prospectus no. 7 & investment statement

ProsPectus No. 7 & Investment statement

Key Features of the Offer 2

Chairman’s Letter 3

summary Financial statements 4-5

Company Profile 6

Directors’ Profiles 7

Directors’ statement 8

main terms and Conditions of this Offer 9-13

Prudential Regulation 14

Benchmarking 15-19

Business Risks 20-21

Lending and Risk management Policies 22

Financial statements 23-26

notes to the Financial statements 27-44

auditor’s Report and Consent 45-46

trustee statement 47

Provisions of the trust Deed 48-50

additional statutory Information 51-53

Investment statement 54-58

application Form 59-60

How to Invest 61

Directory 62

this Prospectus is dated 9 august 2010.

A copy of this Prospectus, duly signed and having attached thereto the documents required by section 41 of the Securities Act 1978 (being the Auditors’ Report and Audit Consent required by regulation 18(1)(c) of the Securities Regulations 2009, “the Regulations”), has been delivered for registration to the District Registrar of Companies at Auckland.

New Zealand legislation referred to in this document may be viewed online at www.legislation.govt.nz

COntents

IMPortANt Note

This section is only intended to provide a summary of certain key features of the offer contained in, and is qualified in its entirety by, this Prospectus. The information provided in this Prospectus is important and should be read thoroughly before making any investment decision.

tHe IssUeR anD PROmOteRThis Prospectus contains an offer by General Finance Limited (“General Finance” or the “Company”).

WHat seCURItIes aRe BeInG OFFeReD?General Finance is offering an opportunity to invest in first ranking Secured Debenture Stock (“Deposits”) for a range of terms from at call, for At Call Deposits, and from six (6) months to five (5) years, for Term Deposits.

DOes tHe Investment Have a CROWn GUaRantee?Effective 12 October 2008, General Finance has a guarantee under the New Zealand deposit guarantee scheme; further information regarding the Crown guarantee may be found on pages 9-10 of this Prospectus. This guarantee expires on 12 October 2010.

The following information is available, free of charge, and at all reasonable times, on the internet site maintained by the Treasury at www.treasury.govt.nz:

• Further information about the deposit guarantee scheme

• The most recent audited statement of financial position of the Crown.

WHat DO I PaY?The Deposits will be issued at par. You must apply for a minimum of $5,000 (or $10,000 if selecting the monthly interest option) of Deposits, except where a smaller sum is agreed by the Directors.

Can I tRansFeR mY Investment?Deposits may be transferred to a third party at the discretion of General Finance. There is currently no established market for transfer-ring Deposits. General Finance is not seeking to list the Deposits on any Stock Exchange.

WHat aRe tHe RetURns?Interest is paid on the Deposits. The interest rates paid will depend on the terms for which you choose to invest. Interest rates on At Call Deposits may be varied from time to time. Interest Rates on Term Deposits are fixed for the terms selected.

Interest is calculated from the date we accept your payment, and is paid or compounded on the last day of March, June, September and December in accordance with the interest payment option chosen by you, and on maturity. For individual investments greater than $10,000, you can choose to have your interest paid monthly, with payment made on the last business day of the month.

WHO Is tHe tRUstee?General Finance has appointed Perpetual Trust Limited (the “Trustee”) as the trustee in respect of the Deposits for the purposes of the Se-curities Act 1978 under a trust deed dated 2 November 2004 as amended by a deed of variation dated 1 December 2010 (the said trust deed, as amended, being referred to in this Prospectus as the “Trust Deed”). The Deposits are constituted and secured by the Trust Deed.

aRe tHe DePOsIts seCUReD?The Deposits are secured by a first ranking security interest granted in favour of the Trustee over all the present and after-acquired real and personal property wherever situated of General Finance. The security interest is subject only to any Prior Security Interests permit-ted by the Trust Deed and claims given priority by law.

Investment statementThe current Investment Statement required by the Securities Act 1978 containing the information detailed in Schedule 2 of the Securities Regulations 2009, appears at pages 54-58 of this document.

HOW DO I aPPLY FOR DePOsIts?You must apply for Deposits in accordance with the instructions on page 61 using the application form on pages 59-60, attached to the current Investment Statement.

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KeY FeatURes OF tHe OFFeR

Dear Investors

We are pleased to present General Finance Limited’s seventh Prospectus and Investment Statement dated 9 August 2010 and the opportunity to invest in the Company’s debenture stock.

The year ended 31 March 2010 has seen an improvement in profitability as the Company has reduced its low yielding cash balances and reentered the residential lending market. We have however continued with the strategy of conservative liquid-ity management and maintained larger than usual cash balances as a buffer against market uncertainty. At 31 March 2010, the Company’s cash balances were 29% of total assets (42% at 30 June 2010). Demand for loans has continued to be strong since 31 March 2010.

During the year our shareholders increased the Company’s paid up capital by 40% to $2.8 million (from $2.0 million), evidenc-ing their commitment to the business.

The Company recorded the following audited result for the year ended 31 March 2010:

• Net surplus before tax was $100,159, up 195% from $33,909 in the previous year.

• Total assets decreased to $5.46 million, down 19% from $6.74 million in the previous year.

• Equity increased to $2.89 million, up 2% from $2.82 million in the previous year.

• The Company’s provision for impairment losses at 31 March 2010 was $225,337, down from $306,310 in the previous year. This represents specific provisions which we believe is prudent given changing market conditions. The Company wrote off $209,847 in bad debts during the year.

The Company has a Crown guarantee under the New Zealand deposit guarantee scheme. Further information regarding the Crown guarantee is set out on pages 9-10 of this Prospectus.

At 31 March 2010, total equity was robust, at 53% of total assets, compared with 42% last year (57% at 30 June 2010).

The Company welcomes and has been preparing for the new prudential regulation of Non-Bank Deposit Takers. Regulations covering credit ratings, capital ratios and related party exposures were gazetted by the Reserve Bank on 24 June 2010 and come into force on 1 December 2010. General Finance’s progress towards meeting these regulations is discussed on page 14 of this Prospectus.

The Company’s lending has remained in the residential property sector with a combination of first and second mortgages being written. With a reduction in the number of participants in the non-bank sector the Company is seeing and settling more first mortgage applications. We believe this trend will continue.

We urge you to read this Prospectus and Investment Statement to find out more about our offer and General Finance. We believe this offer will provide our investors with steady income plus the opportunity to invest in a progressive New Zealand owned and conservatively managed company operating within the residential mortgage finance sector.

We appreciate your support and look forward to your investment in our business.

James Lockie Chairman, General Finance Limited 9 August 2010

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CHaIRman’s LetteR

statement OF COmPReHensIve InCOme

Total Operating Revenue 935,744 863,208 2,045,977 1,826,006 1,835,856 1,368,330

Finance Costs 248,867 352,513 585,088 516,160 516,160 237,290

Profiit from Operating Activities 100,159 33,909 179,578 693,059 702,909 473,555

Income Tax Expense 29,823 20,560 154,009 228,709 231,960 156,273

Profit from Continuing Operations 70,336 13,349 25,569 464,350 470,949 317,282

Total Comprehensive Surplus 70,336 13,349 25,569 464,350 470,949 317,282

statement OF CHanGes In eQUItY

Total Comprehensive Surplus 70,336 13,349 25,569 464,350 470,949 317,282

Transfer from Asset Revaluation Reserve — — 446,264 — — —

Contributions from owners 800,000 — — 1,000,000 1,000,000 —

Distributions to owners (800,000) — — (500,000) (500,000) —

Issued and Paid Up Capital 2,800,000 2,000,000 2,000,000 2,000,000 2,000,000 1,000,000

Asset Revaluation Reserve — — — 446,264 446,264 446,264

Retained Earnings 87,021 816,685 803,336 331,503 406,306 435,357

Total Equity 2,887,021 2,816,685 2,803,336 2,777,767 2,852,570 1,881,621

BaLanCe sHeet

Total Current Assets 4,924,796 6,384,850 7,002,873 8,826,507 8,826,507 6,942,129

Total Non-Current Assets 538,783 350,438 205,820 1,332,998 1,296,155 1,394,382

Total Current Liabilities 1,347,190 2,512,336 2,626,204 5,386,838 5,275,192 2,253,684

Total Non-Current Liabilities 1,229,368 1,406,267 1,779,153 1,994,900 1,994,900 4,201,206

Total Equity 2,887,021 2,816,685 2,803,336 2,777,767 2,852,570 1,881,621

statement OF CasH FLOWs

Net Cash Flows From Operating Activities 201,015 24,746 291,095 534,626 534,626 570,941

Net Cash Flows From Investing Activities (1,401,591) 2,708,631 3,176,347 (2,121,979) (2,121,979) (4,304,678)

Net Cash Flows From Financing Activities (1,284,222) (460,816) (1,701,350) 1,336,827 1,336,827 3,756,884

Net Cash Movement for the Year (2,484,798) 2,272,561 1,766,093 (250,526) (250,526) 23,147

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sUmmaRY FInanCIaL statements

audited For Year ended

31 march ‘10 nZ IFRs





Restatedaudited ForYear ended

31 march ‘07nZ IFRs

audited ForYear ended

31 march ‘07Previous

nZ GaaP

audited ForYear ended

31 march ‘06Previous

nZ GaaP

2

sUmmaRY FInanCIaL statements (continued)

5

the amounts stated in the summary financial statements are for the entity General Finance Limited and have been extract-ed from the full audited financial statements for the years ended 31st march 2006 to 31st march 2010.

the summary financial statements are presented in new Zealand Dollars and all values are rounded to the nearest dollar

the above summary financial statements were authorised for issue in accordance with a resolution of the directors on 4 august 2010. the directors at the relevant times have previously authorised the issue of full financial statements as follows:

• Year ended 31 march 2010: authorised by the directors on 5 July 2010



• Year ended 31 march 2007: authorised by the directors on 23 may 2007

• Year ended 31 march 2006: authorised by the directors on 14 June 2006

the full financial statements, from which these summary financial statements were extracted have been prepared in ac-cordance with nZ GaaP (new Zealand Generally accepted accounting Practice) and comply with the new Zealand equivalents to International Financial Reporting standards (nZ IFRs), and other applicable Financial Reporting standards, as appropriate for profit-oriented entities for the years ended 31st march 2008 to 31st march 2010. the 31 march 2006 and 31 march 2007 financial years were prepared under the applicable nZ GaaP at the time.

the Company has made an explicit and unreserved statement of compliance with IFRs in its full financial statements for the years ended 31st march 2008 to 31st march 2010.

the summary financial statements cannot be expected to provide as complete an understanding as provided by the full financial statements. For a copy of the full financial statements please refer to pages 23 to 44 of this Prospectus.

the full financial statements have been audited by Hayes Knight audit. the audit reports for the full financial statements for the years ended 31st march 2006 to 31st march 2010, include unqualified audit opinions.

there were no changes in accounting policies affecting the prior period other than the transition to nZ IFRs in 2007 and the application of new accounting standards as they were issued and became effective.

the summary financial statements are in compliance with FRs 43.

General Finance Limited is a wholly New Zealand owned and operated finance company, located in premises in Ellerslie in Auckland. The Company is engaged in mortgage origination and management, providing a full range of residential mortgage services. These include prime, no-financials, non-conforming, bridging, and second mortgages. No-financials loans are those for which the borrower does not provide full financial information.

General Finance Limited is a subsidiary of Cairns Lockie Holdings Limited. The Cairns Lockie group (a well established mortgage banking operation) had, in aggregate, over $200 million of mortgage assets under management as at 31 March 2010. The Cairns Lockie group has been in business for over ten years. The directors are James Lockie and William Cairns. Full details of their backgrounds and experience are given below. Both Directors hold full time executive positions with the Company. The details regarding the parent company are given for information only, as the Company is the sole member of the Charging Group.

The majority of mortgages under management are financed by wholesale funders, where these financial institutions accept all the risks of interest rates, foreign exchange and collateral and register the security. General Finance is also a mortgage origina-tor, providing mortgage advances through a broker network to the customer. The mortgage advances held in the company name are written over 6 to 60 month periods, with various priority security over property.

The Company commenced trading on 1 April 2001, initially writing and managing prime residential mortgages for an Austral-asian wholesaler, in competition with New Zealand trading banks. In 2002 the Company widened its product range to include non-conforming residential mortgages placed with another Australasian wholesaler. Non-conforming residential mortgages are those outside normal trading bank criteria. These wholesale suppliers source their funding from the New Zealand and interna-tional capital markets.

It became apparent in 2003 that there was a demand in the residential mortgage market for short term accommodations not being satisfied through traditional sources. The Company designed a first and second mortgage product to meet this demand, initially funded from its own resources.

Due to the success experienced for this short term residential mortgage product, the Company, decided, in 2004, that it would fund part of this growth through the issue of debenture stock. General Finance registered its first prospectus for this purpose on 9 November 2004.

The mortgages under management are written for a variety of different purposes, with solutions tailored to the borrowers’ individual requirements. Most of these mortgages are written for terms of less than twelve months. They generally enable bor-rowers to complete some short term transaction, such as preparing a property for sale or bridging a property acquisition.

A real estate mortgage or a right to a real estate mortgage is taken in all instances as security to support the Company’s lend-ing. Mortgages taken comprise both first and second mortgage securities. Each loan is secured by a registered mortgage or is protected by a registered caveat.

At 31 March 2010, the Company’s finance company gross mortgage book had increased to $3.99 million, from $2.68 million in March 2009.

The Company now operates as an established residential mortgage lender with an emphasis on targeting business from the in-termediary market (including mortgage brokers, financial planners and insurance agents). The Company is active in new product development.

COmPanY PROFILe

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James Lockie LL.B., B.C.A., FCIS, FFin, MInstD – Executive Director

James Lockie has degrees in law and business management from Victoria University of Wellington. He completed his professional law qualifications at Auckland University and has been admitted as a barrister and solicitor of the High Court of New Zealand.

He commenced his career with Toyota New Zealand in the areas of corporate planning and treasury management. In 1986 he joined Omnicorp Investments Limited, as Financial Controller and Company Secretary, establishing their Hong Kong office as an international treasury centre, and was responsible for structuring acquisitions, raising debt and corporate planning.

Returning to New Zealand in 1989, he was appointed Chief Financial Officer and to the Board of TV3, prior to its commencing broadcasting. He oversaw the reorganisation of TV3’s corporate structure, and its initial public offering. After TV3 he founded Horizon Pacific Television, whose four regional television stations began broadcasting in 1995. James was a director of business magazine publisher, Profile Publishing Limited until 2007 and a shareholder and chairman of television and commercial post production company Central Post Operations Limited from 1997 to 2008.

James is currently a shareholder and director of Manuka Health New Zealand Limited, a company specialising in natural health products, and a director of a number of private companies.

He is a Member of the Institute of Directors, a Fellow of the Institute of Chartered Secretaries and Administrators and a Fellow of the Financial Services Institute of Australasia.

William Cairns B.Com., Dip.Bus., FCIS, FFin – Executive Director

William Cairns has a Bachelor of Commerce degree from Canterbury University with post graduate finance qualifications from Auckland University.

He commenced his career with Mobil Oil in 1981 and later joined the New Zealand Dairy Board before entering the financial markets as a dealer with General Bills in 1984. During the late 1980s, he worked as a commercial lender with Advance Bank in Sydney (which became St George Bank and is now part of Westpac Banking Group).

Upon returning to New Zealand in 1990, he was appointed Mortgage Manager with NZ Guardian Trust (a well established trustee company). In this role he was responsible for the

Trust’s mortgage operation, managing of all types of mortgage lending (residential, farming and commercial).

One of his major achievements in this role was to more than treble the size of the mortgage book. When he left in December 1998, it had the largest mortgage book in the trustee company sector.

William served on the Hobson Community Board in Central Auckland, from 1998 to 2001 as a Community Board Councillor. In October 2001, William was elected to the Auckland City Council. He was a member of the Property and Finance Commit-tee, Chairman of the Art Gallery Enterprise Board and a director of Metrowater (Auckland based water utility company). William did not seek re-election in the 2004 local body elections and retired from his Council appointments. In 2009 William was elected to the Auckland Energy Consumer Trust, majority owner of listed electricity lines company Vector Limited

He is a Fellow of the Institute of Chartered Secretaries and Administrators and a Fellow of the Financial Services Institute of Australasia.

Peter Alan Anderson CA(Retired), BCA, ABINZ, ABIA – Chairman

Peter Anderson has a Bachelor of Commerce and Administration degree and obtained a chartered accountancy qualification.

He gained wide ranging banking experience with BNZ culminating in high level responsibilities in retail, wholesale, domestic, and offshore operations, as well as in the bank’s Head Office. He managed Regional credit policy and control responsibilities for up-per South Island and lower North Island.

DIRECTORS’ PROFILES

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Subsequently Peter managed BNZ’s largest corporate branch, handling prime banking relationships of major Producer Boards, Government SOEs, and major public listed companies.

