Reduced-Risk Products
Science UpdateDr. Ian Jones, PhD
JTI VP, Reduced-Risk Products Science

Forward-Looking Statements
This presentation contains forward-looking statements. These statements appear in a number of places in this document and include statements regarding the intent, belief, orcurrent 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” orthe negative of these terms or other similar terminology. These statements are not guarantees of future performance and are subject to various risks and uncertainties. Actualresults, performance or achievements, or those of the industries in which we operate, may differ materially from any future results, performance or achievements expressed orimplied by these forward-looking statements. In addition, these forward-looking statements are necessarily dependent upon assumptions, estimates and data that may beincorrect or imprecise and involve known and unknown risks and uncertainties. Forward-looking statements regarding operating results are particularly subject to a variety ofassumptions, 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 and changing consumer preferences;(7)

our ability to manage impacts derived from business diversification or business expansion;(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.

© Copyright JT 2018

London – June 5, 2018

JT Investor Conference2This presentation contains images of our products in some slides. Those slides
have been included exclusively to illustrate JT Group’s strategy or performanceto our investors. They are not to be used for any other purpose.

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Science is central to our RRP business
Multi-disciplinary expertise & international collaboration

Fundamental
ResearchAppliedScience

JTG R&D centers
Austria, Germany, Japan, Poland,Sweden, Switzerland and the UK

Reduced-Risk
Assessment© Copyright JT 2018

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Broadening spectrum of consumer needs
Focus on Reduced-Risk potential

Consumers are increasingly
SocialConsideration

Convenienceinterested in experiences andproducts that address abroadening spectrum of$personal and social needs

Affordability

Reduced RiskPotential
Satisfaction© Copyright JT 2018

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Combining risk-reduction potential & product acceptanceTo fulfill the Harm Reduction equation

Risk-Reduction
Potential

X

ProductAcceptance=Harm Reduction$© Copyright JT 2018

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The JT Group approach to assessment of RRP
The emission is our starting point

1

EMISSION

What comes out of the product2

UPTAKE

Users’ exposure to emissions & uptake into the body

3

EFFECT

Biological effects of uptake into the body

4

INDOOR AIR QUALITY© Copyright JT 2018

Environmental impact simulations

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7JT Investor Conference

8Tobacco Infused Vapor
How Ploom TECH works

TobaccoVapor

Liquid Cartridge

TobaccoCapsuleBattery© Copyright JT 2018

London – June 5, 2018

1 Emission│ The risk cliff concept1)
Potential risk-reduction in T-Vapor products
Cigarettes
ettes

Temperature may be anindicator of risk
HIGHER

Charcoal
HeatedHeatedTobaccoTobaccoInfusedVapor
LOWER

800700600500

400300200

1000oC© Copyright JT 2018

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91 Emission│ Dramatically reduced levels of TPM in Ploom TECH1)
Analysis of smoke & vapor constituents

3R4F
Reference cigarette(control)

E-cigaretteCommercially available
Heated Tobacco product

Reduction in the nine constituents recommended
by the WHO for reduction in cigarette smoke© Copyright JT 2018
Reference: Internal JT Group Studies. Note: “TPM” stands for Total Particulate Matter.

London – June 5, 2018-99%
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102 Uptake│ Clinical study design2)
Biomarkers of exposure

Existing adultsmokers

60 adult smokers
randomly selected

20 subjects
usedPloom TECH

Screened

Randomized

20 subjects
smokingabstinent

20 subjects
continued tosmoke
The subjects used products ad libitum for 5 days

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112 Uptake│ Reductions similar to smoking abstinence2)
Biomarkers of exposure

ExhaledCO

Ploom TECH Use

Smoking Abstinence

NNK1, 3 – Butadiene(NNAL)(MHBMA)

Acrolein(3-HPMA)

Conventional
cigarettes

0%

20%

-64%
40%

-85%

-69%
-89%

60%

80%

100%
Percentage
Reduction© Copyright JT 2018

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Reference: D. Yuki et al., 2018. Assessment of the exposure to harmful & potentially harmful constituents in healthy Japanese smokers using a novel tobacco vapor product vs. conventional cigarettes and smoking abstinence. Regul Toxicol Pharmacol. 96, 127-134.

