General Capital (GEN:NZ) subsidiary General Finance update

General Capital Limited
Level 7, 12-26 Swanson Street,
PO Box 1314, Shortland Street,
Auckland, New Zealand. 1140.
Phone +64 9 304 0145
Fax +64 9 358 3858



General Capital (GEN:NZ) subsidiary General Finance update.

General Capital Limited advises that its subsidiary General Finance Limited, a Non-bank Deposit Taker
licenced by the Reserve Bank of New Zealand, uploaded the following documents to the disclose
register prior to close of business on 31 July 2019.

1. General Finance Limited 31 March 2019 Financial Statements;
2. Key ratios and selected financial information as at 31 March 2019; and
3. Ranking of debt securities – March 2019.

The documents are expected to be available to view on the disclose register today, 1 August 2019.

Mr. Brent King, Managing Director, explained that the reporting is a requirement of the Financial
Markets Conduct Act 2013.

“We will continue to advise the market each time General Finance Limited uploads a document to the
Disclose Register”, said Mr. King.

The information can be found at www.disclose-register.companiesoffice.govt.nz.

For further information contact:

Brent King
Managing Director
General Capital Limited
+64 21 632 660
Brent.King@gencap.co.nz

1 August 2019

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Issue 8 31 July 2019

GENERAL FINANCE LIMITED
Key ratios and selected financial information as at 31 March 2019


KEY RATIOS

Capital Ratio


31 March 2019


31 March 2018
Restated
3



31 March 2017
Restated
3


Our capital ratio
calculated in
accordance with the
2010 Regulations
1


34% 48% 50%

Minimum capital
ratio required by
our Trust Deed
4


8% if we have a
credit rating
2
, or
15% if we do not
have a credit rating
8% if we have a
credit rating
2
, or
15% if we do not
have a credit rating
8% if we have a
credit rating
2
, or
10% if we do not
have a credit rating

Minimum capital
ratio that must be
included in the trust
deed under reg 8(2)
of the 2010
Regulations
1


8% if we have a
credit rating
2
, or
10% if we do not
have a credit rating
8% if we have a
credit rating
2
, or
10% if we do not
have a credit rating
8% if we have a
credit rating
2
, or
10% if we do not
have a credit rating

The capital ratio is a measure of the extent to which General Finance is able to absorb losses without becoming
insolvent. The lower the capital ratio, the fewer financial assets General Finance has to absorb unexpected
losses arising out of its business activities.


1
Deposit Takers (Credit Ratings, Capital Ratios, and Related Party Exposures) Regulations 2010

2
General Finance is exempt from the requirement to have its creditworthiness assessed by an approved rating agency.
This is because we operate under the Deposit Takers (Credit Ratings Minimum Threshold) Exemption Notice 2016,
exempting us from the Non-bank Deposit Takers Act 2013 requirement to have a credit rating. The exemption applies
because we have liabilities of less than $20 million as at 1 October 2018, calculated as the average of General
Finance’s liabilities as at the end of each of the 12 months preceding that date, making it unduly onerous to comply
with the requirement to have a credit rating, and because we maintain a capital ratio of at least 10% to qualify for the
exemption (and at least 15% to comply with our Trust Deed). This means that General Finance has not received an
independent opinion on its capability and willingness to repay its debts from an approved source.

The exemption applies until 29 February 2020 on the above basis. If General Finance’s average liabilities as at 1
October 2019 reach $20 million or more it will still qualify for the exemption on and from 1 March 2020 so long as it has
liabilities of less than $40 million and maintains a capital ratio of at least 12% to qualify for the exemption (and at least
15% to comply with our Trust Deed), and continues to meet the other terms and conditions of the exemption.

3
Certain errors and reclassifications were made in the 31 March 2018 financial statements which impacted on the
comparative financial statements for 31 March 2017. Furthermore, a new accounting standard, NZ IFRS 9 Financial
Instruments, was adopted in the March 2019 financial year which required retrospective restatement of comparative
financial statements. The capital ratio has been re-calculated based on the restated figures, but there has not been a
significant change. Refer to audited financial statements for 31 March 2018 and 31 March 2019 for further
information.

4
An amendment to the Trust Deed was signed on 19 December 2017. This amendment increased the minimum
capital ratio to 15% if we do not have a credit rating.

Issue 8 31 July 2019

Related Party Exposures


31 March 2019


31 March 2017


31 March 2016

Our aggregate
exposures to
related parties as
calculated in
accordance with the
2010 Regulations
1


6% $nil $nil

Maximum limit on
aggregate
exposures to
related parties that
we must not exceed
that is included in
our Trust Deed
2


10% of capital 10% of capital 15% of capital

Maximum limit on
aggregate
exposures to
related parties that
we must not exceed
that must be
included in our
Trust Deed under
reg 23(3)(b) of the
2010 Regulations
1


15% of capital 15% of capital 15% of capital

Related party exposures are financial exposures that General Finance has to related parties. A related party is
an entity that is related to General Finance through common control or some other connection that may give the
party influence over General Finance (or General Finance over the related party). As at 31 March 2018, these
related parties include our directors, our parent company Corporate Holdings Limited and Investment Research
Group Limited.














