THORNEY TECHNOLOGIES LTD — Management Reports 2018

Sep 23, 2018

Thorney Technologies Ltd
ABN 66 096 782 188

24 September 2018

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Dear fellow TEK shareholder

Chairman’s Update

Since I last wrote to you TEK has continued its strong performance.  I’m pleased
to report that at the end of August 2018 TEK’s Net Tangible Assets per share
(NTA) stood at 27.6 cents (post tax, after fees).

The table below summarises TEK’s NTA performance since inception (an increase of
33%).

TEK NTA (after costs) vs All Ords Accum. Index (January 2017 to August 2018)

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35%
TEK NTA (20.8 Jan-17 / 27.6 Aug-18)
30%
All Ords Accum Index
25%
20%
15%
10%
5%
0%
-5%
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Level 39, 55 Collins Street, Melbourne Vic 3000
Telephone: + 61 3 9921 7116 Facsimile: + 61 3 9921 7100

Chairman’s Update continued

Thorney Technologies Ltd

PORTFOLIO INSIGHTS

I remain very enthusiastic about the strong growth in the value of the TEK
portfolio. We have worked hard to construct a dynamic portfolio of both listed
and unlisted companies which leverages off our extensive global technology
relationships and which provides exposure to a wide range of sectors across the
entire investment life cycle.

Afterpay Touch Group (APT)

The stand-out contributor to TEK's NTA growth in recent months has been our
largest holding, Afterpay Touch Group Limited (APT).  APT is an example of an
Australian technology company which is expanding globally having entered the US
market during the last financial year and, in recent weeks, a move into the UK.
On 30 June 2017, the APT share price was $2.95, whilst at the time of writing,
having recently raised more than $100m, the share price is over $15.00.  That is
an increase of over 400% during the past 14 months.

Updater Inc (UPD)

Another of TEK's main holdings, Updater Inc. (UPD) has recently secured
shareholder approval to de-list from the ASX as it seeks to accelerate its global
growth ambitions by raising capital from the private markets in the US.  TEK is
supportive of this move and has been increasing its holding of UPD in the period
ahead of de-listing.  The ability of TEK to both support and participate in the
privatisation of UPD is an example of our flexible investment mandate, one which
allows us to invest in, and participate in the journey of, both listed and
unlisted technology companies at every stage of their evolution.

Since it first listed on the ASX in 2015, UPD’s management has consistently met
or exceeded market expectations so we remain optimistic in the company being able
to accelerate its growth plans by raising further capital at a substantial
increase in value.

Other

During the period, meaningful contributions to TEK’s performance were delivered
by companies including Readcloud Limited, (up 143% since listing in February
2018) OneVue Holdings Limited, (up 16% since 30 June 2017), NextDC Limited, (up
37% since 30 June 2017) and Zip Co Limited (up 63% since 30 June 2017).

The two main drags on TEK’s performance during the 2018 period were Credible Labs
Inc (CRD) and GetSwift Limited (GSW).

We have not given up on either of these two companies. We have high hopes for
CRD’s recently launched mortgage refinancing marketplace and are monitoring the
company’s progress. By contrast, and notwithstanding encouraging share price
gains in recent days, GSW has a lot of work to do, including dealing with the
shareholder class action and ASIC investigation it is facing, demonstrating that
it has a viable business model and re-establishing its shareholders’ trust.

The public versus private debate

The upcoming delisting of UPD mentioned above has brought into focus the relative
merits of companies being listed or remaining private, especially in the
technology space.  While there will always be an important role for public share
markets and TEK will always maintain an extensive listed portfolio of companies,
we are seeing an increasing number of opportunities in the private and pre-IPO
space.  At present, there is a deep pool of private capital available to
promising start-up companies globally and many start-ups are choosing to stay
private for longer, due to the availability of capital, and to not list publicly
at all.

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Chairman’s Update continued

Thorney Technologies Ltd

Following the completion of the UPD delisting process, the TEK portfolio will
comprise approximately 60% listed companies, 20% unlisted/ private companies and
20% cash.

Whilst UPD will be the largest investment amongst the unlisted companies, there
are numerous other exciting and potentially valuable companies contained in the
portfolio.  In that regard, I have included below a list of some of these
companies, which serves to illustrate the breadth of the unlisted/ private
portfolio and provides exclusive exposure for TEK shareholders.  I anticipate
that a number of these companies will progress to the initial public offer stage
over the next 12-18 months.

