Interim report
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[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.] October 30, 2025 Consolidated Financial Results for the Nine Months Ended September 30, 2025 <under IFRS> Name of the Listed Company: JAPAN TOBACCO INC. (Stock Code: 2914) Listed Stock Exchange: Tokyo Stock Exchange URL: https://www.jt.com/ Representative: Masamichi Terabatake, Representative Director and President, Chief Executive Officer Contact: Hiromasa Furukawa, Senior Vice President, Chief Financial Officer and Corporate Communications Telephone: +81-3-6636-2914 Scheduled starting date of the dividend payments: – Drawing up supplementary documents on financial results: Yes Holding 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 Nine Months of the Fiscal Year Ending December 31, 2025 (from January 1, 2025 to September 30, 2025) (1) Consolidated Operating Results (Cumulative) (Percentages indicate year-on-year changes.) Revenue Operating profit Profit before income taxes Profit for the period Nine months ended Millions of yen % Millions of yen % Millions of yen % Millions of yen % September 30, 2025 2,634,028 13.2 762,935 20.8 707,162 23.0 514,239 15.7 September 30, 2024 2,327,244 － 631,468 － 574,955 － 444,543 0.0 Profit attributable to owners of the parent company Comprehensive income for the period Basic earnings per share Diluted earnings per share Nine months ended Millions of yen % Millions of yen % Yen Yen September 30, 2025 511,749 15.7 737,512 78.6 288.24 288.21 September 30, 2024 442,414 0.1 413,000 (45.4) 249.18 249.14 The Group has classified the Pharmaceutical Business as discontinued operations starting from the nine months ended September 30, 2025. As a result, profits or losses from discontinued operations are presented separately from continuing operations in the Condensed Interim Consolidated Statement of Income. Therefore, revenue, operating profit, and profit before income taxes, represent the amounts for continuing operations. In addition, percentages indicating year-on-year changes are not provided since the same reclassification has been made for the nine months ended September 30, 2024. (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 Millions of yen Millions of yen Millions of yen % Yen September 30, 2025 8,195,045 4,168,764 4,142,487 50.5 2,333.29 December 31, 2024 8,370,732 3,848,727 3,766,623 45.0 2,121.33
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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, 2024 - 97.00 - - 97.00 194.00 Year ending December 31, 2025 - 104.00 Year ending December 31, 2025 (Forecast) 130.00 234.00 Note: Revisions to the cash dividends forecasts most recently announced: Yes 3. Consolidated Earnings Forecasts for the Fiscal Year Ending December 31, 2025 (January 1, 2025 to December 31, 2025) (Percentages indicate year-on-year changes.) Revenue Operating profit Profit attributable to owners of the parent company Basic earnings per share Millions of yen % Millions of yen % Millions of yen % Yen Year ending December 31, 2025 3,456,000 13.1 845,000 168.9 562,000 213.5 316.55 Note: Revisions to the consolidated earnings forecasts most recently announced: Yes [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. The Group expects an annual average of high-single digit growth during the period of the “Business Plan 2025” (fiscal year ending December 31, 2025 to fiscal year ending December 31, 2027), which was announced on February 13, 2025. (Percentages indicate year-on-year changes.) Adjusted operating profit at constant FX Nine months ended September 30, 2025 (Cumulative) Millions of yen 848,991 % 27.2 Year ending December 31, 2025 (Forecast) 923,000 24.3 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 Accounting Standards, 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).” The Group has classified the Pharmaceutical Business as discontinued operations starting from the nine months ended September 30, 2025. As a result, profits or losses from discontinued operations are presented separately from continuing operations in the Condensed Interim Consolidated Statement of Income, and earnings forecasts. Therefore, revenue, operating profit, and adjusted operating profit at constant FX for the nine months ended September 30, 2025 (cumulative) and year ending December 31, 2025 (forecast) represent the amounts for continuing operations. Profit attributable to owners of the parent company from continuing operations only, and basic earnings per share are as follows: ・- Profit attributable to owners of the parent company: ¥555,000 million ・- Basic earnings per share for the period: ¥312.60 For detailed information on the consolidated financial results, please refer to the materials for investors’ meeting that were released on the Company’s website on October 30, 2025. The Company’s website: https://www.jt.com/investors/
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Notes (1) Significant changes in the scope of consolidation during the period: Yes Excluded: One company (TORII PHARMACEUTICAL CO., LTD.) (2) Changes in accounting policies and changes in accounting estimates a. Changes in accounting policies due to revisions in accounting standards under IFRS Accounting Standards: Yes b. Changes in accounting policies due to other reasons: None c. Changes in accounting estimates: None For details, please refer to “3. Condensed Interim Consolidated Financial Statements, (5) 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 September 30, 2025 2,000,000,000 shares As of December 31, 2024 2,000,000,000 shares b. Number of treasury shares at the end of the period As of September 30, 2025 224,612,191 shares As of December 31, 2024 224,409,101 shares c. Average number of shares during the period (cumulative from the beginning of the fiscal year) Nine months ended September 30, 2025 1,775,408,742 shares Nine months ended September 30, 2024 1,775,481,173 shares * Review of the Japanese-language originals of the attached interim consolidated financial statements by certified public accountants or an audit corporation: Yes (voluntary) * 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 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 core revenue from tobacco business or from adjusted operating profit for the current period in the Tobacco Business. Adjusted operating profit results at constant FX for the nine months ended September 30, 2025 excludes the increase in profit caused by 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.”
