COG FINANCIAL SERVICES LIMITED - AGM Information 2012

ARMIDALE INVESTMENT CORPORATION LIMITED ABN 58 100 854 788

NOTICE OF ANNUAL GENERAL MEETING

TIME : 9.30am (AEDT) DATE : 14 November 2012

PLACE : History House – Royal Australian Historical Society Auditorium 133 Macquarie Street SYDNEY NSW 2000

This Notice of Meeting should be read in its entirety. If Shareholders are in doubt as to how they should vote, they should seek advice from their professional advisers prior to voting.

Should you wish to discuss the matters in this Notice of Meeting please do not hesitate to contact Gabriel Radzyminski, Chairman on (+612) 8014 1188 or David Franks, Company Secretary on (+612) 9299 9690

Armidale Investment Corporation Limited

Level 11, 139 Macquarie Street Sydney 2000 NSW

PO Box R1436 Royal Exchange NSW 1225

T. +612 8014 1188 F. +612 8084 9918

CONTENTS PAGE

Notice of Annual General Meeting (setting out the proposed resolutions)	4
Explanatory Statement	7
Glossary	18

Proxy Form (incorporating instructions for completing Appointment of Proxy Form) Separate

TIME AND PLACE OF MEETING AND HOW TO VOTE

VENUE

The Annual General Meeting of the Shareholders of Armidale Investment Corporation Limited which this Notice of Meeting relates to will be held at 9.30am (AEDT), 14 November 2012 at:

History House – Royal Australian Historical Society Auditorium 133 Macquarie Street SYDNEY NSW 2000

YOUR VOTE IS IMPORTANT

The business of the Annual General Meeting affects your shareholding and your vote is important.

VOTING IN PERSON

To vote in person, attend the Annual General Meeting on the date and at the place set out above.

VOTING BY PROXY

To vote by proxy, please complete and sign the proxy form enclosed with this Notice of Meeting as soon as possible and:

(a) send or deliver the proxy form to Armidale Investment Corporation Limited, c/- Link Market Services Limited, Locked Bag A14, Sydney South, New South Wales 1235; or
(b) send the proxy form by facsimile to the Company on facsimile number +612 9287 0309.

so that it is received not later than 9.30am (AEDT), 12 November 2012.

Proxy forms received later than this time will be invalid.

NOTICE OF ANNUAL GENERAL MEETING

Notice is given that the Annual General Meeting of Shareholders of Armidale Investment Corporation Limited will be held at History House – Royal Australian Historical Society, Auditorium, 133 Macquarie Street, SYDNEY NSW 2000 at 9.30am (AEDT) on 14 November 2012.

The Explanatory Statement to this Notice of Meeting provides additional information on matters to be considered at the Annual General Meeting. The Explanatory Statement and the proxy form are part of this Notice of Meeting.

The Directors have determined pursuant to Regulation 7.11.37 of the Corporations Regulations 2001 (Cth) that the persons eligible to vote at the General Meeting are those who are registered Shareholders of the Company on 12 November 2012 at 7.00pm (AEDT).

Terms and abbreviations used in this Notice of Meeting and Explanatory Statement are defined in the Glossary.

AGENDA

BUSINESS

Financial Statements

To receive and consider the Financial Statements and the Reports of the Directors and of Auditors for the financial year ended 30 June 2012.

RESOLUTION 1 – ADOPTION OF REMUNERATION REPORT

To consider and, if thought fit, to pass, with or without amendment, the following resolution as a non-binding ordinary resolution :

“That, for the purposes of Section 250R(2) of the Corporations Act and for all other purposes, approval is given to the adoption of the Remuneration Report as contained in the Company’s financial report for the year ended 30 June 2012.”

Short Explanation : The vote on this resolution is advisory only and does not bind the Directors or the Company.

RESOLUTION 2 – RE-ELECTION OF MR STEVE WHITE

To consider and, if thought fit, to pass, with or without amendment, the following resolution as an ordinary resolution :

“That, Mr Steve White, being a Director of the Company who retires by rotation pursuant to Article 6.4 of the Company’s Constitution, and being eligible, be re-elected as a Director of the Company.”

RESOLUTION 3 – RE-ELECTION OF MR ANDREW GRANT

To consider and, if thought fit, to pass, with or without amendment, the following resolution as an ordinary resolution :

“ That, Mr Andrew Grant, being a Director of the Company elected in accordance with Article 6.2(c) of the Company’s Constitution to fill a casual vacancy, retires in accordance with the Company Constitution and, being eligible for re-election, is re-elected as a Director of the Company.”

RESOLUTION 4 – APPROVAL OF ISSUE OF SECURITIES TO GEORGE MATIS AS CONSIDERATION FOR WATERFALL ARRANGEMENT

To consider and, if thought fit, to pass, with or without amendment, the following resolution as an ordinary resolution :

“ That subject to the passing of Resolution 5, for the purposes of Listing Rule 7.1 of the ASX Listing rules and for all other purposes, approval is given for the Company to issue and allot up to 9,180,000 ordinary shares to George Matis or his nominee as consideration for the acquisition of the Waterfall Arrangement, on the terms and conditions set out in the Explanatory Memorandum accompanying this Notice.”

RESOLUTION 5 – APPROVAL OF ISSUE OF SECURITIES TO ANDREW GRANT AS CONSIDERATION FOR WATERFALL ARRANGEMENT

To consider and, if thought fit, to pass, with or without amendment, the following resolution as an ordinary resolution :

“ That, for the purposes of Listing Rule 10.11 and for all other purposes, approval is given for the Company to issue and allot up to 9,180,000 ordinary shares to Andrew Grant or his nominee as consideration for the acquisition of the Waterfall Arrangement, on the terms and conditions set out in the Explanatory Memorandum accompanying this Notice.”

RESOLUTION 6 – APPROVAL OF ISSUE OF SECURITIES TO ANDREW GRANT UNDER INCENTIVE SHARE SCHEME

To consider and, if thought fit, to pass, with or without amendment, the following resolution as an ordinary resolution :

“That, of the purposes of Listing Rule 10.14 and 10.15A, and for all other purposes, approval is given for the Company to issue and allot to Andrew Grant or his nominee under his Incentive Share Scheme, fully paid ordinary shares having a maximum aggregate value of $375,000 over three years, when based on the preceding three month Weighted Average Share Price from the Incentive Scheme results date, to a maximum of 7,500,000 fully paid ordinary shares, and on the terms and conditions set out in the Explanatory Memorandum accompanying this Notice.”

DATED: 28 SEPTEMBER 2012

BY ORDER OF THE BOARD

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MR DAVID FRANKS COMPANY SECRETARY

Voting Exclusion Statement:

The Corporations Act restricts members of the key management personnel ( KMP ) of the Company and their closely related parties (which includes a KMP’s spouse, dependents and companies controlled by the KMP) from voting in relation to remuneration related resolutions (being Resolution 1 in relation to the remuneration report and in the instance of undirected votes, Resolution 6 in relation to the issue of securities to Andrew Grant under Incentive Share Scheme).

What this means for shareholders : If you intend to appoint a member of the KMP (such as the Chairman of the AGM or one of the directors) as your proxy, please ensure that you direct them how to vote on Resolution 1 and 6. If you intend to appoint the Chairman of the Meeting as your proxy, you can direct him how to vote by either marking the boxes for Resolutions 1 and 6 (for example if you wish to vote for or against or to abstain from voting), or by appointing the Chairman as your proxy without directing him how to vote, you will be giving express authority for the Chairman to exercise your proxy (in which case the Chairman of the Meeting will vote in favour of Resolution 1 and 6).

The Company will disregard any vote cast on resolutions by excluded shareholders detailed in the table below. However, the Company need not disregard a vote if:

it is cast by a person as proxy for a person who is entitled to vote, in accordance with the directions on the proxy form; or
it is cast by a person chairing the meeting as proxy for a person who is entitled to vote, in accordance with a direction on the proxy form to vote as the proxy decides.

Resolution	Shareholders excluded from voting
Resolution 1 – Adoption of Remuneration Report	Key Management Personnel (including Directors) details of whose remuneration are included in the remuneration report and anyof their closelyrelatedparties.
Resolution 4 – Approval of issue of securities to George Matis as consideration for Waterfall Arrangement	George Matis and his associates
Resolution 5 – Approval of issue of securities to Andrew Grant as consideration for Waterfall Arrangement	Andrew Grant and his associates
Resolution 6 – Approval of issue of securities to Andrew Grant under Incentive Share Scheme	Any director, including Mr Andrew Grant, (except a director who is ineligible to participate in any employee incentive scheme in relation to the Company)

EXPLANATORY STATEMENT

This Explanatory Memorandum sets out further information regarding the proposed resolutions to be considered by Shareholders of Armidale Investment Corporation Limited (Company) at the 2012 Annual General Meeting (AGM) to be held, commencing 9.30am (AEDT) on 14 November 2012, at History House – Royal Australian Historical Society, Auditorium, 133 Macquarie Street, SYDNEY NSW 2000. The Directors recommend that Shareholders read this Explanatory Statement before determining whether or not to support the Resolutions.

FINANCIAL REPORT AND REPORTS OF THE DIRECTORS AND AUDITORS

The Company’s Financial Report for the year ended 30 June 2012 is set out in the Company’s 2012 Annual Report. In accordance with the Corporations Act, Shareholders will be given a reasonable opportunity at the Annual General Meeting to ask questions and make comments on the Financial Report and on the business and management of the Company.

During the discussion of this item, the Company’s auditor will be present and will answer qualifying questions.

Written questions for the auditor

If you would like to submit a written question to the Company’s auditor, please post your question to the Company Secretary or fax it to (612) 9299 9629. Written questions must relate to the content of the auditor’s report to be considered at the Annual General Meeting or the conduct of the audit. A list of qualifying questions will be made available at the Annual General Meeting. Mailing details of the Company Secretary are GPO Box 4325, Sydney NSW 2001.

Please note that all questions must be received at least five Business Days before the Annual General Meeting, that is by no later than 9.30am (AEDT) on 7 November 2012 .

RESOLUTIONS 1 - ADOPTION OF REMUNERATION REPORT

The Remuneration Report is set out in the Annual Report. The Remuneration Report sets out the Company’s remuneration arrangements for the Directors and other key management personnel.

Under section 250R(2) of the Corporations Act 2001 , the Company must put the adoption of the Remuneration Report to a vote at the Annual General Meeting. This vote is advisory only and does not bind the Directors or the Company.

The 'two strikes' rule

Under recent changes to the Corporations Act which came into effect on 1 July 2011, if at least 25% of the votes cast on Resolution 1 are voted against adoption of the Remuneration Report at the Annual General Meeting, and then again at the Company's 2013 annual general meeting, the Company will be required to put to Shareholders a resolution proposing the calling of a general meeting to consider the appointment of directors of the Company ( Spill Resolution ).

If more than 50% of Shareholders vote in favour of the Spill Resolution, the Company must convene the general meeting ( Spill Meeting ) within 90 days of the Company's 2013 annual general meeting. All of the Directors who were in office when the Company's 2013 Directors' report was approved, other than the managing director of the Company, will

cease to hold office immediately before the end of the Spill Meeting but may stand for reelection at the Spill Meeting. Following the Spill Meeting those persons whose election or reelection as Directors is approved will be the Directors of the Company.

At the Company’s 2011 Annual General Meeting, the adoption of the Remuneration Report was carried with in excess of 75% votes in favour of this resolution.

A reasonable opportunity will be provided for discussion of the remuneration report at the Annual General Meeting.

RESOLUTION 2 – RE-ELECTION OF MR STEVE WHITE

Mr Steve White was appointed as a director of the Company on 21 September 2010.

Article 6.4 of the Constitution requires one third of the Company’s Directors to retire at each annual general meeting. It also provides that a Director who retires under Article 6.4 is eligible for re-election. Mr White retires by rotation and now seeks re-election in accordance with Article 6.4 of the Constitution.

Mr White is Principal and Director of Noah’s Rule, a specialist risk advisory firm providing independent input and advice on strategy and execution to companies managing significant financial markets exposures. Mr White has had over 20 years’ experience in banking including roles with Barclays Capital Singapore, Rothschild and HSBC Japan in their treasury divisions. Mr White is actively involved working with Managing Directors and Chief Financial Officers in developing the strategies and solutions to their company’s Financial Market Risks, ensuring the management of these risks are within corporate strategy while enhancing any potential upside. Steve is a Graduate Member of the Australian Institute of Company Directors and has a Masters of Management from MGSM.

Directors Recommendations on Resolution 2

The Directors (other than Steve White) recommend that you vote in favour of Resolution 2.

RESOLUTION 3 – RE-ELECTION OF MR ANDREW GRANT

Under Article 6.2(c) of the Company’s Constitution, a Director appointed to fill a casual vacancy holds office only until the end of the next following general meeting and is eligible for re-election at that meeting.

Mr Grant was appointed on the board on 24 July 2012 to fill a casual vacancy. Resolution 3 provides for the re-election of Mr Grant as a Director of the Company in accordance with the Company’s Constitution.

Mr Grant holds a Bachelor of Business Degree and has been an Associate Member of the Chartered Institute of Management Accountants since 1986.

He has 25 years financial management experience in a variety of roles.

Prior to co-founding the Hal Group in 1993, he worked for Atlantic Computer Systems in the UK for a number of years before being transferred to Australia as their representative on a number of Asia Pacific acquisitions. Mr Grant worked as the financial controller and company secretary of Atlantic Computer Systems Asia Pacific. He was also financial controller of RCA Records (UK) before his time at Atlantic. Andrew is currently Executive Chairman of the Hal Group which is a leasing company specialising in technology equipment. Mr Grant is also a non-executive director of Employers Mutual Limited (appointed 2002) and Chairs that Board’s Audit Risk and Compliance Committee.

Employers Mutual is a specialised workers’ compensation manager and insurer. The Employers Mutual group operates throughout Australia, managing over $1 billion per annum of premium and has over 1,400 employees.

Directors Recommendations on Resolution 3

The Directors (other than Andrew Grant) recommend that you vote in favour of Resolution 3.

RESOLUTION 4 – APPROVAL OF ISSUE OF SECURITIES TO GEORGE MATIS AS CONSIDERATION FOR WATERFALL ARRANGEMENT

Background

The Company currently owns approximately ~87% of Hal Data Services Pty Ltd (HDS) following the exercising in late June 2012 of an option held by the Company.

Under the terms of the restructured loan and security arrangements between HDS, AIK and the other noteholders, distributions are made to the noteholders and management in the following proportions (“Waterfall Arrangement”):

(a) The Company: (b) Solar Fund: (c) Entities related to Andrew Grant: (d) Entities related to George Matis:	79.83% 5.17% 7.50% 7.50% 100.00%

The Company is seeking to increase its share of the Waterfall Arrangement by purchasing the respective portions of the Waterfall Arrangement owned by entities associated with Andrew Grant and George Matis for $918,000 each (or $1,836,000 in total) through the issue of shares in AIK at 10.0 cents per share. This will involve the allotment in total of 18.36 million shares in AIK to the vendors which will be escrowed for a period of two years from allotment. Following this acquisition, AIK will own 94.83% of the Waterfall Arrangement under the terms of the restructured loan. This provides AIK an increased share of any payments that will be made from HDS under the Waterfall Arrangement.

Notwithstanding the controlling interest in HDS held by AIK or its increased ownership of the Waterfall Arrangement (subject to shareholder approval under Resolutions 4 and 5), HDS will continue to have obligations under the Loan Note to make repayments to AIK under the Waterfall Arrangement.

Accordingly, Resolution 4 seeks the approval of Shareholders to issue and allot a total of 9,180,000 ordinary shares to George Matis, or his nominee for the acquisition of an entity related to Mr Matis which holds a 7.50% share of the Waterfall Arrangement.

Application of Listing Rules

Listing Rule 7.1 prohibits a listed company from issuing, during any 12 month period, any equity securities or other securities with rights of conversion to equity (including an Option) if the number of those securities exceeds 15% of its issued capital, unless an exception applies or the issue has the prior approval of Shareholders in general meeting.

The Company is seeking shareholder approval for the proposed placement under Resolution 4. The effect of this Resolution will be to permit the Directors to issue the Shares at any time within 3 months of the General Meeting (or a longer period if approved by ASX) without impacting the Company’s 15% capacity.

