[This is an English translation prepared for reference purpose only. Should there be any inconsistency between the translation and the original Japanese text, the latter shall prevail.]

July 31, 2023

Consolidated Financial Results

for the Six Months Ended June 30, 2023

Name of the Listed Company: JAPAN TOBACCO INC. (Stock Code: 2914)

Listed Stock Exchange:

Tokyo Stock Exchange

URL:

https://www.jti.co.jp/

Representative:

Masamichi Terabatake, Representative Director and President,

Chief Executive Officer

Contact:

Nobuya Kato, Senior Vice President, Chief Financial Officer and Corporate

Communications

Telephone:

+81-3-6636-2914

Scheduled date to file Quarterly Securities Report: July 31, 2023

Scheduled starting date of the dividend payments: September 1, 2023

Drawing up supplementary documents on quarterly financial results: Yes

Holding quarterly investors' meeting: Yes (for analysts and institutional investors)

(Yen amounts are rounded to the nearest million, unless otherwise noted.)

1. Consolidated Financial Results for the Six Months of the Fiscal Year Ending

December 31, 2023 (from January 1, 2023 to June 30, 2023)

(1) Consolidated Operating Results (Cumulative)

(Percentages indicate year-on-year changes.)

Revenue

Operating profit

Profit before income taxes

Profit for the period

Six months ended

Millions of yen

%

Millions of yen

%

Millions of yen

%

Millions of yen

%

June 30, 2023

1,392,812

9.9

413,555

8.0

373,430

3.4

288,462

8.9

June 30, 2022

1,266,828

10.7

382,972

18.9

360,985

14.9

265,004

17.3

Profit attributable to

Comprehensive income

owners of the parent

Basic earnings per share

Diluted earnings per share

for the period

company

Six months ended

Millions of yen

%

Millions of yen

%

Yen

Yen

June 30, 2023

287,009

8.7

535,212

(46.6)

161.70

161.65

June 30, 2022

264,063

17.3

1,002,901

150.2

148.80

148.74

(2) Consolidated Financial Position

Equity attributable to

Ratio of equity

Equity attributable to

Total assets

Total equity

attributable to owners

owners of the parent

of the parent company

owners of the parent

company

to total assets

company per share

As of

Millions of yen

Millions of yen

Millions of yen

%

Yen

June 30, 2023

6,974,355

3,949,717

3,867,642

55.5

2,178.87

December 31, 2022

6,548,078

3,616,761

3,540,435

54.1

1,994.78

2. Cash Dividends

Annual dividends per share

First quarter-end

Second quarter-end

Third quarter-end

Fiscal year-end

Total

Year ended December 31,

Yen

Yen

Yen

Yen

Yen

-

75.00

-

113.00

188.00

2022

Year ending December 31,

-

94.00

2023

Year ending December 31,

-

94.00

188.00

2023 (Forecast)

Note:

Revisions to the cash dividends forecasts most recently announced: None

3. Consolidated Earnings Forecasts for the Fiscal Year Ending December 31, 2023 (January 1, 2023 to December 31, 2023)

(Percentages indicate year-on-year changes.)

Profit attributable to

Basic earnings

Revenue

Operating profit

owners of the parent

per share

company

Millions of yen

%

Millions of yen

%

Millions of yen

%

Yen

Year ending

2,759,000

3.8

633,000

(3.1)

457,000

3.2

257.46

December 31, 2023

Note:

Revisions to the consolidated earnings forecasts most recently announced: Yes

[Additional Information] Growth rate in adjusted operating profit at constant FX:

The Group has set its group-wide target for annual average growth rate in adjusted operating profit at constant FX, at mid to high single-digit over the mid- to long-term, and will continue to pursue this goal.

(Percentages indicate year-on-year changes.)

Adjusted operating profit at constant FX

Six months ended

Millions of yen

%

434,330

4.7

June 30, 2023 (Cumulative)

Year ending

730,000

0.3

December 31, 2023 (Forecast)

Note:

Revisions to the consolidated

earnings forecasts most recently announced:

Yes

The Group also discloses certain non-GAAP financial measures that are not required or defined under IFRS, which is the accounting standard the Company applies. These non-GAAP financial measures are used internally to manage each of the business operations to understand their underlying performance, in view of the Group's target for mid- to long-term sustainable growth, and the Group believes that these financial measures are useful information for users of the financial statements to assess the Group's performance. For details of these financial measures, please refer to "Proper use of earnings forecasts, and other special matters, (2)."

For detailed information on the consolidated financial results, please refer to the materials for investors' meeting that were released on the Company's website (https://www.jt.com/investors/) on July 31, 2023.

Notes

  1. Changes in significant subsidiaries during the current period (changes in specified subsidiaries resulting in change in scope of consolidation): None
  2. Changes in accounting policies and changes in accounting estimates
    1. Changes in accounting policies due to revisions in accounting standards under IFRS:Yes
    2. Changes in accounting policies due to other reasons: None
    3. Changes in accounting estimates: Yes

For details, please refer to "1. Matters Regarding Summary Information, (1) Changes in Accounting Policies and Changes in Accounting Estimates."

