Letter from the Chairman of the Remuneration Committee to shareholders

We are pleased to present the remuneration report for the 2016 financial year. This report summarises the philosophy, principles and approach to remuneration at TFG as it applies to executive directors, non-executive directors and other employees. It details the policy and principles set by the remuneration committee (Remco) for each of the primary components of remuneration.

In addition, it expands on and explains the implementation of this policy for each of the pay components, depicting the resulting remuneration mix and remuneration structures in detail. We disclosed the changes made to each component in the past year as part of the continuous need to revise and improve our remuneration practices to align with our strategy and respond to current trends and specific circumstances.

TFG operated in a difficult economic environment in light of the slow pace of growth in the domestic market. Despite this, our group turnover increased by 31,2%. We experienced strong cash sales growth and pleasing HEPS growth levels. More details are disclosed in the Chief Executive Officer’s report.

Mr D M Nurek retired from the board and Remco on 19 June 2015 and was replaced by Mr M Lewis. We acknowledge the valuable role Mr Nurek played in the Remco over many years, and we welcome the international experience and insights Mr Lewis brings to the committee.

The CEO, Mr A D Murray, reaches the normal retirement age of 60 in March 2017. Mr Murray agreed not to retire at that date and agreed to extend his tenure as part of our succession strategy. Consequently, and in consultation with the nomination committee, Remco structured his remuneration package to facilitate, inter alia, an orderly and smooth transition to his successor. This matter is covered in more detail in part 1 of this report.

The remuneration and shareholdings of the directors and prescribed officers of TFG Limited are disclosed, as well as the fees paid to non-executive directors. When setting and reviewing the remuneration policy, we have taken into account the best practice requirements of corporate governance, including the draft King IV report on corporate governance (King IV). In addition, the remuneration packages for directors and senior executives are determined after due consideration of their specific performance, experience and responsibilities. This determination includes engaging external remuneration consultants and performing an extensive independent benchmarking exercise of similar roles in companies comparable to TFG’s size, industry, complexity and risk profile.

The remuneration report is segmented into two parts. The remuneration policy is set out first (part 1), followed by the implementation of the remuneration policy in our 2016 financial year (FY2016) (part 2). We are of the view that the implementation of the policy achieved its FY2016 strategic objectives.

We took note of comments received from shareholder advisors and our investors that arose from the shareholder approval of the remuneration report for the 2015 financial year. Some of the comments from shareholder advisors and our investors, and our responses to those comments, are set out in the table alongside.

As in previous years, we will submit our remuneration report for shareholder approval at our annual general meeting (AGM) through a non-binding advisory vote. We request that you demonstrate your support of our policy, and we welcome any comments and/or suggestions for improvement that you may have.

E Oblowitz

Chairperson of the remuneration committee