FIRSTFOLIO LIMITED RECEIVES ALTERNATIVE FUNDING PROPOSAL.

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1 ASX Release 20 November 2013 Company Announcements Australian Securities Exchange Limited 20 Bridge Street Sydney NSW 2000 FIRSTFOLIO LIMITED RECEIVES ALTERNATIVE FUNDING PROPOSAL. INDEPENDENT DIRECTORS CONTINUE TO UNANIMOUSLY RECOMMEND SHAREHOLDERS VOTE IN FAVOUR OF THE IZN RECAPITALISATION Key Points Firstfolio has received an unsolicited funding proposal from Resimac to raise $22.7 million as an alternative to the $50.2 million IZN Recapitalisation. The Independent Directors and their advisers have considered the Resimac Proposal and concluded that it is INFERIOR to the IZN Recapitalisation. The Independent Directors believe the Resimac Proposal does not solve Firstfolio s critical funding issues or provide capital for growth. In the absence of a superior proposal, the Independent Directors continue to unanimously recommend that shareholders VOTE IN FAVOUR of the resolutions to approve the IZN Recapitalisation at the upcoming General Meeting. On Friday 15 November 2013, Firstfolio Limited (Firstfolio or Company) (ASX: FFF) received an unsolicited funding proposal from Resimac Limited (Resimac) and the ICM Group of companies (which includes Bermuda National Limited) (ICM Group) (Resimac Proposal). The proposal is to raise $7.7 million equity and a further loan of $15 million as an alternative to the recapitalisation proposal from IZN Investments ACE Management Pty Ltd as trustee for the IZN Investments Australian Capital Enterprise Trust to raise equity of $50.2 million (IZN Recapitalisation). After careful consideration and consultation with Firstfolio s legal and financial advisers, the Independent Directors have concluded that the Resimac Proposal is inferior to the IZN Recapitalisation. In the absence of a superior proposal, the Independent Directors continue to unanimously recommend that shareholders VOTE IN FAVOUR of the resolutions to approve the IZN Recapitalisation at the General Meeting to be held at 9.30am on Wednesday 27 November 2013 at Level 4, 60 Carrington Street, Sydney. Firstfolio Chairman, Mr Eric Dodd, said today A comprehensive recapitalisation of Firstfolio is critical. The Independent Directors have considered a range of alternatives. While the proposal from substantial shareholder Resimac and ICM Group is welcomed, the Independent Directors believe that the Resimac Proposal does not provide a solution to Firstfolio s long term funding issues or capital for growth and risks further delays at a time when the Company requires funding to continue as a going concern.

2 Details of Resimac Proposal The Resimac Proposal provides for Firstfolio to raise $22.7 million by way of: (a) (b) a 1 for 1 rights issue to all shareholders at a price of $0.01 per new share to raise approximately $7.7 million. The issue would be fully underwritten by Resimac with no underwriting fee; a loan from Resimac of $15 million. The loan would have a three year maturity and charge interest at prevailing bank loan rates. Detailed terms of the loan are not known and there is a question as to whether the loan and its terms will be acceptable to Firstfolio s existing lenders. The funding would be used to reduce Firstfolio s immediate and short-term debt obligations (notionally $5.5 million to Welas Pty Ltd (Welas) and $16.5 million to the Commonwealth Bank of Australia (CBA)). Details of the Resimac Proposal are set out in Annexure A to this Announcement. Independent Directors Assessment of Resimac Proposal The Independent Directors and Firstfolio s financial adviser, Grant Samuel Corporate Finance (Grant Samuel), have considered the Resimac Proposal and have concluded that it is inferior to the IZN Recapitalisation: (a) No Long Term Solution: The Resimac Proposal is not a long term solution to Firstfolio s critical funding issues: The Resimac Proposal would raise only $7.7 million equity compared to $50.2 million under the IZN Recapitalisation. Pro forma net debt (as at 30 June 2013) would be $54.3 million based on the Resimac Proposal and only $14.2 million based on the IZN Recapitalisation. (b) No capital for growth: The Resimac Proposal does not provide much-needed working capital to support growth: The IZN Recapitalisation will leave approximately $16.4 million available for growth, marketing and working capital initiatives. The Resimac Proposal provides no capital for growth. (c) Further delays and ongoing uncertainty: The Resimac Proposal is incomplete and undocumented without commercial certainty at a time when urgent funding is required for the Company to continue as a going concern: Material terms of the Resimac $15 million loan, such as security, covenants and priority remain to be negotiated. It is doubtful that Firstfolio s principal lenders (CBA and Welas) would support the Resimac Proposal and have already provided their consents to the IZN Recapitalisation. (iii) The IZN Recapitalisation is largely unconditional. The Foreign Investment Review Board has confirmed it has no objection to the IZN Recapitalisation and Firstfolio is on track to satisfy the remaining outstanding conditions precedent in accordance with the previously disclosed timetable.

