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Investor Newsletter #3 - September 2007 

21 September 2007

Welcome to our eleventh 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. 

Over the past two months there has been a lot of comment in the media about finance companies, following the demise of some of them. We believe that one or more of the following points, which we will discuss below, has led to the problems for these companies. We will discuss these points in turn and show how General Finance manages these issues. This is a more technical newsletter than usual, but given the state of the market, we believe this is warranted.

Lending Quality

This is a core component of a finance company. Our only lending is in the residential housing sector. This is the trading banks’ preferred sector as well.  We do not have any lending exposure to new or second hand cars, commercial property, commercial developments, apartment developments, chattel loans or unsecured personal loans. To reiterate, all our lending is in the residential property sector, secured with either first or second mortgages. We view this as one of the safest sectors in the market.

Related Party Lending

This is a "no - no" in the industry. This is where you are lending to yourself or to companies related to you. General Finance has no related party lending whatsoever. We have no lending outside of this country. We are a New Zealand based lender, lending only in this country.


In several cases we have noted that some failed finance companies have been run by persons with unacceptable financial pasts, including former bankrupts, those with a lack of real experience in this sector and those with an absence of professional qualifications. The two directors of General Finance are William Cairns and James Lockie. Both are well qualified academically and belong to professional organisations. Both have many years’ mortgage experience. Neither of us has ever been bankrupted.  Full details of our previous work experience are detailed in our Prospectus. We believe the backgrounds of the directors and their qualifications are important when you are investing in a finance company. Our senior staff is well experienced in the industry as well. The 100% shareholder of General Finance Limited is Cairns Lockie Limited which is a well established non-bank home loan lender. It currently manages a mortgage book of around $375 million. 


Most finance companies are generally geared around 10 times to 1.  This means for every $100 of assets they have, $10 of their own money is at risk (with the balance, $90 being investors’ money).  At 31 March 2007 General Finance Limited was geared 3.55 to 1.  This means that we had $28.18 of equity (our own money) for every $100 of assets. This makes us one of the lowest geared finance companies in the market.  This has to give you, our investors, a level of comfort.


We maintain a bank funding line that is roughly 10% of our mortgage book value. This is a secured facility and it can be used at anytime. We hold additional reserves in cash to enhance our liquidity management.

We hope the above strengthens the view you may have of General Finance Limited. For us, it is very much business as usual.

Next Interest Payment Date

Our next quarterly interest payment will be made on Friday evening, 28 September 2007.  Direct credits will go in that evening, with cheques (if applicable) 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, or by email to  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.