Japan Tobacco : Financial Statements and Independent Auditor's Report

March 22, 2024 at 04:16 am EDT

Japan Tobacco Inc.

Financial Statements and

Independent Auditor's Report

Year Ended December 31, 2023

		Index
1.	Consolidated Financial Statements	1
	(1)	Consolidated Financial Statements	1
		A. Consolidated Statement of Financial Position	1
		B. Consolidated Statement of Income	3
		C. Consolidated Statement of Comprehensive Income	4
		D. Consolidated Statement of Changes in Equity	5
		E. Consolidated Statement of Cash Flows	7
		F. Notes to Consolidated Financial Statements	9
	(2)	Others	100
2.	Nonconsolidated Financial Statements	101
	(1)	Nonconsolidated Financial Statements	101
		A. Nonconsolidated Balance Sheet	101
		B. Nonconsolidated Statement of Income	104
		C. Nonconsolidated Statement of Changes in Net Assets	105
		D. Notes to Nonconsolidated Financial Statements	107
		E. Supplementary Statements	119
	(2)	Major Assets and Liabilities	120
	(3)	Others	120
3.	Independent Auditor's Report	121

1. Consolidated Financial Statements

(1) Consolidated Financial Statements
A. Consolidated Statement of Financial Position
As of December 31, 2022 and 2023
				(Millions of yen)
2022		2023

Assets
Current assets
Cash and cash equivalents (Note 7)	866,885	1,040,206
Trade and other receivables (Note 8)	477,239	535,302
Inventories (Note 9)	691,906	832,611
Other financial assets (Note 10)	37,677	58,633
Other current assets (Note 11)	649,181	789,888
Subtotal	2,722,889	3,256,639
Assets held for sale (Note 12)	702	2,921
Total current assets	2,723,591	3,259,561
Non-current assets
Property, plant and equipment (Notes 13, 15)	775,957	821,499
Goodwill (Note 14)	2,446,063	2,616,440
Intangible assets (Note 14)	246,442	206,982
Investment property (Note 16)	9,495	9,338
Retirement benefit assets (Note 22)	57,792	65,856
Investments accounted for using the equity method	56,943	56,726
Other financial assets (Note 10)	140,366	156,316
Deferred tax assets (Note 17)	91,430	89,379
Total non-current assets	3,824,487	4,022,536

Total assets		6,548,078	7,282,097

- 1 -

				(Millions of yen)
2022		2023

Liabilities and equity
Liabilities
Current liabilities
Trade and other payables (Note 18)	540,089	592,802
Bonds and borrowings (Note 19)	137,308	233,333
Income tax payables	37,470	29,647
Other financial liabilities (Note 19)	40,065	44,470
Provisions (Note 20)	26,610	18,634
Other current liabilities (Note 21)		781,093		1,008,390
Subtotal	1,562,635	1,927,276
Liabilities directly associated with assets held for sale		29		-
Total current liabilities	1,562,664	1,927,276
Non-current liabilities
Bonds and borrowings (Note 19)	821,003	908,926
Other financial liabilities (Note 19)	41,735	40,678
Retirement benefit liabilities (Note 22)	244,116	279,443
Provisions (Note 20)	26,490	45,527
Other non-current liabilities (Note 21)	195,248	127,170
Deferred tax liabilities (Note 17)		40,061		40,586
Total non-current liabilities	1,368,653	1,442,329

Total liabilities	2,931,317	3,369,605
Equity
Share capital (Note 23)	100,000	100,000
Capital surplus (Note 23)	736,400	736,478
Treasury shares (Note 23)	(490,183)	(489,194)
Other components of equity (Note 23)	104,309	290,550
Retained earnings		3,089,909		3,192,323
Equity attributable to owners of the parent company	3,540,435	3,830,156
Non-controlling interests		76,326		82,336
Total equity	3,616,761	3,912,491

