[This is an English translation prepared for reference purpose only. Should there be any inconsistency between thetranslation and the original Japanese text, the latter shall prevail.]

Securities Code: 2914
March 1, 2024
To Our Shareholders
Masamichi Terabatake
Representative Director and President

Japan Tobacco Inc.
1-1, Toranomon 4-chome, Minato-ku, TokyoNOTICE OF CONVOCATION OF
THE 39TH ORDINARY GENERAL MEETING OF SHAREHOLDERS
We are pleased to announce the 39th Ordinary General Meeting of Shareholders of Japan Tobacco Inc. (“JT” or
the “Company”), which will be held as set forth below.
Shareholders not attending the meeting in person are allowed to exercise their voting rights via the Internet
or by mail. Please exercise your voting rights beforehand via the Internet or by mail instead, by 6:00 p.m.
on Thursday, March 21, 2024. (For the method of exercising voting rights via the Internet or by mail, pleaserefer to page 3 of this document.)
Particulars
1. Date and Time of the Meeting: Friday, March 22, 2024 at 10:00 a.m.
2. Place of the Meeting:

The Prince Park Tower Tokyo
Second basement, Convention Hall
8-1, Shibakoen 4-chome, Minato-ku, Tokyo

3. Purpose of the Meeting:
Matters to be Reported:

1. Report on the Business Report, the Consolidated Financial Statements,
and the Independent Auditors’ Report and JT’s Audit & Supervisory
Board Report on the Consolidated Financial Statements for the 39th
Business Term (From January 1, 2023 to December 31, 2023)
2. Report on the Non-Consolidated Financial Statements for the 39th
Business Term (From January 1, 2023 to December 31, 2023)

Matters to be Resolved:
Item 1:
Item 2:Item 3:Item 4:

Appropriation of Surplus
Reduction in Amount of Legal Capital Surplus
Election of Ten (10) Members of the Board
Election of One (1) Audit & Supervisory Board Member

Decisions on convening the meeting* If the voting right is exercised both via the Internet and by mail, only the exercise of the voting right via theInternet shall be valid. If the voting right is exercised more than once via the Internet, only the last exercise of
the voting right shall be valid.
* If there is no indication of for or against on each proposal in the returned form, it shall be deemed that you havevoted for the proposal.

1Electronic provision measure
In convening the 39th Ordinary General Meeting of Shareholders, the Company has taken an electronic provision
measure for providing information that constitutes the content of the Reference Documents for the General
Meeting of Shareholders, etc. (matters for an electronic provision measure). To review the information, please
access either of the following websites on which the information is posted.
[JT’s website]
https://www.jti.co.jp/investors/stock/meeting/index.html (Japanese)
https://www.jt.com/investors/shareholders/index.html (English)[Tokyo Stock Exchange (TSE) website (Listed Company Search)]https://www2.jpx.co.jp/tseHpFront/JJK010010Action.do?Show=Show (Japanese)
https://www2.jpx.co.jp/tseHpFront/JJK020010Action.do?Show=Show (English)(Please access the TSE website, and search by “Issue name” (Japan Tobacco) or “Code” (2914), select “Basic
information” and then “Documents for public inspection/PR information” to review filed information.)* A change in matters for an electronic provision measure will be announced on the Company’s website and theTSE website with a comparison before and after the revision.
* Among matters for an electronic provision measure, under laws and regulations and the provision in Paragraph
2, Article 17 of the Articles of Incorporation of the Company, the paper-based documents delivered toshareholders who have made a request for delivery of such documents do not include the following: “Matters Concerning Subscription Rights to Shares” and “Overview of the Resolutions on theDevelopment of Systems Necessary to Ensure the Properness of Operations and the Operating Status of
the Systems” on the Business Report
 “Consolidated Statement of Changes in Equity” and “Notes to Consolidated Financial Statements” on
the Consolidated Financial Statements
 “Non-Consolidated Statement of Changes in Net Assets” and “Notes to Non-Consolidated Financial
Statements” on the Non-Consolidated Financial Statements
In addition, these items are included in the Consolidated and Non-Consolidated Financial Statements auditedby the Independent Auditors in the course of preparing Independent Auditors’ Report, and in the Business
Report, and Consolidated and Non-Consolidated Financial Statements audited by Audit & Supervisory Board
Members in the course of preparing Audit Report.

Operational arrangements* Please note that the meeting will be conducted in Japanese only. An interpreter, including a sign language
interpreter, may accompany you. If you would like to have an interpreter accompany you, please tell so at thereception desk.
It is also possible for us to arrange a Japanese sign language interpreter for you. If you are in need of this service,please inquire us in writing by March 15 (Friday) (your letter of inquiry must reach us by this date).
* In the case of material changes on the operation of the General Meeting of Shareholders, you will be informed
via the Company’s website.

2

Instructions for Exercising Your Voting Rights
Exercise the Voting Rights via the Internet
Exercise due dateNo later than 6:00 p.m., on Thursday, March 21, 2024

Log in from your smartphone
Scan the QR Code at the lower right-hand side of the Voting Rights Exercise Form. Then, please indicate
whether you are for or against each of the items following the directions on the website.
 It is not necessary to fill in or mail the usual form.
 It is not necessary to turn on your computer or type the Voting Rights Exercise Website address.
 It is not necessary to type a burdensome ID or password.
* Depending on the smartphone model being used, it may not be possible to log in using the QR Code.
* Depending on the app used to scan the QR Code, some additional operations may be necessary.
* QR Code is a registered trademark of DENSO WAVE INCORPORATED.
Log in from your computer, etc.
Voting Rights Exercise Website: https://evote.tr.mufg.jp/
1. Access the Voting Rights Exercise Website.
2. Fill in the “Log-in ID” and the “Temporary Password” described on the lower right-hand side of the
Voting Rights Exercise Form, and click the “Log-in” button.
3. Then, please indicate whether you are for or against each of the items following the directions on thewebsite.
Enquiries on systems, etc.
Mitsubishi UFJ Trust and Banking Corporation, Corporate Agency Division Help Desk
Tel: 0120-173-027 (Japanese-language only)(Business hours: 9:00 to 21:00, Toll-free)
To institutional
investors

JT participates in the electronic voting rights exercise platform operated andadministered by ICJ, Inc.

Exercise the Voting Rights by Mail
Exercise due date

To be returned to us no later than 6:00 p.m., on
Thursday, March 21, 2024

Please indicate whether you are for or against each of the items on the Voting Rights Exercise Form and returnit to us. If there is no indication of for or against on each proposal, it shall be deemed that you have voted forthe proposal.
* In the event voting rights are exercised more than once:(1) If the voting right is exercised both via the Internet and by mail, only the exercise of the voting right
via the Internet shall be valid.
(2) If the voting right is exercised more than once via the Internet, only the last exercise of the voting rightshall be valid.

3

REFERENCE DOCUMENTS
FOR THE GENERAL MEETING OF SHAREHOLDERS
Item 1: Appropriation of Surplus
Under the “4S model” and the JT Group Purpose, the Company has adopted a resources allocation policy, underwhich the Company will continue to place a high priority on making business investments(Note 1) that contributeto sustainable medium- and long-term profit growth as well as to value the balance between profit growththrough business investments and shareholder returns. In this context, the Company has been pursuing enhanced
shareholder returns in proportion to the medium- and long-term profit growth, while maintaining a solid
financial base(Note 2).
In accordance with these policies, year-end dividends for the 39th Business Term will be paid as described
below.
(Notes) 1. Grow adjusted operating profit at constant currency by placing top priority on growth-oriented
investment in the tobacco business, while realizing high-quality top-line growth through continuing
provision of new value and satisfaction to consumers and society.
2. The Group will maintain a strong financial base that secures stability in case of changes in businessenvironment such as economic crises and flexibility enabling expeditious responses to business
investment opportunities.

Year-end dividends(1) Type of assets to be paid as dividends:
Cash(2) Allotment of assets to be paid as dividends and their aggregate amount:¥100 per share of ordinary shares of JT

Aggregate amount: ¥177,530,797,200

Together with the interim dividends of ¥94 per share paid in September 2023, the annual dividends for the39th Business Term will be ¥194 per share.
(3) Effective date for distribution of surplus:
March 25, 2024

4

Reference: Trends in dividend per share (yen) and payout ratio
Dividend per share (yen)● Payout ratio(Notes) 1. For fiscal year 2015, due to the transfer of the Company’s shares, etc., held by a beverage vending
machine operating subsidiary and the closure of its business of manufacture and sale of the Company’s
beverage products, the Beverage Business is categorized as non-continuing business. The payout ratio
including non-continuing business is 44%.
2. In fiscal year 2021, we set a new policy to target a payout ratio of 75% (to be in the range ofapproximately ±5%) as a competitive level in the capital markets.

5【Reference】Resources allocation policy of the Business Plan 2024

Due to strengthening investment in RRP(Note 1) in the Tobacco Business as set forth in the “Business Plan
2024,” the Group expects a mid-single-digit(Note 2) annual average growth rate in adjusted operating profit atconstant FX(Note 3) for the planned period. However, by leveraging the effect of said investment, the Group willcontinue to pursue mid- to high-single-digit(Note 4) annual average growth rate in adjusted operating profit atconstant FX over the medium to long term. The Group has adopted the following resources allocation policy:
Resources allocation policy
Allocate resources based on the “4S model” and the JT Group Purpose.
 Prioritize investments for sustainable profit growth in the medium and long terms
 Prioritize balance between profit growth through investment and shareholder returns
Business investments- Grow adjusted operating profit at constant currency by placing top priority on growth-oriented
investment in the tobacco business, while realizing high-quality top-line growth through continuing
provision of new value and satisfaction to consumers and society.
Shareholder returns- Work to enhance shareholder returns by realizing the Company’s medium- and long-term profit growth,
while maintaining a strong financial base- Target a dividend payout ratio of about 75%(Note 5), a competitive level(Note 6) in capital markets- Consider implementing a share buy-back program, mainly taking into account the Company’s financial
outlook of the respective year and medium-term capital needs(Notes) 1. Reduced-Risk Products (RRP) such as T-Vapor products and E-Vapor products are products withpotential to reduce the risks associated with smoking. T-Vapor products do use tobacco leaf, but insteadof burning the leaf, they use methods such as heating the leaf to generate tobacco vapor (which includes
compounds derived from the tobacco leaf) for the user to enjoy. Conversely, E-Vapor products do not use
tobacco leaf, instead using a liquid inside a device or a specialized cartridge which is electrically heatedto generate vapor for the user to enjoy.
2. mid-single digit: mid-single-digit percentage
3. Adjusted operating profit is calculated by deducting amortization cost of acquired intangibles arising frombusiness acquisitions and adjustment items (income and costs) from operating profit (loss). Adjustment
items (income and costs) are impairment losses on goodwill, restructuring income and costs, and otheritems. Adjusted operating profit growth rate at constant FX is a financial measurement that excludes
foreign exchange effects by translating and calculating adjusted operating profit for the current fiscal year6

in the International Tobacco Business using the foreign exchange rates of the previous fiscal year.
4. mid- to high-single digit: mid- to high-single-digit percentage
5. To be in the range of approximately ±5%.
6. We monitor the shareholder return trends of Fast-Moving Consumer Goods companies which have a
stakeholder model similar to our “4S model” and have realized strong business growth.

7

Item 2: Reduction in Amount of Legal Capital Surplus
To ensure that future capital policies will be executed in a prompt and flexible manner, the Company will reducea portion of legal capital surplus and reclassify the reduced amount as other capital surplus, in accordance withthe provision stipulated in Paragraph 1, Article 448 of the Companies Act.
Details of reduction in amount of legal capital surplus(1) Purpose of the reduction in the amount of legal capital surplus
The Company will reduce ¥100,000,000,000 from its legal capital surplus of ¥736,400,000,000, and theentire amount of the reduction will be reclassified as other capital surplus, bringing the amount of legal
capital surplus after the reduction to ¥636,400,000,000.
(2) Date on which the reduction in the amount of legal capital surplus becomes effective
June 28, 2024

8

Item 3: Election of Ten (10) Members of the Board
The terms of office of all nine (9) present Members of the Board will expire at the conclusion of this Ordinary
General Meeting of Shareholders. Given business environments surrounding the Group, we propose the electionof ten (10) Members of the Board (including five (5) Outside Directors) with the addition of one (1) Outside
Director, to further enhance and strengthen corporate governance to continue the pursuit of sustainable profit
growth and enhancement of corporate value over the mid to long term.
The candidates for the office of Member of the Board are as follows.
Candidate
NumberName

Positions and Responsibilities
in the Company

Advisory
Number of Attendance at
Number of
Panel onmeetings ofyears assignificant
Nomination
concurrent Member of the the Board ofandDirectors
Board
positionsCompensation

1[Reappointed]

Mutsuo Iwai

Chairperson of the Board

3

8 years

14/14(100%)

2[Reappointed]

Shigeaki Okamoto

Deputy Chairperson of the Board

4

2 years

14/14(100%)

3[Reappointed]

Masamichi Terabatake

Representative Director andPresident,
Chief Executive Officer-

1

6 years

14/14(100%)-

1

1 year10/10(100%)----

Outside Director35 years

14/14(100%)

Outside Director23 years

14/14(100%)

Outside Director

52 years

14/14(100%)

Outside Director2

1 year10/10(100%)

Outside Director



1

-

-

4

[Reappointed]

Kei Nakano

5[Newly appointed]

Koji Shimayoshi

6[Reappointed]

7[Reappointed]

8[Reappointed]

9[Newly appointed]

10[Newly appointed]

Representative Director andExecutive Vice President,
Finance, Corporate
Communications, Business
Development and D-LAB
Representative Director andExecutive Vice President,
Corporate Governance, Compliance,
Corporate Strategy, Sustainability,
People & Culture, Information
Technology, Legal, Operation
Review & Business Assurance,
Pharmaceutical Business and FoodBusiness

Yukiko Nagashima[Outside Director][Independent Director]
Masato Kitera[Outside Director][Independent Director]
Tetsuya Shoji[Outside Director][Independent Director]
Hiroko Yamashina[Outside Director][Independent Director]
Kenji Asakura(Notes)[Outside Director][Independent Director]

1. Positions and responsibilities in the Company and the Advisory Panel on Nomination and Compensation represent thoseplanned subject to approval of the election of each candidate.
2. The Chairperson of the Advisory Panel on Nomination and Compensation shall be elected from among Independent Outside
Directors by the Panel members themselves.
3. The number of significant concurrent positions represent the number as of the date of sending this Notice of Convocation.
4. The numbers of years as Member of the Board at the conclusion of this Ordinary General Meeting of Shareholders are presented.

95. The numbers of years as Member of the Board of Hiroko Yamashina and her attendance at meetings of the Board of Directors
represent the number of years and attendance as Outside Audit & Supervisory Board Member.

10

Candidate Number

1

Reappointed

Mutsuo Iwai

(Born October 29, 1960)

Number of the Company’s Shares Held

43,200Brief Personal History, Positions and Responsibilities in the Company, and Significant Concurrent
Positions outside the Company
April 1983
Joined the Company (Japan Tobacco and Salt Public Corporation)
June 2003
Vice President, Corporate Planning Division
July 2004
Vice President, Corporate Strategy Division
June 2005
Senior Vice President and Vice President, Food Business Division, Food Business
June 2006
Member of the Board and Executive Vice President, President, Food Business
June 2008
Executive Vice President, Chief Strategy Officer
June 2010
Member of the Board and Senior Vice President, Chief Strategy Officer and Assistant to
CEO in Food Business
June 2011
Member of the Board
Executive Vice President, JT International S.A.
June 2013
Senior Executive Vice President,
Chief Strategy Officer
January 2016
Executive Vice President,
President, Tobacco Business
March 2016
Representative Director and Executive Vice President, President, Tobacco Business
January 2020
Member of the Board
March 2020
Deputy Chairperson of the Board
June 2020
Outside Director of Benesse Holdings, Inc.
(Current Position)
June 2021
Outside Director of TDK Corporation(Current Position)
March 2022
Chairperson of the Board of the Company(Current Position)
January 2023
Outside Director of &Capital Inc.
(Current Position)(Significant Concurrent Positions outside the Company)
Outside Director of Benesse Holdings, Inc.
Outside Director of TDK Corporation
Outside Director of &Capital Inc.

Reasons for nomination as a candidate for Director
Mutsuo Iwai assumed the position of Deputy Chairperson of the Board of the Company in March 2020, and Chairperson of the Board in March 2022. He
has experience of driving the core Tobacco Business as Representative Director and Executive Vice President of the Company even in unclear anduncertain operating environments, with his forceful execution of business backed by precise decision-making. In addition, his broad and deep knowledge
and insights cultivated through diverse experience both in Japan and overseas in areas such as the Food Business and Corporate Strategy have contributed
to the strengthening of the supervisory function of the Group and relationships with stakeholders, which are essential to the improvement of the corporate
governance of the Group going forward. For this reason, we propose his reelection as a Member of the Board.

* Mutsuo Iwai took office as Member of the Board without Representative rights from January 1, 2020.

11

Candidate Number

2

Shigeaki Okamoto

Reappointed(Born February 20, 1961)

Number of the Company’s Shares Held700

Brief Personal History, Positions and Responsibilities in the Company, and Significant Concurrent
Positions outside the Company
April 1983
Entered Ministry of FinanceJuly 2006
Director for the Budget Bureau, Planning and Administration Division of Budget Bureau,
Ministry of FinanceJuly 2009
Head of Secretariat Division, Minister’s Secretariat, Ministry of Finance
August 2012
Deputy Director-General of the Budget Bureau, Ministry of FinanceJuly 2015
Deputy Vice Minister, Ministry of FinanceJuly 2017
Director-General of the Budget Bureau, Ministry of FinanceJuly 2018
Administrative Vice Minister, Ministry of Finance (Retired in July 2020)
June 2021
Outside Audit & Supervisory Board Member, Yomiuri Land Co., Ltd. (Current Position)
December 2021 Outside Audit & Supervisory Board Member, The Yomiuri Shimbun Osaka Head Office(Current Position)
Outside Audit & Supervisory Board Member, The Yomiuri Shimbun Seibu Head Office(Current Position)
March 2022
Deputy Chairperson of the Board of the Company (Current Position)
June 2022
Outside Audit & Supervisory Board Member, The Yomiuri Shimbun Tokyo Head Office(Current Position)(Significant Concurrent Positions outside the Company)
Outside Audit & Supervisory Board Member, Yomiuri Land Co., Ltd.
Outside Audit & Supervisory Board Member, The Yomiuri Shimbun Osaka Head OfficeOutside Audit & Supervisory Board Member, The Yomiuri Shimbun Seibu Head OfficeOutside Audit & Supervisory Board Member, The Yomiuri Shimbun Tokyo Head Office

Reasons for nomination as a candidate for Director
Shigeaki Okamoto assumed the position of Deputy Chairperson of the Board of the Company in March 2022. Having served important roles such as
Administrative Vice Minister of the Ministry of Finance during his long years of service with ministries and bureaus, Shigeaki Okamoto possesses
considerable knowledge and experience in general national policies. His broad outlook and high standing underpinned by his experience have contributed
to the strengthening of the supervisory function of the Group and relationships with stakeholders, which are essential to the enhancement of the corporate
governance of the Group going forward. For this reason, we propose his reelection as a Member of the Board.

