Urges Shareholders to Make Their Voices Heard at the General Meeting and Vote FOR All Ten Proposals Submitted by Flashlight Capital ahead of Upcoming Deadlines, Which for Some Shareholders are as Early as March 17^th

Shareholders with Questions About How to Vote Can Email ASIA.ENGAGEMENT@GEORGESON.COM

Issues Presentation Detailing Company's Extremely Long Record of Underperformance, Poor Corporate Governance and Inadequate Capital Management

Believes Shareholders Will be Best Served by Electing Flashlight Capital's Independent and Unaffiliated Director Candidates, Who Have Previously Served as the CEOs of LG H&H and Prudential Life Korea

Flashlight Capital Partners Pte. Ltd ("Flashlight Capital"), a meaningful shareholder of KT&G Corporation (KRX: 033780) ("KT&G" or the "Company"), today urged shareholders to make their voices heard by voting before the upcoming deadlines to cast their ballots for Flashlight Capital's proposals under consideration at the Company's 2023 Annual General Meeting of Shareholders (the "General Meeting"). For some shareholders, the deadline is as early as March 17^th.

Flashlight Capital has nominated two highly qualified and independent director candidates – Suk-Yong Cha and Ou-Jin Hwang – for election to KT&G's Board of Directors (the "Board") at the General Meeting. Together, these nominees bring Chief Executive Officer ("CEO") and public company board experience, Korean consumer business leadership expertise, and impressive track records of exceptional revenue growth and shareholder value creation. Flashlight Capital's two candidates would only represent a minority of the Board and are committed to working in a collegial manner with the other KT&G directors, whom they respect.

FOREIGN SHAREHOLDERS WILL ENCOUNTER EARLY VOTING DEADLINES WITH SOME AS EARLY AS MARCH 17, 2023. THE VOTING DEADLINES SET BY THE VOTING AGENTS ARE NOT THE OFFICIAL VOTING DEADLINES SET BY THE COMPANY.

IF YOU ARE UNABLE TO VOTE BECAUSE YOU HAVE MISSED THE INTERNAL VOTING DEADLINE OF YOUR VOTING PROVIDER – OR IF YOU HAVE QUESTIONS ABOUT HOW TO VOTE – PLEASE CONTACT GEORGESON AT ASIA.ENGAGEMENT@GEORGESON.COM

Due to this tight timeframe, it is imperative that shareholders act quickly. The below table details Flashlight Capital's recommendations on how to vote at KT&G's upcoming General Meeting. Importantly, these proposals will appear as submitted by Agnes, which is the fund that is advised by Flashlight Capital.

