative actions, examine our accounting
books and records, or exercise appraisal rights through the depositary.
We are incorporated in Japan with limited liability. A significant portion of our assets are locatedoutside the United States. As a result, it may be more difficult for investors to enforce against us judgments
obtained in U.S. courts predicated upon the civil liability provisions of the federal securities laws of theUnited States or judgments obtained in other courts outside Japan. There is doubt as to the enforceability inJapanese courts, in original actions or in actions for enforcement of judgments of U.S. courts, of civil
liabilities predicated solely upon the federal securities laws of the United States.
Unit Share System
The Companies Act allows companies to establish a “unit” of shares for the purpose of exercising
voting rights at the general meetings of shareholders. Under our articles of incorporation, one unit of ourshares is composed of 100 shares, equivalent to 50 ADSs. Each unit of our shares has one vote. A holder
who owns shares or ADSs in other than multiples of 100 or 50, respectively, will own less than a whole unit
(i.e., for the portion constituting fewer than 100 shares, or fewer than 50 ADSs). Our articles ofincorporation, in accordance with the Companies Act, impose significant restrictions on the rights ofholders of shares constituting less than a whole unit, which include restrictions on the right to vote, toattend a shareholders meeting and to bring derivative actions. In addition, less than whole unit sharescannot be traded on Japanese stock markets. Under the unit share system, holders of our shares constituting
less than one unit have the right to require us to purchase their shares and the right to require us to sell them
additional shares to create a whole unit of 100 shares. However, holders of our ADSs are unable towithdraw underlying shares representing less than one unit and, as a practical matter, are unable to require
us to purchase those underlying shares. The unit share system, however, does not affect the transferabilityof ADSs, which may be transferred in lots of any number of whole ADSs.
Dilution of Your Shares by Issuances of Additional Shares
We may issue additional shares in the future within the unissued portion of our authorized sharecapital and sell shares held as treasury stock, generally without shareholder vote unless the subscription orsale price is significantly lower than the market price. Issuances and sales of our shares in the future may beat prices below the prevailing market prices and may be dilutive.
Foreign Exchange Fluctuations
Market prices for our ADSs may fall if the value of the yen declines against the U.S. dollar. In
addition, the amount of cash dividends or other cash payments made to holders of ADSs will decline if thevalue of the yen declines against the dollar.

39

3. Management’s Discussion and Analysis of Consolidated Financial Condition, Results of Operations andCash Flows(1) Progress of Management Plan
1) Status of Key Indicators laid out as Strategic and Operational Targets
Under the "2021 Mid-term Management Plan," the key indicators to measure performances in termsof meeting our strategic and operational goals are as follows.
Year ended March 31, 2021
(Fiscal 2020)
Annual growth rate forrevenues
Adjusted operating income
marginFiscal 2021 Target(0.4%)

Over 3%

5.7%

Over 10%(Cumulative for two years from
Fiscal 2019 to Fiscal 2020)
1,354.0 billion yen（Cumulative for three years fromReturn on invested capital(ROIC)

6.4%

Over 10%

Overseas revenue ratio

52%

Over 60%

Operating cash flow

Fiscal 2019 to Fiscal 2021）
Over 2.5 trillion yen

The Hitachi Group maintained its profitability close to the level in the previous fiscal year, despite
the severe business environment due to the COVID-19 pandemic. Regarding funds, cash flows fromoperating activities increased about 232.2 billion yen from the previous fiscal year, to 793.1 billion yen
and reached 1,354.0 billion yen including the previous fiscal year due to strengthened cash management.
2) Global Business Expansion‒ Evolution into a Social Innovation Company that leads the DX of social infrastructure
In March 2021, we decided to acquire GlobalLogic Inc. to facilitate the global DX of social
infrastructure. Headquartered in Silicon Valley in the U.S., GlobalLogic is a leading company in thedigital engineering market which continues to grow rapidly. We will be able to strengthen thefollowing two points through synergy between GlobalLogic and our existing strengths in "OT x IT x
Products."
One is our ability of co-creation with customer. GlobalLogic owns design centers for cocreation all over the world and has achieved the fast development of applications and services throughco-creation with customers in a wide range of areas including telecommunications, financial services,automobiles, healthcare and industry. Focusing on developing the core systems that are indispensable
in its customers' businesses, we 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 forcomprehensive digital engineering to address development at all levels from Chip-to-Cloud (from theon-site level to the cloud level). We will evolve into a company that can promptly and efficiently
resolve the challenges faced by customers that emerge in the process of the co-creation with end-toend solutions from sites to cloud.
Resolutely, we have made a crucial decision, and we will survive the competition in a rapidlychanging world and become a global leader achieving digital transformation of social infrastructure byleveraging synergies with GlobalLogic.

40‒ Progress in the Lumada business
In Fiscal 2020, the revenues from Lumada business were 1,100.0 billion yen, 12.7% of total
revenues of the Hitachi Group.

We reorganized Hitachi Vantara LLC in the U.S., which globally leads Lumada and otherdigital solution businesses in January 2020, and globally launched the Lumada Alliance Program in
November 2020 to accelerate open innovation for increasing the social value, environmental value,economic value, and QoL. Further, we will accelerate the DX of social infrastructure globally byconnecting the services provided by GlobalLogic which in March 2021 we announced to acquire, andLumada, as previously mentioned.
‒ Establishment of a business foundation for growth
We have also worked to establish a business foundation to grow into a global leader. We havecontinued reforms of our business portfolio, including the sale of Hitachi Chemical Company, Ltd. andthe 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,
we put the top priority on the health and safety of our employees, their families and our customers andtook measures to maintain social infrastructure and secure a system to support customers andpromoted new workstyles to make remote work as the standard.
Thus, we have established a system to achieve further growth even in the new normal.

41

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

Revenues came to 8,729.1 billion yen, which was the same level as for the year ended March 31,
2020 (Fiscal 2019). Revenues increased in the Energy sector, attributable to the acquisition of thePower Grid business of ABB Ltd, in the Mobility sector, reflecting solid Building Systems business in
China, and in the Smart Life Sector, due to the impact of the management integration of Hitachi
Astemo, Ltd. while revenues decreased due to the deconsolidation of Hitachi Chemical Company, Ltd.
following the sale of its shares held by the Company. Revenues in Hitachi Metals and Hitachi
Construction Machinery also declined due to a deterioration in market conditions reflecting the impact
of COVID-19.
Cost of sales increased 2% to 6,533.8 billion yen, as compared with fiscal 2019, and the ratio of
cost of sales to revenues was 75%, a rise of 2% from fiscal 2019. Gross profit decreased 7% to 2,195.3
billion yen, as compared with fiscal 2019.
Selling, general and administrative expenses came to 1,700.1 billion yen, which was the same levelas for fiscal 2019, and the ratio of selling, general and administrative expenses to revenues was 19%, on
par with the same level in fiscal 2019.
Adjusted operating income decreased 166.7 billion yen to 495.1 billion yen, as compared withfiscal 2019. The decrease was due mainly to lower profits in the Energy sector, Hitachi Construction
Machinery and Hitachi Metals, in addition to the impact of decreased profits resulting from the sale ofshares in Hitachi Chemical Company, Ltd. The decrease was partially offset by increased profits in the
IT sector.
Other income increased 424.1 billion yen to 476.1 billion yen and other expenses decreased 398.2
billion yen to 172.4 billion yen, as compared with fiscal 2019, respectively. The main components are
as follows;- Net gain on sales and disposal of property, plant and equipment decreased 13.7 billion yen to
16.1 billion yen, as compared with fiscal 2019.
- Impairment losses decreased 27.9 billion yen to 109.0 billion yen, as compared with fiscal 2019.
This mainly reflected a decrease in impairment loss that had been caused by the declining
profitability of the Magnetic Materials business in Hitachi Metals. The decrease was partially
offset by the posting of impairment losses on property, plant and equipment in the Automotive
Systems business.
- Net gain on business reorganization and others increased 432.7 billion yen to 452.4 billion yen,
as compared with fiscal 2019, due mainly to a net gain from the sale of shares in Hitachi
42

Chemical Company, Ltd., the diagnostic imaging-related business in the Smart Life sector, andthe sale of part of the holding in Agility Trains East (Holding) Limited.
- Special termination benefits decreased 1.7 billion yen to 19.7 billion yen, as compared withfiscal 2019.
- In fiscal 2019, a loss of 375.9 billion yen was posted as a result of settlement of the South
African project conducted by Mitsubishi Hitachi Power Systems, Ltd. (“MHPS”).
Financial income (excluding interest income) increased 8.2 billion yen to 13.9 billion yen andfinancial expenses (excluding interest charges) decreased 7.5 billion yen to 1.4 billion yen, as comparedwith fiscal 2019, respectively.
Share of gains (losses) of investments accounted for using the equity method declined 4.7 billion
yen to the gains of 38.8 billion yen from fiscal 2019.
As a result of the foregoing, EBIT* increased 666.6 billion yen to 850.2 billion yen, as comparedwith fiscal 2019.
*EBIT (Earnings before interest and taxes) are the earnings before interest and taxes, which ispresented as income from continuing operations, before income taxes less interest income plus interest
charges. EBIT margin is calculated by dividing EBIT by revenue.
Interest income decreased 3.7 billion yen to 16.9 billion yen, as compared with fiscal 2019 andinterest charges declined 1.2 billion yen to 22.7 billion yen, as compared with fiscal 2019.
Income from continuing operations, before income taxes, increased 664.1 billion yen to 844.4
billion yen, as compared with fiscal 2019.
Income taxes increased 274.0 billion yen to 325.2 billion yen, as compared with fiscal 2019.
Loss from discontinued operations decreased 1.0 billion yen to 0.6 billion yen, as compared withfiscal 2019.
Net income increased 391.2 billion yen to 518.5 billion yen, as compared with fiscal 2019.
Net income attributable to non-controlling interests decreased 22.7 billion yen to 16.8 billion yen,
as compared with fiscal 2019.
As a result of the foregoing, net income attributable to Hitachi, Ltd. stockholders increased 414.0
billion yen to 501.6 billion yen, as compared with fiscal 2019.

43

2) Operations by Segment
The following is an overview of results of operations by segment. Revenues for each segment
include intersegment transactions. The numbers within each graph represent the results of the main
businesses, etc. in each segment, and the sum of these numbers in some segments does not correspondto the total results in the segments.
(IT)

Revenues decreased from fiscal 2019, due mainly to the impact of COVID-19 mainly in overseas
such as North America and India, in the front business and services & platforms business, and areactionary decline from favorable revenues in fiscal 2019, which reflected one-time positive impact
factors in the front business.
Adjusted operating income increased compared with fiscal 2019, reflecting improved profitability
as a result of an improved cost structure, despite decreases in revenues both in the front business and theservices & platforms business.
EBIT increased compared with fiscal 2019. This was attributable mainly to rises in adjusted
operating income both in the front business and the services & platforms business and declines in
expenses for business structure reform.
(Energy)

Revenues increased compared with fiscal 2019, owing mainly to the acquisition of the power gridbusiness of ABB Ltd in the energy business and the solid performance of projects related to new
regulations in the nuclear energy business, which offset declines in revenues caused by decreases in thenumber of projects in the service solution business and the power generation solution business in theenergy business.
44

Adjusted operating loss was posted compared to income for fiscal 2019. The increase in revenues
was offset mainly by the posting of amortization expenses for intangible assets associated with theacquisition of the power grid business of ABB Ltd and strengthening measures to for some projects in
the renewable energy business.
EBIT recorded an improved loss compared with fiscal 2019, despite an adjusted operating loss.
This improvement was due primarily to the absence of the loss from the settlement of the South African
project conducted by MHPS posted in fiscal 2019.
(Industry)

Revenues increased compared with fiscal 2019. Revenues in the industrial products business andthe water & environment business declined due mainly to deterioration in market condition reflecting
the impact of COVID-19. In contrast, revenues in the industry & distribution business rose, attributableprimarily to the acquisition of JR Technology Group, LLC, which partly offset decreases in revenues
caused by deterioration in market condition reflecting the impact of COVID-19.
Adjusted operating income decreased compared with fiscal 2019, due mainly to falling revenues,
despite positive factors, including the acquisition of JR Technology Group, LLC.
EBIT decreased from fiscal 2019, due mainly to decline in adjusted operating income.
(Mobility)

Revenues increased compared with fiscal 2019, due mainly to an increase in revenues in thebuilding systems business, which was attributable primarily to business expansion in China and theimpact of consolidation of Yungtay Engineering Co., Ltd. This was partially offset by the decrease inrevenues in the railway systems business, which mainly reflected a fall in revenues in the U.K. and theimpact of COVID-19.
Adjusted operating income decreased compared with fiscal 2019, due mainly to a decline inincome in the railway systems business reflecting a fall in revenues. This was partially offset by45

increased income in the building systems business, which was attributable primarily to the rise inrevenues and cost reduction.
EBIT increased from fiscal 2019, attributable mainly to the posting of a gain on the sale of sharesin Agility Trains East (Holdings) Limited in the railway systems business, despite the decrease inadjusted operating income.
(Smart Life)

Revenues increased as compared with fiscal 2019, due to management integration related to
Hitachi Astemo, Ltd. in the automotive systems business. Revenues in the measurement and analyticalsystems business (Hitachi Hi-Tech) decreased, mainly by the impact of COVID-19. Revenues in thesmart life & ecofriendly systems business also decreased, owing to decreased revenues in the airconditioning systems business which was caused by the impact of COVID-19 and a fall in overseas
sales of home appliances.
Adjusted operating income decreased compared with fiscal 2019, due mainly to the decreased
income in the measurement and analytical systems business as a result of decreased revenues, etc.
Income in the automotive systems business increased, primarily reflected management integration
related to Hitachi Astemo, Ltd. Income in the smart life & ecofriendly systems business also increased,
as a result of improved profitability which was attributable mainly to increased domestic sales in thehome appliances business and cost reduction.
EBIT increased from fiscal 2019, due mainly to the posting of profit from the sale of the diagnostic
imaging-related business, despite the decrease in adjusted operating income.

46

(Hitachi Construction Machinery)

Revenues decreased from fiscal 2019, due mainly to the adverse impacts of COVID-19 and foreign
currency translation.
Adjusted operating income decreased compared with fiscal 2019, due mainly to the decline inrevenues and change in model mix of value chain business and other model mix, despite efforts toimprove profitability through cost reduction, etc.
EBIT decreased compared with fiscal 2019, due mainly to the decreased adjusted operating income(Hitachi Metals)

Revenues decreased as compared with fiscal 2019, due mainly to a decline in demand for products
for automobiles caused by the COVID-19.
An adjusted operating loss was posted as compared to income for fiscal 2019, due mainly to thedecreased revenues.
EBIT recorded an improvement in the loss compared with fiscal 2019, due primarily to a decreasein expenses for business structure reform, despite the decreased adjusted operating income.
(Others)
Revenues decreased 7% to 449.0 billion yen, adjusted operating income decreased 1.1 billion yen
to 21.2 billion yen and EBIT decreased 5.9 billion yen to 25.3 billion yen, as compared with fiscal
2019, respectively.

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

Japan
Revenues in Japan decreased from fiscal 2019. This was due mainly to a decrease in revenues asa result of the sale of Hitachi Chemical Company, Ltd. and decreased revenues in Hitachi Metals.
Overseas
Revenues in Overseas increased compared with fiscal 2019, and the ratio to total revenues was
52%, a rise of 4% compared with fiscal 2019. Revenues in each area are as follows;(North America)
Revenues in North America increased from fiscal 2019, attributable mainly to the higher revenues
in the Energy and Industry sectors, despite decreased revenues both in Hitachi Construction
Machinery and as a result of the sale of Hitachi Chemical Company, Ltd.
(Europe)
Revenues in Europe increased from fiscal 2019, due primarily to the increased revenues in the
Smart Life sector, the Industry sector and the Energy sectors, which was partially offset by thedecreased revenues as a result of the sale of Hitachi Chemical Company, Ltd. and decreased revenues
in the Mobility sector.
(Asia)
Revenues in Asia composed of China and ASEAN, India and other areas increased comparedwith fiscal 2019. Revenues in China rose, attributable mainly to the increased revenues in the Energy
sector, the Mobility sector and the Smart Life sector. In contrast, revenues in ASEAN, India andother areas decreased, due chiefly to reduced revenues as a result of the sale of Hitachi Chemical
Company, Ltd. and decreased revenues in Hitachi Construction Machinery, despite higher revenues
mainly in the Energy sector and the Smart Life sector.
(Other Areas)
Revenues in other areas increased compared with fiscal 2019, owing mainly to rising revenues inthe Energy sector and the Smart Life sector, which was partially offset by decreased revenues mainly
as a result of the sale of Hitachi Chemical Company, Ltd. and lower revenues in the Industry sector.

48

(3) Analysis of Financial Condition and Cash Flows
1) Liquidity and Capital Resources
Policies for Financing Activities
We consider maintaining an appropriate level of liquidity and securing adequate funds for current
and future business operations to be important financial objectives. Through efficient management ofworking capital, we are working to optimize the efficiency of capital utilization throughout our business
operations. We endeavor to improve our group cash management by centralizing such management
among us and our overseas financial subsidiaries.
Under the “2021 Mid-term Management Plan”, we will introduce ROIC as a management
indicator and promote the improvement of capital efficiency and the growth of highly profitablebusinesses through our management. ROIC is an indicator that evaluates returns generated by invested
capital calculated by dividing business profit after taxes by invested capital. To increase returns, ROIC
needs to exceed the weighted average cost of capital (WACC), which is the cost of raising invested
capital.
Going forward, aiming for ROIC above 10%, we will strive to increase shareholder value by
strengthening profitability and reducing WACC through the use of financial leverage. To achieve this,we will improve adjusted operating income, while at the same time continuing to promote thedisposition and sales of owing shares as well as real estate and other idle assets aimed at improving
business asset efficiency with the aim of appropriately structural reforms of unprofitable businesses andcountermeasures to businesses with challenges.
Trends in the Funding Demands
Our major uses of funds are M&A for growth, investment in human resources, capital
investments, research and development (R&D) investments and shareholder returns. As a broad plan,
we plan to use cash income from operating cash flows and the sale of assets in the future by splitting it
into three portions, for investments in future growth, capital investment, and the repayment ofborrowings and shareholder returns, and also plan to allocate a total of 1,500.0 billion yen to R&D
expenses for the next three years.
The major transactions of M&As, etc. are described in “Consolidated Financial Statements －Notes to Consolidated Financial Statements － (5) Business Acquisitions and Divestitures.” The results
and plan of the capital investments are described in “III. Property, Plants and Equipment.” The policy
and results of shareholder returns are described in “ IV. Information on the Company - 3. Dividend
Policy.”Capital Resources
Our internal sources of funds include cash flows generated by operating activities and cash on
hand. Our management also considers short-term investments to be an immediately available source offunds. In addition, we raise funds both in the capital markets and from Japanese and internationalcommercial banks in response to our capital requirements. Our management’s policy is to financecapital expenditures primarily by internally generated funds and to a lesser extent by funds raised
through the issuance of debt and equity securities in domestic and foreign capital markets.
When procuring funds through borrowing, our financial discipline policy is to maintain theappropriate financial condition by considering the financial indicators such as a D/E ratio and aninterest bearing debt/EBITDA ratio.
In order to flexibly access funding, we registered our shelf registration with the maximum
outstanding balance of 300.0 billion yen, and issued the unsecured straight bond of 200.0 billion yen in
March, 2020 in order to raise the finance to be used for the investment.
We maintain commitment line agreements with a number of domestic banks under which we may
borrow in order to ensure efficient access to necessary funds. These commitment line agreements
generally provide for a one-year term, renewable upon mutual agreement between us and each of thelending banks, as well as another commitment line agreement with a contract term of three years endingon July 29, 2022. As of March 31, 2021, our unused commitment lines totaled 600.1 billion yen,including those of 500.0 billion yen which the Company maintained.

49

We receive debt ratings from Moody’s Japan K.K. (Moody’s), S&P Global Rating Japan Inc.
(S&P), as well as Rating and Investment Information, Inc. (R&I). Our debt ratings as of March 31, 2021
were as follows.
Rating Company
Long-term
Short-term
Moody’s
A3
P-2
S&P
A
A-1
R&I
AAa-1+
With our current ratings, we believe that our access to the global capital markets will remain
sufficient for our financing needs. We seek to improve our credit ratings in order to ensure financial
flexibility for liquidity and capital management, and to continue to maintain access to sufficient funding
resources through the capital markets.
2) Cash Flows(Cash Flows from Operating Activities)
Net cash inflow from a change in trade receivables and contract assets decreased by 96.2 billion
yen, as compared with fiscal 2019. However, net cash outflow from a change in inventories and net
cash outflow from a change in trade payables decreased by 95.1 billion yen and 83.2 billion yen, as
compared with fiscal 2019. Furthermore, the Company paid the settlement money on the South African
project conducted by MHPS in fiscal 2019.
As a result of the foregoing, net cash provided by operating activities was 793.1 billion yen in
fiscal 2020, an increase of 232.2 billion yen compared with fiscal 2019.
(Cash Flows from Investing Activities)
Purchase of investments in securities and other financial assets (including investments in
subsidiaries and investments accounted for using the equity method) in fiscal 2020 increased by 623.8
billion yen, as compared with fiscal 2019, due mainly to the purchase of shares of Hitachi ABB Power
Grids Ltd. However, net amount of investments related to property, plant and equipment* was 289.4
billion yen in fiscal 2020. This net sum decreased by 49.2 billion yen compared with fiscal 2019.
Proceeds from sale of investments in securities and other financial assets (including investments in
subsidiaries and investments accounted for using the equity method) in fiscal 2020 increased by 624.7
billion yen, as compared with fiscal 2019, due mainly to the sale of shares of Hitachi Chemical
Company, Ltd. and the diagnostic imaging-related business.
As a result of the foregoing, net cash used in investing activities was 458.8 billion yen in Fiscal
2020, a decrease of 66.9 billion yen compared with Fiscal 2019.
* The sum of the purchase of property, plant and equipment and the purchase of intangible assets,less the proceeds from sale of property, plant and equipment, and intangible assets.
(Cash Flows from Financing Activities)
Net cash inflow from a change in short-term debt in fiscal 2020 increased by 118.8 billion yen, as
compared with fiscal 2019. And, net cash inflow related to long-term debt** in fiscal 2020 increased by
237.5 billion yen, as compared with fiscal 2019. However, net cash outflow related to purchase ofshares of consolidated subsidiaries from non-controlling interests increased by 543.4 billion yen, as
compared with fiscal 2019, due mainly to the purchase of shares of Hitachi High-Tech Corporation.
As a result of the foregoing, net cash used in financing activities was 184.8 billion yen in fiscal
2020, as compared with 2.8 billion yen of net cash inflow in fiscal 2019.
** The proceeds from long-term debt, less the payments on long-term debt.
As a result of the foregoing, cash and cash equivalents as of March 31, 2021 were 1,015.8 billion
yen, an increase of 203.5 billion yen from March 31, 2020. Free cash flows, the sum of cash flows fromoperating and investing activities, were an inflow of 334.2 billion yen in fiscal 2020, an increase of
299.1 billion yen compared with fiscal 2019.

50

3) Assets, Liabilities and Equity
As of March 31, 2021, total assets amounted to 11,852.8 billion yen, an increase of 1,922.7 billion
yen from March 31, 2020. This was attributable to positive factors such as the acquisition of the power
grids business of ABB Ltd. and the management integration of Keihin Corporation, Showa Corporation
and Nissin Kogyo Co., Ltd. related to Hitachi Astemo, Ltd. which offset negative factors such as
decreased assets due to an additional acquisition of shares in Hitachi High-Tech Corporation, thetransfer of all shares in MHPS held by the Company, the sale of all shares in Hitachi Chemical
Company, Ltd. held by the Company, and the sale of diagnostic imaging systems-related businesses.
Cash and cash equivalents as of March 31, 2021 amounted to 1,015.8 billion yen, an increase of 203.5
billion yen from the amount as of March 31, 2020.
As of March 31, 2021, total interest-bearing debt, the sum of short-term debt and long-term debt,
amounted to 2,397.3 billion yen, an increase of 912.3 billion yen from March 31, 2020, primarily as aresult of increases in short-term debt and long-term debt (excluding current portion). As of March 31,
2021, short-term debt, consisting mainly of borrowings from banks and commercial paper, amounted to416.6 billion yen, an increase of 233.3 billion yen from March 31, 2020. As of March 31, 2021, thecurrent portion of long-term debt amounted to 274.3 billion yen, an increase of 43.1 million yen fromMarch 31, 2020. As of March 31, 2021, long-term debt (excluding current portion), consisting mainlyof debentures, and loans principally from banks and insurance companies, amounted to 1,706.3 billion
yen, an increase of 635.8 billion yen from March 31, 2020, due mainly to an increase in borrowings forthe acquisition of the power grids business of ABB Ltd.
As of March 31, 2021, total Hitachi, Ltd. stockholders’ equity amounted to 3,525.5 billion yen, an
increase of 365.5 billion yen from March 31, 2020. As a result, the ratio of total Hitachi, Ltd.
stockholders’ equity to total assets as of March 31, 2021 was 29.7%, compared with 31.8% as of March
31, 2020.
Non-controlling interests as of March 31, 2021 was 932.7 billion yen, a decrease of 174.0 billion
yen from March 31, 2020.
Total equity as of March 31, 2021 was 4,458.2 billion yen, an increase of 191.4 billion yen fromMarch 31, 2020. The ratio of interest-bearing debt to total equity was 0.54, an increase of 0.19 pointfrom March 31, 2020.
(4) Production, Order Received and Sales
The Hitachi Group does not present production and orders received in amount or volume terms foreach segment since it produces and sells a wide variety of products, there are variety of specifications insame kinds of products and certain products are mass-produced. The balance of unsatisfied performanceobligations for the segments that have contracts under which revenues are recognized over a long periodof time is described in “Consolidated Financial Statements － Notes to Consolidated Financial
Statements － (20) Revenues.” Regarding sales, see “(2) Analysis of Results of Operations.”(5) Important Accounting Policies and Estimates
The preparation of the consolidated financial statements in conformity with IFRS requires ourmanagement to make estimates and assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Management considers that certain
accounting estimates to be critical, and that their significance to the financial statements and thepossibility that future events affecting the estimate may differ significantly from management’s current
assumptions could have a material impact on the presentation of our financial condition, changes infinancial condition or results of operations. First, the estimates require us to make assumptions about
matters that are highly uncertain at the time the accounting estimates are made. Second, there could be
different estimates that we reasonably could have used for the accounting estimate in the current period,or changes in the accounting estimate that are reasonably likely to occur as time proceeds. Importantaccounting policies that require management to make estimates and assumptions are as follows.

51

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

52

Goodwill is the source of excess earning power based on the market competitiveness acquired throughbusiness acquisition, and the difference between the net assets of the acquiree and the consideration for
acquisition is recorded as goodwill except for the amount recorded as intangible assets, etc. Goodwill is
not amortized in accordance with IFRS. Irrespective of any indicators of impairment, we tests assets for
impairment annually, mainly in the fourth quarter, by estimating the recoverable amount of each CGU
or a group of CGUs to which such assets are allocated. We continuously monitors the comparison
between the initial estimate and the most recent estimate, and conduct impairment tests if there are signs
that the value will fall below the original estimate and the carrying amount will not be recoverable, due
to changes in events or circumstances such as in business strategies or in the market environment. Suchchanges in the events or circumstances include crises in the global economy and financial markets, andif the carrying amount of each CGU or a group of CGUs to which such assets are allocated exceeds therecoverable amount, the excess amount is recognized as an impairment loss.
The breakdowns of impairment and goodwill by segment are described in “Consolidated Financial
Statements ― Notes to Consolidated Financial Statements ― (4) Segment Information.” The maincontent is described in “Consolidated Financial Statements ― Notes to Consolidated Financial
Statements ― (9) Property, Plant and Equipment and (10) Goodwill and Other Intangible Assets."
Details of the impact of COVID-19 in accounting estimates are described in “Consolidated Financial
Statements ― Notes to Consolidated Financial Statements ― (3) Summary of Significant Accounting
Policies (j) Impairment of Non-Financial Assets.”
Deferred Tax Assets
Deferred tax assets are the amounts of taxes that will be recovered in future periods. In assessing
the realizability of deferred tax assets, we consider whether it is more likely than not that some portionor all of the deferred tax assets will not be realized. Although realization is not assured, we consider thescheduled reversals of deferred tax liabilities and projected future taxable income when assessing
realizability. The outlook for future performance, which is the basis for estimating future taxable
income, may differ from the actual one due to unforeseen events such as economic trends, supply anddemand trends in markets, sales prices of products and services, procurement prices of raw materials
and parts, fluctuations in exchange rates, and rapid technological innovations, and may be corrected in
the future. As a result, the amounts of deferred tax assets that are determined to be recognizable may be
adversely affected. The realizability of deferred tax assets is evaluated for each tax payment in each tax
jurisdiction, and even if running similar businesses, the evaluations can differ depending on the productand the tax jurisdiction. The ultimate realization of deferred tax assets is dependent upon the generationof future taxable income in specific tax jurisdictions during the periods in which these deductible
differences become deductible. Based on these factors, we consider it is more likely than not it willrealize the benefits of these deducible differences as of March 31, 2021. However, the actual times andamounts of taxable income occurrence may differ from the estimates.
Details of the impact of COVID-19 in accounting estimates are described in “Consolidated Financial
Statements ― Notes to Consolidated Financial Statements ― (3) Summary of Significant Accounting
Policies (o) Income Taxes.”
Employee Retirement Benefits
We have a significant amount of employee retirement benefit costs that we derive from actuarial
valuations based on a number of assumptions. Inherent in these valuations are anumber of actuarial assumptions used in estimating employee retirement benefit costs including
mortality, withdrawal and retirement rates, changes in wages and the discount rate. We are required tomake judgments regarding the actuarial assumptions by taking into account various factors including
personnel demographics, market conditions and expected trends in interest rates. Although management
believes that its actuarial assumptions are reasonable in light of the various underlying factors, there canbe no assurance that the actuarial assumptions will correspond to actual results. If our actuarial
assumptions differ from actual results, the consequent deviation of actual employee retirement benefit
costs from estimated costs may have an adverse effect on our financial condition and results ofoperations. A decrease in the discount rate may result in an increase in the amount of projected benefit
obligations. In addition, we may change these actuarial assumptions, such as the discount rate. Changes
53

in actuarial assumptions may also have an adverse effect on our financial condition and results ofoperations. Details of the evaluation of employee retirement benefits are described in “Consolidated
Financial Statements ― Notes to Consolidated Financial Statements ― (3) Summary of Significant
Accounting Policies ― (k) Retirement and Severance Benefits.”(6) Forward-Looking Statements
Certain statements found in “1. Management Policy, Economic Environment and Challenges
Hitachi Group Faces,” “2. Risks Factors” and “3. Management's Discussion and Analysis ofConsolidated Financial Condition, Results of Operations and Cash Flows” and other descriptions in thisreport may constitute “forward-looking statements” as defined in the U.S. Private Securities Litigation
Reform Act of 1995. Such “forward-looking statements” reflect management’s current views withrespect to certain future events and financial performance and include any statement that does notdirectly relate to any historical or current fact. Words such as “anticipate,” “believe,” “expect,”“estimate,” “forecast,” “intend,” “plan,” “project” and similar expressions which indicate future eventsand trends may identify “forward-looking statements.” Such statements are based on currently available
information and are subject to various risks and uncertainties that could cause actual results to differ
materially from those projected or implied in the “forward-looking statements” and from historical
trends. Certain “forward-looking statements” are based upon current assumptions of future events
which may not prove to be accurate. Undue reliance should not be placed on “forward-looking
statements,” as such statements speak only as of the date of this report.
Factors that could cause actual results to differ materially from those projected or implied in any“forward-looking statement” and from historical trends include, but are not limited to:• exacerbation of social and economic impacts of the spread of COVID-19;• economic conditions, including consumer spending and plant and equipment investment in Hitachi’smajor markets, as well as levels of demand in the major industrial sectors Hitachi serves;• exchange rate fluctuations of the yen against other currencies in which Hitachi makes significant
sales or in which Hitachi’s assets and liabilities are denominated;• uncertainty as to Hitachi’s ability to access, or access on favorable terms, liquidity or long-term
financing;• uncertainty as to general market price levels for equity securities, declines in which may require
Hitachi to write down equity securities that it holds;• fluctuations in the price of raw materials including, without limitation, petroleum and othermaterials, such as copper, steel, aluminum, synthetic resins, rare metals and rare-earth minerals, orshortages of materials, parts and components;• estimates, fluctuations in cost and cancellation of long-term projects for which Hitachi uses thepercentage-of-completion method to recognize revenue from sales;• increased commoditization of and intensifying price competition for products;• uncertainty as to Hitachi’s ability to attract and retain skilled personnel;• uncertainty as to Hitachi’s ability to continue to develop and market products that incorporate newtechnologies on a timely and cost-effective basis and to achieve market acceptance for suchproducts;• fluctuations in demand of products, etc. and industry capacity;• uncertainty as to Hitachi’s ability to implement measures to reduce the potential negative impact offluctuations in demand of products, etc., exchange rates and/or price of raw materials or shortages ofmaterials, parts and components;• credit conditions of Hitachi’s customers and suppliers;• uncertainty as to Hitachi’s ability to achieve the anticipated benefits of its strategy to strengthen its
Social Innovation Business;• uncertainty as to the success of acquisitions of other companies, joint ventures and strategic alliances
and the possibility of incurring related expenses;• uncertainty as to the success of restructuring efforts to improve management efficiency by divestingor otherwise exiting underperforming businesses and to strengthen competitiveness;54• general socioeconomic and political conditions and the regulatory and trade environment ofcountries where Hitachi conducts business, particularly Japan, Asia, the United States and Europe,
including, without limitation, direct or indirect restrictions by other nations on imports anddifferences in commercial and business customs including, without limitation, contract terms andconditions and labor relations;• the potential for significant losses on Hitachi’s investments in equity-method associates and joint
ventures;• uncertainty as to the success of cost structure overhaul;• the possibility of disruption of Hitachi’s operations by natural disasters such as earthquakes andtsunamis, the spread of infectious diseases, and geopolitical and social instability such as terrorism
and conflict;• uncertainty as to the outcome of litigation, regulatory investigations and other legal proceedings ofwhich the Company, its subsidiaries or its equity-method associates and joint ventures have become
or may become parties;• the possibility of incurring expenses resulting from any defects in products or services of Hitachi;• uncertainty as to Hitachi’s ability to maintain the integrity of its information systems, as well as
Hitachi’s ability to protect its confidential information or that of its customers;• uncertainty as to Hitachi’s access to, or ability to protect, certain intellectual property; and• uncertainty as to the accuracy of key assumptions Hitachi uses to evaluate its employee benefitrelated costs.
The factors listed above are not all-inclusive and are in addition to other factors contained
elsewhere in this report and in other materials published by Hitachi.

55

4. Material Agreements, etc.
(1) Absorption-type Company Split and Share Transfer
On December 18, 2019, the Company decided to execute an absorption-type split (the “Company Split”)
involving the diagnostic imaging-related business (the “Business”), currently undertaken by the Company andits consolidated subsidiaries and affiliate companies, through which the Business will be transferred to
FUJIFILM Healthcare Corporation as a successor company (the “New Company”), and transfer all shares in
the New Company to FUJIFILM Corporation (such share transfer, the “Share Transfer”) after the Company
Split in order to strengthen competitiveness of the healthcare business. the Company executed an absorptiontype company split agreement with the New Company on February 18, 2021.
The overview of the Company Split and Share Transfer is as follows.
1) Company Split Method
An absorption-type split under which the Company would be the splitting company and the New
Company would be the succeeding company.
2) Effective Date of the Company Split and Share Transfer
March 31, 2021
3) Assets and Liabilities Transferred to the Succeeding Company
Current Assets
Non-Current Assets
Total Assets
Current Liability
Non-Current Liability
Total Liability

61,077 million yen
29,674 million yen
90,751 million yen
25,299 million yen
3,680 million yen
28,980 million yen

4) Details of Allotments
The New Company would issue 99 common stocks accompanying the Company Split. All of the stocks
would be allocated to the Company.
5) Basis of Calculation for Allotment
As the Company held all of issued shares of the New Company, it was considered appropriate that the
New Company issues 99 shares of common stock and allots all the shares to the Company.
6) Profile of the Successor Company after the Company Split and Share Transfer(As of February 18, 2021)
Name
FUJIFILM Healthcare Corporation
Head office
2-1 Shintoyofuta, Kashiwa, Chiba
Representative
President Akio Yamamoto
Capital50 million yen
Research and development, manufacturing, sales and maintenance service ofBusinessdiagnostics imaging systems (CT, MRI, X-ray systems, Ultrasound) and electronic
health records(2) Business Acquisition
On March 31, 2021, the Company decided to acquire GlobalLogic for the purpose of strengthening thedigital portfolio of the Lumada business. Accordingly, Hitachi Global Digital Holdings Corporation(“HGDH”), a U.S. subsidiary of the Company, MergeCo H Global Inc. (“SPC”) which was established by
HGDH for the acquisition and GlobalLogic Worldwide Holdings, Inc., the parent company of GlobalLogic
concluded an agreement regarding the acquisition.
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 1,047.0 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.

56

(3) Cross License Agreement
Party

Party

Country

Item undercontract

Contract
description

U.S.A.

Information
handling
systemsCrosslicense ofpatents

Hitachi, Ltd.
(The Company)

International
Business
Machines Corp.

Hitachi, Ltd.
(The Company)

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

Crosslicense ofpatents

Hitachi, Ltd.
(The Company)

EMC
Corporation

U.S.A.

Information
handling
systemsCrosslicense ofpatents

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

GE-Hitachi
Nuclear Energy
Americas LLC

U.S.A.

NuclearreactorsystemsCrosslicense ofpatents andtechnology

57

Contract period
From January 1, 2008 to
the expiration of patents
applied on or before
January 1, 2023
From March 31, 2010 tothe expiration of patents
applied on or before
December 31, 2014
From January 1, 2003 to
the expiration of patents
applied on or before
December 31, 2002
From October 30, 1991
to June 30, 2023

5. Research and Development(1) Research goals and major issues
The Hitachi Group (the Company and its consolidated subsidiaries) has been working to create value inthree business areas, the Environment, Resilience, and Security & safety, by prioritizing the allocation of
R&D resources to the Social Innovation Business. Through these efforts, it seeks to ensure the continuity andfuture growth of its businesses and contribute to the improvement of its customers’ social, environmental andeconomic value as well as the improvement of people's QoL.
To strengthen the global competitiveness of its businesses, the Hitachi Group facilitates value creationoriented innovation involving the frontline staff that are its contact points with customers. With an eye toward
contributing to the globalization of businesses and the expansion of the Lumada business, it also develops
strong products and services supporting value creation, and the world’s top technologies while also utilizing a
range of resources including those of Hitachi ABB Power Grids Ltd and Hitachi Astemo, Ltd. In addition, it
conducts advanced research to lay a foundation for future solutions to social issues. In February 2021, it
established “Principles guiding the ethical use of AI” with a view toward the human-centered development of
AI and its implementation in society via the Social Innovation Business, in which Lumada is a driving force.
Through these efforts, the Hitachi Group seeks to move forward with R&D to help customers resolve a range
of issues.
(2) Research and development scheme
The Hitachi Group is striving to improve the efficiency of R&D through close coordination between the
R&D divisions of the Company and those of its group companies. It has been expanding collaboration with
universities and other research institutions both in Japan and overseas. In addition, through a number of
initiatives including the establishment of Corporate Venturing Office in April 2019, the Hitachi Group has
been actively strengthening its collaboration with startup companies as well.
The Company seeks to accelerate growth globally through the expansion of its Social Innovation Business.
With this in mind, it has been facilitating R&D to quickly meet local needs by enhancing and increasing thenumber of its R&D facilities and personnel in North America, Europe, China, Asia and India while
simultaneously expanding localization-oriented R&D. In 2015, the Company reorganized its R&D facilities inJapan and overseas, establishing an R&D scheme in which the Global Center for Social Innovation seeks to
identify customer issues and create new solutions in collaboration with customers, the Center for Technology
Innovation works to create innovative products and services while also supporting the development of new
solutions through the fusion and application of technology platforms in focused areas, and the Center for
Exploratory Research focuses on the cultivation of new areas through creative and vision-based fundamental
exploratory research. In 2019, the Company established “Kyōsō-no-Mori” research initiative to accelerateinnovation through open collaborative creation with customers and partners, and opened the “Lumada Data
Science Lab” in Kyōsō-no-Mori in April 2020, where top-class data scientists are encouraged to work
together to achieve value creation through digital solutions.