12

Candidate Number

3

Masamichi Terabatake

Reappointed(Born November 26, 1965)

Number of the Company’s Shares Held

249,117

Brief Personal History, Positions and Responsibilities in the Company, and Significant Concurrent
Positions outside the Company
April 1989
Joined the Company
July 2005
Vice President, Secretary’s Office
July 2008
Vice President, Corporate Strategy Division
June 2011
Senior Vice President, Chief Strategy Officer and in charge of Food Business
June 2012
Senior Vice President, Chief Strategy Officer
June 2013
Member of the Board
Executive Vice President, JT International S.A.
January 2018
President and Chief Executive Officer
March 2018
Representative Director and President, Chief Executive Officer(Current Position)(Significant Concurrent Positions outside the Company)
Chairman of Supervisory Board, JT International Holding B.V.

Reasons for nomination as a candidate for Director
Masamichi Terabatake was appointed President and Chief Executive Officer of the Company in January 2018, and then Representative Director andPresident in March of the same year. He has used the extensive experience and his knowledge and powerful leadership in relation to global business
management, accumulated in a range of duties such as the drawing up and execution of management strategy both in Japan and overseas, and the executionof the business of the International Tobacco Business in his role as Executive Vice President of JT International S.A., and in doing so has been a driver ofthe growth of the Group. We judge that his extraordinary insights and wide-ranging outlook, together with his enhanced reforming capabilities, areindispensable for the management of the Group going forward, and hence we propose his reelection as a Member of the Board.

* Masamichi Terabatake has served concurrently as President, Tobacco Business since January 1, 2020.

13

Candidate Number

4

Reappointed

Kei Nakano(Born March 1, 1968)

Number of the Company’s Shares Held

49,878

Brief Personal History, Positions and Responsibilities in the Company, and Significant Concurrent
Positions outside the Company
April 1991
Joined the Company
April 2011
Vice President, M&S Strategy Department, Tobacco Business Division
June 2014
President and Chief Executive Officer, TS Network Co., Ltd.
January 2016
Senior Vice President, Communications of the Company
October 2019
Senior Vice President, Corporate Strategy
March 2020
Director, Japan Growth Investments Alliance, Inc.
(Current Position)
January 2022
Senior Vice President, Corporate Strategy of the Company
January 2023
Executive Vice President, Finance, Corporate Communications, Business Development
and D-LAB
March 2023
Representative Director and Executive Vice President, Finance, Corporate
Communications, Business Development and D-LAB(Current Position)(Significant Concurrent Positions outside the Company)
Director, Japan Growth Investments Alliance, Inc.

Reasons for nomination as a candidate for Director
Kei Nakano was appointed Executive Vice President of the Company in January 2023 and them Representative Director and Executive Vice President inMarch 2023. He has acquired deep and wide-ranging knowledge in such areas of overall management strategies and business management, during his time
serving in important roles, including President and Chief Executive Officer, TS Network Co., Ltd.; Senior Vice President, Communications of theCompany; Senior Vice President, Corporate Strategy of the Company; and Senior Vice President, Corporate Strategy of the Company; and has utilized
them to the fullest to contribute to the Company’s growth. We judge that his diverse experience and strategic thinking and accurate decision-making basedon such experience will be indispensable as a driving force to advance the Group’s management further, and hence we propose his re-election as a Memberof the Board.

14

Candidate Number

5

Koji Shimayoshi

Newlyappointed(Born March 7, 1968)

Number of the Company’s Shares Held

14,400Brief Personal History, Positions and Responsibilities in the Company, and Significant Concurrent
Positions outside the Company
April 1993
Joined the Company
July 2008
Vice President, Tobacco Business Planning Division, Tobacco Business
July 2012
Vice President, Human Resources Division
July 2014
Vice President, Human Resources Division and Human Resources Planning Division
October 2015
Senior Vice President, Chief Human Resources Officer
January 2017
Senior Vice President, Head of Tobacco Business Planning Division, Tobacco Business
October 2017
Senior Vice President, JT International S.A.
January 2018
Executive Vice President, JT International S.A.
January 2024
Executive Vice President, Corporate Governance, Compliance, Corporate Strategy,
Sustainability, People & Culture, Information Technology, Legal, Operation Review & Business
Assurance, Pharmaceutical Business and Food Business of the Company(Current Position)

Reasons for nomination as a candidate for Director
Koji Shimayoshi served in important roles including Head of Tobacco Business Planning Division, Vice President of Human Resources Division, SeniorVice President, Chief Human Resources Officer, Senior Vice President, Head of Tobacco Business Planning Division, and Tobacco Business, andExecutive Vice President, JT International S.A., a subsidiary of the Company, using his strong leadership focusing on management strategies and business
management both in and outside Japan, enhancement of organizational strength, and human resource management. We judge that his keen discernment andaccurate decision-making based on his wide-ranging experience and advanced knowledge will be indispensable as a driving force to advance the Group’s
management further, and hence we propose his election as a Member of the Board.

15

Candidate Number

6

Yukiko Nagashima

Number of years as Outside Director(at the conclusion of this Ordinary General Meeting of Shareholders)(Born April 4, 1961)

Number of the Company’s Shares Held

5 years0

Brief Personal History, Positions and Responsibilities in the Company, and Significant Concurrent
Positions outside the Company
April 1985
Joined Recruit Co., Ltd. (Current Recruit Holdings Co., Ltd.)
April 2006
Corporate Executive Officer, Recruit Co., Ltd.
January 2008
President and Representative Director, Recruit Staffing Co., Ltd.
October 2012
Corporate Executive Officer, Recruit Holdings Co., Ltd.
June 2016

Reappointed
OutsideDirector
Independent
DirectorStanding Audit & Supervisory Board Member, Recruit Holdings Co., Ltd.
(Current Position)
April 2018
Standing Audit & Supervisory Board Member, Recruit Co., Ltd.
(Current Position)
March 2019
Outside Director of the Company(Current Position)
June 2021
Outside Audit & Supervisory Board Member, SUMITOMO CORPORATION(Current Position)(Significant Concurrent Positions outside the Company)
Standing Audit & Supervisory Board Member, Recruit Holdings Co., Ltd.
Standing Audit & Supervisory Board Member, Recruit Co., Ltd.
Outside Audit & Supervisory Board Member, SUMITOMO CORPORATION

Reasons for nomination as a candidate for Outside Director and summary of expected roles
Yukiko Nagashima assumed the position of Outside Director of the Company in March 2019. We have benefited from her experience in corporate management
and execution of business in a wide range of fields, such as emerging businesses and temporary staffing and objective point of view based on her experience
as a Member of the Audit & Supervisory Boards being reflected in the management of the Company. She also played a big role in supervising businessexecution from an independent and fair standpoint.
We judge that her experience from the perspectives of both management and audit and a high degree of knowledge cultivated thereby will be essential in theGroup’s management. For this reason, we propose her reelection in expectation of her continuous contribution as Outside Director of the Company toimproving corporate governance in the Group through her proactive recommendations and advice provided at the meetings of the Board of Directors and theAdvisory Panel on Nomination and Compensation.
Significant matters concerning candidate for Outside Director- Although the Company has business relationships with both Recruit Holdings Co., Ltd. and Recruit Co., Ltd., of which she is Standing Audit & Supervisory
Board Member, the value of the business in fiscal year 2023 was negligible, coming to less than 0.01% of consolidated revenue for Recruit Holdings Co.,
Ltd. in the fiscal year ended March 2023, and less than 0.01% of the Company’s consolidated revenue in fiscal year 2023.
In addition, the Company has business relationships with SUMITOMO CORPORATION of which she is Outside Audit & Supervisory Board Member,the value of the business in fiscal year 2023 was negligible, coming to less than 0.001% of consolidated revenue for SUMITOMO CORPORATION in thefiscal year ended March 2023, and less than 0.001% of the Company’s consolidated revenue in fiscal year 2023.
We judge that these relationships have no impact on her independence.
- At Recruit Career Co., Ltd., a subsidiary of Recruit Co., Ltd. where she serves as a standing Audit & Supervisory Board Member, and which had concluded
a business outsourcing contract with Recruit Co., Ltd., a service called “Rikunabi DMP Follow,” which indicated the possibility of students withdrawing
from their selections or provisional agreement to join companies, was the subject of a recommendation and directive in December 2019 from the Personal
Information Protection Commission for alleged infringements of the Act on the Protection of Personal Information, etc., while in December 2019 theTokyo Labour Bureau issued an administrative directive on the basis that there had been an infringement of the Employment Security Act and the guidelinesof said Act. In both cases Yukiko Nagashima was unaware of the circumstances in question until the above events came to light, but at meetings of theBoard of Directors she has frequently shared her opinions from the viewpoint of legal compliance. After the above events came to light, in both cases she
worked to gather information from the internal audit division, and to offer opinions and confirmation in relation to measures to prevent the recurrence.

16

Candidate Number

Masato Kitera

7

Reappointed
OutsideDirector
Independent
Director

Number of years as Outside Director(at the conclusion of this Ordinary General Meeting of Shareholders)

3 years

Number of the Company’s Shares Held0
(Born October 10, 1952)
Brief Personal History, Positions and Responsibilities in the Company, and Significant Concurrent
Positions outside the Company
April 1976
Joined the Ministry of Foreign Affairs
January 2008
Director-General for Sub-Saharan African Affairs, Middle Eastern and African Affairs
Bureau, and Secretary-General, TICAD IV, Ministry of Foreign Affairs
July 2008
Director-General, International Cooperation Bureau, Ministry of Foreign Affairs
January 2010
Deputy Minister, Ministry of Foreign Affairs
September 2012 Assistant Chief Cabinet Secretary
November 2012 Ambassador of Japan to the People’s Republic of China
April 2016
Ambassador of Japan to the Republic of France
June 2016
Ambassador of Japan to the Republic of France, Andorra and Monaco(Retired in December 2019)
April 2020
Advisor of the Company
June 2020
Outside Director, Marubeni Corporation(Current Position)
Outside Director, NIPPON STEEL CORPORATION(Current Position)
March 2021
Outside Director of the Company(Current Position)(Significant Concurrent Positions outside the Company)
Outside Director, Marubeni Corporation
Outside Director, NIPPON STEEL CORPORATION

Reasons for nomination as a candidate for Outside Director and summary of expected roles
Masato Kitera assumed the position of Outside Director of the Company in March 2021. He did not engage in corporate management previously other thanserving as an outside director or an outside auditor. However, he held important positions over many years of service with the government, primarily in the
Ministry of Foreign Affairs. With his extensive international experience and a high level of knowledge of international affairs cultivated during his diplomaticand other activities reflected in the management of the Group as it expands its business outside Japan at a time of globally increasing geopolitical risks, hehas played a big role in providing advice and oversight which contribute to the further enhancement of corporate governance.
We believe his high level of international experience and broad knowledge are essential for the Group management by the Company, and thus propose hisreelection in expectation of his continuous contribution as Outside Director of the Company to improving corporate governance in the Group through his
proactive recommendations and advice provided at the meetings of the Board of Directors and the Advisory Panel on Nomination and Compensation.
Significant matters concerning candidate for Outside Director- Although the Company has a business relationship with Marubeni Corporation, of which he is an Outside Director, the value of the business in fiscal year
2023 was negligible, coming to less than 0.001% of consolidated revenue for Marubeni Corporation in the fiscal year ended March 2023, and less than
0.001% of the Company’s consolidated revenue in fiscal year 2023.
In addition, in April 2020 the Company entered into a part-time advisory agreement with Masato Kitera. The agreement was canceled as at the point when
his election was approved at the 36th Ordinary General Meeting of Shareholders held on March 24, 2021. The consideration paid to Masato Kitera basedon this agreement were not more than ¥10 million prescribed in the Company’s independence criteria of outside executives.
We judge that this relationship has no impact on his independence.
- NIPPON STEEL CORPORATION, where Masato Kitera serves as an Outside Director, received an instructive document from Chiba Prefecture, Kisarazu
City, Kimitsu City, and Futtsu City in August 2023 on the draining of colored effluent that flowed out, the draining of liquid exceeding the effluent standards
at outlets, and the company’s handling of water quality measurement results. While Masato Kitera realized these facts only after they had been reported,he has fulfilled his duties through making recommendations and proposals, etc. from a legal compliance perspective at meetings of the Board of Directors
on a day-to-day basis. In addition, after the above incidents were reported, he has worked to review and make recommendations on the matters including
the cause of occurrence, the adequacy of actions taken before and after the fact, and preventive measures.

17Candidate Number

8

Reappointed
OutsideDirector
Independent
Director

Tetsuya Shoji

Number of years as Outside Director(at the conclusion of this Ordinary General Meeting of Shareholders)

2 years

Number of the Company’s Shares Held0
(Born February 28, 1954)
Brief Personal History, Positions and Responsibilities in the Company, and Significant Concurrent
Positions outside the Company
April 1977
Joined Nippon Telegraph and Telephone Public Corporation
June 2006
Senior Vice President, General Manager of the Personnel Department, Nippon Telegraphand Telephone West Corporation
June 2009
Senior Vice President, Head of General Affairs, Nippon Telegraph and Telephone
Corporation
June 2012
Senior Executive Vice President, Representative Member of the Board, NTT
Communications Corporation
June 2015
President & CEO, Representative Member of the Board, NTT Communications
Corporation
October 2018
Representative Member of the Board, NTT, Inc.
June 2020
Corporate Advisor, NTT Communications Corporation (Current Position)
December 2020 Outside Director, circlace Inc. (Current Position)
March 2021
Outside Director, Sapporo Holdings Limited (Current Position)
June 2021
Outside Director, Hitachi Zosen Corporation (Current Position)
Outside Director, Mitsubishi Logistics Corporation (Current Position)
March 2022
Outside Director of the Company (Current Position)(Significant Concurrent Positions outside the Company)
Corporate Advisor, NTT Communications Corporation
Outside Director, circlace Inc.
Outside Director, Sapporo Holdings Limited
Outside Director, Hitachi Zosen Corporation
Outside Director, Mitsubishi Logistics Corporation

Reasons for nomination as a candidate for Outside Director and summary of expected roles
Tetsuya Shoji assumed the position of Outside Director of the Company in March 2022. Having served as a president and representative director for atelecommunications company, Tetsuya Shoji has considerable experiences in business execution and corporate management and wide-ranging insights incorporate planning, human resources, global operations, and digitization promotion. With his such experiences and insights, he advised on the managementof the Group as it expands its business globally and regards IT/information security as one of the increasingly important management foundations in the
future. He also played a big role in supervising business execution from an independent and fair standpoint.
We believe his extensive experience and broad knowledge are essential for the Group management by the Company and expect he will continue contributing
to the improvement of the Group’s corporate governance through his active recommendations and advice as an Outside Director at the Board of Directors
and the Advisory Panel on Nomination and Compensation, etc., and hence we propose his reelection as an Outside Director.
Although Shoji Tetsuya is a Corporate Advisor of NTT Communications, concurrently serving as an Outside Director of circlace Inc., Sapporo Holdings
Limited, Hitachi Zosen Corporation, and Mitsubishi Logistics Corporation, he has attended all of the meetings of the Board of Directors, and Advisory Panelon Nomination and Compensation held since he assumed the office of Outside Director of the Company in March 2022 and devoted his time to performing
his duties appropriately.
Significant matters concerning candidate for Outside Director- Although the Company has a business relationship with NTT Communications Corporation, of which he is a Corporate Advisor, the value of this businessin fiscal year 2023 was negligible, coming to less than 0.05% of consolidated revenue for NTT Communications Corporation in the fiscal year ended
March 2023, and less than 0.05% of the Company’s consolidated revenue in fiscal year 2023.
In addition, the Company has a business relationship with Mitsubishi Logistics Corporation, of which he is an Outside Director, the value of this businessin fiscal year 2023 was negligible, coming to less than 0.001% of consolidated revenue for Mitsubishi Logistics Corporation in the fiscal year ended March
2023, and less than 0.001% of the Company’s consolidated revenue in fiscal year 2023.
We judge that these relationships have no impact on his independence.

18

Candidate Number

9

Hiroko Yamashina

Newly
appointed

Number of years as Outside Audit & Supervisory Board Member(at the conclusion of this Ordinary General Meeting of Shareholders)

1 yearNumber of the Company’s Shares Held0
(Born May 20, 1963)
Brief Personal History, Positions and Responsibilities in the Company, and Significant Concurrent
Positions outside the Company
April 1986
Joined Orient Leasing Co., Ltd.
(Present ORIX Corporation)
March 2007
Head of Office of Internal Controls, ORIX Corporation
May 2010
Executive Officer, ORIX Life Insurance Corporation
January 2013
Managing Executive Officer, ORIX Life Insurance Corporation
January 2014
Corporate Officer, ORIX Corporation
January 2016
Group Executive, ORIX Corporation (Current Position)
President, ORIX Credit Corporation
January 2021
Chairman, ORIX Credit Corporation (Current Position)
March 2023
Outside Audit & Supervisory Board Member of the Company (Current Position)(Significant Concurrent Positions outside the Company)
Group Executive, ORIX Corporation
Chairman, ORIX Credit Corporation

OutsideDirector
Independent
Director
Reasons for nomination as a candidate for Outside Director and summary of expected roles
Hiroko Yamashina assumed the office of Outside Audit & Supervisory Board Member in March 2023. Having served in important roles such as Corporate
Officer of a general financial service provider and President of a subsidiary of the company, Hiroko Yamashina possesses considerable knowledge and broadand deep insights in corporate management and business operation, etc. Although Hiroko Yamashina has served as Outside Audit & Supervisory Board
Member of the Company for only one year at the conclusion of this Ordinary General Meeting of Shareholders, she has made a significant contribution toeffective auditing through expressing honest opinions to management in a timely and appropriate manner. We judge that reflecting her broad outlook and highstanding underpinned by her experience as a corporate manager in the Group’s management is beneficial to strengthening the Group’s corporate governance,
and therefore, she is appropriate as Outside Director of the Company, and for this reason we propose her election as Outside Director.

19

Candidate Number

10

Kenji Asakura

Number of the Company’s Shares Held0
(Born December 11, 1955)
Brief Personal History, Positions and Responsibilities in the Company, and Significant Concurrent
Positions outside the Company
April 1978
Joined Nagase & Co., Ltd.
April 2009
Executive Officer and General Manager of Automotive Solutions Dept.
June 2013
Director, Executive Officer
April 2015
Representative Director, President and CEO
April 2023
Representative Director, Chairman (Current Position)(Significant Concurrent Positions outside the Company)
Representative Director, Chairman, Nagase & Co., Ltd.

Newly
appointed
OutsideDirector
Independent
Director
Reasons for nomination as a candidate for Outside Director and summary of expected roles
Having served in important roles such as Representative Director, President and CEO and Representative Director, Chairman of a trading company
specializing in trading chemical products, Kenji Asakura possesses outstanding experience and wide-ranging knowledge in global corporate management,
business operation, and corporate cultural reform, etc. As we judge that reflecting his broad outlook and high standing underpinned by his experience andtrack record as a top management member of a listed global company in the Group’s management may contribute to further strengthening the effectivenessof the Board of Directors, we expect him to give appropriate proposals and advice on and supervise execution of the Group’s business, and for this reason we
propose his election as Outside Director.
Significant matters concerning candidate for Outside Director- Although the Company has a business relationship with Nagase & Co., Ltd., of which he is the Representative Director, Chairman, the value of thisbusiness in fiscal year 2023 was negligible, coming to less than 0.001% of consolidated net sales for Nagase & Co., Ltd. in the fiscal year ended March
2023, and less than 0.001% of the Company’s consolidated revenue in fiscal year 2023.
We judge that this relationship has no impact on his independence.