With experience in London, he led BNZ’s strategic review of global international operations and undertook Regional General Manager Singapore responsibilities developing the business into the BNZ’s most profitable offshore unit during his four year’s term.

On return to New Zealand Peter joined Security Pacific Merchant Bank as Finance and Administration Director and continued to undertake these responsibilities following the bank’s acquisition by State Bank of South Australia, until State Bank’s decision to close its New Zealand operations.

A period of private entrepreneurial activity in property development and export led to financial consultancy roles and credit approval responsibilities for Rabobank, which introduced Peter to Pioneer Mortgage Services Pty Ltd. He was appointed as Pioneer’s New Zealand Chief Manager in 1999 and in June 2000 was appointed to the Australasian Board, which role he has maintained following the transition of Pioneer’s New Zealand operations to Gold Coast in mid 2008.

Peter has selectively continued to undertake consultancy roles in aspects of financial services and sourcing commercial funding for clients.

He is an Associate of the Bankers’ Institute of New Zealand and an Associate of the Bankers’ Institute of Australia.

Jonathan Cyril Olsen – Non-Executive Director

Educated at Kings College and the University of Auckland (Accountancy), Jonathan’s career commenced in 1956 as junior ac-countant with Porter Wigglesworth and Co. This Company had interests in a wide range of businesses.

In 1960, Jonathan was appointed as CEO of a sizeable Men’s and Boys’ Clothing Manufacturer in New Zealand and the Cook Islands. In 1963 he became Managing Director. Since 1983 to date, he has been the Managing Director of a Property Manage-ment and Investment Company.

Jonathan was elected as an Auckland City Councillor in 1998 and was appointed to the Board of Metrowater Ltd until 2001. He was also appointed to the Board of Auckland Tennis Inc. from 1998 – 2008 and was President in 2010. These businesses and community appointments have provided him with extensive experience in a wide range of fields.

We, the undersigned directors of General Finance Limited, confirm that after having made due enquiry in relation to the period between the date of the latest balance sheet set out in this Prospectus and the date of registration of this Prospectus, there have, in our opinion, arisen no circumstances that materially adversely affect:

(a) the trading or profitability of General Finance Limited:

(b) the value of the assets of General Finance Limited; or

(c) the ability of General Finance Limited to pay its liabilities due within the next twelve months.

James Roderick Lockie William Alexander Adams Cairns

Director Director

DIRECTORS’ STATEMENT

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tHe OFFeR

General Finance Limited (“General Finance” or “the Company”) is offering an opportunity to invest in a maximum of NZ$30,000,000 (excluding any amount that may result from the replacement of securities redeemed after the date of this Prospectus) of first ranking Secured Debenture Stock (“Deposits”).

The Deposits will be issued at par.

The Deposits are constituted and secured by the Trust Deed.

Investors must apply for a minimum of $5,000 worth of Deposits (or $10,000 where the monthly interest option is selected), except where a smaller sum is agreed by the Directors. The maximum that you may subscribe for is your choice.

The offer will remain open until fully subscribed or closed by the Directors.

tHe tRUstee

General Finance has appointed Perpetual Trust Limited as the trustee in respect of the Deposits for the purposes of the Securi-ties Act 1978 under a trust deed dated 2 November 2004 as amended by a deed of variation dated 1 December 2010 (the said trust deed, as amended, being referred to in this Prospectus as the “Trust Deed”) as described more fully under “Provisions of the Trust Deed” on pages 48-50 of this Prospectus.

seCURItY

The Deposits are secured by a security interest granted in favour of the Trustee over all the present and after-acquired real and personal property wherever situated of General Finance. The security interest is subject only to any Prior Security Interests permitted by the Trust Deed and claims given priority by law. For details of Prior Security Interests see pages 49-50 this Prospectus. The Deposits rank equally as to payment of principal and interest notwithstanding that they are created or issued at different dates or for different terms.

CROWn GUaRantee

General Finance has a Crown guarantee under the New Zealand deposit guarantee scheme. It signed a Crown Deed of Guar-antee (Non-Bank Deposit Taker) on 3 December 2008. This was replaced by a Crown Deed of Guarantee dated 8 December 2009, effective from 1 January 2010. The Crown guarantee may assist Investors to recover the principal amount of their Depos-its and accrued interest if General Finance is unable to meet its obligations to them. The Crown guarantee is subject to certain limitations. By way of summary, the main limitations are that:

(i) The Crown guarantee generally applies to qualifying Investors, being all Investors except for related parties of General Finance, financial institutions, persons who are neither New Zealand residents nor New Zealand citizens, or trustees for such persons.

(ii) The Crown guarantee only applies to any obligation of General Finance to pay money to a qualifying Investor pursuant to Deposits, being debt securities issued by General Finance:

(a) which become due or payable during the period from 12 October 2008 to 12 October 2010; or

(b) that exist on the occurrence of a default event or the date upon which the Crown Guarantee is withdrawn, whether or not the Deposits have matured, together with all accrued interest.

(iii) A default event will occur if General Finance:

(a) Fails to make payment to an Investor of any amount when due in respect of a Deposit;

(b) Becomes insolvent;

(c) Is subject to insolvency proceedings;

(d) Seeks, or becomes subject to, the appointment of a voluntary administrator, liquidator or receiver ;

maIn teRms anD COnDItIOns OF tHIs OFFeR

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(e) Loses possession of all or substantially all of its assets or a Court order is sought or enforced against those assets;

(f) Makes an assignment, compromise or the like with or for the benefit of its creditors; or

(g) Becomes subject to any action to place it in statutory management.

(iv) The Crown may withdraw the guarantee where General Finance fails to comply with its obligations under the Crown Guar-antee. General Finance has systems in place to ensure that it complies with these obligations.

(v) The maximum liability of the Crown to each qualifying Investor is limited to NZ$1,000,000. This cap includes any interest due to the qualifying Investor.

If a default event as described above occurs, the Crown will, subject to receiving a notice of claim from a qualifying Investor and verifying the claim, make payment to the qualifying Investor up to the limit of NZ$1,000,000. Claims are required to be made by each qualifying Investor and not the Trustee.

The Trustee has no duties in relation to the New Zealand deposit guarantee scheme and does not monitor General Finance’s compliance with the terms of this Scheme. The Trustee is not involved in any claim made under this Scheme; loss of the Crown guarantee is not an event of default under the Trust Deed.

The following information is available, free of charge, and at all reasonable times, on the internet site maintained by the Treasury at www.treasury.govt.nz:

• Further information about the New Zealand deposit guarantee scheme

• The most recent audited statement of financial position of the Crown.

• A copy of the Crown Deed of Guarantee executed between the Crown and General Finance

teRms

Investors may invest in either At Call Deposits or Term Deposits.

A range of terms is available. At the date of this Prospectus, the terms offered range from at call, for At Call Deposits, and from six (6) months to five (5) years, for Term Deposits.

InteRest Rates

The interest rates paid on Deposits will depend on the term for which you choose to invest.

Interest rates on At Call Deposits may be varied from time to time by General Finance. General Finance may, but is not obliged to, give prior notice to holders of At Call Deposits of any variation. Where General Finance does not give prior notice of any variation, it will notify holders of At Call Deposits of the new interest rate within fourteen (14) days after the new rate becomes effective.

Term Deposits will attract a fixed rate of interest, the amount of which depends upon the length of term invested. If your application is received after the interest rate for the term applied for has decreased, you will be promptly notified of such decrease and, unless you confirm within fourteen (14) days that you accept the new rate, your investment will be refunded, without payment of interest.

General Finance may refuse to accept an application for At Call Deposits or Term Deposits. If an application is declined then any money received with the application will be refunded without payment of interest.

General Finance will set the interest rates offered from time to time. Any variation will not affect applications already accepted for a Term Deposit.

Interest is calculated from the date we receive your payment, and is paid or compounded on the last business day of March,

maIn teRms anD COnDItIOns OF tHIs OFFeR (cont)

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June, September and December and on maturity. If your payment is received after 11 am on any day, interest will be calculated from the next business day. For individual investments over $10,000, investors may choose to have interest paid monthly, by direct credit, on the last business day of the month.

For the terms and interest rates available at the time of investment, please contact General Finance (contact details are in the Directory) or visit our website at www.general.co.nz/DepositRates.htm.

Because the terms, interest rates and payment options offered will vary, the actual returns on investment cannot be quantified in this Prospectus.

InteRest PaYment OPtIOns

In addition to a choice of the term of investment, you are entitled to choose from a range of payment options (described be-low). The range of options allows you to manage your investment in the way that best suits your needs.

General Finance pays interest on the terms and conditions specified in your application form. Interest for broken periods will be paid on the next interest due date.

Interest earned on your investment will, after deduction of any withholding tax or the cost of any approved issuer levy, will be paid in one of the four ways that you may specify in the application form (as follows):

• monthly Direct Credit: by direct credit monthly to the bank or financial institution account specified in the application form (option only available for individual investments in excess of $10,000).

• Quarterly Direct Credit: by direct credit each quarter to the bank or financial institution account specified in the ap-plication form.

• Quarterly Compound: automatically reinvested each quarter. You will then earn interest on interest, at the rate of the De-posit.

• Quarterly Cheque: a cheque will be forwarded to you each quarter to the address specified in the application form.

If you select an interest payment option on the application form and then later decide that you would like to change the speci-fied option, we will be happy to make the change.

General Finance may from time to time offer additional or alternative payment options to those specified above. Should you wish to confirm the payment options current at the time of application, please call us through the details provided in the Directory.

Fees anD CHaRGes

No fees or charges are payable to General Finance for investing.

If Term Deposits are withdrawn prior to maturity, we may charge an early withdrawal fee. For more details regarding early withdrawal, please refer to the comments under the heading “Early Repayment of Term Deposits” below.

There are no fees or charges payable on repayment of At Call Deposits.

matURItY anD eaRLY WItHDRaWaLs

at Call Deposits

At Call Deposits are repayable at call.

Upon receiving written or telephone instructions that you wish to withdraw your investment in At Call Deposits, your invest-ment (unless otherwise advised) will be repaid in accordance with the instructions recorded in your application form. Written instructions are required where payment is required to a bank or financial institution account other than that specified in your


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application form, or you wish to change the instructions specified in your application form.

In the event that instructions are received on or before 11 am on a business day, your investments will be repaid on the same business day as the receipt of your instructions. If your instructions are received after 11 am on any day, your investments will be repaid on the next business day.

term Deposits

Term Deposits will mature on the expiration of the term selected by you on your application form.

If no reinvestment or repayment instructions are received with your application form, then at least fourteen (14) days prior to the maturity of your Term Deposits, General Finance will send you a letter seeking your reinvestment or repayment instructions. The letter will enclose a copy of the Investment Statement and application form current at that time.

Repayment of principal or interest can be made by cheque or by direct credit to the bank or financial institution account nomi-nated on your application form. You can make your choice (in advance) by marking the appropriate box on the application form at the time of your initial investment.

If no maturity instructions are received by the date of maturity of your investment, General Finance will have the option of hold-ing your investment as At Call Deposits until receipt of your instructions, or repaying your investments (together with accrued but unpaid interest) by cheque posted to your last known address recorded on General Finance’s investor register.

The same person (unless the application was signed under a power of attorney, or by a trustee or where the investor has died or is otherwise incapacitated) who signed the initial application form must sign any written (including facsimile) instructions or otherwise author any e-mail instructions to the Administration Team. Where any of the exceptions apply, the party or parties seeking repayment should contact our Funding Manager.

In the event that instructions are received on or before 11 am on a business day, your investments will be repaid (unless other-wise advised) in accordance with your repayment instructions recorded on your application form, on the same business day as the receipt of your instructions. If your instructions are received after 11 am on any day your investment will be repaid on the next business day.

eaRLY RePaYment OF teRm DePOsIts

Early repayment of Term Deposits will be considered at the discretion of General Finance. General Finance relies on com-mitted Term Deposits to properly plan its business, and for this reason will only agree to early repayment at the request of an investor in limited circumstances. The circumstances under which early repayment would be considered, are:

• Hardship: where, due to unforeseen circumstances, an investor’s continued investment may give rise to some form of material hardship.

If a request is made by a holder of Term Deposits for the Deposit to be repaid prior to maturity for any reason including those provided above, General Finance may charge an early withdrawal fee of $150 and the interest rate will be adjusted to reflect the reduced term.

eaRLY RePaYment OF DePOsIts

General Finance has always reserved the right to fully repay all Term Deposits early, and now seeks some flexibility to retain some of benefits to investors in Term Deposits by reserving the ability to partly repay Term Deposits early. Accordingly for all Term Deposits invested from 10 July 2009, in addition to the existing right to fully repay early, General Finance will reserve the right to partly repay those Term Deposits early. General Finance may, without the approval of investors, and upon giving at least fourteen (14) days notice in writing of its intention to the Trustee and all affected investors, repay those investors’ Term


12


Deposits either in whole or in part (including accrued interest), whether or not due for repayment. This action will have two effects on affected investors: it will shorten both the term of that part of their investment that is repaid, and the cash flow from the investment. General Finance will only exercise these rights of early repayment in extraordinary circumstances as it requires a steady stream of investor’s funds to grow and develop the business.

If any Event of Default has occurred under the Trust Deed, the Trustee may, and shall if instructed by at least 75% of all investors, de-mand the immediate repayment of all Deposits whether or not due for repayment, and the Deposits will be repayable at that time.

RIGHt tO tRansFeR

Deposits may be transferred to a third party at the discretion of General Finance. There is currently no established market for transferring Stock. In the event that General Finance consents to the transfer of your investment, there are no fees or charges payable by you in respect of any such transfer.

CeRtIFICates

You will receive a certificate or other written acknowledgment recording the details of your investment. This will be your record of the terms upon which the investment has been accepted by General Finance.

taxatIOn

General

Investing in fixed interest investment products will have taxation implications. The effect of taxation will vary according to your personal circumstances. You should seek independent professional advice prior to investing and satisfy yourself as to the tax implications of the investment.

Withholding tax

Under current legislation, General Finance is required to deduct resident or non-resident (as the case may be) withholding tax from the gross interest payable to you on your investment, and to account for the deduction direct to the Inland Revenue Department. General Finance will deduct withholding tax at the highest rate unless it is satisfied that another rate applies.

If you are a resident of New Zealand for tax purposes or are engaged in business in New Zealand through a fixed establish-ment in New Zealand and supply General Finance with your IRD number, you can choose the rate of resident withholding tax to be deducted. Where you do not provide your IRD number, resident withholding tax is deducted at the default rate.

General Finance is not required to deduct withholding tax where you hold a valid Certificate of Exemption. If you hold a Cer-tificate of Exemption, you are required to forward a copy to General Finance and to notify General Finance immediately if the Certificate of Exemption is withdrawn at any time during the period of your investment.

General Finance is an approved issuer for the purposes of the approved issuer levy regime. If you are not resident in New Zealand for tax purposes and are not engaged in business in New Zealand through a fixed establishment in New Zealand, and General Finance’s prior agreement is sought, then General Finance will deduct the approved issuer levy, instead of non-resident withholding tax, from the gross interest payable to you on your investment.

General Finance does not give any undertaking or warranty that withholding tax deductions will not be made from any interest paid to any person who holds or is entitled to hold a valid Certificate of Exemption, where a copy of that Certificate has not been forwarded to General Finance. General Finance does not give any undertaking or warranty that non-resident deductions will not be made from interest remitted to any address outside New Zealand, irrespective of whether or not the recipient of the interest is or may become a resident in New Zealand for tax purposes or may engage in business in New Zealand through a fixed establishment in New Zealand.

13

PRUDentIaL ReGULatIOn

On 24 June 2010 the Deposit Takers (Credit Ratings, Capital Ratios, and Related Party Exposures) Regulations 2010 (the “Regu-lations”) were gazetted and come into force on 1 December 2010.

A number of requirements are imposed on deposit takers including the Company.

ReQUIRements ReLatInG tO CReDIt RatInG (Refer Part 2 of the Regulations)

Clause 6 of the Regulations sets out certain requirements for credit ratings given by an approved rating agency for the purposes of section 157I of the Reserve Bank of New Zealand Act 1989 (the “Act”).

The creditworthiness of General Finance is not rated by a rating agency approved by the Bank under section 157J of the Act as General Finance is not required to be credit rated because it is exempted from the requirement under section 157I to obtain a credit rating by clause 6 of the Deposit Takers (Credit Ratings Minimum Threshold) Exemption Notice 2009.

This exemption applies because General Finance has liabilities of less than $20 million, making it unduly onerous and burden-some to comply with the requirement under the Act to have a credit rating.

ReQUIRements ReLatInG tO maIntenanCe OF mInImUm CaPItaL RatIO (Refer Part 3 of the Regulations)

Pursuant to clause 8 of the Regulations, a deposit taker’s minimum capital ratio must not be less than 10% if the deposit taker does not have a credit rating.

The capital ratio of a deposit taker is the ratio of the deposit taker’s capital to an amount representing the degree of the follow-ing types of risk to which the deposit taker is exposed:

• credit risk:

• market risk:and operational risk.

