Business and Corporate Focuses for FY 3/2012 President and CEO and Representative Director Hiroshi Kimura Consolidated Financial Results for FY 3/2011

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1 Overview of Consolidated Financial Results for FY 3/2011 and Full term Forecasts for FY 3/2012 *Please be reminded that the figures shown on these slides may differ from those shown in the financial statements as they are intended to facilitate the understanding of individual businesses. *For details, please refer to the footnotes on the slides. Caution concerning forward looking statements Forward Looking and Cautionary Statements This presentation contains forward looking statements about our industry, business, plans and objectives, financial conditions and results of operations based on current expectations, assumptions, estimates and projections. These statements reflect future expectations, identify strategies, discuss market trends, contain projections of operational results and financial conditions, and state other forward looking information. These forward looking statements are subject to various known and unknown risks, uncertainties and other factors that could cause our actual results to differ from those suggested by any forward looking statement. We assume no duty or obligation to update any forward looking statement or to advise of any change in the assumptions and factors on which they are based. Risks, uncertainties or other factors that could cause actual results to differ materially from those expressed in any forward looking statement include, without limitation: (1) health concerns related to the use of tobacco products; (2) legal or regulatory developments and changes; including, without limitation, tax increases and restrictions on sales, marketing and use of tobacco products, governmental investigations and privately imposed smoking restrictions; (3) litigation in Japan and elsewhere; (4) our ability to further diversify our business beyond the tobacco industry; (5) our ability to successfully expand internationally and make investments outside Japan; (6) competition and changing consumer preferences; (7) the impact of any acquisitions or similar transactions; (8) local and global economic conditions; and (9) fluctuations in foreign exchange rates and the costs of raw materials. 2 1

2 Business and Corporate Focuses for FY 3/2012 President and CEO and Representative Director Hiroshi Kimura Consolidated Financial Results for FY 3/2011: Executive Summary EBITDA increased above JPY540 0 billion despite the difficult business environment. Japanese Domestic Tobacco Business Despite a sharp decline in volumes subsequent to a tax hike of an unprecedented scale, profits grew as a result of strategic pricing and as measures were re implemented to enhance brand loyalty. International Tobacco Business Continued to drive JT Group profit growth by focusing on top line growth despite difficult business environment, specifically industry contraction and increased regulation. Pharmaceutical Business Steady progress was made in the clinical development of compounds, including those in the late stage developments and reinforcement of the R&D pipeline. Food Business Solid results for the beverage business while processed food business remained at a standstill under difficult business environment beyond our assumption. However, focus on core products such as staple food is continuing and production facilities are being strengthened. In addition, business integration has made a steady progress with a certain prospect in sight. 4 2

3 Japanese Domestic Tobacco Business:Recovery in Product Supply [Supply Resumption Schedule] (Number of products) April 11 April 25 May 9 June 6 Early July Early August (+9) (+9) (+11) (+22) (+15) As the Great East Japan Earthquake affected JT factories and suppliers, JT took temporary measures in order to ensure stable product supply these measures included temporarily suspension of shipments, limiting the number of products supplied and focusing on supply of key products. The number of products supplied will be gradually expanded, with 73 products in early August. Maximum efforts are made for an early recovery from the earthquake damages. 5 International Tobacco Business: Business Focus for FY3/2012: Business environment Industry contraction has been stabilizing since the second half of 2010 with the exception of a few markets. Overall, the business environment shows encouraging development, but we remain cautious given the current situation of the economy, tax increases and regulation. Measures for profit growth Continued focus on top line growth Focus on GFB Invest in innovation and brand building Exploit pricing opportunities Broaden market base Disciplined cost management Investment in business foundations Grow EBITDA by 10% at constant rates of exchange 6 3

4 Pharmaceutical Business Clinical development (as of May 12, 2011) Code Key Indication Stage Rights JTT-705(oral) JTT-130(oral) JTK-303(oral) Dyslipidemia Dyslipidemia HIV infection Phase 2 (Japan) Phase 2 (Japan) Phase 2 (Overseas) Phase 1 (Japan) Out licensing to Roche (Phase 3) Out licensing to Gilead Sciences (Phase 3) JTT-302(oral) Dyslipidemia Phase 2 (Overseas) JTT-305(oral) Osteoporosis Phase 2 (Japan) JTS-653(oral) Pain Phase 2 (Japan) Overactive bladder JTK-656(oral) HIV infection Phase 1 (Overseas) Hyperphosphatemi Phase 3 (Japan) JTT-751(oral) a Out licensing to Merck(U.S.) In licensing from Keryx Biopharmaceuticals Progress in clinical development JTS 653: Advanced to Phase 2 in Japan JTT 751: Advanced to Phase 3 in Japan JTT 851: Clinical trial started in Japan JTK-853(oral) Hepatitis C Phase 1 (Overseas) Type 2 diabetes Phase 1 (Japan) JTT-851(oral) mellitus Updates since the previous announcement on February 7,2011: JTT 751 advanced to Phase3 in Japan *Progress of f previously out licensed compounds MEK inhibitors: Advanced to Phase 3 by the partner Anti ICOS antibodies: Clinical trial started by the partner (Phase 1) Steadily enhance late stage developments and the capability for drug discovery research. strengthen the capability for clinical development in order to keep up with the progress in clinical development. enhance the capability for drug discovery research in order to reinforce R&D pipeline. Further develop Torii Pharmaceutical s expertise in its areas of strength. 7 Food business Beverages Continue to strengthen Roots,, the flagship brand. Continue with cost reduction efforts. Processed foods and seasonings Strengthen profitability by focusing on staple food products 1) and seasonings (e.g. yeast extract). Continue to promote efficiency across all lines of business. Promotion of top level food safety Actions for reducing risks, Improving consumer response and Strengthening of organization and framework. 1) Staple food products are: frozen noodles, frozen and packed cooked rice, frozen bread 8 4