20

(Notes)

1. No conflict of interest exists between the Company and each candidate.
2. Yukiko Nagashima, Masato Kitera, Tetsuya Shoji, Hiroko Yamashina and Kenji Asakura satisfy the Company’s independence
criteria of outside executives and the requirements of an independent director prescribed by the Tokyo Stock Exchange, Inc.
3. The Company has designated Yukiko Nagashima, Masato Kitera, Tetsuya Shoji and Hiroko Yamashina as independent directors
as prescribed by the Tokyo Stock Exchange, Inc. and intends to designate them as such again, should their election be approved.
The Company also intends to designate Kenji Asakura as an independent director as prescribed by the Tokyo Stock Exchange,
Inc., should his election be approved.
4. The Company has entered into an agreement with Mutsuo Iwai, Shigeaki Okamoto, Yukiko Nagashima, Masato Kitera and
Tetsuya Shoji as Members of the Board (excluding Directors who also serve as Executive Officers, etc.) to limit their liabilities
stipulated in Paragraph 1, Article 423 of the Companies Act to the extent permitted by the laws and regulations. The Company
intends to extend the respective agreement if their reelection is approved. The Company will also enter into an agreement tothe same effect with Hiroko Yamashina and Kenji Asakura as Members of the Board (excluding Directors who also serve as
Executive Officers, etc.) subject to the approval of their election. Currently, the Company has entered into an agreement to thesame effect with Hiroko Yamashina as an Audit & Supervisory Board Member.
5. The Company has entered into a liability agreement with each of its Members of the Board as stipulated in Paragraph 1, Article
430-2 of the Companies Act, whereby the Company shall compensate them for expenses incurred under item (i) of the same
paragraph, and any losses incurred under item (ii) of the same paragraph, to the extent permitted by laws and regulations. If thereelection of the candidates for Members of the Board is approved, the Company intends to extend this agreement with thecandidates to be reelected. The Company will also enter into a liability agreement to the same effect with those to be newly
elected subject to the approval of their election.
6. The Company has entered into a liability insurance agreement for executive officers, etc. with an insurance company as
stipulated in Paragraph 1, Article 430-3 of the Companies Act, and intends to renew this agreement in April 2024. Under theterms of this insurance agreement, litigation expenses and compensation for damages arising from legal action against theinsured by third parties, shareholders or companies shall be supplemented, and a premium for the insurance agreement is fully
borne by the Company. Among the candidates for Members of the Board, those to be reelected are already covered as theinsured by the insurance agreement and remain so subject to the approval of their reelection. Those to be newly elected will becovered as the insured by the insurance agreement subject to the approval of their election.

21

Item 4: Election of One (1) Audit & Supervisory Board Member
Audit & Supervisory Board Member Hiroko Yamashina will resign at the conclusion of this Ordinary General
Meeting of Shareholders. Accordingly, we propose the election of one (1) Audit & Supervisory Board Member as
her substitute.
The Audit & Supervisory Board has approved this proposition.
The candidate for the office of Audit & Supervisory Board Member is as follows.

Emiko Takeishi

Newlyappointed
Outside Audit& Supervisory
Board Member(Born February 16, 1960)

Number of the Company’s Shares Held0

Brief Personal History, Positions in the Company, and Significant Concurrent Positions outside theCompany
April 1982
Joined the Ministry of Labour
July 1992
Joined NLI Research Institute
April 2003
Assistant Professor, Institute of Social Science, The University of Tokyo
April 2004
Research Fellow, NLI Research Institute
April 2006
Assistant Professor, Faculty of Lifelong Learning and Career Studies, Hosei University
April 2007
Professor, Faculty of Lifelong Learning and Career studies, Hosei University (Current
Position)
February 2015
Outside Corporate Auditor, Kewpie Corporation
June 2015
Outside Audit & Supervisory Board Member, Tokio Marine & Nichido Fire Insurance Co.,
Ltd. (Current Position)
June 2023
Outside Audit & Supervisory Board Member, KAJIMA CORPORATION (Current
Position)(Significant Concurrent Positions outside the Company)
Professor, Faculty of Lifelong Learning and Career studies, Hosei University
Outside Audit & Supervisory Board Member, Tokio Marine & Nichido Fire Insurance Co., Ltd.
Outside Audit & Supervisory Board Member, KAJIMA CORPORATION

Independent
Audit &
Supervisory
Board Member
Reasons for nomination as a candidate for Outside Audit & Supervisory Board Member
Emiko Takeishi has served in important roles such as a university professor specialized in human resource management and women’s labor theory, etc., beena member of the Labour Policy Council of the Ministry of Health, Labour and Welfare, and outside auditors of business companies, and possesses wideranging experience and advanced and deep knowledge in personnel systems, labor policies, and corporate governance. Emiko Takeishi has not engaged incorporate management previously other than serving as an Outside Auditor. Nevertheless, we judge that her broad outlook and high standing underpinned by
her wide-ranging experience will enable her to make a significant contribution to the effective auditing of the Group in this highly uncertain businessenvironment and will lead to a strengthening of the Group’s corporate governance, and for this reason we propose her election as Outside Audit & Supervisory
Board Member.
Significant matters concerning candidate for Outside Audit & Supervisory Board Member- Although the Company has a business relationship with Tokio Marine & Nichido Fire Insurance Co., Ltd., of which she is an Outside Audit & Supervisory
Board Member, the value of this business in fiscal year 2023 was negligible, coming to less than 0.05% of ordinary income for Tokio Marine & Nichido
Fire Insurance Co., Ltd. in the fiscal year ended March 2023, and less than 0.05% of the Company’s consolidated revenue in fiscal year 2023.
In addition, the Company has a business relationship with KAJIMA CORPORATION, of which she is an Outside Audit & Supervisory Board Member,the value of this business in fiscal year 2023 was negligible, coming to less than 0.05% of consolidated revenue for KAJIMA CORPORATION in thefiscal year ended March 2023, and less than 0.05% of the Company’s consolidated revenue in fiscal year 2023.
We judge that these relationships have no impact on her independence.
- In December 2023, the FSA issued business improvement orders under the Insurance Business Act to Tokio Marine Nichido Fire Insurance Co., Ltd.,
where Emiko Takeishi serves as an Outside Audit & Supervisory Board Member, because the company was found by the FSA to have committed an act
that may violate the Anti-Monopoly Act and an act inappropriate in view of a key purpose of the Act, and to have a systematic problem behind such acts.
Emiko Takeishi was unaware of the circumstances in question beforehand, but at meetings of the Board of Directors she has frequently provided
recommendations from the viewpoint of internal control and enhancement legal compliance, etc. After the above events came to light, she fulfilled her
duties, instructing thorough research and cause analysis, as well as the formulation of preventive measures.

22

(Notes)

1. No conflict of interest exists between the Company and Emiko Takeishi.
2. Emiko Takeishi satisfies the Company’s independence criteria of outside executives and the requirements of an independent
auditor prescribed by the Tokyo Stock Exchange, Inc. The Company intends to designate Emiko Takeishi as an independent
auditor as prescribed by the Tokyo Stock Exchange, Inc., should her election be approved.
3. The Company will enter into an agreement with Emiko Takeishi as an Audit & Supervisory Board Member to limit her liabilities
stipulated in Paragraph 1, Article 423 of the Companies Act to the extent permitted by the laws and regulations subject to theapproval of her election.
4. The Company will enter into a liability agreement with Emiko Takeishi as stipulated in Paragraph 1, Article 430-2 of theCompanies Act subject to the approval of her election, whereby the Company shall compensate her for expenses incurred underitem (i) of the same paragraph, and any losses incurred under item (ii) of the same paragraph, to the extent permitted by laws
and regulations.
5. The Company has entered into a liability insurance agreement for executive officers, etc. with an insurance company as
stipulated in Paragraph 1, Article 430-3 of the Companies Act, and intends to renew this agreement in April 2024. Under theterms of this insurance agreement, litigation expenses and compensation for damages arising from legal action against theinsured by third parties, shareholders or companies shall be supplemented, and a premium for the insurance agreement is fully
borne by the Company. Emiko Takeishi will be covered as the insured by the insurance agreement subject to the approval ofher election.

23

Reference: Skills Matrix of Members of the Board and Audit & Supervisory Board Members after theOrdinary General Meeting of Shareholders (Planned)
The concept of skills necessary for the Board of Directors
The Company will pursue the “4S model,” the Group’s management principle, and realize the JT Group Purpose.
The area of “human enrichment” undergoes changes in various ways with the times and the people, and theCompany will strive to evolve constantly so that it can continue to be entrusted by society and make valuable
contributions to the area in the future. On that basis, the Company believes that it is important for its Board of
Directors to be comprised of diverse professionals who agree with the “4S model” and JP Group Purpose, with ahigh sense of ethics and integrity as well as knowledge, experience and skills.
In order for the Board of Directors comprised of members based on the above view to properly fulfill its roles andresponsibilities, the Company particularly expects each Member of the Board to demonstrate skills based on theirknowledge and experience in the following areas, and believes that the Board of Directors as a whole has thenecessary skills.
Areas in which the skills are expected to be particularly effective
 “Corporate Management,” including the JT Group’s management strategy, operations, and businessstrategy that contribute to sustainable profit growth and enhancement of corporate value based on the “4Smodel,” our management principle.
 “Global Management,” which is essential for the JT Group, which operates globally, in order to achieve
mid- to long-term business growth.
 “Corporate Finance, Accounting and Capital Policy” and “Legal, Compliance and Risk Management,”
which are the basis of decision-making for effective management and business activities for our corporate
value growth and business continuity.
 “IT / Information Security,” which is one of the important management foundations for strengthening thecompetitiveness of the JT Group and for business continuity.
 “Corporate Governance,” which is the foundation of our corporate activities in order to maximize
stakeholder value, pursue sustainable profit growth, and grow our corporate value over the long term.
 “Sustainability / Environment and Society,” which we consider to be the core to our management
initiatives and for which we formulate strategies based on the “4S model” and materiality analysis, in order
to contribute to building sustainable nature and society through the realization of JT Group Purpose basedon the “4S model.” “DE&I (Diversity, Equity & Inclusion) / Organizational Behavior and Human Resource
Management,” to respect different backgrounds and values, such as gender, sexual orientation, age, andnationality, as well as experience and expertise, and promote the investments in human resources including
growth support focusing on personnel diversity, and the creation of an environment where diverse
employees can perform to the best of their abilities.
 “Business Development / M&A” to formulate strategies and carry out measures for further development
and business growth in order to continue providing “human enrichment” in accordance with ever-changing
society and the values of people.
In addition, in light of the roles and responsibilities of Audit & Supervisory Board Members to oversee the job
performance of Members of the Board, we are particularly expecting Audit & Supervisory Board Members todemonstrate their skills in the areas of “Corporate Finance, Accounting and Capital Policy,” “Legal, Complianceand Risk Management,” and “Corporate Governance.” We believe that the entire Audit & Supervisory Board
has the necessary skills.

24

Areas in which the skills are expected to be particularly effective

Mutsuo Iwai

PositionsShigeaki Okamoto

Masamichi
Terabatake

Representative
DeputyChairperson of the
Chairperson of the Director and
Board
President
Board

Corporate Management

Global ManagementCorporate Finance,
Accounting andCapital PolicyLegal, Complianceand Risk ManagementIT / Information Security

Corporate Governance

Sustainability /Environment and Society
DE&I /
Organizational Behavior
and Human Resource
Management



Kei Nakano

Koji Shimayoshi

YukikoNagashima

Representative
Director andExecutive Vice
President

Representative
Director andExecutive Vice
President

Outside Director





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



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

Business Development /
M&A



25









Masato Kitera

Tetsuya Shoji

HirokoYamashina

Kenji Asakura

Hideaki
Kashiwakura

Tsutomu
Hashimoto

Shigeru
TaniuchiNobuo Inada

Emiko Takeishi

Standing Audit &Supervisory
Standing Audit & Standing Audit & Board Member Outside Audit & Outside Audit &Supervisory
Supervisory
Supervisory
Outside Director Outside Director Outside Director Outside Director Supervisory
Board Member Board Member Outside Audit & Board Member Board Member
Supervisory
Board Member


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

26



【Reference】Corporate GovernanceFundamental Policy Concerning Corporate Governance
We have enhanced our corporate governance, based on our belief that it is the means for conducting
transparent, fair, timely and decisive decision-making for pursuing JT’s management principle, the “4Smodel.” Specifically, the “4S model” aims “to fulfill our responsibilities to our valued consumers,
shareholders, employees and the wider society, carefully considering the respective interests of these four
key stakeholder groups, and exceeding their expectations wherever we can.”We have set out the “JT Corporate Governance Policies” on February 4, 2016, and continuously strive
to make enhancements based on our belief that it will enable us to achieve sustainable profit growth andenhancement of corporate value over the mid to long term, which will contribute to the development of
our Group’s stakeholders and eventually the economic society as a whole.
We will continue to strive to make the enhancement of corporate governance one of the key challenges
for our management.
JT’s Corporate Governance System (as of December 31, 2023)“JT Corporate Governance Policies” is posted on our website (https://www.jt.com/about/index.html).

27

(1) Board of Directors[Roles]The Board of Directors assumes responsibility in making decisions for important issues including the JT Groupmanagement strategies as well as supervising all the activities of the Group.
[Composition]
From the point of view that the Board of Directors determines company-wide management strategy and important
issues and effectively assumes roles and responsibilities as the body exercising supervision over all businessactivities, the concept concerning the composition of the Board of Directors shall be set forth as follows.
 The Board shall have as many members as necessary and appropriate, up to a maximum of fifteen (15). It
comprises diverse professionals with a high sense of ethics and integrity as well as knowledge, experienceand skills, taking into consideration such factors as gender, international experience, work experience, race,
ethnicity, cultural background, and other aspects of diversity, along with necessary skills for the Membersof the Board as laid down separately by the Board of Directors.
 The Board shall include at least one-third of Independent Outside Directors with qualifications conduciveto the Company’s sustainable profit growth and enhancement of corporate value over the mid to long term,in order to strengthen the supervisory functions and transparency of management.
It is currently composed of nine (9) Members of the Board (including four (4) Independent Outside Directors).
Conditional on approval by this Ordinary General Meeting of Shareholders, it is planned that it be composed often (10) Members of the Board (including five (5) Independent Outside Directors).
[Operation during the period under review]
In fiscal year 2023, we had fourteen (14) board meetings to discuss important issues including the management
plan and nomination of Executive Officers.
(2) Audit & Supervisory Board[Roles]The Audit & Supervisory Board shall be composed of persons with proven experience in business, law, financial
affairs and accounting, etc. Audit & Supervisory Board Members, in addition to participating in the Board of
Directors meetings and other important meetings and making remarks as an independent body mandated by theshareholders, shall actively exercise his/her authority such as by proactively inspecting business bases, etc., aswell as appropriately conduct an audit from an objective position corresponding to the nature of duties of
independent outside Audit & Supervisory Board Members or standing Audit & Supervisory Board Members.
[Composition]
It is currently composed of five (5) Audit & Supervisory Board Members (including three (3) Independent Outside
Audit & Supervisory Board Members). Conditional on approval by this Ordinary General Meeting of Shareholders,
it is planned that it continues to be composed of five (5) Audit & Supervisory Board Members (including three(3) Independent Outside Audit & Supervisory Board Members)[Operation during the period under review]
In fiscal year 2023, we had fourteen (14) board meetings to discuss issues including the auditing policies andpreparing of Audit Report.
(3) Advisory Panel on Nomination and Compensation[Roles]The Advisory Panel on Nomination and Compensation, as a voluntary advisory panel to the Board of Directors,
further enhances the objectivity and transparency of the Board of Directors’ decision making and improves thesupervisory functions of the Board of Directors by supporting the development of a group of executive candidates,deliberating on the nomination of Member of the Board and Audit & Supervisory Board Member candidates,deliberating on dismissal of Executive Directors and Members of the Board who also serve as Executive Officers,
and deliberating on matters regarding remuneration for Members of the Board and Executive Officers, thenreporting to the Board of Directors.
[Composition]
The Panel is composed of Members of the Board all of whom do not concurrently serve as an Executive Officer,
and a majority of them are Independent Outside Directors, and the Chairperson of the Panel shall be elected fromamong Independent Outside Directors by the Panel members themselves. The Panel currently consists of the
Chairperson of the Board, Deputy Chairperson of the Board, and four (4) Independent Outside Directors, a totalof six (6) members; upon the approval of Item 3, we will have ten (10) Members of the Board (including five (5)Independent Outside Directors), with the Panel consisting of the Chairperson of the Board, Deputy Chairpersonof the Board, and five (5) Independent Outside Directors, a total of seven (7) members.
[Operation during the period under review]
In fiscal year 2023, five (5) meetings were held to discuss the nomination of the proposed Members of the Board
and Audit & Supervisory Board Members, and their skills matrix, confirm the level of remuneration, confirm thepool of executive candidates, discuss the enhancement of cooperation with the Advisory Panel on Nomination and28

Compensation that helps strengthen the supervisory function of the Board of Directors, and review the key
performance indicators (KPIs) for the executive bonuses and performance share units.
(4) JT Group Compliance Committee[Roles]The JT Group Compliance Committee was established as part of the Company’s efforts to ensure that complianceis practiced fairly and effectively. From fiscal year 2024, the structure of the committee will change so that it willoversee and promote compliance for the entire JT Group as a consultative body with accountability to the Boardof Directors. In addition, corporate and business divisions will each have their own divisional compliancecommittees. These will autonomously deliberate on compliance matters in their own divisions, while the JT Group
Compliance Committee will monitor and deliberate on the JT Group’s overall initiatives and report adequately to
the Board of Directors. In this way, the committee will strive to strengthen the connection with the board andenhance and strengthen the JT Group’s compliance from both the supervision and promotion aspects.
[Composition]
In fiscal year 2023, it was headed by the Chairperson of the Board, with the majority of the members consistingof external members. From fiscal year 2024, the committee will comprise the President, the Vice President, andexternal experts, and the President will serve as the Chairperson.
[Operation during the period under review]
In fiscal year 2023, we had three (3) meetings to discuss initiatives, etc. to further promote compliance. Its
conclusions have been reflected in the Compliance Action Plan for the fiscal year 2024.

29

【Reference】Nomination of Member of the Board Candidates
In “JT Corporate Governance Policy,” the Company prescribes the following.
Nomination of Member of the Board candidates and Audit & Supervisory Board Member candidates, the dismissalof Executive Directors and Members of the Board also serving as Executive Officers and related matters shall be
conducted under the appropriate supervision of the Board of Directors, according to the following policies andprocedures.
 JT shall work on expanding, in terms of quality and quantity, the group of executive candidates with qualities
for assuming sustainable profit growth and increase of company value in the mid- to long-term by pursuingthe “4S model.”Specifically, JT aspires to enhance the development of a group of executive candidates and improve thesubstance of succession plans, along with the process for formulating such plans, while referring to opinionsfrom outside at the Advisory Panel on Nomination and Compensation comprised entirely of Members of theBoard who do not serve as Executive Officers, in which more than half of whose members being Independent
Directors.
 Member of the Board candidates shall be nominated by resolution of the Board of Directors. The resolution
shall be made after securing opportunities for receiving appropriate advice from Independent Outside Director
by having the Advisory Panel on Nomination and Compensation deliberate on a candidate proposal formed by
the President and report the content and results of its deliberations to the Board of Directors.
Audit & Supervisory Board Member candidates shall be nominated by resolution of the Board of Directors as
persons who is expected to perform their duties appropriately from a position independent of the Board of
Directors. The resolution shall be made after securing opportunities for receiving appropriate advice fromIndependent Outside Director by having the Advisory Panel on Nomination and Compensation deliberate on a
candidate proposal formed by the President and report the content and results of its deliberations to the Boardof Directors, and receiving prior consent from the Audit & Supervisory Board.
 Dismissal of Executive Directors and Members of the Board also serving as Executive Officers in the cases
where they do not meet the required qualifications or have become unable to perform their duties shall be madeby resolution of the Board of Directors after securing opportunities for receiving appropriate advice fromIndependent Outside Director by having those Members of the Board who are not subject to dismissal request
the Advisory Panel on Nomination and Compensation to deliberate on the proposal for dismissal and thenhaving the panel report the content and results of its deliberations to the Board of Directors.
Further, when bringing up the agenda item on the appointment of Member of the Board candidates and Audit &Supervisory Board Member candidates at the shareholders’ meeting, and when the Board of Directors has resolved
to dismiss Executive Directors and Members of the Board also serving as Executive Officers, JT shall disclose thereasons for the appointment of individual candidates and for the dismissal.