Total liabilities and equity		6,548,078	7,282,097

- 2 -

B. Consolidated Statement of Income

Years Ended December 31, 2022 and 2023
	2022
Revenue (Notes 6, 25)
2,657,832
Cost of sales (Notes 14, 22)	(1,090,989)
Gross profit	1,566,843
Other operating income (Note 26)	20,262
Share of profit in investments accounted for using the	8,009
equity method

Selling, general and administrative expenses	(941,538)
(Notes 12, 13, 14, 16, 22, 27, 32)

Operating profit (Note 6)	653,575
Financial income (Notes 28, 33)	31,147
Financial costs (Notes 22, 28, 33)	(91,272)
Profit before income taxes	593,450
Income taxes (Note 17)	(149,277)
Profit for the period	444,174
Attributable to

Owners of the parent company	442,716
Non-controlling interests	1,458
Profit for the period	444,174
Earnings per share

Basic (Yen) (Note 30)	249.45
Diluted (Yen) (Note 30)	249.36

Reconciliation from "Operating profit" to "Adjusted operating profit"

(Millions of yen)

2023

2,841,077

(1,225,974)

1,615,103

30,027

8,332

(981,052)

672,410

44,414

(95,222)

621,601

(136,292)

485,310

482,288

3,021

485,310

271.69

271.63

(Millions of yen)

Operating profit

Amortization cost of acquired intangibles arising from business acquisitions

Adjustment items (income) Adjustment items (costs)

Adjusted operating profit (Note 6)

2022

653,575

71,392

(15,865)

18,677

727,779

2023

672,410

58,836

(18,651)

15,407

728,002

- 3 -

C. Consolidated Statement of Comprehensive Income
Years Ended December 31, 2022 and 2023
			(Millions of yen)
	2022	2023
Profit for the period
444,174	485,310
Other comprehensive income
Items that will not be reclassified to profit or loss
Net gain (loss) on revaluation of financial assets measured
at fair value through other comprehensive income (Notes	1,741	2,414
29, 33)
Remeasurements of defined benefit plans (Notes 22, 29)	49,744	(13,538)
Total of items that will not be reclassified to profit or loss	51,485	(11,123)

Items that may be reclassified subsequently to profit or loss

Exchange differences on translation of foreign operations (Notes 29, 33)

Net gain (loss) on derivatives designated as cash flow hedges (Notes 29, 33)

Hedge costs

Total of items that may be reclassified subsequently to profit or loss

Other comprehensive income (loss), net of taxes Comprehensive income (loss) for the period

493,986189,299

8,5844,749

－(17)

502,570194,031

554,055		182,908
998,229	668,217

Attributable to
Owners of the parent company	996,687	660,663
Non-controlling interests	1,542		7,554
Comprehensive income (loss) for the period	998,229	668,217

- 4 -

D. Consolidated Statement of Changes in Equity

Years Ended December 31, 2022 and 2023

(Millions of yen)

Equity attributable to owners of the parent company

Other components of equity

	Share		Capital surplus		Treasury				Exchange		Net gain (loss) on
				Subscription		differences on
	capital			shares				derivatives
					rights to		translation of
									designated as
							shares		foreign
									cash flow hedges
									operations

As of January 1, 2022
100,000	736,400	(490,899)	1,202	(408,175)	(274)
Profit for the period	－		－		－		－		－		－
Other comprehensive income (loss)	－		－		－		－		493,971		8,584
Comprehensive income (loss) for the period	－		－		－		－	493,971	8,584
Acquisition of treasury shares	－		－	(1)		－		－		－
(Note 23)

Disposal of treasury shares (Note 23)	－		－	717	(200)		－		－
Share-based payments (Note 32)	－		－		－		－		－		－
Dividends (Note 24)	－		－		－		－		－		－
Changes in the scope of consolidation	－		－		－		－		－		－
Changes in the ownership interest in a	－		－		－		－		－		－
subsidiary without a loss of control