5 Return of Profits to Shareholders Progress of dividend payout ratio excluding goodwill amortization and dividend per share (JPY per share) 8,000 Per-share year-end dividend 27.6 (%) ,000 Per-share interim dividend 6,000 5,000 4,000 3,000 2,000 2, Dividen payout ratio 2, , ,000 4,000 4,000 4, ,000 1,800 2,200 2,600 2,800 2,800 0 FY 3/2007 FY 3/2008 FY 3/2009 FY 3/2010 FY 3/2011 FY 3/2012 Forecast In a difficult business environment, profit increase has been achieved while steadily reducing interest bearing debts, and total return to shareholders, including share buy back, back, is approximately JPY 85 billion. In FY 3/2012, the aim is for an early recovery from the present difficulties and to maintain and achieve medium to to long term growth. Existing policies for shareholder returns and dividends will be maintained Consistent medium to to long term growth Major changes in preconditions since the medium term management plan JT 11 was formulated. The prolonged global economic recession. Excise hike and price increases resulting in industry contraction, n, tighter regulation. Foreign exchange fluctuation. In the Japanese domestic market, an unprecedented tax hike followed by industry contraction. The Great East Japan Earth Quake. FY 3/2012 is the final year of JT 11,, our medium term management plan. Making maximum efforts to achieve JT 11 group target by overcoming present difficulties from earthquake damages. Management policy post the Great East Japan Earthquake. Recognition as the greatest time of challenge for Japan since the e last war. Active and voluntary measures will be taken than ever to deal with major changes of business environment. 10 5

6 Consolidated Financial Results for FY 3/2011 CFO and Executive Vice President Hideki Miyazaki Consolidated Financial Results for FY 3/2011: : Executive Summary Adjusted net sales excluding tax decreased slightly while EBITDA increased. In the Japanese domestic tobacco business, profits grew as the effect e from strategic pricing offset the sharp volume declines that followed tax hike and price increase. In the international tobacco business, US Dollar based core net sales and EBITDA increased 5.6% and 10.7%, respectively. Favorable pricing and foreign exchange movements more than offset the impact of total shipment volume decline. GFB shipment volume increased 2.7% and share in our key markets continued to grow. In the pharmaceutical business, net sales increased while profits s declined. Steady progress was made in reinforcing the R&D pipeline. In the food business, net sales decreased while EBITDA increased.. Certain progress is now in sight as a result of focusing and concentrating ng on core businesses. 12 6

7 Consolidated Financial Results for FY 3/2011 Adjusted Net Sales FY 3/2010 1,980.9 FY 3/2011 1, % excluding tax 1) EBITDA % < Reference : Before goodwill amortization > FY 3/2010 FY 3/2011 Operating Income % Operating Income 2) % Recurring Profit % Recurring Profit 2) % Net Income % Net Income 2) % ROE FCF 8.6% 9.2% +0.6ppt % Adjusted net sales excluding tax decreased slightly while EBITDA grew, as favorable pricing in the Japanese domestic and international tobacco businesses offset volume declines in the Japanese domestic tobacco business following the tax hike and price increase. Operating income, recurring profit and net income all increased. Extraordinary losses from the Great East Japan Earthquake damages was JPY 10.9 billion. 1) Adjusted net sales excluding tax do not include revenue from the imported tobacco, domestic duty free, the China Division and other peripheral businesses in the Japanese domestic tobacco business, as well as distribution, leaf tobacco, private label, contract manufacturing and other peripheral businesses in the international tobacco business. 2) Before goodwill amortization 13 Japanese Domestic Tobacco Business: FY 3/2011 (BNU,JPY BN) FY 3/2010 FY 3/2011 (%) JT Share Apr Jun 64.5% Jul Sep 65.1% Apr Dec 64.4% FY % Total Sales Volume % 64.0 FY % Apr Sep 64.9% Adjusted Net Sales excluding tax 1) EBITDA % % Total Share of key brands 2) Apr Jun 45.1% Jul Sep 46.1% Oct Dec 62.7% Jan Mar 62.6% FY % Apr Dec 44.9% Operating Income % FY % Apr Sep 45.7% Oct Dec 41.9% Jan Mar 43.0% 38.0 FY06 FY07 FY08 FY09 FY10 Apr-Jun FY10 Jul-Sep FY10 Oct-Dec FY10 Jan-Mar Sales volume decreased 11.3% due to effect from the tax hike and price increase. Adjusted net sales excluding tax remained almost flat as effect from the strategic pricing offset the volume decline; EBITDA and operating income grew. For FY 3/2011, market share of JT brands was 64.1% and 44.5% for key brands. 1) Adjusted net sales excluding tax do not include revenue from the imported tobacco, domestic duty free, the China Division, and other peripheral businesses. 2) Mild Seven, Seven Stars, Pianissimo (The market share figure for key brands is inclusive and retrospective of market share figures for icene and Lucia, which were integrated into Pianissimo family on January 2010). 14 7

8 International Tobacco Business: Results for FY 3/2011 (BNU,MM$) Total Shipment Volume 1) GFB Shipment Volume Core Net Sales excl. tax 2) Core Net Sales excl. tax per thousand 3) (US$) % % 9,682 10, % % EBITDA 2,965 3, % EBITDA % at constant rates of exchange Core Net Sales excl. tax 2) Core Net Sales excl. tax per thousand 3) (US$) 9,682 10, % % EBITDA 2,965 3, % Core net sales and EBITDA increased 5.6% and 10.7% respectively, driven by favorable pricing and foreign exchange movements. At constant rates of exchange, core net sales and EBITDA grew 4.8% and 7.7%, respectively. Yen based EBITDA grew 3.8% despite the impact of strong yen. 1) Total shipment volume includes cigars, pipe tobacco and snus, but does not include private label and contract manufacturing products. 2) Core net sales excluding tax do not include revenue from distribution, leaf tobacco, private label, contract manufacturing and other peripheral businesses. 15 3) Core net sales excluding tax per thousand cigarettes are the quotient of core net sales excluding tax as defined in footnote 2, and total shipment volume as defined in footnote 1, less joint venture volumes. Pharmaceutical Business: FY 3/2011 FY 3/2010 FY 3/2011 Net Sales EBITDA Operating Income Net sales grew due to the strong performance of Torii Pharmaceutical and from milestone revenue of out licensed compounds. Profits declined due to an up front payment by Torii Pharmaceutical in respect of a license agreement, among others. 16 8