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Attached Materials Index 1. Overview of Business Results ........................................................................................................... 2 2. Matters Regarding Summary Information ......................................................................................... 3 3. Condensed Interim Consolidated Financial Statements ..................................................................... 5 (1) Condensed Interim Consolidated Statement of Financial Position .................................................... 5 (2) Condensed Interim Consolidated Statement of Income and Consolidated Statement of Comprehensive Income ..................................................................................................................... 7 (3) Condensed Interim Consolidated Statement of Changes in Equity ................................................. 10 (4) Condensed Interim Consolidated Statement of Cash Flows ............................................................. 12 (5) Changes in Accounting Policies and Changes in Accounting Estimates ......................................... 14 (6) Changes in Method of Presentation ................................................................................................. 14 (7) Segment Information ........................................................................................................................ 15 (8) Note on Premise of Going Concern .................................................................................................. 19 (9) Other................................................................................................................................................. 19 [INDEPENDENT ACCOUNTANT'S REVIEW REPORT] -1-
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1. Overview of Business Results The results are presented in “2025 Third Quarter Results (CFO Presentation),” which was disclosed on TDnet and the Company’s website on October 30, 2025. Please refer to the following. 2025 Third Quarter Results (CFO Presentation): https://www.jt.com/investors/results/forecast/pdf/2025/Third_Quarter/20251030_06.pdf On May 7, 2025, the Company announced an agreement regarding the transfer of its Pharmaceutical Business to Shionogi & Co., Ltd. and the transfer of shares of its consolidated subsidiary, TORII PHARMACEUTICAL CO., LTD. Please refer to the links below for the details of the relevant announcements dated May 7, 2025. Notice regarding the transfer of JT Group’s Pharmaceutical Business through a company simplified absorption -type split https://www.jt.com/media/news/2025/pdf/20250507_12.pdf Notice of Change in Consolidated Subsidiary (Transfer of Subsidiary Shares) https://www.jt.com/media/news/2025/pdf/20250507_11.pdf Additionally, as announced on September 1, 2025, the transfer of shares of TORII PHARMACEUTICAL CO., LTD. has been completed. Notice Regarding Completion of Transfer of Subsidiary Shares https://www.jt.com/media/news/2025/pdf/20250901_02.pdf The details of financial position and cash flow position are as follows. a. Financial position [Assets] Total assets at the end of the nine months ended September 30, 2025 decreased by ¥175.7 billion from the end of the previous fiscal year to ¥8,195.0 billion. This was mainly due to a decrease in cash and cash equivalents despite an increase in goodwill. [Liabilities] Total liabilities at the end of the nine months ended September 30, 2025 decreased by ¥495.7 billion from the end of the previous fiscal year to ¥4,026.3 billion. This was mainly due to a decrease in provision resulting from a down payment as part of the settlement for the litigation in Canada. [Equity] Total equity at the end of the nine months ended September 30, 2025 increased by ¥320.0 billion from the end of the previous fiscal year to ¥4,168.8 billion. This was mainly due to an increase in exchange differences on translation of foreign operations as well as an increase in retained earnings due to the recording of profit attributable to owners of the parent company. b. Cash flow position Cash and cash equivalents at the end of the nine months ended September 30, 2025 decreased by ¥355.1 billion from the end of the previous fiscal year to ¥729.5 billion. Cash and cash equivalents at the end of the same period of the previous fiscal year were ¥794.8 billion. [Net cash flows from operating activities] Net cash flows provided by operating activities during the nine months ended September 30, 2025 were ¥287.0 billion, compared with ¥392.0 billion provided in the same period of the previous year. This was mainly due to the generation of a stable cash inflow from the tobacco business, despite a decrease in provision resulting from a down payment as part of the settlement for the litigation in Canada. [Net cash flows from investing activities] Net cash flows used in investing activities during the nine months ended September 30, 2025 were ¥171.3 billion, compared with ¥142.6 billion used in the same period of the previous year. This was mainly due to purchase of property, plant and equipment and subsequent payments for past fiscal years’ business combinations despite proceeds from sale and redemption of securities. [Net cash flows from financing activities] Net cash flows used in financing activities during the nine months ended September 30, 2025 were ¥473.9 billion, compared with ¥439.4 billion used in the same period of the previous year. This was mainly due to repayments of borrowings and the payment of cash dividends, despite income from financing activities. -2-