Transfer from other components of equity to	－		－		－		－		－		－
retained earnings

Other increase (decrease)	－		－		－		－		－		236
Total transactions with the owners	－		－	716	(200)		－	236
As of December 31, 2022
100,000	736,400	(490,183)	1,001	85,796	8,546
Profit for the period	－		－		－		－		－		－
Other comprehensive income (loss)	－		－		－		－		185,014		4,749
Comprehensive income (loss) for the period	－		－		－		－	185,014	4,749
Acquisition of treasury shares	－		－	(1)		－		－		－
(Note 23)

Disposal of treasury shares (Note 23)	－	78	990	(444)		－		－
Share-based payments (Note 32)	－		－		－		－		－		－
Dividends (Note 24)	－		－		－		－		－		－
Changes in the scope of consolidation	－		－		－		－		－		－
Changes in the ownership interest in a	－		－		－		－		－		－
subsidiary without a loss of control

Transfer from other components of equity to	－		－		－		－		－		－
retained earnings

Other increase (decrease)	－		－		－		－		－		(4,150)
Total transactions with the owners	－	78	989	(444)		－	(4,150)

Hedge costs

－

(17)

－

As of December 31, 2023	100,000		736,478		(489,194)		557		270,810		9,145		(17)

- 5 -

(Millions of yen)

Equity attributable to owners of the parent company

	Other components of equity

	Net gain (loss) on
	revaluation of						Retained
	financial assets		Remeasurements
	measured at fair				earnings
		of defined	Total
	value through
		benefit plans
	other

	comprehensive
	income
As of January 1, 2022	7,161		－	(400,086)	2,863,843
Profit for the period	－		－	－	442,716
Other comprehensive income (loss)	1,880		49,535			553,970	－
Comprehensive income (loss) for the period	1,880	49,535			553,970	442,716
Acquisition of treasury shares (Note 23)	－		－	－		－
Disposal of treasury shares (Note 23)	－		－	(200)	(516)
Share-based payments (Note 32)	－		－	－	460
Dividends (Note 24)	－		－	－	(266,203)
Changes in the scope of consolidation	－		－	－		－
Changes in the ownership interest in a	－		－	－	(1)
subsidiary without a loss of control

Transfer from other components of equity to	(75)	(49,535)			(49,610)	49,610
retained earnings

Other increase (decrease)	－		－			236	－
Total transactions with the owners	(75)	(49,535)			(49,575)	(216,650)
As of December 31, 2022
8,966		－	104,309	3,089,909
Profit for the period	－		－	－	482,288
Other comprehensive income (loss)	2,199		(13,571)			178,375	－
Comprehensive income (loss) for the period	2,199	(13,571)			178,375	482,288
Acquisition of treasury shares (Note 23)	－		－	－		－
Disposal of treasury shares (Note 23)	－		－	(444)	(505)
Share-based payments (Note 32)	－		－	－	505
Dividends (Note 24)	－		－	－	(367,415)
Changes in the scope of consolidation	－		－	－		－
Changes in the ownership interest in a	－		－	－	(0)
subsidiary without a loss of control

Transfer from other components of equity to	(1,111)	13,571			12,460	(12,460)
retained earnings

Other increase (decrease)	－		－			(4,150)	－
Total transactions with the owners	(1,111)	13,571			7,866	(379,875)

		Non-controlling		Total equity
Total		interests



2,809,258	76,823	2,886,081
442,716	1,458	444,174
553,970		85		554,055
996,687	1,542	998,229
(1)		－	(1)
0		－	0
460	21	481
(266,203)	(1,631)	(267,834)
－	(429)	(429)
(1)	(0)	(1)
－		－		－
236		－		236
(265,510)	(2,039)	(267,548)

3,540,435	76,326	3,616,761
482,288	3,021	485,310
178,375		4,533		182,908
660,663	7,554	668,217
(1)		－	(1)
119		－	119
505	22	526
(367,415)	(2,945)	(370,360)
－	(33)	(33)
(0)	1,413	1,413
－		－		－
(4,150)		－		(4,150)
(370,942)	(1,544)	(372,486)