Listing Rule Information

Listing Rule 7.3 requires the following information be provided to Shareholders when seeking approval for the purposes of Listing Rule 7.1:

(a) The maximum number of Shares that will be issued under the Resolution 4 is 9,180,000;
(b) the Shares will be issued no later than three (3) months after the date of the Meeting (or a longer period if approved by ASX) and it is intended that allotment will occur on the same date;
(c) The Company intends to issue the new Shares at a price of $0.10 per share;
(d) The Shares will be issued and allotted to George Matis or his nominee;
(e) The Shares will be fully paid ordinary shares and will rank equally with all existing Shares and issued in accordance with the Constitution of the Company. Quotation of the Shares on the Australian Securities Exchange (“ASX”) will be sought. The Shares will be held under voluntary escrow . The effect of this classification will be that the holder of the restricted securities will not be permitted to deal with any of the restricted securities for a period of twenty four (24) months commencing from the date that the new AIK shares have been issued.

In accordance with ASX Listing Rule 3.10A, an announcement to ASX will be made 10 business days prior to the release of the escrowed securities; and

(f) There will be no funds raised from the allotment of Shares. The allotment of Shares is for the acquisition of an entity related to Mr Matis which holds a 7.50% share of the Waterfall Arrangement.

Voting Exclusion Statement

The Company will disregard any votes cast on Resolution 4 by:

participants in the proposed issue, being Mr George Matis, and a participant who might obtain a benefit, except a benefit solely in the capacity of a holder of ordinary securities, if Resolution 4 is passed; and
any associate of the participants in the issue the subject of Resolution 4.

However, the Company will not disregard a vote if:

it is cast by a person as proxy for a person who is entitled to vote, in accordance with the directions on the Proxy Form; or
it is cast by the person chairing the Meeting as proxy for a person who is entitled to vote, in accordance with a direction on the Proxy Form to vote as the proxy decides.

Directors’ Recommendation and Reasons for Recommendation in relation to Resolution 4

The Directors, with the exception of Mr Grant who has refrained from making a recommendation, recommend that you vote in favour of Resolution 4 as it will increase the Company’s ownership of the Waterfall Arrangement by 7.50% (or 15.00% in combination with Resolution 5).

RESOLUTION 5 – APPROVAL OF ISSUE OF SECURITIES TO ANDREW GRANT AS CONSIDERATION FOR WATERFALL ARRANGEMENT

Background

The Company currently owns approximately ~87% of Hal Data Services Pty Ltd (HDS) following the exercising in late June 2012 of an option held by the Company.

(a) The Company: (b) Solar Fund: (c) Entities related to Andrew Grant: (d) Entities related to George Matis:	79.83% 5.17% 7.50% 7.50% 100.00%

Accordingly, Resolution 5 seeks the approval of Shareholders to issue and allot a total of 9,180,000 ordinary shares to Andrew Grant, or his nominee for the acquisition of an entity related to Mr Grant which holds a 7.50% share of the Waterfall Arrangement.

Application of Listing Rules

ASX Listing Rule 10.11 states that an entity must not issue or agree to issue equity securities to any of the following persons without the approval of holders of ordinary securities:

i. a related party; or
ii. a person whose relationship with the entity or a related party is, in the ASX’s opinion, such that approval should be obtained.

A “related party” for the purposes of the Corporations Act includes a director of a public company and accordingly Andrew Grant is a “related party” to the Company.

In accordance with ASX Listing Rule 7.2, as Shareholder approval is being sought under ASX Listing Rule 10.11, ASX Listing Rule 7.2, Exception 14 provides that further Shareholder approval is not required to be obtained under ASX Listing Rule 7.1.

Listing Rule and Chapter 2E Information

For the purposes of Chapter 2E of the Corporations Act, the Directors have assessed and resolved that the proposed transaction is considered to be on commercial or better than commercial terms for the company and therefore would be reasonable in the circumstances if the Company and the related party were dealing at arm's length and therefore is exempted under Ch 2E of the Corporations Act (Section 208 and 210).

For the purposes of ASX Listing Rule 10.13, the following disclosure is made in respect of the Shares proposed to be granted to Andrew Grant or his nominee, subject to the passing of Resolution 5:

i. The name of the allottee is Andrew Grant, or his nominee;
ii. Andrew Grant is a Director of the Company;
iii. The maximum number of ordinary shares (shares) to be issued is 9,180,000.
iv. The Company proposes to issue the ordinary shares pursuant to Resolution 5 as soon as reasonably practicable after Resolution 5 is approved by Shareholders, but in any case by no later than 1 month after the date of the date of passage of Resolution 5;
v. The issue price of shares to be issued is $0.10 per share, being a total value of $918,000;
vi. The Shares will be fully paid ordinary shares and will rank equally with all existing Shares and issued in accordance with the Constitution of the Company. Quotation of the Shares on the Australian Securities Exchange (“ASX”) will be sought. The Shares will be held under voluntary escrow . The effect of this classification will be that the holder of the restricted securities will not be permitted to deal with any of the restricted securities for a period of twenty four (24) months commencing from the date that the new AIK shares have been issued.

In accordance with ASX Listing Rule 3.10A, an announcement to ASX will be made 10 business days prior to the release of the escrowed securities; and

vii. There will be no funds raised from the allotment of Shares. The allotment of Shares is for the acquisition of an entity related to Mr Grant which holds a 7.50% share of the Waterfall Arrangement.

Voting Exclusion Statement

In accordance with Listing Rule 10.13.6, the Company will disregard any votes cast on Resolution 5 by:

participants in the issue the subject of Resolution 5, being Mr Andrew Grant; and
any Associate of the participants in the issue the subject of Resolution 5.

However, the Company will not disregard a vote if:

it is cast by a person as proxy for a person who is entitled to vote, in accordance with the directions on the Proxy Form; or
it is cast by the person chairing the Meeting as proxy for a person who is entitled to vote, in accordance with a direction on the Proxy Form to vote as the proxy decides.

Directors’ Recommendation and Reasons for Recommendation in relation to Resolution 5

The Directors, with the exception of Mr Grant who has refrained from making a recommendation, recommend that you vote in favour of Resolution 5 as it will increase the Company’s ownership of the Waterfall Arrangement by 7.50% (or 15.00% in combination with Resolution 4).

RESOLUTION 6 – APPROVAL OF ISSUE OF SECURITIES TO ANDREW GRANT UNDER INCENTIVE SHARE SCHEME

Background - General

Resolution 6 seeks the approval of Shareholders to issue and allot to Andrew Grant or his nominee fully paid ordinary shares having a maximum aggregate value of $375,000 over three years, when based on the preceding three month Weighted Average Share Price from the Incentive Scheme results date.

Under ASX Listing Rules 10.14 the Company may not issue or agree to issue incentive equity securities to a director without the prior approval of shareholders.

Andrew Grant is also an Executive at Hal Data Services Pty Ltd and the Company has taken steps to secure his continued services. Mr Grant was appointed to the board on 24 July 2012 to fill a casual vacancy.

The Directors believe it is important to ensure the alignment of interests of key executives and those of AIK shareholders. Following the exercise of the call option to increase the equity interest in HDS and the purchase of an additional 15% of the Waterfall Arrangement, HDS executives would otherwise have limited economic ties to the profitability of HDS.

New employment terms have been agreed with a number of executives, including for Mr Grant a bonus incentive scheme (“Incentive Scheme”) as a means of ensuring an alignment of interests. The proposed, and any future Incentive Schemes, are at the discretion of the board of AIK.

The Incentive Scheme will be linked to the Key Performance Indicators which each executive will be responsible for within HDS and, where applicable, AIK. Furthermore, the Incentive Scheme will be paid in the proportion of 50% cash / 50% in AIK shares, based on the weighted average share price in the preceding three month period from the Incentive Scheme results date.

Background – Annual Incentive Scheme for Mr Grant

Mr Grant’s annual incentive is subject to meeting pre-agreed milestones relating to AIK earnings per share, share price and share value. The maximum amount payable under this scheme will be $250,000 per annum if a transaction with Riverwise Pty Ltd (as previously disclosed to the ASX) is finalised and approved or $150,000 per annum should no transaction eventuate for the respective incentive scheme year.

The incentive payment is capped at a maximum of $250,000 or $150,000 per annum depending on the above mentioned determinations. Any excess achieved would be carried to the next years incentive payment and would be payable up to the cap in that year.

In relation to the scheme:

(a)all future milestones are to be agreed with the Board of Directors. If agreement cannot be reached, the milestones will be determined by the Board of Directors;
(b) if some but not all of the agreed milestones during any bonus period, or Mr Grant’s employment with AIK ends part way through a bonus period, the Board of Directors may, at its absolute discretion, not pay a bonus or pay a proportion of the full annual bonus amount; and
(c) incentive payments will be made 50% in cash and 50% in AIK shares, with the AIK shares to be based on the Weighted Average Price (WAP) in the preceding 3 months.

In relation to the pre-agreed milestone relating to AIK earning per share (EPS), the base amount to be used in the first year for the EPS is the FY13 Budget for Riverwise Pty Ltd and the FY13 Budget agreed by the AIK board.

If there is no transaction with Riverwise Pty Ltd, then the incentive will rely solely on the ASX Share price metric capped at $150,000. The base for the ASX share price is equal to the WAP for the previous 12 months, which would be reset annually.

An example of the Incentive Scheme is noted below.

Milestones for 2012/13:

		Incentive
	Increase	Payable p.a.
EPS (AIK)	5%	$75,000
	10%	$150,000
	20%	$300,000
ASX Price (AIK)	5%	$75,000
	10%	$150,000
	20%	$300,000

As an example, if actual earnings exceeded budgeted earnings by 14% and 3 month weighted average share price to 30 June of assessed financial year exceeded 12 month weighted average ASX Share Price by 9%, then total bonus payable would be calculated as follows:

			Actual
		Incentive	Milestone	Incentive	Weighting	Actual
	Increase	Payable p.a.	Achieved	Achieved	Applied	Incentive
EPS (AIK)	5%	$75,000
	10%	$150,000	14%	$150,000	70%	$105,000
	20%	$300,000
ASX Price (AIK)	5%	$75,000
	10%	$150,000	9%	$75,000	30%	$22,500
	20%	$300,000
Total Incentive						$127,500
Incentive payable	this year					$127,500
Incentive carried to next year						$0

The total bonus of $127,500 would be payable:

(a) 50% or $63,750 in cash; and
(b) 50% or $63,750 with the issue price being weighted average price of prior 3 months from date of allotment

Application of Listing Rules and Corporation Act

(a) Application of Listing Rules

ASX Listing Rule 10.14 states that an entity must not issue or agree to issue equity securities under an employee incentive scheme to any of the following persons without the approval of holders of ordinary securities:

iii. a director of the entity;
iv. an associate of the director; or
v. a person whose relationship with the entity or a related party is, in the ASX’s opinion, such that approval should be obtained.

Andrew Grant is a Director of the Company.

In accordance with ASX Listing Rule 7.2, as Shareholder approval is being sought under ASX Listing Rule 10.11, ASX Listing Rule 7.2, Exception 9 provides that further Shareholder approval is not required to be obtained under ASX Listing Rule 7.1.

Listing Rule and Chapter 2E Information

For the purposes of Chapter 2E of the Corporations Act, the Directors have assessed and resolved that proposed transaction is considered to be on commercial or better than commercial terms for the company and therefore would be reasonable in the circumstances if the Company and the related party were dealing at arm's length and therefore is exempted under Ch 2E of the Corporations Act (Section 208 and 210).

For the purposes of ASX Listing Rule 10.15A, the following disclosure is made in respect of the Shares proposed to be granted to Andrew Grant or his nominee, subject to the passing of Resolution 6:

i. The name of the allottee is Andrew Grant, a Director of the Company, or his nominee;
ii. The maximum number of ordinary shares to be issued is the number fully paid ordinary shares having a maximum aggregate value of $375,000 over three years, when based on the preceding three month Weighted Average Share Price (WAP) from the Incentive Scheme results date. The following table provides examples of the number of shares that would be allotted depending on the aggregate value and WAP:

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For the purposes of this resolution, the maximum number of shares that will be issued will be 7,500,000, based on an assumed share price of $0.050.

iii. The issue price of shares is based on the weighted average share price in the preceding three month period from the Incentive Scheme results date.

The Company’s closing share price on 27 September 2012 was $0.046. The highest in the last 12 months was $0.076 and the lowest share price in the last 12 months was $0.045;

iv. As this is a new scheme, with the only participant being Mr Grant, no shares have been issued under the scheme;
v. Only Mr Grant is eligible to participate in the incentive scheme;
vi. There are no loans in relation to the scheme;

vii. Details of the securities issued the incentive scheme will be published in each annual report of the entity relating to a period in which securities have been issued, and that approval was obtained under listing rule 10.14;
viii. Any additional persons who become entitled to participate in the incentive scheme after the resolution was approved and who were not named in the notice of meeting will not participate until approve is obtained under listing rule 10.14. It is noted that this scheme only applies to Mr Grant;
ix. The Company proposes to issue the ordinary shares pursuant to Resolution 6 each financial year after the incentive scheme results date in three separate tranches, but in any case by no later than 3 years after the date of the date of passage of Resolution 6.
x. The securities to be issued to the above recipients are ordinary shares in the capital of the Company.
xi. Quotation of the Shares on the Australian Securities Exchange (“ASX”) will be sought.
xii. Holders of the Shares will be permitted to participate in new issues of securities of the Company.
xiii. No funds will be raised from the issue of the Shares, however the Company will have provided remuneration to the Director whilst conserving the cash reserves of the Company.

Voting Exclusion Statement

In accordance with Listing Rule 10.15A.6, the Company will disregard any votes cast on Resolution 6 by:

Any director, including Mr Andrew Grant, (except a director who is ineligible to
participate in any employee incentive scheme in relation to the Company); and
any Associate of the participants in the issue the subject of Resolution 6.

However, the Company will not disregard a vote if:

it is cast by a person as proxy for a person who is entitled to vote, in accordance with the directions on the Proxy Form; or
it is cast by the person chairing the Meeting as proxy for a person who is entitled to vote, in accordance with a direction on the Proxy Form to vote as the proxy decides.

Directors’ Recommendation and Reasons for Recommendation in relation to Resolution 6

The Directors, with the exception of Mr Grant who has refrained from making a recommendation, recommend that you vote in favour of Resolution 6.

GLOSSARY

Annual General Meeting means the meeting convened by the Notice.

AEDT means Australian Eastern Daylight Time, Sydney, New South Wales

ASIC means the Australian Securities and Investments Commission.

ASX means Australian Stock Exchange Limited.

ASX Listing Rules or Listing Rules means the Listing Rules of ASX.

Board means the current board of directors of the Company.

Company and Armidale Investment Corporation, AIK means Armidale Investment Corporation Limited (ABN 58 100 854 788).

Constitution means the Company’s constitution.

Corporations Act means the Corporations Act 2001 (Cth).

Directors mean the current directors of the Company.

Explanatory Statement means the explanatory statement to the Memorandum.

Notice means the notice of meeting which forms part of this Memorandum.

Official List means the official list of ASX.

Proxy Form means the proxy form that accompanies and forms part of the Documents.

Resolutions means the resolutions set out in the Notice, or any one of them, as the context requires.

Shareholder means a holder of a Share.

LODGE YOUR VOTE

Armidale Investment Corporation Limited



www.linkmarketservices.com.au

ABN 58 100 854 788

ONLINE

By mail:  Armidale Investment Corporation Limited  [By fax:][ +61 2 9287 0309] C/- Link Market Services Limited Locked Bag A14 Sydney South NSW 1235 Australia



All enquiries to: Telephone: +61 2 8280 7111

X99999999999

ShAREhOLDER VOTING FORM

I/We being a member(s) of Armidale Investment Corporation Limited and entitled to attend and vote hereby appoint:

STEP 1 APPOINT A PROXY the Chairman OR if you are NOT appointing the Chairman of the Meeting as your proxy, of the Meeting please write the name of the person or body corporate (excluding the (mark box) registered shareholder) you are appointing as your proxy. I/we appoint the Chairman of the Meeting as an alternate proxy to the person named. If no person/body corporate is named, the Chairman of the Meeting, is appointed as my/our proxy and to vote for me/us on my/our behalf at the Annual General Meeting of the Company to be held at 9:30am on Wednesday, 14 November 2012, at the history house – Royal Australian historical Society Auditorium 133 Macquarie Street Sydney NSW 2000 and at any adjournment or postponement of the meeting. I/we expressly authorise the Chairman of the Meeting to exercise my/our proxy even if the resolution is connected directly or indirectly with the remuneration of a member of the key management personnel.