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2. Matters Regarding Summary Information Revisions to the Consolidated Earnings Forecasts Most Recently Announced The Group has revised the earnings forecasts in light of circumstances up until now. The Group has classified the Pharmaceutical Business as discontinued operations starting from the nine months ended September 30, 2025. Therefore, the earnings forecasts represent the amounts for continuing operations, and the previous forecasts have been similarly reclassified for comparison. Additionally, profits or losses from discontinued operations are presented separately from continuing businesses as “profit from discontinued operations (attributable to owners of the parent company).” (Billions of yen) Earnings forecasts Changes from the consolidated earnings forecasts most recently announced Year-on-year changes [%] Amount % Revenue 3,456.0 181.0 5.5 13.1 Adjusted operating profit 903.0 89.0 10.9 21.6 Operating profit 845.0 94.0 12.5 168.9 Profit from continuing operations (attributable to owners of the parent company) 555.0 62.0 12.6 221.3 Profit from discontinued operations (attributable to owners of the parent company) 7.0 6.0 600.0 7.8 Profit attributable to owners of the parent company (attributable to owners of the parent company) 562.0 68.0 13.8 213.5 Adjusted operating profit at constant FX 923.0 71.0 8.3 24.3 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, you can identify forward-looking statements by terms such as “may”, “will”, “should”, “would”, “expect”, “intend”, “project”, “plan”, “aim”, “seek”, “target”, “anticipate”, “believe”, “estimate”, “predict”, “potential” or the negative of these terms or other similar terminology. These statements are not guarantees of future performance and are subject to various risks and uncertainties. Actual results, performance or achievements, or those of the industries in which we operate, may differ materially from any future results, performance or achievements expressed or implied by these forward -looking statements. In addition, these forward-looking statements are necessarily dependent upon assumptions, estimates and data that may be incorrect or imprecise and involve known and unknown risks and uncertainties. Forward-looking statements regarding operating results are particularly subject to a variety of assumptions, some or all of which may not be realized. Risks, uncertainties or other factors that could cause actual results to differ materially from those expressed in any forward-looking statement include, without limitation: (1) increase in awareness of health concerns related to smoking; (2) regulatory developments; including, without limitation, tax increases and restrictions on sales, marketing, packaging, labeling and use of tobacco products, privately imposed restrictions and governmental investigations; (3) litigation around the world alleging adverse health and financial effects resulting from, or relating to, tobacco products; (4) our ability to further diversify our business beyond the traditional tobacco industry; (5) our ability to successfully expand internationally and make investments outside Japan; (6) competition, changing consumer preferences and behavior; (7) our ability to manage impacts derived from business diversification or business expansion; -3-
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(8) economic, regulatory and political changes, such as nationalization, terrorism, wars and civil unrest, in countries in which we operate; (9) fluctuations in foreign exchange rates and the costs of raw materials; and (10) catastrophes, including natural disasters. Notes on the Russia-Ukraine War The Group is fully committed to complying with applicable regulations and international 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. -4-
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(Millions of yen) As of December 31, 2024 As of September 30, 2025 Assets Current assets Cash and cash equivalents 1,084,567 729,463 Trade and other receivables 568,982 614,024 Inventories 957,281 1,003,588 Other financial assets 120,211 131,871 Other current assets 826,766 792,232 Subtotal 3,557,807 3,271,179 Assets held for sale 19,765 31,914 Total current assets 3,577,572 3,303,093 Non-current assets Property, plant and equipment 907,700 925,446 Goodwill 2,914,254 3,102,544 Intangible assets 486,463 393,856 Investment property 3,716 2,940 Retirement benefit assets 89,573 93,438 Investments accounted for using the equity method 50,423 75,621 Other financial assets 151,940 127,319 Other non-current assets 5,500 3,280 Deferred tax assets 183,591 167,509 Total non-current assets 4,793,160 4,891,952 Total assets 8,370,732 8,195,045 3. Condensed Interim Consolidated Financial Statements (1) Condensed Interim Consolidated Statement of Financial Position -5-