As of December 31, 2023	10,054		－		290,550		3,192,323		3,830,156		82,336		3,912,491

- 6 -

E. Consolidated Statement of Cash Flows
Years Ended December 31, 2022 and 2023
			(Millions of yen)
	2022	2023
Cash flows from operating activities

Profit before income taxes	593,450	621,601
Depreciation and amortization	199,651	179,652
Impairment losses	27,539	13,710
Interest and dividend income	(26,535)	(42,816)
Interest expense	27,019	28,493
Share of profit in investments accounted for using the	(8,009)	(8,332)
equity method

(Gains) losses on sale and disposal of property, plant and	(4,891)	(16,810)
equipment, intangible assets and investment property

(Gains) losses on sale of investments in subsidiaries	(849)	104
(Increase) decrease in trade and other receivables	26,574	(30,169)
(Increase) decrease in inventories	(93,910)	(136,232)
Increase (decrease) in trade and other payables	(38,251)	40,998
Increase (decrease) in retirement benefit liabilities	(4,156)	455
(Increase) decrease in prepaid tobacco excise taxes	(6,825)	(106,987)
Increase (decrease) in tobacco excise tax payables	24,989	102,787
Increase (decrease) in consumption tax payables	(11,461)	23,249
Other	(28,608)		41,534
Subtotal	675,728	711,238
Interest and dividends received	25,530	41,189
Interest paid	(23,728)	(26,324)
Income taxes paid	(193,731)	(159,088)
Net cash flows from operating activities	483,799	567,014
Cash flows from investing activities
Purchase of securities	(37,414)	(113,010)
Proceeds from sale and redemption of securities	18,208	84,363
Purchase of property, plant and equipment	(81,411)	(94,861)
Proceeds from sale of investment property	7,583	19,653
Purchase of intangible assets	(17,997)	(26,353)
Payments into time deposits	(350)		－
Proceeds from withdrawal of time deposits	1,602		－
Proceeds from sale of investments in subsidiaries	2,963		－
Proceeds from sale of investments in associates	63	1,369
Other	4,930		2,710
Net cash flows from investing activities	(101,822)	(126,129)

- 7 -

			(Millions of yen)
	2022	2023
Cash flows from financing activities

Dividends paid to owners of the parent company	(266,175)	(367,331)
(Note 24)

Dividends paid to non-controlling interests	(1,536)	(2,594)
Capital contribution from non-controlling interests	27	431
Increase (decrease) in short-term borrowings and	(27,610)	143,042
commercial paper (Note 31)

Proceeds from long-term borrowings (Note 31)	1,522	2,890
Repayments of long-term borrowings (Note 31)	(42,849)	(14,909)
Proceeds from issuance of bonds (Notes 19, 31)	69,175	59,795
Redemption of bonds (Notes 19, 31)	(30,000)	(68,194)
Repayments of lease liabilities (Note 31)	(21,009)	(23,613)
Acquisition of treasury shares	(1)	(1)
Payments for acquisition of interests in subsidiaries from	(1)	(17)
non-controlling interests

Proceeds from settlement of derivatives (Note 31)	12,281		－
Other	0	0
Net cash flows from financing activities	(306,176)		(270,500)
Net increase (decrease) in cash and cash equivalents	75,801	170,385
Cash and cash equivalents at the beginning of the period	721,731	866,885
Effect of exchange rate changes on cash and cash	69,353	2,935
equivalents

Cash and cash equivalents at the end of the period	866,885	1,040,206
(Note 7)

- 8 -

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Japan Tobacco Inc. published this content on 22 March 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 22 March 2024 08:15:08 UTC.

