SocietyOne Holdings Pty Ltd

Shareholder Update
December 11 2013
Hello Team.

Amazing but true! Yes not one but two SocietyOne investor updates inside a month!

Please note the following information is extremely confidential and we are sharing
this with you under a permitted disclosure to shareholders in SocietyOne. There will
be a public announcement in the next couple of weeks but until then we are
operating under a strict confidentiality agreement.

Now with that out of the way, I am pleased to announce that we have now finalised
our Series A capital raising round. We have commitments from 3 investors for an $8
million capital raising at a pre money valuation of approx. $22.5 million valuing the
shares at $2.02. This is a 32% increase in share price from the GFC transaction in
August (at $1.53). The lead investor in this round is Westpac Bank who have signed-
on to invest $5 million, followed by GFC investing $2 million and Justin Reizes (Head
of KKR in Australia- investing in his personal capacity) who will be investing a further
$1 million.

We are very excited to have secured Westpac as a lead investor. This is a clearly a
significant milestone in the development of our business. Although its early days I
must say we have found their approach and thinking around innovation and
technology disruption to be very aligned with our own views.

Lets face it this is a pretty big milestone for SocietyOne. It’s the first early stage
investment Westpac have done for “a long time” and securing Westpac as a lead
investor is fantastic validation of the potential of P2P lending in Australia and of
SocietyOne as the obvious category leader. It’s a deal that we expect will generate
interest around the world. Securing a meaningful follow-on investment from GFC
(thanks Oli and Fabian) and bringing an investor of Justins caliber onto the share
register are also clearly significant steps in validating the progress we have been
making at SocietyOne.

None of this would have been possible without the hard work and dedication of the
team at SocietyOne. Nor would it have been possible without the support of our early
investors – a big thanks to all of you guys for supported us on the journey so far.

The summary of the capital raising is as follows:

1) We have now executed long forms (subscription agreement) with Westpac

and the investment will be settled at latest by the end of February 2013;
2) In addition, if Westpac and SocietyOne can finalise a $25 million wholesale
commitment by settlement date, Westpac will receive an additional 5% equity
for providing this facility;
3) GFC have elected to invest $2 million as part of this round at the same share
price as Westpac;
4) We are also excited to be establishing a relationship with Justin Reizes via his
personal $1 million investment in this round.

As part of the Condition Precedent to closing this deal, we have amended the
existing Shareholder agreement and will need all shareholders to sign off on this
agreement ASAP. I have enclosed the final version of the amendment shareholder
agreement. I would suggest that you review it and if you have any questions, please
contact Jerry at 0404420637 or on his email at jerry.yohananov@societyone.com.
But please note that we need to start collecting signatures and ticking off the pre-
completion checklist items ASAP so your prompt response is greatly appreciated.

Greg, Jerry or I will contact each of you shortly to set up a time to answer any
questions and obtain your signature on the Shareholders agreement.

For a summary of the amended Shareholder agreement, it is substantially the same

Shareholders agreement that we have entered into with the GFC initial investment in
August with the following substantive variances:

1) Upon completion of the Investment, the number of Directors will be increase

to 5, with Westpac able to appoint 2 nominees to the Board.
2) Both Westpac and GFC will be provided customary protective provisions
regarding material decisions to be made only such as:

• modification of equity (including new issues)

• changes to constitution
• changes to board
• M&A / launching new businesses / expanding into new territories
• liquidation
• borrowings
• Remuneration of key staff
• exit
• dividends
• litigation etc.

In addition, if either Westpac or GFC drop below 10% equity ownership, they
lose the protective provisions.

3) Westpac will have a Right of First Offer (ROFO). If the Company proposes to
undertake an exit process, Westpac will have the right to submit a non-
binding offer to acquire all or substantially all of the stock or assets of the
Company.

In addition, there are several other matters that we will need to finalize over the next
month including:

1) Various shareholder resolutions relating the restriction of transfer of shares

for Matt and Greg as part of the GFC and Westpac agreements;
2) Consolidation of minor shareholders into an investment vehicle to ensure that
we do not go over 50 shareholders;
3) Preemptive rights for shareholders to participate in this investment round.

Jerry will be communicating with all of you regarding the above.

PLEASE REMEMBER THIS DEAL IS CONDIFENTIAL AND CANNOT BE

DISCUSSED UNTIL WE CIRCULATE THE PRESS RELEASE.

HOWEVER WHEN WE DO CIRCULATE THE PRESS RELEASE WE NEED THE

BIGGEST SPLASH POSSIBLE SO PLEASE DISTRIBUTE AND SHARE WIDELY
AND PROUDLY WHEN WE SEND IT OUT.
Thanks again to all of our investors for your support in helping us build this business.
Greg and Jerry and I wish you all the very best for the festive season and please get
set for a big 2014!!

