Investor Newsletter #4 - December 2008

31 December 2008

Welcome to our December 2008 General Finance quarterly newsletter. We appreciate your support. The purpose of this newsletter is to keep you informed about the company and various financial matters that may interest you.

Government Guarantee

General Finance Limited is one of the small number of finance companies to receive a Crown Guarantee. What does this mean?  For our investors it means their investments have the guarantee of the Crown until 12 October 2010. Details about the Crown Guarantee can be found on the Treasury's website at http://www.treasury.govt.nz/economy/guarantee.  General Finance Limited had to show it was fully compliant with its trust deed. The purpose of the guarantee is to restore confidence into the investment markets and to offer a degree of financial protection to the investing public. For us and any finance company receiving the guarantee, it is good news but it is just business as usual. We will continue to lend purely on residential real estate - we do not lend on property developments, sub-divisions or commercial property. We believe it now easier to write quality lending proposals, as there is less competition in our sector. This good news for our depositors.

Our Results to 30 September 2008

We have released our 30 September 2008 half yearly audited accounts. For the six months to September 2008 interest and fee income was down due the tougher lending and business markets. As a result our net profit before tax was lower at $32,071. Our cash balances increased from $1,804,823 as at 31 March 2008 to $2,565,813.  Cash represents 41% of our total assets. The company does not operate an overdraft facility and sold its only property asset, its premises, a year ago. Since the end of September our cash position has increased further. With high cash levels and with most of our mortgages maturing within the next 12 months, General Finance Limited is in a sound liquidity position.  A copy of our six monthly accounts are on our website at http://www.general.co.nz/prospectus.htm or we would be happy to send you one if you give us a ring.  

Finance Company Investments are Likely to Regain Popularity

One of the downsides of the falling cash rate is that the interest rates investors receive are also reducing.  Prime secured Government stock rates were around 8% a year ago but are now around 5%. Further cuts are expected in the New Year and Government stock rates may go under 4%. After deducting tax and taking inflation into account there is not a lot left over. At rates of 8 - 9%, finance companies are again looking an attractive alternative. Given the Crown Guarantee, considerably stricter supervision by the regulators, trustees and auditors, and the general tightening of lending policies, the remaining finance companies are starting to look attractive as alternative investments.

Next Interest Payment 

Our next quarterly interest payment will be made on the evening of Wednesday 31 December 2008. Direct credits will go in that evening, with cheques (if applicable) and paperwork being forwarded during the week.

If you have any questions about your investment please do not hesitate to contact me on 09 526 7801 or by email to wcairns@general.co.nz  Our website is a www.general.co.nz.      

If you want to invest more funds, to obtain an investment statement and an application form our securities registrar's number is 0800 500 602.

Your continued support is appreciated.

We take this opportunity to wish you a very Merry Christmas and all the best for the New Year.