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(Millions of yen) As of December 31, 2024 As of September 30, 2025 Liabilities and equity Liabilities Current liabilities Trade and other payables 659,510 597,373 Bonds and borrowings 178,668 74,287 Income tax payables 24,621 72,889 Other financial liabilities 59,965 51,142 Provisions 195,918 25,520 Other current liabilities 1,029,925 854,151 Subtotal 2,148,607 1,675,361 Liabilities directly associated with assets held for sale - 16,525 Total current liabilities 2,148,607 1,691,886 Non-current liabilities Bonds and borrowings 1,548,120 1,539,781 Other financial liabilities 49,210 240,029 Retirement benefit liabilities 277,236 273,847 Provisions 253,949 41,433 Other non-current liabilities 120,427 124,221 Deferred tax liabilities 124,455 115,083 Total non-current liabilities 2,373,398 2,334,395 Total liabilities 4,522,005 4,026,281 Equity Share capital 100,000 100,000 Capital surplus 736,697 737,064 Treasury shares (488,579) (489,745) Other components of equity 381,599 600,528 Retained earnings 3,036,905 3,194,640 Equity attributable to owners of the parent company 3,766,623 4,142,487 Non-controlling interests 82,104 26,277 Total equity 3,848,727 4,168,764 Total liabilities and equity 8,370,732 8,195,045 -6-
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(Millions of yen) 2024 2025 Continuing operations Revenue 2,327,244 2,634,028 Cost of sales (1,020,316) (1,126,032) Gross profit 1,306,927 1,507,996 Other operating income 20,481 13,914 Share of profit in investments accounted for using the equity method 8,365 10,224 Selling, general and administrative expenses (704,305) (769,199) Operating profit 631,468 762,935 Financial income 50,647 57,800 Financial costs (107,160) (113,574) Profit before income taxes 574,955 707,162 Income taxes (135,681) (194,289) Profit for the period from continuing operations 439,274 512,872 Discontinued operations Profit for the period from discontinued operations 5,269 1,367 Profit for the period 444,543 514,239 Attributable to: Owners of the parent company 442,414 511,749 Non-controlling interests 2,129 2,490 Profit for the period 444,543 514,239 Interim earnings per share Basic (Yen) Continuing operations 247.04 288.06 Discontinued operations 2.14 0.18 Total basic earnings per share for the interim period 249.18 288.24 Diluted (Yen) Continuing operations 247.00 288.03 Discontinued operations 2.14 0.18 Total diluted earnings per share for the interim period 249.14 288.21 (2) Condensed Interim Consolidated Statement of Income and Consolidated Statement of Comprehensive Income Condensed Interim Consolidated Statement of Income Nine months ended September 30, 2024 and 2025 -7-
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(Millions of yen) 2024 2025 Continuing operations Operating profit 631,468 762,935 Amortization cost of acquired intangibles arising from business acquisitions 38,366 52,797 Adjustment items (income) (9,270) (3,128) Adjustment items (costs) 6,762 2,100 Adjusted operating profit 667,326 814,704 Reconciliation from “Operating profit” to “Adjusted operating profit” -8-
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(Millions of yen) 2024 2025 Profit for the period 444,543 514,239 Other comprehensive income Items that will not be reclassified to profit or loss Net gain (loss) on revaluation of financial assets measured at fair value through other comprehensive income 1,641 406 Remeasurements of defined benefit plans 16,360 185 Total of items that will not be reclassified to profit or loss 18,001 590 Items that may be reclassified subsequently to profit or loss Exchange differences on translation of foreign operations (45,463) 223,191 Net gain (loss) on derivatives designated as cash flow hedges (4,045) (495) Hedge costs (35) (14) Total of items that may be reclassified subsequently to profit or loss (49,543) 222,682 Other comprehensive income (loss), net of taxes (31,542) 223,273 Comprehensive income (loss) for the period 413,000 737,512 Attributable to: Owners of the parent company 411,797 734,967 Non-controlling interests 1,203 2,544 Comprehensive income (loss) for the period 413,000 737,512 Condensed Interim Consolidated Statement of Comprehensive Income Nine months ended September 30, 2024 and 2025 -9-
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(Millions of yen) Equity attributable to owners of the parent company Share Capital Capital surplus Treasury shares Other components of equity Subscription rights to shares Exchange differences on translation of foreign operations Net gain (loss) on derivatives designated as cash flow hedges Hedge costs As of January 1, 2024 100,000 736,478 (489,194) 557 270,810 9,145 (17) Profit for the period - - - - - - - Other comprehensive income (loss) - - - - (44,501) (4,045) (35) Comprehensive income (loss) for the period - - - - (44,501) (4,045) (35) Acquisition of treasury shares - - (2) - - - - Disposal of treasury shares - 221 614 (191) - - - Share-based payments - - - - - - - Dividends - - - - - - - Changes in the scope of consolidation - - - - - - - Changes in the ownership interest in a subsidiary without a loss of control - - - - - - - Transfer from other components of equity to retained earnings - - - - - - - Other increase (decrease) - - - - - (1,611) - Total transactions with the owners - 221 613 (191) - (1,611) - As of September 30, 2024 100,000 736,698 (488,582) 366 226,309 3,490 (52) As of January 1, 2025 100,000 736,697 (488,579) 364 364,809 4,026 12 Profit for the period - - - - - - - Other comprehensive income (loss) - - - - 223,126 (495) (14) Comprehensive income (loss) for the period - - - - 223,126 (495) (14) Acquisition of treasury shares - - (1,622) - - - - Disposal of treasury shares - 367 456 (73) - - - Share-based payments - - - - - - - Dividends - - - - - - - Changes in the scope of consolidation - - - - - - - Changes in the ownership interest in a subsidiary without a loss of control - - - - - - - Transfer from other components of equity to retained earnings - - - - - - - Other increase (decrease) - - - - - (1,468) - Total transactions with the owners - 367 (1,166) (73) - (1,468) - As of September 30, 2025 100,000 737,064 (489,745) 292 587,934 2,063 (2) (3) Condensed Interim Consolidated Statement of Changes in Equity -10-