Kyōsō-no-Mori (Central Research Laboratory)58

(3) R&D expenditures
The Hitachi Group’s R&D expenditures for the fiscal year ended March 31, 2021 were 293.5 billion yen,
3.4% of revenues, that by segment is shown below.
(Billions of yen)Segment

Fiscal Year ended
March 31, 2021

IT

54.8

Energy31.4

Industry

10.5

Mobility

28.6

Smart Life

105.9

Hitachi Construction Machinery

24.7

Hitachi Metals

14.4

Others4.6

Corporate Items

18.2

Total

293.5

(4) R&D achievements
Notable R&D achievements in the fiscal year ended March 31, 2021 are as follows.
(i) Launch of a biometric authentication integrated infrastructure service that achieves safe biometricauthentication (IT Segment)
Hitachi began providing a biometric authentication integrated infrastructure service, a cloud service
featuring the additional inclusion of a feature linking to payment services and entrance management at
commercial facilities using Hitachi’s proprietary public biometric infrastructure (PBI) that safely andsecurely identifies the person to be authenticated by comparing people's finger veins, faces, irises andother details against encrypted biometrics stored in the system. The service provides the safe
authentication of people and cashless payments through biometrics registered in an uncopiable PBIpowered format. The service was included in the 63rd (2020) Top 10 New Products Awards and received
The Nikkan Kogyo Shimbun, Ltd.'s Masuda Award.
(ii) Launch of a solution creating optimized work shift programs for dozens of or hundreds of employees
using Hitachi’s original CMOS annealing calculation technology (IT Segment)
Hitachi began providing a work shift optimization solution which is able to prepare work shiftschedules for dozens or hundreds of employees. The CMOS annealing technology, the core technologyof the solution, is used to quickly solve extremely large and complicated issues for the calculation, called
combinatorial optimization problems. In a society adapting to the new normal created by the COVID-19
pandemic, a shift to flexible workstyles is expected to occur to take advantage of both teleworking andworking at the office. Therefore, this Lumada-engineered solution with the goal of accelerating digital
innovation that Hitachi will apply is a solution for a wide range of businesses and operations, and support
efforts to improve work-life balance and adopt diverse workstyles.
(iii) The commercialization of TED-MOS®, a SiC power device with a new structure that simultaneously
achieves durability and low power consumption (Energy Segment)
In March 2021, Hitachi began shipping samples of TED-MOS®, which realizes improved electricalefficiency and energy conservation when used in many types of equipment and facilities that arecomponents of key social infrastructure such as power systems, railway systems, electric vehicles anddata centers. The power device uses next-generation silicon carbides (SiC). By providing TED-MOS® to
its customers, Hitachi supports the efforts of social infrastructure facilities to reduce power consumption
and CO2 emissions, and thereby contributes to the creation of a decarbonized society. (Achieved throughcollaboration with Hitachi Power Semiconductor Device, Ltd.)59

(iv) Improvement of the 5G demonstration test environments at a Silicon Valley site in North America, andat Kyōsō-no-Mori to accelerate the development of 5G solutions (Industry Segment)
Hitachi improved its 5G demonstration test environments at a Silicon Valley site in North America andat Kyōsō-no-Mori with a view toward the acceleration of development of 5G/Lumada combination-based
solutions that respond to customer needs in the social infrastructure business. In addition, it completed
the development and demonstration test of a technology facilitating the introduction and operation of 5G
solutions, key to making the most of 5G. Hitachi will leverage these environments and technologies topromote its collaborative creation initiatives in the industry area, such as its support of assembly andremote operations using a large-capacity image analysis method, as well as initiatives in the mobility andenergy area.
(v) 2020 Good Design Award received for the new TX-3000 series train car for the Tsukuba Express (TX)
(Mobility Segment)
The new TX-3000 series train used in service for the TX received a 2020 Good Design Award. The
train features improved comfort provided by the Priority Seats and free spaces in all cars, the creation oflight and open interior space with good visibility inside the train, as well as the adoption of universal
design (UD)-based seats with an increased height and reduced depth that enable passengers sit or standeasily. This helped create a design that is a leap forward while still reflecting the current image of the TX
service. (Award shared by Hitachi and the Metropolitan Intercity Railway Company)

TX-3000

Universal seat

Free space

60

Inside(vi) Super Parts Manufacturing Awards grand prize received for the development of an image processing
module achieving accurate, very sensitive blood testing (Smart Life segment)
Hitachi’s image processing module achieving accurate and very sensitive blood testing received the
grand prize at the 2020 Super Parts Manufacturing Award. The module consists primarily of a CMOS
camera, an LED lighting device and an image processing microcomputer and is installed in the specimen
isolation area of blood testing equipment, where only the specimens for testing are inserted from theblood collection tub and assessed. The module garnered praise because it improved the efficiency of
testing by using Hitachi’s original machine learning-applied AI technology to automate assessment,
which was conventionally done by a clinical laboratory technician visually inspecting sample. (Joint
development with Hitachi High-Tech Corporation.)

Image processing module achieving
Blood testing equipment

accurate, very sensitive blood testing(vii) Ichimura Prize in Industry against Global Warming received for the development of an 800V highoutput compact inverter expected to accelerate the ubiquitization of EVs (Smart Life segment)
An 800V high output compact inverter developed to achieve both a 50% reduction of charging timeand comfortable acceleration for electric vehicles, received the Ichimura Prize in Industry against Global
Warming, reflecting the importance of the pressing issue of the ubiquitization of electric vehicles toward
the realization of carbon neutrality. This was due to the creation of an inverter that features thesimultaneous achievement of high voltage resistance, compactness and high output power, building on
the development of a direct water-cooling type double-sided cooling power module that provides superb
isolation voltage and heat dissipation to realize high-level pressure resistance while maintaining goodcooling performance. This improved the system voltage of EVs from its conventional level of about
400V, to 800V. (Award received jointly with Hitachi Astemo, Ltd.)

800V high output compact inverter

Direct water-cooling type double-sided cooling power module61

(viii) Development of a system visualizing the use of renewable energy by piece of equipment and byservice base with an eye toward the creation of a decarbonized society. (Corporate Items)
Hitachi developed a system for visualizing renewable energy-based operations using digitaltechnologies by building, by piece of equipment and by service bases. It introduced the system at the
Hitachi Central Research Laboratory on February 1, 2021 and started to implement a system certifyingthat the Kyōsō-tō, one of the Laboratory’s facilities, is “Powered by Renewable Energy” — that 100% ofelectricity used was generated from renewable energy sources. Going forward, Hitachi will explore thepossibility of providing services that utilize this system and this concept for certification throughcollaboration with partner companies in diverse industries, and by doing so contribute to the realizationof a decarbonized society.

62III. Property, Plants and Equipment
1. Summary of Capital Investment, etc.
The Hitachi Group (the Company and consolidated subsidiaries) selectively invests in R&D andproduct fields expected to grow over the long term, and it also invests to streamline manufacturing process,etc. and to improve the reliability of its products and services.
Capital investment (based on the amount recorded as tangible fixed assets and the investment
property) in the fiscal year ended March 31, 2021 was 359.8 billion yen. A breakdown of capital investment
by segment is as follows. From the beginning of the fiscal year ending March 31, 2021, the Hitachi HighTech segment is abolished and reclassified in the Smart Life segment and the Hitachi Chemical segment isabolished. Figures of the preceding fiscal year, which is compared with the figures of the beginning of the
fiscal year ended March 31, 2021, is similarly changed.

Segment

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

Main purpose of investment
Rent offices,
Streamline development and production of
products
Facility of production for power grid products,
etc.,
Streamline development and production ofother products

IT

78.1

122

Energy35.8

533

Industry

19.7

153

Acquisition of offices

Mobility

20.5

123

Increase production of railway systems

Smart Life

115.9

108

Hitachi Construction
Machinery

34.7

74

Hitachi Metals

27.8

54

Others30.6

78

Increase production of automotive equipment,
Streamline development and production ofsemiconductor processing and inspection
equipment, and measurement and analyticalsystems
Streamline production of construction
machineryStreamline production of specialty steel
products and functional components andequipment, Increase production of magnetic
materials, power electronics materials andapplications, wires, cables and related
products, etc.,
Rent offices, R&D facilities

Corporate Items &(3.5)
Eliminations
Total
359.8
90
(Notes) 1. The figures in the above table include the amount of the right-of-use assets and the investment property
each of which is recorded as tangible fixed assets and other non-current assets, respectively.
2. These investments were mostly financed with the Hitachi Group’s own capital.

63

2. Major Property, Plants and Equipment
The Hitachi Group (the Company and consolidated subsidiaries) engages in diverse business
operations in Japan and overseas. It discloses information on major property, plants and equipment
represented in breakdown by segment and major facilities of the Company and consolidated subsidiaries.
The situation at the end of the fiscal year ended March 31, 2021 is as follows.
(1) Breakdown by Segment(As of March 31, 2021)
Book value (Millions of yen)Segment

Land
Tools,[Area in Buildings Machinery furniture Right-of-use
andandthousands
and
Assetsstructures vehicles
fixturesof m2]
22,981IT[861]

Energy28,965[10,814]

Other

Constructionin progress

Total

Number of
employees

74,006

22,791

43,46981,503

10,408

1,643

256,801

71,80575,975

102,831

14,681

44,180143

20,521

287,296

43,975

Industry

12,623[2,100]28,736

16,0304,683

18,351-

5,623

86,04623,419

Mobility

15,136[2,213]84,85027,343

20,943

13,986766

11,752

174,776

53,517

183,747

285,71363,881

42,552-

71,179718,90789,883

97,61758,066

9,697

59,410109,892

13,395405,257

24,065

Smart Life

71,835[13,230]

Hitachi Construction

57,180Machinery[9,850]

Hitachi Metals

62,654[12,836]

90,160148,242

13,226

11,382-

11,421

337,085

28,589Others25,656[1,524]61,701

2,913

13,364

44,669-287

148,590

12,412

297,030[53,428]

696,792

663,929

183,944

316,033

121,209

135,821 2,414,758

347,665

21,389244

3,515(12,706)

343

718,181664,173

187,459

303,327

121,552

Subtotal
Corporate Items &Eliminations
Total(18,916)[833]
278,114[54,261]260(5,871)

3,199

136,081 2,408,887

350,864(Note) The “Book value - Other” column includes the amount of operating lease assets for leasing business.

64(2) The Company(As of March 31, 2021)

Facility(Main location)

Segment

Book value (Millions of yen)
Details ofLand
Tools,
major facilities [Area in Buildings Machinery furniture Right-ofand
and
use
Other
and equipment thousands
andstructures vehicles
Assetsfixturesof m2]

Constructionin progress

Total

Number of
employees

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

Systemdevelopment
facilities,
manufacturing
facilities forservers,
mainframes, etc.

12,918[122]

46,786125

16,87528,6906,584

222

112,204

9,981

Head Office(Chiyoda-ku,
Tokyo)

Other facilities

4,923
[761]

8,463

218

1,843

23,841-

255

39,546

1,230

R&D facilities

6,063
[776]

19,918

810

3,276

2,280

-

62

32,411

2,410

1,013
[666]

14,754

4,911

637

4,317

-

619

26,254

2,753

9,601
[3,305]

4,117

283

751

1,593

-

304

16,651

1,198

63
[53]

12,251

19

1,523

20

-

4

13,883

1,829

5,830

600

1,636

1,960

3

495

11,134

5,446

[-]

1,524

-

7,338

16

-

162

9,041

510

165
[89]

752

796

1,046

566

-

1,430

4,758

2,117

1,143
[12]

524

208

325

1,923

-

254

4,378

990

Corporate

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

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

Corporate HospitalGroup
Corporate(Hitachi, Ibaraki)

Medicalfacilities

Services &Platforms
Business Unit
(Hitachi, Ibaraki)

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

IT

IT Strategy &Digital Integration
Division
Others(Chiyoda-ku,
Tokyo)
Industry &Distribution
Business Unit andWater &
Industry
Environment
Business Unit
(Chiyoda-ku,
Tokyo)
Smart Life
Business
Management
Smart Life
Division(Taito-ku, Tokyo)

Systemdevelopment
facilities

Manufacturing
facilities forindustrial
solution andwater solution
equipment
Manufacturing
facilities for
medicalequipment

607
[203]

65

(3) Domestic subsidiaries(As of March 31, 2021)
Book value (Millions of yen)
Details ofLand
Tools,
major facilities [Area in Buildings Machinery furniture Right-ofandanduse
and equipment thousands
andstructures vehicles
Assetsfixturesof m2]

Other

Constructionin progress

Total

Number of
employees

Hitachi Astemo,Ltd. (Hitachinaka, Smart Life
Ibaraki)

Manufacturing
facilities forautomotive
equipment

22,632[3,422]

41,52973,427

10,027-

9,666

16,459173,473

16,616

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

Manufacturing
facilities for
specialty steel
products

8,197[1,101]

13,15235,392

1,849

10

-

1,170

59,770

1,629

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

Manufacturing
facilities forsemiconductor
processing
equipment andtest andmeasurement
equipment, etc.

2,116
[241]

30,041

9,059

10,815

951

-

1,167

54,148

2,799

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

Manufacturing
facilities for
specialty steel
products

11,160
[121]

3,664

14,886

993

272

-

164

31,139

1,055

HitachiConstruction
Machinery

Manufacturing
facilities forconstruction
machinery

5,902[5,068]

6,476

5,713

1,721

6,050

-

5,068

30,930

2,943

HitachiConstruction
Machinery

Manufacturing
facilities forconstruction
machinery

12,334[495]

12,766

4,727

259

-

-

168

30,253484

Hitachi Metals,Ltd., Ibaraki
Works(Hitachi, Ibaraki)

Hitachi Metals

Manufacturing
facilities forwires and cables,
etc.

4,643
[1,181]

7,099

3,210

346

905

-

46

16,249

1,345

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

HitachiConstruction
Machinery

Manufacturing
facilities forconstruction
machinery

5,633

6,662

488

3

-

264

15,071

333

4,047
[61]

6,397

403

1,107

-

-

907

12,863

1,633[-]

12,053

28

378

-

-

-

12,459-

Facility(Main location)

HitachiConstruction
Machinery Co.,
Ltd., Tsuchiura
Works(Tsuchiura,
Ibaraki)
HitachiConstruction
Machinery Co.,
Ltd., HitachinakaRinko Works(Hitachinaka,Ibaraki)Segment

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

Other facilities

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

Rent office

Others

2,021
[214]

66

(4) Overseas subsidiaries(As of March 31, 2021)
Book value (Millions of yen)
Subsidiary(Main location)

Segment

Details ofLand
Tools,
major facilities [Area in Buildings Machinery furniture Right-ofandanduse
and equipment thousands
andstructures vehicles
Assetsfixturesof m2]

Other

Constructionin progress

Total

Number of
employees

Hitachi ABBPower Grids Ltd(Zurich,Switzerland)

EnergyManufacturing
facilities for
power gridproducts, etc.

14,883[2,289]62,65899,643

12,69140,501-

19,893

250,269

35,510

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

Other facilities[-]-

13,493

14,137

26,543416-

54,58911,336

Waupaca Foundry,Inc.
Hitachi Metals(Wisconsin,
U.S.A.)

Manufacturing
facilities forautomotive
components

733[5,085]

14,967

29,349

2,507

1,493

-

2,248

51,297

3,990

HitachiAutomotive
Systems Mexico,
S.A. de C.V.
(Querétaro,
Mexico)Smart Life

Manufacturing
facilities forautomotive
equipment

3,077
[426]

5,006

25,987

1,096

-

-

2,240

37,406

4,214

Chassis Brakes
International B.V.
Smart Life
(Eindhoven,
Netherlands)

Manufacturing
facilities forautomotive
equipment

[-]

7,056

14,618

1,508

1,608

-

4,660

29,4504,420(Note) The figures for Hitachi Vantara LLC and Chassis Brakes International B.V. are presented in consolidated basis of eachcompany.

67

3. Plans for Capital Investment, Disposals of Property, Plants and Equipment, etc.
The Hitachi Group (the Company and consolidated subsidiaries) engages in diverse operations inJapan and overseas, and has not decided on specific plans to newly install or expand each of facilities as ofthe end of the fiscal year. For this reason, it discloses amounts of capital investment by segment.
The amount of capital investment for the fiscal year ending March 31, 2022 will be 433.0 billion yen(new installation and expansions, based on the amount recorded as tangible fixed assets and the investment
property), and a breakdown by segment is as follows. From the beginning of the fiscal year ending March
31, 2022, the automotive systems business, which is composed of Hitachi Astemo, Ltd. and its groupcompanies, is spun off from the Smart Life segment as the Automotive Systems segment. Figures shown
below are presented on the basis of the new segmentation.
Segment

Amount(Billions of yen)

Main purpose of investment

IT

55.0

Streamline development and production of products

Energy40.0

Facility of production for power grid products, etc.,
Streamline development and production of otherproducts

Industry

19.0

Manufacturing facilities for industrial products,
Antiseismic reinforcement

Mobility

26.0

Facility of production for railway systems and building
systems

Smart Life

38.0

Facility of production for healthcare-related products,
ERP (Enterprise Resource Planning),
Streamline development and production of otherproducts

Automotive Systems

105.0

Increase production of automotive equipment

Hitachi Construction
Machinery

60.0

Streamline of production for construction machinery

Hitachi Metals

40.0

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

Others26.0

Facility of system development

Corporate Items &Eliminations

24.0

-

Total

433.0

-

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

68IV. Information on the Company
1. Information on the Company’s Stock, etc.
(1) Total number of shares, etc.
1) Total number of shares
Total number of shares authorized to
be issued (shares)

Class
Common stock

2,000,000,000

Total

2,000,000,0002) Issued shares

Class

Number of sharesissued as of the end of
fiscal year (shares)(March 31, 2021)

Number of sharesissued as of thefiling date (shares)(Note)(June 23, 2021)

Stock exchange on which
the Company is listed

Description

The number of shares per

Commonstock

967,885,277

968,234,877

Tokyo, Nagoya

Total

967,885,277

968,234,877-

one unit of shares is 100
shares.
-(Note) The "Number of shares issued as of the filing date" does not include shares issued upon exercise of stock acquisition rightsfrom June 1, 2021 to the filing date.

69

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

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

June 29, 2016

April 6, 2017

April 11, 2018

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

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

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

11,717[8,009]12,766[8,439]12,094[8,502]

Common stock
234,340 shares[160,180 shares](Note 2)

Common stock
255,320 shares[168,780 shares](Note 2)

Common stock
241,880 shares[170,040 shares](Note 2)

¥1 per share¥1 per share¥1 per share

From July 15, 2016
to July 14, 2046

From April 27, 2017
to April 26, 2047

From April 27, 2018
to April 26, 2048

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

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

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

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

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

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

－

－

－

(Note 7)(Note 7)(Note 7)(Notes) 1. The information is that as of the end of fiscal year (March 31, 2021). The number of stock acquisition rights and the numberof shares to be issued upon exercise of stock acquisition rights in brackets in the lower row is information as of the end of
the last month ended before the filing date (May 31, 2021). With regard to the other items, there is no change from theinformation as of the end of fiscal year.
2. If the Company implements a stock split (including gratis allotment of shares of common stock; the same shall apply toreferences to a stock split hereinafter) or a reverse stock split with respect to common stock of the Company after the dateof allotment of the stock acquisition rights, the Number of Shares to be Issued with respect to the stock acquisition rights
not exercised at that time will be adjusted in accordance with following formula:70

Number of Shares to be Issued
Number of Shares to be
Ratio of stock split or=×after adjustment
Issued before adjustment
reverse stock split
In addition, if there is an unavoidable ground requiring an adjustment of the Number of Shares to be Issued, the Number of
Shares to be Issued may be adjusted to the extent necessary by a resolution of the Board of Directors.
Any fractions of less than one share resulting from the adjustment will be rounded down.
3. Issue price for shares issued upon exercise of stock acquisition rights is the sum of the amount to be paid in upon exerciseof each of the stock acquisition rights (¥1 per share) and the fair value of each of the stock acquisition right as calculated at
the date of allotment.
4. The amount of common stock to be increased upon issuing shares through the exercise of stock acquisition rights shall be
one half of the maximum amount of common stock, etc. to be increased calculated in accordance with Article 17,
Paragraph 1 of the Ordinance on Company Accounting. Any fractions of less than one yen resulting from the calculation
shall be rounded up to the nearest yen.
5. A holder of stock acquisition rights may exercise all the stock acquisition rights together only within 10 days (in case thelast day is not a business day, the following business day) from the day immediately following the date on which he/sheceases to be an Executive Officer, a Director or a Corporate Officer of the Company.
6. The number of stock acquisition rights which a holder of stock acquisition rights may exercise shall be determined based on
the ratio of (i) the total shareholder return for shares of Hitachi for three years from the beginning of the fiscal year inwhich the date of allotment of the stock acquisition rights falls to (ii) the growth rate 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 acquisitionrights exercisable=

Number of
TSR/TOPIX×{(× 1.25) – 0.5}
Allotted Rights
Growth Rate Ratio

Any fraction less than one stock acquisition right will be rounded down.
c. In case the TSR/TOPIX Growth Rate Ratio is less than 80%
No Allotted Rights may be exercised.
7. In the event that the Company engages in a merger (only if the Company is to be dissolved as a result of the merger), an
absorption-type company split or incorporation-type company split (in each case, only if the Company is to be a split
company), or share exchange or share transfer (in each case, only if the Company is to be a wholly-owned subsidiary)(hereafter all of which are collectively referred to as “Corporate Reorganization”), then stock acquisition rights for theentities specified under Article 236, Paragraph 1, Item 8 (a) through (e) of the Companies Act (such entity hereinafterreferred to as the “Reorganized Company”) shall be issued to the Stock Acquisition Right Holders holding stockacquisition rights remaining in effect (the “Remaining Stock Acquisition Rights”) immediately prior to the effective date of
the Corporate Reorganization (hereinafter respectively referring to an effective date of absorption-type merger in case of anabsorption-type merger, a date of incorporation of a company incorporated through a consolidation-type merger in case of aconsolidation-type merger, an effective date of absorption-type company split in case of an absorption-type company split,a date of incorporation of a company incorporated through an incorporation-type company split in case of an incorporationtype company split, an effective date of a share exchange in case of a share exchange, or a date of incorporation of a wholly
owning parent company incorporated through share transfer). However, these stock acquisition rights shall be granted only
if provisions for issuing the stock acquisition rights of the Reorganized Company in accordance with the following
conditions are included in an absorption-type merger agreement, a consolidation-type merger agreement, an absorptiontype company split agreement, an incorporation-type company split plan, a share exchange agreement, or a share transfer
plan.
(1) The number of stock acquisition rights of the Reorganized Company to be issued
The number of stock acquisition rights equal to the number of Remaining Stock Acquisition Rights held byrespective Stock Acquisition Right Holders shall be issued.
(2) The class of shares of the Reorganized Company to be issued upon exercise of stock acquisition rights
Common shares of the Reorganized Company shall be issued.
(3) The number of shares of the Reorganized Company to be issued upon exercise of stock acquisition rights
The number shall be determined in accordance with terms and conditions of Remaining Stock Acquisition Rights,
taking into account the conditions and other factors concerning Corporate Reorganization.
(4) Amount of assets to be contributed upon the exercise of stock acquisition rights
The amount of assets contributed upon the exercise of stock acquisition rights to be issued shall be amount derived
by multiplying the amount to be paid in per share to be delivered upon exercise of stock acquisition rights of theReorganized Company (the “Post-reorganization Exercise Price”) prescribed below by the number of shares of theReorganized Company to be issued determined in accordance with paragraph (3) of this section. The PostReorganization exercise price shall be one yen.
(5) Exercise period of stock acquisition rights
The exercise period of stock acquisition rights shall be from the later of the first day of the exercise period of stockacquisition rights or the effective date of the Corporate Reorganization to the expiration date of the exercise period ofstock acquisition rights.
(6) Matters concerning common stock and capital reserve to be increased due to the issuance of shares upon the exerciseof stock acquisition rights
The matters shall be determined in accordance with terms and conditions of Remaining Stock Acquisition Rights.
(7) Restrictions on acquisition of stock acquisition rights through transfer
The acquisition of stock acquisition rights through transfer shall be subject to the approval of the ReorganizedCompany.
(8) Conditions for the exercise of stock acquisition rights
The matters shall be determined in accordance with terms and conditions of Remaining Stock Acquisition Rights.
(9) Matters concerning the acquisition of stock acquisition rights
The matters shall be determined in accordance with terms and conditions of Remaining Stock Acquisition Rights.

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

Date

From April 1, 2016
to March 31, 2017
From April 1, 2017
to March 31, 2018
October 1, 2018

(Note 1)

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

(Note 2)

From April 1, 2019
to March 31, 2020
May 27, 2020
From April 1, 2020
to March 31, 2021

Balance of thetotal number ofissued shares(shares)

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

458,790-

176,757-

4,833,463,387-

458,790-

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

966,692,677-

458,790-

176,757-

966,692,677-

458,790-

176,757

587,800

967,280,477

1,072

459,862

1,072

177,828-

967,280,477-

459,862-

177,828

604,800

967,885,277

928

460,790928

178,756-

967,885,277-

460,790-

178,756

Change in
the total
number ofissued shares(shares)(Note 3)(Notes) 1. The Company completed the share consolidation of every five shares into one share for its common stock.
2. This increase is due to the issuance of new shares as restricted stock compensation.
Issue price: 3,647 yen per share
Amount by which stated capital is to be increased: 1,823.5 yen per share
Allottees: 37 Executive officers of the Company and 34 Corporate officers of the Company
3. This increase is due to the issuance of new shares as restricted stock compensation.
Issue price: 3,067 yen per share
Amount by which stated capital is to be increased: 1,533.5 yen per share
Allottees: 31 Executive officers of the Company and 33 Corporate officers of the Company
4. The Company issued its new shares on June 15, 2021. The total number of issued shares, common stock and capitalreserve increased 349,600 shares, 941 million yens and 941 million yens respectively.

72

(5) Shareholders composition(As of March 31, 2021)
Status of shares (one unit of stock: 100 shares)
Class ofGovernment
Financialshareholders
andinstitution
municipality
Number ofshareholders
Shareownership

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

Total

Number ofsharesless than one
unit (shares)

3

205

62

2,308

1,087

125

222,379

226,169-95

3,200,291

434,021

144,379

4,298,023

763

1,577,468

9,655,040

2,381,277

0.00

33.15

4.50

1.50

44.52

0.01

16.34

100.00-(units)Ownership
percentageof shares(%)(Notes) 1. Of 1,055,799 shares of treasury stock, 10,557 units are included in the “Individuals and others”
column, while 99 shares are included in the “Number of shares less than one unit” column.
2. Of the shares registered in the name of Japan Securities Depository Center, Incorporated (account for
managing stocks whose shareholders have not transferred titles), 53 units are included in the “Other
institution” column and 65 shares are included in the “Number of shares less than one unit” column.

73

(6) Major shareholders(As of March 31, 2021)

Name

Address

The Master Trust Bank of Japan, Ltd.

11-3, Hamamatsucho 2-chome,(Trust Account)

Minato-ku, Tokyo

Custody Bank of Japan, Ltd.
(Trust Account)

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

Hitachi Employees’ Shareholding

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

Association

Tokyo

State Street Bank and Trust

P.O. Box 351, Boston, Massachusetts 02101

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

Nippon Life Insurance Company

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

NATS CUMCO(Standing proxy: Mizuho Bank, Ltd.)

Share
Ownership(shares)

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

91,166,600

9.43

59,465,400

6.15

20,606,840

2.13

20,578,060

2.13

20,000,099

2.07

18,702,358

1.93

16,715,255

1.73

16,698,514

1.73

16,563,302

1.71

C/O City Bank, New York 111
Wall Street, New York, NY, U.S.A.
(15-1, Konan 2-chome, Minato-ku, Tokyo)

SSBTC CLIENT OMNIBUS
ACCOUNT

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

Limited)State Street Bank and Trust
Company 505001

P.O. Box 351, Boston, Massachusetts 02101
U.S.A.

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

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

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

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

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

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

15,549,487

1.61

Total

-

296,045,915

30.62(Notes) 1. NATS CUMCO is the nominee name of the depositary bank, Citibank, N.A., for the aggregate of theCompany’s American Depositary Receipts (ADRs) holders.
2. Some reports on substantial shareholdings regarding the Company under the Financial Instruments andExchange Act are available for public inspection. However, the information in the reports is notdescribed in the above table since the Company does not confirm the actual status of shareholdings as ofMarch 31, 2021. The major contents of the reports are as follows. On October 1, 2018, the Company
completed the share consolidation of every five shares into one share for its common stock. The reports
whose date on which the duty to file report is prior to the effective date of the share consolidation show
the number of shares before the share consolidation.

74Holders

BlackRock Japan Co. Ltd and seven other persons

Date on which the duty to file report
Number of shares
Ownership percentage to the total
number of issued shares

April 14, 2017
304,755,969 shares

Holders
Date on which the duty to file report
Number of shares
Ownership percentage to the total
number of issued shares

6.31%
Sumitomo Mitsui Trust Asset Management Co., Ltd. andone other person
February 15, 2019
48,728,827 shares
5.04%

Holders

Asset Management One Co., Ltd.

Date on which the duty to file report
Number of shares
Ownership percentage to the total
number of issued shares

December 15, 2020
37,992,400 shares
3.93%

75

(7) Information on voting rights
1) Issued shares(As of March 31, 2021)
Classification

Number of voting
rightsNumber of shares (shares)

Description

Shares without voting right

－

－

－

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

－

－

－

Shares with restricted voting right (others)

－

－

－

－

－

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

Common stock

1,088,900

Shares with full voting right (others)

Common stock

964,415,100

Shares less than one unit

Common stock

2,381,277－－

967,885,277－－

Number of issued shares
Total number of voting rights

9,644,151

9,644,151－－－(Note) The “Shares with full voting right (others)” column includes 5,300 shares registered in the name of Japan
Securities Depository Center, Incorporated (account for managing stocks whose shareholders have nottransferred titles) and 53 voting rights for those shares.
2) Treasury stock, etc.
(As of March 31, 2021)

Name ofshareholder

Hitachi, Ltd.

Address

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

Aoyama Special Steel

9-11, Shinkawa 2-chome, Chuo-

Co., Ltd.

ku, Tokyo

SAITA KOUGYOU
CO., LTD.

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

Nitto Jidosha

3268, Nagaoka, Ibarakimachi,

Kiki K.K.

Higashiibaraki-gun, Ibaraki

Mizuho Co., Inc.
Total

Number ofshares held
under own name(shares)

4-1, Koishikawa 5-chome,
Bunkyo-ku, Tokyo
－76

Number ofshares held
under thenames ofothers(shares)

Total shares
held (shares)

Ownership
percentage tothe total
number ofissued shares(%)

1,055,700－

1,055,700

0.11

2,100

－

2,100

0.00

17,600－17,6000.00

10,500－10,500

0.00

3,000

－

3,000

0.00

1,088,900－

1,088,900

0.11

2. Information on Acquisition, etc. of Treasury StockClass of shares
Acquisition of common stock under Article 155, Item 7 and 13 of the Companies Act(1) Acquisition of treasury stock resolved at the general meeting of shareholders
Not applicable.
(2) Acquisition of treasury stock resolved at the Board of Directors meetings
Not applicable.
(3) Details of acquisition of treasury stock not based on the resolutions of the general meeting ofshareholders or the Board of Directors meetings
Acquisition of common stock under Article 155, Item 7 (Note 1)
Classification

Number of shares (shares)

Treasury stock acquired during the
fiscal year ended March 31, 2021

39,523

Total amount (yen)159,134,164

Treasury stock acquired during the
5,432
28,137,879
current period (Note 2)(Notes) 1. Acquisition of stock less than one unit shares due to purchase requests from shareholders under Article
192, Paragraph 1 of the Companies Act.
2. The number of treasury stock acquired due to requests to purchase stock less than one unit shares from
June 1, 2021 to the filing date is not included.
Acquisition of common stock under Article 155, Item 13 (Note)
Classification

Number of shares (shares)

Treasury stock acquired during the
fiscal year ended March 31, 2021

97,000Total amount (yen)-Treasury stock acquired during the137,600
current period(Note) Acquisition without consideration of a part of common stock allotted to the Company’s Executive Officers
and Corporate Officers as restricted stock compensation (Article 27, Paragraph 1 of the Order for
Enforcement of the Companies Act).

77

(4) Status of the disposition and holding of acquired treasury stock
Fiscal year ended March 31, 2021
Classification
Acquired treasury stock which wasoffered to subscribers
Acquired treasury stock which wascanceled
Acquired treasury stock which wastransferred due to merger, shareexchange, share delivery or company
split
Others (Acquired treasury stock
which was transferred upon exerciseof stock acquisition rights, andwhich was sold due to requests fromshareholders holding shares less than
one unit shares to sell additional
shares)Total number of treasury stock held

Current period (Note)

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

-

-

-

-

-

-

-

-

-

-

-

131,465

475,341,841

232,525

733,940,797

1,055,799-

966,306-(Note) The followings are not included: the number of treasury stock which was transferred upon exercise of stockacquisition rights from June 1, 2021 to the filing date; the number of treasury stock which was sold due torequests from shareholders holding less than one unit shares to sell additional shares from June 1, 2021 to
the filing date; and the number of treasury stock acquired due to purchase requests from shareholders
holding shares less than one unit shares from June 1, 2021 to the filing date.

3. Dividend Policy
The Company views the return of profits to shareholders through enhancing corporate value frommid- to long-term 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 securecompetitiveness and aim for growth of the business as global enterprise.
Based on the above policy, annual dividends of 105.0 yen per share were paid for the fiscal year
ended March 31, 2021. It was resolved to pay interim dividends of 50.0 yen per share at the Board of
Directors meeting held on October 28, 2020, resulting in the total amount of interim dividends of 48,342
million yen. In addition, it was resolved to pay year-end dividends of 55.0 yen per share at the Board of
Directors meeting held on May 12, 2021, resulting in the total amount of year-end dividends of 53,175
million yen.

78

4. Corporate Governance, etc.
(1) Corporate governance1) Basic policy about corporate governance
The Company considers growth of profits for shareholders and investors from long-term
perspective as one of its important managerial objectives. As there are wide range of stakeholders for
the Company and Hitachi group from shareholders and investors to customers and clients, theCompany realizes that building good relationships with such stakeholders forms an important part ofits corporate value.
The Company is a company with Nominating Committee, etc. under the Companies Act, aiming
to establish a framework for quick business operation and to realize highly transparent management byseparating responsibilities for management oversight and those for execution of business operations.
The Company attempts to have appropriate composition of the Board of Directors aiming to ensure theeffectiveness of management function in addition to reflect global and various perspective to the
management. The Company set the Corporate Governance Guidelines as basic framework of its
corporate governance including functions of the Board of Directors.
In addition, the Company set Hitachi Group Codes of Conduct as behavior disciplines to beshared among Hitachi group to generate common values for the Hitachi group and promote
understanding of social responsibilities to be fulfilled by the Company.
2) Outline of corporate organizations
Board of Directors
The Board of Directors approves basic management policy for the Hitachi Group and supervises
the execution of the duties of executive officers and directors in order to sustainably enhance corporate
value and the shareholders’ common interests. The basic management policy includes medium-term
management plan and annual budget compilation. The Board of Directors focuses on strategic issues
related to the basic management policy as well as other items to be resolved that are provided in laws,
regulations, the Articles of Incorporation and Board of Directors Regulations. As of June 23, 2021, theBoard of Directors was made up of 13 Directors, and 10 of whom are Independent Directors* and two
concurrently serve as Executive Officers.
* The "Independent Directors" in this report are the directors who fulfill the qualification
requirements to be outside directors as provided by the Companies Act of Japan and also meet theindependence criteria defined by the Company and those as provided by Japanese stock exchanges
where the Company is listed, unless otherwise stated.
Within the Board of Directors, there are three statutory committees of the Nominating
Committee, the Audit Committee and the Compensation Committee with Independent Directors
accounting for the majority of members of each committee. The Board of Directors meetings were
held 9 days during the fiscal year ended March 31, 2021, and the attendance rate of Directors at thosemeetings was 100%. The Nominating Committee meetings were held 8 days, the Audit Committee
meetings were held 17 days, and the Compensation Committee meetings were held 4 days during the
fiscal year ended March 31, 2021.
The Nominating Committee has the authority to determine particular proposals submitted to thegeneral meeting of shareholders for the election and dismissal of Directors, and consists of four
Directors, three of whom are Independent Directors.
The Audit Committee has the authority to audit the execution of duties of Directors andExecutive Officers and to determine on proposals submitted to the general meeting of shareholders forthe election and dismissal of accounting auditors, and consists of six Directors, including five
Independent Directors and one standing Audit Committee member.
The Compensation Committee has the authority to determine remuneration policies for
Directors and Executive Officers and remuneration for individuals based on them. The Compensation
Committee consists of five Directors, four of whom are Independent Directors.
The members of the board of directors and each committee are described in "(2) Directors andSenior Management - 1) Lists of directors and senior management - (a) Directors."
79

With regard to the number of Directors and their election, the Company stipulates in its Articles
of Incorporation that the Company shall have no more than 20 Directors. With regard to the adoptionof resolution for the election of Directors, the Company stipulates in its Articles of Incorporation thatthe presence of shareholders representing one-third or more of the voting, that resolutions for theelection of Directors shall be approved by attending shareholders possessing one-third or more of all
voting rights of the shareholders who are entitled to exercise their votes, and that the resolution shallnot be made by cumulative voting.
The Company maintains a limited liability agreement stipulated in Article 427, Paragraph 1 of
the Companies Act with each director (excluding Executive Director, etc.) The general intent of theagreement is to limit the liability of Directors to the aggregate amount stipulated in each item under
Article 425, Paragraph 1 of the Companies Act.
Executive Officers
Executive Officers decide on matters delegated to them by the Board of Directors and execute
the Company’s business affairs within the scope of assignments determined by the Board of Directors.
As of June 23, 2021, the Company has 32 Executive Officers (See "(2) Directors and Senior
Management - 1) Lists of directors and senior management - (b) Executive Officers.")
The Company stipulates in its Articles of Incorporation that the Company shall have no morethan 40 Executive Officers.
Senior Executive Committee
The Senior Executive Committee is a council to ensure that President deliberately decides onimportant managerial matters, which may affect the Company or the Hitachi Group business, throughdiscussing from diverse viewpoints. It consists of 11 members as of June 23, 2021; Executive
Chairman & CEO (Toshiaki Higashihara), President & COO (Keiji Kojima), five Executive Vice
President and Executive Officers (Masakazu Aoki, Ryuichi Kitamura, Alistair Dormer, Toshiaki
Tokunaga and Toshikazu Nishino), three Senior Vice President and Executive Officers (Yoshihiko
Kawamura, Hidenobu Nakahata and Mamoru Morita) and one Vice President and Executive Officer(Kohei Kodama).
Summary of the directors' and officers' liability insurance agreement
The Company maintains a directors' and officers' liability insurance agreement stipulated in
Article 430-3, Paragraph 1 of the Companies Act. The coverage of insured persons and outline of theinsurance agreement are as follows.
i) Coverage of insured persons
The Company's Directors, Executive Officers and employees who work as officers at thecompany to which they are assigned and some domestic subsidiaries' directors, executive officers,
corporate auditors and employees who work as officers at the company to which they are assigned.
ii) Outline of the insurance agreement
The agreement compensates damages, litigation costs, etc. incurred by an insured person as aresult of a claim for damages due to an act or omission of the insured person as an executive of acompany. However, the Company has taken measures to ensure that the appropriateness of theexecution of duties by officers is not impaired by excluding compensation for intentional negligence of
duties, illegal acquisition of private benefits, and damages resulting from criminal acts. The entire
insurance costs are beard by the Company or its subsidiaries holding the insurance agreement.
3) Matters determined by resolution of the Board of Directors without resolution at the general meetingof shareholders pursuant to the provisions of the Articles of Incorporation
The Company stipulates in the Articles of Incorporation that it may, unless otherwise provided
in the applicable laws, determine on matters specified in each item of Article 459, Paragraph 1 of theCompanies Act by the resolution of the Board of Directors, without resolution at the general meetingof shareholders.