30

【Reference】The Company’s Independence Criteria of Outside Executives
The Company has established an independence criteria of Outside Executives and Independent Outside
Directors/Audit & Supervisory Board Members must not fall under any of the following categories.
1 A person who belongs or belonged to JT or an affiliate or sister company of JT
2 A person who belongs to a company or any other form of organization of which JT is a major shareholder
3 A person who is a major shareholder of JT or who belongs to a company or any other form of organization
which is a major shareholder of JT
4 A person who is a major supplier or customer of JT (if the supplier or customer is a company or any other formof organization, a person who belongs thereto)
5 A major creditor of JT including a major loan lender (if the creditor is a company or any other form oforganization, a person who belongs thereto)
6 A certified public accountant who serves as an independent auditor or an audit advisor of JT, or a person who
belongs to an auditing firm which serves as an independent auditor or an audit advisor of JT
7 A person who receives a large amount of fees from JT in exchange for providing professional services for legal,financial and tax affairs or business consulting services (if the recipient of such fee is a company or any otherform of organization, a person who belongs thereto)
8 A person who receives a large amount of donation from JT (if the recipient of such donation is a company or
any other form of organization, a person who belongs thereto)
9 A person who has fit any of the descriptions in 2 to 8 above in the recent past
10 A close relative of a person who fits any of the following descriptions:(1) A person who fits any of the descriptions in 2 to 8 above (if such descriptions apply to a company or any
other form of organization, a person who performs important duties thereof)(2) A member of the board, audit & supervisory board member, audit advisor, executive officer or employee
of JT or an affiliate or sister company of JT(3) A person who has fit the descriptions in (1) or (2) in the recent past
(Note)•

A company or any other form of organization of which JT is a major shareholder
A company or any other form of organization, in which JT holds more than 10% of all shares issued•

A major shareholder of JT, or a company or any other form of organization which is a major shareholder ofJT
A person, or a company or any other form of organization, that holds more than 10% of all shares of JT
issued•A major supplier or customer of JT
A person whose business with JT accounts for more than 2% of the consolidated revenue of JT, or a person
whose business with JT accounts for more than 2% of the consolidated revenue of the person•

A major creditor of JT including a major loan lender
A financial institution listed in the “Major Lenders” section of JT’s Business Report, and a financial
institution listed as a lender or a lead managing underwriter in materials released at the time of major M&A
deals in the past, and at other times•

A person who receives a large amount of fees from JT in exchange for providing professional services forlegal, financial and tax affairs or business consulting services
A person who receives fees of more than ¥10 million in a fiscal year from JT in exchange for providing
professional services for legal, financial and tax affairs or business consulting services. For a company or
any other form of organization, this shall be 2% or more of total income in a fiscal year. However, even if
the fees shall be less than 2%, in cases where consideration for services in which such professionals are
directly involved exceeds ¥10 million, it shall be considered a large amount.
31•

A person who receives a large amount of donation from JT
A person who receives a donation of more than ¥10 million in a fiscal year from JT. In cases where therecipient is a company or any other form of organization, a person belonging to an organization that receives
a donation of ¥10 million in a fiscal year or the equivalent to 2% of the organization’s total annual income
or consolidated revenue, whichever is the greater amount.

•

A close relative
A spouse or a relative within the second degree of kinship•

A person who performs important duties
A person of head of division or executive rank•

Retrospective measure (criteria for judging “in the recent past”)
The retrospective period shall be the past five years.

Notwithstanding the above mentioned notes, as a result of investigations into the past and present state of
employment of a candidate, it is judged that the person is in effect independent, that person may become an Outside
Director or an Outside Audit & Supervisory Board Member after receiving the approval of the Board of Directors.
In such cases, the grounds for the decision shall be disclosed publicly.

32【Reference】Evaluation of Effectiveness of the Board of Directors of the Company
We evaluate annually the effectiveness of our Board of Directors through a multi-step process. First, all Directors
and Audit & Supervisory Board Members complete a self-assessment questionnaire with regards to factors
including the Board’s operations, oversight function and dialogues with shareholders and investors. Second, theBoard’s administrative staff interview the Members of the Board and Audit & Supervisory Board Members
individually as necessary to delve deeper into their questionnaire responses and compile the evaluation results.
Lastly, the Board reviews and analyzes the self-assessment results with the aim of further improving its
effectiveness.
In fiscal year 2023, the questionnaire was conducted as follows.
In preparing and analyzing the results of the questionnaire, we have received advice from external institutions inorder to ensure objectivity and further improving the evaluation of effectiveness.
－Questionnaire preparation period: From September to November 2023
－Period of evaluation: Year 2023 (January 2023 to December 2023)－Response period: November 17, 2023 - December 1, 2023
－Target respondents: Total of 14 Members of the Board and Audit & Supervisory Board Members－Summary: Rating for each question (on a scale of 5) and filling out the free form
－Consultation by the Board of Directors: February 19, 2024
The major items evaluated were as follows. Questions are designed to confirm improvements to the issues
identified in fiscal year 2022 in addition to items that should be continually checked.
1.

Roles, Functions and Composition of the Board of Directors(6 questions)

2.

Business operation of the Board of Directors(7 questions)3.

Cooperation with audit institutions and risk management(3 questions)

4.

Relationship with shareholders and investors(3 questions)5.

Voluntary committees(2 questions)6.

Issues to be discussed and shared(1 question)

In fiscal year 2023, we took the following actions to address the issues identified in the effectiveness evaluation
for fiscal year 2022.
Main issues

Further strengthening the supervisory function of
the Board of Directors
Strengthening the effectiveness and efficiency of
the Board of Directors



Details of actions
Further enhance opportunities to report and sharethe status of various management issues and risk
management and the status of discussions involuntary committees
Continual improvement of the management of theBoard of Directors, including the enhancement ofmeeting facilities and facilitation of proceedings

In the evaluation of effectiveness conducted for fiscal year 2023, the items undergoing evaluation obtained goodresults on the whole as continuing from fiscal year 2022, allowing the Company to confirm that the effectivenessof the Board of Directors is improving, and the Board of Directors is functioning effectively. The responses toeach question showed minimal deviation, indicating a general consensus in the recognition and understanding of
the strengths and weaknesses of the Members of the Board and Audit & Supervisory Board Members. Additionally,
there was especially high praise for the enhanced efforts in management aspects. These include the setting agenda
items at Board of Directors’ meetings and other forums for the exchange of views, as well as conducting open anddynamic proceedings.
33

In order to make an enhanced effectiveness, the Company will target continuous improvements from fiscal year
2024 onwards, focusing on the following initiatives.
Main issuesContinued strengthening of the effectiveness andefficiency of the Board of Directors
Continued further strengthening of thesupervisory function of the Board of Directors



Policy for improvements going forward
Improvement of the management of the Board of
Directors, including the facilitation ofproceedings
Enhancement of opportunities to share anddiscuss the main management issues, etc.
Enhancement of opportunities for communication
among the officers

The Company will continue to implement improvements required to further enhance effectiveness, including theabove-mentioned activities.

34

[For your reference, we have included various graphs and photographs.]

Business Report(From January 1, 2023 to December 31, 2023)
I.

Matters Concerning Present State of the Corporate Group1.

Overview and Results of Operations
General summary

RevenueCore revenue(Note 1) at constant FX (Note 2), which is one of the Group’s management benchmarks, rose by
6.1% from the previous fiscal year. Revenue increased by 6.9% from the previous fiscal year to ¥2,841.1
billion due to revenue increases in the Tobacco Business and the Pharmaceutical Business.
Adjusted operating profit, operating profit and profit attributable to owners of the parent
company

Adjusted operating profit(Note 3) at constant FX, which is one of the Group’s management benchmarks,
increased by 5.2% from the previous fiscal year mainly driven by growth in the Tobacco Business. Adjusted
operating profit was ¥728.0 billion, the same level as the previous fiscal year, due to unfavorable currency
movements as a result of the Japanese yen appreciating against several local currencies.
Operating profit increased by 2.9% from the previous fiscal year to ¥672.4 billion due to a decrease inamortization cost of acquired intangibles arising from business acquisitions and an increase in gains on saleof real estate in adjustment items.
Profit attributable to owners of the parent company increased by 8.9% from the previous fiscal year to ¥482.3
billion due to an increase in operating profit as well as decreases in financing costs and income taxes.
JT Group Management Benchmarks
Core revenue
at constant FX+6.1% year on year

Adjusted operating profit
at constant FX+5.2% year on year

Consolidated performance[Billions of yen]

Year-On-Year
Change [%]2,841.1+6.9

Adjusted operating profit

728.0

+0.0

Profit attributable to owners of
the parent company

482.3

+8.9

Revenue(Notes)1. Core revenue is the sum of revenues in the pharmaceutical business, processed food business,and others, as well as the core revenue in the tobacco business.
2. Constant FX is a financial measurement that excludes foreign exchange effects calculated andtranslated using the foreign exchange rates of the same period of the previous fiscal year and theincrease in revenue or profit caused by inflation in some markets calculated using certain
methods from adjusted operating profit for the current period in the Tobacco Business, core
revenue, or from core revenue from the Tobacco Business.
35

3. Adjusted operating profit is calculated by totaling operating profit, 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.
Revenue breakdown by business segment

Revenue

Adjusted operating profit

Profit(Attributable to owners of the parent company)

36

Tobacco BusinessIn the current fiscal year, total volume (Note 1) rose by 2.4% from the previous fiscal year to 540.1 billion
cigarettes, driven by mid-single-digit growth in EMA (Note 2), stable volume in Asia (Note 2), following continued
market share gains, and favorable industry volume trends in selected markets. This more than offset a decline
in Western Europe (Note 2) due to lower industry volumes, notably in the U.K. Combustibles volume (Note 3)
increased by 2.3% from the previous fiscal year to 531.3 billion units, fueled by Winston and Camel. RRP
volume (Note 4) grew by 11.8% to 8.8 billion cigarette equivalent units, fueled by HTS (Note 5) volume increasingin Japan and the market launch of Ploom X in Europe.
Core revenue from the Tobacco Business (Note 6) increased by 7.1% from the previous fiscal year to ¥2,478.6
billion (up 6.4% from the previous fiscal year at constant FX) driven by a strong price/mix variance inWestern Europe and EMA and a positive volume contribution and favorable currency movements in Asia and
EMA. RRP-related revenue(Note 7) increased by 8.3% from the previous fiscal year to ¥81.6 billion.
Adjusted operating profit decreased by 0.6% to ¥749.8 billion (up 4.4% from the previous fiscal year atconstant FX) due to unfavorable currency movements.
(Notes)

1. Total volume is the volume of tobacco-based products which excludes contract-manufactured
products, waterpipe, RRP devices and related accessories.
2. The JT Group’s tobacco markets are divided into three distinctive clusters: Asia as the whole
Asian region including Japan; Western Europe as Western Europe region; and EMA as Eastern
Europe, Middle East, Africa, Turkey, Northern and Southern America and Global Travel Retail,for providing insight into the Group’s business for guidance purposes.
3. Combustible volume is the shipment volume of combustibles which excludes contractmanufactured products, oral tobacco (snus and nicotine pouches), waterpipe, heated tobacco
products and E-Vapor.
4. Reduced-Risk Products (RRP) are products with the potential to reduce the risks associated withsmoking. In the Group’s portfolio, these products include heated tobacco sticks (HTS), infusedtobacco capsules (Infused), E-Vapor and Oral.
5. HTS (Heated tobacco sticks) is high temperature heated tobacco products.
6. Core revenue from the tobacco business excludes revenue from distribution, contract
manufacturing and other peripheral businesses.
7. RRP-related revenue is a part of core revenue from the tobacco business and represents all thesale of RRP, principally consumables, devices and the related accessories.

37

Progress of Ploom X- JT’s share in the HTS category in Japan has steadily grown even amid intensifying competition, reachingan 11.4% share in December 2023
- Expanded the geographic reach of Ploom X, making it available to adult consumers in 13 markets as ofDecember 31, 2023
- Expect to cover approximately 80% of the total global HTS demand by the end of fiscal year 2025. Ploom
X to be available in over 40 markets by the end of fiscal year 2026

* JT’s market share estimates by shipment

Continued market share gains- In fiscal year 2023, market share gains recorded in over 50 markets, and total market share reached record
high- Market share increased in the key markets including Italy, Japan, the Philippines and Taiwan

38

Pharmaceutical Business

The Pharmaceutical Business has been striving to make a contribution to the Group’s profits by focusing
R&D investments towards next-generation strategic products and by maximizing the value of each product.
In the area of product development, eight compounds are in clinical development.
On January 30, 2023, CORECTIM® Ointment 0.25% and 0.5% for an indication of atopic dermatitis, basedon the result of the clinical trials in relation to atopic dermatitis for infants, was approved for the expanded
use in infants (aged 6 months to under 2 years).
On September 15, 2023, the Company applied for approval for domestic manufacturing and marketing forJTE-61 (tapinarof) as indications in atopic dermatitis and plaque psoriasis. JTE-061 is also in Phase 3 clinicalstudies conducted in Japan for the indication in atopic dermatitis (pediatric).
On June 7, 2023, Shenzhen Salubris Pharmaceuticals Co., Ltd., a Chinese licensee of enarodustat, received
manufacturing and marketing approval in Mainland China for enarodustat as an indication of anemia
associated with chronic kidney disease in adult patients not on dialysis.
LEO Pharma A/S, a Danish licensee of delgocitinib, submitted a marketing authorization application fordelgocitinib to the European Medicine Agency for the treatment of chronic hand eczema, which was acceptedon August 17, 2023.
Revenue for the current fiscal year increased by 14.4% from the previous fiscal year to ¥94.9 billion due to
one-time income pertaining to license agreements for licensed compounds and an increased revenue of Group
company Torii Pharmaceutical Co., Ltd.
Adjusted operating profit increased by 56.2% from the previous fiscal year to ¥17.4 billion due to an increase
in revenue despite an increase in research and development expenses.

39

【Reference】
Pharmaceutical Business
Clinical Development as of February 13, 2024
＜In-house development＞
Code(Generic Name)

Potential
Indication/Dosageform

JTE-052（delgocitinib）

Autoimmune/allergic
diseases/Oral, Topical

JAK inhibitor

JTE-051

Autoimmune/allergic
diseases/Oral

Suppresses overactive immune
Interleukin-2
response via inhibition of theinducible T cellsignal to activate T cells related
kinase inhibitor
to immune response.

JTT-662

Type 2 diabetes
mellitus/Oral

JTT-861

Chronic heart failure/Oral

Mechanism
Suppresses overactive immune
response via inhibition of Janus
kinase (JAK) related to immune
signal.

JTE-061(tapinarof)

Atopic dermatitis(pediatric)/Topical

JTC-064

Neurodegenerative
disease/Oral

JTV-161

Pulmonary arterial
hypertension/Oral

JTE-162

Autoinflammatory/
Autoimmune diseases/Oral

OriginPhase1 (Japan)

In-house

Phase2 (Overseas)

In-house

Suppresses postprandial
hyperglycemia and normalizes
blood glucose level via
inhibition of SGLT1.

Phase1 (Overseas)

In-house

PDHK inhibitor

Improves cardiac function by
activation of pyruvate
dehydrogenase (PDH) related tocarbohydrate metabolism.

Phase2 (Overseas)

In-house

NDA filed (Japan)
Suppresses skin inflammation via
NDA filed (Japan)
AhR modulator activation of the arylhydrocarbon receptor (AhR)

In-license

Improves metabolic
abnormalities by activation of
pyruvate dehydrogenase (PDH)

Phase1 (Overseas)

In-house

Suppresses pulmonary vascularPim-1 inhibitor cell proliferation by inhibiting
Pim-1

Phase1 (Overseas)

In-house

Suppresses immune response by
inhibition of NLRP3
inflammasome

Phase1 (Overseas)

In-house

NLRP3
inhibitor In-license from
Dermavant SciencesGmbH Co-development with
Torii

Phase3 (Japan)
PDHK
inhibitor

Note

Phase2(Japan)

SGLT1
inhibitor

Atopic dermatitis/TopicalPlaque psoriasis/TopicalPhase(Region)(Notes) 1. Clinical trial phase presented above is based on the first dose.
2. We are also conducting additional studies to examine the potential for use in additional dosage forms.
＜Licensed compounds＞
Compound(JT’s code)

Mechanism

Licenseetrametinib

Novartis

MEK inhibitor

Inhibits cellular growth by specificallyinhibiting the activity of MAPK/ERK
pathway.

delgocitinib

LEO Pharma
ROHTO
Pharmaceutical

JAK inhibitor

Suppresses overactive immune response via
inhibition of Janus kinase (JAK) related toimmune signal.

enarodustat

JW Pharmaceutical
Shenzhen Salubris
Pharmaceuticals

HIF-PH inhibitor

Increases red blood cells by stimulatingproduction of erythropoietin, anerythropoiesis-stimulating hormone, via
inhibition of HIF-PH.

40

Note

Processed Food Business

The Processed Food Business concentrates on frozen and ambient foods business and seasonings business,while at the same time strengthening sales of high value-added products and working on initiatives to improve
profitability.
In the frozen and ambient foods business in the current fiscal year, we maintained high market shares in thedomestic market for our focus areas including frozen noodles, packed rice and okonomiyaki, while also
launching 20 new household products, such as the “Marugu” series of frozen ramen with toppings, supervised
by famous ramen shops which are featuring toppings, noodles and soup, and renewing 30 products for further
competitiveness.
Soaring raw material costs and other negative factors mainly due to acute fluctuations in exchange continued
and adversely affected the business. Despite this challenging business environment, the Processed FoodBusiness has exerted the upmost efforts to generate profits, by revising shipment prices, in addition to
implementing continued initiatives to improve productivity and reducing costs, etc.
Revenue in the current fiscal year decreased by 1.1% from the previous fiscal year to ¥153.9 billion due tothe impact of revenue losses caused by the transfer of the bakery business, partially offset by a positive
contribution from price revisions, as well as top-line growth in food service products due to a recovery ofeating out demand in the frozen and ambient foods business.
Adjusted operating profit increased by 95.2% from the previous fiscal year to ¥6.8 billion due to a positive
contribution from price revisions as well as top-line growth in food-service products in the frozen and ambient
foods business, offsetting the impact of sharp rises in raw materials and other costs.

41

2.

Status of Capital Expenditures
In this fiscal year, we made capital expenditures totaling ¥125.4 billion.
For the tobacco business, the Group made business investments of ¥105.1 billion, for the purpose of RRPrelated investments and renovation, maintenance and renewal of manufacturing equipment. In thepharmaceutical business, we spent ¥7.3 billion on enhancing and strengthening research and development
structures and the like. In the processed food business, we invested ¥5.8 billion in improvement, maintenanceand renewals of production capability.
(Note) Capital expenditures include land; building and structures; machinery and vehicles; and otherproperty, plant and equipment, as well as goodwill, right of trademark, software and other intangible
assets, necessary for production improvements at factories and other facilities, strengthening
competitiveness and executing business in a variety of fields, excluding assets acquired throughbusiness combinations.