  1. Number of shares issued (ordinary shares)
    a. Total number of shares issued at the end of the period (including treasury shares)

As of June 30, 2023

2,000,000,000 shares

As of December 31, 2022

2,000,000,000 shares

  1. Number of treasury shares at the end of the period

As of June 30, 2023

224,934,347

shares

As of December 31, 2022

225,146,463

shares

  1. Average number of shares during the period (cumulative from the beginning of the fiscal year)

Six months ended June 30, 2023

1,774,988,149 shares

Six months ended June 30, 2022

1,774,644,814 shares

  • Quarterly financial results reports are exempt from quarterly review conducted by certified public accountants or an audit corporation.
  • Proper use of earnings forecasts, and other special matters
    1. The forward-looking statements, including earnings forecasts, contained in these materials are based on information currently available to the Company and on certain assumptions and suppositions deemed to be reasonable by the Company. Actual business and other results may differ substantially due to various factors. These forward-looking statements are not intended to be construed as our assurance for it to materialize in the future. Please refer to "FORWARD-LOOKING STATEMENTS" for the suppositions that form the assumptions for earnings forecasts and cautions concerning the use of earnings forecasts.
    2. The Group also discloses certain non-GAAP financial measures that are not required or defined under IFRS, which is the accounting standard the Company applies. These non-GAAP financial measures are used internally to manage each of the business operations to understand their underlying performance, in view of the Group's target for mid- to long-term sustainable growth, and the Group believes that these financial measures are useful information for users of the financial statements to assess the Group's performance.
      Adjusted operating profit
      Adjusted operating profit presented is operating profit (loss) less amortization cost of acquired intangibles arising from business acquisitions and adjustment items (income and costs). Adjustment items (income and costs) are impairment losses on goodwill, restructuring income and costs, and other items. Furthermore, adjusted operating profit at constant FX is also presented as additional information. The Group has set its group-wide target for annual average growth rate in adjusted operating profit at constant FX, at mid to high single-digit over the mid- to long-term, and will continue to pursue this goal. Adjusted operating profit at constant FX is a financial measurement that excludes foreign exchange effects calculated and translated using the foreign exchange rates of the same period of the previous year from adjusted operating profit for the current period in the Tobacco Business. The results for the six months ended June 30, 2023 on a constant FX basis exclude the increase in profit due to inflation in some markets calculated using certain methods.
      The Group makes accounting adjustments to the financial statements of subsidiaries that operate in hyperinflationary economies according to the requirements stipulated in IAS 29 "Financial Reporting in Hyperinflationary Economies".

Attached Materials

Index

1.

Matters Regarding Summary Information

2

(1)

Changes in Accounting Policies and Changes in Accounting Estimates

2

(2)

Revisions to the Consolidated Earnings Forecasts Most Recently Announced

2

2.

Condensed Interim Consolidated Financial Statements

4

(1)

Condensed Interim Consolidated Statement of Financial Position

4

(2)

Condensed Interim Consolidated Statement of Income and Consolidated Statement of

Comprehensive Income

6

(3)

Condensed Interim Consolidated Statement of Changes in Equity

8

(4)

Condensed Interim Consolidated Statement of Cash Flows

10

(5)

Segment Information

12

(6) Note on Premise of Going Concern

16

- 1 -

1. Matters Regarding Summary Information

  1. Changes in Accounting Policies and Changes in Accounting Estimates

The material accounting policies adopted for the condensed interim consolidated financial statements are the same as those for the consolidated financial statements for the year ended December 31, 2022 except the following item. The Group computes income taxes for the interim period based on the estimated average annual effective tax rate. The Company and certain subsidiaries have transitioned from the consolidated taxation system to the group tax sharing system from the year ended December 31, 2023.

(Changes in Accounting Policies)

The Group has adopted the following new accounting standards, amended standards and new interpretations from the year ended December 31, 2023.

IFRS

IAS 1

Presentation of Financial

Statements

IAS 12

Income taxes

Description of new standards and amendments

Amendments to require companies to disclose their material accounting policy information rather than their significant accounting policies

Adoption of temporary exception to the requirement from tax law enacted or substantively enacted to implement international tax reform-the Pillar Two model rules

The adoption of the above standards and interpretations does not have a material impact on the condensed interim consolidated financial statements.

IAS 12 states a temporary exception to eliminate the need for recognition or disclosure for deferred tax assets and liabilities related to the Pillar Two model rules. The Group has adopted this exception retroactively.

The Group does not recognize any deferred tax assets and liabilities related to the Pillar Two model rule.

(Changes in Accounting Estimates)

The Group had previously used a period of 10 to 15 years for the estimated useful lives of tobacco production machinery. However, in consideration of changes in the business environment, the Group has, from the year ending December 31, 2023, revised the estimated useful lives for some tobacco production machinery to 18 years based on estimated economically useful lives that are more consistent with actual conditions and applied this change prospectively.

As a result, operating profit for the six months ended June 30, 2023 increased by ¥4,895 million compared to the figure calculated using the previous method.

(2) Revisions to the consolidated earnings forecasts most recently announced

The Group has revised the earnings forecasts in light of circumstances up until now.

(Billions of yen)

Changes from the consolidated earnings

Year-on-year

Earnings forecasts

forecasts most recently announced

changes

Amount

%

[%]

Revenue

2,759.0

130.0

4.9

3.8

Adjusted operating profit

683.0

16.0

2.4

(6.2)

Operating profit

633.0

21.0

3.4

(3.1)

Profit attributable to owners of

457.0

17.0

3.9

3.2

the parent company

Adjusted operating profit at

730.0

2.0

0.3

0.3

constant FX

- 2 -

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Disclaimer

Japan Tobacco Inc. published this content on 31 July 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 31 July 2023 07:34:45 UTC.