80For the repurchase of the company’s own shares (Article 459, Paragraph 1, Item 1 of theCompanies Act), the Board of Directors shall determine on the matter in order to enable timely
implementation of capital strategies.
Regarding reduction of capital reserve or earned surplus reserve (Article 459, Paragraph 1, Item
2 of the Companies Act), appropriation of surplus (excluding dividends of surplus and disposal of theproperty of the Company) (Article 459, Paragraph 1, Item 3 of the Companies Act) and dividends ofsurplus (Article 459, Paragraph 1, Item 4 of the Companies Act), since the Company was a company
with committees as of the date of enforcement of the Companies Act, it was deemed that its Articles ofIncorporation had stipulations that the Board of Directors was able to decide the above matters without
resolution at the general meeting of shareholders and that it should not stipulate that such matters shallbe resolved at the resolution of the general meeting of shareholders, in accordance with Article 57 of
the Act on Arrangement of Relevant Acts Incidental to Enforcement of the Companies Act (July 26,
2005, Act No. 87). Even after the enforcement of the Companies Act, the Company has made it a rule
to timely decide on these important business judgments by the Board of Directors to enhance theshareholders’ common interests.
The Company has stipulated in its Articles of Incorporation that it may, by resolution of theBoard of Directors, exempt any Director (including former Director) and Executive Officer (including
former Executive Officer) from liabilities as provided Article 423, Paragraph 1 of the Companies Act
to the extent as provided in laws or regulations.
4) Requirement for special resolution of the general meeting of shareholders
To enable to securely meet the quorum of the general meeting of shareholders under Article 309,
Paragraph 2 of the Companies Act, the Company stipulates in its Articles of Incorporation that any
resolution as provided in Article 309, Paragraph 2 of the Companies Act shall be adopted at a general
meeting of shareholders where shareholders representing one-third or more of the voting rights of all
the shareholders shall be present, by a majority of two-thirds or more of the voting rights of theshareholders who are present in such meeting and are entitled to vote.
5) Internal control system and risk management system
Outlines of the internal control system and the risk management system of the Company are as
follows. In addition, these systems were resolved by the Board of Directors as the basic policy forinternal control system under the Companies Act.
i) The following measures shall be taken to ensure the effectiveness of audits by the Audit Committee.
(a) When necessary, the Board of Directors may appoint one or more director(s), who does notserve concurrently as an executive officer, as a director responsible for assisting with the dutiesof the Audit Committee. In addition, the Board of Directors’ Office (the “Office”) shall beestablished specifically to assist with the duties of each Committee and the Board of Directors.
(b) In order to ensure the independence of the Office personnel from Executive Officers and theeffect of instructions by the Audit Committee, the Office is staffed with personnel who work
only for the Office and are not subject to orders and instructions of Executive Officers, and the
Audit Committee shall be informed in advance of planned transfers of the Office personnel.
(c) Executive Officers and employees shall report without delay to the members of the Audit
Committee significant matters affecting the Company and its subsidiaries, results of internal
audits, and the implementation status of reporting under the internal reporting system. It shallbe provided for in the company regulation that reporters using the internal reporting system,
which is common for the Group, shall not receive disadvantageous treatment for reason of
having made a report, and the secretariat of the system shall thoroughly administer thisprovision.
(d) The Office shall be in charge of payment for the expenses incurred in connection with theexecution of the duties of the Audit Committee members and other administrative duties, andshall promptly process the payment for the expense or debt except in the case where theexpense or debt of the claim is clearly found to be unnecessary to the execution of the duties of
them.
81

(e) Standing Committee member(s) shall be appointed to the Audit Committee, and activity plansof the Audit Committee shall be prepared in coordination with the audit plans of Internal
Auditing Office.
ii) The following measures shall be effective to ensure the adequacy of business operations within the
Company and the Hitachi Group.
(a) Such fundamental policies as the emphasis of the social responsibilities of businessenterprises shall be shared with the subsidiaries of the Company.
(b) Each subsidiary of the Company shall develop systems to ensure the appropriateness ofoperations corresponding to its size and other characteristics, basic framework of which issimilar to ones employed in the Company. In order to ensure development of such systems ineach subsidiary, directors and auditors shall be sent from the Company to its subsidiary, andregular audits shall be conducted for the subsidiary.
(c) A reporting system to Directors shall be established to ensure that the execution of duties by
Executive Officers of the Company is in compliance with laws, regulations, and the Articles ofIncorporation.
(d) Information pertaining to the execution of duties by Executive Officers of the Company shall be
prepared and maintained in accordance with internal rules.
(e) A structure shall be established in which each relevant department shall establish regulations
and guidelines, conduct training, prepare and distribute manuals, and carry out other suchmeasures 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.
(f) Efficient performance of duties of the Executive Officers of the Company, and Directors andExecutive Officers of the subsidiaries shall be ensured through the following business
management systems.
- The Senior Executive Committee shall be established in order to deliberate on and facilitate
the formulation of decisions based on due consideration of diverse factors regarding
important issues that affect the Company and/or the Hitachi Group.
- Based on the management policy, medium-term business plans and annual budgets, on which
performance management is based, shall be prepared in order to operate business in aplanned 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, andthe prior approval of the Audit Committee shall be required with respect to the fees to be
paid to the accounting auditors.
- Documented business processes for matters to be reflected in financial reports shall be
executed at the Company and its subsidiaries, and internal and external auditors shall
examine said processes in order to ensure the reliability of financial reports.
- A structure for the adequate and efficient conduct of business operations common to the
Hitachi Group companies shall be established.
(g) Continuous maintenance of a legal and regulatory compliance structure shall be ensured throughthe following business management systems.
- Internal audits shall be conducted, and various committees shall be established for legal andregulatory compliance activities. Furthermore, an internal reporting system common for theGroup shall be established and education on legal and regulatory compliance shall be
provided.
- Various policies and rules on compliance with laws shall be established, aiming to ensurethat the employees are aware of the internal control systems overall and that the systems are
effective.

82

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

83

(2) Directors and Senior Management
1) Lists of directors and senior management
Men: 40 persons, Women: 3 persons(Women’s percentage to total number of Directors and Senior Management: 7%)
The Company is a company with Nominating Committee, etc. pursuant to the Companies Act. The
information on its Directors and Executive Officers is as follows.
(a) Directors

Katsumi Ihara

Louise Pentland

Ravi Venkatesan

Director
Member of Audit
Committee andCompensation
Committee

Director

Joe Harlan

Harufumi Mochizuki Takatoshi Yamamoto Hiroaki Yoshihara

Keiji Kojima
Position andResponsibility

Cynthia Carroll

Name

Katsumi Ihara

Ravi Venkatesan

Hideaki Seki

George Buckley

Helmuth Ludwig

Toshiaki Higashihara

Date ofbirth

Business experience, including experiencein Hitachi, and functions

Term ofofficeShareownership(shares)

Sept. 24,1950

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

(Note 1)900

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

(Note 1)200

Jan. 12,
1963

84

Position andResponsibility

NameDate ofbirth

Director
Member of
Nominating
Committee

Cynthia Carroll

Nov. 13,1956

Director
Compensation
Committee

Joe Harlan

May 5,
1959

Director

George Buckley

Feb. 23,
1947

Business experience, including experiencein Hitachi, and functions
10/1991 General Manager, Foil Products, Alcan
Inc.
1/1996 Managing Director, Aughinish Alumina
Ltd., Alcan Inc.
10/1998 President, Bauxite, Alumina and Specialty
Chemicals, Alcan Inc.
1/2002 President & CEO, Primary Metal Group,
Alcan Inc.
3/2007 CEO, Anglo American plc. (Retired in
April 2013)
6/2013 Director, Hitachi, Ltd.
9/1999 Vice President and Chief Financial Officer,
Lighting Business, General ElectricCompany
9/2001 Vice President, Corporate Financial
Planning and Analysis, 3M Company
11/2002 President and Chief Executive Officer,
Sumitomo 3M Ltd.
10/2004 Executive Vice President, Electro andCommunications Business, 3M Company
10/2009 Executive Vice President, Consumer andOffice Business, 3M Company
9/2011 Executive Vice President, Performance
Materials, The Dow Chemical Company
9/2012 Executive Vice President, Chemicals,
Energy and Performance Materials, The
Dow Chemical Company
10/2014 Chief Commercial Officer and Vice
Chairman, Market Business, The Dow
Chemical Company
10/2015 Vice Chairman and Chief Commercial
Officer, The Dow Chemical Company(Retired in August 2017)
6/2018 Director, Hitachi, Ltd.
2/1993 Chief Technology Officer, Motors, Drives
and Appliances, Emerson ElectricCompany
9/1994 President, US Electrical Motors, Emerson
Electric Company
7/1997 President, Mercury Marine Division andCorporate Vice President, Brunswick
Corporation
4/2000 President and Chief Operating Officer,
Brunswick Corporation
6/2000 Chairman and Chief Executive Officer,
Brunswick Corporation
12/2005 Chairman of the Board, President andChief Executive Officer, 3M Company
2/2012 Executive Chairman of the Board, 3M
Company (Retired in May 2012)
6/2012 Chairman, Arle Capital Partners Limited(Retired in December 2015)
Director, Hitachi, Ltd.

85

Term ofofficeShareownership(shares)(Note 1)

1,400

(Note 1)900

(Note 1)

6,700

Position andResponsibility

NameDate ofbirth

Director

Louise Pentland

Apr. 11,1972

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

Jul. 26,
1949

Director
Member of Audit
Committee andCompensation
Committee

Takatoshi
Yamamoto

Oct. 20,1952

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

Feb. 9,1957

Business experience, including experiencein Hitachi, and functions
8/1997 Admitted as a Solicitor (UK)
7/2001 Senior Legal Counsel, Nokia Networks,
Nokia Corporation
9/2007 Vice President, Acting Chief Legal Officer
and Head of IP Legal, Nokia Corporation
7/2008 Senior Vice President and Chief Legal
Officer, Nokia Corporation
6/2009 Admitted to New York State Bar
Association
2/2011 Executive Vice President and Chief Legal
Officer, Nokia Corporation (Retired in
May 2014)
4/2015 General Counsel, PayPal, eBay Inc.
6/2015 Director, Hitachi, Ltd.
7/2015 Senior Vice President and Chief Legal
Officer, PayPal Holdings, Inc.
9/2016 Executive Vice President and Chief
Business Affairs & Legal Officer, PayPal
Holdings, Inc. (Currently in office)7/2002 Director-General for Commerce andDistribution Policy, Minister’s Secretariat,
Ministry of Economy, Trade and Industryof Japan (“METI”)
7/2003 Director-General, Small and Medium
Enterprise Agency, METI
7/2006 Director-General, Agency for Natural
Resources and Energy, METI
7/2008 Vice-Minister of Economy, Trade andIndustry of Japan
8/2010 Special Advisor to the Cabinet of Japan(Retired in September 2011)10/2010 Senior Adviser to the Board, Nippon Life
Insurance Company (Retired in April
2013)
6/2012 Director, Hitachi, Ltd.
6/2013 President and Representative Director,
Tokyo Small and Medium Business
Investment & Consultation Co., Ltd.
(Currently in office)12/1995 Managing Director, Morgan Stanley Japan
Limited6/1999 Managing Director and Vice Chairman,
Tokyo Branch, Morgan Stanley Japan
Limited7/2005 Managing Director and Vice Chairman,
UBS Securities Japan Co., Ltd.
6/2009 Managing Director, CASIO COMPUTER
CO., LTD.
6/2011 Advisor, CASIO COMPUTER CO., LTD.
(Retired in June 2012)
6/2016 Director, Hitachi, Ltd.
11/1978 Joined Peat Marwick Mitchell & Co.
7/1996 National Managing Partner, the Pacific
Rim Practice, KPMG LLP
10/1997 The Board Member, KPMG LLP
10/2003 Vice Chairman and Global Managing
Partner, KPMG International (Retired in
April 2007)
6/2014 Director, Hitachi, Ltd.

86

Term ofofficeShareownership(shares)(Note 1)1,000

(Note 1)4,800

(Note 1)

11,300(Note 1)2,600

Position andResponsibility

NameDate ofbirth

Director
Member of
Audit Committee

Helmuth Ludwig

Sept. 19,1962

Director
Member of
Nominating
Committee

Keiji Kojima

Oct. 9,1956

Director
Member of Audit
Committee(Standing)Hideaki Seki

Mar. 10,1957

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

87

Term ofofficeShareownership(shares)(Note 1)1,900

(Note 1)

67,300(Note 1)

11,500Position andResponsibility

Director
Member of
Nominating
Committee

NameToshiakiHigashihara

Date ofbirthFeb. 16,
1955

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

Term ofofficeShareownership(shares)(Note 1)

175,300

285,800(Notes) 1. The term of office of the Directors starts upon the election at the Annual General Meeting of
Shareholders on June 23, 2021 and expires at the close of the Annual General Meeting of Shareholders
for the fiscal year ending March 31, 2022.
2. 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 directors who fulfill the qualification requirements to be outside directors as provided forin Article 2, Item 15 of the Companies Act.

88

(b) Executive Officers
Position and Responsibility

Name

Representative Executive
Toshiaki
Officer, Executive
Higashihara
Chairman & CEO
GeneralRepresentative Executive
Officer, President & COO
Overall management, smart Keiji Kojima
life & ecofriendly systems
business, healthcare strategy

Date of
birth

Share
ownership(shares)

See “(a) Directors”(Note 2)

175,300

Oct. 9,1956

See “(a) Directors”(Note 2)

67,300(Note 2)63,600(Note 2)64,760(Note 2)8,900

Jun. 23,
1954

Representative Executive
Officer, Executive Vice
President and Executive
Officer
Assistant to the President(marketing & sales andregional strategies),
marketing & sales andregional strategies

Feb. 4,1952

Representative Executive
Officer, Executive Vice
President and Executive
Officer
Alistair Dormer
Assistant to the President(building systems business,railway systems businessand environmental strategy)
and environmental strategy

Term ofofficeFeb. 16,1955

Representative Executive
Officer, Executive Vice
President and Executive
Officer
Masakazu Aoki
Assistant to the President(business for industry &distribution sectors, water &environment business, andindustrial products business)

Ryuichi Kitayama

Business experience, including
experience in Hitachi, and functions

Aug. 29,1963

4/1977 Joined Hitachi, Ltd.
4/2012 President and Director, Hitachi
Industrial Equipment Systems
Co., Ltd.
10/2014 Vice President and Executive
Officer, Hitachi, Ltd.
4/2016 Senior Vice President andExecutive Officer, Hitachi, Ltd.
4/2017 Executive Vice President andExecutive Officer, Hitachi, Ltd.
Chairman of the Board, Hitachi
Industrial Equipment Systems
Co., Ltd.
4/1976 Joined Hitachi, Ltd.
10/2009 Chief Marketing Officer,
Information &Telecommunication Group,
Information &Telecommunication Systems
Company
4/2010 Vice President and Executive
Officer
4/2014 Senior Vice President andExecutive Officer
4/2015 Executive Vice President andExecutive Officer (Retired in
March 2018)
6/2017 Director, Hitachi HighTechnologies Corporation
6/2018 Chairman of the Board, Hitachi
High-Technologies Corporation
4/2020 Executive Vice President andExecutive Officer, Hitachi, Ltd.
2/2001 Director of Business
Development, Alstom Transport
U.K. Ltd.
6/2003 Joined Hitachi Europe Ltd.
10/2009 Managing Director, Hitachi RailEurope Ltd.
9/2012 Executive Chairman and CEO,
Hitachi Rail Europe Ltd.
4/2014 Global CEO of Rail Systems
business, Hitachi, Ltd.
4/2015 Vice President and Executive
Officer, Hitachi, Ltd.
4/2016 Senior Vice President andExecutive Officer, Hitachi, Ltd.
4/2019 Executive Vice President andExecutive Officer

89

Position and Responsibility

NameDate ofbirth

Representative Executive
Officer, Executive Vice
President and Executive
Officer
Assistant to the President
Toshiaki(systems & services
Tokunagabusiness and defense
systems business), systems& services business, defense
systems business and social
innovation businesspromotion

Mar. 15,1967

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

Toshikazu
NishinoJan. 9,1955

Senior Vice President andExecutive Officer
Services & platforms
business

Jun AbeJun. 14,1961

Representative Executive
Officer, Senior Vice
President and Executive
Officer
Finance, corporate pension
system and investment
strategies

Yoshihiko
Kawamura

Aug. 20,1956

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

Katsuya Nagano

Aug. 30,
1958

Business experience, including
experience in Hitachi, and functions
4/1990 Joined Hitachi, Ltd.
4/2017 President, Hitachi Appliances,Inc.
4/2018 General Manager, Smart Life &Ecofriendly Systems Division,
Hitachi, Ltd.
4/2019 Vice President and Executive
Officer, Hitachi, Ltd.
4/2020 Senior Vice President andExecutive Officer, Hitachi, Ltd.
4/2021 Executive Vice President andExecutive Officer, Hitachi, Ltd.
4/1980 Joined Hitachi, Ltd.
4/2010 Senior Manager, Strategy &Project Office, Supervisory
Office for Management Reforms
4/2011 Vice President and Executive
Officer
4/2013 Senior Vice President andExecutive Officer
4/2015 Executive Vice President andExecutive Officer
4/1984 Joined Hitachi, Ltd.
4/2016 Senior General Manager, Control
System Platform Division,
Services & Platforms Business
Unit
4/2018 Vice President and Executive
Officer
4/2021 Senior Vice President andExecutive Officer
4/1979 Joined Mitsubishi Corporation
4/2010 Senior Vice President, Division
COO, IT Service Division,
Mitsubishi Corporation
4/2015 Joined Hitachi, Ltd.
Executive Strategist, Information& Telecommunication Systems
Group
4/2016 Deputy General Manager of IoTBusiness Promotion Division andGeneral Manager of Incubation
Division, Hitachi, Ltd.
4/2017 Vice President and Executive
Officer, Hitachi, Ltd.
4/2018 Senior Vice President andExecutive Officer, Hitachi, Ltd.
4/1983 Joined Hitachi, Ltd.
4/2016 General Manager of Social
Infrastructure Information
Systems Division, Information &Communication Technology
Business Division
4/2017 Vice President and Executive
Officer
4/2021 Senior Vice President andExecutive Officer

90

Term ofofficeShareownership(shares)(Note 2)

42,400(Note 2)

63,400(Note 2)33,000(Note 2)43,800(Note 2)30,200Position and Responsibility

Name

Representative Executive
Officer, Senior Vice
President and Executive
Hidenobu
Officer
Corporate communications, Nakahata
corporate auditing,corporate export regulationand human capital

Date ofbirth

Jan. 24,
1961

Senior Vice President andExecutive Officer
Power grids business

Claudio Facchin

Jun. 26,
1965

Senior Vice President andExecutive Officer
Management strategies andstrategies for next
generation business

Mamoru Morita

Apr. 12,1959

Vice President andExecutive Officer
Government & external
relations and sustainability
strategy

Hitoshi Ito

Feb. 19,
1959

Vice President andExecutive Officer
Business for financial
institutions

Tatsuro Ueda

Oct. 9,1964

Vice President andExecutive Officer
Energy business

Kenji Urase

Jun. 18,
1961

Vice President andExecutive Officer
Nuclear energy business

Tadashi Kume

Jan. 4,
1963

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

Kohei Kodama

May 24,
1961

Business experience, including
experience in Hitachi, and functions
4/1983 Joined Hitachi, Ltd.
10/2013 Deputy General Manager,
Human Capital Group
4/2014 Vice President and Executive
Officer
4/2018 Senior Vice President andExecutive Officer
1/2016 President, Power Grids business,
ABB Ltd.
7/2020 CEO, Hitachi ABB Power Grids
Ltd (Currently in office)4/2021 Senior Vice President andExecutive Officer, Hitachi, Ltd.
4/1983 Joined Hitachi, Ltd.
4/2015 General Manager of Strategy
Planning Division
4/2016 Vice President and Executive
Officer
4/2020 Senior Vice President andExecutive Officer
4/1982 Joined Ministry of International
Trade and Industry
8/2011 Councillor, Cabinet Secretariat
1/2013 Director-General, Reconstruction
Agency7/2014 Commissioner, Japan Patent
Office10/2016 Advisor, Tokio Marine &Nichido Fire Insurance Co., Ltd.
1/2018 Joined Hitachi, Ltd.
4/2018 Vice President and Executive
Officer
4/1987 Joined Hitachi, Ltd.
4/2019 COO, Financial Institutions
Business Unit
4/2021 Vice President and Executive
Officer
4/1986 Joined Hitachi, Ltd.
3/2015 President, Hitachi Power
Solutions Co., Ltd.
4/2017 Vice President and Executive
Officer, Hitachi, Ltd.
4/1986 Joined Hitachi, Ltd.
4/2019 COO, Nuclear Energy Business
Unit
4/2020 Vice President and Executive
Officer
4/1987 Joined Hitachi, Ltd.
4/2017 Chief Business Risk management
Officer, Systems & Services
Business Division
4/2018 Vice President and Executive
Officer

91

Term ofofficeShareownership(shares)(Note 2)47,400(Note 2)0(Note 2)

42,100(Note 2)23,800(Note 2)

13,000(Note 2)26,800(Note 2)

19,600(Note 2)22,500Position and Responsibility

Vice President andExecutive Officer
Research & development

Name

Norihiro Suzuki

Vice President andExecutive Officer
Marketing & sales (businessfor industry & distribution
Yoji Takeuchi
sectors, water &environment business,building systems business,railway systems businessand smart life business)
Vice President andExecutive Officer
Diversity & inclusion
Lorenastrategy, government &Dellagiovanna
external relations andenvironmental strategy

Date ofbirthDec. 5,
1961

Jul. 1,
1958

Apr. 15,
1969

Vice President andExecutive Officer
Kojin Nakakita
Regional strategies (APAC)

Sept. 28,
1963

Vice President andExecutive Officer
Water & environment
business

Hideshi Nakatsu

May. 10,1967

Vice President andExecutive Officer
Information technology
strategies

Seiichiro Nukui

Jan. 3,
1965

Business experience, including
experience in Hitachi, and functions
4/1986 Joined Hitachi, Ltd.
10/2014 General manager of Central
Research Laboratory
4/2015 General Manager of Global
Center for Social Innovation,
Research & Development Group,
and General Manager of Central
Research Laboratory Group
4/2016 Vice President and Executive
Officer
4/1981 Joined Hitachi, Ltd.
4/2018 CMO of Building Systems
Business Unit, General Manager
of Global Business Strategy
Planning Division, Building
Systems Business Unit
4/2019 Vice President and Executive
Officer
10/1988 Joined Hitachi Europe GmbH
4/2020 Chief Diversity & Inclusion
Officer, Hitachi, Ltd.
(Currently in office)4/2021 Vice President and Executive
Officer, Hitachi, Ltd.
10/1988 Joined Hitachi, Ltd.
4/2017 Chairman of Hitachi Asia Ltd.
(Currently in office)6/2017 Chairman of Hitachi India Pvt.
Ltd. (Currently in office)4/2019 Vice President and Executive
Officer, Hitachi, Ltd.
10/1997 Joined Hitachi Metals, Ltd.
4/2016 President and Representative
Director, Hitachi Plant Services
Co., Ltd. (Retired in March
2020)
4/2019 CEO, Water & Environment
Business Unit, Hitachi, Ltd.
4/2021 Vice President and Executive
Officer, Hitachi, Ltd.
4/1988 Joined Accenture, Ltd. (Japan)
2/2010 Vice President of Company
Executive, and General Mangerof Communication, Electric,
Media and High-tech Industry,Power & Industrial Equipment
Division, Accenture Ltd. (Japan)
4/2015 Joined Hitachi, Ltd.
Executive IT Strategist, Hitachi,
Ltd.
4/2017 Urban Mobility Project Leader,
Future Investment Division,
Hitachi, Ltd.
4/2019 Vice President and Executive
Officer, Hitachi, Ltd.

92

Term ofofficeShareownership(shares)(Note 2)

24,000(Note 2)

24,000(Note 2)800(Note 2)

23,700(Note 2)

13,000(Note 2)

23,600Position and Responsibility

NameDate ofbirth

Vice President andExecutive Officer
Railway systems businessAndrew Barr

Jan. 9,1973

Vice President andExecutive Officer
Marketing & sales andregional strategies (Japan)

Masahiko
Hasegawa

Sept. 17,
1964

Vice President andExecutive Officer
Marketing & sales (businessfor financial institutions,Tatsuro Hoshino
government, public
corporation and social
infrastructure systems anddefense systems business)

Feb. 5,
1962

Vice President andExecutive Officer
Supply chain management Kentaro Masai(manufacturing strategy andquality assurance)

May 22,
1959

Vice President andExecutive Officer
Building systems businessShinya Mitsudomi

Jul. 5,
1958

Vice President andExecutive Officer
Cost structure reform andinformation security
management

Masashi
Murayama

Dec. 23,
1961

Vice President andExecutive Officer
Business for industry &distribution sectors

Kazunobu Morita

May. 12,1966

Vice President andExecutive Officer
Regional strategies (China)

Takashi Yoda

Aug. 22,
1966

Business experience, including
experience in Hitachi, and functions
1/2002 Engineering Manager, Rolling
Stock, UK Government Strategic
Rail Authority
1/2005 Head of Maintenance Delivery[Rail Business], Hitachi EuropeLtd.
1/2014 COO, Hitachi Rail Europe Ltd.
5/2016 CEO, Ansaldo STS S.p.A.
(Currently Hitachi Rail STS
S.p.A.)
4/2019 Vice President and Executive
Officer, Hitachi, Ltd.
4/1987 Joined Hitachi, Ltd.
4/2018 General Manager of Kansai Area
Operation
4/2020 Vice President and Executive
Officer
4/1984 Joined Hitachi, Ltd.
4/2018 President and Chief Executive
Officer, Hitachi Solutions, Ltd.
4/2021 Vice President and Executive
Officer, Hitachi, Ltd.

4/1982 Joined Hitachi, Ltd.
4/2014 President & CEO of Rail
Systems Company, Infrastructure
Systems Group
4/2016 Vice President and Executive
Officer
4/1982 Joined Hitachi, Ltd.
4/2017 Group Head of Sales andManaging Director, Japan / Asia
Pacific, Railway Systems
Business Unit
4/2018 Vice President and Executive
Officer
4/1985 Joined Hitachi, Ltd.
4/2016 CPO and General Manager,
Value Chain Integration Division
4/2019 Vice President and Executive
Officer
4/1991 Joined Mitsubishi PetrochemicalCo., Ltd.
3/2004 Joined Hitachi, Ltd.
4/2019 CSO, Industry Business
Division, Hitachi, Ltd.
4/2021 Vice President and Executive
Officer, Hitachi, Ltd.
4/1990 Joined Hitachi, Ltd.
4/2018 General Manager of Energy
Business Co-Creation &Promotion Division, Power andEnergy Business Administration
Division
4/2019 Vice President and Executive
Officer

Total

Term ofofficeShareownership(shares)(Note 2)3,500

(Note 2)

20,100(Note 2)

16,140(Note 2)

26,600(Note 2)

24,300(Note 2)25,600(Note 2)

13,000(Note 2)23,8001,050,000

93

(Notes) 1. The “Position and Responsibility” column describes positions and matters delegated to each of the
Executive Officers by the Board of Directors.
2. The term of office of the Executive Officers expires on March 31, 2022.
2) Independent Directors(a) Qualification for the Independent Directors and criteria for the independency
For electing an Independent Director, the Nominating Committee of the Company considers, inaddition to the following criteria for the independency, whether the Independent Director has thehighest personal and professional ethics, integrity and insight, and distinguished records of leadershipor experience at policy making levels in business, law, administration, accounting or education, etc.
For the independency of an Independent Director, the Company considers the Independent
director to be independent unless:- his or her immediate family member* is, or has been within the last three years, a director or an
executive officer, of the Company or any of its subsidiaries;- he or she is currently an executive director, an executive officer or an employee of a company
that has made payments to, or received payments from, the Company for property or services
in an amount which, in any of the last three fiscal years, exceeds 2% of any of the companies’
consolidated gross revenues;- he or she has received during any of the last three fiscal years more than 10 million yen in
direct compensation for his or her service as a specialist in law, accounting or tax, or as aconsultant from the Company, other than director compensations; or- he or she serves as an executive officer or director of a not-for-profit organization, and theCompany’s discretionary charitable contributions to the organization in any of the last threefiscal years are more than 10 million yen and 2% of that organization’s annual gross revenues.
* An “immediate family member” includes a person’s spouse, parents, children, siblings, grandparents, grand-children, mothers and fathers-in-law, sons and daughters-in-law, spouses ofsiblings, grand-children-in-law, and brothers and sisters-in-law.
(b) Function of the Independent Directors
Following the policy stated in “(a) Qualification for Independent Directors and criteria for the
independency,” the Company has elected ten persons; 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, as outside Directors under Article 2, Item 15of the Companies Act. The functions and roles expected to them are as follows:
Name

Katsumi Ihara

Ravi Venkatesan

Function and Role
Mr. Ihara has rich experience and insight in the area of global corporate
management gained through the involvement in management at major
companies conducting diversified businesses globally. He is expected
to leverage such experience and insight to reinforce the supervisory anddecision making functional aspects of the Company’s Board of
Directors by offering opinions and proposals regarding the generalmanagement of the Company and supervising the execution of duties
by Executive Officers and others from an independent perspective.
Mr. Venkatesan has rich experience and insight in the area of global
corporate management, digital business and emerging markets. He is
expected to leverage such experience and insight to reinforce thesupervisory and decision making functional aspects of the Company’s
Board of Directors by offering opinions and proposals regarding thegeneral management of the Company from a global viewpoint andsupervising the execution of duties by Executive Officers and othersfrom an independent perspective.
94

Name

Cynthia Carroll

Joe Harlan

George BuckleyLouise Pentland

Harufumi Mochizuki

Takatoshi Yamamoto

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

95

Name

Hiroaki Yoshihara

Helmuth Ludwig

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

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

96

(3) Audit
1) Audit by the Audit Committee
The Audit Committee consists of six Directors, including five Independent Directors and one
standing Audit Committee member.
Mr. Hiroaki Yoshihara, the Chair of the Audit Committee, has considerable knowledge of financeand accounting based on his long experience at KPMG Group with businesses related to accounting, etc.
The Audit Committee conducts audits for whether corporate administration by Directors andExecutive Officers are properly carried out under appropriate internal control systems.
The Audit Committee develops the audit policy and the audit plan, and periodically receives reports
or conducts hearing for execution of duties from Directors and Executive Officers. In addition, themembers of the Audit Committee, who are in charge of internal inspection, examine business units of theCompany and receive reports from subsidiaries in order to check whether business transaction andproperty management are properly carried out, and then report the results to the Audit Committee.
Furthermore, such members of the Audit Committee attend the important meetings including the budget
meeting, the Senior Executive Committee and the Disclosure Committee, inspect audit reports frominternal audit division, and provide internal audit division with instructions about divisions to be subject
to auditing and items to be focused, if necessary.
The Audit Committee receives reports and explanations about the audit plan and results of the audit
from the accounting auditor, and based on the reports, verifies results of financial audits and internal
control audits. In addition, the Audit Committee receives reports and explanations of quality control
systems of the accounting auditor. Furthermore, the Company makes it a rule to obtain the prior approvalof the Audit Committee for remuneration to the accounting auditor.
The attendance record of each member of the Audit Committee during the fiscal year ended March
31, 2021 is as follows.

Katsumi Ihara

Attendance / Number of days held the
Audit Committee (Note 1)
17 days / 17 days

Harufumi Mochizuki

17 days / 17 days

100%

Takatoshi Yamamoto

17 days / 17 days

100%

Hiroaki Yoshihara

17 days / 17 days

100%

Toyoaki Nakamura (Note 2)

6 days / 6 days

100%

Name

Attendance rate (Note 1)
100%

Hideaki Seki (Note 3)
10 days / 10 days
100%
(Notes) 1. They are based on the days held the Audit Committee during each member's term of office.
2. Mr. Toyoaki Nakamura resigned on June 30, 2020.
3. Mr. Hideaki Seki was appointed on July, 30, 2020.

During the fiscal year ended March 31, 2021, the Audit Committee engaged in a variety ofactivities as a whole Hitachi Group and by each business segment to study priority matters such as
strengthening of collaboration and the facilitation of information sharing under a “tripartite audit” (audit
by the Audit Committee, internal audit and audit by accounting auditors), and auditing of theestablishment and operation of internal control systems from the perspective of risk management andvalidity of execution of duties. In addition, a standing committee member worked to obtain information
as needed in a timely and accurate manner, mainly by collaborating with the Internal Auditing Office,among other departments, and attending important internal meetings such as the Senior Executive
Committee, and facilitated information sharing with other committee members.
2) Internal audit
The Internal Auditing Office is in charge of internal audit within Hitachi Group and audits business
units, corporate divisions of headquarters and subsidiaries and affiliates. The number of staff of theInternal Auditing Office is 43 as of March 31, 2021.
The Internal Auditing Office monitors and assesses whether overall business operations, including
marketing, personnel management, labor management, compliance, procurement transactions,production, environment, disaster prevention, export regulations, information system, accounting andfinancing activities, and property management of Hitachi Group are properly carried out pursuant to audit
standards established by the Company, and points out items required to be improved based on the resultsof auditing and follows up their improvements. The Internal Auditing Office reports in advance its
97internal audit plan to the Audit Committee, and reports results of auditing to the President and the Audit
Committee. Furthermore, relating to the internal control over financial reporting, the internal control
division in the Internal Audit Office promotes to establish and maintain the internal control systems
pursuant to the Company’s guideline, assesses its effectiveness, and reports the results to the President
and the Audit Committee.
From the perspective of preventing infection of the COVID-19, the Company has been using IT
technologies, including online meetings, and, especially to carry out audits overseas, has beencommissioning audit divisions of Group companies and auditing firms in each country.
3) Accounting audit(a) Name of accounting auditor
Ernst & Young ShinNihon LLC(b) Consecutive term of service of the certified public accountants
The Fukase accounting firm of certified public accountants carried out an accounting audit of
the Company in 1970 and, subsequently, accounting audits were conducted by Musashi Audit
Corporation, which was established by Fukase certified public accountant etc., from 1971, Century
Audit Corporation, into which Musashi Audit Corporation was merged, from 1986 and Ota Showa
Century Audit Corporation, into which Century Audit Corporation was merged, from 2000, andcurrently Ernst & Young ShinNihon LLC, which was renamed from Ota Showa Century Audit
Corporation, conducts the accounting audits of the Company. Since 2003 when Ernst & Young(“EY”) has become the network firm partnering with the accounting auditor, Hitachi Group
companies, including overseas companies, have selected EY as the accounting auditor uniformly on a
global basis and the Company has been striving to ensure that the accounting auditor performs its
duties properly from an independent standpoint, maintaining a proper degree of tension with theCompany through mutual assessment between the Company’s finance division and internal audit
division and the accounting auditor and the Audit Committee’s strong cooperation with theaccounting auditor and examination of selection of an accounting auditor and reappointment of theaccounting auditor.
At Ernst & Young ShinNihon LLC, certified public accountants are rotated and no certified
public accountants are involved in accounting audits of the same company for more than sevenconsecutive fiscal years. No lead certified public accountants are involved in accounting audits of thesame company for more than five consecutive fiscal years. If a certified public accountant is involvedin accounting audits of the same company for seven consecutive years, he or she will be involved inaccounting audits of that company only after an interval of five fiscal years. No lead certified public
accountants who are involved in accounting audits of the same company for five consecutive fiscal
years will be involved in accounting audits of that company again.
(c) Certified public accountants (CPAs) who executed accounting audit
Takashi Ouchida, Koji Fujima, Takuya Tanaka, Shinya Yoshida(d) Assistants for audit works
48 CPAs and 84 staffs belonging to Ernst & Young ShinNihon LLC assist execution of
accounting audit works as instructed by the three CPAs mentioned in (b).
(e) Policy and reason for the selection of accounting auditors
With a view to ensuring the appropriate execution of duties by accounting auditors, the Audit
Committee selects accounting auditors by considering such factors as quality control systems foraccounting auditors, implementation systems for auditing and the level of audit fees.
In addition, the Audit Committee has prepared the following policies with respect to “policies
for determination of removal and non-reappointment of accounting auditors” set forth in Item 4 of
Article 126 of the Ordinance for Enforcement of the Companies Act.
- In the event the Audit Committee determines that the causes provided for in each item of
Paragraph 1 of Article 340 of the Companies Act apply to an accounting auditor and theaccounting auditor needs to be removed immediately, the Audit Committee shall remove theaccounting auditor by unanimity. Should this occur, the Audit Committee member selected by
the Audit Committee shall give a report on the removal of the accounting auditor and the reason
therefor at the first general meeting of shareholders to be convened after the said removal.
- Besides the case above, it is determined that an accounting auditor should be replaced for suchreason as the difficulty of ensuring an adequate performance of duties by the accounting
98

auditor, the Audit Committee shall determine the contents of the agenda item on the nonretention of the accounting auditor to be submitted to the general meeting of shareholders.
The Audit Committee comprehensively evaluated and studied Ernst & Young ShinNihon LLC
from the perspectives of its history, business size, past performance of auditing and efforts tofacilitate communication with the Audit Committee and other internal divisions, among other factors.
As a result, the Audit Committee decided to select Ernst & Young ShinNihon LLC as the accounting
auditor since the Audit Committee judged that none of the abovementioned policies applies to Ernst& Young ShinNihon LLC and therefore adequate performance of duties by Ernst & Young
ShinNihon LLC is continuously secured.
(f) Evaluation for accounting auditor by the Audit Committee
The Audit Committee evaluated the appropriateness and relevance of auditing conducted byaccounting auditor from the perspectives of the effectiveness of initiatives to facilitatecommunication with the Audit Committee and the top management in particular, the details andimplementation of audit systems and auditing manuals and remuneration for auditing in accordancewith evaluation criteria the Audit Committee formulated in advance. For evaluating the accounting
auditor, the Audit Committee gathered information on matters such as the independence of theaccounting auditor, audit systems and the implementation of audits and audit quality thereof from the
Accounting Control Department and the Internal Auditing Office. The Audit Committee also received
reports from the accounting auditor regarding compliance with laws and regulations, including theaccounting auditor’s independence, methods for evaluating risks with respect to the acceptance andcontinuation of audit services, audit and inspection systems and quality control systems, and detailed
audit plans based on the accounting auditor’s evaluations for risks pertaining to the Company, as well
as results of audits and details of and progress on plans for improving business operations andauditing efficiency at the time of the completion of quarterly reviews and annual audits. Based onsuch reports, the Audit Committee concluded that the accounting auditor conducted highly
transparent audits and its activities were appropriate and relevant.
4) Audit Fees(a) Fees to Certified Public Accountants
Fiscal year ended March 31, 2021
Category

Fees for audit
services(Millions of yen)

Fiscal year ended March 31, 2020

Fees for non-audit
services(Millions of yen)

Fees for audit
services(Millions of yen)

Fees for non-audit
services(Millions of yen)

The Company

525 (Note 1)

101

515 (Note 1)

71

Consolidated
subsidiaries

959 (Note 1)

17939 (Note 2)

28

Total

1,484

118

1,454

99

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

99

(b) Audit fees (excluding the amount mentioned in (a)) to the Company’s accounting auditor, Ernst &Young ShinNihon LLC Group (including Ernst & Young and its group firms which belong to thesame network as Ernst & Young ShinNihon LLC)
Fiscal year ended March 31, 2021
Category

Fees for audit
services(Millions of yen)

Fiscal year ended March 31, 2020

Fees for non-audit
services(Millions of yen)

Fees for audit
services(Millions of yen)

Fees for non-audit
services(Millions of yen)

The Company- (Note 1)

37- (Note 1)

6

Consolidated
subsidiaries

4,290 (Note 2)515

2,723 (Note 1)

596

4,290

552

2,723

602

Total

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

100

(4) Compensation to Directors and Executive Officers
1) Policy on the determination of Compensation of Directors and Executive Officers[Method of Determination of Policy]
The Company’s Compensation Committee sets forth the policy on the determination of theamount of compensation, etc. of each Director and Executive Officer pursuant to applicable provisionsof 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 Directors andExecutive Officers.
- Compensation for Directors shall be such that it enables them to exercise functions of supervision ofmanagement effectively.
- Compensation for Executive Officers shall be such that it enables them to contribute to sustained
improvement in corporate value through the execution of business and employs an appropriatebalance between short-term performance and medium- and long-term performance.
- The level of compensation shall be determined taking into account compensation levels at othercompanies as well as economic and market trends.
- The Compensation Committee utilizes external experts to gain expert advice and an objective
viewpoint, if necessary, for considering the details and amounts of compensation.
[Compensation Structure](i) Matters relating to Directors
Compensation for Directors is basic remuneration as fixed pay. The amount of basic
remuneration is decided by adjusting a basic amount to reflect full-time or part-time status, committee
membership and position, and travel from place of residence, etc. A Director concurrently serving as
an Executive Officer is not be paid compensation as a Director.
(ii)Matters relating to Executive Officers
Compensation for Executive Officers consists of basic remuneration as fixed pay, and shortterm incentive compensation and medium- and long-term incentive compensation as variable pay. The
basic amount of basic remuneration, short-term incentive compensation, and medium- and long-term
incentive compensation is set based on the ratio of 1:1:1 as the standard, taking into account thecomposition of executive compensation for major global companies, in order to improve corporate
value through the growth of global businesses. The higher position Executive Officers holds, thehigher proportion of variable pay is set to the total annual compensation.
The method of determination of each type of compensation is as follows.
Basic remuneration- The amount of basic remuneration is decided by adjusting a basic amount set in accordance with therelevant position to reflect the results of an assessment.
Short-term incentive compensation- The amount of short-term incentive compensation is decided within the range of 0 to 200% of abasic amount set according to the relevant position by adjusting that amount to reflect financial
results and individual performance. Evaluation items and proportion of evaluation item are as shownin the following table.
Evaluation items
Performance- Company performancelinkedDivision performancecomponent

Proportion of evaluation item
Executive Officers that
constitute the Senior
Other Executive Officers
Executive Committee (Note)
80%
30%
-

50%

Individual target-linked component
20%
20%(Note) In case that an “Executive Officers that constitute the Senior Executive Committee” is incharge of sectors or business units, the same proportion of evaluation item as for “Other
Executive Officers” is used.

