THORNEY TECHNOLOGIES LTD — Net Asset Value 2018

Apr 3, 2018

Thorney Technologies Ltd
ABN 66 096 782 188

4 April 2018

Dear fellow TEK shareholder

I am pleased to report that as at the end of February 2018 TEK’s Net
Tangible Asset (NTA) backing was 26 cents per share, an increase of about
25% over its NTA as at the end of February 2017.

This is a very satisfying performance especially in view of the significant
sharemarket gyrations which have occurred over the last few months.  It is
testimony to TEK's portfolio approach of investing in both listed and
unlisted technology companies at every stage of the investment cycle and to
the abilities of the Thorney team to keep identifying value and potential in
the sector.

A number of what can be described as "disclosure scandals" have dominated
the Australian listed tech sector in recent months, resulting in a degree of
nervousness about valuations in the sector.  At the same time the recent
data privacy scandal surrounding Facebook and President Trump’s targeting of
Amazon have also affected sentiment in the sector, both locally and
overseas.

While these issues have very appropriately focussed attention on the
governance and continuous disclosure obligations of listed Australian tech
companies, at TEK we remain firm believers in the long term potential of
tech to transform many established industries.  We are just at the beginning
of what will surely prove to be one of the most exciting and business
disrupting periods in our history.  TEK will continue to be very much
involved.

We remain excited about the sector and are extremely well placed to take
advantage of opportunities which present themselves in the tech space.  Our
networks both locally and overseas mean we have constant visibility of
attractive deals.  In addition, having successfully raised $15 million last
year we are sitting on about $20 million cash as we continue to examine a
host of opportunities in both listed and unlisted companies in Australia,
the USA and Israel.

Below I have outlined some of the highlights in the TEK portfolio as of this
month.

Level 39, 55 Collins Street, Melbourne Vic 3000
Telephone: + 61 3 9921 7116 Facsimile: + 61 3 9921 7100
Website:http://www.thorneytechnologies.com.au/

Chairman’s Update continued

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Listed Portfolio highlights

Afterpay Touch Group Ltd (APT):APT
remains TEK’s largest single holding and
continues to exceed expectations with the market
penetration of what it calls its “buy now,
receive now, pay later” service to Australian
retailers and consumers.  APT is still growing
strongly, and as at 31 December 2017 had more
than 1.5 million customers and more than 12,000
retail partners in Australia and New Zealand.

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This growth in customers and retail partners has led to APT representing
more than 25% of all Australian domestic apparel online sales and more than
8% of all online physical retail sales.  To me, this appears just the
beginning for APT with further growth opportunities identified in several
new verticals and service industries both domestically and overseas.

After a spectacular run APT shares came off their highs recently amid some
profit taking and short selling based on speculation that APT will be
targeted by regulators looking to clamp down on the fast growing payments
sector.

At TEK, we are confident that APT has taken a proactive and transparent
approach towards the regulatory environment and dealing with any
prospective challenges to its business model.

We believe APT Executive Chairman, Anthony Eisen, CEO, Nick Molnar, Group
Head, David Hancock, and their team have done a tremendous job positioning
the company so far, and we continue to believe strongly in their ability to
achieve their growth ambitions.

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Updater Inc. (UPD):  UPD continues to
impress with the dynamic expansion of
relocation services platform across a number of
verticals and we look forward to the company
delivering its first significant revenue flows over
the next 12 months.  The company's most recent
market update and the results from various pilot
programs suggest that UPD’s platform has very
significant growth potential which it can fund,
having raised more than US$50 million in equity
capital during September 2017.

UPD is well advanced in establishing the appropriate governance structures
and management capability, ably led by founder and CEO, David Greenberg.
It recently appointed the co-founder and principal of SNL Financial,
Jessica Nagle to its Board of Directors.  The company is doing a good job
of delivering its message to the market and despite being based in New
York, has an active investor relations strategy offering clarity about its
business model and timing of revenue growth.

I continue to believe in UPD’s ability to exceed its internal growth
targets and emerge as the preferred technology service platform for the
millions of American citizens who relocate each year.