9 Food Business: FY 3/2011 FY 3/2010 FY 3/2011 Net Sales Beverages Processed foods EBITDA Operating Income Net sales for the beverage business increased due to the favorable effect from the summer heat waves and the robust sales of the Roots brand. Net sales for the processed food business declined due to the closure of the rice wholesale business and the exclusion of some subsidiaries from the consolidated results as well as a decline in sales of products for restaurants. Profits grew due to the steady performance of the beverage business and in the absence of the one time factor in the fishery product business in the prior year. 17 International Tobacco Business Jan Mar FY 3/2012 9

10 International Tobacco Business: Executive Summary Results for Jan Mar FY 3/2012 Strong results with all the key indicators exceeding prior year Continued favorable pricing Volume gain despite difficult operating environment Share growth in most of key markets 19 International Tobacco Business: Results for Jan Mar FY 3/2012 (BNU, MM$, $) Shipment Volume Total 1) GFB Reported Core Net Sales excl. tax 2) Core Net Sales excl. tax per thousand 3) 2010 Jan Mar 2011 Jan Mar % % 2,343 2, % % At constant rates of exchange Core Net Sales excl. tax 2) Core Net Sales excl. tax per thousand 3) % 2,343 2, % US Dollar based core net sales increased 4.4%, or 6.5% at constant rates of exchange driven mainly by price/mix. GFB shipment volume grew 2.1% driven by Russia, Taiwan, Turkey and Korea, and total shipment volume grew 0.5%. 1) Total shipment volume includes cigars, pipe tobacco and snus, but does not include private label and contract manufacturing products. 2) Core net sales excluding tax do not include revenue from distribution, leaf tobacco, private label, contract manufacturing and other peripheral businesses core net sales excluding tax have been reclassified to conform to current year presentation, as certain amounts are now reflected as a reduction to core net sales excluding tax, with no impact on gross margin. 20 3) Core net sales excluding tax per thousand cigarettes are the quotient of core net sales excluding tax as defined in footnote 2, and total shipment volume as defined in footnote 1, less joint venture volumes. 10

11 International Tobacco Business: Market Share in Key Markets (12 month moving average) 2010 Mar 2011 Mar Italy 18.7% 20.0% +1.3 ppt France 15.1% 16.1% +1.0 ppt Spain 20.5% 20.7% +0.2 ppt UK 39.2% 39.1% 0.1 ppt Russia 36.8% 37.0% +0.2 ppt Turkey 19.7% 23.2% +3.5 ppt Taiwan 37.4% 38.8% +1.4 ppt Data source: AC Nielsen, Logista, Altadis and JTI estimates Share of market continued to grow year on year in most of our key markets. 21 International Tobacco Business: Performance by cluster Shipment volume growth % vs. the same period last year Total South & West Europe North & Central Europe CIS+ Rest of the World Total* GFB Jan Mar, 2011 Jan Mar, % +2.1% 9.7% 9.1% +1.1% +4.1% +0.7% +7.3% +5.3% +3.9% S&WE: Continued strong performance in Italy (Winston) could not compensate for the downside in Spain due to the accelerated market contraction and an adverse trade inventory adjustment. N&CE:Volume grew in the UK due to momentum of Sterling and Amber Leaf, as well as strong demand ahead of tax increase in March. CIS+: 7.3% growth of GFB shipment volume was driven by resumption of up trading in Russia. Total shipment volume grew as strong performance in Russia was partially offset by volume decline in Ukraine due to continued industry contraction. RoW:Growth momentum in MENWA, Taiwan and Korea continued. In addition, trade inventory adjustment before the April price increase in Taiwan contributed to the total and GFB volume growth. *Total shipment volume includes cigars, pipe tobacco and snus, but does not include private label and contract manufacturing products

12 International Tobacco Business: Core Net Sales for Jan Mar FY 3/2012 ($MM) 2,500 Core Net Sales excluding tax * Roadmap: from Jan Mar 2010 to Jan Mar % % Market Excise tax change Price increase Italy Oct (2010) France Nov (2010) Spain Dec (2010) Dec (2010) 2, ,495 2,447 UK Jan i), Mar Nov (2010) Jan, Mar Russia Jan Dec (2010) +22 Turkey 2,300 2,343 Taiwan Mar, April Jan Mar 2010 Volume Price/Mix Jan Mar 2011 at constant rates of exchange FX impact Jan Mar 2011 ⅰ) Increase in VAT Core net sales grew 4.4% despite adverse foreign exchange movements. Price/mix continued to be the main growth driver. Volume also contributed. At constant rates of exchange, core net sales grew 6.5%. Adverse foreign exchange movements: weaker EUR and GBP * Core net sales excluding tax do not include revenue from distribution, leaf tobacco, private label, contract manufacturing and other peripheral businesses core net sales excluding tax have been reclassified to conform to current year presentation, as certain amounts are now reflected as a reduction to core net sales excluding tax, with no impact on gross margin. 23 Full Term Forecasts for FY 3/

