Investor Newsletter - June 2014

Welcome to our June 2014 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.

Audited Result
General Finance Limited had an improved result to 31 March 2014. We experienced sound revenue growth of 29.6% to $1,375,205 from $1,060,904. Our pre tax profit from operating activities increased to $284,211, up 9.1% from $260,409.  Lending (and receivables) increased to $8.71 million, up 7.0% from $8.14 million and debenture borrowings increased to $6.47 million, up 13.4% from $5.71 million.  During the year we wrote off $25,847 in bad debts. Capital was maintained at $3.1 million, with a risk weighted capital ratio of 63% (well above the 10% required).  This result is satisfactory. We believe the next twelve months will be better, due to an increased growth in our mortgage portfolio, more mortgage applications and the continued improvement in the economy. A growing economy and decreasing unemployment, both of which are currently occurring, are positive for our sector. 

Fewer Choices Out There
Over the past five years, there has been a significant reduction in the number of non-bank deposit takers, such as finance companies, mortgage trusts, solicitors’ mortgage funds, and building societies sourcing funds from the public.  These non-bank deposit takers offered a number of advantages: they were New Zealand owned, often lent on local projects and they provided the investing public with access to higher interest rates. As a result, investors such as yourselves, have fewer investment choices to obtain more competitive interests than those offered by the trading banks. Over this period there have been a number of improved regulatory changes and investors can have a higher level of confidence in the non-bank deposit sector. This bodes well for General Finance.

Non Bank Deposit Takers Licencing
The Non-bank Depositor Takers Act 2013 came into force on 1 May 2014. This means we have to apply to be licensed by the Reserve Bank. We are in the process of applying for this.  A non-bank deposit taker is any financial institution, except a bank, that obtains its funds from the general public. This includes finance companies, building societies, credit unions and so forth.  This is all part on the increasing regulation in our sector.

Next Interest Payment
Our next quarterly interest payment will be made on the evening of Monday 30 June 2014. Direct credits will be processed 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 William Cairns on 09 526 7801 or by email to wcairns@general.co.nz. Our website is www.general.co.nz.

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

Your continued support is noted and appreciated.