The Chairman of the Meeting intends to vote undirected proxies in favour of all items of business.

Proxies will only be valid and accepted by the Company if they are signed and received no later than 48 hours before the meeting. Please read the voting instructions overleaf before marking any boxes with an X

STEP 2			VOTING DIRECTIONS
	For	Against Abstain*		For	Against Abstain*
Resolution 1			Resolution 4
Adoption of Remuneration Report			Approval of issue of securities to George Matis as consideration for waterfall arrangement
Resolution 2			Resolution 5
Re-election of Mr Steve White as a			Approval of issue of securities to Andrew Grant
Director of the Company			as consideration for waterfall arrangement
Resolution 3			Resolution 6
Re-election of Mr Andrew Grant as a			Approval of issue of securities to Andrew
Director of the Company			Grant under incentive share scheme

 * If you mark the Abstain box for a particular Item, you are directing your proxy not to vote on your behalf on a show of hands or on a poll and your votes will not be counted in computing the required majority on a poll. STEP 3 IMPORTANT – VOTING EXCLUSIONS

If the Chairman of the Meeting is appointed as your proxy, or may be appointed by default and you do not wish to direct your proxy how to vote as your proxy in respect of Items 4, 5 and 6 above, please place a mark in this box. By marking this box, you acknowledge that the Chairman of the Meeting may exercise your proxy even though he/she has an interest in the outcome of these Item and that votes cast by him/her for these Item, other than as proxyholder, would be disregarded because of that interest. If you do not mark this box, and you have not directed your proxy how to vote, the Chairman of the Meeting will not cast your votes on Items 4, 5 and 6 and your votes will not be counted in calculating the required majority if a poll is called on these Item. The Chairman of the Meeting intends to vote undirected proxies in favour of Items 4, 5 and 6.

STEP 4

SIGNATURE OF ShAREhOLDERS – ThIS MUST BE COMPLETED

Shareholder 1 (Individual) Joint Shareholder 2 (Individual) Joint Shareholder 3 (Individual) Sole Director and Sole Company Secretary Director/Company Secretary (Delete one) Director

This form should be signed by the shareholder. If a joint holding, either shareholder may sign. If signed by the shareholder’s attorney, the power of attorney must have been previously noted by the registry or a certified copy attached to this form. If executed by a company, the form must be executed in accordance with the company’s constitution and the Corporations Act 2001 (Cth).

AIK PRX202R

HOW TO COMPLETE THIS PROXY FORM

Your Name and Address

This is your name and address as it appears on the company’s share register. If this information is incorrect, please make the correction on the form. Shareholders sponsored by a broker should advise their broker of any changes. Please note: you cannot change ownership of your shares using this form.

Appointment of a Proxy

If you wish to appoint the Chairman of the Meeting as your proxy, mark the box in Step 1. If the person you wish to appoint as your proxy is someone other than the Chairman of the Meeting please write the name of that person in Step 1. If you appoint someone other than the Chairman of the Meeting as your proxy, you will also be appointing the Chairman of the Meeting as your alternate proxy to act as your proxy in the event the named proxy does not attend the meeting.

Votes on Items of Business – Proxy Appointment

You may direct your proxy how to vote by placing a mark in one of the boxes opposite each item of business. All your shares will be voted in accordance with such a direction unless you indicate only a portion of voting rights are to be voted on any item by inserting the percentage or number of shares you wish to vote in the appropriate box or boxes. If you do not mark any of the boxes on the items of business, your proxy may vote as he or she chooses. If you mark more than one box on an item your vote on that item will be invalid.

Appointment of a Second Proxy

You are entitled to appoint up to two persons as proxies to attend the meeting and vote on a poll. If you wish to appoint a second proxy, an additional Proxy Form may be obtained by telephoning the company’s share registry or you may copy this form and return them both together. The appointment of the Chairman of the Meeting as your alternate proxy also applies to the appointment of the second proxy.

To appoint a second proxy you must:

(a) on each of the first Proxy Form and the second Proxy Form state the percentage of your voting rights or number of shares applicable to that form. If the appointments do not specify the percentage or number of votes that each proxy may exercise, each proxy may exercise half your votes. Fractions of votes will be disregarded.
(b) return both forms together.

Signing Instructions

You must sign this form as follows in the spaces provided:

Individual: where the holding is in one name, the holder must sign.

Joint holding: where the holding is in more than one name, either shareholder may sign.

Power of Attorney: to sign under Power of Attorney, you must lodge the Power of Attorney with the registry. If you have not previously lodged this document for notation, please attach a certified photocopy of the Power of Attorney to this form when you return it.

Companies: where the company has a Sole Director who is also the Sole Company Secretary, this form must be signed by that person. If the company (pursuant to section 204A of the Corporations Act 2001 ) does not have a Company Secretary, a Sole Director can also sign alone. Otherwise this form must be signed by a Director jointly with either another Director or a Company Secretary. Please indicate the office held by signing in the appropriate place.

Corporate Representatives

If a representative of the corporation is to attend the meeting the appropriate “Certificate of Appointment of Corporate Representative” should be produced prior to admission in accordance with the Notice of Meeting. A form of the certificate may be obtained from the company’s share registry.

Lodgement of a Proxy Form

This Proxy Form (and any Power of Attorney under which it is signed) must be received at an address given below by 9:30am on Monday, 12 November 2012, being not later than 48 hours before the commencement of the meeting. Any Proxy Form received after that time will not be valid for the scheduled meeting.

Proxy Forms may be lodged using the reply paid envelope or:



ONLINE

www.linkmarketservices.com.au

Login to the Link website using the holding details as shown on the proxy form. Select ‘Voting’ and follow the prompts to lodge your vote. To use the online lodgement facility, shareholders will need their “Holder Identifier” (Securityholder Reference Number (SRN) or Holder Identification Number (HIN) as shown on the front of the proxy form).

 by mail:

Armidale Investment Corporation Limited C/- Link Market Services Limited Locked Bag A14 Sydney South NSW 1235 Australia



by fax:

+61 2 9287 0309



by hand:

delivering it to Link Market Services Limited, 1A Homebush Bay Drive, Rhodes NSW 2138 or Level 12, 680 George Street, Sydney NSW 2000.

If you would like to attend and vote at the Annual General Meeting, please bring this form with you. This will assist in registering your attendance.

ARMIDALE INVESTMENT CORPORATION LIMITED ABN 58 100 854 788 AND ITS CONTROLLED ENTITIES

Annual Financial Report

For The Year Ended 30 June 2012

Level 11 139 Macquarie Street Sydney NSW 2000

Tel (02) 8014 1188 Fax (02) 8084 9918

Chairman’s Letter	2
Executive Chairman’s Report	3
Corporate Governance Statement	6
Directors’ Report	13
Lead Auditor’s Independence Declaration	22
Financial Report
Consolidated Statement of Comprehensive Income	23
Consolidated Statement of Financial Position	25
Consolidated Statement of Changes in Equity	26
Consolidated Statement of Cash Flows	27
Consolidated Notes to the Financial Statements	28
Directors’ Declaration	66
Independent Auditor’s Report to the Members	67
Shareholder Information	70
Directory	71

ARMIDALE INVESTMENT CORPORATION LIMITED ABN 58 100 854 788 AND ITS CONTROLLED ENTITIES

CHAIRMAN’S LETTER

29 August 2012

Dear Shareholder

I present you with the Annual Report for the year ended 30 June 2012 of Armidale Investment Corporation Limited (“ AIK ” or the “ Company ”) and controlled entities (“ the Group ”). The controlled entities are Armidale Investment Corporation (Australia) Pty Ltd (“ AIKPL ”) from 3 March 2011, Hal Data Services Pty Limited (“ HDS ”) from 31 July 2011 and Lease Company of Australia (“ LCA ”) from 1 June 2012.

The Group recorded a loss after tax of $2.4m in the year ended 30 June 2012 (2011: $10.4m profit for the Company only). Earnings per share after tax was a loss of 1.47 cents for the year ended 30 June 2012 (2011: profit of 8.83 cents for the Company only)
The Group’s net assets on 30 June 2012 were $20.4m (2011: $16.1m).
The Group generated strong operating cashflows of $11.4m (2011: $0.1m).
Cash reserves on 30 June 2012 were $6.4m (2011: $2.7m).

Financial year 2012 was another significant year for the Company. It changed its name to Armidale Investment Corporation Ltd, completed all outstanding matters pertaining to the restructure of HDS/LCA debts and settlement of litigation with a former director and continued to take steps to preserve and enhance the value of its exposure to HDS. These steps included:

exercising its option to increase AIK equity ownership of HDS to more than 86%,
commence securing the services key HDS executives and developing appropriate incentive arrangements and
other transactions, that when completed, will provide AIK with a greater share of any payments made to it by HDS.

Against this backdrop, an intense focus for the Board was continued support for growth in the HDS business. This has delivered pleasing results: HDS continues to write new business, and importantly, during the year was able to obtain new third party financing for this new business. Growing a leasing business obviously requires writing new leases, but crucially, requires debt funding. The Directors consider the new third party financing to be a significant step in the continued re-invigoration of the HDS business.

The Company now consolidates HDS in its financial statements, making these significantly more complex to read than in prior years. I encourage all shareholders to take the time to read these financial statements carefully. The Directors have provided the information in Note 2 – Segment Reporting showing an unconsolidated basis which is representative of the information the Directors consider when monitoring the performance of the Company’s investments.

I thank my fellow Directors for their significant efforts to the Company’s performance and also thank all shareholders for their support during the past year.

I look forward to seeing you at the Annual General Meeting.

Yours sincerely

==> picture [182 x 38] intentionally omitted <==

Gabriel Radzyminski Executive Chairman

ARMIDALE INVESTMENT CORPORATION LIMITED ABN 58 100 854 788 AND ITS CONTROLLED ENTITIES

EXECUTIVE CHAIRMAN’S REPORT

The Executive Chairman’s Report provides some more detail on significant events that contributed to the Company’s results as well as updating shareholders on the Company’s arrangements with HAL Data Services Pty Limited (“HDS”), settlement of acquisition of Lease Company of Australia (“LCA”) as well as change to the Board of Directors.

Change of Company Name

A special resolution was passed at the Annual General Meeting of the Company on 25 November 2011 to change the company name from Wallace Absolute Return Limited to Armidale Investment Corporation Limited (“AIK”).

HDS Obligations to the Company

HDS has two main financial obligations to AIK. These are:

A restructuring of the Company’s investment in shares, loans and debentures issued by HDS ( Loan Note Restructure ) announced on 27 November 2009; and
A new financing facility provided by WAB to HDS (HDS Debt Facility) , announced on 24 December 2010.

The key elements of the Loan Note Restructure are a number of minimum cumulative repayment obligations. The table below summarises these obligations and what has occurred.

Comment

Minimum cumulative Comment repayment obligations 31 July 2010 - $57,161 Paid by HDS to the Company on 29 July 2010 31 July 2011 - $4,368,523 The Company received a payment of $1,408,701 from HDS.

As HDS did not meet the full payment required at 31 July 2011 under the terms of the agreement, the Company had the option to exercise its rights under the agreement. These rights required the Company to cause a number of new shares in HDS to be issued to increase its holding above what was then its current 11.5% holding.

The Company received a further payments from HDS of:

$1,500,000 on 20 December 2011 and
• $700,000 on 7 February 2012

31 July 2012 - $8,874,279 HDS did not make any payments to the Company under the Loan Note restructure on 31 July 2012. HDS repaid $1m to the Company of the HDS Debt Facility.

The Loan Note became interest-bearing on 1 January 2012.

Due to the ability of AIK to exercise its call option over HDS, AIK was required to consolidate with HDS from 31 July 2011.

AIK considered its rights to cause the issue of new HDS shares very carefully, with a view to determining a solution that would likely deliver the greatest value to AIK. These discussions led to AIK exercising its option.

Importantly, the exercise of the option by the Company does not extinguish the obligations of HDS to repayments under the Loan Note Restructure.

ARMIDALE INVESTMENT CORPORATION LIMITED ABN 58 100 854 788 AND ITS CONTROLLED ENTITIES

EXECUTIVE CHAIRMAN’S REPORT

Exercise of Option over HDS

The Company exercised its option which resulted in the issue of shares in HDS to AIK for no cost, increasing its shareholding in HDS from 11.5% to 86.82%. The shares were allotted on 29 June 2012.

Terms of Loan Note Restructure between HDS, and other Noteholders

Under the terms of the Loan Note Restructure payments are made to the noteholders in the following proportions (“ Waterfall Arrangement ”):

(a) The Company: (b) Solar Fund: (c) Entities related to Andrew Grant: (d) Entities related to George Matis:	79.83% 5.17% 7.50% 7.50% 100.00%

The Company will, subject to shareholder approval, be increasing its share of the Waterfall Arrangement by purchasing the respective portions of the Waterfall Arrangement owned by entities associated with Andrew Grant and George Matis for $918,000 each (or $1,836,000 in total) through the issue of shares in AIK at 10.0 cents per share. This will involve the allotment in total of 18.36 million shares in the Company to the vendors which will be escrowed for a period of two years from allotment. Following this acquisition, the Company will own 94.83% of the Waterfall Arrangement under the terms of the restructured loan. This provides the Company an increased share of any payments that will be made from HDS under the Waterfall Arrangement.

At the date of this report, shares are yet to be allotted as they are subject to shareholder approval.

New Employment Agreements to be implemented

The Company has taken steps to secure the continued services of key HDS executives.

The Company believes it is important to ensure the alignment of interests of key executives and those of AIK shareholders. Following the exercise of the option and the purchase of an additional 15% of the Waterfall Arrangement, HDS executives would otherwise have limited economic ties to the profitability of HDS.

New employment terms are being agreed with a number of executives, including, where applicable, a bonus incentive scheme (“Incentive Scheme”) as a means of ensuring an alignment of interests. The proposed, and any future Incentive Schemes, are at the discretion of the board of the Company.

The Incentive Scheme will be linked to the Key Performance Indicators which each executive will be responsible for within HDS and, where applicable, the Company. Furthermore, the Incentive Scheme will be paid in the proportion of 50% cash / 50% in the Company’s shares, based on the weighted average share price in the preceding three month period from the Incentive Scheme results date. Further details of the employment arrangements and Incentive Schemes shall be provided once finalised and as required.

New Convertible Loan – Riverwise

On 1 September 2011, the Company made a $3 million secured loan to Riverwise Pty Ltd (“Riverwise”) that could convert, at the Company’s election, into at least 300,000 shares in Riverwise (at $10 per share). The term of the loan was up to six months.

ARMIDALE INVESTMENT CORPORATION LIMITED ABN 58 100 854 788 AND ITS CONTROLLED ENTITIES

EXECUTIVE CHAIRMAN’S REPORT

New Convertible Loan – Riverwise (continued)

Riverwise also granted a put option that allowed the Company, at any time, to assign 50% of the cash flows it receives from HDS as part of the Loan Note Restructure dated 27 November 2009. The consideration, if the Company exercises its option, is half of the valuation of the HDS Loan Note Restructure adopted by the Company on 24 June 2011 less any cash flows received by the Company at the time the option is exercised. The consideration is payable in Riverwise Redeemable Convertible Preference Shares (“RCPS”).

On 29 February 2012, the loan value with capitalised interest and associated costs was $3,316,284. This amount was converted to shares in Riverwise at a conversion price of $7.00 per share. The Company now holds 12.75% of Riverwise share capital.

Riverwise is the sole shareholder of Leading Edge Group Limited (“LEG”). LEG is an Australian owned company that operates as a telecommunication distributor and Buying Group. It also owns Telstra Business Centres in Victoria and New South Wales, retail and business to business distribution for Telecom New Zealand and is a substantial BT distributor in the United Kingdom.

Settlement of LCA Acquisition

On 14 March 2011, Lease Company of Australia Limited (“LCA”) note holders approved the restructure of the existing financing provided to HDS which involved the cancellation of some of the current LCA notes, reducing the LCA notes outstanding from approximately $24 million to $3.5 million.

The Company agreed to acquire LCA for $100,000 and settle its litigation with Richard Wallace and associated entities. The agreement was contingent upon approval by LCA note holders and the Supreme Court of NSW.

On 1 April 2011, the Conditions Precedent were satisfied, specifically:

The court orders were made by the Supreme Court of NSW
The acquisition agreement for LCA was agreed and signed, subject to the Company paying the purchase consideration; and
The Deeds of Release in relation to the settling of the litigation was agreed and signed.