13 Forecasts for FY 3/2012: Disclosure Guidance In the Japanese domestic tobacco business, many uncertain and non transparent elements as outlined below are existing the group consolidated forecast is therefore made with certain conditions and presented in ranges. The Great East Japan Earthquake has affected the product supply of our Japanese domestic tobacco business. As a temporary measure, products are supplied in limited ranges and volumes. [Content of Disclosure] Consolidated adjusted net sales excluding tax and EBITDA are provided in ranges. Guidance is not provided for consolidated net sales, operating income, i recurring profit and net income. Disclosure by segments are as follows: Japanese domestic tobacco business: International tobacco business: Pharmaceutical business: Food business: Adjusted net sales excluding tax /EBITDA disclosed in ranges. Net sales/core net sales excluding tax/ebitda/operating income/depreciation/capital expenditures. Net sales/ebitda/ operating income/ depreciation/ capital expenditures. Net sales/ebitda Forecasts for the consolidated financial results are planned to be announced at 1Q FY 3/2012 announcement. 25 Full Term Forecasts for FY 3/2012 FY 3/2011 Actual a FY3 /2012 Forecast b from FY 3/2011 (b a)/a Adjusted Net Sales excl. tax1) 1, ,925.0 ~ 1, % ~ +0.7% EBITDA ~ % ~ +6.1% Due to the earthquake, many uncertain and non transparent elements in the Japanese domestic tobacco business are existing and the group forecast is therefore provided with certain conditions. The forecast for adjusted net sales excluding tax and EBITDA are provided in ranges. 1) Adjusted net sales excluding tax do not include revenue from the imported tobacco, domestic duty free, the China Division and other peripheral businesses in the Japanese domestic tobacco business, as well as distribution, leaf tobacco, private label, contract manufacturing and other peripheral businesses in the international tobacco business

14 Japanese Domestic Tobacco Business: Volume Forecast (BNU) 1H 2H Forecast % % 13.4% % Positive Negative FY3/2011 FY3/2012 FY3/2012 Forecast Excluding Including the earthquake impact the earthquake impact Full year, excluding earthquake impact: billion cigarettes 11H 59.5 billion cigarettes= (86.5 billion cigarettes heightened demand of 13.5 billion cigarettes) x Impact of tax hike/price increase: 18.5% (price elasticity at approx. 0.5) 22H 56.0 billion cigarettes= (48.1 billion cigarettes+heightened demand: 11.5 billion cigarettes) x trend decline of 7% to 6% Earthquake impact (calculated in light of the following factors) *Impact of shipment suspension *Impact on market share following shipment resumption *Impact of disaster area damages (sales decrease at damaged retail stores) Volume is projected to decline considerably due to the tax hike/price increase in 1H and the trend decline in 2H, coupled by the impact of the earthquake disaster. Forecast is indicated in ranges as it is difficult to make rational projections in relation to the impact of; the temporary suspension of supply, market share post supply recommencement and sales in the earthquake affected areas. Forecast volumes are in the range of 100 ~ 108 billion cigarettes. 25.7% 27 Japanese Domestic Tobacco Business: Forecasts for FY 3/2012 [Monthly sales volume : April (Actual), May June (Forecast)] April May June (BNU) Actual Forecast Forecast FY 3/ FY 3/ vs Prev. Month 18.9% approx % approx % 81.1% approx. 40~ 30% approx. 25~ 15% April sales volume at 2.2 billion, in line with the estimate

15 Japanese Domestic Tobacco Business: Forecasts for FY 3/2012 (BNU,JPY BN) FY 3/2011 Actual a FY 3/2012 Forecast b from FY 3/2011 (b a)/a Total Sales Volume ~ % ~ 19.8% Adjusted Net Sales excl. tax1) ~ % ~ 3.2% EBITDA ~ % ~ +1.3% EBITDA is forecasted in the range of JPY 227 ~261 billion, taking into account of the projected decline in sales volume. 1) Adjusted net sales excluding tax does not account for revenue from imported tobacco, domestic duty free, the China Division, and other miscellaneous business. 29 International Tobacco Business: Forecasts for FY 3/2012 (BNU, MM$) Actual (like for like) a Forecast b from 2010 (b a)/a Total Shipment Volume 1) % GFB Shipment Volume % Core Net Sales excl. tax 2) 10,113 11, % EBITDA 3) 3,336 3, % at constant rates of exchange Core Net Sales excl. tax 2) at constant rates of exchange EBITDA 3) at constant rates of exchange 10,113 10, % 3,336 3, % Forecasted US Dollar based EBITDA growth is 10% at constant rates of exchange driven by price/mix. Forecasted US Dollar based core net sales and EBITDA are to grow 13.0% and 16.3%, respectively. GFB shipment volume is to grow 2.9%. 1)Total shipment volume includes cigars, pipe tobacco and snus, but does not include private label and contract manufacturing products. Yen based EBITDA for 2011: Approx. JPY 318 BN 2) Core net sales excluding tax do not include revenue from distribution, leaf tobacco, private label, contract manufacturing and other peripheral businesses core net sales excluding tax have been reclassified to conform to current year presentation, as certain amounts are now reflected as a reduction to core net sales excluding tax, with no impact on i 30 3) As the international tobacco business adopted IFRS in 2011 ahead of other business divisions, 2010 amounts have been restated to conform to IFRS and are presented on a like for like basis (unaudited information). (Affecting EBITDA, EBITDA at constant rates of exchange) 15

16 International Tobacco Business: Forecasts for FY 3/2012 FX Assumptions 2010 Average actual a 2011 Average Forecast b a vs b (reference) 2011 Jan April Average actual c (reference) 2011 May 6th spot d RUB/$ % GBP/$ % EUR/$ % CHF/$ % TWD/$ % JPY/$ % % appreciation (depreciation) of US Dollar against all the local currencies would cause a decrease (increase) of slightly less than 50MM in US Dollar based EBITA. Major currencies and their approximate compositions of the roughly $50MM decrease (increase) are as follows; RUB 45%, GBP 15%, TWD 10%, EUR 10% and CHF 10% In translation of US Dollar based EBITDA to Yen based EBITDA, fluctuation of 1 Yen against US Dollar would cause approximately JPY 4 billion impact on a reported basis. 31 Pharmaceutical Businesses: Forecasts for FY 3/2012 FY 3/2011 FY 3/2012 Actual a Forecast b from FY 3/2011 b a Net Sales EBITDA Net sales are projected to grow due to the strong performance of Torii Pharmaceutical. Profits are projected to decline due to increase in R&D expenses and in the absence of milestone revenue from out licensed compound received in FY 3/

