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Investor Newsletter #3 - September 2006 

Welcome to our seventh General Finance quarterly investor 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. 


More About the Owner of General Finance Limited


General Finance is a wholly owned subsidiary of Cairns Lockie Limited, a mortgage origination and management company established in 1998. Cairns Lockie Limited is not a retail deposit taker like General Finance Limited, but obtains its funds from wholesale sources through the local capital markets and then on-lends these funds on residential first mortgages. It operates, in many ways, like an old fashioned building society, except that it generates its funding from wholesale sources, which are cheaper than retail funding. Cairns Lockie is referred to as a non-bank mortgage lender. This category also includes building societies, credit unions and mortgage trusts. When compared with many finance companies, Cairns Lockie is of quite a reasonable size, with around $350 million in mortgages under management, nineteen full and part time staff, and offices located in Greenlane in Auckland. 


Finance Company Debentures - A Straight Forward Investment Choice


The Government has been discussing ways to tax gains of those holding overseas shares (excluding Australia) in excess of NZ$50,000. Originally a ridiculous and complex capital gains tax was proposed.  This was going to tax 85% of realised capital gains. It appears now that this will be scrapped and a 5% notional dividend will be used and investors taxed on this. As many holders of offshore shares know, a number of these shares pay very low dividends and the tax required to be paid on the notional dividend may very well exceed the dividend received. Again this solution is flawed and will impose an additional paperwork burden on investors. This brings us back to the ease of investing in finance company debentures, such as those offered by General Finance Limited.  You are taxed at your marginal rate, withholding tax is deducted at source by us and paid to the IRD, interest is paid four times a year and what you receive after withholding tax is yours. It is straight forward.


An Example of Our Current Lending


A couple has found a section at a popular holiday resort with a purchase price of $250,000 and wish to borrow 66% of this, i.e. $165,000. The borrowers believe they have made a good buy and are unsure whether to hold the property and build on it, or trade it for a profit over the summer period. The solution is a bridging loan for six months with General Finance Limited and if they decide to hold it for the long term, we can then provide a more suitable mortgage product.


Next Interest Payment Date


Our next quarterly interest payment will be made on Friday evening, 29 September. Direct credits will go in that evening, with cheques and paperwork being forwarded the following week.


If you have any questions about your investment please do not hesitate to contact me on 09 526 7801.  Our website is at


If you want to invest more funds or obtain statements and the like, our securities registrar’s number is 0800 500 602. 


Your continued support is much appreciated.