KT&G General Meeting Agenda			VOTE FOR:
Agenda No. 2:	2-3:	Cash Dividends of KRW 10,000 per share (Shareholder Proposal by Agnes, etc.)	VOTE FOR: Dividend
Agenda No. 3:		Partial Amendment to Articles of Incorporation (Shareholder Proposal by Agnes, etc.)
	3-1:	Amendment to and Enactment of Provisions Concerning Evaluation and Compensation Committee (Shareholder Proposal by Agnes, etc.)	VOTE FOR: Compensation Committee
	3-2:	Addition of Right to Decide Cancellation of Treasury Shares (Shareholder Proposal by Agnes, etc.)	VOTE FOR: Shareholder's right to cancel Treasury Shares
	3-3:	Establishment of New Provisions for Quarterly Dividends (Shareholder Proposal by Agnes, etc.)	VOTE FOR: Quarterly dividends
	3-4:	Addendum (Shareholder Proposal by Agnes, etc.)
Agenda No. 4:		Cancellation of Treasury Shares (Shareholder Proposal by Agnes, etc.) - To be automatically scrapped if Agenda No. 3-2 is rejected	VOTE FOR: Cancellation of Treasury shares
Agenda No. 5:		Acquisition of Treasury Shares (Shareholder Proposal by Agnes, etc.)	VOTE FOR: Buy-back shares
Agenda No. 7:		Appointment of Two (2) Outside Directors
	7-6:	Appointment of Suk-Yong Cha as Outside Director (Shareholder Proposal by Agnes, etc.)	VOTE FOR: Director candidate Mr. Cha
	7-7:	Appointment of Ou-Jin Hwang as Outside Director (Shareholder Proposal by Agnes, etc.)	VOTE FOR: Director candidate Mr. Hwang
Agenda No. 8:		Appointment of Four (4) Outside Directors
	8-7:	Appointment of Suk-Yong Cha as Outside Director (Shareholder Proposal by Agnes, etc.)	VOTE FOR: Director candidate Mr. Cha
	8-8:	Appointment of Ou-Jin Hwang as Outside Director (Shareholder Proposal by Agnes, etc.)	VOTE FOR: Director candidate Mr. Hwang
Agenda No. 9:		Appointment of Audit Committee Members
	9-5:	Appointment of Suk-Yong Cha as Audit Committee Member (Shareholder Proposal by Agnes, etc.)	VOTE FOR: Appoint director candidate Mr. Cha as a member of Audit Committee
	9-6:	Appointment of Ou-Jin Hwang as Audit Committee Member (Shareholder Proposal by Agnes, etc.)	VOTE FOR: Appoint director candidate Mr. Hwang as a member of Audit Committee

Flashlight Capital also issued a presentation outlining why it believes shareholder-driven change is urgently needed at the Company. Please review the presentation and learn how to vote for meaningful change by visiting www.FlashlightCap.com.

Key takeaways from the presentation include:

The Company's share price has remained stagnant and is trading at the same level it was 15 years ago, substantially lagging peers. KT&G has consistently traded at a 20%-50% discount to the value of its net assets. Equally concerning, the value of the Company's operating assets has declined due to its focus on sales over profit. Further, KT&G's CEO is the highest paid in the food and beverage industry among relevant peers despite the massive shareholder value destruction resulting from an ineffective strategy and poor corporate governance. A prime example of leadership's flawed strategy is its plan to make increased investments in combustibles in Indonesia and Turkey despite competition risks and the Company's recent rush to tout ESG efforts in response to Flashlight Capital's campaign. This apparent contradiction indicates to us that KT&G is being disingenuous and paying lip service to matters of importance to many shareholders.
The Company has refused to genuinely engage with Flashlight Capital and work toward a reasonable private resolution. Despite Flashlight Capital's repeated attempts to reach a private resolution in its meetings with the Board and management team, KT&G has refused to acknowledge the need for shareholder-designated directors and tried to say the bare minimum to placate shareholders. Notably, the Company rejected all of Flashlight Capital's requests and announced an unprecedented and excessive capital expenditure that amounts to 67% of the Company's 2022 revenue, without disclosing the impact on profitability. Unsurprisingly, the market reacted negatively, with the stock price declining nearly 10% since the announcement of the capital expenditure plans at KT&G's Investor Day on January 26^th.¹
The Company's leadership is not aligned with shareholders. The current CEO owns only 0.0002% of KT&G's outstanding shares, and a recent article revealed that KT&G has essentially assured the support of institutions owning approximately 11% of the Company by granting them treasury shares without shareholder approval.
Flashlight Capital has put forth ten proposals for the General Meeting that it believes can break the long cycle of poor performance. Flashlight Capital's proposals include:
- The election of Mr. Cha and Mr. Hwang to the Board and the Audit Committee;
- The establishment of an evaluation committee to help modernize KT&G's pay structures for leaders and establish more incentives;
- Increasing the Company's dividends and share buybacks, and;
- Amending the Articles of Incorporation to cancel the treasury shares, which make up 15% of the Company's total shares outstanding. Notably, KT&G has given away more than 11 million treasury shares to foundations and other interlocking charities and as a result we expect that 11% of the total vote will follow the Board's recommendations.
KT&G has ample ability to fund a dividend and buyback, despite the Company calling Flashlight Capital's proposal "excessive."
- Flashlight Capital is proposing a distribution of KRW 2.4 trillion, which is much less than the Company's KRW 6.5 trillion in total cash and cashable assets.²
- After conducting this proposed distribution and share buyback, KT&G would still have a high net cash position of KRW 4.1 trillion.
Flashlight Capital believes its nominees and proposed governance improvements can meaningfully enhance value. There are actions outlined in Flashlight Capital's presentation that can be immediately proposed and advocated for by the new directors to benefit KT&G and all of its shareholders. It is also clear that based on its track record, the Board should not be making future governance and capital allocation decisions in a silo. Every day that passes without change in the boardroom increases the chance of further value destruction.