17 Food Businesses: Forecasts for FY 3/2012 FY 3/2011 FY 3/2012 Actual a Forecast b from FY 3/2011 b a Net Sales EBITDA Sales for the processed food business is projected to remain flat while sales for the beverage business is projected to decline; overall net sales for the food business is projected to decline. Profits for the processed food business is projected to grow while profits for the beverage business is projected to remain flat; overall profits for the food business is projected to increase. 33 Closing remarks Preparing for the introduction of IFRS at the full year result announcement in FY 3/2012. Financial results until the end of third quarter of FY3/2012 will l be disclosed under Japanese accounting standards financial forecasts are therefore disclosed under Japanese accounting standards. Financial results will be disclosed under IFRS standards at the full year result announcement. Main effects on Profit and Loss Net sales: Accounting method for net sales of the distribution business in the Japanese domestic tobacco business will be changed as these revenues will be considered revenues from agency transactions and hence excluded from net sales. Accordingly, corresponding fees will w be accounted for in net sales. (no effect on profits). Operating income: Main effect will be from ceasing of periodical amortization of goodg ood will (Positive effect of around JPY 80 billion). s in relation to retirement benefit expenses (Positive effect ect of around JPY 10 billion). in the depreciation method: from the declining balance ance method to the straight line method (Positive effect of several JPY billion). Items in extraordinary profit and loss account will be included in SG&A expenses (no effect on net profits)

18 <Back up data> All the Detailed figures comes to <Back up data> 35 Back up data No1: GFB Shipment Volume by Brand (BNU) 2010 Jan Mar 2011 Jan Mar GFB % Winston % Camel % Mild Seven % B&H % Silk Cut % LD % Sobranie % Glamour % 36 18

19 Back up data No 2: Composition Ratio by Four ClusterC [January March 2011] Total Shipment Volume 1) Core Net Sales 2) S&W Europe, 14% N&C Europe, 12% RoW, 30% RoW, 32% S&W Europe, 19% CIS+, 44% CIS+, 31% N&C Europe, 18% 1) Total shipment volume includes cigars, pipe tobacco and snus, but does not include private label and contract manufacturing products. 2) Core net sales excluding tax do not include revenue from distribution, leaf tobacco, private label, contract manufacturing and other peripheral businesses. 37 Back up data No 3: Share of Key Markets (3 Month Average) 2010 Jan Mar 2010 Apr Jun 2010 Jul Sep 2010 Oct Dec 2011 Jan Mar Italy 19.0% 19.5% 19.9% 20.3% 20.4% France 15.8% 15.9% 16.0% 16.2% 16.2% Spain 20.9% 21.4% 20.0% 20.8% 20.3% UK 38.6% 38.9% 38.9% 39.4% 39.0% Russia 36.9% 37.0% 37.1% 36.8% 37.1% Turkey 21.2% 22.8% 23.5% 23.0% 23.3% Taiwan 37.8% 38.4% 38.6% 38.8% 39.4% Data source: AC Nielsen, Logista, Altadis and JTI estimates 38 19

20 Back up data No 4: FX rate (Jan Mar Actual) 2010 Jan Mar Average 2011 Jan Mar Average RUB/$ % GBP/$ % EUR/$ % CHF/$ % TWD/$ % JPY/$ % 39 [This slide intentionally left blank] 40 20

21 [Reference Material] Analysis of Consolidated Financial Results for FY 3/2011 and Full term Forecast for FY 3/2011 Caution concerning forward looking statements Forward Looking and Cautionary Statements This presentation contains forward looking statements about our industry, business, plans and objectives, financial conditions and results of operations based on current expectations, assumptions, estimates and projections. These statements discuss future expectations, identify ify strategies, discuss market trends, contain projections of operational results and financial condition and state s other forward looking information. These forward looking statements are subject to various known and unknown risks, s, uncertainties and other factors that could cause our actual results to differ from those suggested by any forward looking statement. We assume no duty or obligation to update any forward looking statement or to advise of any change in the assumptions and factors on which they are based. Risks, uncertainties nties or other factors that could cause actual results to differ materially from those expressed in any forward looking statement include, without limitation: (1) health concerns relating to the use of tobacco products; (2) legal or regulatory developments and changes; including, without limitation, tax increases and restrictions on the sale, marketing and usage of tobacco products, governmental investigations ions and privately imposed smoking restrictions; (3) litigation in Japan and elsewhere; (4) our ability to further diversify our business beyond the tobacco o industry; (5) our ability to successfully expand internationally and make investments outside of Japan; (6) competition and changing consumer preferences; (7) the impact of any acquisitions or similar transactions; (8) local and global economic conditions; and (9) fluctuations in foreign exchange rates and the costs of raw materials. 2 21

22 Results for FY 3/2011 Japanese Domestic Tobacco Business Adjusted Net sales excluding tax 1) Volume decrease following tax increase and price amendment FY3/ Volume effect 69.8 Price and product mix effect Price Amendment Others +0.9 FY3/ ) Adjusted net sales excluding tax do not account for revenue from the imported tobacco, domestic duty free, the China Division, and other peripheral businesses. 3 Results for FY 3/2011 Japanese Domestic Tobacco Business EBITDA Volume decrease following tax increase and price amendment FY3/ Volume effect Price and product mix effect Cost Leaf tobacco reappraisal gains/loss Sales promotion and others FY3/2011 Price amendment

23 Results for FY 3/2011 International Tobacco Business Core Net sales excluding tax excluding tax 1) FY3/2010 9,682 Volume effect 128 Price and product mix effect FY3/2011 at constant rates of exchange ,144 Forex impact 2) +79 FY3/ ,223 9,500 9,700 9,900 10,100 10,300 (MM US$) 1) Core net sales excluding tax do not include revenue from distribution, leaf tobacco, private label, contract manufacturing and other peripheral businesses. 2) Forex impact is the fluctuation between USD and other currencies 5 Results for FY 3/2011 International Tobacco Business EBITDA FY3/2010 2,965 Volume effect 91 Price and product mix effect +553 Others 233 FY3/2011 at constant rates of exchange Forex effect 1) 3,194 Including Leaf/NTM Costs increase 150MM$ +88 FY3/2011 3,282 2,800 2,900 3,000 3,100 3,200 3,300 3,400 3,500 (MM US$) 1) Forex impact is the fluctuation between USD and other currencies 6 23