101

- The amount of the performance-linked component varies according to the evaluation of company
performance and division performance.
- Company performance is evaluated referring to consolidated revenues, adjusted operating income,
EBIT, and net income attributable to Hitachi, Ltd. stockholders in order to measure the level ofachievement of consolidated financial forecasts disclosed to stakeholders, including shareholders
and investors.
- Division performance is evaluated referring to adjusted operating income and operating cash flows
for each division, among other indicators, to measure the level of achievement of targets under the
Mid-term Management Plan and the annual budgets for divisions.
- The amount of the individual target-linked component varies according to the evaluation of the levelof achievement of individual target for each Executive Officer determined based on his/her
responsibility.
Medium- and Long-term incentive compensation- The shares of restricted stock are granted in order to propel management from a medium- and longterm perspective and to provide incentives to bring about a sustainable increase in enterprise value
by further promoting senior management’s shared values with shareholders through the holding ofshares during their term of office.
- The restriction on transfer shall be lifted if executive officers resign from all of the positions of theCompany’s executive officer, director, and corporate officer.
- With regard to one-half of granted shares of restricted stock, the number of shares whose transfer
restriction is lifted shall be determined after ex-post evaluation. In the ex-post evaluation, the total
shareholder return of Hitachi stock over the three years from the beginning of the fiscal year whenthe medium- and long-term incentive compensation is granted is compared with growth rate of
TOPIX over the same period.
- Lifting of transfer restrictions shall apply to all granted shares if the TSR/TOPIX Growth Rate
Ratio is 120% or more.
- Lifting of transfer restrictions shall apply to part of granted shares if the TSR/TOPIX Growth
Rate Ratio is between 80% or more but less than 120% (*).
- Transfer restrictions shall not be lifted for any shares if the TSR/TOPIX Growth Rate Ratio is lessthan 80%.
* Number of shares whose transfer restrictions are lifted= Number of granted shares × {(TSR/TOPIX Growth Rate Ratio × 1.25) － 0.5}
Shares whose transfer restrictions are not lifted shall be acquired by the Company without
consideration.
- If it is deemed to be inappropriate to grant shares of restricted stock due to laws and regulations in
the country of residence, etc., cash award based on the value of the Company’s share price shall be
substituted for restricted stock.
- From the fiscal year that commenced in April 2019, shares of restricted stock are granted in place ofthe stock options as stock-based compensation the Company has granted previously.
If it is found that an executive officer has been engaged in misconduct during his/her term ofoffice, compensation for Executive Officers that has been already paid shall be returned to theCompany.
With regard to persons who are hired externally such as foreign persons, a compensation
package could be individually determined based on the level of compensation in a job market which isconsidered for compensation benchmarking while referring the above policy. The Company grants
restricted stock units to non-Japanese Executive Officers as medium- and long-term incentive
compensation. One third of vested restricted stock units are delivered in the form of shares of common
stock of the Company and cash each fiscal year over three years from the beginning of the fiscal year
containing the day on which restricted stock units are granted.
(iii) Miscellaneous- It was decided at the Compensation Committee meetings held on December 18, 2007 and March 26,
2008 that the compensation structure for Directors and Executive Officers will be re-examined
starting with the compensation for fiscal 2008 and that the retirement allowance will be abolished.
The payment of retirement allowance to Directors and Executive Officers due to the abolition of theretirement allowance system will be in an amount determined by the Compensation Committee atthe time of the retirement of a relevant Director or Executive Officer.

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

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

Variable pay

NumberofMedium- and Others persons
Short-termlong-term
incentive
incentivecompensationcompensation

Directors(excluding
－
－
－
53
53
2
Independent
Directors)
Independent
－
－
－
356
356
10
Directors
Executive
4,059
1,545
1,218
1,295
0
32
Officers
Total
4,468
1,954
1,218
1,295
0
44
(Notes) 1. The number of Directors indicated excludes two Directors who concurrently serve as
Executive Officers.
2. The amount of compensation, etc. for directors includes the compensation from April toresignation for the director who resigned as of June 30, 2020.
3. Fixed pay and short-term incentive compensation consist of monetary compensation, andmedium- and long-term incentive compensation consist of monetary and non-monetarycompensation.
4. The "Others" column shows the awards for employee inventions.
Performance indicators referred to in company performance evaluations for short-term
incentive compensation are as follows.
(Unit: billions of yen)
Fiscal year ended March 31, 2021
Indicators
TargetResults
Revenues

7,080.0

8,729.1

Adjusted Operating Income

372.0

495.1

EBIT
Net income attributable to
Hitachi, Ltd. stockholders

614.0

850.2

335.0

501.6

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 ofrestricted stock issued as medium- and long-term incentive compensation are as follows.
Total shareholder return
Name
Term
/ TOPIX Growth Rate Ratio
The First Stock Acquisition
From April 1, 2016125.8%
Rights of Hitachi, Ltd.
to March 29, 2019The Second Stock Acquisition
From March 31, 2017121.6%
Rights of Hitachi, Ltd.
to March 31, 2020
The Third Stock Acquisition
From March 30, 2018120.5%
Rights of Hitachi, Ltd.
to March 31, 2021
Restricted Stocks issued in May
From April 1, 2019117.2%
2019
to March 31, 2021 (Note)
Restricted Stocks issued in May
From April 1, 2020
114.8%
2020
to March 31, 2021 (Note)(Note) The ratios are calculated to determine the number of stock acquisition rights that can be
exercised by persons who retire from Executive Officers, Directors or Corporate Officers on
March 31, 2021.

103

In addition, Directors or Executive Officers whose compensation from the Company and its
subsidiaries is not less than ¥100 million and the amount of their compensation are as follows:

Name

Company

Toshiaki
Hitachi, Ltd.
Higashihara (The Company)
Masakazu
Aoki

Hitachi, Ltd.
(The Company)
Hitachi, Ltd.
(The Company)
Kitayama
Hitachi HighRyuichi
Tech Corporation(Consolidated
subsidiary)
Hitachi, Ltd.
(The Company)
Hitachi Global
Life Solutions,
Inc.
(Consolidated
subsidiary)
Keiji
Hitachi Astemo,
KojimaLtd.
(Consolidated
subsidiary)
Hitachi HighTech Corporation(Consolidated
subsidiary)Keiichi
Hitachi, Ltd.
Shiotsuka(The Company)
Alistair
Hitachi, Ltd.
Dormer(The Company)
Toshikazu Hitachi, Ltd.
Nishino(The Company)
Hitachi, Ltd.
Atsushi Oda(The Company)
Hitachi, Ltd.
(The Company)
Yoshihiko Hitachi Astemo,
Kawamura Ltd.
(Consolidated
subsidiary)
Hitachi, Ltd.
(The Company)
Hitachi Global
Toshiaki
Digital Holdings
Tokunaga
Corporation(Consolidated
subsidiary)(Note 5)

Category

Executive
Officer(Note 4)
Executive
Officer
Executive
Officer

Total amount of each type (Millions of yen)
Variable pay
Total amount ofMedium andcompensation,
Short-termLong-term Othersetc.
Fixed pay
incentive
incentive (Note 3) (Millions of yen)compensationcompensation(Note 1)
(Note 2)
148

126

199

-

474

60

62

66

0

189

57

50

24

-

Chairman

2

-

-

-

Executive
Officer

47

53

66

-

Director

4

3

-

-

135

180
Chairman

4

3

-

-

Director

3

2

-

-

60

80

66

-

207

234

105

115

-

455

60

50

66

-

177

48

37

37

-

122

47

43

39

-

Director

0

0

-

-

Executive
Officer

-

23

-

-

Chairmanof theBoard &
CEO

58

36

47

-

Executive
Officer
Executive
Officer
Executive
Officer
Executive
Officer
Executive
Officer

104

131

165

Total amount of each type (Millions of yen)
Name

Company

Category

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

Hitachi, Ltd.
Executive
45
42
39(The Company) Officer
Hidenobu
Hitachi High131
Nakahata
Tech Corporation
Director
2
1(Consolidated
subsidiary)
Hitachi, Ltd.
Executive
37
35
30(The Company) Officer
Hitachi Industrial
Equipment
3
2
Systems Co., Ltd. Director(Consolidated
subsidiary)
Hitachi Global
Life Solutions,Inc.
Director
3
2
Mamoru118(Consolidated
Moritasubsidiary)
Hitachi Metals,
Ltd.
Director
2
0(Consolidated
subsidiary)
Hitachi Chemical
Company, Ltd.
Director
00(Consolidated
subsidiary)
Hitachi, Ltd.
Executive
5(The Company) Officer
Koji
Hitachi Asia Ltd.
124
ChairmanNakakita(Consolidatedof the48
22
26
20
subsidiary)
Board(Note 5)
Hitachi Rail Ltd.
(Consolidated
Andrew Barr
Director
69
41
50
6
167
subsidiary)(Note 5)
Executive
Hiroaki
Hitachi, Ltd.
Officer
104
87
132
324
Nakanishi(The Company)(Note 4)(Notes) 1. Compensations from the Company and consolidated subsidiaries paid depending on financial results
and individual performances in the short term are collectively called.
2. Medium and long-term incentive compensation is stock options as stock-based compensation, restricted
stock compensation, restricted stock units or cash award based on the value of the Company's shareprice.
3. The "Others" column shows the awards for employee inventions and the fringe benefit equivalent, etc.
4. Although concurrently serving as Director for the fiscal year ended March 31, 2021, Messrs. Toshiaki
Higashihara and Hiroaki Nakanishi did not receive compensation as Director.
5. The amount of the remuneration, etc. from foreign subsidiaries shows yen equivalent.

1053) Authorities, roles and activities of the Compensation Committee
The Compensation Committee, which was established under the Companies Act, includes
Independent directors that have majority in the number of committee members, holds the legal
authority to determine remuneration for Directors and Executive Officers, and strives to ensure theobjectivity, transparency and fairness of the remuneration determination processes. The Compensation
Committee has the authority to determine remuneration policies and the details of remuneration(amount of compensation, etc.) of Directors and Executive Officers individually based on the policies.
To determine the details of remuneration individually, the Committee confirms and reviews processes
and details with respect to the assessment of basic remuneration amounts, evaluation of performanceand individual targets related to short-term incentive compensation.
For the fiscal year ended March 31, 2021, based on policies for determining compensation for
Directors and Executive Officers, the Compensation Committee determined amounts of remuneration
for Directors and Executive Officers individually including short-term incentive compensation of
Executive Officers in conjunction with which the Compensation Committee confirmed and reviewed
the process and details of performance and individual target evaluations. Furthermore, theCompensation Committee re-examined the executive compensation system from the viewpoint of
remuneration for top management at global enterprises and sharing of values with shareholders, anddecided on policies for determining remuneration for Directors and Executive Officers that is appliedin the fiscal year ending in March 2022, including the expansion of the restricted stock units
compensation to non-Japanese officers of some of the Company's group companies.

106

(5) Information on shareholdings(a) Criteria for classification of investment securities
The Company classifies investment securities that it holds into two types. If investment
securities are held for the purpose of receiving benefits exclusively through stock price fluctuations
and dividends, those are classified as investment securities for pure investment and the rest ofinvestment securities are classified as investment securities owned for other purposes than pureinvestment.
(b) Equity securities held for purposes other than pure investment(i) Policy for shareholding and examination of the reasonableness of holding
Under the basic policy, the Company will not acquire and hold other companies’ shares except
for cases where acquiring or holding such shares is necessary in terms of transactions or business
relationship. The Company will promote reducing shares that it already owns unless significance ofholding shares and economic rationales of holding are confirmed.
The Board of Directors verifies whether it is appropriate to hold shares for all stock theCompany owns ever year. In such verification, each individual stock was re-examined as to the
purpose of holding the shares and whether benefits from holding shares are in line with target level ofcapital efficiency. As the result of verification, the Company promotes the sales of shares for whichsignificance of holding shares and economic rationale are not confirmed. Details of shares sold in thefiscal year ended March 31, 2021, are presented in (ii) below.
(ii) Number of stock names and balance sheet amount
Number ofstock names

Total amount recordedin the balance sheet(stock names)(millions of yen)

Unlisted stocks

167

24,534

Others50

176,521<Stocks increased in the fiscal year ended March 31, 2021> (Note)
Number ofstock names

Total purchase price forthe shares increased(stock names)(millions of yen)

Reasons of increase

Unlisted stocks

-

-

-

Others---(Note) The Company holds one unlisted stock whose classification in accounting was changed fromaffiliated company's common stocks to investment securities due to decreased ownership
percentages.
<Stocks decreased in the fiscal year ended March 31, 2021>
Number of

Total selling price forstock names(stock names)

the shares decreased(millions of yen)

Unlisted stocks

12

15,851Others

18

1,085

107

(iii) The number and the amount recorded in the balance sheet, etc. of specified investment securities
Specified investment securities
Fiscal year ended Fiscal year ended
March 31, 2021
March 31, 2020
(Note 1)
(Note 1)
Purpose of holdings
and reasons for increases(Note 2)

Number ofshares(shares)Number ofshares(shares)

Balance sheet
amount(Millions of yen)

Balance sheet
amount(Millions of yen)

61,990,548

61,990,548

74,38824,1146,250,000

6,250,000

46,18628,309Central Japan Railway
Company

900,000

900,000

14,895

15,588Shin-Etsu ChemicalCo., Ltd.

521,000

521,000

9,695

5,590

East Japan Railway
Company

812,400

812,400

6,368

6,642

DAIICHI SANKYOCOMPANY,
LIMITED

900,000

300,000

2,902

2,230

3,269,000

3,269,000

2,370

1,546

1,603,000

1,603,000

2,242

1,705

600,000

600,000

1,734

1,491

830,320

830,320

1,642

767

1,286,900

1,286,900

1,570

1,528

206,574

206,574

1,536

1,320

597,600

597,600

1,370

1,191

Stock nameRenesas Electronics
Corporation
Western Digital
Corporation

The Chiba Bank, Ltd.

Maxell Holdings, Ltd.

Ono PharmaceuticalCo., Ltd.

Seiko Electric Co., Ltd.

Seibu Holdings Inc.

Keio Corporation

Sapporo Holdings
Limited108

Holding
shares of
Hitachi, Ltd.

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

No

Maintaining and enhancing business
relationship

No

Maintaining and enhancing business
transactions of selling products andproviding services

No

Maintaining and enhancing business
transactions of selling products andproviding services

Yes

Maintaining and enhancing business
transactions of selling products andproviding services

Yes

Maintaining and enhancing business
transactions of selling products andproviding services (Note 4)No

Maintaining and enhancing business
transactions of selling products andproviding services

Yes

Maintaining and enhancing business
relationship

No

Maintaining and enhancing business
transactions of selling products andproviding services

Yes

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

Yes

Maintaining and enhancing business
transactions of selling products andproviding services

No

Maintaining and enhancing business
transactions of selling products andproviding services

Yes

Maintaining and enhancing business
transactions of selling products andproviding services

Yes(Note 3)

Fiscal year ended Fiscal year ended
March 31, 2021
March 31, 2020
(Note 1)
(Note 1)
Number ofshares(shares)Number ofshares(shares)

Balance sheet
amount(Millions of yen)

Balance sheet
amount(Millions of yen)

215,000

215,000

1,319

1,590

400,000

400,000

1,260

894

523,280523,280

1,012

1,139

328,500

328,500

695

404

The Bank of Kyoto,Ltd.

100,000

100,000

681

344

TOKYU
CORPORATION

394,016

394,016

580

669

Keihan Holdings Co.,Ltd.

121,927

121,927

560

585

Kintetsu Group
Holdings Co., Ltd

104,291

104,291440

521

375,000

375,000

397

259

237,000

474,000

258

411

550,275

550,275

252

293

679,200

679,200

220

243

300,000

300,000

181

133

Taragaon Regency
Hotel508,030

508,030

153

94

Kita-Nippon Bank,
Ltd.

73,50073,500147

144

Stock nameWest Japan Railway
Company

Showa Denko K.K.

Electric Power
Development Co., Ltd.

Tosoh Corporation

euglena Co., Ltd.

Kyushu Electric Power
Company Inc.

The Keiyo Bank, Ltd.

TOMONY Holdings,
Inc.

Daido Signal Co., Ltd.

109

Purpose of holdings
and reasons for increases(Note 2)

Holding
shares of
Hitachi, Ltd.

Maintaining and enhancing business
transactions of selling products andproviding services

No

Maintaining and enhancing business
transactions of selling products andproviding services

Yes

Maintaining and enhancing business
transactions of selling products andproviding services

Yes

Maintaining and enhancing business
transactions of selling products andproviding services

No

Maintaining and enhancing business
transactions of selling products andproviding services

No

Maintaining and enhancing business
transactions of selling products andproviding services

Yes(Note 3)

Maintaining and enhancing business
transactions of selling products andproviding services

No

Maintaining and enhancing business
transactions of selling products andproviding services

No

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

Maintaining and enhancing business
transactions of selling products andproviding services

No

Maintaining and enhancing business
transactions of selling products andproviding services

Yes

Maintaining and enhancing business
transactions of selling products andproviding services

Yes(Note 3)

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

Yes

Received as a result of substituteperformance for accounting
receivables

No

Maintaining and enhancing business
transactions of selling products andproviding services

YesFiscal year ended Fiscal year ended
March 31, 2021
March 31, 2020
(Note 1)
(Note 1)
Number ofshares(shares)Number ofshares(shares)

Balance sheet
amount(Millions of yen)

Balance sheet
amount(Millions of yen)

THE TAIKO BANK，
LTD．

88,00088,000132

127

ANA HOLDINGS
INC.

50,00050,000128

131

Taiwan High Speed
Rail Corporation

957,361

957,361

116

98

San ju San Financial
Group, Inc.

73,62373,623102

109

513,150

513,150

97

79

THE SHIGA BANK，
LTD．

40,00040,00095

102

Hokuriku ElectricPower Company

116,600

233,300

88

176

Nippon Yakin Kogyo
Co., Ltd.

40,42540,425

83

68

THE DAITO BANK,
LTD.

110,000

110,000

77

62

Tokyo Electric Power
Company Holdings,
Inc.

187,500

187,500

69

70

38,00038,00067

30

Nankai Electric
Railway Co., Ltd.

23,831

71,49460

175

THE BANK OF
KOCHI, LTD.

69,90069,90059

44Senshu Ikeda
Holdings, Inc.

315,327

315,327

56

51

16,250

16,25049

51

Stock nameTochigi Bank, Ltd.

Zeon Corporation

The Aichi Bank, Ltd.

110

Purpose of holdings
and reasons for increases(Note 2)

Holding
shares of
Hitachi, Ltd.

Maintaining and enhancing business
transactions of selling products andproviding services

No

Maintaining and enhancing business
transactions of selling products andproviding services

No

Maintaining and enhancing business
transactions of selling products andproviding services

No

Maintaining and enhancing business
transactions of selling products andproviding services

Yes(Note 3)

Maintaining and enhancing business
transactions of selling products andproviding services

Yes

Maintaining and enhancing business
transactions of selling products andproviding services

No

Maintaining and enhancing business
transactions of selling products andproviding services

No

Maintaining and enhancing business
transactions of selling products andproviding services

No

Maintaining and enhancing business
transactions of selling products andproviding services

No

Maintaining and enhancing business
transactions of selling products andproviding services

No

Maintaining and enhancing business
transactions of selling products andproviding services

No

Maintaining and enhancing business
transactions of selling products andproviding services

No

Maintaining and enhancing business
transactions of selling products andproviding services

No

Maintaining and enhancing business
transactions of selling products andproviding services

No

Maintaining and enhancing business
transactions of selling products andproviding services

NoFiscal year ended Fiscal year ended
March 31, 2021
March 31, 2020
(Note 1)
(Note 1)
Number ofshares(shares)Number ofshares(shares)

Balance sheet
amount(Millions of yen)

Balance sheet
amount(Millions of yen)

Tokyo Kiraboshi
Financial Group, Inc.

30,00030,000

42

34

THE CHUKYOBANK, Ltd.

20,00020,00035

4330,00030,00034

31

30,000300,000

23

27

Nishi-Nippon Railroad
Co., Ltd.

6,000

6,000

17

15

The Michinoku Bank,
Ltd.

11,33011,330

12

13

THE NAGANOBANK, LTD.

6,900

6,900

9

7

-

484,310-296-

358,220-137-

100,000-

112-

50,000-39-

32,000-36

Stock nameTomato bank, Ltd.

Jimoto Holdings, Inc.

Yamaguchi Financial
Group, Inc.

Glosel Co., Ltd.

TOYO ELECTRIC
MFG. CO., LTD.

Ricoh Company, Ltd.

ISEKI&CO., LTD.

Purpose of holdings
and reasons for increases(Note 2)

Holding
shares of
Hitachi, Ltd.

Maintaining and enhancing business
transactions of selling products andproviding services

No

Maintaining and enhancing business
transactions of selling products andproviding services

No

Maintaining and enhancing business
transactions of selling products andproviding services

No

Maintaining and enhancing business
transactions of selling products andproviding services

Yes(Note 3)

Maintaining and enhancing business
transactions of selling products andproviding services

No

Maintaining and enhancing business
transactions of selling products andproviding services

No

Maintaining and enhancing business
transactions of selling products andproviding services

Yes

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

No

Held for maintaining and enhancing
business transactions of purchasing
raw materials and components, etc.

Yes

Held for maintaining and enhancing
business relationship

Yes

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

No

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

No(Notes) 1. Since the number of stock which the Company owned as of March 31, 2020 and March 31, 2021 isless than 60, all of the stocks are listed.
2. Since it is hard to state quantitative effects of holding the investment securities, such effects are notdescribed. Regarding the way to verify significance and relations of holding shares are described in"(i) Policy for shareholding and examination of the reasonableness of holding."
3. Shareholding by major subsidiaries of the issuers of each stock is counted.
4. The number of shares held by the Company increased due to the stock split.
(c) Equity securities held for pure investment
None.

111

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

From April 1 to March 31

Annual General Meetingof Shareholders

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

Record date

End of every fiscal year

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

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

Forward office-

Purchasing and selling fee

Free of charge

Method of public notice

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

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

112VII. Reference Information on the Company
1. Information on a Parent Company, etc. of the Company
The Company has no parent company.
2. Other Reference Information
The Company filed the following documents during the period from the commencing date of the fiscal
year ended March 31, 2021 to the filing date of this Annual Securities Report.
(1) Extraordinary Report(pursuant to Article 19, Paragraph 2, Item 8-2 of the Cabinet Office
Ordinance Concerning Disclosure of Corporate Affairs, etc.)

Filed with the Director of the
Kanto Local Finance Bureau
on July 2, 2020

(2) Amended Extraordinary Report(Amendment to Extraordinary Report (1) above)

Filed with the Director of the
Kanto Local Finance Bureau
on July 2, 2020

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

Filed with the Director of the
Kanto Local Finance Bureau
on July 31, 2020

(4) Annual Securities Report and documents attached, and Confirmation
Letter(The 151st business term (from April 1, 2019 to March 31, 2020))

Filed with the Director of the
Kanto Local Finance Bureau
on August 31, 2020

(5) Internal Control Report

Filed with the Director of the
Kanto Local Finance Bureau
on August 31, 2020

(6) Quarterly Report and Confirmation Letter(The First Quarter of the 152nd business term (from April 1, 2020 toJune 30, 2020))

Filed with the Director of the
Kanto Local Finance Bureau
on August 31, 2020

(7) Amended Extraordinary Report(Amendment to Extraordinary Report (3) above)

Filed with the Director of the
Kanto Local Finance Bureau
on October 16, 2020

(8) Quarterly Report and Confirmation Letter(The Second Quarter of the 152nd business term (from July 1, 2020 to
September 30, 2020))

Filed with the Director of the
Kanto Local Finance Bureau
on November 12, 2020

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

Filed with the Director of the
Kanto Local Finance Bureau
on February 3, 2021

(10) Quarterly Report and Confirmation Letter(The Third Quarter of the 152nd business term (from October 1, 2020
to December 31, 2020))

Filed with the Director of the
Kanto Local Finance Bureau
on February 10, 2021

(11) Extraordinary Report
Filed with the Director of the(pursuant to Article 19, Paragraph 2, Item 7 and 12 of the Cabinet Office Kanto Local Finance Bureau
Ordinance Concerning Disclosure of Corporate Affairs, etc.)
on February 18, 2021
(12) Amended Extraordinary Report(Amendment to Extraordinary Report (11) above)

Filed with the Director of the
Kanto Local Finance Bureau
on February 18, 2021

(13) Extraordinary Report(pursuant to Article 19, Paragraph 2, Item 3 and 16-2 of the Cabinet
Office Ordinance Concerning Disclosure of Corporate Affairs, etc.)

Filed with the Director of the
Kanto Local Finance Bureau
on March 31, 2021

(14) Extraordinary Report(pursuant to Article 19, Paragraph 2, Item 12 of the Cabinet Office
Ordinance Concerning Disclosure of Corporate Affairs, etc.)

Filed with the Director of the
Kanto Local Finance Bureau
on April 1, 2021

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

Filed with the Director of the
Kanto Local Finance Bureau
on April 22, 2021

113

(16) Extraordinary Report(pursuant to Article 19, Paragraph 2, Item 12 of the Cabinet Office
Ordinance Concerning Disclosure of Corporate Affairs, etc.)

Filed with the Director of the
Kanto Local Finance Bureau
on April 28, 2021

(17) Securities Registration Statement

Filed with the Director of the
Kanto Local Finance Bureau
on May 18, 2021

(18) Amended Securities Registration Statement(Amendment to Securities Registration Statement (17) above)

Filed with the Director of the
Kanto Local Finance Bureau
on May 25, 2021

(19) Amended Shelf Registration Statement(Amended Shelf Registration Statement concerning the Shelf
Registration Statement filed on June 20, 2019)

Filed with the Director of the
Kanto Local Finance Bureau
on May 28, 2020
July 2, 2020
July 31, 2020
October 16, 2020
February 3, 2021
February 18, 2021
March 31, 2021
April 1, 2021
April 22, 2021 andApril 28, 2021

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

114

Consolidated Financial Statements
Page
NumberConsolidated Financial Statements of Hitachi, Ltd. and Subsidiaries:
Consolidated Statement of Financial Position as ofMarch 31, 2021 and 2020

F-2

Consolidated Statement of Profit or Loss andConsolidated Statement of Comprehensive Income for the years ended
March 31, 2021 and 2020

F-3

Consolidated Statement of Changes in Equity for the years ended
March 31, 2021 and 2020

F-4

Consolidated Statement of Cash Flows for the years ended
March 31, 2021 and 2020

F-5

Notes to Consolidated Financial Statements

F-6

Reports of Independent Registered Public Accounting Firm

F-1

F-80

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

Note

March 31, 2021

March 31, 2020

26
6,20,26
711,26
5

1,015,886
2,734,476
1,653,395
328,153
211,390812,3312,260,205
1,408,937
279,951
456,165

5,943,300

5,217,589

472,105
534,324
2,408,887
1,161,210
964,830
368,197

480,375
440,5142,165,311
635,927
479,794
510,571

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

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

Total non-current assets
Total assets
Liabilities
Current liabilities
Short-term debt
Current portion of long-term debt
Other financial liabilities
Trade payables
Accrued expenses
Contract liabilities
Other current liabilities

26
11,26
26
13
20
5,14

Total current liabilities
Non-current liabilities
Long-term debt
Retirement and severance benefits
Other non-current liabilities

11,26
15
8,12,14,26

Total non-current liabilities
Total liabilities
EquityHitachi, Ltd. stockholders’ equity
Common stock
Capital surplus
Retained earnings
Accumulated other comprehensive income
Treasury stock, at cost

16
5,16,19
16,18
17
16

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

55,909,553

4,712,492

11,852,853

9,930,081

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

183,303
231,237
252,403
1,270,668
604,415615,096
576,056

4,596,930

3,733,178

1,706,329
433,954
657,408

1,070,502
514,375
345,287

2,797,691

1,930,164

7,394,621

5,663,342

460,790
84,0402,710,604
273,561(3,493)459,862
464,795
2,296,208(57,070)(3,809)3,525,502

3,159,986

932,730

1,106,753

Total equity

4,458,232

4,266,739

Total liabilities and equity

11,852,853

9,930,081

See accompanying notes to consolidated financial statements.

F-2

Consolidated Statement of Profit or Loss
Years ended March 31, 2021 and 2020

Millions of yen

Revenues
Cost of sales
Gross profit
Selling, general and administrative expenses
Other income
Other expenses
Financial income
Financial expenses
Share of profits (losses) of investments accounted for using the equity
methodEBIT (Earnings before interest and taxes)
Interest income
Interest charges
Income from continuing operations, before income taxes
Income taxes
Income from continuing operations
Loss from discontinued operations
Net income
Net income attributable to:
Hitachi, Ltd. stockholders
Non-controlling interests
Earnings per share from continuing operations,
attributable to Hitachi, Ltd. stockholders
Basic
DilutedEarnings per share attributable to Hitachi, Ltd. stockholders
Basic
DilutedNote
20

5,15,21
5,21
22
22

2021
8,729,196(6,533,890)
2,195,306(1,700,126)
476,137(172,407)
13,969(1,456)2020
8,767,263(6,396,895)
2,370,368(1,708,485)
51,992(570,635)
5,768(9,033)8

38,864

43,639850,287
16,934(22,778)
844,443(325,247)
519,196(686)
518,510

183,614
20,638(23,984)
180,268(51,246)
129,022(1,776)
127,246

501,613
16,89787,59639,650Yen
520.00519.22

Yen
92.55
92.43

519.29518.51

90.71
90.60

12
14,23

24

24

Consolidated Statement of Comprehensive Income
Years ended March 31, 2021 and 2020

Millions of yen
Note

Net income
Other comprehensive income (OCI)
Items not to be reclassified into net income
Net changes in financial assets measured at fair value through OCI
Remeasurements of defined benefit plans
Share of OCI of investments accounted for using the equity method
Total items not to be reclassified into net income
Items that can be reclassified into net income
Foreign currency translation adjustments
Net changes in cash flow hedges
Share of OCI of investments accounted for using the equity method
Total items that can be reclassified into net income
Other comprehensive income (OCI)
Comprehensive income
Comprehensive income attributable to:
Hitachi, Ltd. stockholders
Non-controlling interests
See accompanying notes to consolidated financial statements.
F-3

2021
518,5102020
127,246

69,362
88,7362,151
160,249(17,207)(8,396)(963)(26,566)

191,8215,346
58,755
255,922(111,323)
13,173(13,609)(111,759)

416,171934,681(138,325)(11,079)

838,237
96,444(8,465)(2,614)17

Consolidated Statement of Changes in Equity

Year ended March 31, 2021

Millions of yen
2021

Balance at beginning of year

Commonstock(note 16)

Capitalsurplus(notes 5,
16 and 26)

Retainedearnings(notes 16
and 18)

Accumulated
othercomprehensive
income(note 17)459,862

464,795

2,296,208(57,070)(3,809)Treasurystock,
at cost(note 16)

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

Total equity

3,159,986

1,106,753

4,266,739

Changes in equity
Reclassified into retained earnings

-

-

9,436

(9,436)

-

-

-

-

Net income--

501,613--501,613

16,897

518,510

Other comprehensive income

-

-

-

336,624-

336,624

79,547416,171

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

Dividends to non-controlling interests

-

-

-

-

-

-

(41,076)(41,076)

Acquisition of treasury stock

-

-

-

-

(159)

(159)

-

(159)

Sales of treasury stock

-

108

-

-

475

583

-

583

928

928

-

-

-

1,856

-

1,856
(607,739)

Issuance of new shares (note 19)-(381,791)

-

3,443

-

(378,348)(229,391)

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

Changes in non-controlling interests

Year ended March 31, 2020

Millions of yen
2020

Balance at beginning of year
Cumulative effects of changes inaccounting policies (note 3)

Commonstock(note 16)

Capitalsurplus(note 16)

Retainedearnings(notes 16
and 18)458,790

463,786

2,287,587

Accumulated
othercomprehensive
income(note 17)56,360Treasurystock,
at cost(note 16)
(3,920)

Total
Hitachi, Ltd.
stockholders’equityNoncontrollinginterests

Total equity

3,262,603

1,151,800

4,414,403--(2,596)--(2,596)(1,075)(3,671)

458,790

463,786

2,284,991

56,360(3,920)3,260,007

1,150,725

4,410,732

Reclassified into retained earnings--

15,382(15,382)

-

-

-

-

Net income--

87,596--87,59639,650127,246

Other comprehensive income

-

-

-

(96,061)-(96,061)(42,264)(138,325)

Dividends to Hitachi, Ltd. stockholders--(91,761)--(91,761)-(91,761)

Restated balance
Changes in equity

Dividends to non-controlling interests

-

-

-

-

-

-

(47,361)(47,361)

Acquisition of treasury stock

-

-

-

-

(166)

(166)

-

(166)

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

-

(138)

-

-

277

139

-

139

1,072

1,072

-

-

-

2,144

-

2,144

-

75

-

(1,987)-(1,912)

6,003

4,091

Total changes in equity

1,072

1,009

11,217(113,430)

111(100,021)(43,972)(143,993)

Balance at end of year

459,862

464,795

2,296,208(57,070)(3,809)3,159,986

1,106,753

4,266,739

See accompanying notes to consolidated financial statements.

F-4

Consolidated Statement of Cash Flows
Years ended March 31, 2021 and 2020

Millions of yen
Note

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

3

5

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

See accompanying notes to consolidated financial statements.

F-5

5

2021

2020

518,510

127,246

491,663
109,009325,247(38,864)
1,337(452,422)(16,976)
89,722(47,937)(31,811)32,693(29,239)
11,322

433,158
136,993
51,244(43,639)870(19,650)(30,370)
185,935(143,072)(115,086)(47,575)(22,483)
224,378

962,254
21,64820,560(22,368)(188,966)

737,949
23,607
13,362(24,885)(189,113)

793,128

560,920(254,750)(118,195)
83,483(322,894)(98,382)
82,539(861,035)(237,172)

682,408
9,249

57,624(7,541)(458,840)(525,826)

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

80,849334,919(279,446)
5,004(91,699)(43,926)(166)
139(2,345)(492)(184,838)

2,837

25

3

54,105(33,193)

203,555

4,738

812,3311,015,886

807,593
812,331Notes to Consolidated Financial Statements(1) Nature of Operations
Hitachi, Ltd. (the Company) is a corporation domiciled in Japan, whose shares are listed on the Tokyo Stock Exchange. The
accompanying consolidated financial statements comprise the Company, its subsidiaries and the Company’s interests in associates
and joint ventures. The Company’s and its subsidiaries’ businesses are global and diverse, and include manufacturing and services
in eight segments consisting of IT, Energy, Industry, Mobility, Smart Life, Hitachi Construction Machinery, Hitachi Metals andOthers.
(2) Basis of Presentation
As the Company meets the requirements of a “Specified Company applying Designated International Financial ReportingStandards” pursuant to Article 1-2 of the Ordinance on Terminology, Forms and Preparation Methods of Consolidated Financial
Statements (Ordinance of the Ministry of Finance of Japan No. 28 of 1976), the consolidated financial statements of the Company
have been prepared in accordance with International Financial Reporting Standards (IFRS) issued by the International AccountingStandards Board (IASB), as permitted by the provision of Article 93 of the Ordinance. The Company’s fiscal year begins on April
1 and ends on March 31 of the following calendar year.
The Company’s consolidated financial statements have been prepared on a historical cost basis, except for derivative assets andliabilities, financial assets and liabilities measured at fair value through profit or loss (FVTPL), financial assets measured at fairvalue through other comprehensive income (FVTOCI) and assets and liabilities associated with defined benefit plans.
The consolidated financial statements are presented in millions of Japanese yen, the functional currency of the Company.
Management of the Company has made a number of judgments, estimates and assumptions relating to the application of
accounting policies, reporting of revenues and expenses and assets and liabilities in the preparation of these consolidated financial
statements. Actual results could differ from those estimates.
Estimates and assumptions are continually evaluated. The effect of a change in accounting estimates, if any, is recognized in thereporting period in which the change was made and in future periods.
The information regarding judgments used in applying accounting policies that could have a material effect on the Company’s
consolidated financial statements is included in the following notes:
・note 3. (a) Basis of Consolidation・note 3. (d) Financial Instruments and note 26. Financial Instruments and Related Disclosures
The information regarding uncertainties arising from assumptions and estimates that could result in material adjustments in thesubsequent consolidated financial statements is included in the following notes:
・note 3. (j) Impairment of Non-financial Assets, note 9. Property, Plant and Equipment and note 10. Goodwill and Other
Intangible Assets
・note 3. (k) Retirement and Severance Benefits and note 15. Employee Benefits
・note 3. (l) Provisions, note 3. (n) Revenue Recognition, note 14. Provisions and note 20. Revenues
・note 3. (o) Income Taxes and note 12. Deferred Taxes and Income Taxes

F-6

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

F-7

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

F-8

Notes to Consolidated Financial Statements

Expected credit losses are measured by taking the probability weighted average of the discounted present values ofdifferences between the total amount of the contractual cash flows and the total amount of cash flows expected to be received
in the future from the financial assets. If one or more events occur, such as overdue payments, extended payment terms,
negative evaluation by third party credit rating agencies, and/or a deterioration in financial position and operating results,
including capital deficit, the financial assets are individually assessed as credit-impaired financial assets and expected credit
losses are measured based mainly on historical credit loss experience, future collectible amounts and other factors. The
expected credit losses on the financial assets that are not credit-impaired are measured through collective assessment based
mainly on provision rates depending on historical credit loss experience adjusted by the current and future economic situationand other factors, if necessary.
For the expected credit losses on trade receivables, contract assets, and other receivables, the allowances for doubtfulreceivables are recorded instead of directly reducing the carrying amounts. Changes in expected credit losses are recognizedin profit or loss as impairment losses and are included in Selling, general and administrative expenses in the consolidated
statement of profit or loss. For financial assets, after all means of collection have been exhausted and the potential forrecovery is considered remote, it is determined that there are no longer any reasonable expectations of recovering thefinancial assets in their entirety or a portion and the carrying amounts are generally written off.
(ii) Non-derivative Financial Liabilities
The Company initially recognizes debt instruments on the date of issuance. All other financial liabilities are initiallyrecognized at the transaction date, on which the Company becomes a party to the agreement.
The Company derecognizes financial liabilities if extinguished, or if the obligation in the contract is redeemed or the liability
is discharged, cancelled or expires.
Non-derivative financial liabilities the Company holds include bonds, debts, trade payables and other financial liabilities.
They are initially measured at fair value (less direct transaction costs), and bonds and long-term debt are subsequently
measured at amortized cost using the effective interest method. Interest accrued on these financial liabilities is included inInterest charges in the consolidated statement of profit or loss.
(iii) Derivatives and Hedge Accounting
The Company uses derivative instruments including forward exchange contracts, cross currency swaps and interest rate
swaps in order to hedge foreign currency exchange risks and interest rate risks. All derivatives are measured at fair valueirrespective of the objective and intent of holding them.
The Company accounts for hedging derivatives as follows:・Fair value hedge: a hedge of the fair value of a recognized asset or liability or of an unrecognized firm commitment. Thechanges in fair value of the recognized assets or liabilities or unrecognized firm commitments and the related derivatives areboth recorded in profit or loss if the hedge is considered effective.
・Cash flow hedge: a hedge of a forecast transaction or of the variability of cash flows to be received or paid related to arecognized asset or liability. The changes in fair value of the derivatives designated as cash flow hedges are recorded inother comprehensive income (OCI) if the hedge is considered effective. This treatment continues until profit or loss isaffected by the variability of cash flows or the unrecognized firm commitment of the designated hedged item, when changes
in fair value of the derivative are recognized in profit or loss. If a non-financial asset or a non-financial liability isrecognized due to a hedged forecast transaction, the changes in the fair value of the derivative recognized in OCI are
included directly in the acquisition cost or other carrying amount of the asset or liability when the asset or liability isrecognized.
The Company follows the documentation requirements as prescribed by IFRS 9 “Financial Instruments” (amended in
October 2017), which includes the risk management objective and strategy for undertaking various hedge transactions. In
addition, a formal assessment is made at the hedge’s inception and subsequently on a periodic basis, as to whether thederivative used in hedging activities is effective in offsetting changes in fair values or cash flows of the hedged items. Hedge
accounting is discontinued if a hedge becomes ineffective.