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(Millions of yen) Equity attributable to owners of the parent company Non-controlling interests Total equity Other components of equity Retained earnings Total Net gain (loss) on revaluation of financial assets measured at fair value through other comprehensive income Remeasurements of defined benefit plans Total As of January 1, 2024 10,054 - 290,550 3,192,323 3,830,156 82,336 3,912,491 Profit for the period - - - 442,414 442,414 2,129 444,543 Other comprehensive income (loss) 1,604 16,361 (30,617) - (30,617) (926) (31,542) Comprehensive income (loss) for the period 1,604 16,361 (30,617) 442,414 411,797 1,203 413,000 Acquisition of treasury shares - - - - (2) - (2) Disposal of treasury shares - - (191) (493) 151 - 151 Share-based payments - - - 496 496 24 520 Dividends - - - (349,759) (349,759) (2,366) (352,126) Changes in the scope of consolidation - - - - - (71) (71) Changes in the ownership interest in a subsidiary without a loss of control - - - 252 252 (539) (287) Transfer from other components of equity to retained earnings (1,025) (16,361) (17,386) 17,386 - - - Other increase (decrease) - - (1,611) - (1,611) - (1,611) Total transactions with the owners (1,025) (16,361) (19,189) (332,118) (350,473) (2,952) (353,425) As of September 30, 2024 10,632 - 240,744 3,302,619 3,891,480 80,587 3,972,067 As of January 1, 2025 12,388 - 381,599 3,036,905 3,766,623 82,104 3,848,727 Profit for the period - - - 511,749 511,749 2,490 514,239 Other comprehensive income (loss) 406 196 223,219 - 223,219 54 223,273 Comprehensive income (loss) for the period 406 196 223,219 511,749 734,967 2,544 737,512 Acquisition of treasury shares - - - - (1,622) - (1,622) Disposal of treasury shares - - (73) (616) 134 - 134 Share-based payments - - - 796 796 22 819 Dividends - - - (356,873) (356,873) (2,273) (359,147) Changes in the scope of consolidation - - - - - (56,129) (56,129) Changes in the ownership interest in a subsidiary without a loss of control - - - (20) (20) 8 (12) Transfer from other components of equity to retained earnings (2,553) (196) (2,749) 2,749 - - - Other increase (decrease) - - (1,468) (49) (1,518) - (1,518) Total transactions with the owners (2,553) (196) (4,290) (354,014) (359,103) (58,371) (417,474) As of September 30, 2025 10,241 - 600,528 3,194,640 4,142,487 26,277 4,168,764 -11-
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(Millions of yen) 2024 2025 Cash flows from operating activities Profit before income taxes 574,955 707,162 Profit before income taxes from discontinued operations 5,317 (14,668) Depreciation and amortization 130,252 146,280 Impairment losses 11,468 27,069 Interest and dividend income (49,973) (57,208) Interest expense 24,652 55,798 Share of profit in investments accounted for using the equity method (8,365) (10,224) (Gains) losses on sale and disposal of property, plant and equipment, intangible assets and investment property (6,234) (2,468) (Increase) decrease in trade and other receivables (32,726) (85,511) (Increase) decrease in inventories (66,455) (79,717) Increase (decrease) in trade and other payables (92,010) (34,515) Increase (decrease) in retirement benefit liabilities (6,922) (7,991) (Increase) decrease in prepaid tobacco excise taxes 115,780 22,559 Increase (decrease) in tobacco excise tax payables (176,406) (129,194) Increase (decrease) in consumption tax payables 12,334 20,928 Increase (decrease) in provisions 1,847 (184,762) Other 46,558 12,624 Subtotal 484,072 386,160 Interest and dividends received 48,525 99,874 Interest paid (23,751) (43,535) Income taxes paid (116,831) (155,502) Net cash flows from operating activities 392,015 286,997 Cash flows from investing activities Purchase of securities (54,101) (10,104) Proceeds from sale and redemption of securities 54,410 51,780 Purchase of property, plant and equipment (86,208) (94,438) Proceeds from sale of investment property 6,437 3,650 Purchase of intangible assets (16,919) (12,214) Payments into time deposits (47,657) (234,400) Proceeds from withdrawal of time deposits - 174,332 Subsequent payments for past fiscal years' business combinations - (68,271) Proceeds from transfer of business - 36,064 Purchase of investments in associates - (23,091) Other 1,399 5,416 Net cash flows from investing activities (142,640) (171,277) (4) Condensed Interim Consolidated Statement of Cash Flows Nine months ended September 30, 2024 and 2025 -12-
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(Millions of yen) 2024 2025 Cash flows from financing activities Dividends paid to owners of the parent company (349,057) (356,455) Dividends paid to non-controlling interests (2,321) (2,064) Capital contribution from non-controlling interests 115 - Increase (decrease) in short-term borrowings and commercial paper (152,814) 14,832 Proceeds from long-term borrowings 100 99,437 Repayments of long-term borrowings (4,481) (666,609) Proceeds from issuance of bonds 97,616 577,483 Redemption of bonds (8,719) (120,165) Repayments of lease liabilities (19,758) (18,767) Acquisition of treasury shares (2) (1,622) Payments for acquisition of interests in subsidiaries from non-controlling interests (100) (12) Other 0 0 Net cash flows from financing activities (439,420) (473,942) Net increase (decrease) in cash and cash equivalents (190,046) (358,221) Cash and cash equivalents at the beginning of the period 1,040,206 1,084,567 Effect of exchange rate changes on cash and cash equivalents (55,312) 5,330 Changes in cash and cash equivalents resulting from transfer to assets held for sale - (2,212) Cash and cash equivalents at the end of the period 794,847 729,463 -13-