Calculation of the capital ratio requires determination of:

• the deposit taker’s capital

• the deposit taker’s risk-weighted amount for credit risk; and

• the deposit taker’s aggregate amount for market risk and operational risk

Of particular note is the risk weighting applying to most of the Company’s assets, being:

• Cash or cash equivalent where the risk weighting is 0%

• Residential first mortgages under a 70% loan to value ratio where the risk weighting is 35%

As at 31 March 2010, the Company’s capital ratio, calculated in accordance with clause 9 of the Regulations, was 93%, well over the minimum capital ratio of 10% set under clause 8 of the Regulations.

RestRICtIOns On ReLateD PaRtY exPOsURes (refer Part 4 of the Regulations)

Under clause 23 of the Regulations, a deposit taker’s limit on aggregate exposure to related parties (as that term is defined in clause 4 of the Regulations) must not be more than 15% of its capital.

The Company, as a matter of policy and practice, does not make related party loans.

As at 31 March 2010 the Company had prepaid management fees, to a related party, amounting to $43,585. According the Company’s exposure to related parties, as at 31 March 2010, calculated in accordance with the regulations, was 1.5%, well within the maximum of 15% set under clause 9 of the Regulations.

14

In August 2008, the Australian Securities & Investments Commission (ASIC) released a regulatory guide called Regulatory Guide 69 – Debenture – Improving Disclosure for Retail Investors. The New Zealand Securities Commission as yet to adopt anything similar.

The ASIC Regulatory Guide 69 (available at http://www.asic.gov.au/asic/ASIC.NSF/byHeadline/New%20regulatory%20docu-ments) has the purpose of improving disclosure to retail investors in the unlisted and unrated debenture market, and requires issuers to detail the benchmarks and to note whether they have complied with them, and “if not, why not”.

The Company commends any disclosure that makes investing more transparent and in the absence of any New Zealand bench-marks, has measured itself against these Australian guidelines.

This is not a mandatory requirement in New Zealand. The Company has made these extra disclosures to keep its investors better informed.

Set out below are the ASIC’s benchmarks, together with the Company’s responses. Investors should consider all benchmarks in view of the debenture offering as a whole in making a decision whether to invest or not.

BenCHmaRKInG

15

ASIC Benchmarks

1. equity Ratio (see RG 69.35)

All issuers should use the following equity ratio benchmarks:

(a) where more than a minor part of the issuer’s activities is property development or lending funds directly or indirectly for property development—the issuer should maintain a minimum equity ratio of 20%;

(b) in all other cases—the issuer should maintain a minimum equity ratio of 8%; and

(c) the debenture issuer’s equity ratio should be calculated as follows:

total equity/(total liabilities + total equity)

2. Liquidity (see RG 69.38)

All issuers should:

(a) have cash flow estimates for the next 3 months; and

(b) ensure that at all times they have cash or cash equivalents sufficient to meet their projected cash needs over the next 3 months.

Extent of Compliance - If not, why not?

General Finance complies with this benchmark.

This benchmark does not apply as the Company is not engaged in property development or lending funds for property development.

The Company’s equity ratio is 52.84%

The Company’s risk adjusted capital ratio (see page 14) is 93%.

2,887,021/(2,576,558+2,887,021) = 52.84%


Three month cash flow estimates are prepared on a weekly basis.

Sufficient cash and cash equivalents are held to meet projected cash needs at all times over the next 3 month period.

At 31 March 2010 the level of cash and cash equivalents held was $1,592,586.

Issuers should also disclose:

(a) their policy on balancing the maturity of their assets and the maturity of their liabilities. For example, where an issuer has a policy of ensuring that their assets and liabili-ties have similar maturity profiles, they should state this in their prospectus and report against this in their ongoing disclosures; and

(b) material assumptions underlying their cash flow estimates (e.g.historical rollover rate).

3. Rollovers (see RG 69.45)

All issuers should clearly disclose their ap-proach to rollovers, including whether the ‘default’ is that debenture investments with them are automatically rolled-over.

4. Credit Ratings (see RG 69.49)

All issuers should:

(a) have their debentures rated for credit risk (i.e. the risk that the principal and in-terest will not be repaid at the end of a relevant period);

(b) use a recognised credit rating agency for this purpose;

The Company’s policy is to maintain a shorter maturity profile for assets and a longer maturity profile for liabilities.

The Company takes special care not to lend long term by having, as at 31 March 2010, 89% of loans to borrowers maturing within 12 months. This compares favourably with the 49% of funds invested by debenture holders maturing beyond 12 months.

In forecasting Company cash flows, it has been assumed that:

• Debentures are repaid as they fall due

• 40% of maturing debenture holders reinvest

• Reinvestments are for a 24 month term

• Performing loans repay on maturity date

• Past due loans repayment is net of any doubtful debt provision with timing estimated on a case by case basis.


The policy of the Company with regards to Rollovers is that at the end of the month before the debenture is due to mature, the Company advises the debenture holder, by letter, of different choices available, including

• To reinvest some or all of the amount repayable.

• To reinvest the amount repayable plus an additional investment.

• To repay the full amount repayable on the maturity date.

If no instructions are received the funds are held on call until such time as instructions about repayment or reinvestment are received.

General Finance is not required to comply with this benchmark.

General Finance is not rated because it is exempted from the requirement to obtain a credit rating under the Deposit Takers (Credit Ratings Minimum Threshold) Exemption Notice 2009.

This exemption applies because General Finance has liabilities of less than $20 million, making it unduly onerous and burdensome to comply with the require-ment under the Reserve Bank of New Zealand Act 1989 to have a credit rating.

BenCHmaRKInG (continued)

16

Extent of Compliance - If not, why not?ASIC Benchmarks


(c) state the current rating in their prospec-tus, who it is from and briefly explain the rating (i.e. what it says about the risk of the investor not getting their money back); and

(d) take reasonable steps to ensure the rat-ing remains current.

5. Loan Portfolio (see RG 69.58)

Issuers who directly on-lend funds or indi-rectly on-lend funds through a related party should disclose the current nature of their (or the related party’s) loan portfolio, including:

(a) how many loans they have and the value of those loans;

(b) by number and value, loans they have by class of activity and geographic region;

(c) by number and value, what proportion of loans are in default or arrears;

(d) by number and value, what proportion of the total loan money is lent on a ‘secured’ basis and what is the nature of the security; and

(e) by number and value, what proportion of the total loan money they have lent to their largest borrower and 10 largest borrowers.

Disclosure should also cover their policy on these issues. For example, where the issuer has a policy of not lending more than (say) 5% of their total loan funds to any one borrower, this should be stated in the disclosure document.

Disclosure should also contain clear explana-tions about the issuer’s approach to taking se-curity in relation to its lending (e.g. what types of security it takes and in what circumstances).


The Company has advanced 33 loans totalling $3,865,676.

All loans are residential. 11 loans totalling $1,168,178 are in the Auckland region. 13 loans totalling $2,175,460 are in the remainder of the North Island. 7 loans totalling $425,568 are in the South Island.

4 loans totalling $1,063,694 (28%) are Past Due and not Impaired. One of these loans for $496,246 repaid post 31 March 2010. 4 loans totalling $451,443 (12%) are Past Due and Impaired.

22 loans totalling $3,169,850 (82%) are secured by first mortgage over resi-dential property 9 loans totalling $599,352 (15.5%) are secured by second mortgage over residential property 2 loans totalling $96,474 (2.5%) are unsecured

The largest loan is $496,245 which is 13% of the total money lent. This loan was repaid post 31 March 2010. The 10 largest loans total $2,548,271 which is 66% of the total money lent.

The Company’s policy is to lend no more than 10% of Total Tangible Assets to any one borrower. In addition the Company will not advance more than 25% of Equity to any one borrower.

It is the Company’s policy to take first or second mortgage security over all types of residential securities including land.


17


6. Related Party transactions (see RG 69.68)

Issuers who on-lend funds should disclose their approach to related party transactions, including:

(a) how many loans they have made to re-lated parties and the value of those loans; and

(b) what assessment and approval process they follow with related party loans (e.g. are they subject to approval of the trustee?).

The issuer should also disclose any policy it has regarding related party lending.

7. valuations (see RG 69.71)

Where the issuer is involved in or (directly or indirectly) lends money for property-related activities, they should take the following approach to valuations:

(a) properties (i.e. real estate) should be valued on an ‘as is’ and (for development property) ‘as if complete’ basis;

(b) issuers should have a clear policy on how often they obtain valuations, includ-ing how recent a valuation has to be when they make a new loan;

(c) issuers should establish a panel of valu-ers and ensure that no one valuer conducts more than 1/3 of the total number of valua-tions they obtained; and

(d) appointment of valuers should be with the trustee’s consent.

Issuers should also include information about the valuation of a particular property in the issuer’s prospectus where:

(a) the property accounts for 5% or more of the total value of property assets of the issuer ;


It is Company policy not to make related party loan advances.

As at 31 March 2010 management fees amounting to $43,585 had been prepaid. This balance has subsequently been repaid.


Properties are valued on an “as is” basis.

Valuations are obtained at the time of accepting a loan, and then we obtain a further valuation if the loan defaults and recovery action is commenced.

The Company has a panel of valuers for Company instructed valuations, to-gether with standard valuer instructions, provided to the Trustee as part of the Company’s Risk Management Policy. No one valuer conducts more than one third of the Company’s valuation work.

Changes to the panel of valuers requires the Trustee’s consent as it is a change to the Risk Management Policy.

The following 5 loans have a property value that is 5% or more of the total value of property assets.


18


(b) the property accounts for 5% or more of the total value of property assets of a related party through which the issuer has indirectly on-lent money: see RG 69.58;

(c) a loan secured against the property accounts for 5% or more of the total value of issuer’s loan book; or

(d) a loan secured against the property accounts for 5% or more of the total value of the loan book of a related party through which the issuer has indirectly on-lent money: see RG 69.58.

8. Lending Principles – Loan-to valuation Ratios (see RG 69.77)

Where an issuer (directly or indirectly) on-lends money in relation to property-related activities, it should maintain the following loan-to-valuation ratios:

(a) where the loan relates to property de-velopment—70% on the basis of the latest ‘as if complete’ valuation; and

(b) in all other cases—80% on the basis of the latest market valuation.

Where the loan relates to property development by a second person (even if related to the issuer), issuers should ensure that funds raised by the issue of deben-tures are only provided to the developer in stages, based on external evidence of the progress of the development.

Loan Purchase Original Current LVR Price Valuation Valuation

434,696* n/a 557,000 557,000 78%

432,116 600,000 600,000 575,000 75%

220,589** 660,000 701,000 735,000 110%

496,245* n/a 1,910,000 1,910,000 26%

232,430 n/a 1,698,000 1,698,000 14%

Purchase prices are not available for all properties as in each case the loan was transacted as a refinance.

* these loans have repaid since balance date.

** this second mortgage includes accrued interest due and a doubtful debt provision had been allowed of $180,658. The LVR includes a first mortgage to another lender of $584,500.


The Company does not lend on property development.

The Company’s loan to valuation ratios, for new lending, are:• 70% residential first mortgages• 65% residential second mortgages


19

The Company is exposed to business risks which may give rise to the money paid by you not being recovered in full by you and of you not receiving the returns expected. The consequence of those risks occurring contributes to the potential insolvency of the business on two levels. First are the general risks, being the normal commercial risks associ-ated with the operation of a finance company and second are the specific risks relating to the markets in which Gen-eral Finance operates and the processes within the Company. These business risks are significantly reduced while the Company has the benefit of a Crown guarantee under the New Zealand deposit guarantee scheme held by General Finance (for fur ther information see pages 9-10 of this Prospectus).

RIsKs GeneRaLLY aPPLICaBLe tO FInanCe COmPanIes

The specific risks applicable to finance companies include:

• Credit Risk: The risk that advances provided by the company to its customers are not repaid in full.

• Liquidity Risk: The risk that the company does not have sufficient cash liquidity to meet its obligations.

• Interest margin Risk: The risk to a company’s profitability associated with the margin between the company’s cost of funds and its return on the advances provided by it, to its customers.

• Pricing Risk: The risk that the value of the company’s financial assets or financial liabilities will fluctuate due to changes in interest rates, currency fluctuations or market prices.

• Financial management Risk: The risk that there is a breakdown in the company’s implementation and contin-ued monitoring of its quality and risk management controls, and financial and governance standards.

• economic Downturn Risk: The risk concerning the stability of the economy and of a downturn in the sectors in which the company is exposed.

• Regulatory Risk: The risk that changing legal requirements may have an adverse effect on the sectors in which the company is exposed.

sPeCIFIC RIsKs aPPLICaBLe tO GeneRaL FInanCe

The risks that are more specifically applicable to General Finance are:

• sector Risk: The risks associated with the real proper ty sector including rises and falls in proper ty values, changes in client circumstances and employment affecting their ability to service and repay borrowings, migra-tion and the demand for real proper ty. Sector risks include:

o Lack of suitable mortgages: The Company may not be able to source suitable mortgages as security for investment within a reasonable time after the issue of the Debentures. This may mean that the return that the Company makes from its investments may not be sufficient to meet Debenture holders’ return entitlements.

o ability of mortgagors to meet mortgage Obligations: Mortgagors to whom the Company has lent money may, due to their personal financial situation, be unable to meet their mortgage obligations. The Company will be exposed to suffer the loss of amounts by which the amount owing by a borrower on default, exceeds the proceeds of sale received by the Company, upon exercising the rights of sale of the proper ty mortgaged to the Company as security for the loan advanced. Most of the Company’s advances are for periods of up to 12 months. When the mortgagor’s takeout event is delayed, the mortgagor may request that their loan term is extended. Such a request is considered in a similar manner to the initial advance and if approved the mortgagor’s advance will be extended for a fur ther period. As at 31 March 2010 the Company had Past Due Assets totalling $1.51 million of which $0.57 million has since been repaid.

BUsIness RIsKs

20

BUsIness RIsKs (continued)

o Impairment Risk: Mortgagors to whom the Company has lent money may not be able to meet their obliga-tions in a timely manner. The Company is exposed to cash flow risk on the timing of these payments. As at 31 March 2010 the Company had Impaired Assets totalling $451,444, with a Provision against these Impaired Assets of $225,337.

• Credit exposure Concentration Risks:

o The risks associated with the concentration of its credit exposures in the residential proper ty sector, par-ticularly in the North Island and the Auckland market. As at 31 March 2010, advances by General Finance in North Island residential proper ty sector represented 86% of its total credit exposure, with 30% being in the Auckland market. This geographical concentration reflects the Company’s current focus on the North Island and the Auckland market.

o The risks associated with the concentration of its credit exposures on a relatively few large loans to custom-ers. As at 31 March 2010, advances by General Finance in its six largest loans represented 51.4% of its total credit exposures. The Company had 33 loans with no individual loan exceeding 20% of equity.

• Finance Industry Implosion: The number of finance (and related) companies that have failed in the last 4 years has impacted adversely on the Company’s reinvestment rates and the inflow of new deposits. This is because of the difficulties experienced by the investing public in distinguishing between sound and unsound issuers. The Company’s business model is focused on lending in the residential proper ty sector, which differs from many of the failed finance companies. In order to survive the current crisis the Company has taken a conservative stance on gearing and liquidity management. At 31 March 2010, total equity was 53% of total assets and our cash balances were $1.59 million (or 29% of total assets).

21

All finance company lending undertaken by General Finance, is done in accordance with the Company’s Lending Policy. This Policy forms the basis for assessment and management of individual advances. It is updated from time to time to reflect changes in the market. The General Finance Lending Policy covers (inter alia) the following items:

• asset Class: The Company currently makes advances on all types of residential securities, including bare land but excluding specialised properties (such as motels), and excluding commercial and farm securities.

• Lending margin: Loans are advanced to a maximum of 70% of the property’s value and may be lower depending on loca-tion and the condition of the security.

• security: The Company takes by way of security a first or second mortgage over the client’s real property. These mort-gages are either registered against the certificate of title or supported by a registered caveat.

• Loan exposure: Advances to a maximum of $450,000 will be entertained as long as they remain inside the Company’s cov-enant to the Trustee, not to advance more than 10% of Total Tangible Assets to any one borrower. In addition the Company will not advance more than 25% of Equity to any one borrower.

• Geographical exposure: Exposure to provincial towns and country areas is to be limited to certain percentages of total loan advances.

• the Loan Process: The Company’s loan process requires a submission to the Company’s credit committee for review. The submission will generally include the following: application, valuation, sale and purchase agreement (if applicable), income details, refinancing statements and credit checks. This material is reviewed, and the transaction is approved or declined.

