Investor Newsletter #4 - December 2011

Welcome to our December 2011 General Finance quarterly newsletter. We appreciate your support. The purpose of this newsletter is to keep you informed about the company and various financial matters that may interest you.

2011 in Summary
This current year is similar in many ways to 2010. We are still in recession, despite what a number of politicians may be saying. The demand for finance has been slow. On a couple of occasions, when we have seen signs of improvement in our economy, events overseas, such as the slow American economy and sovereign debt issues in Europe, have caused abrupt downturns in world share markets and any confidence has quickly evaporated. Our soft commodities, such as dairying, are performing well but some of the benefits have been negated by our strong dollar. This is hurting a number of exporting companies. The Rugby World Cup, although the result was good, failed to provide the economic stimulus that many had hoped for. We end the year on a more positive note, the general election is over and a stable Government can be formed.

2012 Crystal Ball
It is always difficult to predict the next twelve months but we believe certain trends are emerging. Interest rates and mortgages are likely to remain at their current low levels. They will only increase when economic activity starts to improve, unemployment falls and consumer spending increases. Unemployment is likely to remain at these levels, largely due to restructuring and less new employment in Government departments. The Government has few levers to pull, to cut expenditure, but one of them is to cut back on the number of civil servants. There will be some additional spending with rebuilding in Christchurch, which will be positive for the economy. The sovereign debt issues in Europe will continue to dominate the international economic news. Overall, we believe that 2012 will be slightly better than this year, although we are likely to remain in recession.

Next Year for Us
For the coming year we will continue what we have been doing all along - providing short term bridging type loans secured over residential properties. Lending over residential homes and flats has always been considered a safe form of lending. Even when taking this form of security, you need to be careful in the current market. Residential properties, with which we are particular careful, or on which we will not lend include, shoddily built apartments, out-of-the-way holiday homes, unusual properties, and properties in poor condition. It pays with each lending decision, to do ample due diligence on a particular property before any funds are advanced. We are wanting to grow. Over 2011 year, we have seen a positive inflow of money which is particularly pleasing.

Next Interest Payment
Our next quarterly interest payment will be made on the evening of Friday 30 December 2011. Direct credits will be processed that evening, with cheques (if applicable) and paperwork being forwarded during the week.

If you have any questions about your investment please do not hesitate to contact William Cairns on 09 526 7801 or by email to wcairns@general.co.nz. Our website is www.general.co.nz.

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

As this is our last newsletter for the 2011, we wish everyone a Merry Christmas and a happy New Year. We appreciated your support this year and look forward to your continued support in 2012.

Your continued support is noted and appreciated.