F-9

Notes to Consolidated Financial Statements(iv) Offsetting Financial Assets and Liabilities
Financial assets and liabilities are offset and reported as net amounts in the consolidated statement of financial position, only
if the Company currently has a legally enforceable right to set off the recognized amounts and intends to settle on a net basis
or to realize the asset and settle the liability simultaneously.
(e) Put Options of Non-controlling Interests
The Company and its subsidiaries recognize put options on shares of subsidiaries held by non-controlling interests as financial
liabilities at the present value of the exercise price. The Company derecognizes the non-controlling interests and recognizes thedifference between the present value and non-controlling interests in capital surplus.
(f) Inventories
Inventories are stated at the lower of cost or net realizable value. Cost is determined by the specific identification method or by
the moving average method for finished goods, semi-finished goods and work in process, and generally by the moving averagemethod for raw materials. Net realizable value is the estimated selling price in the ordinary course of business less the estimatedcosts of completion and the estimated costs necessary to sell.
(g) Property, Plant and Equipment
Property, plant and equipment are measured using the cost model and stated at cost less accumulated depreciation andaccumulated impairment losses. Acquisition cost includes direct costs of acquisition, costs of dismantling, removing andrestoration of the assets. Each asset is depreciated mainly using the straight-line method over the following estimated useful
lives for major classes of assets:
Buildings and structures
2 to 60 years
Machinery, equipment and vehicles
Tools, furniture and fixtures

2 to 17 years
2 to 20 years

Right-of-use assets

2 to 40 years

Estimated useful lives and the method of depreciation are reviewed at the fiscal year end. Changes in estimated useful lives ordepreciation method are accounted for on a prospective basis as a change in accounting estimate.
(h) Goodwill and Other Intangible Assets
Other intangible assets with finite useful lives are measured using the cost model and stated at cost less accumulated
amortization and impairment losses. Each asset is amortized mainly using the straight-line method over the following estimateduseful lives for major classes of assets:
Software for internal use
2 to 10 years
Software for sale
2 to 10 years
Other

2 to 20 years

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

F-10Notes to Consolidated Financial Statements(i) Leases(i) Lessee
The Company and certain subsidiaries lease facilities, mainly buildings, machines, and vehicles, and recognize a right-of-use
asset, a right to use the underlying asset, and a lease liability, an obligation to make lease payments, and recognize lease costs
as depreciation charges for right-of-use assets and interest expenses on lease liabilities. Lease payments for short-term leases
with a lease term of 12 months or less are recognized in profit or loss on a straight-line basis.
Right-of-use asset
A lessee shall apply a cost model to measure the right-of-use asset, and shall present the corresponding amount in Property,
Plant and Equipment or Other intangible assets as the amount of the right-of-use asset at cost at the commencement date of
the lease less any accumulated depreciation and any accumulated impairment losses. The right-of-use asset at cost includes
the amount of the initial measurement of the lease liability and the initial direct cost incurred by the lessee. The lessee shalldepreciate the right-of-use asset from the commencement date of the lease to the earlier of the end of the useful life of theunderlying asset or the end of the lease term on a straight-line basis. Changes in the useful life or the lease term are accounted
for on a prospective basis as a change in accounting estimate.
Lease liability
The lease liability is measured at the present value of lease payments that are not paid at the commencement date of the lease,
discounted using the interest rate implicit in the lease or the lessee’s incremental borrowing rate, and is included in the
Current portion of long-term debt or Long-term debt. Interest expense on the lease liability in each period during the leaseterm that produce a constant periodic rate of interest on the remaining balance of the lease liability is recognized in profit orloss over the lease term and is included in Interest charges in the consolidated statement of profit or loss.
(ii) Lessor
The Company and certain subsidiaries, as lessors, lease facilities, mainly buildings, machines, and equipment, whereby
substantially all the risks and rewards incidental to the ownership of items of property, plant and equipment are transferred to
the lessee. Therefore, such leases are classified as finance leases with the recognition of the underlying asset discontinued andthe present value of the total amount of lease payments is used to recognize and measure the net investment in the lease.
If substantially all the risks and rewards incidental to the ownership remain with the lessor in a lease, it is classified as an
operating lease, and the underlying asset is continuously recognized, and lease income is recognized over the lease term on astraight-line basis.
(j) Impairment of Non-Financial Assets
For each non-financial asset, the Company reviews the carrying amount and tests for impairment if there are events orcircumstances indicating an asset’s carrying amount may not be recoverable. For an asset that does not generate cash flows thatare largely independent of the cash flows from other assets, the Company considers indicators of impairment based on a cash
generating unit (CGU) or a group of CGUs. Irrespective of any indicators of impairment, the Company tests intangible assets
with indefinite useful lives and goodwill for impairment annually, mainly in the fourth quarter, by estimating the recoverable
amount of each CGU (or group of CGUs) to which such assets are allocated.
The Company measures the recoverable amount of an asset or a CGU (or a group of CGUs) as the higher of fair value less costsof disposal and value in use. In measuring fair values, the Company and its subsidiaries primarily use the income approach(present value technique) based on the estimated future cash flows expected to result from the use of the asset and its eventual
disposal or the market approach to derive reasonable estimates of values in orderly market transactions, such as comparisons ofsimilar public companies and the current gross value of the asset. The Company consults with outside specialists, as appropriate,
depending on the complexity of estimating fair values. Value in use is calculated by the estimated future cash flows based on
business plans approved by management, discounted at the discount rate which is derived from the weighted average cost ofcapital. The business plan used is based on external information, reflects historical experiences, and generally has a maximum of
five years. Since the Company and its subsidiaries are engaged in a wide range of business activities from development,
production and sales of diverse products and the provision of various services, appropriate external information for eachbusiness activity is used for evaluating value in use for each business. Estimated cash flows beyond the period covered by thebusiness plan are calculated using the estimated growth rate not exceeding the long-term average growth rate of the market towhich the asset belongs. The business plan reflects the decrease in demand in certain businesses in the short term due to theimpact 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, and actual result may differ from the estimates. In addition, the discount rate used to calculate thevalue in use is affected by stock market trends and fluctuations in interest rates.
F-11

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

F-12

Notes to Consolidated Financial Statements(n) Revenue Recognition
The Company recognizes revenue in accordance with the following five-step approach.
Step 1: Identify the contract(s) with a customer
Step 2: Identify the performance obligations in the contract
Step 3: Determine the transaction price
Step 4: Allocate the transaction price to the performance obligations in the contract
Step 5: Recognize revenue when (or as) the Company satisfies a performance obligation
The Company offers multiple solutions to meet its customers’ needs which may involve the delivery or performance of multiple
elements, such as goods or services. When the Company enters into multiple contracts for providing the goods or services,
related contracts are combined based on interdependencies between each contract’s consideration and the time the Company
entered into such contracts, and the transaction price is allocated to each performance obligation on the basis of the relative
stand-alone selling prices of each distinct good or service for the purpose of recognizing revenue.
In estimating the stand-alone selling price, the Company considers various factors such as market conditions, entity-specificfactors and information about the customer or class of customer.
The transaction price is the amount of consideration to which the Company expects to be entitled in exchange for transferringpromised goods or services to a customer. Variable consideration, such as discounts and rebates, is included in the transaction
price only to the extent that it is highly probable that a significant reversal in the amount of cumulative revenue recognized will
not occur when the uncertainty associated with the variable consideration is subsequently resolved. The promised amount ofconsideration does not include a significant financing component.
For a performance obligation satisfied over time, the Company measures its progress towards complete satisfaction of that
performance obligation on the basis of output or input methods in consideration of the nature of the goods and services for the
purpose of recognizing revenue. When the Company cannot reasonably measure the progress, revenue is recognized only to theextent of the costs incurred.
The Company recognizes the incremental costs of obtaining a contract with a customer and the costs directly related to fulfillinga contract as an asset if those costs are expected to be recovered, and those assets are amortized based on the methods used torecognize revenue of the goods or services to which the assets relate. The Company recognizes the incremental costs ofobtaining a contract as an expense when incurred if the amortization period of the asset is less than one year.
Revenue recognition under long-term projects requires significant assumptions about the estimated total cost, estimated total
selling price, risk associated with the contract, and other factors. These estimates are subject to variance of uncertain economic
conditions in the future and may variance for a variety of reasons beyond our control. The Company reviews these estimates on
an ongoing basis and reflects them in accounting practices.
(o) Income Taxes
Deferred tax assets and liabilities resulting from temporary differences and others are accounted for based on a liability method.
Deferred tax liabilities are not recognized for temporary differences arising from goodwill, temporary differences arising froman asset or liability in a transaction other than a business combination, which at the time of transaction affects neither accounting
nor taxable income and future taxable difference arising from investments in subsidiaries, associates and joint ventures wherethat the Company is able to control the timing of reversal of the temporary difference while it is probable that the temporary
difference will not reverse in the foreseeable future. Deferred tax assets are recognized to the extent that it is probable that futuretaxable income will be available against which unused tax loss carryforwards, unused tax credits and future deductible
temporary differences can be utilized. Future taxable income reflects the decrease in demand in the short term in part of thebusiness due to the impact of the slowdown in the global economy caused by the spread of COVID-19. The times and amountsof 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. Current tax and deferred tax on items recognized in OCI are also recognized in OCI.
Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in whichthose temporary differences are expected to be reversed. The effect on deferred tax assets and liabilities of a change in tax rates
is recognized in profit or loss and OCI in the period that includes the enactment date.

F-13

Notes to Consolidated Financial Statements(p) Consumption Tax
Consumption tax collected and remitted to taxing authorities is excluded from revenues, cost of sales and expenses in the
consolidated statement of profit or loss.
(q) Earnings per Share
Basic earnings per share (EPS) for net income attributable to Hitachi, Ltd. stockholders is calculated based on the weighted
average number of ordinary shares outstanding during the period. Diluted EPS for net income attributable to Hitachi, Ltd.
stockholders is calculated based on the sum of weighted average number of ordinary shares outstanding during the period andthe conversion of securities with dilutive effects or the number of authorized shares.
(r) Business Combinations
Business combinations are accounted for using the acquisition method. Consideration is measured as the sum of the fair value ofthe consideration transferred at acquisition date and the non-controlling interests in the acquiree. The Company determines, on atransaction by transaction basis, whether to measure non-controlling interests at fair value or by the appropriate share in the fairvalue of identifiable net assets of the acquiree. Acquisition related costs are expensed in the period in which the costs are
incurred.
(s) Changes in Accounting Policies
Adoption of IFRS 16 “Leases”
From the beginning of the fiscal year ended March 31, 2020, the Company has adopted IFRS 16 “Leases”. IFRS 16 sets out the
principles for the recognition, measurement, presentation and disclosure of leases, and lessees are required to account for allleases under a single on-balance sheet model.
As a transitional measure upon the adoption of IFRS 16, the Company applies this standard and the method of recognizing the
cumulative effect of the initial application as an adjustment to the beginning balance of retained earnings at the date of initial
application.
The Company’s leases consist mainly of the leasing of real estate, and the impact of adopting IFRS 16 on the consolidated
statement of financial position at the beginning of the fiscal year ended March 31, 2020 includes an increase in assets of 218,161
million yen associated with the recognition of right-of-use assets, an increase in liabilities of 221,832 million yen associatedwith the recognition of lease liabilities, and a decrease in equity of 3,671 million yen associated with the recognition of an
adjustment to the beginning balance of retained earnings, etc. at the date of initial application. The impact on the consolidated
statement of profit or loss was not material. In addition, with respect to the consolidated statement of cash flows, while lease
payments for operating leases were previously included in cash flows from operating activities, adjustments for depreciation
charges for right-of-use assets are included in cash flows from operating activities and payments of lease liabilities are included
in cash flows from financing activities as a result of adopting IFRS 16; therefore, compared with the previous accounting
standard, cash flows from operating activities increased while cash flows from financing activities decreased.
The Company elects to use the practical expedient under which it is not required to perform a review for the existence of a leasein a contract judged under IAS 17 “Lease” and IFRIC 4 “Determining whether an Arrangement contains a Lease” in priorperiods at the commencement date of IFRS 16. In addition, when IFRS 16 is applied to a lease that is classified as an operatinglease under IAS 17, the following practical expedients are mainly elected to use.
・A lessee accounts for the leases for which the lease term ends within 12 months of the date of initial application, in the same
way as short-term leases.
・A lessee uses hindsight, in determining the lease term if the contract contains options to extend or terminate the lease.
The weighted average lessee’s incremental borrowing rate applied to lease liabilities recognized in the consolidated statement offinancial position at the beginning of the fiscal year ended March 31, 2020 is 1.46%.
The difference between the future minimum lease payments of 135,963 million yen under non-cancelable operating leases as ofMarch 31, 2019 disclosed in accordance with IAS 17 and the lease liabilities of 273,812 million yen recognized in the
consolidated statement of financial position at the beginning of the fiscal year ended March 31, 2020 is 137,849 million yen.
The main factors for the reconciliation from the future minimum lease payments based on non-cancelable operating leases as ofMarch 31, 2019 to lease liabilities recognized in the consolidated statement of financial position at the beginning of the fiscal
year ended March 31, 2020 include decreases of 32,940 million yen due to the application of the practical expedient related toshort-term leases, 17,980 million yen due to the separation of non-lease components of the contract and 9,456 million yen due tothe measurement of the discounted present value of lease liabilities, and increases of 149,026 million yen due to the impact of

F-14

Notes to Consolidated Financial Statements
periods covered by extension options and termination options included in the lease term and 49,199 million yen due to theinclusion of lease liabilities classified as finance leases under IAS 17.
(t) New Accounting Standards not yet Adopted by the Company
The impact of adopting the principal new accounting standards and interpretations issued or amended prior to the approval dateof the consolidated financial statements that is not yet adopted by the Company as of the reporting date on the Company’s
financial position and business performance will not be material.

F-15

Notes to Consolidated Financial Statements(4) Segment Information
Business Segments
The operating segments of the Company are the components for which separate financial information is available and which isevaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance.
The Company discloses its business in eight reportable segments, corresponding to categories of activities classified primarily by
the similarities for the nature of markets, products and services, and economic characteristics. Several operating segments areaggregated into Energy, Industry, Mobility and Smart Life for financial reporting purposes so that users of the financial statements
better understand the Company’s financial position and business performance. The Company aggregates operating segments basedon the similarities of economic characteristics mainly using gross profit margin ratios of operating segments. The primary products
and services included in each segment are as follows:
IT:
Digital solutions (Consulting, Software, Cloud services, System integration, Control systems), IT products (Storage, Servers), andATMs
Energy:Energy solutions (Nuclear, Renewable energy, Thermal, Power grid)Industry:
Industry & distribution solutions, Water & environment solutions and Industrial machinery
Mobility:
Building systems (Elevators, Escalators) and Railway systems
Smart Life:
Smart life & ecofriendly systems (Home appliances, Air conditioners), Measurement and analytical systems (Medical and Bio,
Semiconductor, Industry) and Automotive systems (Powertrain, Chassis, Advanced driver assistance, Motorcycle)
Hitachi Construction Machinery:Hydraulic excavators, Wheel loaders, Mining machinery, Maintenance and services, Construction solutions and Mine management
systems
Hitachi Metals:
Specialty steel products, Functional components and equipment, Magnetic materials and power electronics materials, and Wires,
cables and related products
Others:
Optical disk drives, Property management and others
Effective from April 1, 2020, due to making Hitachi High-Tech Corporation a wholly-owned subsidiary of the Company during
the three months ended June 30, 2020, the Hitachi High-Tech segment was incorporated with the Smart Life segment. Figures forthe year ended March 31, 2020 have been restated on the basis of the reclassification.
In April 2020, the Company sold all shares of Hitachi Chemical Company, Ltd. (currently Showa Denko Materials Co., Ltd.). As aresult, Hitachi Chemical Company, Ltd. was deconsolidated. Accordingly, the Hitachi Chemical segment ceased to be a businesssegment, but the segment figures for the years ended March 31, 2021 and 2020 are disclosed individually to enhance fairdisclosure.

F-16

Notes to Consolidated Financial Statements
The following tables show business segment information for the years ended March 31, 2021 and 2020.
Revenues from External Customers
Millions of yen
2021

2020

IT
Energy1,892,355
1,054,555

1,945,282
334,220

Industry
Mobility

669,956
1,191,702

663,912
1,132,944

Smart Life
Hitachi Construction Machinery

2,138,667
812,341

2,037,269
930,966

735,728-

851,224
612,061

Hitachi Metals
Hitachi Chemical
Others

221,422

247,997

Subtotal
Corporate items

8,716,726
12,4708,755,875
11,388Total

8,729,196

8,767,263

Revenues from Intersegment Transactions
Millions of yen
2021

2020

IT

156,401

154,144

EnergyIndustry

53,431
160,206

65,034
176,837

Mobility
Smart Life

7,930
101,667

11,503130,347

Hitachi Construction Machinery
Hitachi Metals

990
25,887381
30,178Hitachi Chemical
Others227,586

19,372
236,833

Subtotal

734,098

824,629

Corporate items and Eliminations(734,098)(824,629)

-

-

Total
Total Revenues

Millions of yen
2021

2020

IT

2,048,756

2,099,426

EnergyIndustry

1,107,986
830,162399,254
840,749

Mobility
Smart Life

1,199,632
2,240,334

1,144,447
2,167,616

Hitachi Construction Machinery
Hitachi Metals

813,331761,615

931,347
881,402

Hitachi Chemical
Others449,008

631,433
484,830

Subtotal
Corporate items and Eliminations

9,450,824(721,628)

9,580,504(813,241)

Total

8,729,196

8,767,263

F-17

Notes to Consolidated Financial Statements
Segment Profit (Loss)
Millions of yen
2021

2020

IT

244,860

214,449

EnergyIndustry(55,567)
42,366(375,781)
57,858

Mobility
Smart Life

129,036
206,527

112,349
90,016

Hitachi Construction Machinery
Hitachi Metals

27,678(49,155)

70,551(57,274)

Hitachi Chemical
Others25,31924,806
31,294

Subtotal
Corporate items and Eliminations

571,064
279,223

168,268
15,346

Total
Interest income

850,287
16,934

183,614
20,638Interest charges(22,778)(23,984)

Income from continuing operations, before income taxes

844,443

180,268

Segment profit (loss) is measured by EBIT.
Intersegment transactions are generally recorded at the same prices used in arm’s length transactions. Corporate items include
corporate expenses not allocated to individual business segments, such as expenditures for advanced R&D, a part of net gain (loss)
on business reorganization and share of profits (losses) of investments accounted for using the equity method, and others.
Total Assets
Millions of yen
March 31, 2021

March 31, 2020

IT2,060,781

1,988,750

EnergyIndustry

2,277,117
986,314686,524
972,119

Mobility
Smart Life

1,887,517
2,800,365

1,557,964
2,012,796

Hitachi Construction Machinery
Hitachi Metals

1,252,172
976,773

1,199,917
988,209

Hitachi Chemical
Others2,110,609

706,638
1,915,616

Subtotal
Corporate assets and Eliminations

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

12,028,533(2,098,452)

Total

11,852,853

9,930,081

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

F-18

Notes to Consolidated Financial Statements
Investments Accounted for Using the Equity Method
Millions of yen
March 31, 2021

March 31, 2020

IT48,471

46,430

EnergyIndustry

43,546
21,504

22,81920,835

Mobility
Smart Life

24,89986,61756,782
68,593

Hitachi Construction Machinery
Hitachi Metals

30,486
11,49432,86629,076

Hitachi Chemical
Others

4,893

8,922
6,025

Subtotal
Corporate items and Eliminations

271,910200,195

292,348
188,027

Total

472,105

480,375

Goodwill
Millions of yen
March 31, 2021

March 31, 2020

IT214,280

204,243

EnergyIndustry

480,006
155,240

158,010

Mobility
Smart Life

76,051
98,032

52,56550,359Hitachi Construction Machinery
Hitachi Metals

50,95586,64645,707
90,534

Hitachi Chemical
Others-34,509-Subtotal
Corporate items

1,161,210-

635,927-

Total

1,161,210

635,927

F-19

Notes to Consolidated Financial Statements
Depreciation and Amortization
Millions of yen
2021

2020

IT

107,649

112,485

EnergyIndustry

86,726
24,5784,870
22,259

Mobility
Smart Life

30,957
97,27728,47380,827

Hitachi Construction Machinery
Hitachi Metals

51,24650,407

47,12455,180

Hitachi Chemical
Others33,88743,96829,471

Subtotal
Corporate items and Eliminations

482,7278,936

424,657
8,501

Total

491,663

433,158

Depreciation consists of that of property, plant and equipment and investment properties.
Impairment Losses
Millions of yen
2021

2020

IT

17,112

18,838EnergyIndustry

2,692
11,358

2,827
5,409

Mobility
Smart Life

816
39,934

3,238
24,055

Hitachi Construction Machinery
Hitachi Metals

1,391
35,857

6,002
70,198

469

6,022
404

Subtotal
Corporate items and Eliminations

109,629(620)

136,993-

Total

109,009

136,993

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

F-20

Notes to Consolidated Financial Statements
Share of Profits (Losses) of Investments Accounted for Using the Equity Method
Millions of yen
2021

2020

IT

1,732

1,648

EnergyIndustry

4,545
2,462

(9,204)
8,353

Mobility
Smart Life

6,966
12,915

3,029
10,490

Hitachi Construction Machinery
Hitachi Metals

1,428
77

2,682
1,667

541

4,541
337

Subtotal
Corporate items and Eliminations

30,666
8,198

23,54320,096

Total

38,864

43,639Hitachi Chemical
OthersShare of profits (losses) of investments accounted for using the equity method includes impairment losses and reversal of
impairment losses on investments accounted for using the equity method.
Capital Expenditures
Millions of yen
2021

2020

IT
Energy127,277
49,162

104,406
8,222

Industry
Mobility

22,26036,642

15,314
28,121

Smart Life
Hitachi Construction Machinery

139,659
39,640129,635
54,508Hitachi Metals
Hitachi Chemical

28,806-53,01949,641Others37,37946,957

Subtotal

480,825

489,823

Corporate items and Eliminations(2,677)

8,473

Total

478,148498,296

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

F-21

Notes to Consolidated Financial Statements
Geographic Information
The following table shows revenues attributed to geographic areas based on the location of the customers for the years ended
March 31, 2021 and 2020.
Millions of yen
2021

2020

Japan

4,154,818

4,529,095

Asia

1,893,620

1,767,537

North America
Europe1,117,554
1,013,487

1,102,987
924,499

Other Areas

549,717443,145

Overseas Revenues Subtotal

4,574,378

4,238,168

Total Revenues

8,729,196

8,767,263

Revenues in China for the years ended March 31, 2021 and 2020 were 1,043,279 million yen and 871,125 million yen,respectively. Revenues in the U.S.A. for the years ended March 31, 2021 and 2020 were 1,012,134 million yen and 1,017,351
million yen, respectively. Revenues from external customers attributable to any individual country and region other than Japan,
China and the U.S.A. were not material for the years ended March 31, 2021 and 2020.
The following table shows the balances of property, plant and equipment, investment properties, goodwill and other intangible
assets for each geographic area as of March 31, 2021 and 2020.
Millions of yen
March 31, 2021
Japan

March 31, 2020

1,767,672

1,733,369

Asia
North America

543,842
677,996

391,393664,242EuropeOther Areas

1,322,323
263,152

324,088
178,139

Subtotal

4,574,985

3,291,231

Corporate items and Eliminations
Total

5,325

36,6024,580,310

3,327,833

The balances of property, plant and equipment, investment properties, goodwill and other intangible assets in the U.S.A. as ofMarch 31, 2021 and 2020 were 657,570 million yen and 651,290 million yen, respectively. The balances of property, plant andequipment, investment properties, goodwill and other intangible assets in the Swiss Confederation as of March 31, 2021 and 2020
were 1,065,360 million yen and 716 million yen, respectively. The balances of property, plant and equipment, investment
properties, goodwill and other intangible assets in any individual country and region other than Japan, the U.S.A. and the Swiss
Confederation were not material as of March 31, 2021 and 2020.
Significant Customer Information
There was no concentration of revenues from a specific customer for the years ended March 31, 2021 and 2020.

F-22

Notes to Consolidated Financial Statements(5) Business Acquisitions and Divestitures
The following are the main Business Acquisitions and Divestitures and other related transactions for the year ended March 31,
2021, including the period up to the approval date of the consolidated financial statements.
(a) Sale of all shares of Hitachi Metals, Ltd. (Hitachi Metals)
On April 28, 2021, the Company entered into an agreement regarding the following four points for the common stocks of
Hitachi Metals (Hitachi Metals Shares), a consolidated subsidiary of the Company in the Hitachi Metals segment, with K. K.
BCJ-52 (Tender Offeror), a wholly owned company of G.K. BCJ-51, the outstanding shares of which are indirectly owned byinvestment funds which Bain Capital Private Equity, LP and its group provide with investment advice.
(i)Tender Offeror will launch a tender offer (Tender Offer) for Hitachi Metals Shares, when conditions for the commencementof Tender Offer are satisfied, and the Company will not apply for Tender Offer with regard to all of the Hitachi Metals
Shares held by the Company (Shares to Be Sold by the Company).
(ii)In the event Tender Offer is enacted and Tender Offeror is unable to acquire all of the Hitachi Metals Shares (excluding
treasury stock held by Hitachi Metals and Shares to Be Sold by the Company) in Tender Offer, Tender Offeror and theCompany will request convening of a general meeting of shareholders on the matter of items required for implementation ofshare consolidation (Share Consolidation) on Hitachi Metals and exercise approval right for the proposal.
(iii)As promptly as practically possible after Tender Offeror and the Company become holders of all shares of Hitachi Metals(excluding treasury stock held by Hitachi Metals) as a result of Share Consolidation, capital reduction and other measures(Capital Reduction) will be performed for Hitachi Metals in order to secure distributable amount required for acquisition oftreasury stock by Hitachi Metals (Share Repurchase).
(iv)Immediately after Capital Reduction takes effect, Shares to Be Sold by the Company will be transferred to Hitachi Metals
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 aresult, the Company’s ownership ratio of Hitachi Metals Shares will decrease from 53.4% to 0%, and Hitachi Metals will bedeconsolidated. An expected gain on the sale of Hitachi Metals Shares in the amount of approximately 114.0 billion yen will berecognized in Other income in the consolidated statement of profit or loss. 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.
(b) Acquisition of GlobalLogic Inc.
On March 31, 2021, the Company decided to acquire GlobalLogic Inc. (GlobalLogic), a leading U.S.-headquartered digitalengineering service company, in order to strengthen the digital portfolio of “Lumada.”
The acquisition is based on the definitive agreement among Hitachi Global Digital Holdings LLC (HGDH) which is a
subsidiary located in the U.S., MergeCo H Global Inc. (SPC) which was established by HGDH for the acquisition and
GlobalLogic Worldwide Holdings, Inc. (GlobalLogic Worldwide Holdings) which is the parent company of GlobalLogic. 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 1,047.0 billion yen). SPC will be merged with and into GlobalLogic Worldwide Holdings, which will be thesurviving company. As a result, GlobalLogic Worldwide Holdings and GlobalLogic will become wholly owned subsidiaries of
the Company.
(c) Reorganization of the Global Home Appliances Business (excluding Japan)
On December 16, 2020, Hitachi Global Life Solutions, Inc. (Hitachi GLS), a consolidated subsidiary of the Company in the
Smart Life segment, and Arçelik A.S. (Arçelik) signed a share purchase agreement to establish a new joint venture company.
Based on the agreement, Hitachi GLS plans to establish a new company and plans to transfer its global home appliancesbusiness outside of Japan into the new company by July 1, 2021, and Hitachi GLS plans to transfer 60% of the shares ofcommon stock of the new company to Arçelik. The consideration is expected to be approximately 0.3 billion U.S. dollars(approximately 31.5 billion yen). Assuming the transaction is settled, it is expected that Hitachi GLS’s ownership ratio ofshares of the new company will decrease from 100% to 40%, and the new company will turn into an equity-method associateof the Company.
(d) Sale of Diagnostic Imaging-related Business
On December 18, 2019, the Company signed an agreement with FUJIFILM Corporation (Fujifilm) regarding the transfer of the
Diagnostic Imaging-related Business included in the Company, the Company’s subsidiaries and associates in the Smart Lifesegment to Fujifilm.

F-23

Notes to Consolidated Financial Statements
The Company transferred all shares of common stock of FUJIFILM Healthcare Corporation (Fujifilm Healthcare) establishedby the Company to Fujifilm after the Diagnostic Imaging-related Business is succeeded to Fujifilm Healthcare from theCompany through an absorption-type company split. The consideration to be received by the Company was 185,349 million
yen.
As a result, the Company’s ownership ratio of shares of Fujifilm Healthcare decreased from 100% to 0%, and Fujifilm
Healthcare was deconsolidated. A gain on the sale of shares of Fujifilm Healthcare in the amount of 118,320 million yen wasrecognized in Other income in the consolidated statement of profit or loss.
(e) Reorganization of automotive systems business
On October 30, 2019, the Company and Hitachi Automotive Systems, Ltd. (HiAMS), a consolidated subsidiary of theCompany in the Smart Life segment, signed an agreement with Honda Motor Co., Ltd. (Honda), and Keihin Corporation(Keihin), Showa Corporation (Showa), and Nissin Kogyo Co., Ltd (Nissin Kogyo) (together, “the Associates of Honda”), to
integrate management of HiAMS and the Associates of Honda, in order to strengthen development and distribution of global
and competitive solutions in the CASE area.
On January 1, 2021, HiAMS and the Associates of Honda conducted an absorption-type merger in which HiAMS is thesurviving company and each of the Associates of Honda are the disappearing companies, and established Hitachi Astemo, Ltd.
(Astemo). As a result, the Company’s ownership ratio of shares of Astemo became 66.6% and Astemo turned into a subsidiaryof the Company.
The consideration was the common shares of HiAMS. The fair value of the consideration was allocated as follows: 88,747
million yen for Keihin, 59,062 million yen for Showa, and 48,242 million yen for Nissin Kogyo. The fair value of theconsideration was based on the valuation of HiAMS and the Associates of Honda agreed by the Company and Honda. For theagreement, the Company verified the validity of the valuation by taking into account the results of fair value measurements
conducted by third-party valuation specialists and other factors.
In addition to this acquisition, the Company’s ownership interest in the former HiAMS decreased from 100% prior to the
execution of this acquisition to 66.6%, and the Company recognized increases in capital surplus and non-controlling interests inthe amounts of 117,865 million yen and 81,242 million yen, respectively, for the year ending March 31, 2021.
The following table summarizes the fair value of the consideration paid for the Associates of Honda and the amounts of theassets acquired, liabilities assumed, goodwill and non-controlling interests recognized as of the acquisition date.
Millions of yen
158,503
115,185
113,033
67,656
231,139

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

44,69864,216
51,661
846,091

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

229,550
273,791
42,872546,213

Cash paid for the acquisitionNon-controlling interests
Total

196,058
103,820
299,878

The goodwill mainly comprises excess earning power and expected synergies arising from the acquisition.
Non-controlling interests are measured based on the proportionate share of the fair value of the identifiable net assets of the
Associates of Honda.

F-24

Notes to Consolidated Financial Statements
Acquisition related costs of 2,948 million yen have been posted up to the year ended March 31, 2020. Acquisition related costs
included in Other expenses in the consolidated statement of profit or loss for the years ended March 31, 2021 and 2020 were2,298 million yen and 2,946 million yen, respectively.
The operating results of the Associates of Honda for the period from the acquisition date to March 31, 2021 were not material.
Assuming that such acquisition occurred as of April 1, 2020, the results of operations of the Company for the year ended
March 31, 2021 (pro forma information not subject to the audit) are as follows:
Millions of yen
9,225,776
830,340
458,931

Revenues
EBIT
Net income(f) Settlement regarding the South African projectAt the meeting of the Board of Directors held on December 18, 2019, the Company approved a settlement with Mitsubishi
Heavy Industries, Ltd. (MHI) regarding the transfer price adjustment, etc. for the South African project previously in theprocess of arbitration based on economic rationality and business strategy, etc., and reached a settlement agreement with MHI
on the same day. As a result of the conclusion of this settlement, it was agreed that all common shares of Mitsubishi Hitachi
Power Systems, Ltd. (MHPS) held by the Company would be transferred to MHI, and the Company would pay 130,000 million
yen to MHI comprising a settlement payment of 200,000 million yen offset by a consideration of 70,000 million yen in loans
receivable to Mitsubishi Hitachi Power Systems Africa Proprietary Limited (MHPS Africa) to be transferred to MHI.
Accordingly, the Company recorded other accounts payable of 200,000 million yen related to the settlement payment to MHI
and other provision of 273,272 million yen related to the transfer of shares of MHPS. The Company also reversed the provisionof 105,041 million yen related to the transfer price adjustment, etc. of the South African project, which had been recorded prior
to the conclusion of this agreement. As a result of the above, the Energy segment recorded a loss of 375,967 million yen due tothe settlement, which is included in Other expenses in the consolidated statement of profit or loss for the year ended March 31,
2020. Other provision related to this agreement is included in Other current liabilities in the consolidated statement of financial
position as of March 31, 2020, and the change in the provisions, including the reversal of the provision related to the transfer
price adjustment, etc. of the South African project, which had been recorded prior to the conclusion of this agreement, is
included in Other under cash flows from operating activities in the consolidated statement of cash flows for the year ended
March 31, 2020. Regarding the assets to be transferred to MHI under this agreement, the shares of MHPS previously included
in Investments accounted for using the equity method and the loans receivable to MHPS Africa previously included in
Investments in securities and other financial assets classified as non-current assets in the consolidated statement of financial
position, the total of which was 333,614 million yen, were reclassified to Other current assets in the consolidated statement offinancial position since they met the criteria as held-for-sale assets in accordance with IFRS 5 “Non-current Assets Held forSale and Discontinued Operations”.
Furthermore, on March 30, 2020, the Company transferred to MHI, the loans receivable to MHPS Africa, and paid 130,000
million yen to MHI comprising the settlement payment offset by the consideration in loans receivable. On September 1, 2020,
all shares of MHPS held by the Company, 263,614 million yen, which had been classified as held-for-sale assets, weretransferred to MHI, and MHPS ceased to be an associate. Accordingly, the Company reversed other provision of 273,272
million yen related to the transfer of shares of MHPS, which had been included in Other current liabilities in the consolidated
statement of financial position. On September 14, 2020, the Company and MHI received a notice from the Japan Commercial
Arbitration Association stating that the arbitration was closed.
On September 1, 2020, MHPS changed its name to Mitsubishi Power, Ltd.

F-25

Notes to Consolidated Financial Statements(g) Acquisition of ABB's power grids business
On December 17, 2018, the Company decided to acquire the power grid business of ABB Ltd (ABB) and signed an acquisition
agreement with ABB in order to strengthen and expand energy solution business globally. Pursuant to this agreement, theCompany invested 80.1% in Hitachi ABB Power Grids Ltd (Hitachi ABB Power Grid), which was spun off from ABB, and theacquisition was completed on July 1, 2020. As a result, Hitachi ABB Power Grid became a subsidiary of the Company. The
Company has a call option to purchase 19.9% of the shares of Hitachi ABB Power Grid held by ABB, and ABB has a put
option to sell 19.9% of the shares of Hitachi ABB Power Grid held by ABB to the Company exercisable after 2023.
The following table summarizes the fair value of the consideration paid for Hitachi ABB Power Grid and the amounts of theassets acquired, liabilities assumed, goodwill and non-controlling interests recognized as of the acquisition date.
Millions of yen
65,466372,999
174,198
63,883
239,287

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

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

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

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

Cash paid for the acquisitionNon-controlling interests
Total

722,062
79,249801,311

The goodwill mainly comprises excess earning power and expected synergies arising from the acquisition.
Other intangible assets include material intangible assets in the amount of 414,544 million yen (customer relationships of
233,989 million yen, technology of 95,987 million yen, order backlog of 53,542 million yen, and brand license agreement of
31,026 million yen). These intangible assets are measured based on assumptions such as revenue growth rates, gross profit
ratios, attrition rates of existing customers, royalty rates and discount rates.
Non-controlling interests are measured based on the proportionate share of the fair value of the identifiable net assets of Hitachi
ABB Power Grid.
The Cash paid for the acquisition may vary due to transaction price adjustment.
Acquisition related costs of 5,391 million yen have been posted up to the year ended March 31, 2020. Acquisition related costs
included in Other expenses in the consolidated statement of profit or loss for the year ended March 31, 2021 and 2020 were2,909 million yen and 2,358 million yen, respectively.
In addition to this acquisition, the Company repaid 3,000 million U.S. dollars (323,190 million yen) of certain loans owed by
Hitachi ABB Power Grid from ABB's subsidiary, ABB Capital B.V., and the repayment is included in Purchase of investments
in securities and other financial assets (including investments in subsidiaries and investments accounted for using the equity
method) under Cash flows from investing activities in the consolidated statement of cash flows for the year ended March 31,
2021.
The results of operations of Hitachi ABB Power Grid from the date of acquisition to March 31, 2021 (prior to elimination ofintercompany transactions) included in the consolidated statement of profit or loss are Revenues of 722,351 million yen, EBIT

F-26

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

Revenues
EBIT
Net income

Hitachi ABB Power Grid's historical financial information has been adjusted from U.S. GAAP to IFRS to generate pro forma
information. EBIT and Net income include depreciation and amortization of 65,926 million yen on Other intangible assets andPP&E that were recognized as a result of this acquisition.
(h) Additional acquisition of shares of Hitachi High-Tech Corporation (Hitachi High-Tech)
On January 31, 2020, the Company decided to conduct a tender offer to acquire all issued shares of Hitachi High-Tech, aconsolidated subsidiary of the Company in the Smart Life segment, to establish the measurement and analysis platform tostrengthen Lumada. The Company commenced the tender offer on February 17, 2020, and the tender offer was completed on
April 6, 2020.
Furthermore, the Company conducted a series of procedures to make Hitachi High-Tech a wholly-owned subsidiary of theCompany. As a result, the Company’s ownership ratio of shares of Hitachi High-Tech increased to 100% on May 20, 2020.
The total consideration paid was 531,084 million yen, and the Company recognized decreases in capital surplus of 321,627
million yen and non-controlling interest of 209,457 million yen, respectively, for the year ended March 31, 2021.
(i) Sale of all shares of Hitachi Chemical Company, Ltd. (Hitachi Chemical)
On December 18, 2019, the Company signed a tender offer agreement with Showa Denko K.K. (Showa Denko) and HC
Holdings K.K. (HC Holdings), a wholly-owned subsidiary of Showa Denko, under which the Company agrees to tender all
shares of common stock in Hitachi Chemical held by the Company, in response to a tender offer to be carried out by HC
Holdings for the shares of common stock of Hitachi Chemical, a consolidated subsidiary of the Company in the Hitachi
Chemical segment. HC Holdings commenced the tender offer on March 24, 2020, and the tender offer was completed on April
20, 2020. The consideration received by the Company was 495,145 million yen.
As a result, the Company’s ownership ratio of shares of Hitachi Chemical decreased from 51.4% to 0%, and Hitachi Chemical
was deconsolidated. A gain on the sale of shares of Hitachi Chemical in the amount of 278,839 million yen was recognized in
Other income in the consolidated statement of profit or loss. Furthermore, non-controlling interest in Hitachi Chemical
decreased 220,402 million yen in Changes in non-controlling interests in the consolidated statement of changes in equity as aresult of its deconsolidation.
On October 1, 2020, Hitachi Chemical changed its name to Showa Denko Materials Co., Ltd.

F-27

Notes to Consolidated Financial Statements
The following are the main Business Acquisitions and Divestitures for the year ended March 31, 2020.
(a) Acquisition of robotic systems integration business
On April 23, 2019, the Company signed an agreement with JR Intermediate Holdings, LLC (JR Intermediate) to acquire allinterests of JR Technology Group, LLC (JR Technology), a subsidiary of JR Intermediate, in order to expand the robotic
systems integration business globally. On December 27, 2019, Hitachi America, Ltd., a consolidated subsidiary of theCompany, executed the acquisition. As a result, the Company’s ownership ratio of interests of JR Technology became 100%and JR Technology turned into a subsidiary of the Company. Furthermore, Hitachi America, Ltd. repaid 231 million U.S.
dollars (25,304 million yen) of certain loans owed by JR Technology, in addition to the acquisition cost.
The following table summarizes the fair value of the consideration paid for JR Technology and the amounts of the assets
acquired and liabilities assumed recognized as of the acquisition date.
Millions of yen
3,056
26,315
433
871
9,352

Cash and cash equivalents
Trade receivables and contract assets
Inventories
Other current assets
Non-current assets (excluding intangible assets)
Intangible assets
Goodwill (deductible for tax purposes)
Other intangible assets
Total

84,33456,008180,369

Current liabilities
Non-current liabilities
Total

18,382
31,88350,265

Cash paid for the acquisition

130,104

The goodwill mainly comprises excess earning power and expected synergies arising from the acquisition.
The operating results of JR Technology for the period from the acquisition date to March 31, 2020 were not material.
On a pro forma basis, revenues and net income using an assumed acquisition date for JR Technology of April 1, 2019 would
not differ materially from the amounts reported in the consolidated financial statements for the year ended March 31, 2020.