3.

Status of Financing
For the purpose of allocating funds for the repayment of interest-bearing debt, the Company issued straightbonds with general mortgage of total amount ¥60 billion on April 20, 2023.

4.

Business Transfers, Absorption-Type Company Split or Incorporation-Type Company Split
No items to report.

5.

Business Transfers from Other Companies
No items to report.

6.

Succession of Rights and Obligations Relating to Other Entities’ Business as a Result of AbsorptionType Merger or Company Split
No items to report.

7.

Acquisition or Disposal of Shares, Other Equities or Subscription Rights to Shares of Other Companies
No items to report.

42

8.

Trends in Assets and Operating Results(1) Trends in assets and operating results of the JT Group [Consolidated]
36th term
From January 1,
2020 toDecember 31,
2020

37th term
From January 1,
2021 toDecember 31,
2021

38th term
From January 1,
2022 toDecember 31,
2022

39th term
From January 1,
2023 toDecember 31,
2023

Revenue(Millions of yen)

2,092,561

2,324,838

2,657,832

2,841,077

Profit before income
taxes(Millions of yen)

420,063472,390

593,450

621,601

Profit attributable toowners of the parent
company(Millions of yen)

310,253

338,490442,716

482,288

Basic earnings per
share
(Yen)

174.88190.76249.45271.69Total assets(Millions of yen)

5,381,382

5,774,209

6,548,078

7,282,097

Total equity(Millions of yen)

2,599,495

2,886,081

3,616,761

3,912,491(Note) Consolidated financial statements of the JT Group are prepared based on IFRS.

43

(2) Trends in assets and non-consolidated operating results of JT [Non-consolidated]
36th term
From January 1,
2020 toDecember 31,
2020

37th term
From January 1,
2021 toDecember 31,
2021

38th term
From January 1,
2022 toDecember 31,
2022

39th term
From January 1,
2023 toDecember 31,
2023

Net sales(Millions of yen)

596,887

592,220542,181

537,261

Ordinary income(Millions of yen)

240,491

278,809273,734

185,665

Net income(Millions of yen)

241,752

216,896

283,461

184,788

Basic earnings per
share
(Yen)

136.27122.23159.72104.10Total assets(Millions of yen)

2,597,930

2,487,979

2,363,267

2,293,951

Net assets(Millions of yen)

1,390,011

1,344,696

1,368,643

1,179,577(Notes)1. Non-consolidated financial statements of the Company are prepared based on Japanese GAAP.
2. The Company has applied the “Accounting Standard for Revenue Recognition” (ASBJ
Statement No. 29, March 31, 2020) and relevant Guidances effective from the 38th term.

44Trends in assets and operating results of the JT Group [Consolidated]

45

9.

Issues to Be Addressed(1) Basic management policy
Our management principle is based on the pursuit of the “4S model.” The model requires us to fulfill our
responsibilities to our valued consumers, shareholders, employees and the wider society, carefully
considering the respective interests of these four key stakeholder groups, and exceeding their expectations
wherever we can.
By pursuing the “4S model,” we aim to achieve sustainable profit growth over the medium and long term.
Since achieving sustainable profit growth requires us to continue to provide new value and satisfaction to
consumers, we believe it is essential to steadily make business investments for future profit growth on a
medium and long term perspective.
We firmly believe that pursing the “4S model” is the best approach to continuously grow our corporate value
over the medium and long term and serve the common interests of our four stakeholders, including
shareholders.

The Group operates in a business environment that has ever increasing levels of uncertainty and complexity
due to discontinuous changes in social and business situations. In response to this, the Group formulated the
JT Group Purpose “Fulfilling Moments, Enriching Life” and a purpose for each business in fiscal year 2023
to clarify the direction to being a sustainable entity and has also completed formulating the code of conduct
toward the realization of these purposes. In the future, the Group aims to realize the JT Group Purpose by
producing results and making achievements through the implementation of business strategies and thepractice of the code of conduct.
Business Purpose● Tobacco Business: Creating fulfilling moments. Creating a better future.
● Pharmaceutical Business: Respecting science, technology and people, we will contribute topatients’ lives.
● Processed Food Business: Bringing joy to meals and fun to the table.
The area of “human enrichment” undergo changes in various ways with the times and the people, and the JT
Group strives to evolve constantly so that we can continue to be entrusted within this area by society andmake valuable contributions in the future.

46

(2) Medium- and long-term management strategy and issues
The Group’s medium- and long-term resources allocation policy is to prioritize business investments(Note 1)
for sustainable profit growth in the medium and long term, while striking a balance between profit growththrough business investments and shareholder returns, based on the “4S model” and the JT Group Purpose.
With the tobacco business as the Group’s core business and profit growth engine, the Group prioritizes
business investments in the tobacco business for its sustainable profit growth. On the other hand, we will
make necessary investments for the Pharmaceutical Business and the Processed Food Business tocomplement profit growth for the Group as a whole.
The medium and long-term targets for each business are as follows.
Tobacco Business

Aim for a profit level that achieves adjusted operating profit growthof mid- to high-single-digit rate per annum over the medium andlong term as the core business and profit growth engine of the Group

Pharmaceutical Business

Strive to make profit contribution to the Group through promotionof R&D on next-generation strategic products and value
maximization of each product

Processed Food Business

Strive to make profit contribution to the Group through medium-and long-term profit growth with high-quality top-line growth

The Group formulates its three-year business plan by renewing it each year on a rolling basis to assess theincreasingly uncertain business environment accurately and speed up reinforcing its competitive edge. The
Group has set medium- and long-term direction for the group-wide profit targets and the shareholder returns
in the “Business Plan 2024” in line with its management principle and resources allocation policy.
In the “Business Plan 2024,” due to a large-scale strategic investment in the most promising HTS(Note 2), theGroup expects adjusted operating profit at constant FX for fiscal year 2024 at the same level as in the previous
year. However, as the pace of growth of HTS will be more rapid toward the latter half of the business plan
period, the Group expects a mid single digit annual average growth rate in adjusted operating profit atconstant FX during the period. The Group will work to recover a mid to high single digit annual average
growth rate over the medium and long term.
In terms of “prioritize business investments for sustainable profit growth over the medium and long term”
and of “strike a balance between profit growth through business investments and shareholder returns” under
the resources allocation policy based on the “4S model” and the JT Group Purpose, our shareholder returns
policy is set as follows:
・Work to enhance shareholder returns by realizing the Company’s medium- and long-term profit growth,
while maintaining a strong financial base(Note 3)
・Target a dividend payout ratio of about 75%(Note 4), a competitive level(Note 5) in capital markets
・Consider implementing a share buy-back program, mainly taking into account the Company’s financial
outlook of the respective year and medium-term capital needs
In order to achieve the Group-wide medium- and long-term profit targets, our strategic focus across all
businesses is to achieve quality top-line growth by striving in accordance with each target. For each business,
our strategic focus is to improve cost competitiveness and business foundations that support these efforts,
thereby achieving sustainable profit growth.
The business environment in which the Group operates is characterized by an increasing degree of
uncertainty, such as the emergence of geopolitical risks, and foreign exchange risks in a hyperinflation market,
etc. Enhancing adaptability to such a changing environment is critical to achieve sustainable profit growthby overcoming the uncertain business environment and adequately executing business on a global scale.
47

“Adaptability” refers to the ability to assume a wider range of contingencies than in the past, during theplanning phase, and to quickly and flexibly respond to changes and events that surpass the assumptions sothat the Group can deal with uncertainty over the future. The Group believes that how well and how quickly
companies can overcome uncertainties will continue as the key to determine their competitiveness. Moreover,in view of development of digital technology, changes in the consciousness and behavior of consumers, andthe shift towards greater awareness of ESG and sustainability, the Group believes that, rather than merely
responding passively while enhancing its adaptability to such a changing environment, the Group should
initiate transformation itself and accelerate evolution to an organization that will lead this revolution.
(Notes)1. Grow adjusted operating profit at constant FX by placing top priority on growth-oriented
investment in the tobacco business, while realizing high-quality, top-line growth throughcontinuing provision of new value and satisfaction to consumers and society
2. Heated tobacco sticks. High temperature heated tobacco products. One stick is equivalent to a
Ready-Made Cigarettes (RMC).
3. The Company will maintain a strong financial base that secures stability in case of changes inbusiness environment such as economic crises and flexibility enabling expeditious responses tobusiness investment opportunities.
4. To be in the range of approximately ±5%.
5. Monitor the shareholder return trends of global Fast-Moving Consumer Goods (FMCG)
companies which have a stakeholder model similar to our “4S model” and have realized strong
business growth【Reference】Measures to promote management with an awareness of capital costs and share priceIn drawing up a business plan, we calculate and examine our capital costs and report them to the Board of
Directors. We check and confirm that our return on equity (ROE) is well above capital costs. We set up a
hurdle rate, taking into consideration risks associated with each country in which we operate, as well as
inflation and other external risks, and use that as our baseline for profitability. By maintaining that discipline,
we make sure our ROE is always above capital costs. The Group uses adjusted operating profit at constant
FX as a key performance indicator, which excludes the effects of exchange rate fluctuations that can besubstantial due to temporary factors, as well as depreciation costs related to M&A activities for the previous
year. We work to grow profit, including for the current term, by achieving mid to high single digit growth in
the KPI over the medium and long terms. We also believe that together with the operation of investment
discipline by the hurdle rate, it leads to improved ROE.
A comparison of our total shareholder returns (TSR), including dividends, with the TOPIX (total return)shows that ours were below the TOPIX over the long term due to the trend followed by our share prices, butthey outperformed the TOPIX as of the end of 2019, before the COVID-19 pandemic and the end of 2023,
thanks to profit growth during the period and a higher dividend for 2022. Continuous profit growth isimportant to the medium- and long-term stability of our equity value. We also believe that increasing
quantitative corporate value through profit growth, while fostering an understanding of the Group throughenhanced information disclosure from a qualitative perspective, will lead to higher TSR.
【Reference】Purposes of having listed subsidiary and views on governance
The Company has a publicly listed subsidiary, namely Torii Pharmaceutical Co., Ltd. (hereinafter Torii), inlight of the management benefits of owning a subsidiary, including capital market discipline andenhancement of engagement of human capital by utilizing stock remuneration. Another motivation is forTorii to acquire increased competitive advantage in its business through factors, such as credibility building,securing excellent human capital, and morale improvement, all of which are important in the pharmaceuticalbusiness.
Additionally, the Company believes it is an indispensable prerequisite for the subsidiary to maintainindependence in terms of management and to duly protect its minority shareholders’ interests in order for,not only Torii, but also for the Group to grow in value. Therefore, the Company is striving to build an
appropriate governance regime for Torii as a listed subsidiary. The Company has instituted the Group’s
Responsibility and Authority Regulations as an internal decision-making regulation. Torii has opted to adopt
48

these regulations, thereby gaining autonomy in terms of decision-making authority. Such autonomy ensures
its independence as a listed subsidiary.
With regard to purposes of having listed subsidiary and views on governance, please refer to “Corporate
Governance Report” on our website (https://www.jt.com/about/corporate_governance/index.html).

49

【Reference】Our sustainability initiatives
Setting the JT Group Sustainability Targets
The JT Group Purpose indicates the direction in which the JT Group will be heading to ensure the sustainabilityof our society and the Group’s business therein.
The JT Group’s management principle is the “4S model.” We believe that as nature, society and people’s lives
are intertwined, sustaining our ways of living, and the activities of entities, will depend on the sustainability ofthe environment and society in which we exist. In pursuing this principle and by realizing the JT Group Purpose,
we will contribute to the sustainability of our environment and our society. The JT Group Materiality, thefoundation of our sustainability management, has been revised and we have identified five material topics:“Living with the planet,” “Value creation that exceeds consumer expectations,” “Investing in people and provide
motivation,” “Responsible supply chain management” and “Good governance.”
Based on the revised materiality, the JT Group Sustainability Targets have been set, consisting of a total of 25
items. In setting the new targets and initiatives, we focused our attention on the relationships and ties with therevised materiality, while also including past initiatives. For example, in pursuing our materiality “Living withthe planet,” we will perform a comprehensive assessment on the impact of the JT Group’s business on theecosystem, with a view to preserving biodiversity. Furthermore, in relation to our materiality “Investing in people
and provide motivation,” we have set multifaceted targets with the aim of further expanding our human capital.
The underlying point of the new sustainability strategy based on the Group purpose is that people’s lives, society,activities of entities, and the activities of all humans are part of the ecosystem. As a company responsible forcreating the future, we are determined to proactively work on resolving social issues.
Our board is involved in setting and managing the sustainability strategy - the JT Group Sustainability Targets
will be revisited regularly so that they can be further evolved. With our new sustainability strategy in place, wewill uphold our commitment to provide value in realizing the JT Group Purpose “Fulfilling Moments, Enriching
Life.”
External recognition
Our initiatives are recognized by various rating
agencies. Please visit our website for further details.
Please visit the Company’s website ‘External Recognition’(https://www.jt.com/sustainability/external_recognition/index.html)

50

JT
Group
PurposeFulfilling Moments, Enriching LifeAs nature, society, and people’s lives are intertwined, sustaining our ways of living, and the activities ofcorporate entities, will depend on the sustainability of the environment and society in which we exist.
In realizing the JT Group Purpose, we are contributing to that sustainability through our commitment toworking on the issues identified in our materiality.

Living with thePlanetJT Preserve aGroup harmonious
Materi- relationshipality between ourenvironment,
people, andcorporateorganizations
through initiatives
to improve our
impact on
environment

JT
Group
Sustainability
Targetsc

Value
Creation that
Exceeds Consumer
Expectations
Create diverse
products andservices beyond
consumer
expectations

Investingin People andProvideMotivation
Invest in people tosupport theirdevelopment withattention todiversity, andenhance humancapital by fosteringa corporate culturethat maximizes
individuality andability of each
personResponsible
Supply Chain
Management
Create asustainable supply
chain capable ofwithstanding
sudden changes inthe businessenvironment, by
tackling social
issues such as
respecting humanrights orpreservation of ourenvironment

Good Governance
Enhance ourgovernance byimproving our
stakeholder
satisfaction andcontinue to be atrustworthy
corporate entity

Biodiversity impact
assessment

Emission reduction

Renewable energy

Protecting water

Enhancingbiodiversity – No
deforestation, no
conversion

Waste reduction

Designing forcircularity –Packaging, productand device

Sustainableagriculture

Reduced-Risk
Products

Transparency in
reduced-risk science

Youth accessprevention

Creating first-inclass drugs

Food Inclusion

Diversity, equity &inclusion

Talent attraction

Attractive working
conditions

Health and safety

Development
supportInternal andexternalcollaboration

Supplier screening
and supply chain
due diligence

Grower living
incomeHuman rights ingrowercommunities

Grievancemechanisms

Community
investment

Internal control

For details about the JT Group Sustainability Targets, please
visit our website.
https://www.jt.com/sustainability/index.html

51

10. Main Business Contents

Business segment

Main business
Manufacture and sale of tobacco products, mainly Winston and
Camel
Research and development, manufacture and sale ofprescription drugs
Manufacture and sale of frozen and ambient foods, seasonings,
etc.

Tobacco BusinessPharmaceutical Business
Processed Food Business11. Status of Important Subsidiaries

Company name
TS Network Co., Ltd.
Japan Filter Technology
Co., Ltd.
JT International S.A.
Gallaher Ltd.
Torii PharmaceuticalCo., Ltd.
TableMark Co., Ltd.
(Notes)Equityownership(%)

Capital(Millions of yen)

460
(Millions of yen)

461
(Thousands of CHF)

923,723(Thousands of GBP)

50,374(Millions of yen)

5,190(Millions of yen)

22,500Main business

74.5

Distribution of tobacco products

100.0

Manufacture and sale of filters for
tobacco products(100.0)

Manufacture and sale of tobacco
products(100.0)

Manufacture and sale of tobacco
products

53.5

Manufacture
andprescription drugs

sale

of

100.0

Manufacture and sale of processedfoods

1. Figures in parentheses in the “Equity ownership” column indicate indirect holding rates.
2. On the last day of the fiscal year ended December 31, 2023, there were 221 consolidated
subsidiaries, including 6 above-mentioned important subsidiaries, as well as 18 affiliates accounted
for by the equity method.
3. On the last day of the fiscal year ended December 31, 2023, there were no specified wholly owned
subsidiaries as stipulated in Article 118, item 4 of the Regulations for Enforcement of theCompanies Act.

52

12. Major Lenders
LenderOutstanding balance(Millions of yen)

Subordinated syndicated loan
(Note)

100,000

The subordinated syndicated loan was financed jointly by four banks, with Mizuho Bank, Ltd. acting
as the arranger and agent.

13. Major Sales Offices and Factories(1) JT
Headquarters:

1-1, Toranomon 4-chome, Minato-ku, Tokyo, Japan

Sales offices:
Hokkaido, Miyagi, Tokyo, Aichi, Osaka, Hiroshima, Kagawa, Fukuoka, and other 39 sales
offices
Factories:

Kita-Kanto (Tochigi), Tokai (Shizuoka), Kansai (Kyoto), and Tomobe (Ibaraki)

Laboratories:

Tobacco Science Research Center (Kanagawa),
Leaf Tobacco Research Center (Tochigi),
and Central Pharmaceutical Research Institute (Osaka)(2) Subsidiaries
TS Network Co., Ltd. (Tokyo)
Japan Filter Technology Co., Ltd. (Tokyo)
JT International S.A. (Switzerland)
Gallaher Ltd. (U.K.)
Torii Pharmaceutical Co., Ltd. (Tokyo)
TableMark Co., Ltd. (Tokyo)(Note) Text in parentheses shows the location of head office.

53

14. Status of Employees(1) Employees of the JT Group [Consolidated]
Number of employees(Person)Business segment
International Tobacco Business

46,698

Pharmaceutical Business

1,338

Processed Food BusinessCommon company-wide services
within JT

4,299

Total

53,239904(Note) The above number of employees indicates the number of working employees.
(2) Employees of JT [Non-consolidated]

Male/Female
Male

Number ofYear-on-year
employees
increase (decrease)(Person)(Person)
4,742
86

42.4

Average years ofservice(Year)
16.2

Average age(Year old)

Female

1,198

35

37.3

11.2

Total or average

5,940

121

41.4

15.2

(Note) The above number of employees indicates the number of working employees.

54

II.

Matters Concerning Shares of JT

1. Total number of shares authorized:

8,000,000,000 shares

2. Total number of shares issued:

2,000,000,000 shares(Including treasury shares

224,692,028 shares)

3. Number of shareholders:4.

835,441

Major shareholders
Number of shares held
(Share)Name of shareholders
Minister of Finance

Equity ownership (%)

666,925,200

37.57

174,583,700

9.83

61,906,618

3.49

32,423,221

1.83

25,094,341

1.41

17,169,700

0.97

Barclays Securities Japan Limited BNYM

16,188,600

0.91

JP MORGAN CHASE BANK 385781

13,722,976

0.77

JT Group Employees’ Shareholding
Association

11,878,075

0.67Mizuho Securities Co., Ltd.

9,361,248

0.53

The Master Trust Bank of Japan, Ltd.
(Trust Account)
Custody Bank of Japan, Ltd.
(Trust Account)
SMBC Nikko Securities Inc.
STATE STREET BANK WEST CLIENT TREATY 505234
JAPAN SECURITIES FINANCE CO.,LTD.

(Note) Equity ownership is calculated after deducting treasury shares (224,692,028 shares).
5.