Investee Company	Description
Pulse Health LLC	An innovative medical diagnostic company that
(USA)	manufactures patented breath management systems for
	early detection of diseases
Daisee Pty Ltd	A company which builds artificial intelligence
(Australia)	enterprise software solutions focused on leveraging
	unstructured data (voice, emails, chat, documents) to
	improve productivity and customer experience
Aglive Group Ltd	Provides digital supply-chain traceability and
(Australia)	integrated GPS tracking and mobility solutions to the
	agricultural industry
Honk Technologies Inc.	Operates an on-demand mobile application that connects
(USA)	motorists with road-side assist and towing service
	companies throughout the USA
Nexdius Limited	A manufacturer and wholesaler of sunscreen products
(Australia)	which enable Vitamin D absorption
HYP3R Inc	This company offers a location-based marketing platform
(USA)	that helps businesses unlock geo-social data to
	analyse, engage and acquire high-value customers
GLX Holdings Ltd	Operates an online platform that enables the trading of
(Australia)	LNG cargoes globally
Worthy Inc.	Conducts a global online marketplace for pre-owned
(Israel)	luxury goods such as diamonds, watches, jewellery and
	precious metals
Caja Elastic Dynamic	A company that provides innovative robotic solutions
Solutions Ltd	for efficient movement and racking within storage
(Israel)	facilities and warehouses
Terragen Holdings Ltd	A biotech company that produces Great Land™,a liquid
(Australia)	formulation of natural bacteria that improves
	horticultural outcomes and has global market
	application
Bitmain Technologies	Headquartered in Beijing, this company produces
Ltd	integrated circuits for cryptocurrency mining as well
(China/ Israel)	as mining hardware
Traackr	A company which algorithmic-based discovery and
(USA)	analysis capabilities have positioned it as one of the
	leading platforms for managing influencer marketing
Inception VR	The Inception App delivers premium 360 and Virtual
(Israel)	Reality entertainment content to consumers worldwide
LiquiGlide Inc.	LiquiGlide® is an early-stage company looking to
(USA)	commercialise the first-ever durable super slippery
	coatings that prevent viscous liquids from sticking to
	solid surfaces
Lending Express	A company with AI-powered proprietary technology that
(Israel)	matches businesses with the most relevant lenders,
	providing a simple solution at no cost to the user
Solomoto International	Runs a subscription based digital platform that gives
Ltd	small and medium sized businesses the power to unlock
(Israel)	their fullonline potential intoday’s digital world.
Trustify, Inc.	Operates an on-demand technology marketplace platform
(USA)	that helps to connect and hire private investigators in
	the United States.

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Chairman’s Update continued

Thorney Technologies Ltd

I hope the list above gives you an idea of why we ensured TEK had a wide
investment mandate when we established it and also why I remain excited about the
potential of the global technology sector in both the listed and unlisted space.

Being a TEK shareholder allows you to participate in the potential upside of the
unlisted companies featured above.  It is these and other companies which you
will not typically have an opportunity to gain exposure to through ordinary
channels which presents the unique and valuable characteristic of being a TEK
shareholder.

CONCLUSION

I still maintain that we are yet to see anything like the full potential of
technology to disrupt traditional industries and to introduce previously unseen
efficiencies.

At the same time this potential has tested investors’ ability to know just what
is the right valuation to place on companies which show great promise, are pre to
early revenues but are burning cash as they grow but are not yet profitable.

When we launched TEK we were well aware of these issues and the risks and
volatility that can come with them. I am proud that we have successfully steered
a path through these issues and delivered strong NTA growth for our shareholders
since inception.

Our aim is to continue this growth through our ongoing due diligence and
utilising the extensive investment networks we have in Australia, the USA and
Israel.

We remain excited by, and committed to, investing in tech companies both listed
and unlisted. While we will continue to back and trade in those listed companies
that we select as having the highest quality and best prospects of success, our
growing number of unlisted exposures should help enable us to produce some “super
alpha” returns as they mature over the next several years.

Some may even change the world.

I encourage you to stay on the journey with us.

Yours sincerely

Alex Waislitz
Chairman

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