Market Closed - Japan Exchange Other stock markets 02:31:46 2024-04-26 am EDT			5-day change	1st Jan Change
4,177 ^JPY	+0.51%		+2.58%	+14.60%

Apr. 19	Japan Tobacco Issues 643.23 Million Yen Worth of Shares as Restricted Stock Compensation and Performance Share Units	MT
Apr. 15	Japan Tobacco to Issue Euro-Denominated Bonds Worth 600 Million Euros	MT

Japan Tobacco Issues 643.23 Million Yen Worth of Shares as Restricted Stock Compensation and Performance Share Units	Apr. 19	MT
Japan Tobacco to Issue Euro-Denominated Bonds Worth 600 Million Euros	Apr. 14	MT
Japan Tobacco to Dispose of Treasury Shares as Restricted Stock Compensation, Performance Share Units	Mar. 25	MT
Morgan Stanley Adjusts Japan Tobacco’s Price Target to 4,200 Yen From 3,900 Yen, Keeps at Overweight	Mar. 17	MT
Jefferies Adjusts Japan Tobacco Price Target to 3,353 Yen From 3,276 Yen, Keeps at Hold	Feb. 19	MT
Japan Tobacco Records Increase in Cigarette Production Amid Industry-wide Decline	Feb. 14	MT
Transcript : Japan Tobacco Inc., 2023 Earnings Call, Feb 14, 2024	Feb. 14
Japan Tobacco’s Profit Climbs 9% in 2023	Feb. 13	MT
Japan Tobacco sees more growth in cigarette revenues in 2024	Feb. 13	RE
Japan Tobacco Inc. Provides Consolidated Earnings Forecast for Fiscal Year Ending December 31, 2024	Feb. 13	CI
Japan Tobacco Inc. Provides Guidance for the Fiscal Year Ending December 31,2024; Announces Dividend for the Year Ended December 31,2023, Effective date is March 25, 2024	Feb. 13	CI
Japan Tobacco Inc. Provides Dividend Guidance for the Second Quarter for Year Ending December 31, 2024	Feb. 13	CI
2023 highlights of the stock market year	Dec. 21
Ban flavoured vapes, WHO says, urging tobacco-style controls	Dec. 14	RE
Big Tobacco's transition under fire as WHO targets vaping	Dec. 14	RE
Japan Tobacco Inc. Announces Management Changes	Nov. 17	CI
Jefferies Adjusts Japan Tobacco’s Price Target to 3,200 Yen From 2,673 Yen, Keeps at Hold	Nov. 15	MT
Japan Tobacco’s Nine-Month Attributable Profit Rises 9.5%	Oct. 31	MT
Transcript : Japan Tobacco Inc., Q3 2023 Earnings Call, Oct 31, 2023	23-10-31
Big Tobacco turns to rooibos tea to counter upcoming ban	23-10-16	RE
UK's Sunak wants to ban cigarettes for younger generations	23-10-04	RE
Japan Tobacco Receives 113 Billion Yen in Dividends from Consolidated Subsidiary	23-08-29	MT
Jefferies Adjusts Japan Tobacco’s Price Target to 2,673 Yen From 2,652 Yen, Keeps at Hold	23-08-22	MT
Japan Tobacco’s Attributable Net Profit Up 8.7% to 287.01 Billion Yen in Six Month Ended June 30	23-08-01	MT
Transcript : Japan Tobacco Inc., Q2 2023 Earnings Call, Jul 31, 2023	23-07-31

	1st Jan change	Capi.
JAPAN TOBACCO, INC.	+14.60%	47.11B
ALTRIA GROUP, INC.	+7.54%	74.51B
ITC LIMITED	-4.78%	65.87B
KT&G CORPORATION	+2.30%	7.29B
PT HANJAYA MANDALA SAMPOERNA TBK	-6.70%	5.99B
RLX TECHNOLOGY INC.	-4.50%	2.43B
PT GUDANG GARAM TBK	-6.03%	2.27B
BRITISH AMERICAN TOBACCO BANGLADESH COMPANY LIMITED	-29.73%	1.79B
SCANDINAVIAN TOBACCO GROUP A/S	-3.67%	1.36B
EASTERN COMPANY S.A.E	-11.55%	1.17B

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