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IFRS Accounting Standards Description of new standards and amendments IAS 21 The Effects of Changes in Foreign Exchange Rates Providing requirements for accounting treatment and disclosure relating to currencies that lack exchangeability (5) 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, 2024 except for 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 year ending December 31, 2025. The adoption of the above standards and interpretations does not have a material impact on the condensed interim consolidated financial statements. (6) Changes in Method of Presentation For the nine months ended September 30, 2025, continuing operations and discontinued operations have been presented separately, as a result of the classification of the pharmaceutical business as discontinued operations. To reflect the changes in method of presentation, the condensed interim consolidated statement of income and the condensed interim consolidated statement of cash flows for the nine months ended September 30, 2024 have been accordingly changed. -14-
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(7) Segment Information A. Outline of Reportable Segments The reportable segments of the Group are determined based on the operating segments that are components of the Group for which separate financial information is available and are evaluated regularly by the Board of Directors in deciding how to allocate resources and in assessing performance. The Group is mainly engaged in the manufacture and sale of tobacco products and processed foods. The reportable segments of the Group are composed of two segments: “Tobacco Business,” and “Processed Food Business.” The “Tobacco Business” consists of the manufacture and sale of tobacco products in domestic areas and overseas. The “Processed Food Business” consists of the manufacture and sale of frozen and ambient processed foods and seasonings. The shares of Torii Pharmaceutical Co., Ltd., a pharmaceutical subsidiary of the Group, held by the Company were transferred to Torii Pharmaceutical Co., Ltd. on September 1, 2025. In addition, an absorption-type split contract regarding the transfer of the Company’s pharmaceutical business to Shionogi & Co., Ltd. was concluded on September 25, 2025. Accordingly, for the nine months ended September 30, 2025, the “Pharmaceutical Business” has been classified as discontinued operations and excluded from reportable segments. -15-
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(Millions of yen) Reportable Segments Other (Note 2) Elimination Consolidated Tobacco Processed Food Total Revenue External revenue 2,212,027 113,487 2,325,515 1,729 - 2,327,244 Intersegment revenue 1 21 22 1,513 (1,535) - Total revenue 2,212,028 113,508 2,325,536 3,242 (1,535) 2,327,244 Segment profit (loss) Adjusted operating profit (Note 1) 699,602 6,355 705,957 (38,651) 20 667,326 (Millions of yen) Clusters Asia Western Europe EMA Total Core revenue (Note 3) 609,018 536,469 976,868 2,122,355 Adjusted operating profit (Note 1) 194,657 224,638 280,306 699,602 B. Revenues and Performances of Reportable Segments Revenues and performances of reportable segments are as follows. The Board of Directors assesses segment performance and determines resource allocation after reviewing revenues and adjusted operating profit. Since financial income, financial costs and income taxes are managed by the Group head office, these income and expense categories are excluded from segmental performance. Transactions within segments are primarily based upon prevailing market prices. Nine months ended September 30, 2024 ¥2,122,355 million of the external revenue from the tobacco business is core revenue. Breakdown of core revenue from tobacco business and adjusted operating profit by cluster is as follows. Asia: All over Asia including Japan Western Europe: Western Europe region EMA: Africa, Middle East, Eastern Europe, Turkey, Americas and all duty-free markets Asia includes Taiwan, Japan, the Philippines, etc. Western Europe includes Italy, the United Kingdom, Spain, etc. EMA includes Turkey, Romania, Russia, etc. -16-
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(Millions of yen) Reportable Segments Other (Note 2) Elimination Consolidated Tobacco Processed Food Total Revenue External revenue 2,516,859 115,247 2,632,106 1,922 - 2,634,028 Intersegment revenue 1 23 23 1,958 (1,981) - Total revenue 2,516,859 115,270 2,632,129 3,880 (1,981) 2,634,028 Segment profit (loss) Adjusted operating profit (Note 1) 845,386 5,548 850,933 (36,236) 7 814,704 (Millions of yen) Clusters Asia Western Europe EMA Total Core revenue (Note 3) 639,070 565,252 1,224,195 2,428,517 Adjusted operating profit (Note 1) 195,256 251,588 398,542 845,386 Nine months ended September 30, 2025 ¥2,428,517 million of the external revenue from the tobacco business is core revenue. Breakdown of core revenue from tobacco business and adjusted operating profit by cluster is as follows. Asia: All over Asia including Japan Western Europe: Western Europe region EMA: Africa, Middle East, Eastern Europe, Turkey, Americas and all duty-free markets Asia includes Taiwan, Japan, the Philippines, etc. Western Europe includes Italy, the United Kingdom, Spain, etc. EMA includes Turkey, Romania, Russia, etc. -17-