The purchase consideration of $100,000 was paid on 1 June 2012, completing the settlement and acquisition of LCA. The financial statements of LCA were included in the consolidated financial statements from 1 June 2012.

Board of Director Changes

Mr Mark Schiliro resigned as Non-Executive Director on 12 June 2012.

Mr Andrew Grant who is currently the Executive Chairman of HDS was appointed as Executive Director on 24 July 2012.

Apart from the above, there were no other changes to the Board of Directors during the year or to the date of this report.

==> picture [182 x 38] intentionally omitted <==

Gabriel Radzyminski Chairman Sydney 29 August 2012

ARMIDALE INVESTMENT CORPORATION LIMITED ABN 58 100 854 788 AND ITS CONTROLLED ENTITIES CORPORATE GOVERNANCE STATEMENT

This statement outlines the main corporate governance practices in place throughout the financial year, which comply with the ASX Corporate Governance Council’s Best Practice and Recommendations, unless otherwise stated.

BOARD FUNCTIONS

The functions of the Board include:

Setting the strategy for the Company, including operational and financial objectives and ensuring that there are sufficient resources for this strategy to be achieved;
Overseeing and monitoring organisational performance against these strategies and objectives;
Monitoring compliance with legal and regulatory standards;
Ensuring any significant risks facing the Company and its investments have been identified and appropriate control, monitoring and reporting mechanisms are in place;
Monitoring financial performance including approval of the annual and half-year financial reports and liaising with the Company's auditors;
Enhancing the reputation of the Company;
Appointing and assessing the performance of the Executive Chairman; and
Ensuring the market and shareholders are fully informed on material developments.

BOARD COMPOSITION

The current Board comprises Gabriel Radzyminski, Mark Smith, Andrew Grant and Steve White.

Mark Schiliro resigned on 12 June 2012 and Andrew Grant was appointed Executive Director on 24 July 2012.

Steve White and Mark Schiliro are Independent Non-Executive Directors. Gabriel Radzyminski is Executive Chairman, Andrew Grant is an Executive Director and Mark Smith is a Non-Executive Director. Due to their executive nature, Gabriel Radzyminski and Andrew Grant are not considered independent. As entities related to Mark Smith are substantial shareholders, he is not considered independent.

The Executive Chairman is responsible for leadership of the Board and for the efficient organisation and conduct of the Board’s function. The Executive Chairman’s role is to manage the affairs of the Company.

The details of the directors’ experience, qualifications, special responsibilities and attendance at meetings are set out in the Directors’ Report. At each annual general meeting, one third of the Board (other than the Managing Director) must retire and, if those directors so choose, may offer themselves for re-election.

The Board has in place formal processes for performance evaluation of the directors and key executives.

BOARD NOMINATION

Due to the size of the Board no nomination committee has been established.

ARMIDALE INVESTMENT CORPORATION LIMITED ABN 58 100 854 788 AND ITS CONTROLLED ENTITIES CORPORATE GOVERNANCE STATEMENT

POLICIES

Board policies relevant to the composition and functions of Directors include:

The Board is required to consist of a majority of independent Directors and the membership of the Audit Committee was to consist solely of independent Directors.
The Audit Committee must be chaired by an independent Director other than the Board Chairman.
The Board will generally meet monthly with an agenda designed to provide adequate information about the affairs of the Company, allow the Board to guide and monitor management and assist involvement in discussions and decisions on strategy.
The Board has an agreed policy on the circumstances in which Directors are entitled to obtain access to Company documents and information.

INDEPENDENCE

The Board assesses the independence of each Director. For this purpose an independent Director is:

A non-executive Director whom the Board considers to be independent of management and free of any business or other relationship that could materially interfere with the exercise of unfettered and independent judgment;
Is not a substantial shareholder of the Company (as defined in section 9 of the Corporations Act 2001 );
Within the last three years has not been employed in an executive capacity by the Group;
Within the last three years has not been a professional advisor to the Group either as a principal, or material consultant, or an employee materially associated with the service provided;
Is not a material supplier or customer of the Company; and,
Has no material contractual relationship with the Company.

In addition to being required to conduct themselves in accordance with the ethical policies of the Group, Directors are required to be meticulous in their disclosure of any material contract or relationship in accordance with the Corporations Act 2001 and this disclosure extends to the interests of family companies and spouses. Directors are required to strictly adhere to the constraints on their participation and voting in relation to matters in which they may have an interest in accordance with the Corporations Act 2001 and the Group's policies.

Steve White as a Non-Executive Director has been assessed as independent. In reaching that determination, the Board has taken into account (in addition to the matters set out above):

The specific disclosures made by each non-executive Director as referred to above;
Where applicable, the related party dealings referable to each non-executive Director, noting that those dealings are not material under accounting standards;
That no non-executive Director has ever been employed by the Company or any of its subsidiaries;
That no non-executive Director is, or has been associated with a supplier, professional adviser, consultant to or customer of the Company which is material under accounting standards; and

ARMIDALE INVESTMENT CORPORATION LIMITED ABN 58 100 854 788 AND ITS CONTROLLED ENTITIES CORPORATE GOVERNANCE STATEMENT

INDEPENDENCE (CONTINUED)

That no non-executive Director personally carries on any role for the Company otherwise than as a Director of the Company.

The Company does not comply with the independence Corporate Governance recommendation. However the Board believes that its current composition is appropriate to deliver on the Company’s stated objectives. The Company supports the appointment of Directors who bring a wide range of business and professional skills and experience.

Due to the size of the Company and the Board no nomination committee has been established.

RESOURCES AVAILABLE TO DIRECTORS

Independent Directors have the right to seek independent professional advice in the furtherance of their duties as Directors of the Company at the Company’s expense.

The Executive Chairman’s prior approval of such expenditure is required.

BUSINESS CONDUCT

Conflicts of Interest

In accordance with the Constitution of the Company and the Corporations Act 2001 , Directors must disclose to the Board any personal material interest which they may have in a matter that relates to the affairs of the Company in compliance with section 191 of the Corporations Act 2001 and any Director with a material personal interest in a matter being considered by the Board must not be present when the matter is being considered and must not vote on the matter.

Confidentiality

Directors must not use or publish non-public information of the Company except where disclosure is authorised or legally mandated.

Fair Dealing

The Company actively promotes a set of values designed to assist all personnel in their dealings with each other, competitors, customers and the community.

Company Assets

All employees of the Company are required to protect and ensure efficient use of the Company’s assets for legitimate business purposes.

Legal Compliance

The Company actively promotes compliance with laws and regulations, the reporting of unlawful/unethical behaviour, and protection for those who report violations in good faith.

DIRECTOR DEALINGS IN COMPANY SECURITIES

The Board has a policy in place for Directors of the Company which prohibits them from dealing in the Company’s shares without the consent of at least one other Director.

Directors must not deal if they are in possession of information which is price sensitive.

The Board is aware of its obligation to keep the market fully informed.

AUDIT ARRANGEMENTS

Committees

The Board has established an Audit Committee to assist in the execution of its duties and to allow detailed consideration of complex financial and other issues. Due to the size of the Board, other committees have not been established, other than a Remuneration Committee.

ARMIDALE INVESTMENT CORPORATION LIMITED ABN 58 100 854 788 AND ITS CONTROLLED ENTITIES CORPORATE GOVERNANCE STATEMENT

AUDIT ARRANGEMENTS (CONTINUED)

Audit Committee

During the year, the Board’s Audit Committee comprises Mark Schiliro (Chairman) up until the date of his resignation from the board on 12 June 2012, Steve White and Gabriel Radzyminski. The main responsibilities of the Audit Committee include reviewing the effectiveness of the internal control environment, prudent management of financial risks, fulfilling the Company’s accounting and financial reporting obligations, reviewing the effectiveness and efficiency of operations, and maintaining an effective and efficient audit.

In performing these functions, the Committee:

Reviews the financial statements and reports of the Company;
Reviews accounting policies to ensure compliance with current laws, relevant regulations and accounting standards;
Conducts any investigations relating to financial matters, records, accounts and reports which it considers appropriate; and
Reviews all material matters requiring exercise of judgment by management and reports those matters to the Board.

The Board makes use of external independent specialists to ensure that appropriate risk management practices are in place.

Since year end, Andrew Grant has replaced Mark Schiliro on the committee, with Steve White becoming Chairman.

The Company does not comply with the majority independence and only non-executive Corporate Governance recommendations. However the board believes that the committee’s current composition is appropriate to deliver on the Committee’s stated objectives. The Company supports the appointment of members to the Committee who bring a wide range of business and professional skills and experience.

INDEPENDENCE OF AUDITORS

The Board:

Monitors the independence of its auditors;
Reviews the independent safeguards put in place by its auditors;
Requires the rotation of the audit partner every 5 years;
Reviews and may restrict the type of non-audit services which can be provided by its auditors;
Undertakes a review of non-audit fees paid to its auditors.

Auditor:

Grant Thornton Audit Pty Limited has been the Auditor of the Group since the start of the financial year and continues in that office.

ARMIDALE INVESTMENT CORPORATION LIMITED ABN 58 100 854 788 AND ITS CONTROLLED ENTITIES CORPORATE GOVERNANCE STATEMENT

CONTINUOUS DISCLOSURE

The Corporations Act 2001 and the ASX Listing Rules (Listing Rules) require that a company discloses to the market matters which could be expected to have a material effect on the price or value of the Company’s securities. Matters involving potential market sensitive information must first be reported to the Executive Chairman either directly or via the Company Secretary. The Executive Chairman will advise the other Directors if the issue is important enough to warrant the consideration of the full Board. In all cases the appropriate action must be determined and carried out in a timely manner in order for the Company to comply with the Information Disclosure requirements of the ASX.

Once the appropriate course of action has been agreed upon, either the Executive Chairman or Company Secretary will disclose the information to the relevant authorities, being the only authorised officers who are able to disclose such information.

The Company recommenced in November 2009 publishing its NTA on a monthly basis through the ASX.

SHAREHOLDER COMMUNICATIONS

The Board aims to keep shareholders informed of all major developments affecting the Company's activities and its state of affairs through announcements to the ASX, releases to the media and dispatch of financial reports. The current Board is reviewing all shareholder communications and will update the communication options in due course.

BUSINESS RISKS

The Board is the vehicle to facilitate the identification of significant areas of business risk and to implement procedures to manage those risks. The Company’s procedures manual contains detailed procedures in relation to the identification, analysis, evaluation, treatment and communication of risks associated with the Company’s business and these will be updated as the Company moves back to normal business environment.

INTERNAL CONTROL FRAMEWORK

The Company has developed a set of policies and procedures (set out in the Company’s procedures manual) in relation to the Company’s compliance and risk programs. This provides the Board and management with an ongoing program to identify, monitor and manage compliance issues and significant risks with a view to protecting the value of the shareholder's investment and safeguarding the Company’s investments.

REMUNERATION

A remuneration committee has been established consisting of Stephen White as Chairman and Mark Smith.

The Committee is responsible for the following:

Considering changes in remuneration policy likely to have a material impact on the Company;
Considering senior executive appointments;
Determining remuneration for senior management; and
Leadership performance of employees, legislative compliance in relation to employment issues, and any incentive plans operating within the Company.

ARMIDALE INVESTMENT CORPORATION LIMITED ABN 58 100 854 788 AND ITS CONTROLLED ENTITIES CORPORATE GOVERNANCE STATEMENT

REMUNERATION (CONTINUED)

The Company’s policies regarding the terms and conditions of remuneration relating to the appointment and retirement of Board members are approved by the Board following receipt and consideration of professional advice where this is considered appropriate. Any increase in the maximum total remuneration of the Directors of the Company (other than the Managing Director or a Director who is a salaried officer), which was set at $250,000 in 2002, is subject to the approval of shareholders. Non-executive Directors’ remuneration totalled $85,550 for the financial year ended 30 June 2012 (2011 - $104,136).

ETHICAL STANDARDS

The Company sets standards of behaviour required of all employees including:

To act properly and efficiently in pursuing the objectives of the Company;
To avoid situations which may give rise to a conflict of interest;
To know and adhere to the Company’s Equal Employment Opportunity policy and programs;
To maintain confidentiality in relation to the affairs of the Company and its suppliers of services; and
To be absolutely honest in all professional activities.

These standards are communicated to staff. In addition, the Company has established insider trading guidelines for staff to ensure that unpublished price sensitive information about the Company or any other company is not used in an illegal manner.

BEHAVIOUR ISSUES

The Company is committed to providing fair, safe, challenging and rewarding work, recognising the importance of attracting and retaining the best staff and consequently, being in a position to provide good service to its investors.

There are various policies and systems in place to enable achievement of these goals, including:

Discrimination Guidelines;
Health and Safety Guidelines;
Recruitment and Selection Guidelines;
Performance feedback and review processes; and
Development and Progress Assessment Timetable.

The Company is strongly committed to maintaining an ethical workplace and complying with legal and ethical responsibilities. Staff are required to report fraud, corrupt conduct, mal-administration and serious and substantial waste by other working staff.

ARMIDALE INVESTMENT CORPORATION LIMITED ABN 58 100 854 788 AND ITS CONTROLLED ENTITIES CORPORATE GOVERNANCE STATEMENT

GOVERNANCE PHILOSOPHY

The Board places significant importance on the governance of the Company, which it believes is vital to its well-being. The Company has adopted a comprehensive framework of Corporate Governance Guidelines which are designed to properly balance performance and conformance and thereby allow the Company to undertake, in an effective and prudent manner, the investment activities which are the basis of its business.

COMPANY PROFILE

The Company was listed on the Australian Securities Exchange (“ASX”) on 28 January 2003.

The Company’s net assets consist of a mix of cash and cash equivalents and investments in HDS, Riverwise and LCA.

INVESTMENT GUIDELINES

The Board reviews investments on a case by case basis.

DIVERSITY

The Board of Directors is committed to having an appropriate blend of diversity on the Board and in the Company’s senior executive positions. The Board has established a policy regarding gender, age, ethnic and cultural diversity.

The key element of the diversity policy is as follows:

Annual assessment of Board gender diversity objectives and performance against objectives by the Board.

At year end:

(a) There were no women on the Board;
(b) Women comprise 30% of employees throughout the Group (excluding the Board and indirect investments); and
(c) Across all operations, (excluding the Board and indirect investments), 33.33% of senior leadership roles are occupied by female employees.

ARMIDALE INVESTMENT CORPORATION LIMITED ABN 58 100 854 788 AND ITS CONTROLLED ENTITIES DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2012

Your Directors present their report on the results of the Group for the financial year ended 30 June 2012.

DIRECTORS

The names and particulars of the Directors of the Company in office at any time during or since the end of the financial year are:

Mark Smith – BOptom (Non-executive Director)

Mark lives in Armidale in country New South Wales. He has been a long term investor for many years. He has also established a number of successful small businesses in the New England region of New South Wales. Mark is also a part time owner-builder, farmer and apiarist.

Gabriel Radzyminski – BA(Hons), MCom (Executive Chairman)

Gabriel is Managing Director of Sandon Capital Pty Limited, a boutique investment management and advisory firm. He has advised a number of shareholders in listed companies on engaging with boards and management and is portfolio manager of the Sandon Capital Activist Fund. He has more than 10 years of investment experience as an analyst and portfolio manager, including managing investments across a number of asset classes. Gabriel currently serves as executive director of Mercantile Investment Company Limited and as an independent non-executive director of RHG Limited.

Steve White – MM (Non-executive Director)

Steve is a Principal and Director of Noah’s Rule, a specialist risk advisory firm providing independent input and advice on strategy and execution to companies managing significant financial markets exposures. Steve has had over 20 years experience in banking including roles with Barclays Capital Singapore, Rothschild and HSBC Japan in their treasury divisions. Steve is actively involved working with Managing Directors and Chief Financial Officers in developing the strategies and solutions to their company's Financial Markets Risks, ensuring the management of these risks are within corporate strategy while enhancing any potential upside. Steve is a Graduate Member of the Australian Institute of Company Directors and has a Masters of Management from MGSM.