Status of shares granted to Members of the Board and Audit & Supervisory Board Members of theCompany as consideration for execution of duties during the current fiscal year
Persons eligible for the
granting
Members of the Board(excluding Outside Directors)

Number of persons eligible forthe granting

Number of shares
104,408 shares

3

Outside Directors––

Audit & Supervisory Board
Members––(Notes) 1. The Company’s stock remuneration system is comprised of two kinds of stock remuneration:
restricted stock remuneration and performance share units. For details, please refer to pages 63 to
66 of the Business Report.
2. The above shares are shares granted as two kinds of stock remuneration: restricted stock55

remuneration and performance share units. On July 12, 2023, the Company disposed of 157,700
treasury shares (including 85,200 shares granted to Members of the Board) for the allotment of
restricted stock remuneration to three Members of the Board who also serve as Executive Officers,
and to 15 Executive Officers (including two Executive Officers who retired), and disposed of 37,019
treasury shares (including 19,208 shares granted to Members of the Board) for the allotment of
performance share units to three Members of the Board who also serve as Executive Officers, andto ten Executive Officers.
3. The retired Executive Officers who received the allotment of restricted stock remuneration are those
who retired as Executive Officer of the Company on June 30, 2023 and no longer held a position as
Member of the Board, Audit & Supervisory Board Member or Executive Officer of the Company
as of July 1, 2023.
6.

Other significant matters concerning shares
No items to report.

56

III. Matters Concerning Members of the Board and Audit & Supervisory Board Members of JT
1.

Members of the Board and Audit & Supervisory Board Members
Position

Name

Chairperson of theBoard

Mutsuo Iwai

Deputy Chairperson of
the Board

Shigeaki Okamoto

Representative
Director and President

Masamichi
Terabatake

Representative
Director and Executive
Vice President

Kiyohide Hirowatari

Representative
Director and Executive
Vice President

Kei Nakano

Member of the Board

Main Kohda

Member of the Board

Yukiko Nagashima

Responsibility

Chief Executive
Officer
Corporate
Governance,
Compliance,
Corporate Strategy,
Sustainability,
People & Culture,
Information
Technology, Legal,
Operation Review &Business Assurance,
PharmaceuticalBusiness and FoodBusiness
Finance, Corporate
Communications,
Business
Development and DLAB

Significant concurrent positions
outside the Company
Outside Director, Benesse
Holdings, Inc.
Outside Director, TDK
Corporation
Outside Director, &Capital Inc.
Outside Audit & Supervisory
Board Member, Yomiuri Land
Co., Ltd.
Outside Audit & Supervisory
Board Member, The Yomiuri
Shimbun Osaka Head OfficeOutside Audit & Supervisory
Board Member, The Yomiuri
Shimbun Seibu Head OfficeOutside Audit & Supervisory
Board Member, The Yomiuri
Shimbun Tokyo Head Office
Chairman of Supervisory Board,
JT International Holding B.V.

Director, Japan Growth
Investments Alliance, Inc.
Novelist
Outside Director, Japan
Exchange Group, Inc.
Outside Director, MITSUBISHI
MOTORS CORPORATION
Standing Audit & Supervisory
Board Member, Recruit
Holdings Co., Ltd.
Standing Audit & Supervisory
Board Member, Recruit Co.,Ltd.
Outside Audit & Supervisory
Board Member, SUMITOMOCORPORATION

57

Position

Name

Member of the Board

Masato Kitera

Member of the Board

Tetsuya Shoji

Standing Audit &Supervisory Board
MemberStanding Audit &Supervisory Board
MemberStanding Audit &Supervisory Board
MemberSignificant concurrent positions
outside the Company
Outside Director, Marubeni
Corporation
Outside Director, NIPPONSTEEL CORPORATION
Corporate Advisor, NTT
Communications Corporation
Outside Director, circlace Inc.
Outside Director, Sapporo
Holdings Limited
Outside Director, Hitachi Zosen
Corporation
Outside Director, Mitsubishi
Logistics Corporation

Hideaki
Kashiwakura
Tsutomu Hashimoto
Shigeru Taniuchi

Audit & Supervisory
Board Member

Nobuo Inada

Audit & Supervisory
Board Member

Hiroko Yamashina(Notes)Responsibility

Attorney at Law, Inada Law
Firm
Outside Director, an Audit &Supervisory Board Member,
Nomura Securities Co., Ltd.
Group Executive, ORIX
Corporation
Chairman, ORIX Credit
Corporation

1. Members of the Board Main Kohda, Yukiko Nagashima, Masato Kitera and Tetsuya Shoji are
Outside Directors.
2. Audit & Supervisory Board Members Shigeru Taniuchi, Nobuo Inada and Hiroko Yamashina are
Outside Audit & Supervisory Board Members.
3. Members of the Board Main Kohda, Yukiko Nagashima, Masato Kitera and Tetsuya Shoji, andAudit & Supervisory Board Members, Shigeru Taniuchi, Nobuo Inada and Hiroko Yamashina,
are designated as independent officers (directors and auditors) as prescribed by the Tokyo Stock
Exchange, Inc.
4. As Audit & Supervisory Board Member Hideaki Kashiwakura has served as Deputy Chief
Financial Officer of the Company, Audit & Supervisory Board Member Tsutomu Hashimoto has
served as Vice President, Operational Review and Business Assurance Division of the Company,
Audit & Supervisory Board Member Shigeru Taniuchi has served in a wide range of important
positions in the Ministry of Finance, and Audit & Supervisory Board Member Nobuo Inada hasserved as Outside Director, an Audit & Supervisory Board Member of Nomura Securities Co.,
Ltd., they have relevant knowledge about financing and accounting.
5. Representative Director and Executive Vice President Kei Nakano, Standing Audit & Supervisory
Board Members Hideaki Kashiwakura, Tsutomu Hashimoto and Shigeru Taniuchi, and Audit &Supervisory Board Members Nobuo Inada and Hiroko Yamashina assumed their office on March24, 2023.

58

6. Members of the Board Naohiro Minami and Kazuhito Yamashita, Standing Audit & Supervisory
Board Members Ryoko Nagata, Hiroshi Yamamoto and Toru Mimura, and Audit & Supervisory
Board Members Hiroshi Obayashi and Koji Yoshikuni retired on March 24, 2023.
7. As of January 1, 2024, after the closing of the fiscal year under review, we had changes in the
responsibilities of the Member of the Board who also serves as an Executive Officer: Kiyohide
Hirowatari is now a Director who does not serve as an Executive Officer.
8. As of August 23, 2023, Representative Director and President Masamichi Terabatake retired fromthe position of Chairman and Managing Director of JT International Group Holding B.V.
9. The Company has entered into agreements with each of its Members of the Board (excluding
Members of the Board who also serve as Executive Officers) and Audit & Supervisory Board
Members with respect to the liability set forth in Paragraph 1, Article 423 of the Companies Act,by which the liability for damages of each of them is limited to the minimum amount set forth inParagraph 1, Article 425 of the same Act, provided they perform their duties without knowledgeof such damages and without gross negligence.
10. The Company has entered into liability agreements with each of its Members of the Board andAudit & Supervisory Board Members above as stipulated in Paragraph 1, Article 430-2 of theCompanies Act, whereby the Company shall compensate them for expenses incurred under item(i) of the same paragraph, and any losses incurred under item (ii) of the same paragraph, to theextent permitted by laws and regulations. However, to provide coverage for losses incurred underitem (ii) of the same paragraph, measures have been put into place to ensure that the proper
performance of duties of insureds is not impaired, by making such coverage premised upon a final
judgment or the reaching of a judicial settlement (including cases where the Company recognizes
there is a due process that is equivalent to this) and requiring a resolution by the Board of Directorsof the matter after it has been deliberated by the Advisory Panel on Nomination and Compensationof the Company.
11. The Company has entered into a liability insurance agreement for executive officers, etc. with aninsurance company as stipulated in Paragraph 1, Article 430-3 of the Companies Act, under which
all Members of the Board, Audit & Supervisory Board Members, and Executive Officers are theinsured. Under the terms of this insurance agreement, litigation expenses and compensation fordamages arising from legal action against the insured by third parties, shareholders or companies
shall be supplemented, and its premium is fully borne by the Company. Note that any damages,
etc., incurred by the insured in association with his/her criminal act or violation of laws andregulations while he/she is aware of that are not subject to the coverage; as such, a measure istaken to ensure/maintain the appropriateness in the execution of duties by the insured.

59

2.

Remunerations for Members of the Board and Audit & Supervisory Board Members(1) Total remunerations for Members of the Board and Audit & Supervisory Board Members

Category
Members of the
Board(Outside Directors)
Audit &
Supervisory Board
Members(Outside Audit &Supervisory Board
Members)
Total(Outside Director
and Outside Audit& Supervisory
Board Members)(Notes)Total
remunerations(Millions ofyen)

Total remuneration by type (Millions of yen)
Base salary

Executive bonus

Restricted stock
remuneration

Performance
share units

Number of
eligible
officers(Person)

1,457
(93)

566
(93)

417
(-)

273
(-)

202
(-)

11
(4)

157
(75)

157
(75)

(-)

(-)

(-)

10
(6)

1,614
(168)

722
(168)

417
(-)

273
(-)

202
(-)

21
(10)

1. For executive bonuses, the amounts planned to be paid are shown.
2. For performance share units, the amount to be recorded as expenses for the fiscal year under review
is listed.
3. Executive bonus and performance share units of the above fall under performance-linked
remuneration and others.
4. Restricted stock remuneration and performance share units of the above fall under non-monetary
remuneration and others.
5. The above list includes two Members of the Board and five Audit & Supervisory Board Members(including three Outside Audit & Supervisory Board Members) who retired on March 24, 2023.

(2) The remuneration amount for Members of the Board and Audit & Supervisory Board Members or thepolicy concerning the remuneration calculation method thereof and the method of determining the policy
1. Executive Remuneration Policy
The Board of Directors determines the policies on executive remuneration including the methodology on
determination of remuneration of each Member of the Board. These policies are determined after being
deliberated and reported by the Advisory Panel on Nomination and Compensation comprised entirely of theMember of the Board who do not serve as Executive Officers, in which more than half of whose members being
Independent Outside Directors, in order to ensure independence and objectivity.
Based on these policies, the Company’s basic concept on executive remuneration is as follows: Set the remuneration at an adequate level to retain personnel with superior capabilities.
 Link the remuneration to the Company’s performance so as to motivate executives to achieve theirperformance targets.
 Link the remuneration to corporate value over the medium and long term.
 Ensure transparency by implementing objective and quantitative frameworks.
2. Executive Remuneration Composition
The remuneration for Members of the Board and Audit & Supervisory Board Members is made of four
components. In addition to the monthly “base salary,” there is an “executive bonus,” which reflects the Group’sbusiness performance in the relevant fiscal year, a “restricted stock remuneration plan” and “performance shareunit plan,” which are linked to the medium- and long-term corporate value of the Group. The Restricted StockRemuneration Plan and the Performance Share Unit Plan were introduced in 2020 in order to strengthen theefforts to enhance the medium- and long-term corporate value and to further promote shared value withshareholders.
The composition of remuneration by member category is as follows:60 Members of the Board who also serve as Executive Officers
Remuneration for the Members of the Board who also serve as Executive Officers comprises “base salary,”“executive bonus,” “restricted stock remuneration plan” and “performance share unit plan” as they are
required to achieve results by executing their duties on a daily basis.
From fiscal year 2023, the Company has increased the composition ratio of the medium- and long-term
incentives that consist of “restricted stock remuneration plan” and “performance share unit plan,” seeking
to further promote aggressive management from a medium- and long-term perspective. The composition
ratio for each type of remuneration from fiscal year 2023 is as follows.

(Notes)1. The composition ratios vary depending on the duties of Members of the Board and the ranges areindicated in the illustration.
2. The ratio of restricted stock remuneration plan and performance share unit plan is about 3 to 1.
3. Under performance share unit, 50% is paid as cash towards tax payment.
4. The figure above shows the composition ratio of remuneration if executive bonus and performance
share units are paid at the standard amount. The ratio may fluctuate depending on performance andshare price of the Company, and the remuneration levels of our benchmark companies, among otherthings.
 Members of the Board (excluding Outside Directors) who do not serve as Executive Officers
For Members of the Board (excluding Outside Directors) who do not serve as Executive Officers,
remuneration is not linked to business performance but is composed of “base salary” only, as they are
required to make decisions on the JT Group management strategies aimed at enhancing corporate value andto fulfill supervisory functions including monitoring the implementation of medium- and long-term growthstrategies, etc.
 Outside Directors
Remuneration for Outside Directors is composed of “base salary” only and does not include performancelinked remuneration to ensure their independence. At the Board of Directors of the Company held on
February 14, 2022, a resolution was adopted that from the meeting of the Advisory Panel on Nomination
and Compensation held on March 23, 2022, the Chairperson shall be elected from among Independent
Outside Directors by themselves, and that the Outside Director who serves as the Chairperson shall receive
the remuneration at a level of the amount corresponding to the duty of the Chairperson, in addition to the
remuneration other Outside Directors receive.
 Audit & Supervisory Board Members
In the light of the role of Audit & Supervisory Board Members, which is primarily to conduct audits on legal
compliance, their remuneration is composed of “base salary” only.

<Remuneration structure for Members of the Board and Audit & Supervisory Board Members>

Members of the
Executive Officer
Board(excluding
Not an Executive
OutsideOfficer
Directors)
Outside Directors
Audit & Supervisory Board Members

Base salary

Executive bonus

Restricted stock
remuneration plan /Performance share
units plan

Applicable

Applicable

Applicable

ApplicableNot applicableNot applicable

Applicable
ApplicableNot applicableNot applicableNot applicableNot applicable

3. Ceiling of the Total Executive Remuneration and Approval Process
Regarding the amount of remuneration for Members of the Board of the Company (nine (9) Members as ofDecember 31, 2023), at the 38th Ordinary General Meeting of Shareholders held on March 24, 2023, approval61was obtained for an upper limit to base salary of ¥0.8 billion per year for all Members of the Board (including¥160 million per year for Outside Directors) (nine (9) Members of the Board was subject to this rule at the timeof the resolution, including four (4) Outside Directors). In addition to this remuneration, at the 38th Ordinary
General Meeting of Shareholders held on March 24, 2023, approval was obtained for executive bonuses to theMembers of the Board who also serve as an Executive Officer not exceeding 0.3% of profit (attributable toowners of the parent company), restricted stock remuneration not exceeding ¥600 million (or 300,000 shares)
annually, and performance share units not exceeding the amount obtained by multiplying fixed number of baseshare units(Note 1) (up to 200,000 shares) with share price at offering(Note 2) (or 100,000 shares) (for three (3)Members of the Board were subject to this rule at the time of the resolution).
Further, the maximum amount of the annual aggregate remuneration for all Audit & Supervisory Board
Members (five (5) Members as of December 31, 2023) was approved at the 34th Ordinary General Meeting of
Shareholders held on March 20, 2019 and shall not exceed ¥240 million. (five (5) Audit & Supervisory Board
Members were subject to this rule at the time of the resolution).
(Notes)1. Number of base share units (determined by the Board of Directors of the Company based on the duties, etc., ofrespective eligible Members of the Board) x Offering ratio/percentage (For the performance evaluation periods
stating from 2020 and 2021, performance-linked payout is set to be in the range of 0% to 200% based on profit
achievement. For the performance evaluation periods stating from 2022 and 2023, performance-linked payout is set
to be in the range of 0% to 190% based on profit achievement and either -10%, 0% or +10% is added/deducted toresults depending on evaluations of the ESG-related index).
2. After the performance evaluation period ends, based on the closing price of the ordinary shares of the Company on
the Tokyo Stock Exchange on the preceding business day of the date of the resolution by the Board of Directorsof the Company concerning the allotment of the ordinary shares of the Company under the plan (or the closing priceon the immediately preceding business day, if transactions are not executed on that day), the amount shall be
determined by the Board of Directors of the Company within the range not particularly favorable to eligible
Members of the Board.

Determination of the amount of remuneration for each Member of the Board is benchmarked based on a surveyof remuneration of directors conducted by third parties, based on the remuneration levels of major domestic
manufacturers that are expanding overseas with the similar size and profits (benchmark companies). To be more
specific, after benchmarking the level of base salary and the percentage of variable remuneration in annual
bonuses and medium- and long-term incentives, the Representative Director and President decide the amountof remuneration for Members of the Board based on the results of the review by the Advisory Panel on
Nomination and Compensation, in line with the methods of calculation as set forth in the internal rules, andwithin the maximum remuneration approved at the General Meeting of Shareholders. At this point, because theRepresentative Director and President is judged suitable for overviewing the Company’s management andconsolidated performance to decide the amount of remuneration for Members of the Board by considering theevaluation of their execution of duties, the Representative Director and President is delegated to make suchdecisions.
As to the remuneration for the fiscal year under review, based on the details of the review by the Advisory Panelon Nomination and Compensation, Representative Director and President Masamichi Terabatake has decided
the amount of remuneration for Members of the Board relating to base salary, executive bonuses, the monetary
remuneration claim toward the allotment of restricted stock, and the monetary remuneration claim toward theallotment of performance share units, by following the methods of calculation as set forth in the internal rules;
and the Board of Directors judges that its details are in compliance with the determination policy.
The remuneration of Audit & Supervisory Board Members is also benchmarked in the same way, and isdetermined by deliberation among the Audit & Supervisory Board Members within the maximum remuneration
approved at the General Meeting of Shareholders.
4. Executive Remuneration Details
 Base salary
Executives will be remunerated with monthly base salary as per their responsibilities. Members of the Board
who also serve as Executive Officers will be individually evaluated for achievement of their performance targets
through execution of their duties that will lead to the Group’s sustainable profit growth. Performance targets are
set through interviews with the Company’s President and Chief Executive Officer at the beginning of the fiscal
year and evaluated at the end of fiscal year. The base salary for the following fiscal year will be set within certain
range reflecting the individual performance evaluations. However, an individual performance evaluation will
not be applicable for the Company’s President and Chief Executive Officer.

62 Executive bonus
Executive bonus for Members of the Board who also serve as Executive Officers will be paid as monetary
remuneration reflecting the performance of a fiscal year. Core revenue at constant FX, adjusted operating profit(AOP) at constant FX, adjusted operating profit on a reported basis, profit results, and an RRP-related index(Note)
will be the key performance indicators (KPI) for the calculation of executive bonuses, which will be used
to measure the performance of the business itself, which is the foundation of sustainable profit growth, as wellas the achievement rate of profit growth, from the viewpoint of providing shared value with the shareholders
and setting indices conducive to sustainable profit growth over the medium and long term. In calculating theamounts of executive bonuses, 15% accounts for core revenue at constant FX, 35% for AOP at constant FX,
25% for adjusted operating profit on a reported basis and 25% for profit. The ratio that performance on a reported
basis accounts for on the KPIs used to determine executive bonuses has been set to 50%. Performance-linked
payout is based on the KPI achievement in the range of 0% to 190% and either -10%, 0% or +10% isadded/deducted to results depending on evaluations of the RRP-related index. In a case where a Member of theBoard who is a recipient of executive bonus has carried out certain wrongful behavior, the officer involved will
be required to refund a part of the executive bonus already paid.
(Note)

Qualitative evaluation indicators pertaining to the implementation of strategies and level of achievement related to RRP(Reduced-Risk Products), which is a focus area.

