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Table of contents

Introductory word ................................................................................................................................................................................................................5

Company Profile .................................................................................................................................................................................................................. 7

About us ................................................................................................................................................................................................................................. 9

Consolidated Highlights ....................................................................................................................................................................................................... 9

Overview of selected events in 2022 ................................................................................................................................................................................. 10

Development of products with reduced risk .................................................................................................................................................................. 12

Our Products ......................................................................................................................................................................................................................... 18

IQOS ILUMA I TEREA ........................................................................................................................................................................................................ 19

IQOS 3 DUO I HEETS ..................................................................................................................................................................................................... 20

lil SOLID I Fiit .................................................................................................................................................................................................................... 21

IQOS VEEV I VEEV ......................................................................................................................................................................................................... 23

Cigarettes ............................................................................................................................................................................................................................... 25

Report of the Board of Directors ..................................................................................................................................................................................... 26

Report of the Supervisory Board ...................................................................................................................................................................................... 39

Consolidated Financial Statements ................................................................................................................................................................................. 42

Consolidated Statement of Financial Position ................................................................................................................................................................... 43

Consolidated Statement of Comprehensive Income ........................................................................................................................................................ 44

Consolidated Statement of Changes in Equity .................................................................................................................................................................. 45

Consolidated Cash Flow Statement .................................................................................................................................................................................... 46

Notes to the Consolidated Financial Statements ........................................................................................................................................................ 47

1. GENERAL INFORMATION ................................................................................................................................................................................................. 47

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES .............................................................................................................................................. 49

3. FINANCIAL RISK MANAGEMENT .................................................................................................................................................................................... 59

4. SEGMENT REPORTING ................................................................................................................................................................................................... 65

5. PROPERTY, PLANT AND EQUIPMENT ........................................................................................................................................................................... 67

6. IMPAIRMENT OF PROPERTY, PLANT AND EQUIPMENT ............................................................................................................................................ 67

7. LEASES .............................................................................................................................................................................................................................. 68

8. INVENTORIES .................................................................................................................................................................................................................... 68

9. TRADE AND OTHER FINANCIAL RECEIVABLES AND OTHER NON-FINANCIAL ASSETS ..................................................................................... 69

10. CASH AND CASH EQUIVALENTS ................................................................................................................................................................................ 69

11. EQUITY .............................................................................................................................................................................................................................. 70

12. TRADE AND OTHER FINANCIAL LIABILITIES AND OTHER NON-FINANCIAL LIABILITIES ................................................................................... 71

13. OFFSETTING FINANCIAL ASSETS AND FINANCIAL LIABILITIES WITH RELATED PARTIES ................................................................................ 71

15. DEFERRED INCOME TAX ............................................................................................................................................................................................... 72

16. EXPENSES BY NATURE - ADDITIONAL INFORMATION ........................................................................................................................................... 73

17. EMPLOYEE BENEFITS EXPENSE ................................................................................................................................................................................... 73

18. AUDITOR'S FEES ............................................................................................................................................................................................................. 74

19. PROVISIONS ................................................................................................................................................................................................................... 74

20. OTHER OPERATING INCOME ....................................................................................................................................................................................... 74

21. OTHER OPERATING EXPENSE ...................................................................................................................................................................................... 74

22. NET PROFITS AND LOSSES FROM FINANCIAL INSTRUMENTS ............................................................................................................................. 75

23. INCOME TAX EXPENSE ................................................................................................................................................................................................. 75

24. EARNINGS PER SHARE .................................................................................................................................................................................................. 76

25. PROFIT DISTRIBUTION .................................................................................................................................................................................................. 76

26. CONTINGENT LIABILITIES ............................................................................................................................................................................................ 76

27. RELATED PARTY TRANSACTIONS .............................................................................................................................................................................. 77

28. INFORMATION ON THE IMPACT OF THE RUSSIAN INVASION OF UKRAINE AND MACROECONOMIC IMPLICATIONS .............................. 79

29. SUBSEQUENT EVENTS ................................................................................................................................................................................................ 80

Separate Financial Statements ......................................................................................................................................................................................... 81

Separate Statement of Financial Position .......................................................................................................................................................................... 82

Separate Statement of Comprehensive Income ............................................................................................................................................................... 83

Separate Statement of Changes in Equity ......................................................................................................................................................................... 84

Separate Statement of Cash Flow ...................................................................................................................................................................................... 85

Notes to the Separate Financial Statements ................................................................................................................................................................. 86

1. GENERAL INFORMATION ................................................................................................................................................................................................. 86

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES .............................................................................................................................................. 88

3. FINANCIAL RISK MANAGEMENT .................................................................................................................................................................................... 103

4. PROPERTY, PLANT AND EQUIPMENT ........................................................................................................................................................................... 65

5. IMPAIRMENT OF PROPERTY, PLANT AND EQUIPMENT ............................................................................................................................................ 103

6. LEASES .............................................................................................................................................................................................................................. 104

7. INVENTORIES .................................................................................................................................................................................................................... 104

8. TRADE AND OTHER FINANCIAL RECEIVABLES AND OTHER NON-FINANCIAL ASSETS ..................................................................................... 105

9. CASH AND CASH EQUIVALENTS ................................................................................................................................................................................. 105

10. EQUITY ............................................................................................................................................................................................................................. 105

11. TRADE AND OTHER FINANCIAL LIABILITIES AND OTHER NON-FINANCIAL LIABILITIES .................................................................................... 106

