Annual Securities Report (PDF Format)
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(Translation) Annual Securities Report (The 150th Business Term) From April 1, 2018 to March 31, 2019 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 19, 2019 [Fiscal Year] The 150th Business Term (from April 1, 2018 to March 31, 2019) [Company Name] Kabushiki Kaisha Hitachi Seisakusho [Company Name in English] Hitachi, Ltd. [Title and Name of Toshiaki Higashihara, President & CEO Representative] [Address of Head Office] 6-6, Marunouchi 1-chome, Chiyoda-ku, Tokyo [Phone No.] 03-3258-1111 [Contact Person] Masachika Sawada, Manager, Legal Division [Contact Address] 6-6, Marunouchi 1-chome, Chiyoda-ku, Tokyo [Phone No.] 03-3258-1111 [Contact Person] Masachika Sawada, Manager, Legal Division [Place Where Available for Tokyo 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 of Japan. 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 the International 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 the original Annual Securities Report are included at the end of this document. This English translation of the Annual Securities Report reflected the amendment that was reported in the Amendment Report of the Annual Securities Report filed with the Director of the Kanto Local Finance Bureau via EDINET on August 7, 2019. In this document, the terms “we,” “us,” “our” and “Hitachi” refer to Hitachi, Ltd. and consolidated subsidiaries or, as the context may require, Hitachi, Ltd. on a non-consolidated basis and the term “the Company” refers to Hitachi, Ltd. on a non- consolidated 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 the nearest 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 and Exchange Act of Japan and other laws and regulations amending and/or supplementing the Financial Instruments and Exchange 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. Contents Part I Information on the Company …………………………………………………………………………… 1 I. Overview of the Company ……………………………………………………………………………… 1 1. Key Financial Data ………………………………………………………………………………… 1 2. History ……………………………………………………………………………………………… 3 3. Description of Business …………………………………………………………………………… 5 4. Information on Affiliates ………………………………………………………………………… 7 5. Employees ………………………………………………………………………………………… 17 II. Business Overview ……………………………………………………………………………………… 18 1. Management Policy, Economic Environment and Challenges Hitachi Group Faces…………… 18 2. Risk Factors …..…………………………………………………………………………………… 19 3. Management's Discussion and Analysis of Consolidated Financial Condition, Results of Operations and Cash Flows ………………………………………………………………………… 28 4. Material Agreements, etc ………………………………………………………………………… 37 5. Research and Development ……………………………………………………………………… 39 III. Property, Plants and Equipment ……………………………………………………………………… 41 1. Summary of Capital Investment, etc. ……………………………………………………………… 41 2. Major Property, Plants and Equipment …………………………………………………………… 42 3. Plans for Capital Investment, Disposals of Property, Plants and Equipment, etc. ………………… 46 IV. Information on the Company ………………………………………………………………………… 47 1. Information on the Company’s Stock, etc. ………………………………………………………… 47 (1) Total number of shares, etc. …………………………………………………………………… 47 (2) Information on the stock acquisition rights, etc. ………………………………………………… 48 (3) Information on moving strike convertible bonds, etc. …………………………………………… 50 (4) Changes in the total number of issued shares and the amount of common stock and other …… 50 (5) Shareholders composition ……………………………………………………………………… 50 (6) Major shareholders ……………………………………………………………………………… 51 (7) Information on voting rights …………………………………………………………………… 53 2. Information on Acquisition, etc. of Treasury Stock ……………………………………………… 54 3. Dividend Policy …………………………………………………………………………………… 55 4. Corporate Governance, etc. ………………………………………………………………………… 56 (1) Corporate Governance ……………………………………………………………………............ 56 (2) Directors and Senior Management..……………………………………………………………… 60 (3) Audit .......................................…………………………………………………………………… 72 (4) Compensation to Directors and Executive Officers……………………………………………… 75 (5) Information on shareholdings .…………………………………………………………………… 81 V. Financial Information …………………………………………………………………………………… 86 VI. Stock-Related Administration for the Company ……………………………………………………… 87 VII. Reference Information on the Company ……………………………………………………………… 88 Part II Information on Guarantors, etc. for the Company ……………………………………………………… 89 [Consolidated Financial Statements] …………………………………………………………………………… F-1 Consolidated Financial Statements. ……………………………………………………………………… F-2 Reports of Independent Registered Public Accounting Firm ……………………………………………… F-72 [Internal Control Report (Translation)] ………………………………………………………………………… A-1 [Independent Auditors’ Report (Translation)] ………………………………………………………………… A-3 [Confirmation Letter (Translation)] …………………………………………………………………………… A-6 Part I Information on the Company I. Overview of the Company 1. Key Financial Data (1) Consolidated financial data, etc. (Millions of yen, unless otherwise stated) IFRS Fiscal year 146th 147th 148th 149th 150th business term business term business term business term business term Year end March 2015 March 2016 March 2017 March 2018 March 2019 Revenues 9,774,930 10,034,305 9,162,264 9,368,614 9,480,619 Income from continuing 518,994 517,040 469,091 638,646 516,502 operations, before income taxes Net income attributable to 217,482 172,155 231,261 362,988 222,546 Hitachi, Ltd. stockholders Comprehensive income attributable to Hitachi, Ltd. 337,578 (127,557) 299,397 382,341 171,140 stockholders Total Hitachi, Ltd. 2,942,281 2,735,078 2,967,085 3,278,024 3,262,603 stockholders’ equity Total equity 4,296,342 4,125,570 4,096,995 4,511,671 4,414,403 Total assets 12,433,727 12,551,005 9,663,917 10,106,603 9,626,592 Total Hitachi, Ltd. stockholders’ equity per share 3,046.74 2,832.39 3,072.79 3,395.00 3,378.81 (yen) Earnings per share attributable to Hitachi, Ltd. stockholders, 225.19 178.27 239.49 375.93 230.47 basic (yen) Earnings per share attributable to Hitachi, Ltd. stockholders, 224.99 178.08 239.42 375.60 230.25 diluted (yen) Total Hitachi, Ltd. 23.7 21.8 30.7 32.4 33.9 stockholders’ equity ratio (%) Return on equity (%) 7.8 6.1 8.1 11.6 6.8 Price earnings ratio (times) 18.3 14.8 12.6 10.3 15.6 Net cash provided by operating 451,825 812,226 629,582 727,168 610,025 activities Net cash used in investing (612,545) (730,799) (337,955) (474,328) (162,872) activities Net cash provided by (used in) 233,206 (26,467) (209,536) (321,454) (320,426) financing activities Cash and cash equivalents at 701,703 699,315 765,242 697,964 807,593 end of year Number of employees [Average number of part-time 336,670 335,244 303,887 307,275 295,941 [48,592] [45,111] employees, etc.] (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 and earnings per share attributable to Hitachi, Ltd. stockholders, basic and diluted, are calculated on the assumption that the Company conducted this share consolidation at the beginning of the 146 business term. 4. Average numbers of part-time employees, etc. are not stated for the 148th, 149th and 150th business term since those were less than 10% of the number of employees. -1- (2) Financial data etc. of the Company (Millions of yen, unless otherwise stated) 146th 147th 148th 149th 150th Fiscal year business term business term business term business term business term Year end March 2015 March 2016 March 2017 March 2018 March 2019 Revenues 1,842,126 1,859,605 1,906,532