Mark Schiliro – BCom, ACA (Non-executive Director) – Resigned on 12 June 2012

Mark Schiliro was formerly a partner in the Chartered Accountancy firm Grosvenor Schiliro, and is currently a Partner of the auditing firm MNSA, a director of the registered auditing firm MNSA Pty Limited, and a director of the Chartered Accountancy firm Mark Schiliro and Associates (MNSA) Pty Limited. Mark has over twenty years experience as a Chartered Accountant (ACA), and completed his Bachelor of Commerce majoring in Accounting, Finance and Systems from the University of New South Wales. Mark is a member of the Institute of Chartered Accountants, a registered tax agent, a registered company auditor and has recent experience of being the auditor of eight listed companies.

Andrew Grant – BBus(Hons) (Executive Director) – Appointed on 24 July 2012

Andrew Grant is one of the founding members of HDS. Andrew has been an Associate Member of the Chartered Institute of Management Accountants since 1986. He has financial management experience of in excess of 26 years and extensive experience within the computer and finance industry. Andrew is a NonExecutive Director of Employers Mutual Limited, a specialised workers compensation manager and insurer, and is the Chairman of that Board’s Audit Risk and Compliance Committee.

COMPANY SECRETARY

Gabriel Radzyminski resigned from his role of joint company secretary on 20 February 2012 leaving David Franks as the sole company secretary of the Company.

David Franks - BEc, CA, F Fin, JP

David Franks is principal of Franks and Associates Pty Limited (Chartered Accountants). David is currently Company Secretary for the following companies: Amerod Exploration Limited, Australian Power and Gas Company Limited, Elk Petroleum Limited, Pulse Health Limited, Solar Sailor Holdings Limited, White Energy Company Limited and White Energy Technology Limited.

ARMIDALE INVESTMENT CORPORATION LIMITED ABN 58 100 854 788 AND ITS CONTROLLED ENTITIES DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2012

DIRECTORS’ MEETINGS

The number of directors’ meetings held during the financial year and attendances by directors is as follows:

	Number of	Number of
	Meetings	Meetings
	Eligible to	Attended
Director	Attend
Gabriel Radzyminski - Chairman	14	14
Mark Smith	14	13
Steve White	14	14
Andrew Grant – Appointed 24 July 2012	-	-
Mark Schiliro – Resigned 12 June 2012	12	11

PRINCIPAL ACTIVITIES

During the year, the principal activities of entities within the Group were:

Investment in fixed interest securities.
Purchase, sale and lease of predominantly information technology equipment in both Australian and overseas markets.

There have been no significant changes in the nature of these activities during the year.

DETAILS OF REPORTING PERIOD

Consolidated financial statements have been prepared for the first time from 1 July 2011 and all comparative figures are for the parent Company only.

OPERATING AND FINANCIAL REVIEW

The net loss after income tax of the Group for the year amounted to $2,378,461 (2011 Company profit: $10,397,713) and the loss before income tax was $2,067,839 (2011 Company profit: $10,397,713).

FINANCIAL POSITION

The net assets of the Group was $20,355,921 as at 30 June 2012 (2011 Company: $16,086,544).

ARMIDALE INVESTMENT CORPORATION LIMITED ABN 58 100 854 788 AND ITS CONTROLLED ENTITIES DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2012

REMUNERATION REPORT

i) Principles used to determine the nature and amount of remuneration

The Group’s policy for determining the nature and amount of remuneration of board members and senior executives of the Group is as follows:

a. The maximum total remuneration of the Directors of the Group (other than the Managing Director or a Director who is a salaried officer) has been set at A$250,000 per annum to be divided among them in such proportions as they think fit;

The remuneration of all Directors except Andrew Grant is not linked to the performance of the Group.

When the Company exercised its option over HDS, new employment terms are being agreed with a number of executives, including, where applicable, an Incentive Scheme as a means of ensuring an alignment of interests. The proposed and any future incentive schemes are at the discretion of the board of the Company.

The Incentive Scheme will be linked to the Key Performance Indicators which each executive will be responsible for within HDS and where applicable, the Company. The Incentive Scheme will be paid in the proportion of 50% cash and 50% in the Company’s shares, based on the weighted average share price in the preceding three month period from the Incentive Scheme results date.

The Board ensures that director reward satisfies the following key criteria for good reward governance practices:

a. competitiveness and reasonableness; b. acceptability to members; and c. transparency

Directors’ remuneration excludes insurance premiums paid by the Group or related parties in respect of directors’ and officers’ liabilities and legal expenses insurance contracts, in accordance with common commercial practice.

ii) Directors’ fees

The current base remuneration for non-executive Directors was last reviewed with effect from 21 September 2010.

iii) Benefits

Directors received no additional benefits other than base remuneration.

iv) Retirement Benefits

No retirement benefits are provided to Directors.

ARMIDALE INVESTMENT CORPORATION LIMITED ABN 58 100 854 788 AND ITS CONTROLLED ENTITIES DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2012

REMUNERATION REPORT (CONTINUED)

v) Directors’ and key management personnel remuneration disclosures

The remuneration of each Director of the Company and other key management personnel of the consolidated entity during the year is set out in the following table:

Directors’ and Key Management Personnel Remuneration

	Short term benefits	Short term benefits	Post employment benefits	Post employment benefits
Names	Cash salary & fees		Superannuation		TOTAL
Executive Directors	2012 $	2011 $	2012 $	2011 $	2012 $	2011 $
Gabriel Radzyminski (Executive Chairman)	40,000	26,667	3,600	2,400	43,600	29,067
Michael Birch (Resigned 21 September 2010)	-	133,933	-	-	-	133,933
Total Executive Director’s Remuneration:	40,000	160,600	3,600	2,400	43,600	163,000

Non-Executive Directors
MarkSmith	20,000	15,548	1,800	1,399	21,800	16,947
Steve White	30,000	23,322	2,700	2,099	32,700	25,421
Mark Schiliro (Resigned 12 June 2012)	28,486	29,168	2,564	2,625	31,050	31,793
Kenneth Barry (Resigned 21September 2010)	-	-	-	19,075	-	19,075
Alan Liddle (Resigned 21 September 2010)	-	10,000	-	900	-	10,900
Total Non-Executive Directors’ Remuneration:	78,486	78,038	7,064	26,098	85,550	104,136
Key Management Personnel *
Andrew Grant1,2	137,500		16,500		154,000
George Matis3	137,500		16,500		154,000
Raylee Carruthers	166,429		14,979		181,408
Total Key Management Personnel *Remuneration: **	441,429		47,979		489,408

These amounts cover the period from 31 July 2011, when the Company was deemed to control HDS

1 Andrew Grant was appointed Executive Director of the Company on 24 July 2012

2 Payment of remuneration to CAT One Investment Pty Limited, a company associated with Andrew Grant

3 Payment of remuneration to Venagrow Pty Limited, a company associated with George Matis

ARMIDALE INVESTMENT CORPORATION LIMITED ABN 58 100 854 788 AND ITS CONTROLLED ENTITIES DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2012

REMUNERATION REPORT (CONTINUED)

vi) Company performance, shareholder wealth and Non-Executive Directors’ remuneration

The following table compares the Company’s performance and Non-Executive Directors’ remuneration since 1 July 2007:

Directors Net after tax (loss)/ profit ($) Dividends paid (cents per share) Share Price ($) Non-Executive Directors’ remuneration	2012 2011 2009 2008 2010 (2,378,461) 10,397,713 (2,264,605) (59,601,460) (23,790,279) - - - - - 0.05 0.07 0.06 0.07 0.36
	85,550 104,136 120,806 120,105 119,900

Voting and comments made at the company’s 2011 Annual General Meeting

The Company received more than 75% of “yes” votes on its remuneration report for the 2011 financial year. The company did not receive any specific feedback at the AGM on its remuneration report.

vii) Key Management Personnel

The key management personnel include the key executives of Hal Data Services Pty Limited that became controlled by the Company on 31 July 2011.

viii) Service Agreements

Subject to Rule 6.16(c) of the Company’s Constitution, at every annual general meeting 1/3 of the Directors or, if their number is not a multiple of 3, then, subject to the Listing Rules, the number nearest to 1/3, must retire from office and are eligible for re-election.

ix) Remuneration Options

There were no options granted as remuneration during the financial year.

x) Shares Issued on Exercise of Remuneration Options

There were no shares issued on the exercise of options granted as remuneration during the financial year.

xi) Directors shareholdings

The shareholding of each Director is set out in the following table:

CONSOLIDATED GROUP

2012 Directors Mark Smith Gabriel Radzyminski * Steve White Mark Schiliro (resigned 12 June 2012) ***	Balance 1 July 2011 Net Change Balance 30 June 2012 100,829,439 (35,389,276) 65,440,163 - 648,558 648,558 - 700,000 700,000 - 240,686 240,686
	100,829,439 (33,800,032) 67,029,407

held by indirect interest through Armidale Investment Company Pty Limited, Presmore Pty Limited ATF Smith Miller Family Trust and Presmore Pty Limited ATF Serendipity Trust
** held by indirect interest through Sandon Capital Pty Limited
*** held by indirect interest through SILJ Pty Limited ATF Schiliro Family Superannuation Fund

ARMIDALE INVESTMENT CORPORATION LIMITED ABN 58 100 854 788 AND ITS CONTROLLED ENTITIES DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2012

REMUNERATION REPORT (CONTINUED)

xi) Directors shareholdings (continued)

PARENT ENTITY 2011 Directors Mark Schiliro Mark Smith Gabriel Radzyminski Steve White Kenneth Barry Alan Liddle * Michael Birch **	Balance 1 July 2010 Net Change Balance 30 June 2011 - - - - 100,829,439 100,829,439 - - - - - - 54,724 (54,724) - 27,467 (27,467) - 143,350 (143,350) -
	225,541 100,603,898 100,829,439

held by indirect interest through Armidale Investment Company Pty Limited, Presmore Pty Limited ATF Smith Miller Family Trust and Presmore Pty Limited ATF Serendipity Trust

** not a director at 30 June 2011

REMUNERATION COMMITTEE

A remuneration committee has been established consisting of Steve White as Chairman and Mark Smith.

MEETINGS OF REMUNERATION COMMITTEE

Meetings held during the year were as follows:

	Remuneration	Committee meetings
	Number of	Number of
	Meetings	Meetings
Director	Eligible to	Attended
	Attend
Steve White - Chairman	1	1
Mark Smith	1	1

AUDIT COMMITTEE

During the year, the Board’s Audit Committee comprised Mark Schiliro (Chairman), Steve White and Gabriel Radzyminski. Mark Schiliro resigned on 12 June 2012. Since year end, Andrew Grant has been appointed to the committee on 24 July 2012, with Steve White becoming Chairman.

MEETINGS OF AUDIT COMMITTEE

Meetings held during the year were as follows:

	Audit Committee	meetings
	Number of	Number of
	Meetings	Meetings
Director	Eligible to	Attended
	Attend
Mark Schiliro – Chairman (Resigned 12 June 2012)	1	1
Gabriel Radzyminski	1	1
Steve White – Appointed Chairman on 24 July 2012	1	1
Andrew Grant – Appointed on
24 July 2012	-	-

ARMIDALE INVESTMENT CORPORATION LIMITED ABN 58 100 854 788 AND ITS CONTROLLED ENTITIES DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2012

NON-AUDIT SERVICES PROVIDED BY THE AUDITOR

The Directors, in accordance with advice received from the Audit Committee, are satisfied that the provision of non-audit services is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001 . The Directors are of the view that the nature and scope of each type of non-audit service provided did not compromise the auditor’s independence. For the year ended 30 June 2012, fees paid or payable for non-audit work performed by the auditor included the following:

Other services provided by related practice of auditor $NIL Other assurance services $NIL

LEAD AUDITOR’S INDEPENDENCE DECLARATION

The Lead Auditor’s Independence Declaration for the year ended 30 June 2012 has been received and can be found on page 22 of the Annual Report.

DIVIDENDS

No dividends were paid or declared during the year.

EVENTS SUBSEQUENT TO REPORTING DATE

Receipt of $1m from HDS under HDS Debt Facility

On 24 July 2012, the Company received a payment of $1.0 million from HDS, which represents a part payment of amounts owed by HDS to the Company under the HDS Debt Facility. This payment is in addition to payments received previously as part of the Loan Note Restructure.

Appointment of new Director

On 24 July 2012, Andrew Grant was appointed as Executive Director of the Company.

Loan Note Restructure – Waterfall Arrangement

Payments under the Waterfall Arrangements of the Loan Note Restructure are made in the following proportions:

(a) The Company: (b) Solar Fund: (c) Entities related to Andrew Grant: (d) Entities related to George Matis:	79.83% 5.17% 7.50% 7.50% 100.00%

At the date of this report, shares are yet to be allotted as they are subject to shareholder approval.

ARMIDALE INVESTMENT CORPORATION LIMITED ABN 58 100 854 788 AND ITS CONTROLLED ENTITIES DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2012

EVENTS SUBSEQUENT TO REPORTING DATE (CONTINUED)

Implementation of new employment agreements

The Company has taken steps to secure the continued services of key HDS executives.

Incorporation of Oceania Leasing Corporation Limited

Oceania Leasing Corporation Limited, a 100% subsidiary of the parent Company was registered on 9 August 2012.

SIGNIFICANT CHANGES IN STATE OF AFFAIRS

Other than stated elsewhere in this report no significant changes in the Group’s state of affairs occurred during the financial year.

FUTURE DEVELOPMENTS

Disclosure of further information in relation to likely developments in the operations of the Group and the expected results of operations in future years have not been included in this report as the directors believe it would be likely to result in unreasonable prejudice to the Group.

ENVIRONMENTAL ISSUES

The Group’s operations are not subject to significant environmental regulation under the law of the Commonwealth or any State or Territory.

OPTIONS

At 30 June 2012 there were no options outstanding. No options have been granted over unissued shares during or since the end of the financial year.

ARMIDALE INVESTMENT CORPORATION LIMITED ABN 58 100 854 788 AND ITS CONTROLLED ENTITIES

INDEMNIFICATION AND INSURANCE OF OFFICERS AND AUDITORS

The Group has executed a deed of indemnity for each of the directors which indemnify them to the extent permitted by Sections 199A, 199B and 199C of the Corporations Act 2001 .

The Group has paid premiums to insure each of the Directors against liabilities for costs and expenses incurred by them in defending any legal proceedings arising out of their conduct while acting in the capacity of director of the Group, other than conduct involving a wilful breach of duty in relation to the Group.

Details of the amount of the premium paid in respect of the insurance policy are not disclosed as such disclosure is prohibited under the terms of the contract.

No indemnities have been given or insurance premiums paid during or since the end of the financial year for any person who is or has been an auditor of the Group.

PROCEEDINGS ON BEHALF OF THE GROUP

No person has applied for leave of the Court to bring proceedings on behalf of the Group or intervened in any proceedings to which the Group is a party for the purpose of taking responsibility on behalf of the Group for all or any part of those proceedings.

The Group was not a party to any such proceedings during the year.