24 Results for FY 3/2011 Pharmaceutical Business Net sales FY3/ Torii Pharmaceutical Co., Ltd. (non consolidated) +2.9 Royalty income, etc. +0 FY3/ Results for FY 3/2011 Pharmaceutical Business EBITDA FY3/ R&D expenses (non consolidated) +0.2 Operating income of Torii Pharmaceutical Co., Ltd. (non consolidated) 4.2 Royalty income, etc FY3/

25 Results for FY 3/2011 Food Business Net sales FY3/ Beverages +6.2 Processed foods etc FY3/ Results for FY 3/2011 Food Business EBITDA FY3/ Beverages +1.0 Processed foods etc Overhead costs +0.1 FY3/

26 Results for FY 3/2011 Recurring profit Net income FY 3/ FY 3/ Opearing Income Recurring profit Non operating income/loss Extraordinary profit.loss, income tax etc 50.5 FY 3/ FY 3/ Positive Factors: Improvement in foreign exchange loss/profits (21.0 BN) Decrease in interest payment (9.0 BN) Negative Factors: Decrease in interest income and dividend income, among others (3.9 BN) Positive Factors: Decrease in business restructuring cost (5.5 BN) Decrease in loss on disposition of property (3.3 BN) Negative factors: Decrease in profit on sale of property, plant and equipment among others (20.1BN) Gain from the reversal of liability on a fine levied under the UK competition law in FY 3/2010(16.7BN) Payment of a fine to the Canadian authorities (12.8BN) Damages related to the Great East Japan Earthquake (10.9 BN) 11 [This slide intentionally left blank] 12 26

27 Summary of Consolidated B/S as of March 31, 2011 Assets Compared to B/S as of Mar. 31, 2010 Current Assets: up JPY 51.9BN March Cash and deposits/ short term investment securities Inventories Notes and accounts receivable trade 3, Increase in cash and deposits/short term investment securities up JPY BN Increase from bond issues Decrease in inventories down JPY 41.2 BN Decrease in sales volume in the Japanese domestic tobacco business, yen dollar forex effect on the international tobacco business Increase in notes and accounts receivable trade up JPY 4.9 BN Top line growth in the Japanese Domestic Tobacco Business Decrease in other current assets down JPY 20.8 BN Effect of strong yen in the International Tobacco Business Trademarks Goodwill Other assets March , Fixed Assets: down JPY BN Decrease in Trademarks down JPY 64.4 BN Effect of strong yen and amortization in International Tobacco Business Decrease in Goodwill down JPY BN Effect of strong yen and amortization in International Tobacco Business Decrease in Property Plant and Equipment down JPY 16.0 BN Effect of strong yen in the International Tobacco Business 3,400 3,500 3,600 3,700 3,800 3, Summary of Consolidated B/S as of March 31, 2011 Liabilities & Net Assets Compared to B/S as of March 31, 2010 Liabilities : down JPY BN March Loans payable CP Bonds Tobacco excise tax payable Other liabilities Retained earnigs Foreign currency translation adjustment Other net assets March , , , , , , , , , , ,900.0 Decrease in Loans payable down JPY 37.8BN Decrease in Commercial papers down JPY BN Decrease in Bonds down JPY 7.1 BN Increase in Tobacco excise tax payable up JPY 4.7 BN Increase due to price increase in the Japanese domestic tobacco business Net Assets : down JPY BN Increase in Retained earnings up JPY 89.5 BN Decrease in Foreign currency translation adjustment down JPY BN Appreciation of JPY against US$ (From US$1= JPY to US$1= JPY 81.49) 14 27

28 Forecast for FY 3/2012 compared to results of the previous fiscal year Japanese Domestic Tobacco Business Adjusted Net Sales excluding tax 1) /EBITDA Adjusted Net Sales excluding tax 1) EBITDA FY3/ ~ ~261.0 FY3/2012 Forecast Negative factors Decrease in JT sales volume: 134.6BN units ~ BN units Negative factors Decrease in JT sales volume 134.6BN units ~ BN units Positive factors Price effect Positive factors Price effect 1)Net sales excluding tax does not account for imported tobacco, domestic duty free, the China division and others. 15 Forecast for FY 3/2012 compared to results of the previous fiscal year International Tobacco Business Core Net Sales excluding tax 1) /EBITDA 2) Core Net Sales excluding tax 1) EBITDA 2) FY3/2011 (like for like)2) 10,113 3,336 FY3/2012 Forecast 11,430 10, % At constant rates of exchange +13.0% 3, % 3, % At constant rates of exchange 7,500 8,500 9,500 10,500 11,500 Positive factors Price/Mix effect (MM US$) 1,500 2,000 2,500 3,000 3,500 4,000 (MM US$) Positive factors Price/Mix effect 1) Core net sales excluding tax do not include revenue from distribution, leaf tobacco, private label, contract manufacturing and other peripheral businesses core net sales excluding tax have been reclassified to conform to current year presentation, as certain amounts are now reflected as a reduction to core net sales excluding tax, with no impact on gross margin. 16 2) As the international tobacco business adopted IFRS in 2011 ahead of other business divisions, 2010 amounts have been restated to conform to IFRS and are presented on a like for like basis (unaudited information). (Affecting EBITDA, EBITDA at constant rates of exchange) 28

29 Forecast for FY 3/2012 compared to results of the previous fiscal year Pharmaceutical Business Net Sales/EBITDA Net Sales EBITDA FY3/ FY3/2012 Forecast Positive factors Increase in sales of Torii Pharmaceutical Co. Ltd.: JPY 45.3 BN to JPY 48.8 BN (up JPY 3.4 BN) Negative factors Increase in R&D expenses Decrease in operating profit due to increase in R&D expenses of Torii Pharmaceutical Co., LTD., 17 Forecast for FY 3/2012 compared to results of the previous fiscal year Food Business Net Sales/EBITDA Net Sales EBITDA FY3/ FY3/2012 Forecast Positive factors Positive factors Concentration in core businesses of Table Mark group Strong focus on Roots, the flagship brand, and strategic Negative factors focus on staple food products as well as seasonings (eg. Decrease in sales of beverage business from earthquake damages Yeast extract) and cost reduction 18 29