Consolidated performance indicators and actual results related to executive bonus for the fiscal year underreview are as follows:
Fiscal year ended December 31, 2023
Performance indicator (Consolidated)
TargetActual(Billions of yen)(Billions of yen)Core revenue at constant FX
2,606.0
2,712.5
Adjusted operating profit at constant
728.0
765.7
FX
Adjusted operating profit on a
667.0
728.0
reported basis
Profit(Profit attributable to owners of the
440.0
482.3
parent company) Restricted stock remuneration
The Restricted Stock Remuneration Plan is designed to strengthen the shared value with shareholders and toenhance the corporate value over the medium and to long term. Members of the Board who also serve as
Executive Officers (“Eligible Directors”) are eligible to receive monetary remuneration claims every fiscal year
towards restricted stock and the Eligible Directors will receive the allocation of Company’s ordinary shares bypaying all of the monetary remuneration claims in kind in accordance with the resolution of the Board of
Directors (the allotment is made by means of disposal of treasury shares). In disposal of ordinary shares of theCompany due to this Plan, a restricted stock allotment agreement shall be concluded between the Company andeach Eligible Director.
The monetary compensation towards the purchase of the Company’s restricted stock will be decided based on
the closing price of the Company’s share at the Tokyo Stock Exchange as of the business day immediately
preceding the resolution by the Board of Directors. However, if the Company share does not trade at the Tokyo
Stock Exchange on the day prior to the resolution of the Company’s Board of Directors, the closing price of theimmediately preceding trading day will be used. This price of share will be decided by the Company’s Boardof Directors within a scope that is not particularly advantageous to the Eligible Directors who will receive therestricted stock.
In addition, the allocation of monetary remuneration claims to the Eligible Directors assumes that such director
accepts the compensation as contribution in kind and enters into the restricted stock allotment agreement.
The specific details of the Plan are as follows. Any other matters regarding the Plan shall be determined by theCompany’s Board of Directors.
i

The total amount of monetary remuneration claims and number of shares
The total amount of monetary remuneration claims for all Eligible Directors together shall not exceed ¥600
million per year or the total number of ordinary shares allotted by the Company shall not exceed 300,000
63

shares per year. If there is a stock split, stock consolidation, or any other event requiring adjustment to thetotal number of shares to be allocated after this Restricted Stock Remuneration Plan has been approved inthe 35th Ordinary General Meeting of Shareholders held on March 19, 2020, the relevant total number shallbe adjusted accordingly within a reasonable range.
ii Transfer restriction period and details
Members of the Board who receive the allotted restricted stock (“Allotted Shares”) are prohibited to transfer
the Allotted Shares, pledge them, mortgage them, or use any arrangement to dispose them over 30 years(“Restriction Period”).
iii Removal of transfer restrictions
In case any Member of the Board who receive the allotted restricted stock retires due to expiration of theterm or resigns due to reasons deemed reasonable by the Company’s Board of Directors, from a position as
Member of the Board or any other positions separately specified by the Company’s Board of Directors during
the Restriction Period, the transfer restrictions will be removed on all the Allotted Shares.
iv Revocation of Allotted Shares without any compensation
Allotted Shares will be revoked by the Company if a Member of the Board who receive the allotted restricted
stock violates any laws and regulations or falls under any other event specified by the Company’s Board of
Directors during the Restriction Period, the Company retains the right to acquire all or part of the Allotted
Shares without any compensation.
v Handling in the case of reorganization
During the Restriction Period, if the Company becomes defunct due to merger or organization restructuring,
the transfer restrictions for Allotted Shares will be removed following the resolution of the Company’s Boardof Directors before the effective date of such reorganization.
 Performance share units
The Performance Share Unit Plan is a performance-linked stock compensation system that aims to strengthen
the shared value with shareholders, to enhance the corporate value over the medium and long- term and tocommit to achieving business results over the medium-term.
Members of the Board who also serve as Executive Officers are eligible to receive monetary remuneration
claims and cash towards the acquisition of ordinary shares after the performance evaluation period(“Performance Evaluation Period”) (Note), which is comprised of three fiscal years starting from the fiscal year
subject to provision, in accordance with the rate of achievement of performance and other multi-year
performance targets during the Performance Evaluation Period. The Advisory Panel on Nomination andCompensation deliberates and decides on the achievement rate of such targets for performance and other items
during the Performance Evaluation Period. The remuneration for the performance share units will be disbursed
after the Performance Evaluation Period expires, in principle, as monetary remuneration claims and cash
towards the acquisition of ordinary shares. Each of the Eligible Directors will receive the allocation ofCompany’s ordinary shares by paying all of the monetary remuneration claims in kind (the allotment is madeby means of disposal of treasury shares).
The monetary compensation towards the purchase of the Company’s ordinary shares will be decided based on
the closing price of the Company’s share at the Tokyo Stock Exchange as of the business day immediately
preceding the resolution by the Board of Directors. However, if the Company share does not trade at the Tokyo
Stock Exchange on the day prior to the resolution of the Company’s Board of Directors, the closing price of theimmediately preceding trading day will be used. This price of share will be decided by the Company’s Boardof Directors within a scope that is not particularly advantageous to the Eligible Directors who will receive theperformance share units. In addition, since monetary remuneration claims and cash to deliver the Company’s
ordinary shares are granted according to the above achievement rate of performance, the allocation of themonetary remuneration claims and cash to the Eligible Directors, the amount of the claims and cash to deliver
the Company’s ordinary shares, and the number of shares delivered are not decided by the expiration of the
Performance Evaluation Period.
(Note)The initial year for offering was set as 2020, with a Performance Evaluation Period of three fiscal years, from the fiscal
year ended December 31, 2020, to the fiscal year ended December 31, 2022. For 2021, Performance Evaluation Period
is three fiscal years, from the fiscal year ended December 31, 2021, to the fiscal year ending December 31, 2023. For
2022, Performance Evaluation Period is three fiscal years, from the fiscal year ended December 31, 2022, to the fiscal
year ending December 31, 2024. For 2023, Performance Evaluation Period is three fiscal years, from the fiscal year
ended December 31, 2023, to the fiscal year ending December 31, 2025. From the fiscal year 2024 forward, to the extent
approved at the 38th Ordinary General Meeting of Shareholders held on March 24, 2023 (not exceeding the amountobtained by multiplying fixed number of base share units (up to 200,000 shares) with share price at offering), theCompany will implement the performance-linked stock compensation plan, with respective fiscal years set as the year
for offering with a new (performance evaluation) period of three consecutive fiscal years starting thereof.

64

The specific details of the Plan are as follows. Any other matters regarding the Plan shall be determined by theCompany’s Board of Directors.
i The total amount of monetary remuneration claims and cash and number of shares
The total amount of monetary remuneration claims and cash for all Eligible Directors together shall not
exceed the amount obtained by multiplying fixed number of base share units (up to 200,000 shares) withshare price at offering. The total number of ordinary shares allotted annually for all Eligible Directors
together shall not exceed 100,000 shares. If a stock split, stock consolidation, or any other event requiring
adjustment to the total number of shares to be allocated arises after the 35th Ordinary General Meeting of
Shareholders held on March 19, 2020, the relevant total number shall be adjusted accordingly within areasonable range.
ii Share allotment and cash calculation methodology
The Company determines performance indicators and others such as performance-linked figures for the Plan
which are necessary to specifically calculate the number of shares to be distributed taking into account thereview conducted by the Advisory Panel on Nomination and Compensation of the Company. Profit has been
set as the KPI for the Performance Evaluation Period that began from fiscal year 2020 and fiscal year 2021
from the perspective of providing shared value with shareholders. For the evaluation period starting in fiscal
year 2022, the Company introduced an ESG-related index on top of profit, in order for the Company andshareholders to seek an alignment on a mutual perspective of evaluating and being evaluated. In fiscal year
2022 and fiscal year 2023, the Company has adopted its progress on initiatives to realize net zero as an ESGrelated index, specifically the target attainment rates to reduce Greenhouse Gas emissions.
For the details of calculations, the number of the ordinary shares of the Company to be issued to Eligible
Directors and the amount of cash to be paid to Eligible Directors as funds toward tax payment shall becalculated based on the formula (1) and (2) below, respectively (Note that any fractions less than one share
shall be rounded off). Further, in the event of retirement or appointment during the Performance Evaluation
Period, reasonable adjustments may be made in the number of the ordinary shares of the Company or theamount to be offered to the Eligible Director or his/her inheritors, in accordance with the provisions set by
the Board of Directors of the Company. If the number of the ordinary shares of the Company allotted to
Eligible Directors calculated by the formula (1) is greater than the maximum aggregate number of theordinary shares of the Company to be allotted to Eligible Directors, it shall be deducted in a reasonable
manner, such as a proportional distribution, as laid down by the Board of Directors of the Company, within
the range not exceeding the maximum aggregate number.
(i) Number of the ordinary shares of the Company to be issued to Eligible Directors
Number of base share units x Offering ratio/percentage x 50%(ii) Amount of cash to be paid to eligible Members of the Board(Number of base share units x Offering ratio/percentage – Number of ordinary shares of the Company
calculated in (i)) x Share price at the time of issue

65

iii Pre-requisites for distribution
The Company shall provide the monetary remuneration claims and cash to Eligible Directors, and Eligible
Directors are required to purchase the Company’s ordinary shares with all the monetary remuneration claims
received as contribution in kind, after the Performance Evaluation Period expires and the following
conditions for distribution of Company’s ordinary shares are met.
(i) Remaining in his/her term of office as Member of the Board, Executive Officer or any other positions
separately specified by the Board of Directors during the fiscal year subject to provision(ii) Non-existence of certain illegal acts(iii) Other requirements considered necessary, which are stipulated by the Board of Directors
iv Handling in the case of reorganization
During the Performance Evaluation Period, if the Company becomes defunct due to merger or organization
restructuring, the Company’s Board of Directors may, prior to the effective date of the said organizational
restructuring, decide to pay towards performance share units in accordance with the duration from thecommencement date of the Performance Evaluation Period to the date of approval for the said organizational
restructuring. However, in lieu of the aforementioned allocation of the Company’s ordinary shares, cash will
be reasonably calculated by the Company’s Board of Directors as the amount equivalent to the said ordinary
shares, within the limit of the remuneration for the Performance Share Unit Plan.

66

3.

Matters concerning Outside Directors and Outside Audit & Supervisory Board Members(1) Significant concurrent positions outside the Company
Category

Name
Main Kohda

Organizations whereconcurrent positions are held
Novelist
Japan Exchange Group, Inc.
MITSUBISHI MOTORSCORPORATION
Recruit Holdings Co., Ltd.

YukikoNagashima
Member of theBoard
Masato Kitera

Tetsuya Shoji

Audit &
Supervisory
Board Member

Nobuo Inada
HirokoYamashina

Recruit Co., Ltd.
SUMITOMOCORPORATION
Marubeni Corporation
NIPPON STEELCORPORATIONNTT Communications
Corporation
circlace Inc.
Sapporo Holdings Limited
Hitachi Zosen Corporation
Mitsubishi Logistics
Corporation
Inada Law Firm
Nomura Securities Co., Ltd.
ORIX Corporation
ORIX Credit Corporation

Position
Outside Director
Outside Director
Standing Audit &Supervisory Board Member
Standing Audit &Supervisory Board Member
Outside Audit & Supervisory
Board Member
Outside Director
Outside Director
Corporate Advisor
Outside Director
Outside Director
Outside Director
Outside Director
Attorney at Law
Outside Director, an Audit &Supervisory Board MemberGroup Executive
Chairman(Note) There are no special relationships to be mentioned between the above organizations in which concurrent
positions are held and JT.

67

(2) Major activities during this fiscal year
Category

Name

Main Kohda

Yukiko Nagashima

Member of theBoard

Masato Kitera

Tetsuya Shoji

Status of main activities
Main Kohda attended all 14 Board of Directors meetings
held during the fiscal year under review. Her contribution
toward improving the Group corporate governance was
expected based on her extensive knowledge ininternational finance, wide experience of serving on
government examination committees and similar
positions, and deep insight and objective point of view
demonstrated through her activities as an author; shefulfilled her duties adequately as an Outside Director byproviding advice and recommendations on finance, IR,and other areas.
Yukiko Nagashima attended all 14 Board of Directors
meetings held during the fiscal year under review. Her
contribution toward improving the Group corporate
governance was expected based on her experience incorporate management and execution of business in awide range of fields, such as emerging businesses andtemporary staffing and objective point of view based onher experience as a Member of the Audit & Supervisory
Boards, she fulfilled her duties adequately as an Outside
Director by providing advice and recommendations on
business strategy, sustainability strategy, and other areas.
Masato Kitera attended all 14 Board of Directors
meetings held during the fiscal year under review. His
contribution toward improving the Group corporate
governance was expected based on his extensive
international experience and a high level of knowledge ofinternational affairs cultivated during his diplomatic andother activities, and he held important positions overmany years of service with the government, primarily in
the Ministry of Foreign Affairs, he fulfilled his duties
adequately as an Outside Director by providing advice
and recommendations on country risk, compliance, andother areas.
Tetsuya Shoji attended all 14 Board of Directors meetings
held during the fiscal year under review. He has
considerable experience, track record, and insight into
corporate management. His contribution toward
improving the Group corporate governance was expectedbased on his wide experience in areas such as corporate
planning, human resources, global operations, anddigitization promotion, he fulfilled his duties adequately
as an Outside Director by providing recommendations
and advice on business strategy, IR, and other areas.

68Category

Name

Shigeru Taniuchi

Audit &
Supervisory Board
MemberNobuo Inada

Hiroko Yamashina

Status of main activities
Shigeru Taniuchi attended all 10 Board of Directors
meetings, as well as all 10 meetings of the Audit &Supervisory Board, held during the fiscal year underreview since he assumed office on March 24, 2023. Basedon his extensive experience and broad and deep insight infinance and legal affairs, he has fulfilled his duties as an
Audit & Supervisory Board Member, providing advice
and recommendations on the Company’s governancesystem, including crisis management system, etc.
Nobuo Inada attended all 10 Board of Directors meetings,
as well as all 10 meetings of the Audit & Supervisory
Board, held during the fiscal year under review since heassumed office on March 24, 2023. Based on his
extensive experience and broad and deep insight in legal
affairs and compliance, he has fulfilled his duties as an
Audit & Supervisory Board Member, providing advice
and recommendations on the Company’s governancesystem including compliance system, etc.
Hiroko Yamashina attended all 10 Board of Directors
meetings, as well as all 10 meetings of the Audit &Supervisory Board, held during the fiscal year underreview since she assumed office on March 24, 2023.
Based on her extensive experience and broad and deep
insight in corporate management and business operation,
she has fulfilled her duties as an Audit & Supervisory
Board Member, providing advice and recommendations
on the Company’s governance system including humanresource management, etc.

(3) Total amount of remunerations
Outside Audit &Supervisory Board
Total
MemberAmount to
Amount to
Amount to
Number to
Number to
be paidbe paidbe paidbe paidbe paid(Millions of(Millions of(Millions of(Person)(Person)
yen)
yen)
yen)
93
6
75
10
168

Outside Director
Category

Base salary

Number to
be paid(Person)4(Note) The above list includes three Audit & Supervisory Board Members who retired on March 24, 2023.

69

IV. Matters Relating to Independent Auditor
1.

Name of Independent Auditor:

Deloitte Touche Tohmatsu LLC

2.

Fees for Independent Auditor relating to this fiscal year

(1) Fees for Independent Auditor relating to this fiscal year of JTi)

Fees for audit attestation based on Paragraph 1, Article 2 of
the Certified Public Accountants Act:

ii)

Fees for tasks other than audit attestation based on Paragraph
1, Article 2 of the Certified Public Accountants Act:

¥365 million¥100 million(2) Amount of cash and other financial benefits to be paid by JT and its subsidiaries:¥586 million(3) Reasons for approval of the Independent Auditor’s remuneration by the Audit & Supervisory Board:
When the Company concluded an audit contract with Independent Auditor, the Audit & Supervisory Board Members
obtained necessary materials and received reports from the Members of the Board, relevant internal departments, andthe Independent Auditor, and performed verification to confirm that the amount of remuneration to be paid to the
Independent Auditor, the persons in charge of the audits, and other details of the audit contract were appropriate.
Based upon this verification, the Audit & Supervisory Board checked and examined matters including the content of
the Independent Auditor’s accounting plan, the status of the performance of the auditing duties, and the basis forcalculation of the remuneration estimate, and, as a result, determined that approval was fair and reasonable.
(Notes)

1. Fees paid under the terms of the audit contract concluded between Deloitte Touche Tohmatsu LLC
and JT in relation to audit attestation based on the Companies Act and the Financial Instruments
and Exchange Act are not clearly classified, and since they cannot be effectively classified, their
total is indicated in the amount in “(1), i)” above.
2. JT retains Deloitte Touche Tohmatsu LLC for tasks other than audit attestation based on
Paragraph 1, Article 2 of the Certified Public Accountants Act, which consist of advisory services
on strengthening the state of overseas security governance, etc., and the issuance of the comfort
letter in relation to the bond issuing, and for which a consideration is paid to the same.
3. Among the important subsidiaries of JT, JT International S.A. is audited by Deloitte AG, andGallaher Ltd. is audited by Deloitte & Touche LLP.

3.

Policy on dismissal or non-reappointment of Independent Auditor
In the case that an Independent Auditor is adjudged to fall within any of the items listed in Paragraph 1, Article
340 of the Companies Act, with the agreement of all of the Audit & Supervisory Board Members, the Company
shall dismiss the Independent Auditor. Additionally, apart from the above, should an incident occur casting
serious doubt on the ability of the Independent Auditor to continue to perform its duties, the Audit &Supervisory Board shall decide the content of proposal and submit such proposal to the General Meeting of
Shareholders that the Independent Auditor should be dismissed or should not be reappointed.

* All figures contained in this Business Report are rounded to the nearest unit.

