The JT Group tobacco business

Strategic focus and investment for sustainable growth

Mutsuo Iwai

Executive Vice President,President of Tobacco BusinessCaution on Forward-Looking Statements
Today’s presentations contain forward-looking statements. These statements appear in a number of places in these presentations and include statements regarding the intent, belief, or current andfuture 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 similarterminology. 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-lookingstatements 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) decrease in demand for tobacco products in key markets;(2) restrictions on promoting, marketing, packaging, labeling and usage of tobacco products in markets in which we operate;(3) increases in excise, consumption or other taxes on tobacco products in markets in which we operate;(4) litigation around the world alleging adverse health and financial effects resulting from, or relating to, tobacco products ;(5) our ability to realize anticipated results of our acquisition or other similar investments;(6) competition in markets in which we operate or into which we seek to expand;(7) deterioration in economic conditions in areas that matter to us;(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 2016.

London – September 23, 2016

JT Investor Meeting2This presentation contains images or packages of our brands in some slides.
Those slides have been included exclusively to illustrate JT Group’s strategy orperformance to our investors. They are not intended to be used for any otherpurpose.

© Copyright JT 2016

London – September 23, 2016

JT Investor Meeting3

Sustainable profit growththrough continuous business investment

London – September 23, 2016

JT Investor Meeting4Strong earnings performance driven by focused investments

Tobacco Business
The core business and profit growth engine of the JT Group

+9.1%*
InternationalTobacco BusinessJapan Domestic
Tobacco Business

The Group’s profit growth engine

Competitive platform of profitability+10.8%*+6.4%© Copyright JT 2016
* 2015 adjusted operating profit growth rate at constant currency

London – September 23, 2016

JT Investor Meeting5The strategic framework for sustainable growth
VisionTo be the No.1 global tobacco company

Strategic Framework

Quality top-line growthCompetitive cost base

Emerging
products
development

Cost optimization

Brand equity
enhancement

Geographicexpansion

Robust business foundations
Human resources / Organizational capabilities

Resource Allocation Policy
Prioritize business investment for sustainable growth© Copyright JT 2016

London – September 23, 2016

JT Investor Meeting6Operating environment- Key challenges & future opportunities

London – September 23, 2016

JT Investor Meeting

7Global cigarette industry volume contraction gradually moderates
Global cigarette industry volume evolution-1.6%

Europe-3.9%

-5.8%

CIS+

-7.9%

-1.5%

-5.7%

CAGR
2011-15

-2.0%

-1.8%

-3.9%

-1.8%

-4.9%

-6.9%

-6.1%

-5.1%

Total -2.3%

Other2011© Copyright JT 2016
Source: Internal estimates (China excluded)

2012

2013
London – September 23, 2016

2014

2015
JT Investor Meeting8Growth opportunities in emerging markets
Cigarette industry volume in emerging markets(1)Main growth areas(Industry volume, 2015 vs. 2011)+2.5%Middle East

2011

+6.9%

Asia Pacific+3.4%

Africa+2.9%

2015© Copyright JT 2016
London – September 23, 2016
Source: Internal estimates. (1) Asia Pacific, Latin America, Middle East & Africa. Emerging markets classification based on World Bank’s income group

JT Investor Meeting9Solid pricing environment
Global industry value evolution+15.1%+3.6%
CAGR 2001-2015

20012005© Copyright JT 2016
Source: Internal estimates (China excluded, US$ at constant currency)

2010
London – September 23, 2016

2015
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Accelerating investment forsustainable growthLondon – September 23, 2016

JT Investor Meeting11Three investment priorities for quality top-line growth
Brand equity
enhancement

Assure mid-term profitability
and maximize long-term profit growthGeographic expansionin emerging markets

Secure sustainable future growththrough seeding investments

Emerging products
development

Achieve leadership positionin the emerging products category© Copyright JT 2016

London – September 23, 2016

JT Investor Meeting

12Investment in brands is the cornerstone of quality top-line growth
Share of market, 2015 vs. 2011 (pp)

+0.4
+0.3

+0.2+0.1© Copyright JT 2016
Source: Internal estimates (China excluded)

London – September 23, 2016

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Expansion of our geographic footprint for future growth
Broaden earnings base and enhance profitability in emerging markets
New market entries

NPL

BGD

DOP

Strengthen JTG presence

IRN

ETH

EGY

BGR

HUN

Distribution expansion

PHL

BRA
© Copyright JT 2016

THA

KOR

VNM

MMR
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Emerging Products: Vapor market opportunities
Still dominated by E-Vapor while T-Vapor is emerging
Vapor industry value evolution($BN)

Vapor industry value by category

E-Vapor SoV by market in 2015

T-Vapor

10ROW2015
Vaporindustry

5>50%
USA & UKcombinedRussia
GermanyFranceUSA

China

E-Vapor
Italy

02010

UK2015© Copyright JT 2016
Source: Internal estimates (Vapor includes E-Vapor and T-Vapor)

London – September 23, 2016

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Emerging Products: JT Group’s vision and strategic goals
Become the most trusted global leader in Emerging Products (both E & T-vapor)
Buildworld class product portfolio& brand mix

Achievea sustainable global footprint

Developpotential for reduced-risk claims© Copyright JT 2016

Obtain public certification by accelerating investment incapability enhancement
London – September 23, 2016

JT Investor Meeting16Confident to deliver sustainable profit growth

JTG tobacco business

Shareholders

Mid to high single-digit
Consumers

profit growth in the mid- to long-term
Employees© Copyright JT 2016

SocietyLondon – September 23, 2016

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Closing Remarks
Mutsuo Iwai

Executive Vice President,
President of Tobacco BusinessIn closing• Confidence in achieving sustainable profit growth in the mid- to long-term• Prioritize investment to pursue quality top-line growth• Japan domestic market will continue to be a solid profit contributor• Strong position in Western Europe and the UK, with further opportunities to grow ahead• Fulfill our commitment toward our stakeholders as core business and profit growth engineof the JT Group© Copyright JT 2016

London – September 23, 2016

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