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Chairman’s Update continued

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Yojee Limited (YOJ):  Just as Updater seeks
to disrupt the US home relocation industry and its
associated services, Yojee is working to disrupt
the logistics space with its platform technology
which provides logistics and supply chain
management capabilities via its blockchain secured
software.

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We are excited by the potential for innovation in the massive and growing
global logistics industry and believe YOJ is well placed to become a
significant player.

The company recently entered a pilot services agreement with UPS Asia - a
subsidiary of the giant United Parcel Service - for the use of Yojee's
technology in UPS Asia's specific supply chain environment.

While the program will not generate revenue in the pilot stage, it is a
compliment to YOJ and its technology that UPS Asia is willing to trial it.
The outcome of the pilot will be keenly watched.

YOJ also appears to be doing a good job in the areas of corporate
governance and shareholder engagement, having appointed an independent
chairman, holding regular roadshows and briefing sessions for investors and
working with reputable stockbroking firms.

GetSwift Ltd (GSW):  In contrast to
Yojee, GSW's ambitions to become a dominant
player in the logistics software space have
hit a significant snag.

The company is now facing two shareholder class actions over alleged
failures in its ASX disclosure obligations which resulted in its share
price plunging from more than $4 just a few months ago to less than 50
cents currently.  While GSW is defending the actions, at best they will be
a major distraction for management and they have highlighted what appears
to have been a lack of understanding at GSW about how Australian public
companies operate, and how they should be structured from a governance,
transparency and continuous disclosure perspective.

We still believe in the integrity and potential of GSW's platform product
and understand the company is working hard to maintain and grow its
customer relationships.  Fortunately, GSW has a solid cash buffer while it
works through its issues however, it also needs to convince its investors
and the market that it is still worthy of support.  I have called for GSW
to appoint both an independent chairman and additional directors, to work
on its governance practices and restructure its performance incentives.
Until we see some real changes in those and other areas the market is
entitled to remain cynical.

While TEK’s exposure to GSW is currently comparatively modest, we have been
both a buyer and a seller of GSW shares in recent months.  We will continue
to monitor developments.

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Chairman’s Update continued

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ReadCloud Limited (RCL):ReadCloud is an
Australian education software provider serving
secondary schools.  In February, it completed a $6
million capital raise and listed on the ASX with TEK
participating in its heavily oversubscribed IPO.

The company's shares, 20 cents at IPO, enjoyed a
strong debut and are now trading at around 37 cents.

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We are excited about the potential of this company which describes itself
as a provider of digital reading solutions and e-books delivering
Australian school curricula digitally in one app across many devices.

Students and teachers using the ReadCloud app can share notes, questions,
videos and weblinks within the platform.

RCL experienced steady growth and cashflows for several years as a private
company and before listing was serving about 50 schools and 22,000 users.

The capital raise provided it with sufficient cash to fund its expansion
plans targeting the more than 2,700 secondary schools in Australia.

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OneVue Holdings Limited (OVH):  OVH’s emergence
as a relevant and investable ‘fintech’ appears to be well
on track after it reported improved financial metrics in
its recent half year results.  This company is another good
example of Thorney’s ability to "sniff out" value at an
early stage and then work with the company to release that
value and move onto the market's radar.  A 27% increase in
total revenue, coupled with improved operating margins
delivered a result which shareholders should be confident
that the market will continue to recognise.

I continue to be impressed by how well OVH’s fund services, platform
services and trustee services are regarded by its customers, a principal
reason why growth in each business segment was witnessed during the
recently completed reporting period.

We maintain our confidence that OVH will deliver further earnings
improvements and enjoy even greater market recognition.

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Chairman’s Update continued

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HUB24 Limited (HUB):  Another of our favourite
fintechs, HUB has continued its evolution as one of the
fastest growing superannuation and investment
management platforms in Australia.

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HUB recently reported another excellent half year period of profitable
performance.  At the end of February, it had in excess of $7.2 billion in
funds under administration and an ambition to continue its strong
performance led by a dynamic management team.