70Consolidated Statement of Financial Position(As of December 31, 2023)(Millions of yen)Account title

AmountAccount title

Current assets

AmountCurrent liabilities

Cash and cash equivalents

1,040,206

Trade and other payables

592,802

Trade and other receivables

535,302

Bonds and borrowings

233,333

Inventories

832,611

Income tax payables

29,647

Other financial assets

58,633

Other financial liabilities

44,470

Other current assets

789,888

Provisions

18,634

Subtotal

3,256,639

Other current liabilities

1,008,390

Assets held for sale

2,921

Total current liabilities

1,927,276

Total current assets

3,259,561

Non-current assets
Property, plant and equipment
Goodwill
Intangible assets

821,499

Non-current liabilities

2,616,440

Bonds and borrowings

908,926

206,982

Other financial liabilities

40,678Investment property

9,338

Retirement benefit liabilities

279,443

Retirement benefit assets

65,856

Provisions

45,527

Investments accounted for using theequity method

56,726

Other non-current liabilities

127,170

Other financial assets

156,316

Deferred tax liabilities

40,586

Deferred tax assets

89,379Total non-current liabilities

Total non-current assets

4,022,536

Total liabilities

1,442,329
3,369,605

EquityShare capital

100,000

Capital surplus

736,478

Treasury shares(489,194)

Other components of equity

290,550

Retained earnings
Equity attributable to owners of theparent company
Non-controlling interests

Total assets

7,282,097

71

3,192,323
3,830,156
82,336

Total equity

3,912,491

Total liabilities and equity

7,282,097

Consolidated Statement of Income(Year ended December 31, 2023)(Millions of yen)Account title

AmountRevenue

2,841,077

Cost of sales(1,225,974)

Gross profit

1,615,103

Other operating income

30,027

Share of profit in investments accounted for using the equity method

8,332

Selling, general and administrative expenses(981,052)

Operating profit

672,410

Financial income

44,414

Financial costs(95,222)

Profit before income taxes

621,601

Income taxes(136,292)

Profit for the period

485,310Attributable to:
Owners of the parent company

482,288

Non-controlling interests

3,021

72

Nonconsolidated Balance Sheet(As of December 31, 2023)(Millions of yen)Account title

AmountAccount title

ASSETS
Current assets

AmountLIABILITIES
426,237

Current liabilities

755,663

Cash and deposits

177,685

Accounts payable–trade7,279

Accounts receivable–trade33,949

Short-term borrowings

158,000
20,000

Merchandise and finished goods

38,008Current portion of long-term borrowings

Semi-finished goods

80,783

Lease obligations

Work in process988

Raw materials and supplies

38,491

Advance payments–trade400

Prepaid expenses

6,165

Short-term loans receivable from subsidiaries
and affiliates

33,831

Other

15,967

Allowance for doubtful accounts
Noncurrent assets(31)
1,867,714

70,378National tobacco special excise taxes payable

8,484

Local tobacco excise taxes payable

79,077

Income taxes payable

5,624

Accrued consumption taxes

27,323

Cash management system deposits received

300,833

Provision for bonuses

5,498

Other provisions

1,331

Other

28,933

Bonds payable

125,000

67,108Long-term borrowings

120,000

1,891

Lease obligations

27,462

Provision for retirement benefits

101,387

Other

12,278

Buildings
Structures
Machinery and equipment

305

Tools, furniture and fixtures

9,652

Land

46,171

Construction in progress

5,994

Patent right

42,765

Noncurrent liabilities

158,583

Intangible assets

Accounts payable–other
National tobacco excise taxes payable

358,711

Property, plant and equipment

Vehicles138

45

1,114,374

Total liabilities
NET ASSETS
Shareholders’ equity

126,487
163

1,175,451

Capital stock

100,000

Capital surplus

736,478

Legal capital surplus

736,400

Right of trademark

32,783

Other capital surplus

Software8,331

Retained earnings

Goodwill

71,542

Legal retained earnings

18,776

Other

13,668Other retained earnings

809,391

Reserve for investment loss on developing
Investments and other assets

new business

1,582,644

Reserve for reduction entry
Investment securities
Shares of subsidiaries and affiliates
Long-term loans receivable from subsidiaries
and affiliates

21,753
1,502,043

10,593

Deferred tax assets

24,694Other

18,110Total assets

Retained earnings brought forward
Treasury shares

5,558Long-term prepaid expenses

Allowance for doubtful accounts

Special account for reduction entry

Valuation and translation adjustments
Valuation difference on available-for-salesecurities
Deferred gains or losses on hedges
Subscription rights to shares(108)
2,293,951

73

78
828,167326
32,922
914
775,229(489,194)
3,569
6,545
(2,975)557

Total net assets

1,179,577

Total liabilities and net assets

2,293,951

Nonconsolidated Statement of Income(Year ended December 31, 2023)(Millions of yen)Account title

AmountNet sales

537,261

Cost of sales

191,861

Gross profit

345,399

Selling, general and administrative expenses

325,269

Operating income

20,131Non-operating income
Interest income

135

Dividends income

162,991

Other

11,937

175,064

Non-operating expenses
Interest expenses

1,633Interest on bonds

846

Foreign exchange losses

5,960

Other

1,090

9,529
185,665

Ordinary income
Extraordinary income
Gain on sales of noncurrent assets

17,001

Other

1,698

18,699Extraordinary losses
Loss on sales of noncurrent assets

214

Loss on retirement of noncurrent assets

2,715

Impairment loss

4,506

Other

1,854

9,289
195,075

Income before income taxes
Income taxes-current

14,905

Income taxes-deferred(4,618)

10,287
184,788

Net income

74

(TRANSLATION)

INDEPENDENT AUDITOR'S REPORT

February 13, 2024

To the Board of Directors ofJapan Tobacco Inc.:

Deloitte Touche Tohmatsu LLC
Tokyo office

Designated Engagement Partner,
Certified Public Accountant:

Yukitaka Maruchi

Designated Engagement Partner,
Certified Public Accountant:

Koji Ishikawa

Designated Engagement Partner,
Certified Public Accountant:

Yoichi Matsushita

OpinionPursuant to the fourth paragraph of Article 444 of the Companies Act, we have audited the consolidated
financial statements of Japan Tobacco Inc. and its consolidated subsidiaries (the "Group"), namely, theconsolidated statement of financial position as of December 31, 2023, and the consolidated statement ofincome and consolidated statement of changes in equity for the fiscal year from January 1, 2023 to
December 31, 2023, and the related notes of significant matters for preparing the consolidated financial
statements and other related notes to the consolidated financial statements.
In our opinion, the accompanying consolidated financial statements present fairly, in all material respects,
the consolidated financial position of the Group as of December 31, 2023, and its consolidated financial
performance for the year then ended in accordance with accounting standards prescribed pursuant to theprovisions of the second sentence of the first paragraph of Article 120 of the Ordinance on Company
Accounting that omit a part of the disclosures required under International Financial Reporting Standards.
Basis for Opinion
We conducted our audit in accordance with auditing standards generally accepted in Japan. Our
responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of
the Consolidated Financial Statements section of our report. We are independent of the Group inaccordance with the provisions of the Code of Professional Ethics in Japan, and we have fulfilled our otherethical responsibilities as auditors. We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our opinion.
Other Information
Management is responsible for the other information. Audit & Supervisory Board members and the Audit &Supervisory Board are responsible for overseeing the Directors' execution of duties relating to the designand operating effectiveness of the controls over the other information. The other information comprises theinformation included in the Business Report and the accompanying supplemental schedules.
Our opinion on the consolidated financial statements does not cover the other information and we do not
express any form of assurance conclusion thereon.

75

In connection with our audit of the consolidated financial statements, our responsibility is to read the otherinformation and, in doing so, consider whether the other information is materially inconsistent with theconsolidated financial statements or our knowledge obtained in the audit or otherwise appears to bematerially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this otherinformation, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of Management and Audit & Supervisory Board Members and the Audit &Supervisory Board for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of the consolidated financial
statements in accordance with accounting standards prescribed pursuant to the provisions of the second
sentence of the first paragraph of Article 120 of the Ordinance on Company Accounting that omit a part ofthe disclosures required under International Financial Reporting Standards, and for such internal control as
management determines is necessary to enable the preparation of consolidated financial statements thatare free from material misstatement, whether due to fraud or error.
In preparing the 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 inaccordance with accounting standards prescribed pursuant to the provisions of the second sentence of thefirst paragraph of Article 120 of the Ordinance on Company Accounting that omit a part of the disclosuresrequired under International Financial Reporting Standards.
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 theGroup's financial reporting process.
Auditor's Responsibilities for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as
a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's reportthat includes our opinion. Misstatements can arise from fraud or error and are considered material if,
individually or in the aggregate, they could reasonably be expected to influence the economic decisions ofusers taken on the basis of these consolidated financial statements.
As part of an audit in accordance with auditing standards generally accepted in Japan, we exercise
professional judgment and maintain professional skepticism throughout the audit. We also:• Identify and assess the risks of material misstatement of the consolidated financial statements, whether
due to fraud or error, design and perform audit procedures responsive to those risks. The procedures
selected depend on the auditor's judgment. In addition, we obtain audit evidence that is sufficient andappropriate to provide a basis for our opinion.
• Obtain, when performing risk assessment procedures, an understanding of internal control relevant tothe audit in order to design audit procedures that are appropriate in the circumstances, but not for the
purpose of expressing an opinion on the effectiveness of the Group's internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by management.
• Conclude on the appropriateness of management's use of the going concern basis of accounting and,based on the audit evidence obtained, whether a material uncertainty exists related to events orconditions that may cast significant doubt on the Group's ability to continue as a going concern. If weconclude that a material uncertainty exists, we are required to draw attention in our auditor's report to therelated disclosures in the consolidated financial statements or, if such disclosures are inadequate, tomodify our opinion. Our conclusions are based on the audit evidence obtained up to the date of ourauditor's report. However, future events or conditions may cause the Group to cease to continue as agoing concern.

76• Evaluate whether the overall presentation and disclosures of the consolidated financial statements are inaccordance with accounting standards prescribed pursuant to the provisions of the second sentence ofthe first paragraph of Article 120 of the Ordinance on Company Accounting that omit a part of thedisclosures required under International Financial Reporting Standards, as well as the overall
presentation, structure and content of the consolidated financial statements, including the disclosures,and whether the consolidated financial statements represent the underlying transactions and events in amanner that achieves fair presentation.
• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or businessactivities within the Group to express an opinion on the consolidated financial statements. We areresponsible for the direction, supervision and performance of the group audit. We remain solely
responsible for our audit opinion.
We communicate with Audit & Supervisory Board members and the Audit & Supervisory Board regarding,among other matters, the planned scope and timing of the audit and significant audit findings, including any
significant deficiencies in internal control that we identify during our audit.
We also provide Audit & Supervisory Board members and the Audit & Supervisory Board with a statementthat we have complied with relevant ethical requirements regarding independence, and communicate withthem all relationships and other matters that may reasonably be thought to bear on our independence, andwhere applicable, actions taken to eliminate threats or safeguards applied.
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 tobe disclosed pursuant to the provisions of the Certified Public Accountants Act of Japan.

Notes to the Readers of Independent Auditor's Report
This is an English translation of the independent auditor's report as required by the Companies Act ofJapan for the conveniences of the reader. The other information in "the accompanying supplemental
schedules" referred to in the "Other Information" section of this English translation is not translated.

77

(TRANSLATION)

INDEPENDENT AUDITOR'S REPORT

February 13, 2024

To the Board of Directors ofJapan Tobacco Inc.:

Deloitte Touche Tohmatsu LLC
Tokyo office

Designated Engagement Partner,
Certified Public Accountant:

Yukitaka Maruchi

Designated Engagement Partner,
Certified Public Accountant:

Koji Ishikawa

Designated Engagement Partner,
Certified Public Accountant:

Yoichi Matsushita

OpinionPursuant to the first item, second paragraph of Article 436 of the Companies Act, we have audited thenonconsolidated financial statements of Japan Tobacco Inc. (the "Company"), namely, the nonconsolidatedbalance sheet as of December 31, 2023, and the nonconsolidated statement of income andnonconsolidated statement of changes in net assets for the 39th fiscal year from January 1, 2023 to
December 31, 2023, and the related notes of significant accounting policies and other related notes to thenonconsolidated financial statements, and the accompanying supplemental schedules.
In our opinion, the accompanying nonconsolidated financial statements present fairly, in all material
respects, the financial position of the Company as of December 31, 2023, and its financial performance forthe year then ended in accordance with accounting principles generally accepted in Japan.
Basis for Opinion
We conducted our audit in accordance with auditing standards generally accepted in Japan. Our
responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of
the Nonconsolidated Financial Statements section of our report. We are independent of the Company inaccordance with the provisions of the Code of Professional Ethics in Japan, and we have fulfilled our otherethical responsibilities as auditors. We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our opinion.
Other Information
Management is responsible for the other information. Audit & Supervisory Board members and the Audit &Supervisory Board are responsible for overseeing the Directors' execution of duties relating to the designand operating effectiveness of the controls over the other information. The other information comprises theinformation included in the Business Report and the accompanying supplemental schedules.
Our opinion on the nonconsolidated financial statements does not cover the other information and we do
not express any form of assurance conclusion thereon.

78

In connection with our audit of the nonconsolidated financial statements, our responsibility is to read theother information and, in doing so, consider whether the other information is materially inconsistent with thenonconsolidated financial statements or our knowledge obtained in the audit or otherwise appears to bematerially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this otherinformation, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of Management and Audit & Supervisory Board Members and the Audit &Supervisory Board for the Nonconsolidated Financial Statements
Management is responsible for the preparation and fair presentation of the nonconsolidated financial
statements in accordance with accounting principles generally accepted in Japan, and for such internal
control as management determines is necessary to enable the preparation of nonconsolidated financial
statements that are free from material misstatement, whether due to fraud or error.
In preparing the nonconsolidated financial statements, management is responsible for assessing theCompany's ability to continue as a going concern, disclosing, as applicable, matters related to going
concern in accordance with accounting principles generally accepted in Japan.
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 theCompany's financial reporting process.
Auditor's Responsibilities for the Audit of the Nonconsolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the nonconsolidated financial statements
as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor'sreport that includes our opinion. Misstatements can arise from fraud or error and are considered material if,
individually or in the aggregate, they could reasonably be expected to influence the economic decisions ofusers taken on the basis of these nonconsolidated financial statements.
As part of an audit in accordance with auditing standards generally accepted in Japan, we exercise
professional judgment and maintain professional skepticism throughout the audit. We also:• Identify and assess the risks of material misstatement of the nonconsolidated financial statements,
whether due to fraud or error, design and perform audit procedures responsive to those risks. The
procedures selected depend on the auditor's judgment. In addition, we obtain audit evidence that is
sufficient and appropriate to provide a basis for our opinion.
• Obtain, when performing risk assessment procedures, an understanding of internal control relevant tothe audit in order to design audit procedures that are appropriate in the circumstances, but not for the
purpose of expressing an opinion on the effectiveness of the Company's internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by management.
• Conclude on the appropriateness of management's use of the going concern basis of accounting and,based on the audit evidence obtained, whether a material uncertainty exists related to events orconditions that may cast significant doubt on the Company's ability to continue as a going concern. If weconclude that a material uncertainty exists, we are required to draw attention in our auditor's report to therelated disclosures in the nonconsolidated financial statements or, if such disclosures are inadequate, tomodify our opinion. Our conclusions are based on the audit evidence obtained up to the date of ourauditor's report. However, future events or conditions may cause the Company to cease to continue as agoing concern.

79• Evaluate whether the overall presentation and disclosures of the nonconsolidated financial statements
are in accordance with accounting principles generally accepted in Japan, as well as the overall
presentation, structure and content of the nonconsolidated financial statements, including thedisclosures, and whether the nonconsolidated financial statements represent the underlying transactions
and events in a manner that achieves fair presentation.
We communicate with Audit & Supervisory Board members and the Audit & Supervisory Board regarding,among other matters, the planned scope and timing of the audit and significant audit findings, including any
significant deficiencies in internal control that we identify during our audit.
We also provide Audit & Supervisory Board members and the Audit & Supervisory Board with a statementthat we have complied with relevant ethical requirements regarding independence, and communicate withthem all relationships and other matters that may reasonably be thought to bear on our independence, andwhere applicable, actions taken to eliminate threats or safeguards applied.
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 Company which is
required to be disclosed pursuant to the provisions of the Certified Public Accountants Act of Japan.

Notes to the Readers of Independent Auditor's Report
This is an English translation of the independent auditor's report as required by the Companies Act ofJapan for the conveniences of the reader. "The accompanying supplemental schedules" referred to in the"Opinion" section of this English translation are not included in the attached financial documents. In
addition, the other information in "the accompanying supplemental schedules" referred to in the "Other
Information" section of this English translation is not translated.

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[The following represents a translation, for convenience only, of the original report issued in the Japanese
language.]
Audit Report of the Audit & Supervisory Board

AUDIT REPORTRegarding the performance of duties by the Members of the Board for the 39th fiscal year from January 1, 2023
to December 31, 2023, the Audit & Supervisory Board hereby submits its audit report, which has been preparedthrough discussions based on the audit report prepared by each Audit & Supervisory Board Member.
1. Auditing Methods Employed by Audit & Supervisory Board Members and the Audit & Supervisory Board
and Details of Such Methods(1) The Audit & Supervisory Board established auditing policies, allocation of duties, and other relevant matters,
and received reports from each Audit & Supervisory Board Member regarding his or her audits and results thereof,
as well as received reports from the Members of the Board, other relevant personnel, and Independent Auditors
regarding performance of their duties, and sought explanations as necessary.
(2) Each Audit & Supervisory Board Member complied with the auditing standards of Audit & Supervisory Board
Members established by the Audit & Supervisory Board, followed the auditing policies, allocation of duties, andother relevant matters, communicated with the Members of the Board, and any other relevant personnel, and madeefforts to optimize the environment for information collection and audit, and conducted his or her audits in thefollowing methods:i) We participated in the Board of Directors’ meetings and other important meetings, received reports from theMembers of the Board, and other relevant personnel regarding performance of their duties, sought explanations
as necessary, examined important documents, and studied the operations and financial positions at the head officeand principal offices. With respect to subsidiaries, we communicated and exchanged information with Membersof the Board, Audit & Supervisory Board Members, and other relevant personnel of the subsidiaries, and received
business reports from subsidiaries as necessary.
ii) We monitored and verified the details of the resolution of the Board of Directors related to the system that
ensures Members of the Board are carrying out their duties in compliance with laws and regulations and the
Articles of Incorporation, and other systems that ensure the propriety of the operations of the corporate group
comprised of a stock company and its subsidiaries, which are described in Paragraphs 1 and 3 of Article 100 of
the Regulations for Enforcement of the Companies Act. We also monitored and verified the condition of thesystem (internal control system) put in place in accordance with the aforesaid resolution.
iii) We monitored and verified whether the Independent Auditors maintained their independence and implemented
appropriate audits, and we received reports from the Independent Auditors regarding the performance of theirduties and sought explanations as necessary. In addition, we received notice from the Independent Auditors that“the system for ensuring that duties are performed properly” (matters set forth in each item of Article 131 of theRegulations on Corporate Accounting) is organized in accordance with the “Quality Management Standards
Regarding Audits” (Business Accounting Council) and other relevant regulations, and sought explanations asnecessary.
Based on the above methods, we examined the business report and the accompanying supplemental schedules, thenon-consolidated financial statements (non-consolidated balance sheet, non-consolidated statement of income,81and non-consolidated statement of changes in net assets) and the accompanying supplemental schedules, as wellas consolidated financial statements (consolidated statement of financial position, consolidated statement ofincome, and consolidated statement of changes in equity, which omit some disclosure items required underInternational Financial Reporting Standards (IFRS) in accordance with the provision of the second sentence ofParagraph 1, Article 120 of the Regulations on Corporate Accounting) related to the relevant fiscal year.
2. Audit Results(1) Results of Audit of Business Report and Other Relevant Documents
1.

In our opinion, the business report and the accompanying supplemental schedules are in accordancewith the related laws and regulations and Articles of Incorporation, and fairly represent JT’s
condition.

2.

With regard to the performance of duties by the Members of the Board, we have found no evidenceof wrongful action or material violation of related laws and regulations, nor of any violation withrespect to the Articles of Incorporation.

3.

In our opinion, the contents of the resolutions of the Board of Directors regarding the internal
controls system are fair and reasonable, and, furthermore, the development, implementation andmaintenance of the internal controls system are appropriate.

(2) Results of Audit of Non-Consolidated Financial Statements and the accompanying supplemental schedules
In our opinion, the methods and results employed and rendered by the Independent Auditors, Deloitte Touche
Tohmatsu LLC, are fair and reasonable.
(3) Results of Audit of Consolidated Financial Statements
In our opinion, the methods and results employed and rendered by the Independent Auditors, Deloitte Touche
Tohmatsu LLC, are fair and reasonable.

February 16, 2024
The Audit & Supervisory Board, Japan Tobacco Inc.

Standing Audit & Supervisory Board Member

Hideaki Kashiwakura (seal)

Standing Audit & Supervisory Board Member

Tsutomu Hashimoto (seal)

Standing Audit & Supervisory Board Member

Shigeru Taniuchi(seal)

Audit & Supervisory Board Member

Nobuo Inada(seal)

Audit & Supervisory Board Member

Hiroko Yamashina(seal)(Note) Standing Audit & Supervisory Board Member Shigeru Taniuchi and Audit & Supervisory Board Members
Nobuo Inada and Hiroko Yamashina are Outside Audit & Supervisory Board Members provided for by
Article 2, item 16 and Paragraph 3, Article 335 of the Companies Act.

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