3 Effect│ Less biological impact compared to smoking3)
Analysis of cell viability[Cell Viability]

Reference cigaretteCommercially available
CommercTobacco product
Heated To100%

E-cigarette A
E-cigarett
E-cigarette B
E-cigarett

90%

TECH
Ploom TE
80%
70%
60%
50%
40%
30%

20%
10%0%010© Copyright JT 2018

100

1,000

10,000Puffs/L (logarithmic)
100,000

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Reference: S. Munakata et al., 2017. Comparative effects of cigarette smoke and novel tobacco product vapor on in vitro cellular responses in human bronchial epithelial cells. Society of Toxicology 2017, Baltimore.

3 Effect│ Less biological impact compared to smoking3)
Analysis of oxidative stress (inflammation)[GSH-GSSG]

Reference cigaretteCommercially available
Heated Tobacco product100%

E-cigarette A
E-cigarette B

90%

Ploom TECH
80%70%
60%
50%
40%
30%
20%
10%0%0© Copyright JT 2018

10100London – June 5, 2018

1,000

10,000Puffs/L (logarithmic)
100,000

JT Investor Conference

Reference: S. Munakata et al., 2017. Comparative effects of cigarette smoke and novel tobacco product vapor on in vitro cellular responses in human bronchial epithelial cells. Society of Toxicology 2017, Baltimore.

143 Effect│ Observably less effect on tissue model, even at 10 times more puffs3)
In vitro airway modelControl(before exposure)

Smoking(3R4F cigarette)

0 Puffs/L200 Puffs/L

2,000 Puffs/L© Copyright JT 2018

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Reference: Internal JT Group Studies.

4 Indoor Air Quality│ Minimal impact4)
Exhaled breath analysis[ug per exhalation]

Ploom TECH Use

No Product Use

0.9
0.8
0.7
0.6
0.5
0.4
0.3
0.2
0.1
0.0

Nicotine© Copyright JT 2018

Formaldehyde

AcetoneLondon – June 5, 2018

Reference: H. Ichitsubo and M. Kotaki, 2018. Indoor air quality (IAQ) evaluation of a Novel Tobacco Vapor (NTV) product. Regul Toxicol Pharmacol. 92, 278-294.

Ammonia

JTJT
Investor
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4 Indoor Air Quality│ Minimal impact4)
Simulation of an occupied smoking lounge
Cigarette Use[Units]Ploom TECH Use

No Product Use

1,000.0

100.0

10.0

1.0

0.1

Solanesol(ug/m3)

Nicotine(ug/m3)3-Ethenylpyridine(ug/m3)

Formaldehyde(ug/m3)

Acetaldehyde(ug/m3)

Acetone(ug/m3)© Copyright JT 2018

Toluene(ug/m3)TVOC(ug/m3)PG(ug/m3)Glycerol(ug/m3)

CO(ppm)Ammonia(ug/m3)SPM(mg/m3)JTJT
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Reference: H. Ichitsubo and M. Kotaki, 2018. Indoor air quality (IAQ) evaluation of a Novel Tobacco Vapor (NTV) product. Regul Toxicol Pharmacol. 92, 278-294.

Positive scientific results to date
Summary of Reduced-Risk potential

1EMISSION

2UPTAKE

34EFFECTINDOOR AIR QUALITY© Copyright JT 2018

9Our scientific assessments on

9Ploom TECH are providing

9highlighting its strong

very encouraging results,
Reduced-Risk potential

9London – June 5, 2018

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Follow our progress at JT-Science.com© Copyright JT 2018

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