• arrears management: An arrears management process is prescribed. This involves contacting the client for installment arrears and arranging for the payment to be re-presented. When arrears reach 60 days the policy requires that a Property Law Act notice is issued, with enforcement proceedings commencing on the expiry of this notice. At 31 March 2010 there were past due (by one day or more) accounts totaling $1.52 million equating to 39.2% of total mortgage advances. Of these $1.04 million were in 90-days past due. As a result of the Company’s arrears management policy, since balance date $0.56 million of past due accounts have been repaid. Recovery action is in progress on remaining past due assets in accordance with policy.

• Credit Protection Insurance: The Company does not carry credit protection insurance should an advance go into default. Borrowers are not required to take on payment protection insurance.

• Guarantors: It is the Company’s policy to make advances to borrowers with a reasonable personal covenant. Where advances are made to companies or trusts the Company requires a guarantee from the individuals behind the transaction, in most cases.

• treasury Policy: It is the Company’s policy to ensure that sufficient liquid funds are available to meet current and forecast cash flow requirements.

From 1 September 2009, section 157M of the Reserve Bank Act 1989 (the “Act”) requires every deposit taker to have a risk management programme and to take all practicable steps to comply with its risk management programme.

A risk management programme must be in writing; and set out the procedures that the deposit taker will use for the effective identification and management of the following risks:

o credit risk:

o liquidity risk:

o market risk:

o operational risk

In accordance with section 157N of the Act, General Finance completed its risk management programme, and delivered it to the Trustee on 31 August 2009 and the Trustee has advised that it is satisfied that the risk management programme meets the requirements set out in section 157M of the Act.

Each month the Company reviews its previous month’s activities against the risk management programme.

LenDInG anD RIsK manaGement POLICIes

22

23

NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS (Continued)

FOR THE YEAR ENDED 31 MARCH 2010

2010 $ 2009 $

The accompanying notes form par t of and should be read in conjunction with the Financial Statements

NOTE

STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 MARCH 2010

CONTINUING OPERATIONS

REVENUE

Fees Charged 236,694 178,560

Interest Received 19 699,050 666,978

Other Income — 17,670

935,744 863,208

EXPENSES

Audit Fees (provided by Hayes Knight Audit) 49,434 30,520

Tax Services (Hayes Knight NZ Limited) 4,485 1,389

Bad Debts Written Off 209,847 448,666

Movement in Impairment Loss Provisions (80,972) (345,132)

Finance Costs 248,867 352,513

Brokers’ Fees 49,211 24,545

Lender Commissions 52,495 28,720

Management Fees 219,998 220,000

Other Expenses 82,220 68,078

835,585 829,299

RESULT FROM OPERATING ACTIVITIES 100,159 33,909

Income Tax Expense / (Credit) 6 29,823 20,560

PROFIT FROM CONTINUING OPERATIONS 70,336 13,349

DISCONTINUED OPERATIONS

Net Surplus From Discontinued Operations — —

OTHER COMPREHENSIVE INCOME

Other Comprehensive Income — —

TOTAL COMPREHENSIVE SURPLUS (DEFICIT) FOR THE PERIOD 70,336 13,349



24

EQUITY AT BEGINNING OF THE PERIOD 2,816,685 2,803,336

Comprehensive Surplus (Deficit) for the period 70,336 13,349

CONTRIBUTIONS / DISTRIBUTIONS

Distributions to owners 11 (800,000) —

Contributions from owners 8 800,000 —

EQUITY AT END OF THE PERIOD 2,887,021 2,816,685

2010 $ 2009 $


NOTE

STATEMENT OF CHANGES IN EQUITYFOR THE YEAR ENDED 31 MARCH 2010

25



TOTAL EQUITY 8 2,887,021 2,816,685

Attributable to:

Company Shareholder 2,887,021 2,816,685

CURRENT ASSETS

Cash & Cash Equivalent 4 1,592,586 4,077,384

Accounts Receivable 50,548 46,093

Taxation Refundable 6 24,894 58,928

Mortgage Advances – Current Portion 5 3,256,768 2,202,445

Total Current Assets 4,924,796 6,384,850

CURRENT LIABILITIES

Accounts Payable 38,065 50,038

Debenture Stock Investors - Current Portion 7 1,273,636 2,379,452

Unearned Fees – Current Portion 32,557 26,815

Unearned Interest – Current Portion 2,932 56,031

Total Current Liabilities 1,347,190 2,512,336

Working Capital 3,577,606 3,872,514

NON-CURRENT ASSETS

Mortgage Advances – Term Portion 5 383,571 165,178

Deferred Tax Asset 6 155,212 185,260

Total Non-Current Assets 538,783 350,438

NON-CURRENT LIABILITIES

Debenture Stock Investors – Term Portion 7 1,225,392 1,403,798

Unearned Fees – Term Portion 3,976 2,469

Total Non-Current Liabilities 1,229,368 1,406,267

NET ASSETS 2,887,021 2,816,685

Authorised for issue on behalf of the Board:

WAA Cairns (Director) J R Lockie (Director) 5 July 2010

2010 $ 2009 $NOTE


BALANCE SHEETAS AT 31 MARCH 2010



26

CASH FLOWS FROM OPERATING ACTIVITIES

Cash was provided from

Fees Received 239,488 184,312

Interest Received 645,951 684,782

Income Tax Refund 34,259

Other Income — 15,476

919,698 884,570

Cash was applied to

Payment to suppliers 469,816 408,011

Interest paid 248,867 352,513

Income Tax Paid — 99,300

718,683 859,824

Net cash inflow from Operating Activities 18 201,015 24,746

CASH FLOWS FROM / (TO) INVESTING ACTIVITIES

Cash was applied from / (to)

Net Mortgage Advances (1,401,591)

Net cash inflow / (outflow) from Investing Activities (1,401,591) 2,708,631

2,708,631

CASH FLOWS FROM / (TO) FINANCING ACTIVITIES

Cash was applied from / (to)

Dividends Paid (800,000)

Capital Introduced 800,000

Net Repayment of Debenture Stocks (1,284,222) 460,816

Net cash inflow (outflow) from Financing Activities (1,284,222) (460,816)

NET CASH MOVEMENT FOR YEAR (2,484,798) 2,272,561

OPENING CASH BALANCE 4,077,384 1,804,823

CLOSING CASH BALANCE 1,592,586 4,077,384

COMPOSITION OF CASH

Bank Deposits 1,592,586 4,077,384

Closing Cash Balance 1,592,586 4,077,384

2010 $ 2009 $

NOTE

STATEMENT OF CASH FLOWSFOR THE YEAR ENDED 31 MARCH 2010

27



1. Statement of Accounting Policies

General Information

The financial statements presented here are for the entity General Finance Limited.

General Finance Limited (the “Company”) is a finance and mortgage lending company. It is a wholly owned subsidiary of Cairns Lockie Holdings Limited, an established New Zealand owned and operated mortgage bank-ing company. The results of the Company are reported herein as an individual entity.

The Company, a profit-oriented entity, is a limited liability company incorporated and domiciled in New Zealand. The address of its registered office is Level 1, 638 Great South Rd, Ellerslie, Auckland

The presentation currency used by the Company is New Zealand dollars. In presenting amounts in the financial statements these amounts have been rounded to the nearest dollar.

2. Summary of Significant Accounting Policies

Basis of Preparation

These financial statements have been prepared in accordance with the requirements of the Companies Act 1993, the Financial Reporting Act 1993.

These financial statements have also been prepared in accordance with New Zealand Generally Accepted Ac-counting Practice (NZ GAAP). They comply with New Zealand equivalents to International Financial Reporting Standards (NZ IFRS) and other applicable Financial Reporting Standards as appropriate to profit-orientated entities. They comply with the International Financial Reporting Standards (IFRS).

Historical cost convention

These financial statements have been prepared on a going concern basis in accordance with historical cost con-cepts, as modified by the revaluation of certain assets as identified in specific accounting policies below.

3. Specific Accounting Policies

Revenue and expense recognition

Revenue, which includes interest income and fee income, is recognised to the extent that it is probable that eco-nomic benefits will flow to the Company and that revenue can be measured reliably. Expenses are recognised in the income statement on an accrual basis. Interest revenue, fee income and interest expense are recognised using the effective interest method.

The effective interest rate method calculates the amortised cost of a financial asset or financial liability and al-locates the interest income or interest expense, including any fees and directly related transaction costs that are an integral part of the effective interest rate, over the term of the loan.

Income Tax

Income tax expense comprises current and deferred tax. Income tax expense is recognised in profit or loss except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity.

NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 MARCH 2010



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Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substan-tively enacted at the reporting date, and any adjustment to tax payable in respect of previous years.

Deferred tax is recognised using the balance sheet method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation pur-poses. Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date.

A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available against which temporary differences can be utilised. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that is no longer probable that the related tax benefit will be realised.

Foreign Currency

There are no foreign currency transactions.

Leased Assets

Leases under which all the risks and benefits of ownership are effectively retained by the lessor are classified as operating leases. Operating lease payments are charged to expenses over the period of expected benefit.

Borrowing Costs

All borrowing costs are expensed.

Financial Instruments

Financial instruments are recognised in the balance sheet when the Company becomes party to a financial con-tract. The Company derecognises a financial asset from its balance sheet when, and only when, (i) the contrac-tual rights to the cash flows from the financial asset expire, or (ii) the Company has transferred all or substantial-ly all of the risks and rewards of ownership of the financial asset and no longer controls the financial asset. The Company derecognises a financial liability from its balance sheet, when and only when, it is extinguished.

All the Company’s financial instruments are initially recorded at fair value plus transaction costs. Due allowance is made for impaired receivables (provision for impairment losses).

Receivables

Receivables are stated at expected realisable value. Bad debts are written off during the period in which they are identified.

Liabilities

Liabilities are stated at the estimated amounts payable and include all obligations that can be reliably estimated. Current liabilities include the amounts payable within twelve months of these financial statements.

Goods and Services Tax (GST)

The company is involved in both exempt and taxable activities for Goods and Services Tax purposes. Accord-ingly these Financial Statements are prepared on a GST exclusive and inclusive basis depending on the type of transaction. The company registered for GST on 1 March 2003 and deregistered from GST on 31 March 2008.

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Impairment of loans and advances

Loans and advances are regularly reviewed for impairment loss. Credit impairment provisions are raised for exposures that are known to be impaired. Loans are impaired and impairment losses are incurred if there is ob-jective evidence of impairment as a result of one or more loss events that occurred after the initial recognition of the loan and prior to the reporting date, and that loss event (or events) has had a reliably measurable impact on the estimated future cash flows of the individual loan or the collective portfolio of loans. When a loan has been identified as impaired the carrying amount is decreased to its estimated recoverable amount, being the present value of the expected future cashflows, including amounts recoverable from the realisation of security, discounted at the loan’s original effective interest rate.

Impairment is assessed initially for assets that are individually significant.

Past Due Assets are any financial assets in which the counterparty has failed to make a payment when contrac-tually due.

Restructured Assets are financial assets that have been restructured due to deterioration in the counterparty’s financial position and where the Company has made concessions that it would not otherwise consider. Once a financial asset is restructured it remains in this category independent of satisfactory performance after restruc-turing. A restructured asset may also be classed as an impaired asset or a past due asset.

Note 13 discloses impaired assets, past due assets and restructured assets.

Statement of Cash Flows

The statement of cash flows has been prepared using the direct approach modified by the netting of certain items.

Segment Reporting

A business segment is a distinguishable component of the entity that is engaged in providing products or ser-vices that are subject to risks and returns that are different to those of other business segments

The operating business is organised and managed as a single business with a collection of services sold to common customers through similar channels. General Finance Limited is considered to be only one business segment, operating in one geographical segment, being New Zealand.

Changes in Accounting Policies

In the current accounting period the company has replaced the Income Statement with a Statement of Com-prehensive Income. There have been no changes to prior year figures as a result of this change.

In the current period interest was accrued on an impaired asset. This interest was assessed for impairment and anticipated losses fully provided for. In prior years interest was not accrued on impaired assets.

There have been no other changes in accounting policies in the twelve months ended 31 March 2010.



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2010 $ 2009 $

2010 $ 2009 $

2010 $ 2009 $

4. Current Assets – Cash & Cash Equivalent

Cash on Hand 1,592,586 2,471,516

Term Deposits — 1,605,868

1,592,586 4,077,384

Cash on Hand Interest Rate: Between 0% and 3.00% (on call)

Term Deposit Interest Rate: Between 4.00% and 7.75% (terms from three to nine months)

5. Loan Advances

First Mortgage Advances 3,290,800 1,522,825

Second Mortgage Advances 599,352 908,519

Unsecured Advances 96,474 253,589

3,986,626 2,684,933

Undrawn Loan Commitments (120,950) (11,000)

Impairment Losses Provision (225,337) (306,310)

Net Mortgage Advances 3,640,339 2,367,623

Mortgage Advances – Current Portion 3,256,768 2,202,445

Mortgage Advances – Non-Current Portion 383,571 165,178

3,640,339 2,367,623

Loan advances represent mortgages to unrelated parties at commercial interest rates. Current loan advances are repayable within 12 months. Term loan advances are repayable between 12 months to 4.5 years. Capital-ised interest loans are 32.0% of total advances (March 2009: 27.3%)

Interest Rate: Between 12.95% and 19.95%.

Effective Interest Rate: Between 13.75% and 21.88%

Reconciliation of Movement in Impairment Provision Account

Balance at beginning of year 306,310 651,442

Movement in collective provision for impairment losses — —

Bad Debts Written Off (209,847) (448,666)

Additional provision for impairment losses 128,874 103,534

Balance at end of year 225,337 306,310

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2010 $ 2009 $

Reconciliation of Movement in Past Due and Impaired Assets

Balance of past due assets at beginning of year 579,374 980,637

New loans entered into (130,783) (45,709)

Additions to past due 1,671,115 497,706

Repayments (394,722) (404,594)


Balance of past due assets at end of year 1,515,137 579,374

Balance of impaired assets at beginning of year 563,800 1,497,823

Additions to impairment assets 97,491 707,046

Repayments — (646,218)

Bad debts written off (209,847) (447,050)

Reassessed impairment — (547,801)

Balance of impaired assets at end of year 451,444 563,800

Balance of restructured assets at beginning of year 253,739 —

Additions to restructured assets 272,771 702,405


Balance of restructured assets at end of year 316,663 253,739

Since balance date $565,676 of Assets classified as Past Due have been repaid.



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2010 $ 2009 $

2010 $ 2009 $

6. Income Tax

Profit Reconciliation

Operating Surplus before Income Tax 100,159 33,909

Non Assessable Income – Non Deductible Expenses

Add back Prior Year Over Accrued (748) 34,623

Taxable Income 99,411 68,532

Prima Facie Tax – 30% (March 2009: 30%) 29,823 20,560

Current Tax — —

Deferred Tax 29,823 20,560

Income Tax Expense 29,823 20,560

Taxable Income @ 30% (March 2009: 30%) — —

Less Tax paid relating to current year — —

RWT Paid 24,894 18,928

Provisional Tax Payments — 40,000

Taxation Payable (refundable) for current year 24,894 (58,928)

Prior Year tax payable — —

Taxation Payable (refundable) 24,894 (58,928)

Imputation Credits

As at balance date imputation credits totaled $156,747 (March 2009: $584,810). Subject to the provisions of the Income Tax Act 1994, the benefit of these credits may be passed to the shareholders as imputed tax paid on future dividends.

Movements through the Imputation Credit account were as follows:


Income tax payments / (refunds) (58,928) 72,782

RWT Credits received 24,894 18,928

ICA Credits attached to dividends paid (394,030) —


From 1 April 2010 any imputation credits attached to dividends paid will be capped at the 30/70 tax credit ratio.

Tax Losses

There was a $292,035 income tax loss (March 2009: $311,223) and no unrecognised temporary differences carried forward.

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2010 $ 2009 $

2010 $ 2009 $

Deferred Tax Reconciliation

Deferred Tax attributed to:


Increase / (Decrease) in impairment loss provision (24,292) (103,540)

Increase / (Decrease) in unearned fees — (10,387)

Increase / (Decrease) in losses carried forward (5,756) 93,367


Impairment Loss Provision 67,601 91,893

Doubtful Debt Provision — —

Tax Losses 87,611 93,367

155,212 185,260

Since 31 March 2010 the Government has announced that the Company tax rate will reduce from 30% to 28% effective from 1 April 2011. The financial effects of the change in tax rate have not been brought to account in the financial statements for the year ended 31 March 2010. Had the financial effect of the change in tax rate been recognised at 31 March 2010 there would have been a reduction in the balances of deferred tax assets by $8,357.

7. Debenture Stock Investors

Current 1,273,636 2,379,452

Non-Current 1,225,392 1,403,798

2,499,028 3,783,250

Repayment Terms: On call up to 5 years

Effective Interest Rate: 2.00% - 11.25%

Security: First ranking security interest over the assets and undertakings of General Finance Limited in favour of the Trustee (subject only to any prior security interests permitted by the Trust Deed and preferential claims given priority by operation of law). Effective 12 October 2008 General Finance Limited has a guarantee under the New Zealand Government Deposit Guarantees Scheme. This scheme expires on 12 October 2010. Deposits maturing after the scheme expires are not covered by the guarantee.