30 Data sheets for the FY ended March 2011 Data Sheet(1) 1. Summary of Business Performance (unit: JPY billion) 6. Amortization relating to major acquisitions Net Sales including excise tax 6, , Goodwill Amortization relating to major acquisitions International tobacco business (unit: USD million) Adjusted net sales excluding excise tax * 1, , Former RJRI and Gallaher EBITDA * Including former RJRI, Gallaher and others Operating Income * Termination of goodwill amortization: Former RJRI Apr 19, Former Gallaher Mar 27 Recurring Profit (unit: JPY billion) Net Income * Excluding revenues from the imported tobacco, domestic duty free, the China Division and other peripheral businesses in the Japanese domestic tobacco business, as well as distribution, leaf tobacco, private label, contract manufacturing and other peripheral businesses in the international tobacco business (Reference: Figures for major profit items before goodwill amortization) Food business * Including one time goodwill amortization of TableMark's subsidiary in the FY ended Mar Operating Income * Termination of goodwill amortization: Dec 12 Recurring Profit Trademark amortization relating to major acquisitions (unit: JPY billion) Net Income FY ended Mar Japanese domestic tobacco business 2. Breakdown of net sales (unit: JPY billion) Former RJRI * Terminated in Apr 09 Net sales including excise tax *1 6, , International Tobacco Business Japanese domestic tobacco 3, , (unit: USD million) International tobacco *1 2, , Former RJRI and Gallaher mainly20 Adjusted net sales excluding excise tax *1 *2 *3 1, , * Termination of trademark rights amortization: Former RJRI Apr 19, Former Gallaher Mar 27 Japanese domestic tobacco * Capital expenditure (unit: JPY billion) International tobacco *1 * Pharmaceutical Leaf tobacco reappraisal profit / loss * (unit: JPY billion) TableMark (Former Katokichi) Cash and cash equivalents * Cash and cash equivalents = cash and deposits + marketable securities + securities purchased under repurchase agreements 9. Interest bearing debt * (unit: JPY billion) Interest bearing debt * Interest bearing debt = short term bank loans + CP + bonds + long term borrowings+ lease obligation Leaf tobacco reappraisal profit / loss * Profit when denoted negative 10. Business data FY ended FY ended <Japanese domestic tobacco business> Mar Mar Breakdown of SG&A expenses (unit: JPY billion) JT sales volume* (billion cigarettes) FY ended FY ended Total demand (billion cigarettes) Mar Mar JT market share 64.9% 64.1% 0.8%pt SG&A JT net sales before tax per 1,000 cigarettes (JPY) 12,692 14,365 1,673 Personnel * JT net sales after tax per 1,000 cigarettes (JPY) 4,056 4, Advertising and general publicity * Sales volume of domestic duty free and China division is excluded, which was 3.6 billion for FY Sales promotion ended Mar and 3.5billion for FY ended Mar. 2011, respectively. R&D Consolidated EBITDA <Pharmaceutical business> Operating income R&D expenses (parent company) (JPY billion) Depreciation and amortization * Japanese domestic tobacco EBITDA Operating income <Food business Beverage business> FY ended Mar. 2010* FY ended FY ended Mar Mar (New Food (Former (New standard) standard) standard) Beverages Processed foods Capital expenditures Others Japanese domestic tobacco *1 International tobacco business: Year ended Dec.2009 and Year ended Dec.2010 International tobacco * *2 Excluding revenue from the imported tobacco, domestic duty free, the China Division and other peripheral Pharmaceutical businesses Food *3 Excluding revenue from the distribution, leaf tobacco,private label, contract manufacturing and other Other/Elimination and corporate peripheral businesses * International tobacco business: Year ended Dec.2009 and Year ended Dec.2010 (Reference) (unit: USD million) 8. Cash and cash equivalents * (unit: JPY billion) International tobacco Core net sales excl. excise tax *1 *3 International tobacco Core net sales excl. excise tax *1 *3 at constant rates of exchange FY ended Mar ,682 FY ended Mar FY ended Mar FY ended Mar , , FY ended Mar FY ended Mar As of end of Mar FY ended Mar FY ended Mar Depreciation and amortization <International tobacco business> Others Total shipment volume* (billion cigarettes) * Personnel expense is the sum of compensation, salaries, allowances, provision for retirement GFB shipment volume (billion cigarettes) benefit, legal welfare, employee bonuses and accrual of employee bonuses. JPY/USD rate for consolidation (JPY) % RUB/USD rate for consolidation (RUB) % 5. EBITDA by business segment *1 (unit: JPY billion) GBP/USD rate for consolidation (GBP) % FY ended FY ended FY ended EUR/USD rate for consolidation (EUR) % Mar Mar Mar * Total shipment includes cigars, pipe tobacco and snus, but does not include private label and contract (New (Former (New (New manufacturing. standard) standard) standard) standard) Year ended Dec Year ended Dec As of end of Mar Year ended Dec FY ended Mar As of end of Mar Year ended Dec Year ended Dec As of end of Mar As of end of Mar Year ended Dec FY ended Mar As of end of Mar Years to amortize Years to amortize Years to amortize Years to amortize FY ended Mar (New standard) Depreciation and amortization * Number of beverage vending machines * 257, ,000 8,000 International tobacco EBITDA * JT owned 33,000 33,000 0 Operating income Combined 82,000 83,000 1,000 Depreciation and amortization * * Beverage vending machines include vending machines for cans and packs, etc. and for cups owned by other companies and operated by our subsidiary. "JT owned" vending machines are owned by JT. "Combined" vending machines are Pharmaceutical EBITDA owned by our subsidiaries or affiliates, and focus on selling JT brand beverages but also sell non JT brand beverages. Operating income Number of vending machines as of end March 2011 does not reflect the damages from the Great East Japan Earthquake Depreciation and amortization * and is therefore total number of vending machiens before the earthquake. Food EBITDA Number of employees *1 Operating income As of end of As of end of Depreciation and amortization * Mar Mar Other/Elimination and corporate EBITDA Number of employees (consolidated basis) 49,665 48,472 1,193 Operating income Japanese domestic tobacco 11,282 11, Depreciation and amortization * International tobacco 24,751 23, (Reference) (unit: USD million) Pharmaceutical 1,634 1, FY ended FY ended Foods 11,143 10, Dec Dec Other businesses/corporate International tobacco EBITDA 2,965 3, Number of employees (parent company) 8,961 8, International tobacco EBITDA at constant rates of *1 Number of employees is counted at working base, unless otherwise indicated. 3, exchange *1 EBITDA=operating income + depreciation and amortization *2 *2 Depreciation and amortization = depreciation of tangible fixed assets + amortization of intangible fixed assets + amortization of long term prepaid expenses + amortization of goodwill *3 International tobacco business: Year ended Dec.2009 and Year ended Dec

