JTI at a glance

© Copyright JTI 2013

• JT was established in 1985

• In 1999 JT becomes global with the purchase of the international operations of R.J. Reynolds

• JT Group includes Japan’s domestic tobacco market, as well as beverages, seasonings, processed foods and pharmaceutical businesses

• A global Fortune 500 company*

• Over 51,000 employees worldwide, including JTI

• 33.3% owned by the Japanese government, making it the largest shareholder

JTI at a glance 2

Our parent companyThe JT Group

Beverages

Processed foods

Pharmaceuticals

Japanese domestic tobacco

*2013

© Copyright JTI 2013 JTI at a glance 3

JTI today

27,0001

employees (approx.)

364

offices

25factories

8research & development centers

5 tobacco processing facilities

• JTI is the JT Group’s international tobacco business

• We employ people in 73 countries around the world

• We are a leading international tobacco product company created in 1999

• We sold 416.4 billion cigarettes2

• The Company’s core revenue is USD 12,273 million2

© Copyright JTI 2013

1 As of December 2013

2 Jan-Dec 2013

JTI at a glance

A portfolio strongly represented across most price segments

4

Our Global Flagship Brand portfolio

JTI at a glance 5

Our ‘Other Tobacco Products’ and ‘Emerging Products’

Roll-your-own, make-your-own

SnusCigars

Ploom

Electronically heated tobacco product that heats tobacco pods to create vapor

Shisha

Investment case

JTI in Serbia

JTI: the first and biggest Japanese investor in Serbia

2003 - JTI opens the

marketing and sales office in Belgrade  

2006 - JTI acquires

Tobacco Industry Senta - todayJT International a.d. Senta

Initial investment of USD 45 million

USD 169 million JTI invested so far in Serbia.

Key rationale

• Supplying promising markets of Serbia and West Balkans

Importance of CEFTA

• Free-trade agreement between Serbia, Montenegro, Bosnia & Herzegovina, Albania, (UN Mission in) Kosovo, Macedonia, and Moldova

• Provides 0% customs duty for our exports to Macedonia, Montenegro and Bosnia and Herzegovina

EU trade liberalization

• Preferable customs rates for import of various goods from Serbia envisaged in Stabilization and Association Agreement

JTI exports from Serbia

• Cigarettes to Bosnia and Herzegovina, Montenegro, Macedonia, Croatia and Albania

• Serbian-grown tobacco to the EU

• Total export of cigarettes and tobacco in 2013 worth USD 23,4 million

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Why investing in Serbia?

Senta factory

• Factory in Senta

• West Balkan’s headquarters in Belgrade

• Offices in Bosnia and Herzegovina, Croatia, Albania and Kosovo

JTI in Serbia production base for the Western Balkans7 markets – one EU member and 6 CEFTA parties

*

*The map is without prejudice to positions on status, and is in line with UNSC 1244 and the ICJ Opinion on the Kosovo declaration of independence.

JTI: tax contributor in Serbia

JTI is the 6th largest taxpayer in the country

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13.6 billion dinars contributed to the state budget in 2013.

JTI growth story

2006

2007

2008

2009

2010

2011

2012

2013

Exp

ecte

d0

5

10

15

20

25

2.33.8

9.8

17.618.5

21.2 21.823.4

JTI Senta export growth

Leaf Cigarettes Total

• Sales volume in Serbia increased by 50% despite significant market contraction

• JTI’s share of market in Serbia increased by over 100% since 2006

Tobacco growing operations in Serbia

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• JTI - a leader in tobacco production in Serbia with market share of 43% in ’12

• JTI cooperates in Serbia with 250 seasonal workers and 180 farmers

• Continuous growth of tobacco production and total yield per hectare

• Over 50% increased tobacco purchase

• 80% increase in contracted tobacco

• Today JTI in Serbia employs over 300 people

• From 2006-2013 JTI generated 200 new jobs

• Engages over 250 seasonal workers

• Internships programs for graduated students (2010 – 2014) - 34 interns

• Skillful and well educated (mostly English-speaking) workforce

Employees – Wheel of our Growth

• Senta factory is first in Serbia to implement Kaizen management process

• Fully accepted by the employees

• Productivity increased by 52%

• Reject ratio reduced by 66%.

• Factory certificated: ISO 9001:2008, ISO 14001:2004, OHSAS 18001:2007

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Kaizen

• Continuous dialog with the Government

• Communication maintained on all key aspects of economic legislation development

• Investor-friendly tax regime

• Salary tax rate -10% and corporate profit tax rate – 15%, among the lowest in the Europe

• National treatment of foreign investors

• Serbia’s EU aspirations influencing regulatory environment that is heading towards alignment with EU

• Predictable development of operating environment (e.g. excise calendar in tobacco industry)

Conclusion

• The investment in Serbia proved to be good platform for business expansion of JTI in Serbia and Adriatica region

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Business Environment in Serbia

EnterprisingOpenChallenging