Signed in accordance with a resolution of the Board of Directors:

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GABRIEL RADZYMINSKI Chairman

In Sydney, dated this 29[th] day of August 2012

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ARMIDALE INVESTMENT CORPORATION LIMITED ABN 58 100 854 788 AND ITS CONTROLLED ENTITIES

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 JUNE 2012

Note Revenue 3 Other Income 3 Realised Gain on Investments Gain on acquisition of receivables book Establishment Fee, Legal Costs & Line Fees Reversal of Impairment Losses on Investments Cost of Sales Administration Expenses Consulting Fees Depreciation and Amortisation Expenses Employee Benefits Expense Finance Costs Impairment Expense 14 Legal Fees Marketing Expenses Facility Expenses Other Expenses Brokerage and Other Investment Costs (Loss)/ Profit before Income Tax Income Tax Expense 5 (Loss)/ Profit after Income Tax Other Comprehensive Income Reversal of Impairments Losses on Equity Interest in Investments Other Comprehensive (Loss)/ Income for the year Total Comprehensive (Loss)/ Income for the year	CONSOLIDATED GROUP 2012 $ 17,072,038 1,433,764 - 3,055,307 - - (1,863,079) (1,477,492) (20,900) (14,128,775) (3,364,501) (1,217,054) (187,160) (24,233) (78,820) (632,451) (634,483) - (2,067,839) (310,622) (2,378,461) - - (2,378,461)	PARENT ENTITY 2011 $ 362,841 59,139 154,882 - 398,055 11,184,313 - - (565,030) (343) (281,436) (3,479) - (349,532) - (561,287) (410)
		10,397,713 -
		10,397,713 93,206
		93,206
		10,490,919

The accompanying notes should be read in conjunction with these financial statements

ARMIDALE INVESTMENT CORPORATION LIMITED ABN 58 100 854 788 AND ITS CONTROLLED ENTITIES

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (CONTINUED) FOR THE YEAR ENDED 30 JUNE 2012

Note (Loss)/ Profit Attributable to: Members of the Parent Company Non-controlling Interests (Loss)/ Profit for the Period Total Comprehensive (Loss)/ Profit Attributable to: Members of the Parent Company Non-controlling Interests (Loss)/ Profit for the Period Basic and Diluted (Loss)/ Profit per Share (Cents per Share)	CONSOLIDATED GROUP 2012 $ PARENT ENTITY 2011 $ (363,223) (2,015,238) (2,378,461) 10,490,919 - - (363,223) (2,015,238) (2,378,461) 10,490,919 - 10,490,919 (1.47) 8.83

The accompanying notes should be read in conjunction with these financial statements

ARMIDALE INVESTMENT CORPORATION LIMITED ABN 58 100 854 788 AND ITS CONTROLLED ENTITIES

CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2012

Notes CURRENT ASSETS Cash and Cash Equivalents 7 Trade and Other Receivables 8 Current Tax Assets 9 Other Current Assets 10 Inventories 11 Financial Assets - Other 12 TOTAL CURRENT ASSETS NON-CURRENT ASSETS Financial Assets - Loans and Receivables 12 Financial Assets - Available for Sale 12 Financial Assets - Other 12 Plant and Equipment 13 Deferred Tax Assets 9 Intangibles 14 TOTAL NON-CURRENT ASSETS TOTAL ASSETS CURRENT LIABILITIES Trade and Other Payables 15 Income in Advance 15 Financial Liabilities - Other 16 Provisions 17 TOTAL CURRENT LIABILITIES NON-CURRENT LIABILITIES Financial Liabilities - Other 16 Deferred Tax Liabilities 9 Provisions 17 TOTAL NON-CURRENT LIABILITIES TOTAL LIABILITIES NET ASSETS EQUITY Issued Capital 18 Reserves 19 Accumulated Losses 20 Non-Controlling Interest TOTAL EQUITY	CONSOLIDATED GROUP 2012 $ 6,427,941 8,419,969 110,880 290,050 43,280 2,852,706 18,144,826 - - 4,756,961 4,009,161 1,960,330 9,581,821 20,308,273 38,453,099 2,661,056 837,571 4,571,346 324,612 8,394,585 3,274,901 6,376,684 51,008 9,702,593 18,097,178 20,355,921 92,448,555 (18,336,390) (50,531,309) (3,224,935) 20,355,921	PARENT ENTITY 2011 $ 2,675,772 2,374,955 4,943 34,023 - -
		5,089,693
		11,184,313 93,206 - 172 - -
		11,277,691
		16,367,384
		280,840 - - -
		280,840
		- - -
		-
		280,840
		16,086,544
		92,448,555 93,206 (76,455,217) -
		16,086,544

The accompanying notes should be read in conjunction with these financial statements

ARMIDALE INVESTMENT CORPORATION LIMITED ABN 58 100 854 788 AND ITS CONTROLLED ENTITIES

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2012

PARENT ENTITY Balance at 1 July 2010 Total Comprehensive Income for the Year Profit for the Year Other Comprehensive Income Total Comprehensive Income for the Year Transactions with Owners, Recorded Directly in Equity Issue of Share Capital Share Issue Costs Balance at 30 June 2011 CONSOLIDATED GROUP Balance at 1 July 2011 Total Comprehensive Income for the Year (Loss) for the Year Other Comprehensive Income Total Comprehensive (Loss) for the Year Transactions with Owners, Recorded Directly in Equity Recognition of Non- Controlling Interest Transfer to Purchased Controlling Interest Reserve Transfer from Non- Controlling Interest Issue of Share Capital Share Issue Costs Balance at 30 June 2012	Issued Capital Equity Reserve (Accumulated Losses) Non- Controlling Interest Purchased Controlling Interest Reserve Total Equity $ $ $ $ 89,491,831 - (86,852,930) - - 2,638,901 - - 10,397,713 - - 10,397,713 - 93,206 - - - 93,206
	- 93,206 10,397,713 - - 10,490,919
	3,146,619 - - - - 3,146,619 (189,895) - - - - (189,895)
	92,448,555 93,206 (76,455,217) - - 16,086,544
	92,448,555 93,206 (76,455,217) - - 16,086,544 - - (363,223) (2,015,238) - (2,378,461) - - - - - -
	- - (363,223) (2,015,238) - (2,378,461)
	- - 26,287,131 (19,639,293) - 6,647,838 - - - 18,429,596 - 18,429,596 - - - - (18,429,596) (18,429,596) - - - - - - - - - - - -
	92,448,555 93,206 (50,531,309) (3,224,935) (18,429,596) 20,355,921

The accompanying notes should be read in conjunction with these financial statements

ARMIDALE INVESTMENT CORPORATION LIMITED ABN 58 100 854 788 AND ITS CONTROLLED ENTITIES

CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2012

Note CASH FLOWS FROM OPERATING ACTIVITIES Proceeds from the Sale of Investments Receipts from Customers Dividends Received Interest Received Other Income Payments to Suppliers and Employees Finance Costs Income Tax Paid Net Cash Provided by Operating Activities 21b CASH FLOWS FROM INVESTING ACTIVITIES Net Cash Received on Acquisition 24 Purchases of Property, Plant and Equipment Proceeds from Sale of Property, Plant and Equipment Purchase of Receivables Book Proceeds from Sale of Receivables Purchase of Investments HDS Loan Provided Cash (Used in) Investing Activities CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from Issue of Share Capital Repayment to Noteholders Proceeds from Borrowings Repayment of Borrowings Cash Provided by Financing Activities Net Increase/(Decrease) in Cash Held Cash and Cash Equivalents at the Beginning of the Financial Year Cash and Cash Equivalents at the End of the Financial Year 21a	CONSOLIDATED GROUP 2012 $ - 20,680,826 170 964,530 - (8,792,882) (1,059,356) (427,206) 11,366,082 3,035,364 (1,506,402) 391,516 (8,375,000) 525,446 (3,416,286) - (9,345,362) - (869,750) 5,720,000 (3,118,801) 1,731,449 3,752,169 2,675,772 6,427,941	PARENT ENTITY 2011 $ 1,766,337 - 56,696 273,694 80,614 (2,058,567) (3,479) (1,911)
		113,384
		- - - - - - (1,770,557)
		(1,770,557)
		2,956,724 - - -
		2,956,724
		1,299,551 1,376,221
		2,675,772

The accompanying notes should be read in conjunction with these financial statements

ARMIDALE INVESTMENT CORPORATION LIMITED ABN 58 100 854 788 AND ITS CONTROLLED ENTITIES

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

The financial report is a general purpose financial report that has been prepared in accordance with Australian Accounting Standards including Australian Accounting Interpretations, other authoritative pronouncements of the Australian Accounting Standards Board and the Corporations Act 2001 .

These consolidated financial statements and notes represent those of Armidale Investment Corporation Limited and its controlled entities (the Group). The controlled entities are Hal Data Services Pty Limited (“HDS”) from 31 July 2011 and Lease Company of Australia (“LCA”) from 1 June 2012.

Armidale Investment Corporation Limited is a publicly listed company limited by shares, incorporated and domiciled in Australia. It is a for-profit entity for the purpose of preparing financial statements under the Australian Accounting Standards. The group is engaged in investment activities and technology leasing conducted predominantly in Australia and derives revenue and investment income from listed and unlisted securities and fixed interest securities.

Australian Accounting Standards set out accounting policies that the Australian Accounting Standards Board has concluded would result in a financial report containing relevant and reliable information about transactions, events and conditions to which they apply.

Compliance with Australian Accounting Standards results in full compliance with the International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB).

The financial report was approved for release by the Board of Directors on 29 August 2012.

NOTE 1 - STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES

Comparative figures for the year ended 30 June 2011 are for the parent Company only. Armidale Investment Corporation (Australia) Pty Limited (“AIKPL”) is a wholly owned subsidiary of the Company and was incorporated on 3 March 2011. Consolidated financial statements were prepared for the first time for the period commencing from 1 July 2011 when HDS became controlled by the Company from 31 July 2011 and LCA became controlled from 1 June 2012.

Basis of Preparation

The financial statements have been prepared on an accrual basis and are based on historical costs modified by the revaluation of selected assets, financial assets and financial liabilities for which the fair value basis of accounting has been applied.

Principles of Consolidation

A controlled entity is any entity that Armidale Investment Corporation Limited has the power to control the financial and operating policies of the entity so as to obtain benefits from its activities. In assessing the power to govern, the existence and effect of holdings of actual and potential voting rights are considered.

As at reporting date, the assets and liabilities of the controlled entities have been incorporated into the consolidated financial statements as well as their results for the year then ended.

All inter-company balances and transactions, including any unrealised profits or losses, have been eliminated on consolidation. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with those policies applied by the parent entity.

Non-controlling interests, being the equity in a subsidiary not attributable, directly or indirectly, to a parent, are reported separately within the equity section of the consolidated statement of financial position and statement of comprehensive income. The non-controlling interests in the net assets comprise their interests at the date of the original business combination and their share of changes in equity since that date.

ARMIDALE INVESTMENT CORPORATION LIMITED ABN 58 100 854 788 AND ITS CONTROLLED ENTITIES

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

NOTE 1 - STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Principles of Consolidation (continued)

Business combinations occur where control over another business is obtained and results in the consolidation of its assets and liabilities. All business combinations, including those involving entities under common control, are accounted for by applying the purchase method. The purchase method requires an acquirer of the business to be identified and for the cost of the acquisition and fair values of identifiable assets, liabilities and contingent liabilities to be determined as at acquisition date, being the date that control is obtained. Cost is determined as the aggregate of fair values of assets given, equity issued and liabilities assumed in exchange for control. Costs directly attributable to the business combination are expensed when incurred. Any deferred consideration payable is discounted to present value using the entity’s incremental borrowing rate.

Goodwill is recognised initially at the excess of cost over the acquirer’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities recognised. If the fair value of the acquirer’s interest is greater than cost, the surplus is immediately recognised in profit or loss after the fair value of the acquired assets and liabilities have been reassessed.

Changes in Accounting Policies

Adoption of AASBs and improvements to AASBs 2011 – AASB 1054 and AASB 2011-1 The AASB has issued AASB 1054 Australian Additional Disclosures and 2011-1 Amendments to Australian Accounting Standards arising from the Trans-Tasman Convergence Project , and made several minor amendments to a number of AASBs. These standards eliminate a large portion of the differences between the Australian and New Zealand accounting standards and IFRS and retain only additional disclosures considered necessary. These changes also simplify some current disclosures for Australian entities and remove others.

The accounting policies set out below have been consistently applied to all years presented unless otherwise stated.

A. Income tax

The income tax expense (income) for the year comprises current income tax expense (income) and deferred tax expense (income).

Current income tax expense charged to profit or loss is the tax payable on taxable income. Current tax liabilities (assets) are therefore measured at the amounts expected to be paid to (recovered from) the relevant taxation authority.

Deferred income tax expense reflects movements in deferred tax asset and deferred tax liability balances during the year as well as unused tax losses.

Current and deferred income tax expense (income) is charged or credited outside profit or loss when the tax relates to items that are recognised outside profit or loss.

Except for business combinations, no deferred income tax is recognised from the initial recognition of an asset or liability where there is no effect on accounting or taxable profit or loss.

Deferred tax assets and liabilities are calculated at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled and their measurement also reflects the manner in which management expects to recover or settle the carrying amount of the related asset or liability.

ARMIDALE INVESTMENT CORPORATION LIMITED ABN 58 100 854 788 AND ITS CONTROLLED ENTITIES

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

NOTE 1 - STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

A. Income tax (Continued)

Deferred tax assets relating to temporary differences and unused tax losses are recognised only to the extent that it is probable that future taxable profit will be available against which the benefits of the deferred tax asset can be utilised.

Where temporary differences exist in relation to investments in subsidiaries, branches, associates and joint ventures, deferred tax assets and liabilities are not recognised where the timing of the reversal of the temporary difference can be controlled and it is not probable that the reversal will occur in the foreseeable future.

Current tax assets and liabilities are offset where a legally enforceable right of set-off exists and it is intended that net settlement or simultaneous realisation and settlement of the respective asset and liability will occur. Deferred tax assets and liabilities are offset where: (a) a legally enforceable right of set-off exists; and (b) the deferred tax assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities where it is intended that net settlement or simultaneous realisation and settlement of the respective asset and liability will occur in future periods in which significant amounts of deferred tax assets or liabilities are expected to be recovered or settled.

The parent Company and the controlled entity are not a consolidated group for tax purposes. The parent Company has not accounted for any income tax expense for the period ended 30 June 2012. The income tax expense shown on the consolidated Statement of Comprehensive Income and the deferred tax assets and liabilities shown on the Statement of Financial Position is for the controlled entity only.

B. Revenue recognition

Revenues are recognised at fair value of the consideration received net of the amount of goods and services tax (GST) payable to the Australian Taxation Office ("ATO").

i. Trading Income

Profits and losses realised from the sale of investments and unrealised gains and losses are included in the Statement of Comprehensive Income in the year they are incurred.

ii. Dividend Income

Dividends and distributions are brought to account on the date that the shares or units are traded exdividend. All dividends received are recognised as revenue when the right to receive the dividend has been established.

iii. Interest Income

Interest income is recognised as it accrues, taking into account the effective interest rate on the associated financial asset.

iv. Other Income

Other income is recognised when the right to receive the income has been established.

v. Lease Rentals

Rental income comprises revenue earned from leasing equipment where the Group is the lessor and has retained the right to the contracted rentals streams. Rental income is recognised on an accruals basis, with amounts received but unearned taken up as deferred income and amounts earned but not yet received taken up as trade debtors.

ARMIDALE INVESTMENT CORPORATION LIMITED ABN 58 100 854 788 AND ITS CONTROLLED ENTITIES

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

NOTE 1 - STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

B. Revenue recognition (continued)

vi. Residual Income

Income received from lease rentals past the term of the lease is recognised as rental income when received.

vii. Asset Sales

The profit or loss on disposal of assets is brought to account at the date an unconditional contract of sale is established.

C. Cash and cash equivalents

For the purpose of the Statement of Cash Flows, cash includes cash on hand and at call deposits with banks or financial institutions net of bank overdrafts, and investments in money market instruments maturing within less than two months.

D. Financial instruments

Recognition and Initial Measurement

Financial instruments, incorporating financial assets and financial liabilities, are recognised when the entity becomes a party to the contractual provisions of the instrument. Trade date accounting is adopted for financial assets that are delivered within timeframes established by marketplace convention. This is the date the Group commits itself to either the purchase or sale of the asset.

Financial instruments are initially measured at fair value plus transactions costs where the instrument is not classified as at fair value through profit or loss. Transaction costs related to instruments classified as at fair value through profit or loss are expensed to profit or loss immediately. Financial instruments are classified and measured as set out below.

Effective interest rate method

The effective interest rate method is a method of calculating the amortised cost of a financial asset and of allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts through the expected life of the financial assets, or, where appropriate, a shorter period.

Income is recognised on an effective interest rate basis for debt instruments other than those financial assets ‘at fair value through profit or loss’.

Classification and Subsequent Measurement

i. Financial assets at fair value through profit or loss

Financial assets are classified at fair value through profit or loss when they are held for trading for the purpose of short term profit taking, where they are derivatives not held for hedging purposes, or designated as such to avoid an accounting mismatch or to enable performance evaluation where a group of financial assets is managed by key management personnel on a fair value basis in accordance with a documented risk management or investment strategy. Such assets are subsequently measured at fair value with changes in carrying amount being included in profit or loss.

ii. Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market and are subsequently measured at amortised cost using the effective interest rate method. Gains and losses are recognised in profit or loss through the amortisation process and when the financial asset is derecognised.