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2010 $ 2009 $

2010 $ 2009 $

2010 $ 2009 $

Concentration of Funding 2010

Auckland 56%

Wellington 14%

Other North Island 21%

South Island 7%

Overseas 2%

The Company’s largest deposit is $200,000 representing 8% of deposits

8. Share Capital

Issued and Paid Up Capital

2,800,000 Ordinary Shares 2,800,000 2,000,000

Retained Earnings 87,021 816,685

Total Equity 2,887,021 2,816,685

Share Capital

Opening Balance 2,000,000 2,000,000

New shares issued during the year 800,000 —

Closing Balance 2,800,000 2,000,000

Retained Ernings

Opening Balance 816,685 803,336

Surplus / (Deficit) for the year 70,336 13,349

Dividend paid during the year (800,000) —

Closing Balance 87,021 816,685

On 31 March 2010, the Company issued 800,000 ordinary shares of $1 each, which were fully paid up.

All ordinary shares rank pari passu (equally) in all respects. An ordinary share confers on the holder the right to one vote on a poll.

9. Commitments for Expenditure

Capital Commitments

There were no material commitments for capital expenditure outstanding at balance date. (March 2009: $0)

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10. Contingent Liabilities

There were no material contingent liabilities at balance date. (March 2009: $0)

11. Related Party Transactions

General Finance Limited is 100% owned by Cairns Lockie Holdings Limited which is under the ultimate control of the Ilam Trust (in which the director, W A A Cairns is a trustee) and Forthbank Trustees Limited (a corporate trustee for the James Lockie Family Trust and Debra Lockie Family Trust. The director, J R Lockie is a director of Forthbank Trustees Limited). W A A Cairns and J R Lockie are the directors of Cairns Lockie Holdings Limited.

During the twelve month period the company paid management fees of $219,998 (Last year 12 months $220,000) to Cairns Lockie Limited, a related company, for providing administration services, including com-pensation for key management personnel. As at 31 March 2010 management fees amounting to $43,585 had been prepaid. The balance has been repaid subsequent to balance date. No other compensation is paid to key management personnel. During the twelve month period the company paid and then rescinded a dividend of $650,000, and received interest at market rates.

Closely related family members of the directors have invested on aggregate $311,987 (March 2009: $235,448) in debenture stocks of the company on normal terms.

On 30 March 2010 the Company declared a fully imputed dividend of $800,000 ($0.4 per share).

12. Lending Industry Segments

The company provides mortgage advances, which we record in the Balance Sheet, through a broker network to the customer. The mortgage advances held in the company name are written over 6 to 60 month periods, with various priority security over property.

Credit exposures are concentrated in the residential property sector, particularly in the North Island and the Auckland Market. As at 31 March 2010, advances by General Finance in the North Island residential property sector represented 86% of its total exposure, with 30% being in the Auckland market. This geographical con-centration reflects the Company’s current focus on the North Island and the Auckland market.

The maximum credit exposure of the company, assuming a zero value for collateral is $5,508,816 (March 2009: $6,808,409).

A number of mortgages managed by the company are mortgages which are financed by wholesale funders, where these financial institutions accept all the risks of interest rates, foreign exchange, collateral and register the security.

The company has no foreign exchange exposure.

Concentration of Credit Exposures

As at 31 March 2010 the company had the following concentration of credit exposures (mortgage advances) as a percentage of equity.



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13-24 Months $ 24+ Months $0-6 Months $ 7-12 Months $Total $

Equity Percentage No of Loans Average Loan Size

0% to 5% 26 66,225

5% to 10% 4 195,196

10% to 15% 1 432,116

15% to 20% 2 465,471

20% to 25% — —

25% to 30% — —

30% to 35% — —

The majority of lending is to private individuals and trusts in the North Island. The concentration of the credit exposure to the six largest loans is 51.4% (March 2009: 60.5%) of the total loan portfolio.

13. Asset Quality

Gross past due accounts total to $1,515,137 (March 2009: $579,374) which equates to 39.2% (March 2009: 21.6%) of total Mortgage Advances. Since balance date $565,676 of past due accounts have been repaid. Impaired assets total to $451,444 (March 2009: $563,800) which equates to 11.7% (March 2009: 21.0%) of total Mortgage Advances. Any interest accrued on impaired assets has been provided for in the period it was accrued.

As at 31 March 2010 the total provision for credit impairment was $225,337 (March 2009: $306,310). The total provision at 31 March 2010 and March 2009 represented individual provisions.

Security held over the past due and impaired assets is first and second mortgages over residential proper-ties in the North Island. Loans now unsecured as a result of security enforcement total $96,474 (March 2009: $253,589) which equates to 2.5% (March 2009: 5%) of total Mortgage Advances.

As at balance date, the Company has a total of $1,041,233 in 90-day past due assets (March 2009: $725,849)

Aging Analysis – Expected Cashflows – March 2010

Past Due Assets (Not Impaired)

Restructured Finance Receivables — — — — —

Otherwise Past Due Finance Receivables 1,063,694 997,792 — 65,902 —

Totals 1,063,694 997,792 — 65,902 —

Impaired Assets

Restructured Finance Receivables 100,657 5,100 5,100 49,730 40,727

Other Impaired Finance Receivables 125,449 — — 125,449 —

Totals 226,106 5,100 5,100 175,179 40,727

Total Past Due Assets 1,289,800 1,002,892 5,100 241,081 40,727

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Contractual Cash Flows

Aging Analysis – Expected Cashflows - March 2009

Past Due Assets (Not Impaired)

Restructured Finance Receivables 15,535 1,300 1,300 2,600 10,335

Otherwise Past Due Finance Receivables 563,839 525,505 — — 38,334

Totals 579,374 526,805 1,300 2,600 48,669

Impaired Assets 106,538 3,900 67,015 7,800 27,823

Restructured Finance Receivables

Other Impaired Finance Receivables 150,976 — — 150,976 —

Totals 257,514 3,900 67,015 158,776 27,823

Total Past Due Assets 836,888 530,705 68,315 161,376 76,492

The estimated fair value of the impaired assets is $226,107, comprising the book value of $451,444, less specific provisions for doubtful debts of $225,337 (March 2009: $257,514, comprising the book value of $563,800, less specific provisions for doubtful debts of $306,310). In determining whether an asset is impaired management takes into consideration the amount of time the loan is overdue, the estimated resale value of the secured properties and the value of any security ranking above that held by the company. There were no real estate assets acquired through the enforcement of security held at year end.

14. Liquidity Profile

The following tables set out the undiscounted contractual cash flows, and the undiscounted expected cash flows, of the Company’s financial assets and liabilities. Refer Notes 4, 5 and 7 for respective interest rates. No other monetary assets and liabilities attract interest charges.

March 2010

Financial Assets

Cash and Cash Equivalent 1,592,586 1,592,586 — — —

Other Monetary Assets 75,443 75,443 — — —

Finance Receivables 3,911,781 3,337,536 232,981 277,318 63,946

Totals 5,579,810 5,005,565 232,981 277,318 63,946

Financial Liabilities

Debenture Stock 2,724,901 1,061,307 341,948 640,360 681,286

Other Monetary Liabilities 18,549 18,549 — — —

Totals 2,743,450 1,079,856 341,948 640,360 681,286

Net Cashflow 2,836,360 3,925,709 (108,967) (363,042) (617,340)



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Expected Cash Flows


Contractual Cash FlowsMarch 2009

Financial Assets



Finance Receivables 2,862,630 1,336,605 1,351,307 135,152 39,565

Totals 7,045,035 5,519,010 1,351,307 135,152 39,565


Debenture Stock 4,059,639 1,713,595 866,135 1,168,643 311,266

Other Monetary Liabilities 135,353 132,884 2,469 — —

Totals 4,194,992 1,846,479 868,604 1,168,643 311,266

Totals 2,850,042 3,672,531 482,703 (1,033,491) (271,701)

March 2010

Financial Assets



Finance Receivables 3,770,234 2,886,009 248,554 542,767 92,904

Totals 5,458,594 4,574,369 248,554 542,767 92,904


Debenture Stock 1,709,325 636,784 222,680 407,370 442,491

Other Monetary Liabilities 18,549 18,549 — — —

Totals 1,727,874 655,333 222,680 407,370 442,491

Net Cashflow 3,730,720 3,919,036 25,874 135,397 (349,587)

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Expected Cash FlowsMarch 2009

Financial Assets



Finance Receivables 2,679,383 778,702 1,593,411 137,752 169,517

Totals 6,861,788 4,961,107 1,593,411 137,752 169,517


Debenture Stock 4,014,621 1,285,196 1,092,994 1,100,595 535,836

Other Monetary Liabilities 135,353 132,884 2,469 — —

Totals 4,149,974 1,418,080 1,095,463 1,100,595 535,836

Totals 2,711,814 3,543,027 497,948 (962,843) (366,319)

In determining the expected cash flow the following assumptions have been made:

• Debentures are repaid as they fall due

• 40% of maturing debenture holders reinvest

• Reinvestments are made for a 24 month term

• Performing loans repay on maturity date

• Past due loans repayment is net of any doubtful debt provision with timing estimated on a case by case basis.

15. Fair Value

The following table sets out the fair value of the Company’s financial assets and liabilities. The fair value of finance receivables and debenture stock is estimated at the present value of contractual principal and interest cash flows. The interest rate used to discount estimated cash flows is 14.74% (March 2009: 13.00%) for loan advances and 8.02% (March 2009: 6.50%) for debentures, being market rates of interest at the reporting date.



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Total Carrying

Value $

Total

Fair Value $

Total Carrying

Value $

Total

Fair Value $

Fair Value

March 2010

Financial Assets

Cash and Cash Equivalents 1,592,586 1,592,586

Other Monetary Assets 75,443 75,443

Finance Receivables 3,640,343 3,594,333

Totals 5,308,372 5,262,362


Debenture Stock 2,499,028 2,348,861

Other Monetary Liabilities 18,549 18,549

Totals 2,517,577 2,367,410

Net Asset Value 2,790,795 2,894,952

Fair Value

March 2009

Financial Assets

Cash and Cash Equivalents 4,077,384 4,077,384

Other Monetary Assets 105,021 105,021

Finance Receivables 2,673,933 2,745,823

Totals 6,856,338 6,928,228


Debenture Stock 3,783,250 3,902,442

Other Monetary Liabilities 135,353 135,353

Totals 3,918,603 4,037,795

Totals 2,937,735 2,890,433

16. Critical Estimates and Judgments Used in Applying Accounting Policies

These financial statements are prepared in accordance with New Zealand equivalents of the International Financial Reporting Standards and other authoritative accounting pronouncements. Notwithstanding the existence of relevant accounting standards, there are a number of critical accounting treatments which include complex or subjective judgments and estimates that may affect the reported amounts of assets and liabilities in the financial statements. Estimates and judgments are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. An explanation of the judgments and estimates made by the Company

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in the process of applying its accounting policies, that have the most significant effect on the amounts recognised in the financial statements are set out below.

Deferred Tax Assets

The company believes that sufficient income will be generated over the next three years to fully utilise the deferred tax asset.

Credit Provisioning

Provisions for impairment in customer loans and advances are raised by management to cover actual and expected losses arising from past events. Losses for impaired loans are recognised promptly when there is objective evidence that impairment of a loan or portfolio of loans has occurred. Impairment losses are calculated on individual loans and on loans assessed collectively. Losses expected from future events, no matter how likely, are not recognised. The amount of the impairment loss is recognised as an expense in the Statement of Comprehensive income.

The calculation of impairment provisions includes consideration of all expected cash flows associated with the loss. This includes any expected cash flows from realisation of security and interest and takes into account any costs expected to be incurred, including security realisation costs, legal and administration costs.

Individual provisions

An individual provision is raised where there is an expectation of a loss of principal, interest and/or fees and there is objective evidence of impairment.

At each balance date, the Company reviews individually significant loans for evidence of impairment. All relevant information, including the economic situation, solvency of the customer/guarantor, enforceability of guarantees, current security values and the time value of future cash flows are taken into account in determining individual provisions. At a minimum, individual provisions are reassessed on a quarterly basis, upon receipt of a significant asset realisation or when there is a change in customer circumstances/business strategy.

The long-term historical loss experience is reviewed by management and adjustments made to reflect current economic and credit conditions as well as taking into account such factors as concentration risk in an individual portfolio. In addition, management recognise that a certain level of imprecision exists in any model used to generate risk grading and provisioning levels.

Management regularly reviews and adjusts the estimates and methodologies as improved analysis becomes available. Changes in these assumptions and methodologies could have a direct impact on the level of credit provisions and credit impairment charge recorded in the financial statements.

Credit Assessment

All loans are subject to regular scrutiny. This includes a review of the borrower’s repayment history and any interest arrears; any changes in the borrowers circumstances which could impact on their ability to repay either interest or principal amounts on their due date; and any movement in the security value.

Risk Management Policies

The Company manages risk through an approval, delegation and limits structure. Regular views of the policies, systems and risk reports are conducted within the Company.



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In September 2009 the Company implemented a Risk Management Policy pursuant to the requirements of the Reserve Bank Act 1989. The Risk Management Policy identifies risks to be managed and describes the processes to measure, monitor and control those risks.

• Credit risk, including concentrations of credit risk, to bank counterparties and related party credit risk is the potential loss arising from the non-performance by the counterparty to an instrument or facility. Credit risk arises when funds are extended, committed, invested or otherwise exposed through contractual agreements. Credit risk is controlled through a combination of approvals, limits, reviews and monitoring procedures which are carried out on a regular basis, the frequency of which is dependent on the level of risk. A central credit administration function oversees credit policy and asset quality.

• Balance Sheet Risk Management embraces the management of non-traded interest rate risk liquidity and the risk to capital and earnings as a result of exchange rate movements. This risk is overseen by the central credit administration function.

• Interest rate risk management’s objective is to product strong and stable net interest income over time. Interest rate risk management focuses on two principal sources of risk; mismatches between the repricing dates of interest bearing assets and liabilities; and the investment of capital and other non-interest bearing liabilities in interest bearing assets.

Bank deposit interest rates are fixed within the bank floating interest rates. At 31 March 2010 bank deposits attracted a weighted average interest rate of 2.55% (see Note 4 for individual interest rates). A 1% decrease in the weighted average interest rate would reduce the annual interest income from $40,661 to $24,685, and a 2% decrease would reduce the income to $8,759 (based on bank deposits held at 31 March 2010). As at 31 March 2010 the weighted average interest rate on debenture stock was 8.0%. All debentures have fixed interest rates for the term of the debenture.

• Currency risk relates to the potential loss arising from the change in the value of foreign, currency positions, due to changes in foreign exchange rates. The company does not enter into any foreign currency denominated transactions.

• Liquidity risk is the risk that under certain conditions, cash outflows can exceed cash inflows in a given pe-riod. The Company closely monitors and forecasts its liquidity risk, and ensures that sufficient funds are available to the repayment requirements for deposits as they fall due, by both holding cash on hand and by exiting suffi-cient of the finance receivables. At 31 March 2010 deposits maturing beyond the expiry of the Crown guaran-tee (12 October 2010) totaled 61% of total deposits. By 31 May 2010 this figure had risen to 66%. Deposits maturing in June and July 2010 total $764,833 which are fully covered by cash balances held. Remaining deposits maturing from August to October 2010 total $45,000.

• Market risk relates to the risk arising from the link between the Company’s mortgage portfolio and the property market, which may vary from time to time. The Company assesses the risk of loss in fair value from the effect of hypothetical changes in property values. The Company’s weighted average loan to asset ratio is not able to exceed 70% (first mortgages) or 65% (second mortgages) of market value. As at 31 March 2010 the weighted average loan to asset ratio was 46.64%. Based on sensitivity testing of the loan portfolio at 31 March 2010 the Company estimates it has a $250,632 exposure on secured mortgages to a property downturn of up to 25% from date of valuation. Of this exposure, $189,991 has been provided for in impairment losses in the financial statements.

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2010 $ 2009 $

• Other material business risks to which the Company is exposed consist of operating risks that are poten-tially inherent in day to day operations. These risks include natural disaster, criminal activity including fraud and forgery, systems failure, personnel failure and non-compliance with legislation and regulations. In accordance with Company Policy, operating risks are managed as part of the day to day running of all business operations. Specialist units within the Company assist in managing operating risks by setting standards and policies, providing advisory and investigation services and monitoring compliance.

17. Post Balance Date Events

There are no post balance date events (March 2009: None).