F-28

Notes to Consolidated Financial Statements(b) Acquisition of Chassis Brakes International B.V. (Chassis Brakes)
On July 24, 2019, the Company and HiAMS, a consolidated subsidiary of the Company in the Smart Life segment, signed anagreement with Caliper Acquisition International S.à r.l. (Caliper), a special purpose vehicle of KPS Capital Partners, for
HiAMS to acquire all shares of Chassis Brakes in order to further strengthen core businesses and build HiAMS’s global
presence. On October 11, 2019, the acquisition was executed. As a result, the Company’s ownership ratio of shares of Chassis
Brakes became 100% and Chassis Brakes turned into a subsidiary of the Company. Furthermore, Hitachi International(Holland) B.V., a consolidated subsidiary of the Company, repaid 194 million euro (23,066 million yen) of certain loans owed
by Chassis Brakes, in addition to the acquisition cost.
The following table summarizes the fair value of the consideration paid for Chassis Brakes and the amounts of the assets
acquired and liabilities assumed recognized as of the acquisition date.
Millions of yen
3,666
13,815
10,894
5,940
28,548Cash and cash equivalents
Trade receivables and contract assets
Inventories
Other current assets
Non-current assets (excluding intangible assets)
Intangible assets
Goodwill (not deductible for tax purposes)
Other intangible assets
Total

47,66334,139144,665

Current liabilities
Non-current liabilities
Total

50,07434,51384,587

Cash paid for the acquisition

60,078The goodwill mainly comprises excess earning power and expected synergies arising from the acquisition.
The operating results of Chassis Brakes for the period from the acquisition date to March 31, 2020 were not material.
On a pro forma basis, revenues and net income using an assumed acquisition date for Chassis Brakes of April 1, 2019 would
not differ materially from the amounts reported in the consolidated financial statements for the year ended March 31, 2020.
On January 1, 2021, HiAMS changed its name to Hitachi Astemo, Ltd.

(6) Trade Receivables and Contract Assets
The components of trade receivables and contract assets are as follows:
Millions of yen
March 31, 2021
Accounts receivable
Contract assets

March 31, 2020

1,948,569

1,684,225

634,318

429,117

Others151,589

146,863

Total

2,734,476

2,260,205

Trade receivables and contract assets are stated as net of the allowance for doubtful receivables.
Others include notes receivable and electronically recorded monetary claims.

F-29

Notes to Consolidated Financial Statements(7) Inventories
The components of inventories are as follows:
Millions of yen
March 31, 2021

March 31, 2020

Finished goods

656,527

606,158

Semi-finished goods and work in process

628,039

539,634

Raw materials

368,829

263,145

1,653,395

1,408,937

Total

For the years ended March 31, 2021 and 2020, the amounts of inventories expensed and included as cost of sales were 5,339,244
million yen and 5,367,710 million yen, respectively, and the write-downs of inventories were 64,351 million yen and 52,054
million yen, respectively.
(8) Investments Accounted for Using the Equity Method
The aggregated carrying amounts of investments accounted for using the equity method as of March 31, 2021 and 2020, and theCompany and certain subsidiaries’ share of total comprehensive income of equity-method associates and joint ventures for theyears ended March 31, 2021 and 2020 are as follows:
Millions of yen
Associates
March 31, 2021
Carrying amount of investments

Joint ventures

March 31, 2020

409,779

March 31, 2021

428,067

March 31, 2020

62,32652,308

As of March 31, 2021 and 2020, the Company and certain subsidiaries’ interests in certain joint ventures operating at a loss havethe cumulative loss exceeding the Company and certain subsidiaries’ investments, and thus the negative amounts of 41,258
million yen and 76,745 million yen, respectively, were recognized in other non-current liabilities.
Millions of yen
Associates
2021

Joint ventures
2020

2021

2020

Net income fromcontinuing operations

30,337

34,811

8,527

8,828

Other comprehensive income

27,259(14,177)

33,647(395)

Total comprehensive income

57,596

20,63442,174

8,433

In addition to the share of Net income from continuing operations of equity method associates and joint ventures, impairment
losses and reversal of impairment losses on investments accounted for using the equity method were recognized in Share of profit(loss) of investments accounted for using the equity method. The amounts of impairment losses recognized in the consolidated
statement of profit or loss for the years ended March 31, 2021 and 2020 were 12,104 million yen and 4,442 million yen,respectively. The impairment losses previously recognized on investments accounted for using the equity method were reversedby 17,217 million yen in the year ended March 31, 2021.

F-30

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

Right-of-use
assetsLand

Buildings Machineryandandstructures
vehicles

290,874

679,887

551,117

174,473---

290,874

679,887

Additions

1,278Transfers between
accounts
Sales and disposals

Other

Constructionin progress

Total

-

119,405

140,929

1,956,685-

259,992(39,083)-

220,909551,117

174,473

259,992

80,322140,929

2,177,594

8,162

29,884

23,68587,445-244,986

395,440

3,540

59,562

146,169

44,599

3,862

1,861

(259,593)-(14,114)(5,913)(5,947)(4,004)(3,779)(4,769)(1,999)(40,525)-(54,043)(125,980)(67,857)(76,825)(16,144)-(340,849)

Impairment losses(4,255)(12,287)(41,511)(3,297)(3,029)-(2,525)(66,904)

Acquisitions anddivestitures

153

7,380

11,242

2,150

6,286

88

4,708

32,007(2,910)(12,436)(12,727)(3,868)(7,177)(942)(4,085)(44,145)

(460)

5,240

901

10,867504

41,713(6,072)

52,693274,106

675,552

553,148

176,748

267,279

102,129

116,349

2,165,311

Net carrying amountMarch 31, 2019
(Before restatement)
Cumulative effects ofchanges in accounting
policies
April 1, 2019
(After restatement)

Depreciation

Currency translation
effectOther
March 31, 2020
Additions

61

5,362

25,937

21,845

107,742-

198,615

359,562

Transfers between
accounts(439)

56,067

90,83854,870

(558)

1,567

(202,345)-

Sales and disposals(3,175)(17,707)(9,600)(5,194)(4,298)(9,646)(2,086)(51,706)-(51,134)(117,123)(64,127)(92,743)(18,198)-(343,325)

Impairment losses(4,655)(11,611)(46,680)(4,374)(6,259)(71)(2,619)(76,269)

Acquisitions anddivestitures

11,931

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

23,699231,505

Currency translation
effect4,269

18,57323,255

4,218

10,064

2,919

4,800

68,098Other(3,984)

3,691

174

9,239

4,008

42,915(332)

55,711March 31, 2021

278,114718,181664,173

187,459

303,327

121,552

136,0812,408,887

Depreciation

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

F-31

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

Buildings Machineryandandstructures
vehiclesTools,
furnitureandfixtures

March 31, 2019

366,350

1,747,110

2,475,446

937,581

March 31, 2020

346,566

1,767,093

2,525,387

March 31, 2021

359,702

1,822,715

2,861,627

March 31, 2019

Right-of-use
assetsOther

Constructionin progress

Total

-

249,976

300,0076,076,470

938,059

535,682

187,168

264,2936,564,248

996,172

615,323

207,058

305,835

7,168,432(75,476) (1,067,223) (1,924,329)(763,108)-(130,571)(159,078) (4,119,785)

March 31, 2020

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

March 31, 2021

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

Gross carrying amount

Accumulated
depreciation andimpairment losses

Impairment Losses Recognized for the Year Ended March 31, 2021:
The Smart Life segment recognized impairment losses of 35,461 million yen, mainly attributable to the lower than expected
productivity at some domestic factories in the Automotive Systems business consisting of impairment losses on property, plantand equipment of 26,351 million yen relating to business assets of machinery and on other intangible assets of 1,288 million yen.
The recoverable amount was determined on the basis of fair value less costs of disposal, which was measured at 10,615 million
yen as of December 31, 2020, the date on which impairment losses were recognized. A market approach was used in measuring
the fair value of the relevant assets. These fair value measurements were based on real estate appraisal value, and thus classified
as Level 3 of fair value hierarchy.
The Hitachi Metals segment recognized impairment losses of 30,469 million yen, mainly attributable to the lower than expected
future revenue projected for the magnetic materials business consisting of impairment losses on property, plant and equipment of
10,356 million yen relating to business assets of machinery and on goodwill and other intangible assets of 5,301 million yen. The
recoverable amount was determined on the basis of value in use, which was measured at 74,875 million yen as of September 30,
2020, the date on which impairment losses were recognized. The value in use was discounted at 10.1% (before tax), which wasderived from the weighted average cost of capital. In addition, mainly attributable to the lower than expected future revenue
projected for the aircraft & energy materials business consisting of impairment losses on property, plant and equipment of 12,027
million yen relating to business assets of machinery and on goodwill and other intangible assets of 75 million yen. The
recoverable amount was determined on the basis of value in use, which was measured at 16,491 million yen as of March 31,
2021, the date on which impairment losses were recognized. The value in use was discounted at 7.3% (before tax), which wasderived from the weighted average cost of capital.
Impairment Losses Recognized for the Year Ended March 31, 2020:
The Smart Life segment recognized impairment losses of 17,480 million yen, of which 7,743 million yen was attributable to thelower than expected future revenue at one of factories of a subsidiary in the U.S.A. relating to business assets of machinery in the
Automotive Systems business. The recoverable amount was determined on the basis of fair value less costs of disposal. The costsof disposal exceeded the fair value thus the recoverable amount was recorded at nominal value as of March 31, 2020. A market
approach was used in measuring the fair value of the relevant assets. These fair value measurements were based on observable
market transactions, and thus classified as Level 2 of fair value hierarchy.
The Hitachi Metals segment recognized impairment losses of 31,188 million yen, mainly attributable to the lower than expected
future revenue projected for the magnetic materials business consisting of impairment losses on property, plant and equipment of
22,479 million yen relating to business assets of machinery and on goodwill and other intangible assets of 38,952 million yen.
The recoverable amount was determined on the basis of value in use, which was measured at 106,313 million yen as of
September 30, 2019, the date on which impairment losses were recognized. The value in use was discounted at 9.6% (before tax),
which was derived from the weighted average cost of capital.

F-32

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

Goodwill

Other

Total

Net carrying amountMarch 31, 2019
(Before restatement)
Cumulative effects of changes inaccounting policies

561,936

94,73835,498267,844

398,080

-

-

-

103

103

561,936

94,73835,498267,947

398,183

April 1, 2019
(After restatement)Internal developments

-

805

1,891

56,62659,322

Purchases
Transfers between accounts-

11,212
34,432410
22,27027,701(56,702)39,323-

Amortization
Impairment losses(51,861)(38,749)(1,094)(21,877)(4,122)(30,082)(11,451)(90,708)(16,667)

Disposals
Acquisitions and divestitures

140,590(2,147)
984

(65)
2

(886)
100,593(3,098)
101,579

Currency translation effectOther(14,606)
(132)

(764)
(498)

(80)
(67)

(7,250)519(8,094)(46)

March 31, 2020

635,927

98,91933,860347,015

479,794

Internal developments

-

7,334

4,123

64,54175,998Purchases
Transfers between accounts-

10,274
63,678132
24,02931,847(87,707)42,253-

Amortization
Impairment losses(14,293)(43,768)(7,611)(21,320)(3,463)(81,374)(7,820)(146,462)(18,894)

Disposals
Acquisitions and divestitures

486,110(1,885)
6,888

(14)
6,873

(1,012)497,926(2,911)
511,687

Currency translation effectOther

53,466
-

1,053
(112)

498
101

22,254(429)

23,805(440)

1,161,210

134,770

44,819785,241

964,830

March 31, 2021

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

F-33

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

Software for Software forinternal use
sale

Other

Total

Gross carrying amountMarch 31, 2019568,643

590,831544,840

590,367

1,726,038

March 31, 2020

689,504

602,425565,416707,0311,874,872

March 31, 2021

1,218,173

650,657

569,118

1,218,584

2,438,359

March 31, 2019

(6,707)(496,093)(509,342)(322,523)(1,327,958)

March 31, 2020

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

March 31, 2021

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

Accumulated amortization andimpairment losses

The Company writes off goodwill if it has been fully impaired.
Impairment Losses Recognized for the Year Ended March 31, 2021:
The IT segment recognized impairment losses of 12,953 million yen, mainly due to the lower than expected future revenue on
software for sale and other intangible assets as a result of changes in market trends.
The Industry segment recognized impairment losses of 10,663 million yen, mainly due to the lower than expected future revenue
on goodwill and other intangible assets as a result of changes in market trends.
Impairment Losses Recognized for the Year Ended March 31, 2020:
The IT segment recognized impairment losses of 16,751 million yen, mainly due to the lower than expected future revenue on
software for sale and other intangible assets as a result of changes in market trends.
The Hitachi Metals segment recognized impairment losses of 39,011 million yen, of which 38,952 million yen was attributable tothe lower than expected future revenue projected for the magnetic materials business. Details of these impairment losses aredescribed in note 9.
The carrying amounts of other intangible assets with indefinite useful lives as of March 31, 2021 and 2020 amounted to 17,513
million yen and 6,757 million yen, respectively. The main components of such assets are acquired brands. They are assessed tohave indefinite useful lives because there is no foreseeable limit to the period over which such assets are expected to generate net
cash inflows for the entity.
Expenditures on research activities aimed at obtaining new scientific or technical knowledge or understanding are expensed whenincurred. Expenditures on development activities for a new or major improvement of production plan or design prior to thebeginning of commercial production or use are capitalized as an internally generated intangible asset only when such
expenditures attributable to the intangible asset can be reliably measured, it is feasible for the Company to complete thedevelopment, and it is highly probable that the Company will obtain the future economic benefit. Otherwise, the expenditures arerecognized as an expense when incurred.
The carrying amounts of internally generated other intangible assets (at cost less accumulated amortization and impairment
losses) as of March 31, 2021 and 2020 amounted to 208,857 million yen and 142,845 million yen, respectively. These assets aremainly included in software for internal use or software for sale.
Research and development expenditures recognized as an expense for the years ended March 31, 2021 and 2020 were 293,571
million yen and 293,799 million yen, respectively, and they are included in Cost of sales and Selling, general and administrative
expenses in the consolidated statement of profit or loss.

F-34

Notes to Consolidated Financial Statements
The Company tests goodwill acquired through business combinations for impairment by comparing the carrying amount and therecoverable amount per CGU (or group of CGUs).
The following are the group of CGUs with a significant proportion of goodwill allocated for the year ended March 31, 2021.
As of March 31, 2021, the group of CGUs with a significant proportion of goodwill allocated was the power 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 for the impairment test of goodwill of the power grid business for the year ended March 31, 2021 wascalculated based on the value in use. The value in use was determined using discounted future cash flows based on the businessplans and are estimated using significant assumptions including revenue growth rates and gross profit ratios which require
management judgements. The business plan reflected past experience based on external information. For the year ended March
31, 2021, cash flows were projected over five years, the discount rates (before tax) used was 10.6%, and the growth rate used was
2.1%.
As of March 31, 2021, the group of CGUs with a significant proportion of goodwill allocated was the System & Service Business
Division in the IT segment, and the carrying amounts of goodwill allocated to the System & Service Business Division was
201,001 million yen. The recoverable amount used for the impairment test of goodwill of the System & Service Business
Division for the years ended March 31, 2021 was calculated based on the fair value less costs of disposal. The fair value less costsof disposal was calculated by the market approach based on EV/EBITDA valuation multiples of similar companies that werecomparable to the System & Service Business Division. The fair value hierarchy classification was level 3 measured byunobservable inputs.
The following is the group of CGUs with a significant proportion of goodwill allocated for the year ended March 31, 2020.
As of March 31, 2020, the group of CGUs with a significant proportion of goodwill allocated was the System & Service Business
Division in the IT segment, and the carrying amounts of goodwill allocated to the System & Service Business Division was
190,978 million yen. The recoverable amount used for the impairment test of goodwill of the System & Service Business
Division for the years ended March 31, 2020 was calculated based on the fair value less costs of disposal. The fair value less costsof disposal was calculated by the market approach based on EV/EBITDA valuation multiples of similar companies that werecomparable to the System & Service Business Division. The fair value hierarchy classification was level 3 measured byunobservable inputs.
For goodwill allocated to each CGU (or group of CGUs), the Company considers the recoverable amount may be less than the
carrying amount if the primary assumptions used in the impairment test of goodwill change significantly.

F-35

Notes to Consolidated Financial Statements(11) Leases(a) Lessee
The Company and certain subsidiaries use leased facilities and equipment, including buildings, machinery and equipment andvehicles.
The following table shows the carrying amount of right-of-use assets at the end of March 31, 2021 and 2020 by class ofunderlying asset.
Millions of yen
Class of underlying asset
Buildings
andstructures

Tools,
furnitureandfixtures

Machineryandvehicles

Land

Total

Other

March 31, 2020

179,476

34,69923,62529,322

608

267,730

March 31, 2021

205,797

37,992

23,27435,426

1,139

303,628

The following table shows the expense relating to leases and cash outflow for the years ended March 31, 2021 and 2020.
Millions of yen
2021

2020

Depreciation for right-of-use assets
Buildings and structures

69,40653,866

Machinery and vehicles

12,55812,322Tools, furniture and fixtures

7,866

7,601

Land

2,442

2,895

Other

702

503

Total

92,974

77,187

Interest charges on lease liabilities

4,339

3,675

Expense relating to short-term leases, etc.

21,63932,787

Expenses relating to leases

118,952

113,649
Millions of yen

2021
Total cash outflow for leases

2020
123,622

Additions of right-of-use assets for the years ended March 31, 2021 and 2020 are disclosed in note 9.
Maturity analysis of lease liabilities at the end of March 31, 2021 and 2020 are disclosed in note 26.

F-36

115,315

Notes to Consolidated Financial Statements(b) Lessor
The Company and certain subsidiaries lease certain assets such as manufacturing machinery and equipment under finance andoperating lease arrangements.
The following table shows lease income for the years ended March 31, 2021 and 2020.
Millions of yen
2021

2020

Lease income from finance leases

3,058

4,879

Lease income from operating leases

53,04652,059Total lease income

56,10456,938

A significant component of lease income from finance leases represents finance income on the net investment in the lease.
(i) Finance leases
The following table shows the maturity analysis of the finance lease payments receivable as of March 31, 2021 and 2020.
Millions of yen
March 31, 2021

March 31, 2020

Undiscounted lease payments to be received
Within 1 year

51,367

46,166After 1 year but not more than 5 years

43,361

43,157More than 5 years

5,798

2,610

100,526

91,933(7,396)(5,907)

Total
Unearned finance income relating to the lease payments
receivable
Discounted unguaranteed residual value
Net investment in finance leases

139

436

93,26986,462(ii) Operating leases
The following table shows the maturity analysis of the undiscounted operating lease payments to be received as of March 31,
2021 and 2020.
Millions of yen
March 31, 2021

March 31, 2020

Within 1 year

4,646

4,836

After 1 year but not more than 5 years

3,597

3,341

606

962

8,849

9,139

More than 5 years
Total

F-37

Notes to Consolidated Financial Statements(12) Deferred Taxes and Income Taxes
The components of income taxes recognized in the consolidated statement of profit or loss and deferred taxes recognized in the
consolidated statement of comprehensive income are as follows:
Millions of yen
2021

2020

Income taxes
Current tax expense

220,305

175,072

Temporary differences originated and reversed

53,825(69,717)

Changes in realizability of deferred tax assets

51,117(54,109)325,247

51,246

20,382(8,019)Remeasurements of defined benefit plans

27,509(937)

Net changes in cash flow hedges

1,376

5,752

Foreign currency translation adjustments

2,958(1,009)Total

52,225(4,213)

Deferred tax expense

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

The Company and its Japanese subsidiaries were subject to a national corporate tax, an inhabitant tax and business tax, for theyears ended March 31, 2021 and 2020, which in the aggregate resulted in a combined statutory income tax rates of approximately
30.5%.
The Company and certain subsidiaries file consolidated income tax returns in certain jurisdictions.

F-38

Notes to Consolidated Financial Statements
Reconciliations between the combined statutory income tax rate and the effective income tax rate are as follows:
2021

2020

Combined statutory income tax rate

30.5%

30.5%

Share of (profits) losses of investments accounted for using the equity
method

(1.4)

(7.4)

Change in excess amounts over the tax basis of investments in
subsidiaries and investments accounted for using the equity method

(4.8)

33.1

Gain or loss on sale of investments in subsidiaries and investments
accounted for using the equity method

7.4

(4.3)

Expenses not deductible for tax purposes
Impairment of goodwill

0.6
0.5

3.3
8.8

Change in realizability of deferred tax assets
Difference in statutory tax rates of foreign subsidiaries

6.1
(1.3)

(30.0)(6.5)

Other, net

0.9

0.9

38.5%

28.4%

Effective income tax rate
Changes in deferred tax assets and liabilities are as follows:

Millions of yen
March 31, 2021

March 31, 2020

Deferred tax assets, net at beginning of year

282,998

161,691

Recognized in profit or loss
Recognized in OCI(104,942)(52,225)

123,826
4,213

Acquisitions, divestitures and others(114,952)(6,732)

Deferred tax assets, net at end of year

10,879282,998

Significant components of the deferred tax assets and liabilities are as follows:
Millions of yen
Consolidated statement offinancial position
March 31,2021
Deferred tax assets
Retirement and severance benefits
Accrued expenses
Depreciation of property, plant andequipment
Net operating loss carryforwards

March 31,2020

Consolidated statement of
profit or loss
2021

2020

44,38475,974(5,844)(214)

109,697

255,711(146,585)

157,157

6,476

8,343

85

(3,201)

33,845

17,603

14,614

7,641

Net intercompany profits oninventories, P.P.E. and others

27,09028,141(4,563)(2,453)

Deferred revenues
Other

11,982
96,326

21,45449,182(9,361)(1,206)(1,486)
6,505

Total deferred tax assets

329,800

456,408(152,860)

163,949

Deferred tax liabilities
Deferred profit on sale of properties(7,420)(8,014)263

206

Investments in securities
Intangible assets(115,173)(152,682)(102,280)(34,864)

27,427
14,417(38,928)
3,948

Other

(43,646)(28,252)

5,811(5,349)Total deferred tax liabilities(318,921)(173,410)

47,918(40,123)

10,879282,998(104,942)

123,826

Net deferred tax assets

F-39

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

Other non-current assets
Other non-current liabilities
Total

March 31, 2021
143,126

Millions of yen
March 31, 2020
330,680(132,247)(47,682)

10,879282,998

Deferred tax liabilities are not recognized for excess amounts over the tax basis of investments in subsidiaries and investments
accounted for using the equity method that are considered to be reinvested indefinitely, for such differences will unlikely reversein the foreseeable future. The temporary differences related to undistributed earnings of subsidiaries for which deferred tax
liabilities are not recognized were 774,353 million yen and 660,886 million yen, respectively, as of March 31, 2021 and 2020.
In assessing the realizability of deferred tax assets, the Company considers whether it is more likely than not that some portion or
all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generationof future taxable income in specific tax jurisdictions during the periods in which these deductible differences become deductible.
Although realization is not assured, the Company carries out an assessment of the scheduled reversals of deferred tax liabilities
and projected future taxable income, including the execution of certain available tax strategies if needed. Based on these factors,
the Company considers it is more likely than not it will realize the benefits of these deductible differences as of March 31, 2021.
Deductible temporary differences and net operating loss carryforwards for unrecognized deferred tax assets are as follows:
Millions of yen
March 31, 2021

March 31, 2020

Deductible temporary differences

1,634,738

1,243,180

Net operating loss carryforwards

675,461

484,130

2,310,199

1,727,310

Total

Net operating loss carryforwards for unrecognized deferred tax assets will expire as follows:
Millions of yen
March 31, 2021

March 31, 2020

Within 5 years

193,286

164,465

After 5 years but not more than 10 years

211,753

119,047

More than 10 years

270,422200,618

Total

675,461

484,130F-40

Notes to Consolidated Financial Statements(13) Trade Payables
The components of trade payables are as follows:
Millions of yen
March 31, 2021

March 31, 2020

1,383,702

1,118,467

Others132,252

152,201

Total

1,515,954

1,270,668

Accounts payable

Others include electronically recorded monetary claims and notes payable.
(14) Provisions
Changes in the balance and components of provisions for the year ended March 31, 2021 are as follows:
Millions of yen

March 31, 2020

Provisions for
Provisions related
Asset retirement
Product warranty expected losses on
to restructuring
obligations
provisions
construction(structural reform)
contracts
30,97010,19827,043
94,475

Other
provisions
325,786

Additions

2,838

19,706

13,252

52,94930,550Utilized (a)(3,597)(21,533)(12,220)(51,636)(294,184)(229)

10,37435,1436,921

58,886

Acquisitions and divestitures
Currency translation effects,
and others

(594)

805

2,577

1,566

5,675

March 31, 2021

29,38819,55065,795104,275

126,713

Current

1,484

19,17757,851

99,350106,498

Non-current

27,904

373

7,944

4,925

20,215(a) Utilized of other provisions include reversal of other provision of 273,272 million yen related to the transfer of shares of
MHPS, which had been recorded by the settlement regarding the South African project.
Asset Retirement Obligations
The Company and its subsidiaries recognize asset retirement obligations principally based on the estimated future expendituresusing historical experience when the Company and its subsidiaries have a legal or contractual obligation associated with theretirement of tangible fixed assets used in normal operations, such as lease dilapidations of factory facilities and premises.
Provisions Related to Restructuring (Structural Reform)
Provision related to restructuring (structural reform) is recognized when the Company and its subsidiaries have a detailed formal
plan for the restructuring of the business or a part of business and have raised a valid expectation in those affected that it will
carry out the restructuring by starting to implement the plan or announcing its main features to those affected. The provision isrecognized based on the estimated amount of direct expenditures attributable to restructuring.
Provisions related to restructuring (structural reform) mainly include special termination benefits for restructuring (structuralreform).
Product Warranty Provisions
The Company and its subsidiaries provide warranties for certain products and services. Product warranty provisions arerecognized by estimating future expenditures based principally on historical experience of warranty claims.
Provisions for Expected Losses on Construction Contracts
Provisions for expected losses on construction contracts are recognized based on future estimated losses as the Company and its
subsidiaries fulfill long-term project requirements.

F-41

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

F-42

Notes to Consolidated Financial Statements
In terms of the corresponding accounting treatment for retirement benefits, risk-sharing corporate pension plans, for which anentity accepts contribution obligations to the extent stipulated in the rules but has no further obligations to make any
additional contributions, are classified as defined contribution plans. Since this risk-sharing corporate pension plan imposesno additional contribution obligations, at the time of the shift to the revised plan, the difference between the defined benefit
obligations related to the portion transferred to the revised plan and the amount of assets transferred to the revised plancorresponding to the decrease in defined benefit obligations, 21,206 million yen, was recognized as a settlement gain in Other
income in the consolidated statement of profit or loss for the year ended March 31, 2020, and Retirement and severance
benefits in the consolidated statement of financial position decreased by 21,206 million yen as of April 1, 2019
The severance lump-sum payment plans provide a lump-sum payment at the time of retirement, and the benefit is calculated
based on factors such as the salary level at retirement and the years of service. The Company and certain subsidiaries have an
obligation to pay benefits directly to beneficiaries.
Defined contribution plans require companies to make contributions over a participation period, and plan participants
themselves are responsible for the management of plan assets. Benefits are paid by the trustee, and the Company and certain
subsidiaries’ responsibility is limited to making contributions.

F-43

Notes to Consolidated Financial Statements
Changes in the present value of defined benefit obligations and the fair value of plan assets for the years ended March 31,
2021 and 2020 are as follows:
Millions of yen
March 31, 2021

March 31, 2020

Defined benefit obligations
At beginning of year
Service cost

1,836,601
62,9032,160,054
63,795Interest cost
Plan amendments

11,004
(250)

9,562
2,310

Actuarial losses
Benefits paid

41,512(104,472)(13,877)(106,972)

Acquisitions and divestitures
Transfer to defined contribution pension plan

78,78141(1,049)(11,672)

Settlements/curtailments
Effect of shift to risk-sharing corporate pension plan(662)
(4,713)(312)(260,900)

Currency translation effectAt end of year

13,4591,934,204(4,338)
1,836,601

Fair value of plan assets
At beginning of year

1,367,906

1,671,976

Interest income
Return on plan assets (excluding interest income)

9,320
145,282

9,840(18,579)

Employers’ contributions
Employees’ contributions

64,8691,439

44,058470

Benefits paid
Acquisitions and divestitures(80,427)
69,617(82,766)(1,834)(6)(365)(11,577)(1,176)(4,039)
11,203(239,694)(2,812)

1,584,799

1,367,906

2,113

12,107

351,518

480,802

Transfer to defined contribution pension plan
Settlements/curtailments
Effect of shift to risk-sharing corporate pension plan
Currency translation effectAt end of year
Effect of asset ceiling
Net liability amount recognized in the consolidated statementof financial position
The components of actuarial gain or loss are as follows:

Millions of yen
March 31, 2021

March 31, 2020

Arising from changes in financial assumptions(10,548)

11,566

Arising from changes in demographic assumptions
Other(15,414)(15,550)

(83)
2,394

The Company and certain subsidiaries remeasure the defined benefit obligations and plan assets at the end of the fiscal year.
The discount rates used in actuarial calculation of defined benefit obligations are as follows:
Percentage
March 31, 2021
Discount rate

0.6

F-44

March 31, 2020
0.6

Notes to Consolidated Financial Statements
If, at March 31, 2021, the discount rate rose by 0.5%, the defined benefit obligations would decrease by 100,416 million yen,
and if the discount rate decreased by 0.5%, the defined benefit obligations would increase by 108,187 million yen.
The sensitivity analysis is based on an assumption that all other variables other than the one analyzed are held constant; inreality, changes in other assumptions may impact the outcome of the analysis.
The Fund’s plan asset management is based on the safe and efficient management of the contributions, diversified
investments and determination of the investment ratio that should be sustained over the long term. The Fund seeks to maintaincurrent value of assets sufficient for future obligations. A target rate of return is established to ensure a stable long term rateof return on assets. A diversified investment strategy is carried out while a target asset allocation is established to achieve thetarget rate of return. The target asset allocation is based on the expected rate of return by each class of asset, the standard
deviation of the rate of return and the correlation coefficient among the assets. It is currently approximately 20% in equity,
50% in public and corporate bonds, and 30% in hedge funds, securitization products, life insurance general accounts andother assets. If market values fluctuate exceeding certain levels, the investment ratio is adjusted to the target allocation ratio inorder to control risks.
In selecting trustees or asset management companies, the Fund takes into account appropriate quantitative and qualitativeevaluations. The Fund also presents its management policies to the trustees or asset management companies, and periodicallyreceives asset management reports.
The fair values of plan assets invested as of March 31, 2021 and 2020 are as follows:
Millions of yen
March 31, 2021
With quoted market
price in an active
marketEquityGovernment bonds and municipal
debt securities
Corporate bonds and other debt securities
Hedge funds
Securitization products
Cash and cash equivalents
Life insurance general accounts
Commingled funds
Other
Total

With no quoted market
price in an active
market

Total

9,715

320

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

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

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

March 31, 2020
With quoted market
price in an active
marketEquityGovernment bonds and municipal
debt securities
Corporate bonds and other debt securities
Hedge funds
Securitization products
Cash and cash equivalents
Life insurance general accounts
Commingled funds
Other
Total

With no quoted market
price in an active
market

Total

8,241

2,122

10,363112,158
46,887
2,312
169,598

850
39,58946,63442,283
134,909903,713
28,208
1,198,308

113,008
39,58946,63442,28346,887
134,909903,71330,5201,367,906

F-45

Notes to Consolidated Financial Statements
As of March 31, 2021 and 2020, investments in equity were allocated to approximately 40% in stocks listed in Japan and 60%
in stocks listed in foreign markets.
As of March 31, 2021 and 2020, Japanese government bonds were allocated to approximately 95% of the government bonds
and municipal debt securities, the majority of which were Japanese national bonds. Foreign public bonds, as of March 31,
2021 and 2020, were allocated to approximately 5%, the majority of which were foreign national bonds.
As of March 31, 2021, investments in corporate bonds and other debt securities were allocated to approximately 10% inJapanese corporate bonds and debt instruments, and 90% in foreign corporate bonds and debt instruments. As of March 31,
2020, investments in corporate bonds and other debt securities were allocated to approximately 20% in Japanese corporate
bonds and debt instruments, and 80% in foreign corporate bonds and debt instruments.
Hedge funds primarily consist of investments in relative value strategy funds, event driven funds, equity long or short funds,
and macroeconomic and Commodity Trading Advisor (CTA) funds.
Securitization products primarily consist of investments in equity of Japanese real estate funds, and debt and equity ofcollateralized loan obligations (CLO).
Commingled funds represent pooled institutional investments. As of March 31, 2021 and 2020, commingled funds wereallocated to 30% in listed stocks, 40% in government bonds, 10% in corporate bonds and other debt securities, 10% in cash
and cash equivalents and 10% in other assets.
Funding by the Fund is conducted by taking into account various factors such as funded status and actuarial calculations. For
the purpose of maintaining balanced finance into the future, the bylaws of the Fund require recalculation of the contribution
amounts at the end of fiscal year every five years. Basic assumptions (expected interest rates, mortality rates, withdrawal rate,etc.) are reviewed to recalculate the appropriate level of contribution.
The amount of contributions expected to be paid by the Company and its subsidiaries to the plan assets for the year ending
March 31, 2022 is 62,995 million yen.
The weighted average duration (expected average maturity) of defined benefit obligations as of March 31, 2021 and 2020
were 12.2 years and 12.1 years, respectively.
Contributions made to defined contribution plans and expensed in profit or loss in the years ended March 31, 2021 and 2020
were 36,949 million yen and 28,505 million yen, respectively.
In addition, contributions made to the risk-sharing corporate pension plan and expensed in profit or loss in the year ended
March 31, 2021 and 2020 were 18,056 million yen and 16,324 million yen, respectively. The amount of the contributions to
the risk-sharing corporate pension plan expected to be paid by the Company and its subsidiaries from the year ending March
31, 2022 is 20,760 million yen.
(b) Employee Benefit Expenses
The aggregated amounts of employee benefit expenses including salary recognized in the consolidated statement of profit orloss for the years ended March 31, 2021 and 2020 were 2,425,658 million yen and 2,282,736 million yen, respectively.

F-46

Notes to Consolidated Financial Statements(16) Equity(a) Common Stock
Number of shares
March 31, 2021
Total number of authorized shares

March 31, 2020

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

2,000,000,000
Capital amount(Millions of yen)March 31, 2019

966,692,677

458,790

March 31, 2020

967,280,477

459,862

March 31, 2021

967,885,277

460,790

Note: The Company issued new shares as restricted stock compensation, the total number of issued shares increased 587,800
shares on May 31, 2019, and increased 604,800 shares on May 27, 2020, and became 967,885,277 shares.
Shares issued by the Company are non-par value common stock. The issued shares above include treasury stock. The changes
in treasury stock for the years ended March 31, 2021 and 2020 are as follows:
Treasury stock(Number of shares)
March 31, 2019

(Millions of yen)

1,086,667

3,920

Acquisition of treasury stock

41,098

166

Sales of treasury stock(77,024)(277)

March 31, 2020

1,050,741

3,809

Acquisition of treasury stock

136,523

159

Sales of treasury stock(131,465)(475)

1,055,799

3,493

March 31, 2021

The number of shares of the Company held by the Company’s associates as of March 31, 2021 and 2020 were 33,200 sharesand 33,400 shares, respectively.
(b) Surplus(i) Capital Surplus
The Companies Act of Japan mandates that at least half of paid-in capital be appropriated as common stock and the rest be
appropriated as legal reserve within capital surplus.
The changes in capital surplus include the effect of changes in the Company’s ownership interest in its consolidated
subsidiaries. For the year ended March 31, 2021, the changes in capital surplus were mainly due to the decrease of 321,627
million yen in additional acquisition of shares of Hitachi High-Tech by the Company, the increase of 117,865 million yen
due to the decrease of the Company’s ownership interest in the former HiAMS from 100% to 66.6% and the decrease of
176,044 million yen due to a put option on non-controlling interests of Hitachi ABB Power Grid.
(ii) Retained Earnings
The Companies Act of Japan requires that ten percent of retained earnings appropriated for dividends be retained until the
total amount of earned reserves included in capital reserve and retained earnings reaches a quarter of the nominal value ofcommon stock. Earned reserves may be available for dividends by resolution at the shareholders’ meeting.