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(Millions of yen) Reportable Segments Other (Note 2) Elimination Consolidated Tobacco Processed Food Total Adjusted operating profit (Note 1) 699,602 6,355 705,957 (38,651) 20 667,326 Amortization cost of acquired intangibles arising from business acquisitions (38,366) - (38,366) - - (38,366) Adjustment items (income) (Note 4) 3,141 - 3,141 6,130 - 9,270 Adjustment items (costs) (Note 5) (5,974) (30) (6,004) (758) - (6,762) Operating profit (loss) 658,403 6,325 664,727 (33,279) 20 631,468 Financial income 50,647 Financial costs (107,160) Profit before income taxes 574,955 (Millions of yen) Reportable Segments Other (Note 2) Elimination Consolidated Tobacco Processed Food Total Adjusted operating profit (Note 1) 845,386 5,548 850,933 (36,236) 7 814,704 Amortization cost of acquired intangibles arising from business acquisitions (52,797) - (52,797) - - (52,797) Adjustment items (income) (Note 4) 349 901 1,250 1,878 - 3,128 Adjustment items (costs) (Note 5) (659) (23) (682) (1,418) - (2,100) Operating profit (loss) 792,279 6,425 798,704 (35,776) 7 762,935 Financial income 57,800 Financial costs (113,574) Profit before income taxes 707,162 Reconciliation from “Adjusted operating profit” to “Profit before income taxes” Nine months ended September 30, 2024 Nine months ended September 30, 2025 -18-
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(Millions of yen) 2024 2025 Restructuring incomes 6,130 1,878 Other 3,141 1,250 Adjustment items (income) 9,270 3,128 (Millions of yen) 2024 2025 Restructuring costs 6,094 1,442 Other 668 658 Adjustment items (costs) 6,762 2,100 (Note 1) For adjusted operating profit, amortization cost of acquired intangibles arising from business acquisitions, and adjustment items (income and costs) are excluded from operating profit (loss). (Note 2) “Other” includes business activities relating to real estate rental and corporate expenditure relating to corporate communication and operation of the head office. (Note 3) Core revenue from tobacco business does not include revenue related to the distribution business and contract manufacturing. (Note 4) The breakdown of “Adjustment items (income)” is as follows: Nine months ended September 30, 2024 and 2025 Restructuring incomes for the nine months ended September 30, 2024 and 2025 mainly related to gains on sale of real estate. Other (income) for the nine months ended September 30, 2024 mainly related to gains on deconsolidation of subsidiaries. (Note 5) The breakdown of “Adjustment items (costs)” is as follows: Nine months ended September 30, 2024 and 2025 Restructuring costs for the nine months ended September 30, 2024 mainly related to rationalization in a market in the “Tobacco Business.” (8) Note on Premise of Going Concern No items to report (9) Other The Company’s Canadian subsidiary, JTI-Macdonald Corp. (hereinafter referred to as “JTI-Mac”), together with local subsidiaries of two other tobacco companies, deposited a total of approximately ¥1,361 billion as an upfront payment in accordance with the court-approved CCAA Plan. Of this amount, JTI-Mac contributed approximately ¥180 billion. The Plan came into effect on August 29, 2025. Therefore, the Company utilized an amount equal to JTI-Mac’s deposit payment from the provision for loss on litigation in Canada recorded in the previous fiscal year and reclassified the remaining balance to “Other financial liabilities” on the condensed interim consolidated statement of financial position. -19-
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(TRANSLATION) INDEPENDENT ACCOUNTANT'S REVIEW REPORT October 30, 2025 To the Board of Directors of Japan Tobacco Inc.: Deloitte Touche Tohmatsu LLC Tokyo office Designated Engagement Partner, Certified Public Accountant: Koji Ishikawa Designated Engagement Partner, Certified Public Accountant: Takeshi Io Designated Engagement Partner, Certified Public Accountant: Akifumi Horie Accountant's Conclusion We have reviewed the condensed interim consolidated financial statements of Japan Tobacco Inc. and its consolidated subsidiaries (the "Group") included in the Appendix to Consolidated Financial Results, namely, the condensed interim consolidated statement of financial position as of September 30, 2025, and the condensed interim consolidated statement of income, condensed interim consolidated statement of comprehensive income, condensed interim consolidated statement of changes in equity and condensed interim consolidated statement of cash flows for the nine-month period then ended, and the related notes. Based on our review, nothing has come to our attention that causes us to believe that the accompanying condensed interim consolidated financial statements are not prepared, in all material respects, in accordance with the Article 5-2 of the Tokyo Stock Exchange's standard for preparation of quarterly financial statements, omitting certain disclosures under the Article 5-5 of the Tokyo Stock Exchange's standard for preparation of quarterly financial statements. Basis for Accountant's Conclusion We conducted our review in accordance with interim review standards generally accepted in Japan. Our responsibility under those standards is further described in the Accountant's Responsibility for the Review of the Condensed Interim Consolidated Financial Statements section of our report. We are independe nt of the Group in