1
Deposit Takers (Credit Ratings, Capital Ratios, and Related Party Exposures) Regulations 2010


2
An amendment to the Trust Deed was signed on 19 December 2017. This amendment decreased the maximum
limit on aggregate exposures to related parties to 10% of capital.

Issue 8 31 July 2019


Liquidity


31 March 2019


31 March 2018


31 March 2017

Our liquidity
calculated in
accordance with the
quantitative liquidity
requirements
included in our
Trust Deed *

22.5 times 7.1 times 33.6 times

The minimum
liquidity
requirements
required by our
Trust Deed

A liquidity cover
ratio of 1.25 times
A liquidity cover
ratio of 1.25 times
A liquidity cover
ratio of 1.25 times

Liquidity requirements help to ensure that General Finance has sufficient realisable assets on hand to pay its
debts as they become due in the ordinary course of business. Failure to comply with liquidity requirements may
mean that General Finance is unable to repay investors on time, and may indicate other financial problems in its
business.

Issue 8 31 July 2019
SELECTED FINANCIAL INFORMATION





Year Year

Year
Ended Ended As At Ended
31 Mar 19 31 Mar 18 1 Apr 2017 31 Mar 17
(Audited) Restated
2
Restated
2
Restated
1

$ $ $ $
STATEMENT OF COMPREHENSIVE INCOME
(EXTRACT)



Total interest, fee and commission income 1,780,343 1,595,768

1,362,846
Interest expense 592,791 535,602

494,460
Profit before income tax 159,470 378,238

440,562
Net profit after tax 124,765 272,181

316,684
Total comprehensive income 124,765 272,181

316,684
STATEMENT OF CHANGES IN EQUITY (EXTRACT)



Total equity at start of year 3,366,213 3,094,032

3,195,865
Shares issued 1,600,000 250,000

-
Dividends paid - -250,000

-400,000
Profit for the period 124,765 272,181

316,684
Total equity at end of year 5,090,978 3,366,213

3,112,549
STATEMENT OF FINANCIAL POSITION (EXTRACT)

Cash and cash equivalents 2,814,108 4,844,288 3,624,873 3,624,873
Loan receivables 17,196,205 8,583,952 8,276,815 8,302,534
Other assets 146,381 81,550 28,191 20,990
Total assets 20,156,694 13,509,790 11,929,879 11,948,397

Term deposits 14,900,458 9,854,092 8,681,074 8,681,074
Other liabilities 165,258 289,485 154,773 154,774
Total liabilities 15,065,716 10,143,577 8,835,847 8,835,848

Share capital 4,650,000 3,050,000 2,800,000 2,800,000
Retained earnings 440,978 316,213 294,032 312,549
Total equity 5,090,978 3,366,213 3,094,032 3,112,549
CAPITAL

less deferred tax asset and intangible assets -80,952 -73,480 -21,494 -14,293
Capital (per 2010 Regulations) 5,010,026 3,292,733 3,072,538 3,098,256

STATEMENT OF CASH FLOWS (EXTRACT)



Net Cash Flows from Operating Activities -8,646,518 51,032

-482,104
Net Cash Flows from Investing Activities -42,136 -33,107

-
Net Cash Flows from Financing Activities 6,658,474 1,201,490

38,816
Net Cash Movement for the Year -2,030,180 1,219,415

-443,288



1
As disclosed as comparatives to the 31 March 2018 financial statements. Certain restatements were made for errors identified in
the 31 March 2017 financial statements further details of which can be found in the 31 March 2018 Audited Financial Statements.
2
A new accounting standard, NZ IFRS 9 Financial Instruments, was adopted in the year ended 31 March 2019 and required
retrospective restatement of the 31 March 2018 comparative financial statements and the 1 April 2017 comparative statement of
financial position. Further details can be found in the 31 March 2019 audited financial statements.

Issue 8 31 July 2019

HOW THE RATIOS HAVE BEEN CALCULATED


Capital ratio



Position at 31 March 2019



Capital


Gross capital 5,090,978

Less deductions 80,952

Total capital 5,010,026



Risk

Risk Weighted
Exposures Exposure Weight Exposures

Cash 2,814,108 20% 562,822
Residential mortgages:

LVR 70% and under 12,059,087 35% 4,220,680
LVR 70% - 80% 926,038 50% 463,019
LVR 80% - 90% - 100% -
LVR 90% - 100% - 125% -
LVR over 100% - 150% -
Second mortgages 2,192,186 150% 3,288,279
Property development loans:

LVR 60% and under 1,416,483 150% 2,124,725
LVR 60% - 100% 602,411 200% 1,204,822
Other assets (Unsecured) - 200% -
Other assets 65,429 350% 229,002
Investments - 600% -
Deductions from capital 80,952

-

Total credit risk weighted exposures
(A)

12,093,349

Total assets (B) 20,156,694

Operational and Market Exposures (A+B)/2x0.175

2,821,879


Total Exposures

14,915,228

Capital Ratio at 31 March 2019

34%
(being Total Capital/Total Exposures)