F-47

Notes to Consolidated Financial Statements(17) Accumulated Other Comprehensive Income (AOCI) and Other Comprehensive Income (OCI)
Components of AOCI, net of related tax effects, presented in the consolidated statement of changes in equity, and changes in eachcomponent for the years ended March 31, 2021 and 2020 are as follows:
Millions of yen
2021

2020

Foreign currency translation adjustments
Balance at beginning of year

(30,686)

52,166

OCI, net of reclassification

133,106(82,819)

Net transfer of non-controlling interests

8,307

(33)

110,727(30,686)

Balance at beginning of year

1,958

10,312

OCI

80,413(6,101)

Net transfer of non-controlling interests

3,066

-

Reclassified into retained earnings(5,137)(2,253)

Balance at end of year

80,300

1,958

Balance at beginning of year

66,373

95,725

OCI

69,721(16,225)

Net transfer of non-controlling interests

3,227

2

Reclassified into retained earnings(4,299)(13,129)

Balance at end of year

135,022

66,373

Balance at beginning of year

(94,715)(101,843)

OCI, net of reclassification

53,384

9,084

(71)

-

Others(11,086)(1,956)

Balance at end of year

(52,488)(94,715)

Balance at beginning of year

(57,070)

56,360

OCI, net of reclassification

336,624(96,061)

Net transfer of non-controlling interests

14,529(31)

Balance at end of year
Remeasurements of defined benefit plans

Net changes in financial assets measured at FVTOCINet changes in cash flow hedges

Net transfer of non-controlling interests

Total AOCI

Reclassified into retained earnings(9,436)(15,382)

Others(11,086)(1,956)

Balance at end of year

273,561(57,070)

F-48

Notes to Consolidated Financial Statements
The following shows a reconciliation of OCI, including non-controlling interests, to profit or loss items and deferred income tax
effect per components of OCI during the years ended March 31, 2021 and 2020.
Millions of yen
2021
Before tax

Tax effect

After tax

OCI arising during the year:
Foreign currency translation adjustments

194,482(2,937)

191,545

Remeasurements of defined benefit plans

116,245(27,509)88,736

Net changes in financial assets measured at FVTOCI

89,744(20,382)

69,362

Net changes in cash flow hedges

4,635

(755)

3,880

Share of OCI of investments accounted for using the equity method

28,359(4,815)23,544

Total

433,465(56,398)

377,067

297

(21)

276

Net changes in cash flow hedges

2,087

(621)

1,466

Share of OCI of investments accounted for using the equity method

45,110(7,748)37,362

Total

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

194,779(2,958)

191,821

Remeasurements of defined benefit plans

116,245(27,509)88,736

Net changes in financial assets measured at FVTOCI

89,744(20,382)

69,362

Net changes in cash flow hedges

6,722(1,376)

5,346

Share of OCI of investments accounted for using the equity method

73,469(12,563)

60,906

Total

480,959(64,788)416,171

Reconciliation of OCI to profit or loss:
Foreign currency translation adjustments

OCI, net of reclassification adjustments:

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

69,439Remeasurements of defined benefit plans

9,039

Net changes in financial assets measured at FVTOCI

1,076

Net changes in cash flow hedges

(7)

Total

79,547

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

122,382

Remeasurements of defined benefit plans

79,697

Net changes in financial assets measured at FVTOCI

68,286

Net changes in cash flow hedges

5,353

Share of OCI of investments accounted for using the equity method

60,906

Total

336,624

F-49

Notes to Consolidated Financial Statements

Millions of yen
2020
Before tax

Tax effect

After tax

OCI arising during the year:
Foreign currency translation adjustments(112,823)

1,009(111,814)

Remeasurements of defined benefit plans(9,333)937(8,396)

Net changes in financial assets measured at FVTOCI(25,226)

8,019(17,207)

Net changes in cash flow hedges

15,021(4,665)

10,356

Share of OCI of investments accounted for using the equity method(20,202)

3,861(16,341)

Total(152,563)

9,161(143,402)

491

-

491

Net changes in cash flow hedges

3,904(1,087)

2,817

Share of OCI of investments accounted for using the equity method

1,772

(3)

1,769

Total

6,167

(1,090)5,077

Foreign currency translation adjustments(112,332)

1,009(111,323)

Remeasurements of defined benefit plans(9,333)937(8,396)

Net changes in financial assets measured at FVTOCI(25,226)

8,019(17,207)

Net changes in cash flow hedges

18,925(5,752)

13,173

Share of OCI of investments accounted for using the equity method(18,430)

3,858(14,572)

Total(146,396)

8,071(138,325)

Reconciliation of OCI to profit or loss:
Foreign currency translation adjustments

OCI, net of reclassification adjustments:

OCI, net of reclassification adjustments, attributable tonon-controlling interests:
Foreign currency translation adjustments(37,815)

Remeasurements of defined benefit plans(2,802)

Net changes in financial assets measured at FVTOCI(1,438)Net changes in cash flow hedges

(209)

Total

(42,264)

OCI, net of reclassification adjustments, attributable to
Hitachi, Ltd. stockholders:Foreign currency translation adjustments(73,508)

Remeasurements of defined benefit plans(5,594)

Net changes in financial assets measured at FVTOCI(15,769)

Net changes in cash flow hedges

13,382

Share of OCI of investments accounted for using the equity method(14,572)

Total(96,061)

F-50

Notes to Consolidated Financial Statements(18) Dividends
Dividends paid on the Company’s common stock for the years ended March 31, 2021 and 2020 are as follows:
Cash dividends(millions of yen)

Appropriation from

Cash dividends
per share (yen)The Board of Directors
on October 28, 2020

48,342Retained earnings

The Board of Directors
on May 13, 2020

48,311The Board of Directors
on October 30, 2019
The Board of Directors
on May 10, 2019

Decision

Record date

Effective date

50.0

September 30, 2020

November 30, 2020

Retained earnings

50.0

March 31, 2020

June 8, 2020

43,481Retained earnings

45.0

September 30, 2019

November 29, 2019

48,280Retained earnings

50.0

March 31, 2019

May 31, 2019

The dividends on the Company’s common stock whose record date falls in the year ended March 31, 2021 and the effective datefalls in the next fiscal year is as follows:

Decision
The Board of Directors
on May 12, 2021

Cash dividends(millions of yen)

Appropriation from

Cash dividends
per share (yen)53,175Retained earnings

55.0

F-51

Record date

Effective date

March 31, 2021

June 2, 2021

Notes to Consolidated Financial Statements(19) Stock-based Compensation
The Company introduced a restricted stock compensation plan as stock-based compensation in place of the stock option plan andgrants shares of restricted stock in place of the existing stock options as stock-based compensation from the year ended March 31,
2020. In addition, the Company introduced a restricted stock unit plan and grants restricted stock units from the year ended March
31, 2021.
Stock-based compensation expenses recognized for the years ended March 31, 2021 and 2020 were 1,031 million yen and 724
million yen, respectively.
(a) Restricted stock compensation plan
In accordance with the restricted stock compensation plan (hereinafter the “Plan”) to be introduced by the Company, Executive
Officers and Corporate Officers (hereinafter the “Eligible Persons”) will receive shares of common stock to be newly issued or
disposed by the Company by making contributions in kind of the monetary compensation claims which are granted in order toallot the shares of restricted stock to the Eligible Persons. In addition, with respect to the issuance or disposition of shares ofcommon stock of the Company under the Plan, the Company and each Eligible Person executes an agreement on allotment of
restricted stock (hereinafter the “Allotment Agreement”).
Outline of the Allotment Agreement(1) Transfer restriction period
From the payment date relating to the issuance or disposition of the shares of restricted stock to the date on which the Eligible
Person ceases to be an Executive Officer, Director or Corporate Officer of the Company.
(2) Acquisition by the Company without consideration
If certain events set out in the Allotment Agreement occur, the Company will acquire the shares without any consideration
promptly on or after a date notified to Eligible Persons. The Company will also acquire the shares for which the transfer
restrictions are definitely not lifted at the time of such determination, without any consideration.
The outlines of issuance for the years ended March 31, 2021 and 2020 are as follows.
March 31, 2021

March 31, 2020

Issuance date

May 27, 2020

May 31, 2019

Number of shares

604,800 shares

587,800 shares

3,067 yen

3,647 yen

Issue price per share [1] [2][1] The issue price for the year ended March 31, 2021 is the closing price per share for the Company’s common stock on April
20, 2020 (preceding business day of the date upon the decision by the President regarding the issuance of new shares) in thefirst section of the Tokyo Stock Exchange, Inc.
[2] The issue price for the year ended March 31, 2020 is the closing price per share for the Company’s common stock on April
22, 2019 (preceding business day of the date upon the decision by the President regarding the issuance of new shares) in thefirst section of the Tokyo Stock Exchange, Inc.
(b) Restricted stock unit (hereinafter the “RSU”) plan
In accordance with the RSU plan to be introduced by the Company, the Company’s non-Japanese Executive Officers andCorporate Officers (hereinafter the “Eligible Persons”) will be granted restricted stock units (hereinafter the “RSUs”)
corresponding to the number of shares of the Company’s common stock (hereinafter the “Shares to be Delivered”) set inadvance for each eligible person and, over three fiscal years after granting, one-third of the RSUs will become vested after theend of each fiscal year and the Shares to be Delivered and cash for the vested RSUs will be delivered.
The eligible persons will receive shares of common stock to be newly issued or disposed by the Company by making
contributions in kind of the monetary compensation claims which are granted after the end of each fiscal year in order to allot
the Shares to be Delivered to the eligible persons.
If the eligible persons retire due to expiration of their term of office, death or other legitimate reasons recognized by theCompany’s Compensation Committee, they will receive the Shares to be Delivered and cash corresponding to the portion of
RSUs granted reflecting the period from the granting date until such retirement.

F-52

Notes to Consolidated Financial Statements(c) Stock option plan
Under the Company’s stock option plan, Executive Officers and Corporate Officers are granted the right to purchase shares ofcommon stock of the Company (stock acquisition rights).
Details of the Company’s stock option plan for the years ended March 31, 2021 and 2020 are as follows.
Fiscal Year of Issuance and Name

Grant Date

Exercise period

Year ended March 31, 2019
The Third Stock Acquisition Rights of Hitachi, Ltd.

From April 27, 2018

April 11, 2018

to April 26, 2048

Year ended March 31, 2018
The Second Stock Acquisition Rights of Hitachi, Ltd.

From April 27, 2017
to April 26, 2047

April 6, 2017

Year ended March 31, 2017
The First Stock Acquisition Rights of Hitachi, Ltd.

From July 15, 2016

June 29, 2016

to July 14, 2046

Conditions for the exercise of stock acquisition rights(1) During the above exercise period, a holder of stock acquisition rights may exercise all the stock acquisition rights
determined in accordance with the provisions of paragraph (2) or (3) below in a lump sum only within ten days (in case thelast day is not a business day, the following business day) from the day immediately following the date on which he/sheceases to be an Executive Officer, a Director or a Corporate Officer of the Company.
(2) The number of stock acquisition rights that a holder of stock acquisition rights may exercise, shall be determined based on
the ratio of (i) the total shareholder return (TSR) for shares of the Company for three years from the beginning of the fiscal
year in which the date of allotment of the stock acquisition rights falls (Waiting Period) to (ii) the growth rate of TOPIX(Tokyo Stock Price Index) for the same period (TSR/TOPIX Growth Rate Ratio): market condition.
(3) The number of stock acquisition rights, that a holder of stock acquisition rights who has left his/her position in the
Company before the end of the Waiting Period (Resignee) may exercise, shall be determined by reducing the number ofstock acquisition rights allotted to him/her in proportion to the term of office of the Resignee in the Waiting Period, andapplying the TSR/TOPIX Growth Rate Ratio for the period from the beginning of the fiscal year in which the date ofallotment of the stock acquisition rights falls to the time of resignation in accordance with the provision of paragraph (2)above.
A summary of stock option activity for the years ended March 31, 2021 and 2020 is as follows. The number of stock options istranslated into their equivalent number of shares (20 shares per stock option).

Outstanding at beginning of year

2021
2020
Weighted average
Weighted average
Number of shares
Number of shares
exercise priceexercise price（shares）(shares)
(yen)
(yen)
890,960
1
1,004,780
1

Granted

-

-

-

-

Forfeited [1](32,860)

1(39,580)

1

Exercised(126,560)

1(74,240)

1

-

-

-

-

Outstanding at end of year

731,540

1

890,960

1

Exercisable at end of year

2,060

1

-

-

Expired[1] Including the stock acquisition rights which became non-exercisable because of the market condition.
The weighted average share prices at the date of exercise for the years ended March 31, 2021 and 2020 were 3,128.0 yen and
3,677.0 yen.
The range of exercise price as of March 31, 2021 and 2020 was 1 yen. The weighted average remaining contractual lives of stock
options outstanding as of March 31, 2021 and 2020 were 26.2 years and 27.2 years, respectively.

F-53

Notes to Consolidated Financial Statements(20) Revenues(a) Disaggregation of revenue
The Company derives revenues primarily from contracts with customers. The following table shows the disaggregation ofrevenue attributable to each reportable segment and geographic area.
Effective from April 1, 2020, the Company reclassified its reportable segments. Accordingly, figures for the year ended March
31, 2020 have been restated on the basis of the reclassification. Details of the reclassification are described in note 4.
Millions of yen
2021
Overseas
Revenues
Subtotal

Total
Revenues

37,803511,306

2,048,756

227,612

127,205

769,564

1,107,986

98,964

15,294

15,358203,419

830,162

465,398

50,326

264,786

51,964

832,474

1,199,632

1,026,149

593,333

303,771

216,555

100,526

1,214,185

2,240,334

Hitachi Construction Machinery

203,337

191,801

107,175

110,542

200,476

609,994

813,331

Hitachi Metals

342,847

160,875

207,085

35,434

15,374

418,768

761,615

-

-

-

-

-

-

-

Others384,071

44,819

8,550

7,852

3,716

64,937449,008

Subtotal

4,826,177

1,929,057

1,125,115

1,018,053

552,4224,624,647

9,450,824

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

Total

4,154,818

1,893,620

1,117,554

1,013,487

549,717

4,574,378

8,729,196

Japan

Asia

North
America

Europe

Other
Areas

1,537,450

167,762

165,763

139,978

Energy338,422

231,266

183,481Industry

626,743

73,803

Mobility

367,158

Smart Life

IT

Hitachi Chemical

Millions of yen
2020
Overseas
Revenues
Subtotal

Total
Revenues

38,907552,994

2,099,426

4,369

2,692

48,893399,254

59,631

13,27521,028

178,663

840,749

368,985

44,518299,543

46,773759,819

1,144,447

1,079,787

455,057

335,407

206,993

90,372

1,087,829

2,167,616

Hitachi Construction Machinery

205,604

211,663

173,426

136,197

204,457

725,743

931,347

Hitachi Metals

405,410

166,137

245,349

44,542

19,964475,992

881,402

Hitachi Chemical

229,823

272,241

48,021

63,113

18,235

401,610

631,433

Others408,869

49,097

13,405

7,247

6,212

75,961

484,830

Subtotal

5,273,000

1,817,821

1,111,013

930,030

448,640

4,307,504

9,580,504

Corporate items and Eliminations(743,905)(50,284)(8,026)(5,531)(5,495)(69,336)(813,241)

Total

4,529,095

1,767,537

1,102,987

924,499

443,145

4,238,168

8,767,263

Japan

Asia

North
America

Europe

Other
Areas

1,546,432

176,337

182,999

154,751

Energy350,361

33,575

8,257

Industry

662,086

84,729

Mobility

384,628

Smart Life

IT

F-54

Notes to Consolidated Financial Statements
The IT segment consists of Front Business and Services & Platforms, for which revenue amounted to 1,414,239 million yen
and 790,258 million yen for the year ended March 31, 2021 and 1,431,130 million yen and 826,362 million yen for the year
ended March 31, 2020, respectively (including intersegment transactions). Front Business is operated mainly in Japan, andServices & Platforms is operated mainly in Japan, North America and Europe.
Effective from April 1, 2020, the IT segment changed its scope of business field. Figures for the year ended March 31, 2020
have been restated on the basis of the reclassification.
The Company's revenues include revenue recognized based on the pattern of the cost accrual arising from long-term projects.
Of the revenue recognized during the fiscal years ended March 31, 2021 and 2020, the amount of revenue recognized based on
the pattern of the cost accrual arising from long-term projects were 1,389,409 million yen and 1,139,859 million yen,respectively.
(b) Information about satisfaction of performance obligations
The following is information about satisfaction of performance obligations related to major goods and services of eachreportable segment.
(IT)
Front Business primarily provides goods and services such as system integration, consulting and cloud services. These longterm projects provide goods and services according to customers’ specifications over a specified period of time, and revenue
is recognized mainly based on the pattern of the cost accrual (the progress of the project mostly based on the cost incurred
relative to the estimated total cost) or the passage of time as performance obligations are satisfied over time.
Many of the contracts require payments based on milestones, and in some cases, payments are made before performanceobligations are satisfied.
Services & Platforms primarily sells control systems, software and IT products. Revenue is recognized when control over the
goods is transferred to customers as performance obligations are satisfied at the point in time upon the completion or upondelivery of the goods. The Company’s general terms and conditions apply, and there are no significant transactions in which
payment terms include deferred payments, etc.
(Energy, Industry and Mobility)
The Energy segment includes revenue from businesses such as energy solutions, which are operated mainly in Japan, Asia,
Europe, and North America. The Industry segment includes revenue from businesses such as industry & distribution systems,
which are operated mainly in Japan. The Mobility segment includes revenue from building systems and railway systems
businesses. The building systems business is operated mainly in China and the railway systems business is operated mainly inEurope.
Long-term projects related to contracts such as construction in these segments involve manufacturing and providing goods
based on customers’ specifications over a specified period of time. As performance obligations are satisfied over time,revenue is recognized mainly based on the pattern of the cost accrual (the progress of the project mostly based on the cost
incurred relative to the estimated total cost). In addition, these segments provide certain services promised in the contracts
such as maintenance throughout the duration of the contract, and recognize revenue over time based on the passage of time.
Many of the contracts require payments based on milestones, and, in some cases, payments are made before performanceobligations are satisfied.
Further, in the sale of industrial equipment, etc. included in the Industry segment, and in the sale of elevators, etc. included in
the Mobility segment, revenue is recognized when control over the goods is transferred to customers as performanceobligations are satisfied at the point in time upon the completion or upon delivery of the goods. The Company’s generalterms and conditions apply, and there are no significant transactions in which payment terms include deferred payments, etc.
(Other)In the Smart Life, Hitachi Construction Machinery, and Hitachi Metals segments, performance obligations are generally
satisfied at a point in time upon completion or upon delivery of the goods, and revenue is recognized when control overgoods is transferred to customers. The Company’s general terms and conditions apply, and there are no significant
transactions in which payment terms include deferred payments, etc.
These segments provide certain services promised in the contracts such as maintenance throughout the duration of thecontract, and they recognize revenue over time based on the passage of time. The Company’s general terms and conditions
apply, and there are no significant transactions in which payment terms include deferred payments, etc.

F-55

Notes to Consolidated Financial Statements(c) Information about contract balances
The following table shows the beginning and ending balances of Trade receivables, Contract assets and Contract liabilities fromcontracts with customers for the fiscal years ended March 31, 2021 and 2020.
Millions of yen
2021
March 31, 2021

2020
April 1, 2020

March 31, 2020

April 1, 2019

Trade receivables

2,115,973

1,846,078

1,846,078

1,980,165

Contract assets

676,524484,999484,999

484,120

Contract liabilities

1,016,207

707,352

707,352

654,536

Of the revenue recognized during the fiscal years ended March 31, 2021 and 2020, the amount included in Contract liabilities atthe beginning of the fiscal years were 352,608 million yen and 292,613 million yen, respectively. And the amount related toperformance obligations satisfied in the past periods were not material.
(d) Transaction price allocated to remaining performance obligations
The following table shows the balance of unsatisfied performance obligations by reportable segment for the fiscal years ended
March31, 2021 and 2020.
Millions of yen
March 31, 2021

March 31, 2020

Intersegment

Balance of unsatisfied

Intersegment

Balance of unsatisfied

transactions

performance obligationstransactions

performance obligations

IT50,181

1,080,587

53,577

1,068,472

Energy29,2881,884,151

27,348625,730

Industry

89,043476,109

86,941

441,956

Mobility

3,905

4,247,366

5,713

3,692,326

Segments of the Company and its subsidiaries that have contracts under which revenue is recognized over a long period of time
are primarily the IT segments, Energy segments, Industry segments and Mobility segments.
The estimated timing of unsatisfied performance obligations at the fiscal year ended March 31, 2021 are as follows.
Approximately 90% of the balance of unsatisfied performance obligations of the IT segment was expected to be satisfied within
three years and approximately 10% after three years but no more than five years.
Approximately 80% of the balance of unsatisfied performance obligations of the Energy segment was expected to be satisfied
within three years and approximately 10% after three years but no more than five years.
Approximately 90% of the balance of unsatisfied performance obligations of the Industry segment was expected to be satisfied
within three years.
Approximately 50% of the balance of unsatisfied performance obligations of the Mobility segment was expected to be satisfied
within three years and approximately 10% after three years but no more than five years.
The estimated timing of unsatisfied performance obligations at the fiscal year ended March 31, 2020 are as follows.
Approximately 90% of the balance of unsatisfied performance obligations of the IT segment was expected to be satisfied within
three years and approximately 10% after three years but no more than five years.
Approximately 60% of the balance of unsatisfied performance obligations of the Energy segment was expected to be satisfied
within three years and approximately 20% after three years but no more than five years.
Approximately 90% of the balance of unsatisfied performance obligations of the Industry segment was expected to be satisfied
within three years.
Approximately 50% of the balance of unsatisfied performance obligations of the Mobility segment was expected to be satisfied
within three years and approximately 10% after three years but no more than five years.

F-56

Notes to Consolidated Financial Statements
The remaining segments have contracts whose initial expected terms are generally one year or less. Accordingly, related
information is excluded from this disclosure in accordance with the practical expedient.
(e) Assets recognized from the costs incurred for obtaining or fulfilling contracts with customers
The Company and its subsidiaries recognize the costs incurred for obtaining or fulfilling contracts with customers as an asset tothe extent those costs are expected to be recovered. Such costs recognized as an asset as of March 31, 2021 and 2020 were notmaterial.
(21) Other Income and Expenses
The main components of other income and expenses for the years ended March 31, 2021 and 2020 are as follows:
Millions of yen
2021
Net gain (loss) on sales and disposals of fixed assets

2020

16,12629,920

Impairment losses(109,009)(136,993)

Net gain (loss) on business reorganization and others

452,422

19,650Special termination benefits(19,706)(21,422)-(375,967)

Loss due to the settlement of the South African project

Impairment losses are mainly recognized on property, plant and equipment, investment properties, goodwill and other intangible
assets. Net gain (loss) on business reorganization and others include gains and losses related to obtaining and losing control ofinvestees and gains and losses related to obtaining and losing significant influence over investees.
Restructuring charges (structural reform expenses) included in other expenses for the years ended March 31, 2021 and 2020 were
128,715 million yen and 159,086 million yen, respectively. Restructuring charges (structural reform expenses) mainly include
impairment losses and special termination benefits.
The detail of loss due to the settlement of the South African project is disclosed in note 5.
(22) Financial Income and Expenses
The main components of financial income and expenses for the years ended March 31, 2021 and 2020 are as follows:
Millions of yen
2021

2020

Dividends received

3,445

5,531

Exchange gain (loss)

9,193(4,493)

Dividends received for the years ended March 31, 2021 and 2020 are from FVTOCI financial assets.

F-57

Notes to Consolidated Financial Statements(23) Discontinued Operations
In the Energy segment, the Company classified the part of thermal power generation systems business which was not transferredto Mitsubishi Hitachi Power Systems, Ltd. (currently Mitsubishi Power, Ltd.) for business integration in the thermal power
generation systems business with Mitsubishi Heavy Industries, Ltd. but was operated by the Company and certain subsidiaries as
discontinued operations in the consolidated statement of profit or loss since the projects were completed in the year ended March
31, 2015.
Profit or loss and cash flows from the discontinued operations for the years ended March 31, 2021 and 2020 are as follows:
Millions of yen
2021

2020

Profit or loss from discontinued operations
Revenues
Cost of sales and expenses
Loss from discontinued operations, before income taxes
Income taxes
Loss from discontinued operations

7

48

(693)

(1,826)(686)(1,778)

-

2

(686)

(1,776)
Millions of yen

2021

2020

Cash flows from discontinued operations
Cash flows from operating activities(611)(2,981)

Cash flows from investing activities--

Cash flows from financing activities

736

2,745

F-58

Notes to Consolidated Financial Statements(24) Earnings Per Share (EPS) Information
The calculations of basic and diluted EPS attributable to Hitachi, Ltd. stockholders are as follows:
Number of shares
2021
Weighted average number of shares on which basic EPS is calculated

2020

965,965,329

965,708,920

Stock options

731,540

832,420

Restricted stock

684,997

339,060

Restricted stock units

24,533-

967,406,399

966,880,400

Effect of dilutive securities

Number of shares on which diluted EPS is calculated

Millions of yen
2021

2020

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

502,299

89,372--502,299

89,372(686)(1,776)

-

-

(686)

(1,776)501,61387,596--501,61387,596Net loss from discontinued operations,
attributable to Hitachi, Ltd. stockholders
Basic
Effect of dilutive securities
Diluted
Net income attributable to Hitachi, Ltd. stockholders
Basic
Effect of dilutive securities
Diluted

Yen
2021

2020

EPS from continuing operations,
attributable to Hitachi, Ltd. stockholders
Basic520.0092.55

Diluted519.22

92.43

Basic

(0.71)(1.84)

Diluted(0.71)(1.84)

Basic

519.2990.71

Diluted518.51

90.60

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

EPS attributable to Hitachi, Ltd. stockholders

F-59

Notes to Consolidated Financial Statements(25) Supplementary Cash Flow Information
Changes in liabilities from financing activities for the years ended March 31, 2021 and 2020 are as follows:
Millions of yen
Short-term debt
March 31, 2019
(Before restatement)
Cumulative effects of changes inaccounting policies
April 1, 2019
(After restatement)
Cash flows

Bonds

Long-term
borrowings

Lease liability

Total

111,031

170,498

674,043

49,1991,004,771---

224,613

224,613

111,031

170,498

674,043

273,8121,229,384

80,849215,205(77,369)(82,363)

136,322---87,71587,715

Non-cash changes
Finance lease liability incurred
Acquisitions and divestitures

5,793

-

48,5306,583

60,906(14,370)(410)(7,556)(6,949)(29,285)

March 31, 2020

183,303385,293

637,648

278,798

1,485,042

Cash flows

199,679

9,991

383,334(100,346)

492,658---

111,505

111,505

Acquisitions and divestitures

15,864(29,878)

250,837

19,386

256,209

Currency translation effect and others

17,789553

23,7909,810

51,942416,635

365,959

1,295,609

319,153

2,397,356

Currency translation effect and others

Non-cash changes
Finance lease liability incurred

March 31, 2021

F-60

Notes to Consolidated Financial Statements(26) Financial Instruments and Related Disclosures(a) Capital Management
The Company manages its capital under the policy of maintaining appropriate level of assets, liabilities and capital for current
and future business operations, as well as optimizing the efficiency of capital utilization throughout the business operations.
The Company uses the total Hitachi, Ltd. stockholders’ equity ratio as an important indicator in capital management and it isregularly monitored. The total Hitachi, Ltd. stockholders’ equity ratio as of March 31, 2021 and 2020 were 29.7% and 31.8%,
respectively.
The Company is not subject to any capital requirements except for the general rules such as the Japanese Company Law.
(b) Financial Risks
The Company is engaged in business activities world-wide, and constantly exposed to various risks such as market risks(mainly currency exchange risk and interest rate risk), credit risk and liquidity risk. The Company implements risk
management policies to avoid or mitigate these financial risks.
(i) Currency Exchange Risk
The Company and its subsidiaries hold assets and liabilities exposed to currency exchange risk. In order to hedge this risk,
the management uses forward exchange contracts or cross currency swaps.
For trade receivables and payables denominated in foreign currencies, the Company and its subsidiaries measure the future
cash flows per currency on a monthly basis, and enter into forward exchange contracts using a constant ratio with the
purpose of fixing the future cash flows arising from receivables and payables and forecasted transactions denominated inforeign currencies. The terms of forward exchange contracts are largely within one year. If necessary, the Company and its
subsidiaries establish a risk control policy and a risk management approach specific to each transaction by reviewing thebusiness characteristics, the structure of income and expenditure, and conditions of the contract. The Company and its
subsidiaries hedge the risk exposure arising from specific transactions based on the risk control policy and the risk
management approach.
To fix cash flows from long-term debt denominated in foreign currencies, the Company and its subsidiaries enter intocross currency swap agreements with the same maturities as the underlying debt. The hedging relationship between theforward exchange contracts or cross currency swaps and the underlying hedged items is highly effective in offsetting theimpact from changes in foreign currency exchange rates.
The sensitivity analysis for currency exchange rates shown below indicates the impact on income from continuing
operations, before income taxes, in the Company’s consolidated statement of profit or loss, if the Japanese yen depreciatedby 1% on the foreign-currency-denominated financial instruments held by the Company and its subsidiaries as of March
31, 2021 and 2020, while all other variables are held constant.
Millions of yen
Currency
Impact on income from continuing

US Dollar

operations, before income taxes

Euro

F-61

2021

2020
2,559

330

101

156

Notes to Consolidated Financial Statements(ii) Interest Rate Risk
The Company and its subsidiaries are exposed to interest rate risk related principally to long-term debt obligations. In
order to minimize this risk, the Company and its subsidiaries enter into interest rate swap agreements to control fluctuation
risk of cash flows. The interest rate swaps entered into are mainly receive-variable, pay-fixed interest rate swaps. Under
the interest rate swaps, the Company and its subsidiaries receive variable interest rate payments on long-term debt andmake fixed interest rate payments, thereby creating fixed interest rate long-term debt.
Certain financing subsidiaries raise funds by issuing long-term debt with a fixed interest rate and lending it at variableinterest rates, creating interest rate risk. In order to minimize this risk, interest rate swaps are used to convert, in effect, thefixed rate to a variable rate to manage fluctuations in fair value resulting from interest rate risk. The hedging relationshipbetween the interest rate swaps and the underlying hedged items is highly effective in offsetting the impact from changes
in cash flows and fair value resulting from interest rate risk.
The sensitivity analysis for interest rate shown below indicates the impact on income from continuing operations, before
income taxes, in the consolidated statement of profit or loss, if interest rates increased by 1% on the financial instruments(floating-interest financial assets and liabilities measured at amortized cost, FVTPL financial assets and liabilities andderivatives) held by the Company and its subsidiaries as of March 31, 2021 and 2020, while all other variables are held
constant.
Millions of yen
2021
Impact on income from continuing operations,
before income taxes

2020(6,394)(2,421)(iii) Credit Risk
Trade receivables and contract assets, and other receivables resulting from operating activities of the Company and its
subsidiaries are exposed to credit risk of the customers. Investments in debt securities held for managing cash surplus andequity instruments held for strategic purposes are exposed to credit risk of the issuers. Derivative transactions entered into
in order to lower market risks are exposed to credit risk of the counter-party financial institutions.
For credit risk of customers, the Company conducts periodic credit checks as appropriate for the products sold and thecustomers’ financial conditions and credit ratings. A credit limit is set according to the credit risk. For cash surplus,
investment is restricted to low risk debt securities, and derivative transactions are entered into with financial institutions
with high credit rating only.
No significant concentration of credit risk is present in a particular region or a customer, as the Company and its
subsidiaries are engaged in diverse industries worldwide.

F-62

Notes to Consolidated Financial Statements
The changes in the balance of allowance for doubtful receivables for trade receivables, contract assets and otherreceivables, and the changes in the gross carrying amounts of trade receivables and contract assets, and other receivables
corresponding to the allowance for doubtful receivables for the years ended March 31, 2021 and 2020 are as follows.
Other receivables mainly consist of lease receivables and financial assets measured at amortized cost such as short-termloans receivable, other accounts receivable, debt securities measured at amortized cost and long-term loans receivable.
Millions of yen
Trade receivables and contract
assetsAllowance for doubtful receivables
Collective
assessment

Individual
assessment

March 31, 201918,620Change, net

3,332

Credit-impairment [1]Gross carrying amount

Total

Collective
assessment

Individual
assessment

Total

13,90232,522

2,391,639

105,168

2,496,807

5,825

9,157

(77,943)(38,890)(116,833)

(21)

21

-

(1,443)

1,443-

Write-off [2]

(635)

(343)

(978)

(2,599)(752)(3,351)Other [3]

(472)

(578)

(1,050)(1,619)(4,276)(5,895)20,824

18,82739,651

2,308,035

62,6932,370,728

701

6,245

6,946

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

March 31, 2020
Change, net
Credit-impairment [1]

(27)

27

-

14,778(14,778)-

Write-off [2](834)(3,025)(3,859)(22,078)(3,391)(25,469)

Other [3]12,5697,379

19,948748,100

103,994

852,094

March 31, 2021

33,23329,45362,686

2,713,379

141,804

2,855,183

F-63

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

Collective
assessment

Individual
assessment

Gross carrying amount

Total

Collective
assessment

Individual
assessment

Total

March 31, 2019

385

1,887

2,272

503,986

15,413519,399

Change, net

71

2,458

2,529

(115,816)

1,404(114,412)

Credit-impairment [1]

-

-

-

(26)

26

-

Write-off [2]

(176)

(195)

(371)

(1,097)(195)(1,292)Other [3]

(8)

(38)

(46)

(1,239)(441)(1,680)March 31, 2020

272

4,112

4,384

385,808

16,207402,015

Change, net

27

1,057

1,084

(155,203)305(154,898)

Credit-impairment [1]

-

-

-

(44)

44

-

Write-off [2](1)(1,275)(1,276)(1,526)(1,495)(3,021)Other [3]

3

136

139

176,433

20,762

197,195

301

4,030

4,331

405,468

35,823441,291

March 31, 2021

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

F-64Notes to Consolidated Financial Statements(iv) Liquidity Risk
Trade payables and financial liabilities, such as long-term debts, held by the Company and its subsidiaries are exposed toliquidity risk. With respect to this risk, the Company and its subsidiaries try to optimize capital efficiency through efficientmanagement of working capital, and maintain cash control through a centralized cash management system. They are alsoable to raise funds, as necessary, from capital markets through the issuance of debt and equity securities, and fromcommercial banks through borrowings and commitment lines. The total unused commitment lines as of March 31, 2021
are disclosed in note 30.
The following tables present the maturities of non-derivative financial liabilities. Trade payables are not included in thetables since the carrying amounts agree with the contractual cash flows and they all mature in less than one year.
Millions of yen
Carrying
amountShort-term debt

Contractual
cash flows

March 31, 2021
Within 1 year

After 1 year
but not morethan 5 years

More than 5
years

416,635

417,993

417,993--319,153

335,421

93,270174,920

67,231Long-term debt
Lease liabilities
Bonds
Long-term borrowings

365,959

373,650

11,508

179,797

182,345

1,295,609

1,314,067

179,905

825,661

308,501

237,805

243,894-

243,894-

Other non-current liabilities
Put options of non-controllinginterests

Millions of yen
Carrying
amountShort-term debt

Contractual
cash flows

March 31, 2020
Within 1 year

After 1 year
but not morethan 5 years

More than 5
years

183,303

184,667

184,667--

83,918144,837

62,071Long-term debt
Lease liabilities

278,798

290,826

Bonds

385,293

395,427

1,721

185,624

208,082Long-term borrowings

637,648

647,959

153,052

373,149

121,758

The weighted average interest rate for short-term debt is 0.6%, and the weighted average interest rate for long-termborrowings is 0.5% with maturities ranging from 2021 to 2039.

F-65

Notes to Consolidated Financial Statements
The details on each bond issued are provided below.

Issuer

The Company
The Company

Name of bondUnsecureddebenture #16
Unsecureddebenture #17

March 31,2020

Security

Millions of yen
Interest
Mature
rates
in
(%)

IssuedMarch 31,
2021

2013

30,00030,000 Unsecured

0.8

2023

2013

20,00020,000 Unsecured

1.4

2028

The Company

Unsecureddebenture #18

2020

90,00090,000 Unsecured

0.1

2023

The Company

Unsecureddebenture #19

2020

20,00020,000 Unsecured

0.2

2027

2020

90,00090,000 Unsecured

0.3

2030

0.1

2021

115,959

135,293 Unsecured

2.8

2031

365,959385,293

The Company

Subsidiaries

Unsecureddebenture #20

2012

Unsecureddebentures

2021

Total

The following table shows the maturities of the main types of derivatives, expressed in gross amounts, even though they
are net settlement derivatives.
Millions of yen
Within 1 year

Forward exchange contracts
Cross currency swaps
Interest rate swaps
Option contracts

March 31, 2021
More than 5
After 1 year
years
but not morethan 5 years

Total

In

8,644

3,743

1

12,388Out

16,694

3,104-

19,798

In

6,128

9,375

-

15,503

Out

2,898

2,330

-

5,228

In

29

276

3,746

4,051

Out

316

1,140

-

1,456

In

22

87

-

109

Out

88

-

-

88
Millions of yen

Within 1 year

Forward exchange contracts

In36,128Out

13,664

Cross currency swaps

In

1,253

Out

4,398

In

Interest rate swaps
Option contracts

March 31, 2020
After 1 year
More than 5
but not more
years
than 5 years
136,450749-

14,413

6,296

-

7,549

1,599

-

5,997

-

390

-

390

Out

252

2,594

-

2,846

In

6,081

86

-

6,167

Out

197

10

-

207

F-66

321

Total

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

F-67

Notes to Consolidated Financial Statements(ii) Financial Instruments Measured at Amortized Cost
The carrying amounts and estimated fair values of the financial instruments measured at amortized cost as of March 31,
2021 and 2020 are as follows.
The fair value estimated for financial assets and liabilities measured at amortized cost is classified in Level 2 of the fairvalue hierarchy.
Millions of yen
March 31, 2021
Carrying amounts

March 31, 2020

Estimated
fair values

Carrying amounts

Estimated
fair values

AssetsInvestments in securities and otherfinancial assets
Lease receivables

90,044

91,48383,55384,834

Debt securities

55,71455,71673,04873,051Long-term loans receivable

21,10322,40926,642

28,576

365,959

367,537

385,293

386,082

1,295,609

1,296,373

637,648

640,929

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

F-68Notes to Consolidated Financial Statements
The following tables present the assets and liabilities that are measured at fair value on a recurring basis as of March 31,
2021 and 2020.
March 31, 2021
Class of financial instruments

Millions of yen
Level 1

Level 2

Level 3

Total

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

131

-

9,865

9,996

Debt securities

12,749

4,548

6,054

23,351-

34,981

87

35,068235,278977

110,853

347,108

248,158

40,506

126,859

415,523-

26,739-26,739-26,739-26,739Derivatives
FVTOCI financial assets:
Investments in securities and otherfinancial assets
Equity securities
Total financial assets at fair value
FVTPL financial liabilities:
Other financial liabilities
Derivatives
Total financial liabilities at fair value
March 31, 2020
Class of financial instruments

Millions of yen
Level 1

Level 2

Level 3

Total

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

-

-

4,001

4,001

8,638

4,550

8,617

21,805-44,4096,147

50,556

135,452-

108,884

244,336

144,090

48,959127,649

320,698-

24,021-

24,021-

24,021-

24,021FVTOCI financial assets:
Investments in securities and otherfinancial assets
Equity securities
Total financial assets at fair value
FVTPL financial liabilities:
Other financial liabilities
Derivatives
Total financial liabilities at fair value

F-69

Notes to Consolidated Financial Statements
The following tables present the changes in Level 3 instruments measured on a recurring basis for the years ended March
31, 2021 and 2020.
2021

Millions of yen
Level 3 financial assets

Balance at beginning of year

Equitysecurities

Debt
securities

Derivatives

Total

112,885

8,617

6,147

127,649

Gain (loss) in profit or loss [1]Gain in OCI [2]

541
2,534

(415)
-

1
-

127
2,534

Purchases
Sales and redemption

7,689(1,985)450(2,055)(6,061)

8,139(10,101)

Acquisitions and divestitures
Other(1,115)
169

(61)
(482)

-

(1,176)(313)

Balance at end of year

120,718

6,054

87

126,859

493

(415)

1

79

Unrealized gain (loss) relating tofinancial assets held at end of year [3]2020Millions of yen
Level 3 financial assets

Equitysecurities

Debt
securities

Derivatives

Total

Balance at beginning of year

105,077

9,344

7,059

121,480

Loss in profit or loss [1]Gain in OCI [2]

(124)
1,871

(54)
-

(912)
-

(1,090)
1,871

Purchases
Sales and redemption

3,839(2,393)455(1,032)-

4,294(3,425)Acquisitions and divestitures
Other

(505)
5,120

(46)
(50)

-

(551)
5,070

112,885

8,617

6,147

127,649

(124)

(31)

(912)

(1,067)

Balance at end of year
Unrealized loss relating tofinancial assets held at end of year [3][1] Gain (loss) in profit or loss related to FVTPL financial assets is included in Financial income and Financial expenses
in the consolidated statement of profit or loss.
[2] Gain in OCI related to FVTOCI financial assets is included in Net changes in financial assets measured at fair value
through OCI in the consolidated statement of comprehensive income.
[3] Unrealized gain (loss) relating to FVTPL financial assets held at the end of year is included in Financial income andFinancial expenses in the consolidated statement of profit or loss.
Fair values are measured by the finance departments in accordance with the Company’s policies and procedures.
Valuation models are determined so that they reflect each financial instrument’s nature, characteristics and risks mostappropriately. The finance departments continually examine changes in important inputs that could affect the fair value. Incase the fair value of a financial instrument was significantly impaired, administrators review and approve the impairment
loss.
(ⅳ) Other
The Company and its subsidiaries recognize put options on shares of subsidiaries held by non-controlling interests asfinancial liabilities at the present value of the exercise price. The Company derecognizes the non-controlling interests andrecognizes the difference between the present value and non-controlling interests in capital surplus.
Put options on non-controlling interests of Hitachi ABB Power Grids Ltd are measured at the present value of the exercise
price and the carrying amount of the put options was 237,805 million yen as of March 31, 2021 included in Other noncurrent liabilities in the consolidated statement of financial position.

F-70

Notes to Consolidated Financial Statements
Equity instruments held with the objective of maintaining and strengthening business relations with the issuers areclassified as FVTOCI financial assets. The following is a list of principal equity instruments designated as FVTOCI andtheir fair values.
March 31, 2021

Millions of yen

Principal FVTOCI financial assets

Fair value

Renesas Electronics Corporation

74,389Western Digital Corporation

46,187

Honda Motor Co., Ltd.

24,914JECC Corporation

21,591

Central Japan Railway Company

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

12,285

Nippon Steel Kowa Real Estate Co., Ltd.

8,794

East Japan Railway Company

6,368

Dalian Hi-Think Computer Technology Corporation

5,543

Nippon Tochi-Tatemono Co., Ltd.

5,484

March 31, 2020

Millions of yen

Principal FVTOCI financial assets

Fair value

Western Digital Corporation

28,309Renesas Electronics Corporation

24,114JECC Corporation

21,591

Central Japan Railway Company

15,588

Nippon Steel Kowa Real Estate Co., Ltd.

9,012

Shin-Etsu Chemical Co., Ltd.

7,083

East Japan Railway Company

6,642

Nippon Tochi-Tatemono Co., Ltd.

4,899

Honda Motor Co., Ltd.