Nominee Bios

Suk-Yong Cha is the CEO and Chairman of the Board of LG H&H, where he has been responsible for 18 years of consecutive growth and was recognized as one of the top leaders in Korea. He has a track record of extraordinary value creation in the consumer goods industry, which would be additive to KT&G's Board.
- Since 2005, Mr. Cha has served as the CEO and Chairman of the Board of LG H&H (KRX: 051900), a producer of household goods that manages cosmetics, household goods and beverages business, where his leadership recognized him as one of the best managers in Korea.
- Former President of Procter & Gamble (NYSE:PG) ("P&G") Korea, a multinational consumer goods corporation, and Former President and CEO of P&G Ssangyong Paper, a paper manufacturer.
- Former CEO of Haitai Confectionery and Foods Co Ltd. (KRX:101530), a manufacturer of instant foods, such as confectionery, beverages and ice creams.
- Lives in Korea and holds an MBA from Cornell University and a JD course of Indiana University School of Law.
- Acquired the Association of International Certified Professional Accountants certification (AICPA), and also worked as CFO of P&G Korea (1989-1994), P&G Philippines (1995-1996), P&G Asia (1997-1998).
Ou-Jin Hwang is the former CEO of Prudential Life Korea where he led changes in the Korean insurance market that more than doubled revenues over a seven-year period. His executive and board leadership experience improving governance, company operations and reorganizing non-core assets would be additive to KT&G's Board.
- Held roles of increasing responsibility at Prudential Life, including serving as the Chief Marketing Officer of Prudential International.
- Former board member of ADT Caps (now known as SK shieldus), the 2^nd largest security services company in Korea, where he led business structure improvements and governance activities to improve communication between shareholders and management.
- Former Vice Chairman of Ceragem Group, a global healthcare company, and CEO of Ceragem Health & Beauty, a professional global health & beauty care company introducing cosmetic products made from natural ingredients.
- Has a deep understanding of finance from his experience as CEO of Prudential Life Korea, one of the most profitable life insurance companies, for seven years.
- Lives in Korea and holds a degree from Sogang University Graduate School of Business and from Sogang University in English Literature.

About Flashlight Capital

Flashlight Capital Partners Pte. Ltd is an investment management firm founded by Carlyle Group's former Head of Korea, Sanghyun Lee. Based in Singapore, Flashlight Capital's investment philosophy is grounded in improving corporate governance and unlocking long-term value at its portfolio companies. For more information about Flashlight Capital, please visit www.FlashlightCap.com.

¹ Source: Bloomberg; Stock price decline calculated between January 26, 2023, through March 15, 2023.

² Cash and cashable assets include: Consolidated Gross Cash (Cash and Cash Equivalents, Current Other Financial Assets, Current fair market value profit or loss, Long-term other financial assets, Long-term deposits in MSA Escrow Fund, Long-term fair value through profit or loss, Fair value through other comprehensive income or loss), Real Estate Investment, and one non-core business listed in Korea.

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Flashlight Capital Urges KT&G Shareholders to Vote FOR ALL Its Proposals Ahead of Upcoming Voting Deadlines