Japan Tobacco : Consolidated Financial Results for the Six Months Ended June 30, 2022

[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.]

Consolidated Financial Results

July 29, 2022

for the Six Months Ended June 30, 2022

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, Corporate Communications
Telephone:	[phone]

Scheduled date to file Quarterly Securities Report: July 29, 2022

Scheduled starting date of the dividend payments: September 1, 2022

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, 2022 (from January 1, 2022 to June 30, 2022)

(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, 2022	1,266,828	10.7	382,972	18.9	360,985	14.9	265,004	17.3
June 30, 2021	1,144,539	11.1	322,084	27.8	314,095	39.0	225,940	30.3
	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, 2022	264,063	17.3	1,002,901	150.2		148.80		148.74
June 30, 2021	225,190	30.5	400,888	-		126.92		126.86

(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, 2022	6,648,864	3,754,629	3,677,143	55.3	2,071.80
December 31, 2021	5,774,209	2,886,081	2,809,258	48.7	1,583.10

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
-	65.00	-	75.00	140.00
2021
Year ending December 31,	-	75.00
2022
Year ending December 31,			-	75.00	150.00
2022 (Forecast)
Note:	Revisions to the cash dividends forecasts most recently announced: None

3. Consolidated Earnings Forecasts for the Fiscal Year Ending December 31, 2022 (January 1, 2022 to December 31, 2022)

							(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	2,486,000	6.9	549,000	10.0	362,000	6.9	203.97
	December 31, 2022
	Note:	Revisions to the consolidated earnings forecasts most recently announced: Yes

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

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. The Group expects an annual average of mid- single digit growth during the period of the "Business Plan 2022" (fiscal year ending December 31, 2022 to fiscal year ending December 31, 2024.) which was announced on February 14, 2022.

(Percentages indicate year-on-year changes.)

			Adjusted operating profit at constant rates of exchange
	Six months ended	Millions of yen		%
	386,726		8.0
	June 30, 2022 (Cumulative)
	Year ending	604,000		(1.1)
	December 31, 2022 (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 29, 2022.

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, 2022	2,000,000,000 shares
As of December 31, 2021	2,000,000,000 shares

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

As of June 30, 2022	225,149,397	shares
As of December 31, 2021	225,475,301	shares

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

Six months ended June 30, 2022	1,774,644,814	shares
Six months ended June 30, 2021	1,774,315,180	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 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..............................................................................................	16

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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, 2021 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, 2022.

	IFRS		Description of new standards and amendments
IFRS 3	Business Combinations		Amendments to update references to the conceptual
			framework
IFRS 9	Financial Instruments		Clarifying fees and costs to be included in the 10 percent
			test for derecognition of financial liabilities

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

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

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

However, since the most recently announced earnings forecasts were formulated, there are no material changes in the assumptions regarding COVID-19 for earnings forecasts.

				(Billions of yen)
		Changes from the consolidated earnings	Year-on-year
	Earnings forecasts	forecasts most recently announced
	changes
		Amount	%	[%]
Revenue	2,486.0	171.0	7.4	6.9
Adjusted operating profit	625.0	14.0	2.3	2.4
Operating profit	549.0	15.0	2.8	10.0
Profit attributable to owners of	362.0	6.0	1.7	6.9
the parent company
Adjusted operating profit at	604.0	(31.0)	(4.9)	(1.1)
constant rates of exchange

Notes on the Russia-Ukraine War

The Group is fully committed to complying with all applicable sanctions while continuing business operations. In parallel, given the continued challenging and complex environment, we continue to evaluate various options, including the potential transfer of ownership of our Russian tobacco business.

As this moment, the Company is unable to reasonably estimate the outlook and the impact on its financial results. The Company will promptly make announcements regarding this matter if anything occurs that should be disclosed.

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