accordance with the provisions of the Code of Professional Ethics in Japan, including the ethical requirements that are relevant to audits of the financial statements of public interest entities, and we have fulfilled our other ethical responsibilities as accountants. We believe that we have obtained the evidence to provide a basis for our review conclusion. Responsibilities of Management and Audit & Supervisory Board Members and the Audit & Supervisory Board for the Condensed Interim Consolidated Financial Statements Management is responsible for the preparation of the condensed interim consolidated financial statements in accordance with the Article 5-2 of the Tokyo Stock Exchange's standard for preparation of quarterly financial statements, omitting certain disclosures under the Article 5-5 of the Tokyo Stock Exchange's standard for preparation of quarterly financial statements, and for such internal control as management determines is necessary to enable the preparation of condensed interim consolidated financial statements that are free from material misstatement, whether due to fraud or error. -20-
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In preparing the condensed interim consolidated financial statements, management is responsible for assessing the Group's ability to continue as a going concern, disclosing, as applicable, matters related to going concern in accordance with the Article 5-2 of the Tokyo Stock Exchange's standard for preparation of quarterly financial statements, omitting certain disclosures under the Article 5-5 of the Tokyo Stock Exchange's standard for preparation of quarterly financial statements. Audit & Supervisory Board members and the Audit & Supervisory Board are responsible for overseeing the Directors' execution of duties relating to the design and operating effectiveness of the controls over the Group's financial reporting process. Accountant's Responsibility for the Review of the Condensed Interim Consolidated Financial Statements Our objective is to issue an accountant's report that includes our conclusion. As part of a review in accordance with interim review standards generally accepted in Japan, we exercise professional judgment and maintain professional skepticism throughout the review. We also: • Make inquiries, primarily of management and persons responsible for financial and accounting matters, and apply analytical and other interim review procedures. A review is substantially less in scope than an audit conducted in accordance with auditing standards generally accepted in Japan. • Conclude whether nothing has come to our attention, based on the evidence obtained, related to going concern that causes us to believe that the condensed interim consolidated financial statements are not prepared, in all material respects, in accordance with the Article 5-2 of the Tokyo Stock Exchange's standard for preparation of quarterly financial statements, omitting certain disclosures under the Article 5-5 of the Tokyo Stock Exchange's standard for preparation of quarterly financial statements, if we conclude that a material uncertainty exists related to events or conditions that may cast significant doubt on the Group's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our accountant's report to the related disclosures in the condensed interim consolidated financial statements or, if such disclosures are inadequate, to modify our conclusion. Our conclusions are based on the evidence obtained up to the date of our accountant's report. However, future events or conditions may cause the Group to cease to continue as a going concern. • Evaluate whether nothing has come to our attention that causes us to believe that the overall presentation and disclosures of the condensed interim consolidated financial statements are not prepared in accordance with the Article 5-2 of the Tokyo Stock Exchange's standard for preparation of quarterly financial statements, omitting certain disclosures under the Article 5-5 of the Tokyo Stock Exchange's standard for preparation of quarterly financial statements. • Obtain evidence regarding the financial information of the entities or business units within the Group as a basis for forming a conclusion on the condensed interim consolidated financial statements. We are responsible for the direction, supervision and review of the interim review of the condensed interim consolidated financial statements. We remain solely responsible for our conclusion. We communicate with Audit & Supervisory Board members and the Audit & Supervisory Board regarding the planned scope and timing of the review and significant findings that we identify during our review. We also provide Audit & Supervisory Board members and the Audit & Supervisory Board with a statement that we have complied with relevant ethical requirements regarding independence, and communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, actions taken to eliminate threats or safeguards applied. -21-
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Interest Required to Be Disclosed by the Certified Public Accountants Act of Japan Our firm and its designated engagement partners do not have any interest in the Group which is required to be disclosed pursuant to the provisions of the Certified Public Accountants Act of Japan. Notes to the Readers of Independent Accountant's Review Report This is an English translation of the independent accountant's review report as originally issued in Japanese for the conveniences of the reader. -22-