The diligence, discipline and steady growth demonstrated by HUB continues
to be rewarded by the sharemarket with the share price more than doubling
in the period since 1 January 2017.

While TEK has taken advantage of HUB's strong share price gains and trimmed
some of our holding we remain optimistic that it will continue to grow and
will hit $10 billion in funds under administration in the not too distant
future.

Oventus Medical Limited (OVN): Oventus

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is an Australian company which has developed a non-
invasive device that deals with the common and
sometimes life threatening problem of sleep apnoea.

While other options such as surgery and CPAP
devices already address sleep apnoea and snoring,
the attraction of the OVN device is that it is
similar to a mouthguard which is easily fitted and
it is comparatively less expensive than other
medical options.  The company has signed a global
manufacture and distribution agreement with the
Modern Dental Group.

At the Sohn Hearts and Minds Investor conference in Sydney late last year,
I recommended OVN as a stock likely to significantly outperform.

Subsequently, OVN shares did enjoy a strong rise but have since fallen back
on a lack of news from the company.

We are not concerned about this as we have always understood OVN's revenues
would not begin to flow for some time.  We continue to have high
expectations for the company and will look to add to our position at lower
price levels.

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Chairman’s Update continued

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Unlisted companies:

TEK has an increasing number of positions in unlisted companies in
Australia, the USA and Israel.  While the vast majority of these are small
start-ups, they do give us a breadth of valuable exposure to the unlisted
tech space and a portfolio from which may emerge some tech stars of the
future.  Here are a few of the highlights.

Daisee:Daisee is an Australian artificial intelligence (AI) company
which recently raised $8.8 million from a range of investors including TEK.

Daisee’s name stands for Deep Artificial Intelligence for Enterprise
Ecosystems.  Its aim is to combine the best in AI research from leading
universities including Deakin University and the University of New South
Wales with commercial know how to create software applications for
companies across a range of industries.

The company has considerable commercial expertise in its management
including Richard Kimber who is a former Google regional MD.

Businesses around the world are, for the most part, only just beginning to
appreciate the potential of AI to make them more efficient.  The number of
Australian companies spending more than $1m on AI is expected to more than
double over the next 4 years.  Daisee is well placed to tap into that
growing demand.

Pulse Health:This US based company produces the Revelar breath
analysis technology which measures aldehydes - organic compounds found in
the breath.

Aldehydes are a key indicator of lipid peroxidation and disease risk
especially in cancer and heart disease.

As a result the Revelar product offers hope of an easy non invasive test
which may provide early warning of elevated disease risk.  The company has
a highly qualified and experienced board and executive team and is
progressing manufacture of commercial orders in anticipation of a soft
launch.  It recently completed a funding round at a valuation above TEK's
entry price.

The next 12 months should prove very interesting for Pulse and we will
watch the company's progress with interest.

Hyp3r:As mentioned in my last update, Hyp3r was introduced to us
through our strong connections to the San Francisco-based venture capital
fund, Structure Capital which has a good track record of backing successful
start-ups.  Hyp3r was recently named one of the world's Top 10 social media
companies by Fast Company Magazine in its World's Most Innovative Companies
2018 issue.

Hyp3r's technology enables social media to be tracked and analysed by
reference to locations, so allowing its customers to engage with their own
customers while they are in their venues.  For example theme park and
stadium owners can use Hyp3r to communicate directly via smart phones with
people while they are visiting their venues.

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Chairman’s Update continued

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Conclusion

The tech industry is a dynamic, exciting and potentially lucrative one which
is changing the way we live and do business.

This so called fourth industrial revolution we are experiencing - like all
revolutions - will produce both big winners and big losers.

At TEK we will continue to grow our tech networks and exposures domestically
and internationally and take a broad portfolio approach to manage risk.  We
also take advantage of trading opportunities when we see them.

We are prepared to take overweight positions in companies that we believe
have the potential to deliver strong returns, while never "risking the
farm".

In this way TEK will continue to provide its shareholders with exposure to
the tech revolution at every stage of the cycle while still aiming to
produce superior returns.

Thank you for your continued support.

Best regards

Alex Waislitz
Chairman

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