18. Reconciliation of Net Profit after Tax with Cash Inflow from Operating Activities

Reported Profit after Tax 70,336 13,349

Add/(Deduct) non-cash items

Bad Debts Written Off 209,847 448,666

Movement in Impairment Loss Provision (80,973) (345,132)

Deferred Tax Movement 30,048 20,560

158,922 124,094

Movements in Other Working Capital Items

Decrease/(Increase) in Accounts Receivable (4,455) (27,830)

Increase/(Decrease) in Income Tax Payable 34,034 (91,709)

Increase/(Decrease) in Income Received in Advance (45,849) 56,031

(Decrease)/Increase in Accounts Payable (11,973) (43,851)

(Decrease)/Increase in Unearned Fees — (5,338)

(28,243) (112,697)

Total Movement – Inflow/(Outflow) 130,679 11,397

Net cash Inflow(Outflow) from Operating Activities 201,015 24,746



44

2010 $ 2009 $

19. Subclasses of Interest Income

Loan advances 580,160 445,714

Interest on impaired advances:

Restructured assets 58,584 23,944

Other impaired assets — —

Cash and cash equivalent 60,306 197,320

Total interest income 699,050 666,978

20. Standards and Interpretations to Published Standards that are Not Yet Effective

NZ IFRS 8 - Operating Segments NZ IFRS 8 requires an entity to report financial and descriptive information based on its reportable segments. This standard may result in changes to the disclosures in the Company’s financial statements.

NZ IFRS 9 – Financial Instruments – Classification and Measurement IFRS 9 specifies how an entity should classify and measure financial assets including some hybrid contracts.

NZ IAS 7 – Statement of Cashflows (Amendments) The amendment of NZ IAS 7 states that only expenditure that results in a recognised asset can be classified as cash flow from investing activities.

NZ IAS 24 – Related Party Disclosures (Revised 2009) NZ IAS 24 simplifies and clarifies the definition of a related party.

The remaining Standards and Interpretations that are not yet effective are not relevant to the company.

AUDITOR’S REPORT

45

AUDITOR’S REPORT (Continued)

46

TRUSTEE STATEMENT

47

MAIN POINTS OF THE TRUST DEED

General Finance has appointed Perpetual Trust Limited (the “Trustee”) as the trustee for the purposes of the Securities Act 1978, under a Trust Deed dated 2 November 2004 as amended by a deed of variation dated 1 December 2010 (the said trust deed, as amended, being referred to in this Prospectus as the “Trust Deed”). The Trustee is under a duty to exercise reasonable diligence to ascertain whether or not General Finance has complied with the Trust Deed, this Prospectus, the Investment Statement and the terms upon which Deposits are accepted.

Deposits are secured by a first ranking security interest over the assets and undertaking of General Finance in favour of the Trust-ee (subject only to any Prior Security Interests permitted by the Trust Deed and preferential claims given priority by operation of law). Deposits are issued under the terms of the Trust Deed and a summary of the main points of the Trust Deed is given below.

Capitalised words used in this Prospectus that are not otherwise defined have the meanings given to those terms under the Trust Deed.

A Trust Deed between General Finance Limited and Perpetual Trust Limited governs the terms of the Term Deposits and the At Call Deposits. The Term Deposits and At Call Deposits are collectively defined as “Stock” in the Trust Deed and referred to as “Deposits” in this Prospectus.

Covenants and security interests included in the Trust Deed are given by General Finance and any future subsidiary of General Finance which becomes a party to the Trust Deed. General Finance and any such future subsidiaries are together called the “Charging Group”.

Pursuant to the Trust Deed, General Finance has granted in favour of the Trustee a first ranking security interest over the whole of its present and future assets and undertaking, (subject only to Prior Security Interests permitted by the Trust Deed as detailed below under “Permitted Prior Security Interests” and preferential claims given priority by operation of law).

The Trustee holds the security interest on behalf of, and for the benefit of, all Stockholders.

DUTIES OF THE TRUSTEE

The Trust Deed appoints the Trustee to act in the interests of the Stockholders by overseeing compliance by the Charging Group with regard to their obligations under the Trust Deed and the terms upon which the Deposits are accepted. The Trustee is under a duty to exercise reasonable diligence to ascertain whether or not the Charging Group has committed any breach of the Trust Deed or any of the conditions of issue of the Deposits. The Trustee is also bound to carry out the other duties prescribed in the Fifteenth Schedule to the Securities Regulations 2009. This includes an obligation on the Trustee to exercise reasonable diligence to ascertain whether or not the assets of the Charging Group are sufficient to repay the Deposits as they become due. The Trustee does not guarantee the repayment of Deposits or the payment of interest.

REPORTING TO THE TRUSTEE

To ensure the Trustee is fully informed, and for the protection of the Stockholders, General Finance has undertaken that it will forward to the Trustee the following:

(i) Annual audited financial statements together with an Auditor’s report;

(ii) Half-yearly financial statements either audited or reviewed by the Company’s auditor :

(iii) Monthly management financial statements and a management report on various matters concerning the affairs and assets of General Finance; and

(iv) Audited financial statements if the Trustee requires them under any special circumstances.

COMPANY’S COVENANTS TO THE TRUSTEE

The Trust Deed contains a covenant by General Finance that the Total Liabilities of the Charging Group will not exceed 95% of the value of the Total Tangible Assets of the Charging Group. Total Tangible Assets is defined in the Trust Deed as the aggregate of;

(i) 75% of the market value of any Real Property, and

(ii) the market value of any shares, or other equity securities or units in any company, or unit trust, and

(iii) the book values of all other Tangible Assets.

Definitions of Tangible Assets, Total Liabilities and Related Party Transactions are consistent with those defined by generally accepted accounting practice.

General Finance further covenants in the Trust Deed that it will not permit the Charging Group’s Capital Ratio to be less than 8%, if the Company has a credit rating or less than 10%, if the Company does not have a credit rating. The Capital Ratio is calculated in accordance with regulation 9 of the Deposit Takers (Credit Ratings, Capital Ratios, and Related Party Exposures) Regulations 2010 (the “Deposit Takers Regulations”).

PROVISIONS OF THE TRUST DEED

48

The Charging Group may not without the written consent of the Trustee:

(i) Own any shares, land, other equity securities, or units in any company or unit trust, except land and shares held as security for loans made by the Charging Group (or as a result of enforcement of that security) or land owned and occupied by any member of the Charging Group or shares in any other member of the Charging Group or premises leased and occupied by any member of the Charging Group for the purpose of its business.

(ii) Enter into any transaction with a related person except in the ordinary course of business where the terms of the transaction are evidenced in writing and the consideration is on an arms’ length basis as if between two unrelated parties provided that in any 12 month period the aggregate value of all such transactions entered into or remaining outstanding shall not exceed 2% of Total Tangible Assets.

(iii) At any time permit the Charging Group’s aggregate Related Party Exposures to exceed 15% of the Charging Group’s Capital with Related Party Exposures and Capital calculated in accordance with the Deposit Takers Regulations.

(iv) Allow the amount owing to the Charging Group under finance receivables by any one debtor or related group of debtors to exceed 10% of Total Tangible Assets.

(v) At any time permit the level of Liquidity to fall below 10% of Total Tangible Assets with Liquidity calculated in accordance with the Trust Deed.

(vi) Carry on any business other than that of providing financial accommodation and financial services, or acquire any assets other than assets used in such business.

(vii) Issue stock if the Company is, or would as a result of such action be in breach of the terms of the Trust Deed, unless in the Trustee’s opinion, the breach is not material to the interests of the stockholders.

(viii) Sell or transfer as a going concern, whether by a single transaction, or any series of transactions,whether related or not, the whole of its undertaking, or any part or parts thereof comprising more than 25% of Total Tangible Assets.

(ix) Enter into or make any proposal for a compromise or amalgamation (other than any amalgamation with a related company, prior written notice of which has been given to the Trustee).

(x) Make any distribution other than by way of dividend out of profits and in any event no distributions of any kind are to be made at any time after an Event of Default has occurred and is continuing.

The Charging Group must:

(i) Permit the Trustee through its agent, attorney or representative to attend any General Meeting of the Company and to be heard on any part of the business of the meeting which concerns the Trustee and Stockholders.

(ii) Carry on and conduct its business in any efficient, prudent and business like manner.

(iii) Duly pay all liabilities and comply with all obligations binding on it by law, contract or otherwise.

(iv) Give whenever requested, to the Trustee or any Chartered Accountant or Receiver or other person appointed by the Trustee such information as they shall require with respect to all matters relating to its affairs and all matters relating to the stockholders or fail to ensure that all such information is true and accurate in all material respects as at the date when that information is provided and will not omit to state any fact or circumstances which would make that information untrue, inaccurate or misleading in any material respect.

(v) Notify the Trustee, promptly upon becoming aware of the same, of the occurrence or any Event at Default and any event or circumstance which;

(i) with the lapse of time, giving of notice or fulfillment of any other requirement would constitute an Event of Default or ;

(ii) may have a material adverse effect on the Company, giving full details of it and of any action taken (or to be taken) as a result.

(vi) Maintain in full effect all consents required to enable it to perform or comply with its material obligations under the Trust Deed, and

(vii) Duly and promptly comply with all laws directives and consents the non-compliance with which might give rise to a charge or have a material adverse effect on the Company or may adversely and materially affect the rights and security of the Trustee or any stockholder under the Trust Deed.

The Trustee may from time to time consult with the Company regarding the requirement for additional metrics to be complied with to calculate the liquidity of the Company. Following such consultation, both parties shall, acting reasonably, agree what additional covenants shall be inserted into the Risk Management Programme to be complied with by the Company. Any failure to comply with the additional covenants inserted into the Risk Management Programme within 14 days following agreement by both parties, shall result in an Event of Review.

PROVISIONS OF THE TRUST DEED (Continued)

49

PERMITTED PRIOR SECURITY INTERESTS

The Charging Group may create a prior security interest over any asset to secure the purchase price of that asset provided that the principal amount secured by all such prior security interests does not exceed 5% of Total Tangible Assets.

If a new subsidiary becomes a member of the Charging Group, any security interests over that new subsidiary can remain for up to 6 months from the date the subsidiary becomes a member of the Charging Group.

ENFORCEMENT

The Trust Deed gives the Trustee the right, in certain situations, to take action against the Charging Group to enforce the Stock-holders’ rights and remedies and to realise the assets of the Charging Group secured by the Trust Deed. A Stockholder can only enforce its rights and remedies against the Charging Group if the Trustee has become bound to do so and has failed to do so.

Under the Trust Deed, the events that will constitute default by the Charging Group include:

(i) Non payment of any Stock or other monies owing under the Trust Deed on its due date;

(ii) Various insolvency events in respect of General Finance or any other Charging Group Member;

(iii) General Finance or any other Charging Group Member ceasing or threatening to cease carry on, all or a substantial part of, the business;

(iv) Breach of the Trust Deed, which continues for more than fourteen (14) days after General Finance or any other Charging Group Member first became aware of the breach; or

(v) Any indebtedness for borrowed money of any Charging Group Member of $10,000 in aggregate or more is not paid when due or becomes due prematurely due to a default by the relevant Charging Group Member.

(vi) Enforcement of a Prior Security Interest

(vii) Changes in control of the Company without prior consent of the Trustee.

The Trustee has an ability to waive any breach of the Trust Deed where the Trustee is satisfied that the interest of Stockholders will not be materially prejudiced.

The Trustee may, while an Event of Default is continuing, demand immediate payment from General Finance of all Deposits and accrued interest and the costs incurred by the Trustee in relation to the Deposits. Once the Trustee has received such payment, it must, subject to the payment of any monies secured by any Prior Security Interest, apply the proceeds:

Firstly, (subject to any order made by any Court) towards payment of the Trustee’s (and agent, attorney or manager of the Trustee) or any Receiver’s costs, liabilities and remuneration;

Secondly, towards the payment of the outstanding amount owed to Stockholders in proportion to the amounts owing to them;

Thirdly, any surplus proceeds will then be returned to General Finance (subject to the rights of any other creditors) or to such other persons as the High Court of New Zealand, on the application of the Trustee, shall direct.

CHARGING SUBSIDIARIES

As at the date of this Prospectus, there are no Charging Subsidiaries as defined by the Trust Deed.

MEETING OF STOCkHOLDERS

The Trust Deed provides for meetings of Stockholders over matters that may be determined by ordinary or extraordinary resolu-tions. All Stockholders are bound by any ordinary or extra ordinary resolutions duly passed at such meetings.

The Trustee has an obligation to call a meeting of all Stockholders if a Major Security Stockholder or the holders of not less than 10% of the Principal amount of all Stock make a written request to the Trustee.

REGISTER OF STOCkHOLDERS

The Trust Deed requires that the Company maintain a Register of all Deposits at its registered office. The Trustee may inspect the Register at any time. The Register is audited annually.

The above is only a summary of some of the provisions in the Trust Deed and any specific reference must be made to the actual Trust Deed. A copy of the Trust Deed may be inspected at the registered office of General Finance free of charge, the office of the Trustee or on the Companies Office website as specified in the Directory.

PROVISIONS OF THE TRUST DEED (Continued)

50

ADDITIONAL STATUTORY INFORMATION

Included in this Schedule is the information required under the Second Schedule of the Securities Regulations 2009 not elsewhere set out in this Prospectus. At the date of this Prospectus, General Finance is the only member of the “Group”, the “Borrowing Group” and the “Charging Group”.

Clause Statutory Topic List Page

1 Main terms of offer 2, 9-13,52

2 Name and address of offeror n/a

3 Details of incorporation of issuer 52

4 Guarantors 2, 9-10, 52

5 Names, addresses, and other information 7, 62

6 Restrictions on directors’ powers 52

7 Description of activities of borrowing group 3,6, 52

8 Summary financial statements 4-5

9 Acquisition of business or subsidiary 52

10 Material contracts 52

11 Pending proceedings 53

12 Issue expenses 53

13 Ranking of securities 53

14 Provisions of trust deed and other restrictions on borrowing group 48-50

Trustee Statement 47

15 Other terms of offer and securities 53

16 Financial statements requirements apply only if member of group has commenced business n/a

17 Financial Statements 23-44, 53

18 Additional interim financial statements n/a

19 Places of inspection of documents 53

20 Other material matters 53

21 Directors’ statement 8

22 Auditor’s report 45-46

51

ADDITIONAL STATUTORY INFORMATION

DETAIL OF INCORPORATION OF ISSUER

Incorporation

General Finance Limited was incorporated under the Companies Act 1993 on 13 June 1997 with registration number 860336.

Public File

The public file relating to General Finance may be viewed on the Companies Office website at www.companies.govt.nz. Where relevant documents are not available on the website, a request for the documents can be made by telephoning the Ministry of Economic Devel-opment Business Service Centre, as detailed in the directory.

GUARANTORS

The offer of Deposits under this Prospectus is not guaranteed by any associated or parent company of General Finance.

General Finance currently has a Crown guarantee under the New Zealand deposit guarantee scheme, further details of which are set out on pages 9-10 of this Prospectus.

RESTRICTIONS ON DIRECTORS’ POWERS

The Constitution of General Finance and the Companies Act 1993 provide that the directors may not cause the Company to enter into any transaction.

(a) to acquire assets or dispose of company assets the value of which exceed 50% of the Company’s assets;

(b) that will or is likely to have the effect of the Company acquiring rights or interests or incurring obligations or liabilities the value of which exceeds 50% of the Company’s assets (other than by way of charge); or

(c) in which all or any one of the directors is interested;

without that transaction being approved by special resolution of shareholders.

There are no other modifications, exceptions or limitations on the powers of the board of the Company imposed under the Companies Act 1993 or General Finance’s constitution as at the date of registration of this Prospectus.

DESCRIPTION OF ACTIVITIES OF BORROWING GROUP

The principal assets of General Finance which are charged as security for the securities offered under this Prospectus comprise of the advances made by the Company by first and second mortgages as described in this Prospectus and furniture, office equipment, suitable for the operation of a finance company as a going concern. The principal assets are not subject to obligations in favour of another person that modify or restrict the Company’s ability to deal with the assets.

ACQUISITIONS OF BUSINESSES OR SUBSIDIARIES

There have been no acquisitions of businesses or subsidiaries by General Finance in the two years preceding the date of this Prospectus.

MATERIAL CONTRACTS

The only material contracts entered into by General Finance in the two (2) years preceding the date of this Prospectus (other than in the ordinary course of business) are as follows:

• A Crown Deed of Guarantee (Non-Bank Deposit Taker) dated 3 December 2008 was executed between Her Majesty the Queen in right of New Zealand and General Finance.

• A replacement Crown Deed of Guarantee (Non-Bank Deposit Taker) dated 8 December 2009 was executed between Her Majesty the Queen in right of New Zealand and General Finance. Further information regarding this Crown guarantee is set out on pages 9-10 of this Prospectus.

52

ADDITIONAL STATUTORY INFORMATION (cont)

PENDING PROCEEDINGS

There are no legal proceedings or arbitrations that are pending at the date of registration of this Prospectus that might have a materially adverse effect on General Finance.

ISSUE EXPENSES

The estimated amount of costs and expenses, exclusive of brokerage, payable by General Finance in respect of issuing this Prospectus, the Invest-ment Statement, and associated documentation is $25,000. Brokerage will be paid at the following rates (which may vary from time to time) to recognised financial advisors approved by General Finance, on the nominal value of the debenture stock issued in respect of applications lodged.