3 (d) Low issue price: Firstfolio shares will be issued under the Resimac Proposal at 1 cent each. If there was a significant shortfall in the rights issue, Resimac might achieve control at a very low price. In contrast, shares would be issued under the IZN Recapitalisation at an average of slightly over 2.1 cents each (including 1 billion shares which will be issued to IZN at 3.5 cents each). The Independent Directors are of the view that the IZN Recapitalisation will result in a sustainable capital structure with a significant proportion of debt repaid and additional capital to support growth. In the absence of a superior proposal the Independent Directors continue to unanimously recommend that shareholders VOTE IN FAVOUR of the resolutions to approve the IZN Recapitalisation at the General Meeting to be held at 9.30am on Wednesday 27 November 2013 at Level 4, 60 Carrington Street, Sydney. The Board will continue to consider any alternative proposals that arise which might provide a superior outcome for shareholders in accordance with its fiduciary obligations. Shareholders with any questions are encouraged to contact the Shareholder information line between 9am and 5pm Sydney time on business days by calling from within Australia or from outside Australia. By order of the Board of Directors Dustine Pang Company Secretary About Firstfolio Limited Firstfolio Limited (ASX: FFF) is a mortgages and financial services distribution business which offers a diversified range of mortgage solutions through its two key businesses; echoice and Folio Mortgage & Finance. Firstfolio also offers its customers an alternative funding option through Firstfolio Capital. echoice is one of Australia s most recognised online mortgage brands, using industry leading technology to provide customers with mortgage and financial product options through convenient online portals. Folio Mortgage & Finance provides mortgage products, mortgage processing and management services, personal loan products, commercial loans, as well as equipment finance and leasing. Products are provided via a national network of mortgage brokers, affiliates and industry partners. Loans under management (LUM) were $19 billion at 30 June 2013 making it one of Australia s largest independent platforms for the delivery of financial products and services. Forward Looking Statements This document may contain certain statements (including indications of and guidance on future earnings and performance, projections, estimates and opinions which can be identified by the fact that they use words such as anticipate, estimate, expect, project, intend, plan, budget, believe, target, may, assume and words of similar import) concerning the anticipated future performance of Firstfolio ("Forward Looking Statements"). These Forward Looking Statements may involve significant elements of subjective judgment and assumption as to future events which may or may not be correct. None of these Forward Looking Statements is a guarantee or representation as to future performance or any other further matters, which will be influenced by a number of factors and subject to various uncertainties and contingencies, many of which will be outside the control of Firstfolio. Accordingly, Firstfolio s actual results, performance and prospects could differ materially from that expressed in or implied by the Forward Looking Statements. No representation or warranty, express or implied, is made by Firstfolio that the Forward Looking Statements contained in this announcement are accurate, complete, reliable or adequate that they will be achieved or prove to be correct. Except for any statutory liability which cannot be excluded, each of Firstfolio, its respective officers, employees and advisers expressly disclaims any responsibility for the accuracy or completeness of the Forward Looking Statements and excludes all liability whatsoever (including in negligence) for any direct or indirect loss or damage which may be suffered by any person as a consequence of any information in this release or any error or omission therefrom.

4 Appendix A Details of RESIMAC s interim funding proposal Key Points 1. $22.7m in funding to meet Firstfolio s (FF) short-term debt obligations: a. Short-term debt obligations are taken to include $5.5m repayable to Welas Pty. Ltd in January 2014 and $16.5m is due to the CBA by 7 th April [A further $1.7m is due to the NAB by July 2014] b. RESIMAC will fully underwrite a one-for-one rights issue to all shareholders at a price of 1 cent per share raising $7.7m c. RESIMAC will make available a committed loan of $15 million i. The loan would carry a three year maturity, from the date of signing of the agreement ii. The rate of interest would reflect the prevailing rate for loan facilities as would be charged by the four major Australian banks. d. The aggregate $22.7m will meet the short-term obligations listed above. e. The proceeds from the rights issue and loan facilities will be immediately available to FF to assist in the reduction of the creditors outstanding facilities that cannot be met from the business cashflow and reserves and in the provision of any immediate cash flow needs by the business. f. No underwriting fee is payable by FF under this proposal in contrast to the $2.4m fee under the ACE proposal. 2. Immediate negotiations with the two major creditors to ensure FF remains a going concern and that there is an agreed path to repayment. a. RESIMAC is keen to engage with both the CBA and Welas Pty. As soon as possible to: i. Understand the current terms of each debt obligation ii. Explain the details and rationale of our proposal iii. Explore longer term solutions that meet the needs and interest of both creditors and shareholders 3. Access to additional financing through RESIMAC and the ICM Group. a. Subject to discussions with management and creditors to more clearly understand the financial position of the Company, RESIMAC Limited will be pleased to consider further funding requirements b. Such funding could be structured as either equity or debt depending on the financing requirement. 4

5 Conditions 4. Acceptance of RESIMAC s proposal and rejection of ACE s proposal a. RESIMAC believes our proposal to be clearly superior to the one tabled by ACE, especially with regard to shareholders interests b. A detailed explanation of our objections to ACE s proposal in contained in Appendix B along with the relevant merits of RESIMAC s proposal c. Acceptance of our proposal would include rejection of the ACE proposal and, we would anticipate result in the cancellation of the General Meeting scheduled for 27 November. d. Should there be any doubt as to the superiority of RESIMAC s proposal we would welcome an Independent Experts opinion. e. We note that the ACE break fee of $600k is more than offset by the savings in our proposal since RESIMAC is not proposing to charge an underwriting fee in contrast to ACE s $2.4m charge. 5. The appointment of new Directors to the Board of FF a. RESIMAC will in due course seek the appointment of new Directors to the Board of FF, the majority of whom will be Independent Directors 6. Requisite Approvals a. Acceptance of RESIMAC s proposal is subject to: i. Board approval from FF; ii. Compliance with ASX regulations; iii. Correct legal documentation. b. Legal advice obtained by RESIMAC indicates that our proposal is not subject to FIRB approval i. However, for the avoidance of doubt and to facilitate further discussions an application has been made to FIRB to allow RESIMAC to increase its holding in FF above 15% 5