ARMIDALE INVESTMENT CORPORATION LIMITED ABN 58 100 854 788 AND ITS CONTROLLED ENTITIES

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

NOTE 1 - STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

D. Financial instruments (continued)

Classification and Subsequent Measurement (continued)

iii. Held-to-maturity investments

Held-to-maturity investments are non-derivative financial assets that have fixed maturities and fixed or determinable payments, and it is the Company’s intention to hold these investments to maturity. They are subsequently measured at amortised cost using the effective interest rate method. Gains and losses are recognised in profit or loss through the amortisation process and when the financial asset is derecognised.

iv. Available-for-sale financial assets

Available-for-sale financial assets are non-derivative financial assets that are either designated as such or that are not capable of being classified in any of the other categories of financial assets due to their nature. They comprise investments in the equity of other entities where there is neither a fixed maturity nor fixed or determinable payments. Available-for-sale financial assets are subsequently measured at fair value with any remeasurements other than impairment losses and foreign exchange gains and losses recognised in other comprehensive income. When the financial asset is derecognised, the cumulative gain or loss pertaining to that asset previously recognised in other comprehensive income is reclassified into profit or loss.

Available-for-sale financial assets are classified as non-current assets when they are expected to be sold after 12 months from the end of the reporting period. All other available-for-sale financial assets are classified as current assets.

v. Financial Liabilities

Non-derivative financial liabilities (excluding financial guarantees) are subsequently measured at amortised cost using the effective interest rate method.

Amortised cost is calculated as:

a the amount at which the financial asset or financial liability is measured at initial recognition; b less principal repayments;

c. plus or minus the cumulative amortisation of the difference, if any, between the amount initially recognised and the maturity amount calculated using the effective interest rate method; and
d. less any reduction for impairment.

The effective interest rate method is used to allocate interest income or interest expense over the relevant period and is equivalent to the rate that exactly discounts estimated future cash payments or receipts (including fees, transaction costs and other premiums or discounts) through the expected life (or when this cannot be reliably predicted, the contractual term) of the financial instrument to the net carrying amount of the financial asset or financial liability. Revisions to expected future net cash flows will necessitate an adjustment to the carrying value with a consequential recognition of an income or expense in profit or loss. Gains or losses are recognised in profit or loss through the amortisation process and when the financial liability is derecognised.

vi. Derivative instruments

Derivative financial instruments which may be held by the Company may be traded in a less active market. The use of settlement price provided by recognised exchanges is a valuation technique commonly used by market participants to price derivative instruments and it has been demonstrated to provide reliable estimates of prices obtained in actual market transactions. An appropriate measure of fair value is the use of a valuation technique which includes using recent arm's length market transactions between knowledgeable and willing parties, discounted cash flow analysis and option pricing models.

ARMIDALE INVESTMENT CORPORATION LIMITED ABN 58 100 854 788 AND ITS CONTROLLED ENTITIES

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

NOTE 1 - STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

D. Financial instruments (continued)

vii . Fair value

Fair value is determined based on current bid prices for all quoted investments. Valuation techniques are applied to determine the fair value for all unlisted securities, including recent arm’s length transactions, reference to similar instruments and option pricing models.

viii . Derecognition

Financial assets are derecognised where the contractual rights to receipt of cash flows expires or the asset is transferred to another party whereby the entity no longer has any significant continuing involvement in the risks and benefits associated with the asset. Financial liabilities are derecognised where the related obligations are either discharged, cancelled or expired. The difference between the carrying value of the financial liability extinguished or transferred to another party and the fair value of consideration paid, including the transfer of non-cash assets or liabilities assumed, is recognised in profit or loss.

ix. Impairment of Financial Assets

At the end of each reporting period, the Group assesses whether there is objective evidence that a financial asset has been impaired. A financial asset or a group of financial assets is deemed to be impaired if, and only if, there is objective evidence of impairment as a result of one or more events (a “loss event”) having occurred, which has an impact on the estimated future cash flows of the financial assets.

In the case of available-for-sale financial assets, a significant or prolonged decline in the market value of the instruments is considered to constitute a loss event. Impairment losses are recognised in profit or loss immediately. Also, any cumulative decline in fair value previously recognised in other comprehensive income is reclassified to profit or loss at this point.

In the case of financial assets carried at amortised cost, loss events may include: indications that the debtors or a group of debtors are experiencing significant financial difficulty, default or delinquency in interest or principal payments; indications that they will enter bankruptcy or other financial reorganisation; and changes in arrears or economic conditions that correlate with defaults.

For financial assets carried at amortised cost (including loans and receivables), a separate allowance account is used to reduce the carrying amount of financial assets impaired by credit losses. After having taken all possible measures of recovery, if management establishes that the carrying amount cannot be recovered by any means, at that point the written-off amounts are charged to the allowance account or the carrying amount of impaired financial assets is reduced directly if no impairment amount was previously recognised in the allowance account.

When the terms of financial assets that would otherwise have been past due or impaired have been renegotiated, the Group recognises the impairment for such financial assets by taking into account the original terms as if the terms have not been renegotiated so that the loss events that have occurred are duly considered.

E. Inventories

Inventories are measured at the lower of cost and net realisable value. Costs are assigned on a FIFO basis.

F. Plant and equipment

Each class of plant and equipment is carried at cost less, where applicable, any accumulated depreciation and impairment of value.

Depreciation is calculated on a straight line basis over the useful life of the asset commencing from the time the asset is held ready for use.

ARMIDALE INVESTMENT CORPORATION LIMITED ABN 58 100 854 788 AND ITS CONTROLLED ENTITIES

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

NOTE 1 - STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

F. Plant and equipment (continued)

The depreciation rates used for each class of depreciable assets are:

Furniture, plant and equipment 25-30% Leased plant and equipment 20-35%

The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each reporting period date.

An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount.

Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These gains or losses are included in the statement of comprehensive income.

G. Leases

Leases of property, plant and equipment where the Group, as lessee, has substantially all the risks and rewards of ownership are classified as finance leases. Finance leases are capitalised at the lease’s inception at the fair value of the leased property or, if lower, the present value of the minimum lease payments. The corresponding rental obligations, net of finance charges, are included in other short-term and long-term payables. Each lease payment is allocated between the liability and finance cost. The finance cost is charged to the statement of comprehensive income over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. The property, plant and equipment acquired under finance leases is depreciated over the shorter of the asset’s useful life and the lease term.

Leases in which a significant portion of the risks and rewards of ownership are not transferred to the Group as lessee are classified as operating leases (note 17). Payments made under operating leases (net of any incentives received from the lessor) are charged to the statement of comprehensive income on a straight-line basis over the period of the lease.

Lease income from operating leases where the Group is a lessor is recognised in income on a straight-line basis over the lease term.

H. Intangibles

Residual Rights

An intangible asset is an identifiable non-monetary asset without physical substance that has, identifiably, control over a resource and existence of future economic benefits. On acquisition of the residual rights management value the rights based on the present value of the expected future inertia lease income and expected sales proceeds on sale of the assets. Residual Rights are amortised over a period of 6 months immediately following the underlying contracted lease terms.

Fair value is measured at the present value of the estimated cash flows, including inertia rental and proceeds from sale. At the end of the lease term the right (intangible asset) is transferred to property, plant and equipment to reflect the ownership of the physical asset by the Group.

Software

Costs incurred in developing products or systems and costs incurred in acquiring software and licenses that will contribute to future period financial benefits through revenue generation and/or cost reduction are capitalised to software and systems. Costs capitalised include external direct costs of materials and service, direct payroll and payroll related costs of employees’ time spent on the project. Amortisation is calculated on a straight-line basis over periods generally ranging from 2 to 5 years.

ARMIDALE INVESTMENT CORPORATION LIMITED ABN 58 100 854 788 AND ITS CONTROLLED ENTITIES

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

NOTE 1 - STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

H. Intangibles (continued)

Goodwill

Goodwill represents the future economic benefits arising from a business combination that are not individually identified and separately recognised. Goodwill is carried at cost less accumulated impairment losses. Refer to note 14 for a description of impairment testing procedures.

Rental Income Stream

A separately identifiable intangible asset, Rental Income Stream, was recognised following the acquisition of HDS. The value has been determined based on the present value of expected future net cash flows over the next 3 years. Amortisation is calculated on straight-line basis over 3 years commencing 31 July 2011.

I. Critical accounting estimates and judgments

The Board of Directors (“the Board”) evaluates estimates and judgments incorporated into the financial report based on historical knowledge and best available current information. Estimates assume a reasonable expectation of future events and are based on current trends and economic data.

Key estimates

(i) Impairment

The Group assesses impairment at the end of each reporting period by evaluating conditions and events specific to the Group that may be indicative of impairment triggers. Recoverable amounts of relevant assets are reassessed using value-in-use calculations which incorporate various key assumptions.

(ii) Estimated return on the Residual Rights

The Directors estimated the return, based on the historical residual earnings average adjusted by the Directors’ expectation. The estimated return is estimated in the range of 20% to 25%.

(iii) Key estimate - leased asset useful life

The Group is required to assess the estimate to be used for the residual value of plant and equipment on lease, and the average length of time of the lease for determining depreciation. The estimates are based on past history, and are reassessed each year.

(iv) Additional critical accounting estimate

The Directors are required to assess the estimate to be used for the residual value of plant and equipment on lease, and the average length of time of the lease for determining depreciation. The estimates are based on past history, and are reassessed each year.

Key judgments

(i) Recognition of Deferred Tax Assets

A deferred tax asset of $22,592,415 (comprising of temporary differences of $9,443,036 and tax losses of $13,149,379) has not been recognised by the parent Company as the Directors of the Company is of the opinion that there are not sufficient foreseeable taxable profits in order to offset the tax losses (See Note 4). Deferred Tax Asset recognised on the Statement of Financial Position is for the controlled entity only.

(ii) Doubtful Debts Provision

The consolidated group assesses the doubtful debt provision at each reporting date based on the likelihood of collectability of debts due at that time.

Apart from the above there are no estimates or judgments that have a material impact on the financial results of the Group for the year ended 30 June 2012.

ARMIDALE INVESTMENT CORPORATION LIMITED ABN 58 100 854 788 AND ITS CONTROLLED ENTITIES

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

NOTE 1 - STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

J. Trade and other payables

Trade and other payables represent the liability outstanding at the end of the reporting period for goods and services received by the Group during the reporting period which remains unpaid. The balance is recognised as a liability with the amount being normally paid within 30 days of recognition of the liability.

K. Borrowings

Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognised in the statement of comprehensive income over the period of the borrowings using the effective interest rate method. Fees paid on the establishment of loan facilities, which are not an incremental cost relating to the actual draw-down of the facility, are recognised as prepayments and amortised on a straight-line basis over the term of the facility.

Borrowings are removed from the statement of financial position when the obligation specified in the contract is discharged, cancelled or expired. The difference between the carrying amount of a financial liability that has been extinguished or transferred to another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in other income or other expenses.

Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the reporting date.

L. Foreign Currency Transactions and Balances

Functional and presentation currency

The functional currency of each entity is measured using the currency of the primary economic environment in which that entity operates. The consolidated financial statements are presented in Australian dollars which is the parent entity’s functional and presentation currency.

Transaction and balances

Foreign currency transactions are translated into functional currency using the exchange rates prevailing at the date of the transaction. Foreign currency monetary items are translated at the yearend exchange rate. Non-monetary items measured at historical cost continue to be carried at the exchange rate at the date of the transaction. Non-monetary items measured at fair value are reported at the exchange rate at the date when fair values were determined.

Exchange differences arising on the translation of monetary items are recognised in the statement of comprehensive income, except where deferred in other comprehensive income as a qualifying cash flow or net investment hedge.

Exchange difference arising on the translation of non-monetary items are recognised directly in other comprehensive income to the extent that the gain or loss is directly recognised in other comprehensive income, otherwise the exchange difference is recognised in the statement of comprehensive income.

M. Goods and services tax (GST)

Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST incurred is not recoverable from the Australian Taxation Office (ATO). In these circumstances the GST is recognised as part of the cost of acquisition of the asset or as part of an item of expense.

Receivables and payables in the Statement of Financial Position are shown inclusive of GST. The net amount of tax recoverable from or payable to the ATO is included within other assets or other liabilities.

Cash flows are presented in the Statement of Cash Flows on a gross basis. The GST component of cash flows arising from investing and financing activities which is recoverable from, or payable to, the ATO is classified as operating cash flows.

ARMIDALE INVESTMENT CORPORATION LIMITED ABN 58 100 854 788 AND ITS CONTROLLED ENTITIES

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

NOTE 1 - STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

N. Employee Benefits

Provision is made for the Group’s liability for employee benefits arising from services rendered by employees to balance date. Employee benefits that are expected to be settled within one year have been measured at the amounts expected to be paid when the liability is settled, plus related on-costs.

Employee benefits payable later than one year have been measured at the present value of the estimated future cash outflows to be made for those benefits. Those cash flows are discounted using market yields on national government bonds with terms to maturity that match the expected timing of cash flows.

O. Provisions

Provisions are recognised when the Company has a legal or constructive obligation, as a result of past events, for which it is probable that an outflow of economic benefits will result and that outflow can be reliably measured. Provisions are measured using the best estimate of the amounts required to settle the obligation at the end of the reporting period.

P. Comparative figures

When required by accounting standards, comparative figures have been adjusted to conform to changes in presentation for the current financial year.

Comparative figures for the year ended 30 June 2011 are for the parent Company only. Consolidated financial statements were prepared for the first time from 1 July 2011 when HDS became controlled by the Company from 31 July 2011 and LCA became a controlled entity from 1 June 2012.

Q. New Accounting Standards for Application in Future Periods

At the date of authorisation of these financial statements, certain new standards, amendments and interpretations to existing standards have been published but are not yet effective, and have not been adopted early by the Group.

Certain other new standards and interpretations have been issued but are not expected to have a material impact on the Group's financial statements.

AASB 9 Financial Instruments (effective from 1 January 2013)

The AASB aims to replace AASB 139 Financial Instruments: Recognition and Measurement in its entirety. The replacement standard (AASB 9) is being issued in phases. To date, the chapters dealing with recognition, classification, measurement and derecognition of financial assets and liabilities have been issued. These chapters are effective for annual periods beginning 1 January 2013. Further chapters dealing with impairment methodology and hedge accounting are still being developed. Management have yet to assess the impact that this amendment is likely to have on the financial statements of the Group. However, they do not expect to implement the amendments until all chapters of AASB 9 have been published and they can comprehensively assess the impact of all changes.

Consolidation Standards

A package of consolidation standards are effective for annual periods beginning or after 1 January 2013. Information on these new standards is presented below. The Group’s management have yet to assess the impact of these new and revised standards on the Group’s consolidated financial statements.

AASB 10 Consolidated Financial Statements (AASB 10)

AASB 10 supersedes the consolidation requirements in AASB 127 Consolidated and Separate Financial Statements (AASB 127) and Interpretation 112 Consolidation – Special Purpose Entities. It revised the definition of control together with accompanying guidance to identify an interest in a subsidiary. However, the requirements and mechanics of consolidation and the accounting for any non-controlling interests and changes in control remain the same.

ARMIDALE INVESTMENT CORPORATION LIMITED ABN 58 100 854 788 AND ITS CONTROLLED ENTITIES

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

NOTE 1 - STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Q. New Accounting Standards for Application in Future Periods (Continued)

AASB 13 Fair Value Measurement (AASB 13)

AASB 13 does not affect which items are required to be fair-valued, but clarifies the definition of fair value and provides related guidance and enhanced disclosures about fair value measurements. It is applicable for annual periods beginning on or after 1 January 2013. The Group’s management have yet to assess the impact of this new standard.

AASB 2011-9 Amendments to Australian Accounting Standards Presentation of Items of Other Comprehensive Income s (AASB 101 Amendments)

The AASB 101 Amendments require an entity to group items presented in other comprehensive income into those that, in accordance with other IFRSs: (a) will not be reclassified subsequently to profit or loss and (b) will be reclassified subsequently to profit or loss when specific conditions are met. It is applicable for annual periods beginning on or after 1 July 2012. The Group’s management expects this will change the current presentation of items in other comprehensive income; however, it will not affect the measurement or recognition of such items.

AASB 2011-4 Amendments to Australian Accounting Standards to Remove Individual Key Management Personnel Disclosure Requirements (AASB 124 Amendments) AASB 2011-4 makes amendments to AASB 124 Related Party Disclosures to remove individual key management personnel disclosure requirements, to achieve consistency with the international equivalent (which includes requirements to disclose aggregate (rather than individual) amounts of KMP compensation), and remove duplication with the Corporations Act 2011 . The amendments are applicable for annual periods beginning on or after 1 July 2013. The Group’s management have yet to assess the impact of these amendments.