Issue 8 31 July 2019
Capital ratio



Position at 31 March 2018



Capital


Gross capital 3,366,213

Less deductions 73,480

Total capital 3,292,733



Risk

Risk Weighted
Exposures Exposure Weight Exposures

Cash 4,844,288 20% 968,858
Tax refund due - 0% -
Residential mortgages:

LVR 70% and under 7,031,234 35% 2,460,932
LVR 70% - 80% 553,237 50% 276,619
LVR 80% - 90% - 100% -
LVR 90% - 100% - 125% -
LVR over 100% - 150% -
Second mortgages 999,480 150% 1,499,220
Other assets (Unsecured) - 200% -
Other assets 8,070 350% 28,245
Investments - 600% -

Total credit risk weighted exposures
(A)

5,233,874

Total assets (B) 13,509,790

Operational and Market Exposures (A+B)/2x0.175

1,640,071


Total Exposures

6,873,945

Capital Ratio at 31 March 2018

48%
(being Total Capital/Total Exposures)

Issue 8 31 July 2019
Capital ratio



Position at 31 March 2017



Capital


Gross capital 3,094,032

Less deductions 21,494

Total capital 3,072,538



Risk

Risk Weighted
Exposures Exposure Weight Exposures

Cash 3,624,873 20%

724,975
Tax refund due - 0% -
Residential mortgages:

LVR 70% and under 6,277,828 35%

2,197,240
LVR 70% - 80% 1,276,407 50%

638,204
LVR 80% - 90%

100% -
LVR 90% - 100%

125% -
LVR over 100%

150% -
Second mortgages 713,876 150%

1,070,814
Other assets (Unsecured) 8,703 200%

17,406
Other assets 6,697 350%

23,440
Investments - 600% -

Total credit risk weighted exposures
(A)

4,672,079

Total assets (B) 11,929,879

Operational and Market Exposures (A+B)/2x0.175

1,452,671


Total Exposures

6,124,750

Capital Ratio at 31 March 2017

50%
(being Total Capital/Total Exposures)

Issue 8 31 July 2019
AGGREGATE EXPOSURE TO RELATED
PARTIES


31 March 31 March 31 March
2019 2018 2019
Loans to related parties (A) 307,254 $nil $nil
Other related party exposures (B) -
Capital 5,010,026
(A + B) / C 6%

*Related party exposures are calculated by dividing total related party exposures by Capital
(per 2010 Regulations).



HOW LIQUIDITY MEASURES HAVE BEEN CALCULATED


31 March
2019
31 March
2018
31 March
2017

Liquidity 2,814,108 4,844,288 4,209,873

3 month expected loan receivables 4,579,319 2,928,869 4,661,884
3 month gross deposit redemptions 328,080 1,099,266 263,772

Liquidity Cover Ratio (times)
1
22.5 7.1 33.6

1
The Liquidity Cover Ratio is calculated by dividing Liquidity plus the 3 month expected loan
receivables, by the 3 month expected gross deposit redemptions.

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RANKING OF DEBT SECURITIES

The diagram below illustrates the ranking of the Term Deposits on a liquidation.

Ranking on a
liquidation of
General Finance

Examples
Indicative amount at
31 March 2019
Higher
ranking
earlier
priority





Lower
ranking
later
priority
Liabilities that rank in
priority to the term
deposits
Creditors preferred by
law (including IRD for
unpaid tax) and any
permitted prior ranking
security interests

$67,906
Liabilities that rank
equally to the term
deposits

Term deposits and the
accrued interest
$14,928,161
Liabilities that rank
below the term
deposits

Lesser ranking
secured creditors and
unsecured creditors
$69,649
Equity Distribution of surplus
assets

$5,090,978

As at 31 March 2019, the amount of the liability secured by the security interest was
$14,928,161 and the total value of the assets subject to the security interest was
$20,156,694.


















General Finance is exempt from the requirement to have its creditworthiness assessed by an approved rating agency.
This is because we operate under the Deposit Takers (Credit Ratings Minimum Threshold) Exemption Notice 2016,
exempting us from the Non-bank Deposit Takers Act 2013 requirement to have a credit rating. The exemption applies
because we have liabilities of less than $20 million as at 1 October 2018, calculated as the average of General
Finance’s liabilities as at the end of each of the 12 months preceding that date, making it unduly onerous to comply
with the requirement to have a credit rating, and because we maintain a capital ratio of at least 10% to qualify for the
exemption (and at least 15% to comply with our Trust Deed). This means that General Finance has not received an
independent opinion on its capability and willingness to repay its debts from an approved source.

The exemption applies until 29 February 2020 on the above basis. If General Finance’s average liabilities as at 1
October 2019 reach $20 million or more it will still qualify for the exemption on and from 1 March 2020 so long as it has
liabilities of less than $40 million and maintains a capital ratio of at least 12% to qualify for the exemption (and at least
15% to comply with our Trust Deed), and continues to meet the other terms and conditions of the exemption.