12. OFFSETTING FINANCIAL ASSETS AND FINANCIAL LIABILITIES WITH RELATED PARTIES ................................................................................ 107

14. DEFERRED INCOME TAX ............................................................................................................................................................................................... 107

15. EXPENSES BY NATURE - ADDITIONAL INFORMATION ........................................................................................................................................... 108

16. EMPLOYEE BENEFITS EXPENSE ................................................................................................................................................................................... 109

17. AUDITOR'S FEES ............................................................................................................................................................................................................. 109

18. PROVISIONS .................................................................................................................................................................................................................... 109

19. REVENUES ....................................................................................................................................................................................................................... 110

20. OTHER OPERATING INCOME ....................................................................................................................................................................................... 110

21. OTHER OPERATING EXPENSE ...................................................................................................................................................................................... 110

22. NET PROFITS AND LOSSES FROM FINANCIAL INSTRUMENTS ............................................................................................................................. 110

23. INCOME TAX EXPENSE ................................................................................................................................................................................................ 111

24. EARNINGS PER SHARE .................................................................................................................................................................................................. 111

25. PROFIT DISTRIBUTION .................................................................................................................................................................................................. 112

26. CONTINGENT LIABILITIES ............................................................................................................................................................................................ 112

27. RELATED PARTY TRANSACTIONS .............................................................................................................................................................................. 112

28. SUBSEQUENT EVENTS ................................................................................................................................................................................................. 115

Report on Relations between Controlling Entity and Controlled Entity,and between Controlled Entity and Entities Controlled by the

same Controlling Entity ...................................................................................................................................................................................................... 116

Independent auditor's report to the shareholders of company Philip Morris ČR a.s. ........................................................................................... 120

Other Information for Shareholders ................................................................................................................................................................................ 130

Report on corporate governance of Philip Morris ČR a.s. and Summary Explanatory Report of the Board of Directors of Philip Morris

ČR a.s. .................................................................................................................................................................................................................................... 137

Members of Board of Directors, Supervisory Board and Audit Committee of Philip Morris ČR a.s. ................................................................. 144

This document created in PDF (Portable Document Format) is a translation from the original which was prepared in the Czech language. It represents non-official version of the Annual Financial Report. The company has taken all steps to ensure that this version conforms to the original, except for the use of machine-readable XBRL tags. The official version of the Annual Financial Report prepared in single electronic reporting format ("ESEF"), which is the XHTML format, can be accessed at:https://www.pmi.com/resources/docs/default-source/czech-market/investors-relation/annual-meeting-2023/PMCR-vyrocni-zprava-2022.zipIn case of any content discrepancies the official version of the Annual Financial Report always takes precedence over this document.

INTRODUCTORY WORD

Dear Shareholders,

This Annual Report is a look back at our work in 2022, a watershed year in many ways. In the end, unfortunately, for very different reasons than we expected on the threshold of the new year. However much we envisioned a reboot in economic performance and public social events after two years of the COVID-19 pandemic, this optimism only lasted until the end of February, when we all watched the Russian invasion of Ukraine with concern. Like everyone else, I wondered what impact the war would have on our business and lives. However, this incident also showed the character of the people living in the Czech Republic, Slovakia and other neighbouring countries. There was a great wave of solidarity, and I am incredibly proud that our company and its employees actively supported those Ukrainians seeking shelter and, as in previous "COVID" years, helped wherever it was needed, regardless of their own comfort.

At the same time, it is symbolic that in 2022, Phillip Morris commemorated its 30th anniversary in the Czech Republic. Although licensed production in Kutná Hora dates back to 1987, its real entry came with the privatization of the state-owned company Tabák, a.s. in 1992. After thirty years of successful operation, we can proudly say it is one of the most successful transformation projects of the post-revolution period. The total value of the transaction of USD 420 million became the second-highest foreign investment in Czechoslovakia. At the same time, it was the most significant investment by an American company in Central Europe. Philip Morris quickly established itself as one of the most vital foreign concerns operating on the Czech market and brought a strong know-how and corporate management culture to the emerging economy, as well as stable employment according to the standards of advanced economies and trade openness on the Prague Stock Exchange, including stable returns paid to shareholders without exception since 1997. In addition, the company has been a net taxpayer throughout its history, with current annual corporate income tax payments of around CZK 1 billion.

The past thirty years illustrate our culture and social responsibility very well. We successfully continue to offer equal opportunities to all our employees without distinction. I am overwhelmed that here in the Czech Republic, we have retained both the EQUAL SALARY Certificate and the Top Employer certification. At the same time, we were granted the "Top Responsible Business Award", which honours companies that emphasize responsibility and sustainability. The Kutná Hora plant has been carbon neutral since 2021 while we continue to invest significant resources in the modernization of the plant and, in particular, reducing its energy consumption. In 2022, the Kutná Hora plant was recertified as carbon neutral. It became just the second production facility in the Czech Republic that has met the requirements of the Alliance for Water Stewardship audit - i.e., responsible water management. This path has proven to be the right one just in 2022. Thanks to these steps, we were able to face a record-high increase in energy costs, among the highest in the Czech Republic compared to other countries. I do not doubt that our approach will help us cope with the crisis that has been affecting the European

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Philip Morris CR a.s. published this content on 28 March 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 28 March 2023 05:57:02 UTC.