Regards

Matt

We set out to raise funding (debt and equity) on the basis of

validating all of the above

o We have raised $2m with GFC in August.

o We are at the term sheet stage with parties interested in
providing both equity and wholesale funding and we are working
our way through those agreements with the aim of closing
another round of funding by XMAS
o We have had (and continue to have) extensive discussions with
wholesale funding candidates but have not yet closed a deal.
o Securing sufficient funding to enable us to focus on growing
the business has continued to take much longer and be much
harder than we anticipated.
• We set out to prove that our ClearMatch technology would provide us
with an excellent low-risk platform on which to launch and then scale
this business:
o Almost no downtime of the platform since launch, zero security
breaches.
o 1000's of daily transactions successfully consummated.
o 72 inbound enquiries to license of partner with SocietyOne to
gain access to our ClearMatch platform.

In terms of a quick scorecard review I believe we can say that we have

ticked the majority of these boxes and where we have not done so we have
made changes that I am confident will enable us to tick these boxes in 2014.

One issue however that warrants a deeper review is the rate of growth of the
personal loan book as that has clearly not grown at our originally forecast
rate. A number of the reasons behind this slower than targeted rate of
growth are set out below including:

• We needed to throttle back marketing spend aimed at attracting

borrowers due to the delays associated with raising capital.
• We needed to throttle back loan approvals due to limited treasury
funding – principally because we had expected by the middle of this
year to have closed an agreement to secure wholesale funding that
would then enable a faster rate of book build.
• We continue to proceed cautiously with our credit underwriting
policies which is the main driver of our relatively low loan approval
rates (note that with comprehensive consumer reporting due to arrive
post March 2014 we believe the quality of the third party data
necessary to support much larger origination volumes will begin to
become available.
• We have developed high quality channel relationships with partners
like DPM to originate personal loans to young doctors but the
application volume has been slower than we anticipated.

A couple of things have become obvious to us over the last 12 or so months,

the most important of these include:

• We need to offer investors a broader range of asset classes than

simply personal loans:
o We have prioritised finding and I believe have made good
progress in developing attractive new asset classes.
• We need to make investing in a personal loans portfolio seem less
“risky”:
o We launched the limited indemnity proposition this year (for
diversification risk mitigation).
o In 2014 we plan to go beyond this and are working to develop a
broader indemnity.
• We need to diversify our revenue streams and reduce our cash burn:
o We have frozen new hires over the last 12 months.
o We have entered into an exciting licensing agreement with an
ASX listed 3rd party who is one of the leading players in the
alternative lending category which provides significant cash-
flow and risk diversification as it positions the ClearMatch
technology as the only Cloud based globally available P2P
lending platform that is available as a Software as a Service
(SAAS) option.

The implications for our growth strategy at SocietyOne are as follows:

• We will continue to grow the personal loan book at a rate that makes
sense given available funding and quality of credit data.

• We will build out additional asset classes that offer investors for
the first time a direct access to a portfolio of non-correlated asset
classes

• We will in parallel develop a high margin, recurring revenue licensing

business that has the potential to become a significant line of
business. To that end we have closed our first multi-year license
customer who will also be an excellent reference customer as we move
forward to close commercial agreements with our current pipeline of
licensing prospects.
Market Opportunity

P2P globally is very hot (LendingClub recently saw a valuation of US$2.3b)

and the Fintech space in general is attracting lots of investor interest.
Clearly there is a very large opportunity in front of us in Australian and
across near regional markets.

But as with any business at our stage of growth there are also significant
risks. These include the fact that its taken us a long time to raise money,
that we have not been able to grown the personal loan book at the originally
forecast rate and that competitors will no doubt enter the market in 2014 or
2015.

There are three core elements to our plan to address these risks moving
forward

1. Product enhancements to enable us to attract and convert more

Sophisticated and wholesale investors to our personal loans product
(principally a new 'true' indemnity product)
2. Launch and validate 2 new asset classes (the first of these will be
secured livestock loans against which we have already written
approximately 200k in loans over the last 3 months and for which we
have just secured our first $3m wholesale facility to fund the
development of that book over the next 3 months)
3. Make our first reference customer for the ClearMatch platform
fabulously successful and have them deploy ClearMatch across their
business

I’d like to thank team at SocietyOne and you guys for your continued
support.

Also like to thank Murray as chairman who has added lot of rigour to the
board meeting and decision-making processes of the company and been a very
good sounding board for our evoking plans.

Cheers

Matt