Japan Tobacco : Quarterly financial report - Quarterly Securities Report.

[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.]

April 28, 2022

Consolidated Financial Results for the Three Months Ended March 31, 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: April 28, 2022 Scheduled starting date of the dividend payments: -

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 Three Months of the Fiscal Year Ending December 31, 2022 (from January 1, 2022 to March 31, 2022)

• (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 March 31, 2022 March 31, 2021	Millions of yen % 581,505 6.2 547,366 5.3	Millions of yen % 178,368 11.4 160,129 24.2	Millions of yen % 174,699 11.7 156,342 35.8	Millions of yen % 124,602 9.3 114,039 31.3

  Profit attributable to owners of the parent company	Comprehensive income for the period	Basic earnings per share	Diluted earnings per share
  Three months ended March 31, 2022 March 31, 2021	Millions of yen % 124,110 9.1 113,786 31.7	Millions of yen % 230,570 (5.2) 243,127 -	Yen 69.94 64.13	Yen 69.91 64.10

• (2) Consolidated Financial Position

Total assets	Total equity	Equity attributable to owners of the parent company	Ratio of equity attributable to owners of the parent company to total assets	Equity attributable to owners of the parent company per share
As of March 31, 2022 December 31, 2021	Millions of yen 5,747,354 5,774,209	Millions of yen 2,983,147 2,886,081	Millions of yen 2,905,828 2,809,258	% 50.6 48.7	Yen 1,637.49 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, 2021 Year ending December 31, 2022	Yen - -	Yen 65.00	Yen -	Yen 75.00	Yen 140.00
Year ending December 31, 2022 (Forecast)	75.00	-	75.00	150.00

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.)

Revenue	Operating profit	Profit attributable to owners of the parent company	Basic earnings per share
Year ending December 31, 2022	Millions of yen % 2,315,000 (0.4)	Millions of yen % 534,000 7.0	Millions of yen % 356,000 5.2	Yen 200.62

Note:

Revisions to the consolidated earnings forecasts most recently announced: None

[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. 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
Three months ended March 31, 2022 (Cumulative)	Millions of yen 186,114	% 4.5
Year ending December 31, 2022 (Forecast)	635,000	4.0

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 April 28, 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

  • a. Changes in accounting policies due to revisions in accounting standards under IFRS: Yes

  • b. Changes in accounting policies due to other reasons: None

  • c. 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."

• (3) 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, 2022	2,000,000,000 shares
As of December 31, 2021	2,000,000,000 shares
b.	Number of treasury shares at the end of the period
As of March 31, 2022	225,432,376 shares
As of December 31, 2021	225,475,301 shares
c.

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

Three months ended March 31, 2022

Three months ended March 31, 2021

1,774,562,503 shares 1,774,254,698 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

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

No items to report.

Notes on the Russia-Ukraine War

Based on the recent Russia-Ukraine war, the Company suspended all new investments and marketing activities in the Russian market. Given the challenging and unpredictable environment, the Company has continued to evaluate various options for the Russia business, including the potential transfer of ownership.

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

Notes on the Spread of COVID-19

Concerning the spread of COVID-19, the Group continues to conduct business operations of each business fully in compliance with the policies and directives of the governments and relevant authorities of each country, and nothing is obstructing business continuity at present.

With regard to the impacts of the spread of COVID-19, it is necessary to carefully monitor and examine foreign exchange rate trends and the responses of the governments and relevant authorities of each country going forward. Because it is difficult at this time to predict when the spread of COVID-19 will be brought under control and its future impact, COVID-19 may negatively affect the Group's business performance depending on future situation. If the need for a revision to the Group's earnings forecasts arises, the Company will swiftly announce such a revision.