6 months 0.25% 1 year 0.50% 2 years 1.00% 3 – 5 years 1.50%

All applications must bear the financial advisor’s stamp. General Finance reserves the right to adjust brokerage on investments that are repaid early. No brokerage is payable by investors.

RANkING OF SECURITIES

As at 31 March 2010, and as at the date of this Prospectus there are no securities that are secured by a mortgage or charge over any of the assets of General Finance and that rank in point of security ahead of the security offered by the Trust Deed. The only claims on the assets of Gen-eral Finance that will or may rank equally with your claim (as the holder of Deposits) are the claims of other holders of Deposits including those who invested pursuant to a previous offer ($2,503,004 as at 31 March 2010) or who invest pursuant to this or a subsequent offer.

The Charging Group may create a prior security interest over any asset to secure the purchase price of that asset provided that the principal amount secured by all such prior security interests does not exceed 5% of Total Tangible Assets. No such prior security interests have been entered into.

OTHER TERMS AND THE OFFER AND SECURITIES

All terms of the offer are contained in this Prospectus and all terms of the Deposits being offered are set out in this Prospectus, other than those implied by law or set-out in a document that:• is registered with a public official; • is available for public inspection; and • is referred to in this Prospectus.

FINANCIAL STATEMENTS

The latest financial statements, for the year ended 31 March 2010, for General Finance that comply with Financial Reporting Act 1993, and have been registered under the Financial Reporting Act 1993 on 6 August 2010, can be found at pages 23-44 of this Prospectus.

PLACES OF INSPECTION OF DOCUMENTS

General Finance’s Constitution, the Trust Deed and any material contracts are available for inspection at our offices listed in the Direc-tory during normal business hours free of charge.

This Prospectus, the current Investment Statement and application form, and General Finance’s Financial Statements are able to be viewed on-line at any time at the Company’s website at www.general.co.nz/prospectus.htm

This Prospectus, the Trust Deed, the Material Contracts, General Finance’s constitution, and all other documents in relation to the incorporation of the Company are able to be viewed on-line at any time at the Companies Office website www.companies.govt.nz on payment of the prescribed fee. Copies of the documents may also be obtained (on payment of a fee) by telephoning the Ministry of Economic Development Business Service Centre, as detailed in the directory.

OTHER MATERIAL MATTERS

There are no material matters relating to the offer of Deposits under this Prospectus other than those set out in this Prospectus.

53

ADDITIONAL STATUTORY INFORMATION (cont)

IMPORTANT INFORMATION

(The information in this section is required under the Securities Act 1978 and the Securities Regulations 2009) Investment decisions are very impor-tant. They often have long term consequences. Read all documents carefully. Ask questions. Seek advice before committing yourself.

CHOOSING AN INVESTMENT

When deciding whether to invest, consider carefully the answers to the following questions that can be found on the pages noted below:

Important Questions:

1. What sort of investment is this? 54 2. Who is involved in providing it for me? 54 3. How much do I pay? 55 4. What are the charges? 55 5. What returns will I get? 55 6. What are my risks? 55-57 7. Can the investment be altered? 57 8. How do I cash in my investment? 57-58 9. Who do I contact with inquiries about my investment ? 58 10. Is there anyone to whom I can complain if I have problems with the investment? 58 11. What other information can I obtain about this investment? 58

In addition to the information in this document, important information can be found in the current registered prospectus for the investment. You are entitled to a copy of that prospectus on request.

ENGAGING AN INVESTMENT ADVISER

An investment adviser must give you a written statement that contains information about the adviser and his or her ability to give advice. You are strongly encouraged to read that document and consider the information in it when deciding whether or not to engage an adviser. Tell the adviser what the purpose of your investment is. This is important because different investments are suitable for different purposes, and carry different levels of risk. The written statement should contain important information about the adviser, including

• relevant experience and qualifications, and whether dispute resolution facilities are available to you; and

• what types of investments the adviser gives advice about; and

• whether the advice is limited to investments offered by 1 or more particular financial institutions; and

• information that may be relevant to the adviser’s character, including certain criminal convictions, bankruptcy, any adverse findings by a court against the adviser in a professional capacity, and whether the adviser has been expelled from, or prohibited from joining, a professional body; and

• any relationships likely to give rise to a conflict of interest.

The adviser must also tell you about fees and remuneration before giving you advice about an investment. The information about fees and remunera-tion must include –

• the nature and level of the fees you will be charged for receiving the advice; and

• whether the adviser will or may receive a commission or other benefit from advising you.

An investment adviser commits an offence if he or she does not provide you with the information required.

STATUTORY INFORMATION

1. What sort of investment is this?

This Investment Statement contains an offer by General Finance Limited (“General Finance”) for you to invest in an issue of up to $30 million of first ranking Secured Debenture Stock (“Deposits”). The Deposits will be issued as Stock under a Trust Deed dated 2 November 2004 (the “Trust Deed”) made between General Finance and Perpetual Trust Limited (the “Trustee”). The Deposits will be secured by a security interest granted in favour of the Trustee over all the present and after-acquired real and personal property wherever situated of General Finance. The security interest is subject only to any Prior Security Interests permitted by the Trust Deed and claims given priority by law. Prior Security Interests are described in paragraph 6 below.

You may invest in either At Call Deposits or Term Deposits. A range of terms is available. The terms offered range from at call, for At Call Deposits, and from six (6) months to five (5) years, for Term Deposits.

There is a registered prospectus containing an offer of the Deposits. General Finance is not seeking to list the Deposits on any Stock Exchange.

2. Who is involved in providing it for me?

Issuer and Promoter: General Finance Limited is the Issuer and Promoter of the Deposits.

General Finance’s address is Level 1, 638 Great South Road, Ellerslie, Auckland.

Directors: The directors of the Issuer and Promoter are James Lockie and William Cairns.

General Finance’s address is Level 1, 638 Great South Road, Ellerslie, Auckland.

Trustee: Perpetual Trust Limited is the trustee in respect of the Deposits for the purposes of the Securities Act 1978. The Trustee’s address is Level 12, AMP Centre, 29 Custom Street West, Auckland. The Trustee does not guarantee the repayment of Deposits or the payment of any interest thereon.

INVESTMENT STATEMENT DATED AND PREPARED AT 9 AUGUST 2010

54

Business Activities: General Finance is a mortgage origination and management company providing a range of residential mortgage services. It has been operating since 2001. General Finance is a wholly owned subsidiary of Cairns Lockie Holdings Limited. The Cairns Lockie group is an established mortgage banking operation. General Finance is based in Ellerslie in Auckland. The purpose of this debenture issue is to diversify General Finance’s funding base from wholesale sources to include retail funding. The retail funds being raised will be lent to borrowers requiring advances on their residential property and will be secured against General Finance’s assets which mainly comprise first and second residential mortgages. As at the date of this Investment Statement, General Finance has not advanced any loan to a related party.

3. How much do I pay?

Whether, and how much, to invest is at your discretion. If you choose to invest you must apply for a minimum of

• $5,000 of Deposits, where interest is to be paid (or compounded) quarterly

• $10,000 of Deposits where the monthly interest payment option has been selected,

except where a smaller sum is agreed by the Directors. Subject to the maximum offer amount, no maximum investment amount is prescribed. The Deposits will be issued to you at par.

General Finance reserves the right to refuse any application or to accept any application in part only and to close all or any part of the offer at any time.

You must apply for Deposits in accordance with the instructions on the application form attached to this Investment Statement.

A cheque for the subscription amount made payable to General Finance Limited must accompany a completed current application form. Payment is to be made to General Finance Limited, c/- Computershare Investor Services Limited, Private Bag 92119, Auckland 1142.

4. What are the charges?

None of the following types of charge are payable by you: entry charges, trustee, administration or management charges, expenses or overhead charges, or switching, sales or alteration charges.

However if Term Deposits are repaid at your request prior to maturity, General Finance may adjust the interest rate payable on those Term Deposits to the interest rate applicable (at the date of investment) to the term during which those Term Deposits were outstanding and may charge an early withdrawal fee of $150.

Early repayment of Term Deposits may be permitted in certain circumstances. Please refer to point 8 below, for more details regarding early repayment.

No fees or charges are payable to General Finance on repayment of At Call Deposits.

None of the types of charge specified in the first paragraph above that are payable by General Finance affect the amount of returns payable to you.

5. What returns will I get?

The nature of the returns to you from the Deposits is the repayment of the principal and the payment of interest. The key factors that determine the returns to you are, in the case of repayment of the principal, the principal amount of the Deposit and, in the case of the payment of interest, the prin-cipal amount of the Deposit, the term of the Deposit, the applicable interest rate, the applicable payment option and whether or not New Zealand resident or non-resident withholding tax or the cost of approved issuer levy is deducted.

Until your application for Deposits is accepted, no amount of returns quantifiable as at the date of this Investment Statement and enforceable by you has been promised.

The deduction of New Zealand resident or non-resident withholding tax or the cost of approved issuer levy will affect the returns.

No reserves or retentions apply.

At Call Deposits will be repaid at call. Subject to maintaining a minimum investment of $5,000 (or $10,000, where the monthly interest option is selected), except where a smaller sum is agreed by the Directors and unless otherwise agreed by General Finance, partial withdrawals in minimum amounts of $1,000 may be made.

Term Deposits will mature on the expiration of the term selected by you in your application form. Please refer to paragraph 8 below.

Interest is calculated from the date General Finance receives your payment and is paid on the last business day of, or compounded on the last day of, March, June, September and December and on maturity (or on the last business day of the month where the monthly interest option is selected). If your payment is received after 11 am on any day, interest will be calculated from the next business day.

The terms and interest payment options are set out on the application form attached to this Investment Statement. To confirm the available interest rates, please call General Finance’s Administration Team on 0800 500 602.

General Finance is the person legally liable to pay the returns.

Effective 12 October 2008, General Finance has a Crown guarantee under the New Zealand deposit guarantee scheme (refer pages 9-10 of the Prospectus for a summary of the terms of the Crown guarantee). Further information about the deposit guarantee scheme and the most recent audited statement of financial position of the Crown, are available, free of charge, and at all reasonable times, on the internet site maintained by the Treasury at www.treasury.govt.nz.

There is no other guarantor of the Deposits.

6. What are my risks?

Risks

The principal risks of the money paid by you not being recovered in full by you and of you not receiving the returns referred to in paragraph 5 above are those applicable generally to finance companies (including General Finance) and those applicable more specifically to General Finance. The risks

INVESTMENT STATEMENT (Continued)

55

applicable at the date of this Investment Statement are detailed below. The consequence of those risks occurring is the risk that General Finance may become insolvent. These risks are significantly reduced while the Company has the benefit of the Crown guarantee under the New Zealand deposit guarantee scheme held by General Finance (for further information see pages 8-9 of the Prospectus).

Risks Generally Applicable to Finance Companies

The specific risks applicable to finance companies include:

• Credit Risk: The risk that advances provided by the company to its customers are not repaid in full.

• Liquidity Risk: The risk that the company does not have sufficient cash liquidity to meet its obligations.

• Interest Margin Risk: The risk to a company’s profitability associated with the margin between the company’s cost of funds and its return on the advances provided by it, to its customers.

• Pricing Risk: The risk that the value of the company’s financial assets or financial liabilities will fluctuate due to changes in interest rates, currency fluctuations or market prices.

• Financial Management Risk: The risk that there is a breakdown in the company’s implementation and continued monitoring of its quality and risk management controls, and financial and governance standards.

• Economic Downturn Risk: The risk concerning the stability of the economy and of a downturn in the sectors in which the company is exposed.

• Regulatory Risk: The risk that changing legal requirements may have an adverse effect on the sectors in which the company is exposed.

Specific Risks Applicable to General Finance

The risks that are more specifically applicable to General Finance are:

• Sector Risk: The risks associated with the real property sector including rises and falls in property values, changes in client circumstances and employment affecting their ability to service and repay borrowings, migration and the demand for real property. Sector risks include:

o Lack of Suitable Mortgages: The Company may not be able to source suitable mortgages as security for investment within a reasonable time after the issue of the Debentures. This may mean that the return that the Company makes from its investments may not be sufficient to meet Debenture holders’ return entitlements.

o Ability of Mortgagors to Meet Mortgage Obligations: Mortgagors to whom the Company has lent money may, due to their personal financial situation, be unable to meet their mortgage obligations. The Company will be exposed to suffer the loss of amounts by which the amount owing by a borrower on default, exceeds the proceeds of sale received by the Company, upon exercising the rights of sale of the property mortgaged to the Company as security for the loan advanced. Most of the Company’s advances are for periods of up to 12 months. When the mortgagor’s takeout event is delayed, the mortgagor may request that their loan term is extended. Such a request is considered in a similar manner to the initial advance and if approved the mortgagor’s advance will be extended for a further period. As at 31 March 2010 the Company had Past Due Assets totalling $1.51 million of which $0.57 million has since been repaid.

o Impairment Risk: Mortgagors to whom the Company has lent money may not be able to meet their obligations in a timely manner. The Company is exposed to cash flow risk on the timing of these payments. As at 31 March 2010 the Company had Impaired Assets totaling $451,444, with a Provision against these Impaired Assets of $225,337.

• Credit Exposure Concentration Risks:

o The risks associated with the concentration of its credit exposures in the residential property sector, particularly in the North Island and the Auckland market. As at 31 March 2010, advances by General Finance in North Island residential property sector represented 86% of its total credit exposure, with 30% being in the Auckland market. This geographical concentration reflects the Company’s current focus on the North Island and the Auckland market.

o The risks associated with the concentration of its credit exposures on a relatively few large loans to customers. As at 31 March 2010, advances by General Finance in its six largest loans represented 51.4% of its total credit exposures. The Company had 33 loans with no individual loan exceeding 20% of equity.

• Finance Industry Implosion: The number of finance (and related) companies that have failed in the last 4 years has impacted adversely on the Company’s reinvestment rates and the inflow of new deposits. This is because of the difficulties experienced by the investing public in distinguish-ing between sound and unsound issuers. The Company’s business model is focused on lending in the residential property sector, which differs from many of the failed finance companies. In order to survive the current crisis the Company has taken a conservative stance on gearing and liquidity management. At 31 March 2010, total equity was 53% of total assets and our cash balances were $1.59 million (or 29% of total assets).

Credit rating

• Section 157I of the Reserve Bank of New Zealand Act 1989 (the “Act”) requires a deposit taker to have a current rating of its creditworthiness, except where there is an exemption in terms of sections157G and 157H of the Act.

• The creditworthiness of General Finance is not rated by a rating agency approved by the Bank under section 157J of the Act because it is ex-empted from the requirement to obtain a credit rating under the Deposit Takers (Credit Ratings Minimum Threshold) Exemption Notice 2009.

• This exemption applies because General Finance has liabilities of less than $20 million, making it unduly onerous and burdensome to comply with the requirement under the Act to have a credit rating.


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General Finance believes that its lending policies contribute to a mitigation of the risks detailed above. Please refer to the Prospectus on page 22 for General Finance’s lending policies.

Consequences of Insolvency

If General Finance becomes insolvent, you will not be liable to pay any money to any person as a result of that insolvency.

The only claims on the assets of General Finance that will or may rank ahead of your claim (as the holder of Deposits) in the event of General Fi-nance being put into liquidation or wound up are claims given priority by law (such as claims for liquidation costs, taxes, and employees’ wages), Prior Security Interests permitted by the Trust Deed and any unpaid Trustee fees and expenses.

The only claims on the assets of General Finance that will or may rank equally with your claim (as the holder of Deposits) are the claims of other holders of Deposits including those who invested pursuant to a previous offer or who invest pursuant to this or a subsequent offer.

Permitted Prior Security Interests

The Charging Group may create a prior security interest over any asset to secure the purchase price of that asset provided that the principal amount secured by all such prior security interests does not exceed 5% of Total Tangible Assets.

If a new subsidiary becomes a member of the Charging Group, any security interests over that new subsidiary can remain for up to 6 months from the date the subsidiary becomes a member of the Charging Group.

7. Can the investment be altered?

General Finance reserves the right to vary the terms and interest rates offered at any time. Any variation will not affect applications accepted for a Term Deposit.

Interest rates on At Call Deposits may be varied from time to time by General Finance. General Finance may, but is not obliged to, give prior notice to investors in At Call Deposits of any variation. Where General Finance does not give prior notice of any variation, it will notify investors in At Call Deposits of the new interest rate within fourteen (14) days after the new rate becomes effective.

Term Deposits will attract a fixed rate of interest, the amount of which depends upon the length of term invested. If your application is received after the interest rate for the term applied for has decreased, you will be promptly notified of such decrease and, unless you confirm within fourteen (14) days that you accept the new rate, your investment will be refunded.

Term Deposits are for a fixed term which under ordinary circumstances cannot be altered by you or General Finance. Refer to point 8 below, with regard to early withdrawal of Deposits and the adjusted interest rate that may be applicable.