4,860

Dalian Hi-Think Computer Technology Corporation

4,644

See note 22 for dividends received from investment securities classified as FVTOCI financial assets.
Accumulated gains and losses on valuation of FVTOCI financial assets are reclassified into retained earnings when
derecognized during the fiscal year. The net gains reclassified, net of taxes, for the years ended March 31, 2021 and 2020
were 4,299 million yen and 13,129 million yen, respectively. These financial assets were derecognized upon disposal ofshares after reviewing particular business relations, or acquisitions and divestitures.
The information on FVTOCI financial assets that were derecognized for the years ended March 31, 2021 and 2020 is asfollows:
Millions of yen
2021

2020

Fair value at the time of derecognition

13,55024,302

Accumulated gains at the time of derecognition

4,464

16,221F-71

Notes to Consolidated Financial Statements(d) Derivatives and Hedging Activities(i) Fair Value Hedge
Changes in the fair value of recognized assets and liabilities, and of derivatives designated as a fair value hedge of these assets
and liabilities are recognized in profit or loss for the period in which the changes occur. Derivatives designated as a fair value
hedge include forward exchange contracts associated with operating transactions, cross currency swaps agreements and interest
rate swaps associated with financing transactions.
(ii) Cash Flow Hedge
Foreign Currency Risk
A portion determined as an effective hedge with respect to changes in the fair value of forward exchange contracts designatedas an effective cash flow hedge of forecasted foreign-currency-denominated transactions are recognized in OCI. AOCI issubsequently reclassified into profit or loss when the hedged items affect profit or loss for the period. If a non-financial asset ora non-financial liability is recognized due to a hedged forecast transaction, the changes in the fair value of the derivative
recognized in OCI are included directly in the acquisition cost or other carrying amount of the asset or liability at which point
the asset or liability is recognized.
Interest Rate Risk
A portion determined as an effective hedge with respect to changes in the fair value of interest rate swaps designated as a hedgeof the variability of cash flows associated with long-term debt are recognized in OCI. AOCI is subsequently reclassified tointerest charges over the period in which the interest on the debt affects profit or loss.
When applying hedge accounting, the Company assesses hedge effectiveness through a qualitative assessment of whether thecritical terms of the hedged item and the hedging instrument match or are closely aligned and whether changes in the fair value
or cash flows of the hedging instrument offset changes in the fair value or cash flows of the hedged item in order to confirm thatan economic relationship exists between the hedged item and the hedging instrument. The Company also sets appropriate hedge
ratios based on the economic relationship between the hedged item and the hedging instrument and the Company’s risk
management policies. For the years ended March 31, 2021 and 2020, hedge ineffectiveness recognized in profit or loss were notmaterial.
The notional amounts and carrying amounts of hedging instruments as of March 31, 2021 and 2020 are as follows. The carrying
amount of hedging instruments is included in Investments in securities and other financial assets and Other financial liabilities
or Other non-current liabilities in the consolidated statement of financial position.
March 31, 2021
Hedging instruments

Millions of yen
Carrying amount

Notional amountMore than 1 year

AssetsLiabilities

Fair value hedge
Foreign currency risk

299,371

93,418

8,625

6,926

Interest rate risk

47,854

41,201276

1,063

Foreign currency risk

313,298

106,964

3,632

4,691

Interest rate risk

249,488

163,923

3,775

393

910,011405,506

16,30813,073

Cash flow hedge

Total
March 31, 2020
Hedging instruments

Millions of yen
Carrying amount

Notional amountMore than 1 year

AssetsLiabilities

Fair value hedge
Foreign currency risk

533,740

75,431

11,941

5,715Interest rate risk

57,30047,657390

1,712

Foreign currency risk

887,165

24,02328,561

8,477Interest rate risk

175,663

116,325-

1,134

1,653,868

263,436

40,892

17,038Cash flow hedge

Total

F-72

Notes to Consolidated Financial Statements
The carrying amounts of hedged items related to fair value hedges as of March 31, 2021 and 2020 are as follows.
March 31, 2021

Millions of yen
Carrying amount

Hedged items related tofair value hedges

Recognized in statement offinancial position

Foreign currency risk

Trade receivables and contract assets,
Investments in securities and other financial assets,

Interest rate risk

Investments in securities and other financial assets

AssetsLiabilities

167,779

131,592

31,801

16,053

199,580

147,645

Short-term debt and Long-term debt
Total
March 31, 2020

Millions of yen

Hedged items related tofair value hedges

Carrying amount

Recognized in statement offinancial position

AssetsLiabilities

Trade receivables and contract assets,
Foreign currency risk

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

Interest rate risk

Investments in securities and other financial assets

375,960

Total

157,780

41,52015,780417,480

173,560

For the years ended March 31, 2021 and 2020, changes in the fair value of hedging instruments and hedged items related to fairvalue hedges and the accumulated amount of fair value hedge adjustments on hedged items included in the carrying amount of
the hedged items were not material.
For the years ended March 31, 2021 and 2020, changes in the fair value of hedging instruments related to cash flow hedges
recorded in Accumulated other comprehensive income are as follows.
Millions of yen
Changes in fairAmount directly
value of hedging
included in
instruments
carrying amount ofrecognized in otherhedged assets orcomprehensive
liabilities
incomeApril 1,
2020

Price risk

(572)

Amountreclassified to
profit or loss
[1]

March 31,
2021

-

-

572

-

Foreign currency risk

12,078208(15,957)

1,462(2,209)Interest rate risk

(1,144)

4,427

-

53

3,336

Total

10,362

4,635(15,957)

2,087

1,127
Millions of yen

Changes in fairAmount directly
value of hedging
included in
instruments
carrying amount ofrecognized in otherhedged assets orcomprehensive
liabilities
incomeApril 1,2019

Price risk

Amountreclassified to
profit or loss
[1]

March 31,
2020

(36)

(698)

162

-

(572)

Foreign currency risk

(4,204)15,303(2,902)

3,881

12,078Interest rate risk

(1,583)

416

-

23

(1,144)

Total(5,823)15,021(2,740)3,904

10,362[1] In the consolidated statement of profit or loss, the amount reclassified to profit or loss is included mainly in Revenues andFinancial expenses for hedges of foreign currency risk and mainly in Interest charges for hedges of interest rate risk.
F-73

Notes to Consolidated Financial Statements(e) Securitization of Financial Assets
For the purpose of providing diversified and stable financing, the Company and certain subsidiaries securitize certain financial
assets, and transfer trade and lease receivables through certain third-party financial institutions or structured entities formed bythese financial institutions. The Company does not consolidate such structured entities used for securitization purposes since it has
been determined that they are not controlled by the Company.
These unconsolidated structured entities used for securitization purposes are operated in the ordinary course of business of thefinancial institutions, and they procure funds by issuing commercial paper and other borrowings. Basically, investors in thesestructured entities only have recourse to the assets owned by the entity itself, but not to any other assets held by the Company or its
subsidiaries. The amount of assets transferred by the Company and certain subsidiaries is considerably small compared to the total
assets of the structured entities sponsored by the financial institutions that purchase a large amount of assets from entities otherthan the Company and certain subsidiaries. The Company and certain subsidiaries have only limited exposure to the risks borne bythese structured entities. The majority of the involvement with these structured entities used for securitization purposes by theCompany and certain subsidiaries concerns the servicing of assets. The Company and certain subsidiaries do not provide any noncontractual support to the structured entities and have not made any implicit support arrangements with them.
For the securitizations of financial assets by the Company and certain subsidiaries, which resulted in derecognizing the financial
assets in their entirety, the Company and certain subsidiaries retain no significant continuing involvement. For other securitizationsof financial assets, the Company and certain subsidiaries do not derecognize the financial assets in their entirety when they retain
substantially all credit risks and economic value related to the transferred financial assets through holding subordinated interests,
and the carrying amounts of these financial assets are not material.
(27) Pledged Assets
As a general contractual term for long-term and short-term debt, banks may demand collateral and guarantees for present andfuture obligations, and retain rights to offset the liabilities with bank deposits when repayment is overdue or any breach ofcontract occurs.
Per trustee agreements of secured bonds and particular secured or unsecured loan agreements, trustees or lenders generally havethe right to pre-approve profit distributions including dividend payments and new stock issues, as well as the right to demand
additional collateral or mortgage.
The Company and its subsidiaries pledged a portion of their assets as collateral primarily for bank loans as follows:
Millions of yen
March 31, 2021

March 31, 2020

Trade receivables and contract assets

4,990

9,958

Inventories

9,103

16,671333

340

Investments in securities and other financial assets
Land

1,777

-

50

1,111

Machinery and other property, plant and equipment

59,27250,125

Total

75,52578,205

Buildings and structures

F-74

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

Reporting segment
IT

Name of subsidiary
Hitachi Information & Telecommunication

Business location

Ownership
percentage
of votingrights (%)

Yokohama, Kanagawa

100.0

Engineering, Ltd.
IT

Hitachi-Omron Terminal Solutions, Corp.

Shinagawa-ku, Tokyo

100.0

IT

Hitachi Solutions, Ltd.

Shinagawa-ku, Tokyo

100.0

IT

Hitachi Systems, Ltd.

Shinagawa-ku, Tokyo

100.0

IT

Hitachi Computer Products (America), Inc.

Oklahoma,

100.0

U.S.A.
IT

Hitachi Global Digital Holdings Corporation

California,

100.0

U.S.A.
IT

Hitachi Payment Services Private Limited

Chennai,
India

100.0

IT

Hitachi Vantara LLC

California,
U.S.A.

100.0

EnergyHitachi-GE Nuclear Energy, Ltd.

Hitachi, Ibaraki

80.0

EnergyHitachi Plant Construction, Ltd.

Toshima-ku, Tokyo

100.0

EnergyHitachi Power Semiconductor Device, Ltd.

Hitachi, Ibaraki

100.0

EnergyHitachi Power Solutions Co., Ltd.

Hitachi, Ibaraki

100.0

EnergyHitachi ABB Power Grids Ltd

Zurich,Switzerland

80.1

Industry

Hitachi Industrial Equipment Systems Co., Ltd.

Chiyoda-ku, Tokyo

100.0

Industry

Hitachi Industrial Products, Ltd.

Chiyoda-ku, Tokyo

100.0

Industry

Hitachi Industry & Control Solutions, Ltd.

Hitachi, Ibaraki

100.0

Industry

Hitachi Plant Services Co., Ltd.

Toshima-ku, Tokyo

100.0

Industry

Hitachi Industrial Holdings Americas, Inc.

Illinois,

100.0

U.S.A.
Industry

JR Technology Group, LLC

Michigan,

100.0

U.S.A.
Industry

Sullair, LLC

Indiana,
U.S.A.

100.0

Mobility

Hitachi Building Systems Co., Ltd.

Chiyoda-ku, Tokyo

100.0

Mobility

Hitachi Elevator (China) Co., Ltd.

Guangzhou,
China

70.0

Mobility

Hitachi Rail Ltd.

London,

100.0

U.K.

F-75

Notes to Consolidated Financial Statements

Reporting segment

Name of subsidiaryBusiness location

Ownership
percentage
of votingrights (%)

Smart Life

Hitachi Astemo, Ltd.

Hitachinaka, Ibaraki

66.6

Smart Life

Hitachi Global Life Solutions, Inc.

Minato-ku, Tokyo

100.0

Smart Life

Hitachi High-Tech Corporation

Minato-ku, Tokyo

100.0

Smart Life

Hitachi Astemo Americas, Inc.

Kentucky,

100.0

U.S.A.
Smart Life

Hitachi Consumer Products (Thailand), Ltd.

Prachinburi,
Thailand

84.1

Hitachi Construction
Machinery

Hitachi Construction Machinery Co., Ltd.

Taito-ku, Tokyo

51.5

Hitachi Metals

Hitachi Metals, Ltd.

Minato-ku, Tokyo

53.4

OthersHitachi-LG Data Storage, Inc.

Minato-ku, Tokyo

51.0

OthersHitachi Real Estate Partners, Ltd.

Chiyoda-ku, Tokyo

100.0

OthersHitachi America, Ltd.

California,
U.S.A.

100.0

OthersHitachi Asia Ltd.

Singapore

100.0

OthersHitachi (China), Ltd.

Beijing,

100.0

OthersHitachi Europe Ltd.

OthersHitachi India Pvt. Ltd.

China
Maidenhead,

100.0

U.K.

-

New Delhi,
India

Other 834 companies

F-76

100.0
-

-

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

March 31, 2021

March 31, 2020

Trade receivables and contract assets

82,866

104,011

Trade payables

60,30574,578

Lease obligations [1]33,431

34,827
Millions of yen

With joint ventures

March 31, 2021

March 31, 2020

Trade receivables and contract assets

26,08942,435Long-term loans receivable [2]14,76521,920Trade payables

7,905

10,757[1] Included in Current portion of long-term debt and Long-term debt in the consolidated statement of financial position.
[2] Included in Investments in securities and other financial assets in the consolidated statement of financial position.
Revenue and purchase transactions of the Company and its subsidiaries with associates and joint ventures are as follows:
Millions of yen
With associates

2021

2020

Revenues

346,630

452,098

Purchases

276,551

308,101
Millions of yen

With joint ventures

2021

2020

Revenues

49,91190,287Purchases

9,482

20,259(b) Compensation for Directors and Executive Officers of the Company
Millions of yen
2021
Basic remuneration, year-end allowance andperformance-linked compensation

2020
3,481

3,651

etc.)

871

676

Total

4,353

4,327

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

F-77

Notes to Consolidated Financial Statements(30) Commitments and Contingencies(a) Loan Commitments(i) Loan Commitments to Associates and Others
The Company provides loan commitments to associates and others. The outstanding balance of loan commitments as ofMarch 31, 2021 is as follows:
Millions of yen
March 31, 2021
Total commitments available

130

Less amount utilized-

Balance available

130

Since some loan commitments require credit approval before execution, the amount of total commitments available may
not be necessarily utilized in full.
(ii) Commitments with Financial Institutions
The Company and certain subsidiaries have line of credit arrangements with banks in order to secure efficient financing forbusiness operations. The total unused line of credit as of March 31, 2021 amounted to 600,165 million yen, primarily
belonging to the Company. The Company has commitment line agreements with a number of banks and pays commitment
fees as consideration. These commitment agreements generally provide a one year term with renewal at the end of theterm. The unused line of credit under these arrangements as of March 31, 2021 amounted to 300,000 million yen. The
Company also maintains other commitment line agreements with several financial institutions, with terms of three years
ending in July 2022. The unused line of credit under these arrangements as of March 31, 2021 amounted to 200,000
million yen.
(b) Commitments for Acquisition of Assets
As of March 31, 2021, outstanding commitments made to purchase property, plant and equipment were 51,742 million yen.
(c) Guarantee Obligations
The Company and certain subsidiaries provide debt guarantees to their associates, joint ventures and third parties. As of
March 31, 2021, the balance of the guarantee obligations was 69,005 million yen. It consisted of guarantees to associates of
54,529 million yen, to joint ventures of 2,205 million yen and to third parties of 12,271 million yen.
(d) Litigation
In November 2017, a subsidiary in Japan received a complaint that was filed against three companies, namely a construction
company of a condominium complex, the subsidiary and a secondary subcontractor, by a contractee in Japan seeking
approximately 45.9 billion yen in compensation for expenses allegedly incurred arising from concerns over partial
deficiencies of piling work during the construction phases of the condominium complex, which the subsidiary contracted as
the primary subcontractor. In July 2018, the compensation claim against these three companies was amended toapproximately 51.0 billion yen by the contractee.
In relation to the aforementioned lawsuit, in April 2018, the subsidiary in Japan received a complaint that was filed against
the subsidiary and the secondary subcontractor, by the construction company of the condominium complex seeking
approximately 49.6 billion yen in compensation for expenses allegedly incurred arising from the aforementioned lawsuit. In
July 2018, the compensation claim against these two companies was amended to approximately 54.8 billion yen by theconstruction company of the condominium complex. Although the subsidiary in Japan will address these claims and explain
its position, there can be no assurance that it will not be held liable for any amounts claimed.
In December 2017, a subsidiary in Europe received a complaint filed by a customer in Europe seeking compensation forconsequential losses of 263 million euro (34,143 million yen) and interest allegedly incurred by performance defects of apower plant. As of March 31, 2021, the amount of compensation claimed by the customer was changed to 270 million euro
(35,050 million yen). Although the subsidiary in Europe will vigorously defend itself against this lawsuit, there can be noassurance that it will not be held liable for any amounts claimed.

F-78

Notes to Consolidated Financial Statements
The Company and its subsidiaries execute a number of business reorganizations, including mergers, acquisitions anddivestitures. Contracts for these reorganizations include clauses for transaction price adjustments subsequent to thereorganizations. There is a possibility products or services provided by the Company and its subsidiaries contain defects. As
the result of price adjustments, or in compensation for defects in products or services etc. there is a possibility that theCompany pays for any amounts.
Depending upon the outcome of the above legal proceedings, there may be an adverse effect on the consolidated financial
position or results of operations. Currently, the Company is unable to estimate the adverse effect, if any, of many of theseproceedings. The actual amount of fines, surcharge payments or any other payments resulting from these legal proceedings
may be different from the accrued amounts.
In addition to the above, the Company and its subsidiaries are subject to legal proceedings and claims which have arisen in
the ordinary course of business and have not been finally adjudicated. These actions when ultimately concluded anddetermined will not, in the opinion of management, have a material adverse effect on the consolidated financial statements of
the Company and subsidiaries.
(31) Approval of Consolidated Financial Statements
The consolidated financial statements were approved on June 23, 2021 by Keiji Kojima, President and COO of the Company.

F-79

Independent Auditor’s Report
To the Stockholders and Board of Directors ofHitachi, Ltd.
OpinionWe have audited the accompanying consolidated financial statements of Hitachi, Ltd. and its subsidiaries (theGroup), which comprise the consolidated statement of financial position as of March 31, 2021, and theconsolidated statements of profit or loss, comprehensive income, changes in equity, and cash flows for the year
then ended, and notes to the consolidated financial statements.
In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, theconsolidated financial position of the Group as of March 31, 2021, and its consolidated financial performance andits consolidated cash flows for the year then ended in accordance with International Financial Reporting Standards(IFRSs).
Basis for Opinion
We conducted our audit in accordance with auditing standards generally accepted in Japan. Our responsibilities
under those standards are further described in the Auditor’s Responsibilities for the Audit of the Consolidated
Financial Statements section of our report. We are independent of the Group in accordance with the ethicalrequirements that are relevant to our audit of the consolidated financial statements in Japan, and we have fulfilled
our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we haveobtained is sufficient and appropriate to provide a basis for our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of theconsolidated financial statements of the current period. These matters were addressed in the context of the audit of
the consolidated financial statements as a whole, and in forming the auditor’s opinion thereon, and we do notprovide a separate opinion on these matters.
Measurement of intangible assets recognized in the acquisition of the power grid business
Description of Key Audit Matter
The Company invested 80.1% in Hitachi ABB Power Grids Ltd, which was spun off from ABB Ltd, and theacquisition was completed on July 1, 2020.
The Company recognized related intangible assets in the amount of 414,544 million yen (customer relationships of
233,989 million yen, technology of 95,987 million yen, order backlog of 53,542 million yen, and brand license
agreement of 31,026 million yen) as a result of the measurement of the identifiable assets acquired and liabilities
assumed (See Note (5) Business Acquisitions and Divestitures, (g) Acquisition of ABB’s power grids business).
The measurement of intangible assets is determined using discounted future cash flows expected to be generated by
the assets and is affected by estimates of future cash flows and the discount rates. Future cash flows are estimatedusing significant assumptions including revenue growth rates, gross profit ratios, attrition rates of existingcustomers, and royalty rates, which require management judgements.
We determined that the measurement of intangible assets is a key audit matter because of the significance of thebalance of intangible assets and the significant impact on the consolidated financial statements from the
management judgements related to the significant assumptions.

F-80

Auditor’s Response
We primarily performed the following procedures regarding the measurement of intangible assets.
・ We obtained an understanding of the details and objectives of the transaction by examining related materials
such as the acquisition agreement and making inquiries of management.
・ We involved valuation specialists from a network firm in assessing the valuation methods of intangible assets,
significant assumptions used in the estimation of future cash flows, and the discount rates.
・ We performed following procedures related to significant assumptions used in the estimation of future cash
flows.
- We made inquiries of management about revenue growth rates and gross profit ratios, comparing with
operating results and available external data such as market growth rates.
- We made inquiries of management about the attrition rates of existing customers, analyzing customer sales
trends over the past five years.
- We made inquiries of management about royalty rates, analyzing rate levels.
・ We also made inquiries of management about the risks reflected in the discount rates, evaluating the consistency
with the risks reflected in future cash flows.
Measurement of recoverable amount of group of cash-generating units containing goodwill related to the power
grid business
Description of Key Audit Matter
The Company recognized goodwill in the amount of 480,006 million yen related to the power grid business (SeeNote (10) Goodwill and Other Intangible Assets). The goodwill represents 41% of goodwill and 4% of total assetsof the Group.
The Company measured the recoverable amount based on value in use in the impairment test of the group of cashgenerating units containing the goodwill. The measurement of value in use is determined using discounted future
cash flows and is affected by estimates of future cash flows and the discount rate. Future cash flows are based on
the business plan and are estimated using significant assumptions including revenue growth rates and gross profit
ratios which require management judgements.
We determined that the measurement of the recoverable amount is a key audit matter because of the significance ofthe balance of goodwill and the significant impact on the consolidated financial statements from the management
judgements related to the significant assumptions.
Auditor’s Response
We primarily performed the following procedures regarding the measurement of the recoverable amount of thegroup of cash-generating units containing the goodwill.
・ We obtained an understanding of the business plan by examining related business planning materials.
・ We assessed the effectiveness of the business planning process by comparing the business plan at the time ofacquisition of the power grid business with the post-acquisition operating results and the business plan at thetime of the impairment test.
・ We involved valuation specialists from a network firm in assessing the valuation method of value in use,significant assumptions used in the estimation of future cash flows, and the discount rate.
・ We made inquiries of management about revenue growth rates and gross profit ratios, comparing with actual
operating results and available external data such as market growth rates.
・ We made inquiries of management about the risks reflected in the discount rate, evaluating the consistency withthe risks reflected in future cash flows.
・ We performed sensitivity analyses assuming reasonably possible changes in significant assumptions, assessing
the effect on the recoverable amount.

F-81

Estimation of total cost of long-term projects
Description of Key Audit Matter
The Group has long-term projects involving the manufacture and provision of goods in accordance with customer
specifications that are completed over specified periods of time to customers in a broad range of business areas
across the world.
The Group recognizes revenues from long-term projects by measuring the progress of the project mostly based on
the cost incurred relative to the estimated total cost to satisfy the performance obligations (See Note (20) Revenues,(a) Disaggregation of revenue, (b) Information about satisfaction of performance obligations). Furthermore, theGroup recognizes provisions for expected losses on construction contracts based on the estimated amount of losses
associated with fulfilling the project requirements (See Note (14) Provisions).
Estimations of total cost of long-term projects affect the corresponding amounts of revenues and provisions. Eachof the Group’s long-term projects is distinct in terms of customer requirements, such as detailed specifications andscheduling, and therefore estimations of total cost depend on management judgements. Estimations of total cost are
particularly complex in relation to large-scale projects.
We determined that the estimation of total cost of long-term projects is a key audit matter because auditing
estimations of total costs of long-term projects requires consideration of various factors affecting such estimations
corresponding to each project as a result of the nature of the Group’s long-term projects.
Auditor’s Response
We obtained an understanding of the project management systems utilized by the Group as well as its processes for
estimating total costs, and tested the relevant internal controls, including the approval of initial and revised
operating budgets that serve as the basis of estimating total cost.
We selected samples of long-term projects, such as those projects whose total contract value exceeded certain
materiality thresholds and projects involving qualitative risks, including delays in the progress of the project, and,on a quarterly basis, performed selected procedures from the following considering the status of each project:
・ We identified the significant factors influencing the estimates, including those related to customer
specifications on goods and the timing of delivery, by examining contracts and project management materials
and making inquiries of management, and assessed the effects of estimation uncertainty inherent in thosesignificant factors influencing the estimates. In addition, we compared specific line items in the estimated total
cost with corresponding quotations from suppliers.
・ We assessed necessity of revising estimates of total cost considering the status of each project based oninquiries of management and by examining project management materials.
・ We assessed the effectiveness of the processes for estimating total costs by comparing initial and previous
period estimates with actual total costs for completed projects and previous period estimates with the latest
estimates for projects in progress.
・ We additionally made separate inquiries to project managers for projects that were considered particularly
significant to corroborate management explanations of their status.

F-82

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

F-83

Interest Required to Be Disclosed by the Certified Public Accountants Act of Japan
Our firm and its designated engagement partners do not have any interest in the Group which is required to bedisclosed pursuant to the provisions of the Certified Public Accountants Act of Japan.
Ernst & Young ShinNihon LLC
Tokyo, Japan
June 23, 2021
/s/ Takashi Ouchida
Takashi Ouchida
Designated Engagement Partner
Certified Public Accountant/s/ Koji Fujima
Koji Fujima
Designated Engagement Partner
Certified Public Accountant/s/ Takuya Tanaka
Takuya Tanaka
Designated Engagement Partner
Certified Public Accountant/s/ Shinya Yoshida
Shinya Yoshida
Designated Engagement Partner
Certified Public Accountant

F-84

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

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

Director, Kanto Local Finance Bureau[Filing Date]

June 23, 2021

[Company Name]

Kabushiki Kaisha Hitachi Seisakusho[Company Name in English]

Hitachi, Ltd.

[Name and title of

Keiji Kojima, President & COO

Representative][Name and title of CFO]

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

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

1. Matters Related to Basic Framework of Internal Control over Financial Reporting
Mr. Keiji Kojima, President & COO, and Mr. Yoshihiko Kawamura, Senior Vice President and Executive
Officer, are responsible for establishing and maintaining internal control over financial reporting of Hitachi, Ltd.
(the “Company”) and have established and maintained internal control over financial reporting in accordancewith the basic framework for internal control set forth in the “On the Revision of the Standards and PracticeStandards for Management Assessment and Audit concerning Internal Control Over Financial Reporting(Council Opinions)” published by the Business Accounting Council.
The internal control over financial reporting is designed to achieve its objectives to the extent reasonablethrough the effective function and combination of its basic elements. Therefore, there is a possibility that internal
control over financial reporting may not completely prevent or detect misstatements.
2. Matters Related to Scope of Assessment, Record Date, and Assessment Procedure
We assessed the effectiveness of our internal control over financial reporting on the record date as of March
31, 2021. We made this assessment in accordance with assessment standards for internal control over financial
reporting generally accepted in Japan.
In making this assessment, we evaluated internal control which may have a material effect on the entire
financial reporting on a consolidated basis (“company-level controls”) and based on the result of this assessment,
we appropriately selected business processes to be evaluated, analyzed these selected business processes,
identified key controls that may have a material impact on the reliability of our financial reporting, and assessed
the design and operation of these key controls. These procedures have allowed us to evaluate the effectiveness of
our internal controls.
We determined the required scope of assessment of internal control over financial reporting for theCompany, as well as its consolidated subsidiaries, equity-method associates and joint ventures, from theperspective of the materiality that may affect the reliability of our financial reporting. The materiality that may
affect the reliability of our financial reporting is determined taking into account the materiality of quantitativeand qualitative impacts. We confirmed that we had reasonably determined the scope of assessment of internal
controls over business processes in light of the results of assessment of company-level controls conducted for theCompany, its consolidated subsidiaries, equity-method associates and joint ventures. We did not include a partof consolidated subsidiaries, equity-method associates and joint ventures which do not have any quantitatively or
qualitatively material impact on the consolidated financial statements in the scope of assessment of companylevel controls.
Regarding the scope of assessment of internal control over business processes, we accumulated business
units in descending order of total revenues (after elimination of intercompany transactions) for the previous
fiscal year, and those business units whose combined amount of revenues reaches approximately 80% of total
revenues on a consolidated basis were selected as “significant business units.” In addition, some of our equitymethod associates and joint ventures which have a significant effect to our consolidated financial statements
were selected as “significant business units.” At the selected significant business units, we included, in the scopeof assessment, those business processes leading to revenues, accounts receivables and inventories and thosebusiness processes relating to greater likelihood of material misstatements and significant account involving
estimates or forecasts as significant accounts that may have a material impact on our business objectives.
Further, not only at selected significant business units, but also at other business units, we added to the scope ofassessment, as business processes having greater materiality considering their impact on the financial reporting,those business processes relating to businesses or operations dealing with high-risk transactions.
3. Matters Related to Results of Assessment
As a result of the assessment above, we concluded that our internal control over financial reporting was
effective as of March 31, 2021.
4. Supplementary Matters
None.
5. Special Notes
None.
A-2

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

Independent Auditors’ Report(filed under the Financial Instruments and Exchange Act of Japan)
June 23, 2021
Mr. Keiji Kojima, President
Hitachi, Ltd.

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

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[Audit of Financial Statements]
OpinionPursuant to Article 193-2, Paragraph 1 of the Financial Instruments and Exchange Act, we have audited theconsolidated financial statements of Hitachi, Ltd. and its subsidiaries (the Group), which comprise the consolidated
statement of financial position as of March 31, 2021, and the consolidated statements of profit or loss,
comprehensive income, changes in equity, and cash flows for the year then ended, and notes to the consolidated
financial statements.
In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, theconsolidated financial position of the Group as of March 31, 2021, and its consolidated financial performance andits consolidated cash flows for the year then ended in accordance with International Financial Reporting Standards(IFRSs) prescribed in Article 93 of the Ordinance on Terminology, Forms, and Preparation Methods ofConsolidated Financial Statements.

A-3

Basis for Opinion
We conducted our audit in accordance with auditing standards generally accepted in Japan. Our responsibilities
under those standards are further described in the Auditor’s Responsibilities for the Audit of the Consolidated
Financial Statements section of our report. We are independent of the Group in accordance with the ethicalrequirements that are relevant to our audit of the consolidated financial statements in Japan, and we have fulfilled
our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we haveobtained is sufficient and appropriate to provide a basis for our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of theconsolidated financial statements of the current period. These matters were addressed in the context of the audit of
the consolidated financial statements as a whole, and in forming the auditor’s opinion thereon, and we do notprovide a separate opinion on these matters.

Measurement of intangible assets recognized in the acquisition of the power grid business
Description of Key Audit Matter
The Company invested 80.1% in Hitachi ABB Power Grids Ltd, which was spun off from ABB Ltd, and theacquisition was completed on July 1, 2020.
The Company recognized related intangible assets in the amount of 414,544 million yen (customer relationships of
233,989 million yen, technology of 95,987 million yen, order backlog of 53,542 million yen, and brand license
agreement of 31,026 million yen) as a result of the measurement of the identifiable assets acquired and liabilities
assumed (See Note (5) Business Acquisitions and Divestitures, (g) Acquisition of ABB’s power grids business).
The measurement of intangible assets is determined using discounted future cash flows expected to be generated by
the assets and is affected by estimates of future cash flows and the discount rates. Future cash flows are estimatedusing significant assumptions including revenue growth rates, gross profit ratios, attrition rates of existingcustomers, and royalty rates, which require management judgements.
We determined that the measurement of intangible assets is a key audit matter because of the significance of thebalance of intangible assets and the significant impact on the consolidated financial statements from the
management judgements related to the significant assumptions.
Auditor’s Response
We primarily performed the following procedures regarding the measurement of intangible assets.
・ We obtained an understanding of the details and objectives of the transaction by examining related materials
such as the acquisition agreement and making inquiries of management.
・ We involved valuation specialists from a network firm in assessing the valuation methods of intangible assets,
significant assumptions used in the estimation of future cash flows, and the discount rates.
・ We performed following procedures related to significant assumptions used in the estimation of future cash
flows.
- We made inquiries of management about revenue growth rates and gross profit ratios, comparing with
operating results and available external data such as market growth rates.
- We made inquiries of management about the attrition rates of existing customers, analyzing customer sales
trends over the past five years.
- We made inquiries of management about royalty rates, analyzing rate levels.
・ We also made inquiries of management about the risks reflected in the discount rates, evaluating theconsistency with the risks reflected in future cash flows.

A-4

Measurement of recoverable amount of group of cash-generating units containing goodwill related to the power
grid business
Description of Key Audit Matter
The Company recognized goodwill in the amount of 480,006 million yen related to the power grid business (SeeNote (10) Goodwill and Other Intangible Assets). The goodwill represents 41% of goodwill and 4% of total assetsof the Group.
The Company measured the recoverable amount based on value in use in the impairment test of the group of cashgenerating units containing the goodwill. The measurement of value in use is determined using discounted future
cash flows and is affected by estimates of future cash flows and the discount rate. Future cash flows are based on
the business plan and are estimated using significant assumptions including revenue growth rates and gross profit
ratios which require management judgements.
We determined that the measurement of the recoverable amount is a key audit matter because of the significance ofthe balance of goodwill and the significant impact on the consolidated financial statements from the management
judgements related to the significant assumptions.
Auditor’s Response
We primarily performed the following procedures regarding the measurement of the recoverable amount of thegroup of cash-generating units containing the goodwill.
・ We obtained an understanding of the business plan by examining related business planning materials.
・ We assessed the effectiveness of the business planning process by comparing the business plan at the time ofacquisition of the power grid business with the post-acquisition operating results and the business plan at thetime of the impairment test.
・ We involved valuation specialists from a network firm in assessing the valuation method of value in use,significant assumptions used in the estimation of future cash flows, and the discount rate.
・ We made inquiries of management about revenue growth rates and gross profit ratios, comparing with actual
operating results and available external data such as market growth rates.
・ We made inquiries of management about the risks reflected in the discount rate, evaluating the consistency
with the risks reflected in future cash flows.
・ We performed sensitivity analyses assuming reasonably possible changes in significant assumptions, assessing
the effect on the recoverable amount.
Estimation of total cost of long-term projects
Description of Key Audit Matter
The Group has long-term projects involving the manufacture and provision of goods in accordance with customer
specifications that are completed over specified periods of time to customers in a broad range of business areas
across the world.
The Group recognizes revenues from long-term projects by measuring the progress of the project mostly based on
the cost incurred relative to the estimated total cost to satisfy the performance obligations (See Note (20) Revenues,(a) Disaggregation of revenue, (b) Information about satisfaction of performance obligations). Furthermore, theGroup recognizes provisions for expected losses on construction contracts based on the estimated amount of losses
associated with fulfilling the project requirements (See Note (14) Provisions).
Estimations of total cost of long-term projects affect the corresponding amounts of revenues and provisions. Eachof the Group’s long-term projects is distinct in terms of customer requirements, such as detailed specifications andscheduling, and therefore estimations of total cost depend on management judgements. Estimations of total cost are
particularly complex in relation to large-scale projects.
We determined that the estimation of total cost of long-term projects is a key audit matter because auditing
estimations of total costs of long-term projects requires consideration of various factors affecting such estimations
corresponding to each project as a result of the nature of the Group’s long-term projects.
Auditor’s Response
We obtained an understanding of the project management systems utilized by the Group as well as its processes for
estimating total costs, and tested the relevant internal controls, including the approval of initial and revised
operating budgets that serve as the basis of estimating total cost.
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We selected samples of long-term projects, such as those projects whose total contract value exceeded certain
materiality thresholds and projects involving qualitative risks, including delays in the progress of the project, and,on a quarterly basis, performed selected procedures from the following considering the status of each project:
・ We identified the significant factors influencing the estimates, including those related to customer
specifications on goods and the timing of delivery, by examining contracts and project management materials
and making inquiries of management, and assessed the effects of estimation uncertainty inherent in thosesignificant factors influencing the estimates. In addition, we compared specific line items in the estimated total
cost with corresponding quotations from suppliers.
・ We assessed necessity of revising estimates of total cost considering the status of each project based oninquiries of management and by examining project management materials.
・ We assessed the effectiveness of the processes for estimating total costs by comparing initial and previous
period estimates with actual total costs for completed projects and previous period estimates with the latest
estimates for projects in progress.
・ We additionally made separate inquiries to project managers for projects that were considered particularly
significant to corroborate management explanations of their status.
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 inaccordance with IFRSs, and for such internal control as management determines is necessary to enable thepreparation of consolidated financial statements that are free from material misstatement, whether due to fraud or
error.
In preparing the consolidated financial statements, management is responsible for assessing the Group's ability tocontinue as a going concern and disclosing, as required by IFRSs, matters related to going concern.
Audit Committee is responsible for overseeing the Group’s financial reporting process.
Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole
are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes ouropinion. Misstatements can arise from fraud or error and are considered material if, individually or in theaggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis ofthese consolidated financial statements.
As part of an audit in accordance with auditing standards generally accepted in Japan, we exercise professional
judgment and maintain professional skepticism throughout the audit. We also:・ Identify and assess the risks of material misstatement of the consolidated financial statements, whether due tofraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is
sufficient and appropriate to provide a basis for our opinion.
・ Consider internal control relevant to the audit in order to design audit procedures that are appropriate in thecircumstances for our risk assessments, while the purpose of the audit of the consolidated financial statements
is not expressing an opinion on the effectiveness of the Group’s internal control.
・ Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates andrelated disclosures made by management.
・ Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on
the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may castsignificant doubt on the Group’s ability to continue as a going concern. If we conclude that a material
uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the
consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions
are based on the audit evidence obtained up to the date of our auditor’s report. However, future events orconditions may cause the Group to cease to continue as a going concern.
・ Evaluate the overall presentation, structure and content of the consolidated financial statements, including thedisclosures, and whether the consolidated financial statements represent the underlying transactions and eventsin a manner that achieves fair presentation in accordance with IFRSs.
・ Obtain sufficient appropriate audit evidence regarding the financial information of the entities or businessactivities within the Group to express an opinion on the consolidated financial statements. We are responsible
for the direction, supervision and performance of the group audit. We remain solely responsible for our audit
opinion.
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We communicate with the Audit Committee regarding, among other matters, the planned scope and timing of theaudit and significant audit findings, including any significant deficiencies in internal control that we identify during
our audit.
We also provide the Audit Committee with a statement that we have complied with the ethical requirements
regarding independence that are relevant to our audit of the financial statements in Japan, and to communicate withthem all relationships and other matters that may reasonably be thought to bear on our independence, and whereapplicable, related safeguards.
From the matters communicated with the Audit Committee, we determine those matters that were of mostsignificance in the audit of the consolidated financial statements of the current period and are therefore the key
audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure
about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicatedin our report because the adverse consequences of doing so would reasonably be expected to outweigh the public
interest benefits of such communication.
[Audit of Internal Control]
OpinionPursuant to Article 193-2, Paragraph 2 of the Financial Instruments and Exchange Act, we have audited theinternal control report of Hitachi Ltd. and its subsidiaries (the Group) as of March 31, 2021.
In our opinion, the internal control report, which states that the internal control over financial reporting was
effective as of March 31, 2021, presents fairly, in all material respects, the results of the assessments of internal
control over financial reporting in accordance with assessment standards for internal control over financial
reporting generally accepted in Japan.
Basis for Opinion
We conducted our audit of the internal control report in accordance with auditing standards for internal control
over financial reporting generally accepted in Japan. Our responsibilities under those standards are further
described in the Auditor’s Responsibilities for the Audit of the Internal Control Report section of our report. We
are independent of the Group in accordance with the ethical requirements that are relevant to our audit of theinternal control report in Japan, and we have fulfilled our other ethical responsibilities in accordance with theserequirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Responsibilities of Management and Audit Committee for the Internal Control ReportManagement is responsible for the design and operation of internal control over financial reporting and the
preparation and fair presentation of the internal control report in accordance with assessment standards for internal
control over financial reporting generally accepted in Japan.
Audit Committee is responsible for overseeing and examining the design and operation of internal control overfinancial reporting.
Internal control over financial reporting may not completely prevent or detect financial statement misstatements.
Auditor’s Responsibilities for the Audit of the Internal Control Report
Our objectives are to obtain reasonable assurance about whether the internal control report is free from material
misstatement based on our audit of the internal control report and to issue an auditor’s report that includes ouropinion.

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As part of our audit in accordance with auditing standards for internal control over financial reporting generally
accepted in Japan, we exercise professional judgment and maintain professional skepticism throughout the audit.
We also:・ Perform procedures to obtain audit evidence regarding the results of the assessments of internal control overfinancial reporting in the internal control report. The procedures for the audit of the internal control report are
selected and performed, depending on the auditor’s judgment, based on significance of effect on the reliabilityof financial reporting.
・ Evaluate the overall presentation of the internal control report, including the appropriateness of the scope,
procedures and results of the assessments that management presents.
・ Obtain sufficient appropriate audit evidence regarding the results of the assessments of internal control overfinancial reporting in the internal control report. We are responsible for the direction, supervision andperformance of the audit of the internal control report. We remain solely responsible for our audit opinion.
We communicate with the Audit Committee regarding, among other matters, the planned scope and timing of ouraudit of the internal control report, the results thereof, material weaknesses in internal control identified during our
audit of internal control report, and those that were remediated.
We also provide the Audit Committee with a statement that we have complied with relevant ethical requirements
regarding independence that are relevant to our audit of the internal control report 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 to bedisclosed pursuant to the provisions of the Certified Public Accountants Act of Japan.
(The above represents a translation, for convenience only, of the original report issued in the Japanese language.)

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

Confirmation Letter[Applicable Law]

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

Director, Kanto Local Finance Bureau[Filing Date]

June 23, 2021

[Company Name]

Kabushiki Kaisha Hitachi Seisakusho[Company Name in English]

Hitachi, Ltd.

[Name and title of

Keiji Kojima, President & COO

Representative][Name and title of CFO]

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

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

1. Matters Related to Adequacy of Statements Contained in the Annual Securities Report
Mr. Keiji Kojima, President & COO, and Mr. Yoshihiko Kawamura, Senior Vice President and Executive
Officer, confirmed that statements contained in the Annual Securities Report for the 152nd fiscal year (from
April 1, 2020 to March 31, 2021) were adequate under the Financial Instruments and Exchange Act.
2. Special Notes
None.

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