31 Consolidated financial outlook for the fiscal year ending Mar. 31, 2012 compared to the results of previous fiscal year *This guidance is made in accordance with the Japanese accounting standards. Some figures are disclosed in ranges. Certain figures are not disclosed at present, as rational estimates are difficult due to the influence of the East Japan earth quake, amongst others. *For the international tobacco business, financial results for the fiscal year ended March 2011 are disclosed on US GAAP basis, whereas for the fiscal year ending March 2012, the figures will be disclosed on IFRS basis, after making the necessary conversion to the Japanese accounting standards (for example, amortization of goodwill). FY 03/2011 Data sheets for FY ended Mar Data Sheet (2) (JPY billion) Major assumptions (1)Japanese domestic tobacco business (billions of cigarettes) Sales volume ~ ~ 26.6 *Excluding sales of domestic duty free and China division (2) International tobacco business (billions of cigarettes, JPY, RUB, GBP, EUR, CHF, TWD) Year 2010 Year 2011 Adjusted net sales excl. excise tax *1*2*3 1, ,925.0 ~ 1, ~ 13.3 EBITDA ~ ~ 32.8 Total shipment volume* BNU Operating income GFB shipment volume BNU Recurring profit JPY/USD rate % JPY Net income RUB/USD rate % RUB Return on Equity 9.2% GBP/USD rate % GBP Free cash flow EUR/USD rate % EUR (Reference: Before goodwill amortization) (JPY billion) CHF/USD rate % CHF Net income TWD/USD rate % TWD EPS (JPY) 24, Cash dividends per share (JPY) 6,800 8,000 1,200 Payout Ratio 27.6% Consolidated financial outlook by business segment (JPY billion) Goodwill amortization relating to major acquisitions FY 03/2011 International tobacco business (unit: USD million) Year 2010 Year 2011 Adjusted net sales excl. excise tax *1*2*3 1, ,925.0 ~ 1, ~ 13.3 Japanese domestic tobacco * ~ ~ 19.9 Former RJRI and Gallaher International tobacco *1* * Termination of goodwill amortization: Former RJRI Apr 19, Former Gallaher Mar 27 Pharmaceutical Goodwill includes Former RJRI, Former Gallaher and others. Food Others Food Business (unit: JPY billion) EBITDA *1* ~ ~ 32.8 FY 03/2011 FY 03/2012 Japanese domestic tobacco ~ ~ 3.3 International tobacco * TableMark Pharmaceutical * Termination of goodwill amortization: Dec 12 Food Others/Elimination and corporate Trademark rights amortization relating to major acquisitions Operating income * Japanese domestic tobacco International tobacco business (unit: USD million) International tobacco * Year 2010 Year 2011 Pharmaceutical Food 9.4 Former RJRI and Gallaher Others/Elimination and corporate 13.5 * Termination of trademark rights amortization: Former RJRI Apr 19, Former Gallaher Mar 27 Depreciation and amortization *1* Japanese domestic tobacco 44.7 International tobacco * Pharmaceutical Food 26.6 Others/Elimination and corporate 4.7 (JPY billion) Capital expenditures * Japanese domestic tobacco 55.9 International tobacco * Pharmaceutical Food 25.0 Others/Elimination and corporate 1.2 (Reference) (unit: USD million) (unit: USD million) Year2010 (like forlike)*7*8 Year2011 FY 03/2012 FY 03/2012 from Year 2010 to Year 2011 from FY 03/2011 to FY 03/2012 from FY 03/2011 to FY 03/2012 Year2010 FY 03/2011 FY 03/2012 *Total shipment includes cigars, pipe tobacco and snus, but does not include private label and contract manufacturing products. International tobacco Core net sales excl. excise tax *1*3*8 International tobacco Core net sales excl. excise tax at constant rate *1*3*6*8 10,113 11,430 1,317 10,223 10,113 10, ,223 International tobacco EBITDA *1*7 3,336 3, ,282 International tobacco EBITDA at constant rate *1*6*7 *1 International tobacco business: Year ended Dec.2009 and Year ending Dec ,336 3, ,282 *2 Excluding revenue from the imported tobacco, domestic duty free, the China Division and other peripheral businesses *3 Excluding revenue from the distribution, leaf tobacco,contract manufacturing and other peripheral businesses *4 EBITDA=operating income + depreciation and amortization *5 *5 Depreciation and amortization = depreciation of tangible fixed assets + amortization of intangible fixed assets + amortization of long term prepaid expenses + amortization of goodwill *6 Assuming the exchange rates for fiscal year ended March 2011 and year ending March 2012 remain the same. *7 As the international tobacco business adopted IFRS in 2011 ahead of other business divisions, 2010 amounts have been restated to conform to IFRS and are presented on a like for like basis (unaudited information). (Affecting EBITDA, EBITDA at constant rates of exchange) * core net sales excluding tax have been reclassified to conform to current year basis, as certain amounts are now reflected as a reduction to core net sales excluding tax, with no impact on gross margin. 31