General Finance has always reserved the right to fully repay Term Deposits early, and now seeks some flexibility to retain some of benefits to inves-tors in Term Deposits by reserving the ability to partly repay Term Deposits early. Accordingly for all Term Deposits invested from the date of this Investment Statement, in addition to the existing right to fully repay early, General Finance will reserve the right to partly repay those Term Deposits early. General Finance may, without the approval of investors and upon giving at least fourteen (14) days’ notice in writing of its intention to the Trustee and all affected investors, repay the investors’ Term Deposits in whole or in part (including accrued interest), whether or not due for repay-ment. This action will have two effects on affected investors: it will shorten both the term of that part of their investment that is repaid, and the cash flow from the investment. General Finance will only exercise these rights of early repayment in extraordinary circumstances as it requires a steady stream of Deposits to grow its business.

If an event of default occurred under the Trust Deed, the Trustee may, and shall if instructed pursuant to an Extraordinary Resolution (as defined in the Trust Deed) of holders of Deposits, demand immediate payment of all Deposits whether or not due for repayment, and the Deposits will be repayable at that time. The Trust Deed can be altered by an Extraordinary Resolution of holders of Deposits or by agreement between the General Finance and the Trustee in limited circumstances.

8. How do I cash in my investment?

Deposits will be repaid to the investors by General Finance as follows:

At Call Deposits: Upon receiving written or telephone instructions that you wish to withdraw all or part of your investment in At Call Deposits, your investment, or the relevant part thereof, will be repaid in accordance with the instructions recorded in your application form.

Written instructions are required where payment is required to a bank or financial institution account other than that specified in your application form, or you wish to change the instructions specified in your application form.

In the event that instructions are received on or before 11 am on a business day, your investments will be repaid on the same business day as the receipt of your instructions. If your instructions are received after 11 am on any day, your investments will be repaid on the next business day.

Term Deposits: Term Deposits will mature on the expiration of the term selected by you on your application form.

If no reinvestment or repayment instructions are received with your application form, then at least fourteen (14) days prior to the maturity of your Term Deposits, General Finance will send you a letter seeking your reinvestment or repayment instructions. The letter will enclose a copy of the Investment Statement and application form current at that time.

Repayment of principal or interest can be made by cheque or by direct credit to the bank or financial institution account nominated on your applica-tion form. You can make your choice (in advance) by marking the appropriate box on the application form at the time of your initial investment.

If no maturity instructions are received by the date of maturity of your investment, General Finance will have the option of holding your investment as At Call Deposits until receipt of your instructions, or repaying your investments (together with accrued but unpaid interest) by cheque posted to your last known address recorded on General Finance’s investor register.


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The same person (unless the application was signed under a power of attorney, or by a trustee or where the investor has died or is otherwise inca-pacitated) who signed the initial application form must sign any written (including facsimile) instructions or otherwise author any e-mail instructions to the Administration Team. Where any of the exceptions apply, the party or parties seeking repayment should contact our Funding Manager.

In the event that instructions are received on or before 11 am on a business day, your investments will be repaid (unless otherwise advised) in ac-cordance with your repayment instructions recorded on your application form, on the same business day as the receipt of your instructions. If your instructions are received after 11 am on any day your investment will be repaid on the next business day.

Early Repayment of Term Deposits: Early repayment of Term Deposits will be considered at the discretion of General Finance. General Finance relies on committed Term Deposits to properly plan its business, and for this reason will only agree to early repayment at the request of an investor in limited circumstances. The circumstances under which early repayment would be considered, are where an investor’s continued investment may give rise to some form of material hardship.

If a request is made by a holder of Term Deposits for the Deposit to be repaid prior to maturity for any reason including those provided above, Gen-eral Finance may charge an early withdrawal fee of $150 and the interest rate will be adjusted to reflect the reduced term.

If any Event of Default has occurred under the Trust Deed, the Trustee may, and shall if instructed by at least 75% of all investors, demand the immedi-ate repayment of all Deposits whether or not due for repayment, and the Deposits will be repayable at that time.

Right to Sell Securities

Investors may transfer Deposits at the discretion of General Finance. It should be noted that there is no established market for transferring Deposits. In the event that General Finance consents to the transfer of your investment, there are no fees or charges payable by you in respect of any such transfer.

9. Who do I contact with enquiries about my investment?

If you have any enquiries about your investment, please call General Finance’s Treasury Team on (09) 526 5000 at Level 1, 638 Great South Road, Ellerslie, Auckland

10. Is there anyone to whom I can complain if I have problems with the investment?

Administration Team

In the first instance, any complaints you may have about your investment can be made to our Administration Team on (09) 526 5000 or at Level 1, 638 Great South Road, Ellerslie, Auckland

The Directors

If you believe that your complaint has not been resolved to your satisfaction, you can then direct it to the Directors of General Finance on (09) 526 5000 or at Level 1, 638 Great South Road, Ellerslie, Auckland.

Trustee

If you still believe that your complaint has not been resolved you can then direct it to the Trustee on 09 366 3290 or at Level 12, AMP Centre, 29 Custom Street West, Auckland.

Ombudsman

There is no Ombudsman to whom complaints can be made.

11. What other information can I obtain about this investment?

Prospectus and Financial Statements: Other information about the Deposits and General Finance is contained or referred to in General Finance’s most recent Prospectus and in General Finance’s most recent financial statements contained earlier in this document. Additional copies can be obtained, free of charge, from General Finance, Level 1, 638 Great South Road, Ellerslie, Auckland during normal business hours.

The Prospectus, financial statements and other documents relating to General Finance are able to be viewed on-line at any time free of charge at the Company’s website at www.general.co.nz/prospectus.htm

The Prospectus, financial statements, Material Contracts and other documents relating to General Finance are filed on a public register at the Companies Office of the Ministry of Economic Development and available for public inspection on payment of the prescribed fee (including at www.companies.govt.nz). Copies of the documents may also be obtained (on payment of a fee) by telephoning the Ministry of Economic Development Business Service Centre, as detailed in the directory.

Annual Information: General Finance is required to give you annually a certificate stating the amount of resident or non-resident withholding tax deductions from interest paid to you on Deposits and, unless it provides you with a Certificate, is required to send you on request, or at least once every six months, a written statement that properly evidences the nature and ownership of your Deposits.

On Request Information: General Finance is required to make available to you on request copies of its most recent registered Prospectus, invest-ment statement, financial statements, and documents registered under the Securities Act 1978 for the purpose of extending the period during which allotments may be made under the registered Prospectus. Holders of Deposits are also entitled to inspect the Register of Stock. A request for this information, or to inspect the Register, may be made to General Finance, Level 1, 638 Great South Road, Ellerslie, Auckland during normal business hours. No charge will be made by General Finance for the provision of this information or to inspect the Register.


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To: The DirectorsGeneral Finance LtdC/- Computershare Investor Services Limited Private Bag 92119Auckland 1142

INVESTOR DETAILS

APPLICANT TO COMPLETE – BLOCK LETTERS PLEASE

For applications on behalf of Trusts, all Trustees’ names must be shown.

Mr/Mrs/Miss/Ms/Trustee: Date of Birth / / First Name/s Surname

Mr/Mrs/Miss/Ms/Trustee: Date of Birth / / First Name/s Surname

Name of Company, Club, Society or Trust (if applicable):

Full Postal Address

Post Code:

Email: Day Telephone: Mobile:

TAX DETAILS

Please deduct Resident Withholding Tax (RWT) at:

12.5% 21% 30% (Company Rate Only) 33% 38%

I/We are Non-Residents for Tax purposes, please deduct

AIL NRWT

Investor IRD Number Joint Applicant IRD Number

DEBENTURE STOCk DETAILSPlease insert the amount you wish to invest at the rate and corresponding term indicated on the rate sheet included with this Investment Satatement. Rates are per annum and subject to change without notice. Minimum investment $5,000 (or $10,000 where monthly interest option is selected).

DEBENTURE STOCK AMOUNT RATE TERM

6 months

1 year

18 months

2 years

3 years

4 years

5 years

MY BANk ACCOUNT DETAILS (for distrihution purposes)

Bank Branch Account No Suffix

Bank Name: Branch:

Name of Account Holder:

PLEASE READ THIS BEFORE SIGNING

I/We hereby apply for the Debenture Stock specified above (or such lesser numbers as may be allocated) upon the terms of the Prospectus (dated 9 August 2010), Investment Statement (dated 9 August 2010) and application form and agree that my/our application will not be revoked. Under the terms of the Privacy Act 1993, I/we agree that all information about me/us provided on this application form may be used by the Issuer for the purpose of mailing me/us further information on other investment products of services offered by General Finance Limited (unless I/we advise General Finance Limited to the contrary). I/We understand that I/we may request access to the personal details provided by me/us from the Issuer. A fee may be payable. If I/we consider these personal details to be incorrect, I/we understand that these personal details may be corrected at my/our request.

Signature:____________________________________Date:_______________ Signature:____________________________________Date:________________

FOR OFFICE USE ONLY

BANkED ON:

BROkER’S STAMP

PTO

Please indicate how your interest is to be paid (tick the box)

Monthly Direct Credit to Bank account

Quarterly Compound

Quarterly Direct Credit to Bank account

Quarterly by Cheque

ADVISER CONFIRMATION

The Financial Transaction Reporting Act 1996 requires the identity of all investors to be verified. If the application cheque is not being drawn on an account with a New Zealand registered bank, or if the account name on the cheque is different from the name of the entity or person(s) that will own the Debentures to which this application relates, your Adviser will need to complete the declaration below.

DECLARATION OF ADVISER AS AGENT OF GENERAL FINANCE LIMITED (IF APPLICABLE)

I have seen an original or certified copy of the identification for each investor to whom this application relates and I have kept a copy of this identification for my files. I have no reason to believe that each investor is not who he or she claims to be.

Signature: Date:

Name:

Company/Firm:

Identification Used:

CERTIFICATE OF NON-REVOCATION OF POWER OF ATTORNEY (IF APPLICABLE)

I (Name of Attorney)

of (Address of Attorney)

(Occupation):

HEREBY CERTIFY:

1. By a Power of Attorney dated day of 20

(Full name of person for whom attorney is signing)

of (Address of person for whom attorney is signing)

(Occupation):

(‘Donor’) appointed me his/her/its attorney on the terms and conditions set out in that power of attorney.2.I have executed the application for Debenture Stock on the face of this form as attorney under that power of attorney and pursuant to the powers thereby conferred upon me.3.As the date of this certificate I have not received any notice or information of the revocation of that power of attorney by the death or winding up of the Donor or otherwise.

SIGNED AT: this day of 20

Signature of Attorney:

IMPORTANT: An original or certified copy of the relevant Power of Attorney must be lodged with the Application Form. Originals will be returned.

Completing the Application Form

Complete all the relevant sections of the Application Form. This information will be held by General Finance and is required:

• For identification; • For the purpose of managing your investment; • To enable us to contact you when your investment matures; • To enable us to contact you if we or any General Finance related parties make special offers to investors or to send you information relating to any investment or other products or services that General Finance consider may be of interest to you.

If you wish to invest in a combination of the investment options you may do so on the one Application Form by completing more than one panel.

1. Investor Details

The Financial Transactions Reporting Act 1996 requires the identity of all new investors to be verified.

Personal Investors: If the investment is in your name and you pay by personal cheque you do not need to provide further identification.

However, for investments made by two persons jointly where only one investor is named on the cheque, the other investor must still provide identification.

If any applicant(s) is/are under 18 years of age, the Application Form must be signed by the parent or guardian of the applicant(s).

Other Investors: If you are making an investment with a bank cheque or by third party cheque, or if you are an authorised signatory, please provide either a certified copy of your passport or two other forms of acceptable identification as follows:

• Drivers Licence • Bank Debit or Credit • Student I.D. Card • Birth Certificate

Please send certified copies of identification. A certified copy is one that has been sighted, copied and signed by a Justice of the Peace, Solicitor or another responsible person such as a Bank Manager, Police Officer, Chartered Accountant or Judge.

Companies: Please provide a copy of the Certificate of Incorporation. Applications must be executed on behalf of the company by two directors, or one director whose signature has been witnessed.

Trustees & Estates: If there are less than three trustees, identification is required for each trustee, as specified under “Other Investors”.

Where there are more than three trustees, one trustee must be noted on the Application Form as the Principal Facility Holder and identification of that person supplied. A certified copy of the Trust Deed may be required on request.

Power of Attorney: If this application is made under a Power of Attorney, the Power of Attorney (or a certified copy) must be produced to General Finance. The donee of such Power of Attorney must certify that he/she has received no notice of revocation thereof, by the death of the donor or otherwise, using the panel on the back of the application form.

2. Tax Details

All investments will have withholding tax deducted unless a copy of the “Certificate of Exemption” is attached to this form, or “Approved Issuer Levy” (AIL) is applicable (see below). Non-New Zealand Tax Residents: Where interest is paid to overseas residents, General Finance may deduct New Zealand Non-Resident Withholding Tax (NRWT), or the cost of the “Approved Issuer Levy”. To enable us to deduct NRWT or AIL, please provide us with both your mailing and residential address.

If selected, NRWT will be deducted at the rate that applies to your country of residence, per the address provided. Alternatively, the cost of AIL (currently 2% of interest paid) will be deducted in lieu of NRWT (Special conditions apply; please contact us for details). NRWT will be rated zero when selecting the AIL option.

New Zealand Tax Residents, please note: If we do not have your IRD number on file, we are required to deduct Resident Withholding Tax (RWT) at the non-declaration rate of 38%.

3. Debenture Stock Details

Please select one of the investment terms and payment options that best suits your needs. To confirm the options and interest rates available at the time of your application, or if you have any questions please call our Administration Team on 0800 500 602 or visit our website at www.general.co.nz.

4. Bank Account Details

Please complete the bank account details that you wish General Finance to use for distribution purposes.

5. Privacy Declaration

General Finance will at all times protect the confidentiality of all information received from and about you, not being publicly available information, and will not disclose any of it without your prior consent to any third party, except for the purpose of managing your investment or as required by law. You can request access to and correction of any information held by General Finance and you agree to inform General Finance of any changes that you require to the information held.

6. Investment Payment

Make your cheque (for the full amount of the investment) payable to “General Finance Limited” and crossed “Not Transferable”.

7. Post Your Investment

Gather any additional documents required to be attached to the application form as detailed above. Post your application form, together with any additional documents and your cheque to:

General Finance Limited, c/- Computershare Investor Services Limited, Private Bag 92119, AUCKLAND 1142

We reserve the right to refuse or accept in part only, any application and to close all or any part of the issue at any time. In the unlikely event that an application was not accepted, interest will not be paid, and the funds will be immediately returned to the applicant or applicants.

HOW TO INVEST

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Issuer and PromoterGeneral Finance LimitedPO Box 74-212, Greenlane, Auckland, 1546Freephone: 0800 500 602 Telephone: 09 526 5000 Facsimile: 09 579 7795Email: [email protected]: www.general.co.nz

Registered OfficeLevel 1, 638 Great South Road, Ellerslie, Auckland, 1051

DirectorsJames Roderick Lockie LL.B, BCA, FCIS, FFin, MInstDLevel 1, 638 Great South Road, Auckland, 1051

William Alexander Adams Cairns B.Com, Dip Bus, FCIS, FFinLevel 1, 638 Great South Road, Auckland, 1051

Peter Alan AndersonCA(Retired), BCA, ABINZ, ABIA 105a Upland Road, Remuera, Auckland, 1050

Jonathan Cyril Olsen 126 Lucerne Road, Remuera, Auckland, 1050

Solicitor to the IssuerNowland Gordon & AssociatesBarrister & SolicitorsLevel 4, 40 Johnston Street, Wellington, 6011Telephone: 04 499 5171Facsimile: 04 499 5181

BankersBank of New Zealand Limited

Securities RegistrarComputershare Investor Services LimitedPrivate Bag 92119, Auckland, 1142Level 2, 159 Hurstmere Road, Takapuna, North Shore City, 0622Telephone: 09 488 8777 Facsimile: 09 488 8787

AuditorsHayes Knight AuditLevel 1, 1 Broadway, Newmarket, Auckland, 1023Telephone: 09 550 5910Facsimile: 09 307 0143

TrusteePerpetual Trust LimitedLevel 12, AMP Centre29 Custom Street West, Auckland, 1010Telephone: 09 366 3290 Facsimile: 09 303 2696 Website: www.perpetual.co.nz

Solicitor to the TrusteeBell GullyLevel 21, Vero Centre, 48 Shortland Street, Auckland, 1010Telephone: 09 916 8800 Facsimile: 09 916 8801

Companies OfficeRegistrar of CompaniesPrivate Bag 92061, Auckland Mail Centre, 1142Freephone: Ministry of Economic DevelopmentBusiness Service Centre 0508 266 726Facsimile: 09 912 7787Website: www.companies.govt.nz

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DIRECTORY

www.general.co.nz

prospectus no. 7 & investment statement

Documents