Japan Tobacco : Consolidated Financial Results for the Six Months Ended June 30, 2021

[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 30, 2021

	Consolidated Financial Results
	for the Six Months Ended June 30, 2021
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:	Hiroyuki Fukuda, Senior Vice President, Communications
Telephone:	[phone]

Scheduled date to file Quarterly Securities Report: July 30, 2021

Scheduled starting date of the dividend payments: September 1, 2021

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, 2021 (from January 1, 2021 to June 30, 2021)

(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, 2021	1,144,539	11.1		322,084	27.8		314,095	39.0		225,940	30.3
June 30, 2020	1,030,218	(2.7)		251,989	(19.1)		225,961	(22.2)		173,354	(27.3)
		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, 2021	225,190	30.5	400,888	2,085.3			126.92			126.86
June 30, 2020	172,495	(23.8)		18,345	(91.3)			97.23			97.19
(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, 2021		5,538,885		2,862,838		2,786,090		50.3		1,570.05
December 31, 2020		5,381,382		2,599,495		2,522,834		46.9		1,421.92

2. Cash Dividends

Annual dividends per share

		First quarter-end	Second quarter-end	Third quarter-end	Fiscal year-end	Total
		Yen	Yen	Yen	Yen	Yen
Year ended December 31,	-	77.00	-	77.00	154.00
2020
Year ending December 31,	-	65.00
2021
Year ending December 31,			-	65.00	130.00
2021 (Forecast)
Note:	Revisions to the cash dividends forecasts most recently announced: None

3. Consolidated Earnings Forecasts for the Fiscal Year Ending December 31, 2021 (January 1, 2021 to December 31, 2021)

							(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	2,200,000	5.1	402,000	(14.3)	272,000	(12.3)	153.29
	December 31, 2021
	Note:	Revisions to the consolidated earnings forecasts most recently announced: Yes

[Additional Information] Growth rate in adjusted operating profit at constant rates of exchange:

The Group has set its group-wide target for annual average growth rate in adjusted operating profit at constant rates of exchange, 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 rates of exchange
	Six months ended	Millions of yen		%
	365,121		26.9
	June 30, 2021 (Cumulative)
	Year ending	522,000		7.2
	December 31, 2021 (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 visit the Company's website (https://www.jt.com/investors/index.html), where materials for investors' meeting have been released today, and refer to the quarterly securities report scheduled to be submitted today.

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
3. 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: None

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, 2021	2,000,000,000	shares
As of December 31, 2020	2,000,000,000	shares

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

As of June 30, 2021	225,479,825	shares
As of December 31, 2020	225,754,671	shares

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

Six months ended June 30, 2021	1,774,315,180	shares
Six months ended June 30, 2020	1,774,011,394	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 rates of exchange 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 rates of exchange, at mid to high single-digit over the mid- to long-term, and will continue to pursue this goal. Adjusted operating profit at constant rates of exchange 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 and increase in profit due to inflation in some markets calculated using certain methods from adjusted operating profit for the current period in the International Tobacco Business.
     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" (hereinafter referred to as "IAS 29"). However, the impact of IAS 29 is not included in adjusted operating profit at constant rates of exchange.

	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 .................................................................................................	15

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1. Matters Regarding Summary Information

1. Changes in Accounting Policies and Changes in Accounting Estimates

The significant 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, 2020 except the following item.

The Group computes income taxes for the interim period based on the estimated average annual effective tax rate.

(Changes in Accounting Policies)

The Group has adopted the following new accounting standards, amended standards and new interpretations from the beginning of the first quarter ended March 31, 2021.

	IFRS		Description of new standards and amendments
IFRS 16	Leases		Amendment for COVID-19-related rent concessions on or
			after June 30, 2021

IFRS 16 amendment mentioned above has been early applied.

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

Part of the condensed interim consolidated financial statements for the year ended December 31, 2020 has been reclassified to conform with the presentation for the year ending December 31, 2021.

(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
	Earnings forecasts	forecasts most recently announced	Year-on-year changes
			[%]
	Amount	%
Revenue	2,200.0	120.0	5.8	5.1
Adjusted operating profit	517.0	42.0	8.8	6.2
Operating profit	402.0	39.0	10.7	(14.3)
Profit attributable to owners of the	272.0	32.0	13.3	(12.3)
parent company
Adjusted operating profit at	522.0	10.0	2.0	7.2
constant rates of exchange

The continued spread of COVID-19 has had a significant impact on the global economy and social life, and it is difficult at this time to predict when COVID-19 will be brought under control. Amid this, the Company assumes that the economies of each country will gradually recover despite the continued impact of the spread of COVID-19 on the global economy. Furthermore, the impact on demand in the tobacco business and the Processed Food Business will continue to an extent going forward, and earnings forecasts have been formulated.

FORWARD-LOOKING STATEMENTS

This document contains forward-looking statements. These statements appear in a number of places in this document and include statements regarding the intent, belief, or current and future expectations of our management with respect to our business, financial condition and results of operations. In some cases,

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