Japan Tobacco : Consolidated Financial Results for the Three Months Ended March 31, 2023

[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.]

May 2, 2023

Consolidated Financial Results

for the Three Months Ended March 31, 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 ExecutiveOfficer
Contact:	Nobuya Kato, Senior Vice President, Chief Financial Officer and Corporate
	Communications
Telephone:	[phone]

Scheduled dateto file QuarterlySecurities Report: May 2, 2023

Scheduled startingdate of the dividend payments: -

Drawing up supplementary documents on quarterly financial results: Yes

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

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

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

December 31, 2023 (from January 1, 2023 to March 31, 2023)

(1) Consolidated Operating Results (Cumulative)		(Percentages indicate year-on-year changes.)
	Revenue		Operating profit	Profit before income taxes	Profit for the period
Three months ended	Millions of yen	%	Millions of yen	%	Millions of yen	%	Millions of yen	%
March 31, 2023	665,278	14.4	206,404	15.7	183,146	4.8	145,226	16.6
March 31, 2022	581,505	6.2	178,368	11.4	174,699	11.7	124,602	9.3
	Profit attributable to	Comprehensive income
	owners of the parent	Basic earnings per share	Diluted earnings per share
	for the period
	company
Three months ended	Millions of yen	%	Millions of yen	%		Yen		Yen
March 31, 2023	144,684	16.6	170,311	(26.1)		81.52		81.49
March 31, 2022	124,110	9.1	230,570	(5.2)		69.94		69.91

(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
March 31, 2023	6,346,628	3,586,249	3,507,288	55.3	1,976.03
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,	-
2023
Year ending December 31,		94.00	-	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	2,629,000	(1.1)	612,000	(6.4)	440,000	(0.6)	247.91
	December 31, 2023
	Note:	Revisions to the consolidated earnings forecasts most recently announced: None

[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
	Three months ended	Millions of yen		%
	204,727		5.1
	March 31, 2023 (Cumulative)
	Year ending	728,000		0.0
	December 31, 2023 (Forecast)
	Note:	Revisions to the consolidated	earnings forecasts most recently announced:	None

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 May 2, 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
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: 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 March 31, 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 March 31, 2023	225,079,867	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)

Three months ended March 31, 2023	1,774,914,730 shares
Three months ended March 31, 2022	1,774,562,503 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. Theforward-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 certainnon-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 three months ended March 31, 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
(7)	Subsequent Events………………………………………………………………………………….17

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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 transitioned from the consolidated taxation system to the group tax sharing system from the first quarter ended March 31, 2023.

(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, 2023.

IFRS

IFRS 1	Presentation of Financial
Statements

Description of new standards and amendments

Amended in order to carry out disclosures using material accounting policies instead of significant accounting policies

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

(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 three months ended March 31, 2023 increased by ¥2,388 million compared to the figure calculated using the previous method.

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

No items to report.

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