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Investor Newsletter #4 - December 2005

Welcome to our fourth General Finance 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. This newsletter is prepared on a quarterly basis.

Our Six Monthly Results to 30 September 2005

General Finance Limited had a good six monthly result to 30 September 2005. Our profit, before tax, was $141,449 and compares favourably with the full year to 31 March 2005 of $230,931. In our September result, for the first time, we included a provision for doubtful debts of $31,490. This is not an actual write off but rather a provision. We believe all conservatively run finance companies should make these provisions. Our total assets grew to $4.59 million, up from $2.77 million in March. The demand for loans remains strong. All of our loans remain secured over residential properties. If you would like a copy of our six monthly accounts please feel free to contact us or go to our website at where you can download them.

Our 2006 Crystal Ball

It is always difficult to make predictions but a number of trends are beginning to emerge. We continue to have a robust economy with low unemployment, so there will be a continued demand for first home buyers to purchase their own properties despite the higher interest rates. These higher rates together with lower immigration are starting to slow down the demand for investment properties. In most cases the rental return is well below the prevailing interest rates, and the likelihood of capital gains is less over the coming 12 months. Higher interest rates will have a negative impact on our business and exporting sectors rather than the intended housing sector. We are starting to see firms laying off employees particularly due to the high dollar. We do see a continued demand for well located properties in attractive suburbs.

Quarterly Cut Off Dates

As you know we pay (or compound) interest four times a year at the end of each quarter. The payment date is always the last day of the last month of the quarter, provided it falls on a business day. If this day is either a Saturday, Sunday or a public holiday, our interest payment will be made on the first business day after the quarter end. In order to achieve this we have a cut off point around the middle of the month. For example, for our interest payment due on 31 December 2005, the cut off date is 16 December 2005. This means that funds we receive from 17 December to 31 December 2005 do not receive a partial interest payment at 31 December 2005 but the interest is accrued and compounded and paid out the following quarter. The advantage of this system is that our investors are actually paid out at quarter end, and not a few days or a week later. The investors who invest in the last two weeks of each quarter know that their interest will be compounded and promptly paid out at the end of the next quarter.

Some Lending Examples

As discussed in previous newsletters one of our main types of lending is short term bridging finance. Here are two examples:

a) A family has found a new home, maybe in the same city or a different one, which they like but they have not sold their existing property. These types of lending transactions are short term by their nature. The owners are keen to sell their old property. We are well secured, with a first mortgage over their new property and a second over their existing one.

b) Someone is doing up their property to sell, and need a small loan to complete their upgrading. They do not want to disturb their first mortgage arrangements. The solution is a small short term second mortgage with us.

If you have any questions about your investment please do not hesitate to contact me on 09 526 7800.

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.