Amendments to IAS 32 Financial Instruments: Presentation and IFRS 7 Financial Instruments: Disclosures 5

The amendments to IAS 32 add application guidance to address inconsistencies in applying IAS 32’s criteria for offsetting financial assets and financial liabilities. Qualitative and quantitative disclosures have been added to IFRS 7 relating to gross and net amounts of recognised financial instruments that are (a) set off in the statement of financial position and (b) subject to enforceable master netting arrangements and similar agreements, even if not set off in the statement of financial position. The amendments are applicable for annual periods beginning on or after 1 January 2014. The Group’s management have yet to assess the impact of these amendments.

NOTE 2 - SEGMENT REPORTING

Identification of reportable segments

The Group has identified its operating segments based on the internal reports that are reviewed and used by the Board of Directors in assessing performance. This has resulted in each main group being shown separately.

Description of segments

Armidale Investment Corporation Limited (AIK)

AIK is engaged in investment activities conducted predominantly in Australia and derives revenue and investment income from unlisted securities and fixed interest securities.

Armidale Investment Corporation (Australia) Pty Limited (AIKPL)

AIKPL is a wholly owned subsidiary of the Company and was incorporated on 3 March 2011.

Hal Data Services Pty Limited (HDS)

HDS purchases, sells and leases predominantly information technology equipment in both Australian and overseas markets.

ARMIDALE INVESTMENT CORPORATION LIMITED ABN 58 100 854 788 AND ITS CONTROLLED ENTITIES

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

NOTE 2 - SEGMENT REPORTING (CONTINUED)

Lease Company of Australia Limited (LCA)

The principal activities of LCA are to manage the repayment of interest and principal to noteholders in relation to funds previously raised and advanced to Hal Data Services Pty Limited.

Basis of accounting for purposes of reporting by operating segments

Accounting policies adopted

Unless stated otherwise, all amounts reported to the Board of Directors are determined in accordance with accounting policies that are consistent to those adopted in the financial statements of the Group.

Changes in segments

AIKPL is a wholly-owned subsidiary of the Company from 3 March 2011. HDS became an operating segment on 31 July 2011 and LCA was an operating segment from 1 June 2012.

Inter-segment transactions

Internally generated revenue is only between AIK, HDS and LCA and all such transactions are eliminated on consolidation for the Group’s financial statements.

Segment assets

Where an asset is used across multiple segments, the asset is allocated to the segment that receives majority economic value from the asset. In the majority of instances, segment assets are clearly identifiable on the basis of their nature and physical location.

Segment liabilities

Liabilities are allocated to segments where there is direct nexus between the incurrence of the liability and the operations of the segment. Segment liabilities include trade and other payables.

(i) SEGMENT PERFORMANCE Revenue External Revenue Inter-Segment Revenue Total Segment Revenue Reconciliation of Segment Revenue to Group Revenue Inter-Segment Elimination Total Group Revenue Cost of Sales Employee Benefits Expense Depreciation and Amortisation Expense Segment Net (Loss) Before Tax	Armidale Investment Corporation Limited Armidale Investment Corporation (Australia) Pty Limited Hal Data Services Pty Limited Lease Company of Australia 30/6/2012 $ 30/6/2012 $ 30/6/2012 $ 30/6/2012 $ 269,551 - 21,290,387 1,171 442,554 100,000 4,237,956 533,674	Total 30/6/2012 $ 21,561,109 5,314,184
	712,105 100,000 25,528,343 534,845	26,875,293
	- - 1,863,079 - 129,150 - 3,235,351 - 115 - 13,748,186 12,933	(5,314,184)
		21,561,109
		1,863,079 3,364,501 13,761,234
		(2,067,839)

ARMIDALE INVESTMENT CORPORATION LIMITED ABN 58 100 854 788 AND ITS CONTROLLED ENTITIES

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

NOTE 2 – SEGMENT REPORTING (CONTINUED)

* The total equipment under lease at original cost managed by HDS is $86 million (iii) SEGMENT LIABILITIES Segment Liabilities 143,258 - 25,843,018 1,744,387 Significant Segment Liability balances for the Period Financial Liabilities - - 15,700,470 1,739,500 Trade and Other Payables 143,258 - 3,390,245 4,887 Current and Deferred Tax Liabilities - - 6,376,684 - Provisions - - 375,619 - 143,258 - 25,843,018 1,744,387 Reconciliation of Segment Liabilities to Group Liabilities Inter-Segment Elimination Total Group Liabilities from Continuing Operations Armidale Investment Corporation Limited Armidale Investment Corporation (Australia) Pty Limited Hal Data Services Pty Limited Lease Company of Australia 30/6/2012 $ 30/6/2012 $ 30/6/2012 $ 30/6/2012 $ (ii) SEGMENT ASSETS Segment Assets 16,313,719 2 28,778,630 1,756,294 Significant Segment Asset balances for the Period Trade and Other Receivables - - 8,356,862 16,173 Cash and Cash Equivalents 2,938,892 2 3,488,426 621 Other Assets 55,185 - 290,050 - Inventories - - 43,280 - Financial Assets 13,319,585 - 4,324,896 1,739,500 Property, Plant & Equipment 57 - 4,009,104 - Current and Deferred Tax Assets - - 2,071,210 - Intangibles - - 6,194,802 - 16,313,719 2 28,778,630 1,756,294* Reconciliation of Segment Assets to Group Assets Inter-Segment Elimination Total Group Assets from Continuing Operations	Armidale Investment Corporation Limited Armidale Investment Corporation (Australia) Pty Limited Hal Data Services Pty Limited Lease Company of Australia 30/6/2012 $ 30/6/2012 $ 30/6/2012 $ 30/6/2012 $ 16,313,719 2 28,778,630 1,756,294 - - 8,356,862 16,173 2,938,892 2 3,488,426 621 55,185 - 290,050 - - - 43,280 - 13,319,585 - 4,324,896 1,739,500 57 - 4,009,104 - - - 2,071,210 - - - 6,194,802 -	27,730,663 17,439,970 3,538,390 6,376,684 375,619 Total 30/6/2012 $ 46,848,645 8,373,035 6,427,941 345,235 43,280 19,383,981 4,009,161 2,071,210 6,194,802 46,848,645 (8,395,546) 38,453,099
	16,313,719 2 28,778,630 1,756,294
	143,258 - 25,843,018 1,744,387	27,730,663
		(9,633,485)
		18,097,178

ARMIDALE INVESTMENT CORPORATION LIMITED ABN 58 100 854 788 AND ITS CONTROLLED ENTITIES

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

NOTE 2 – SEGMENT REPORTING (CONTINUED)

The comparative figures below are for the parent Company only.

(i) SEGMENT PERFORMANCE Revenue Total Revenue Segment Net Profit Before Tax (iii) SEGMENT LIABILITIES Segment Liabilities Segment Liability movements for the Period Financial Liabilities Trade and Other Payables Provisions (ii) SEGMENT ASSETS Segment Assets Significant Segment Asset balances for the Period Cash and Cash Equivalents Trade and Other Receivables Financial Assets Property, Plant & Equipment Other Assets Current Tax Assets	Armidale Investment Corporation Limited 30/6/2011 $ 12,159,230 10,397,713 16,367,384 2,675,772 2,374,955 11,277,519 172 34,023 4,943
	16,367,384
	280,840 - 280,840 -
	280,840

ARMIDALE INVESTMENT CORPORATION LIMITED ABN 58 100 854 788 AND ITS CONTROLLED ENTITIES

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

	CONSOLIDATED GROUP 2012 $	PARENT ENTITY 2011 $ - - 50,746 312,095 -
NOTE 3 – REVENUE Revenue Sale of Goods Lease Rentals Dividends Received Interest Received Sale of Receivables Streams Other Income Bad Debts Recovered Sundry income NOTE 4 – PROFIT /(LOSS) FROM ORDINARY ACTIVITIES Profit /(loss) before income tax expense has been determined after: a. Auditor’s remuneration Auditing or reviewing the consolidated financial report: Current Auditor – Grant Thornton Audit Pty Limited Former Auditor – Moore Stephens Other services provided by related practice of former auditor	3,091,214 12,474,962 170 980,246 525,446 17,072,038 1,221,115 212,649 1,433,764 177,000 - 177,000 - 177,000
		362,841
		57,161 1,978
		59,139
		31,900 33,525 65,425 7,150 72,575

ARMIDALE INVESTMENT CORPORATION LIMITED ABN 58 100 854 788 AND ITS CONTROLLED ENTITIES

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

	CONSOLIDATED GROUP 2012 $	PARENT ENTITY 2011 $
NOTE 5 – TAXATION a. Income tax expense The components of tax expense comprise: - Current tax - Deferred tax (temporary differences) - Deferred tax (over)/ under provision b. The reconciliation of the expected tax expense based on the domestic effective tax rate at 30% (2011:30%) is as follows: (Loss)/ Profit for the year before tax Tax at the Australian tax rate of 30% Tax effect of amounts which are not deductible (taxable) in calculating taxable income: - Imputation credits - Other assessable income - Non deductible expenses - Prior year dividend adjustment - Other deductible expenses - Other non assessable income - Reversal of previously recognised impairment losses - Revenue losses not recognised this year - Utilisation of tax losses not previously brought to account - Adjustment for group losses not recognised - Deferred tax balances - Under/ (over) provision in prior years Current income tax expense	684,247 (608,217) 234,592 310,622 (2,067,839) (620,352) - 11,931 149,961 - (39,401) (11,929) - - (331,268) 1,267,867 (350,780) 234,593 310,622	- - -
		-
		10,397,713 3,119,314 5,996 1,785 88,237 3,182 (63,375) (46,465) (3,355,294) 246,620 - - - -
		-

As disclosed in Note 1A the parent company and its controlled entities are not a tax consolidated group. As a result, losses cannot be offset amongst Group entities which render a calculation of average effective tax rate impractical.

The average effective tax rate for HDS is 16.13% and nil for the other group companies. There are numerous timing differences which impact the HDS effective rate from year to year, the most notable for this period relate to the gain on write-down of financial instrument and the gain on acquisition of a receivables book. Furthermore, the utilisation of previously unrecognised tax losses has created a permanent difference.

The total franking account balance for the Company at 30 June 2012 is $24,179, $540,962 for HDS and $92,119 for LCA. As the Group is not consolidated for income tax purposes it is only the individual entities that can avail themselves of these franking credits.

The above available amounts are based on the balance of the dividend franking account at year-end adjusted for:

i. franking credits that will arise from the payment of the current tax liability;
ii. franking debits that will arise from the payment of dividends recognised as a liability at the yearend;

ARMIDALE INVESTMENT CORPORATION LIMITED ABN 58 100 854 788 AND ITS CONTROLLED ENTITIES

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

CONSOLIDATED
GROUP	PARENT ENTITY
2012	2011
$	$

NOTE 5 – TAXATION (CONTINUED)

iii. franking credits that will arise from the receipt of dividends recognised as receivables at the year-end; and iv. franking credits that the entity may be prevented from distributing in subsequent years.

The ability to utilise the franking credits is dependent upon there being sufficient available net assets to declare dividends, and the payment of dividends does not prejudice the Group’s ability to pay its creditors and is fair and reasonable to the Group’s shareholder as a whole.

NOTE 6 – EARNINGS/ (LOSS) PER SHARE

a. Reconciliation of (loss)/ profit to net (loss)/ profit Net (loss)/ profit (Loss)/ profit used in calculation of basic (loss)/ profit per share b. Weighted average number of shares Weighted average number of ordinary shares outstanding during the year used in the calculation of basic and diluted (loss)/ profit per share NOTE 7 – CASH AND CASH EQUIVALENTS Cash at bank	(2,378,461) (2,378,461) No. 161,758,429 6,427,941 6,427,941	10,397,713 10,397,713 No. 117,811,508 2,675,772
		2,675,772

Cash balances not available for use:

The parent Company's Australian Financial Services License was withdrawn on 24 June 2011 and accordingly the term deposit balance of $28,883 as at 29 February 2012 was redeemed. The cash balance of $20,000 held as a performance bond was also cancelled.

Terms and conditions :

The weighted average interest rate on cash and cash equivalents for the Company as at 30 June 2012 was 2.72% (2011: 4.71%). The effective interest rate on short-term bank deposits for HDS ranged from 0.5% to 5.5%.

NOTE 8 – TRADE AND OTHER RECEIVABLES

Current Trade receivables Allowance for impairment of receivables Other receivables: Loan Receivable1 Interest & Line Fees Receivable Sundry Debtors Total current trade and other receivables	21,671,696 (13,314,834) 8,356,862 - - 63,107 8,419,969	- -
		-
		2,334,481 39,769 705
		2,374,955

1 This amount which is the financing facility provided to HDS has been eliminated on consolidation at 30 June 2012.

Allowance for impairment of receivables

Current trade and term receivables generally on 30-day terms. A provision for impairment is recognised when there is objective evidence that an individual trade or term receivable is impaired.

ARMIDALE INVESTMENT CORPORATION LIMITED ABN 58 100 854 788 AND ITS CONTROLLED ENTITIES

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

CONSOLIDATED GROUP PARENT ENTITY 2012 2011 $ $	CONSOLIDATED GROUP PARENT ENTITY 2012 2011 $ $
NOTE 8 – TRADE AND OTHER RECEIVABLES (CONTINUED) Movement in the allowance for impairment of receivables is as follows: At 1 July 6,465,264 Provision for impairment recognised in the year 441,077 Provision recognised on acquisition of lease book 6,413,363 Write back of provision (4,870) Balance at 30 June 13,314,834	- - - -
	-

Ageing analysis of trade and other receivables and the applicable provision for impairment is as follows:

Current Not more than 1 month More than 1 month and not more than 2 months More than 2 months and not more than 3 months More than 3 months and not more than 6 months More than 6 months and not more than 1 year More than 1 year Impaired – at recoverable amount	Gross 185,291 252,001 183,457 117,617 192,339 71,578 17,169,413 3,500,000 21,671,696	Provision Net (72,642) 112,649 (60,572) 191,429 (38,224) 145,233 (59,064) 58,553 (119,008) 73,331 (54,024) 17,554 (12,911,300) 4,258,113 - 3,500,000 (13,314,834) 8,356,862

NOTE 9 – TAXATION

Assets Current - Income tax Non-Current - Deferred tax Liabilities Non-Current - Deferred tax	110,880 1,960,330 6,376,684 6,376,684	4,943
		-
		-
		-

Deferred tax assets not brought to account, the benefits of which will only be realised if the conditions for deductibility set out in Note 1(a) occur. The unrecognised deferred tax asset as at 30 June 2012 for the parent Company is $22,592,415 comprising tax losses of $13,149,379 and temporary differences of $9,443,036.

ARMIDALE INVESTMENT CORPORATION LIMITED ABN 58 100 854 788 AND ITS CONTROLLED ENTITIES

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

	CONSOLIDATED GROUP PARENT ENTITY 2012 2011 $ $ 2,093,192 - (380,767) - 1,712,425 - 75,612 - (14,195) - 61,417 - 21,927 - (10,608) - 11,319 - 415,682 - (344,434) - 71,248 - - - 103,921 - 103,921 -	CONSOLIDATED GROUP PARENT ENTITY 2012 2011 $ $ 2,093,192 - (380,767) - 1,712,425 - 75,612 - (14,195) - 61,417 - 21,927 - (10,608) - 11,319 - 415,682 - (344,434) - 71,248 - - - 103,921 - 103,921 -
NOTE 9 – TAXATION (CONTINUED) Deferred tax assets Provisions and accruals Opening balance Charged to the statement of comprehensive income Closing balance Plant and Equipment Opening balance Charged to the statement of comprehensive income Closing balance Prepayments Opening balance Charged to the statement of comprehensive income Closing balance Deferred income Opening balance Charged to the statement of comprehensive income Closing balance Tax losses Opening balance Charged to the statement of comprehensive income Closing balance	2,093,192 (380,767) 1,712,425 75,612 (14,195) 61,417 21,927 (10,608) 11,319 415,682 (344,434) 71,248 - 103,921 103,921
		-
		- -
		-
		- -
		-
		- -
		-
		- -
		-

ARMIDALE INVESTMENT CORPORATION LIMITED ABN 58 100 854 788 AND ITS CONTROLLED ENTITIES

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

	CONSOLIDATED GROUP 2012 $	PARENT ENTITY 2011 $ - - - - - - - - - - - - 34,023
NOTE 9 – TAXATION (CONTINUED) Deferred tax liability Residual Rights Opening balance Charged to the statement of comprehensive income Closing balance Provisions and accruals Opening balance Charged to the statement of comprehensive income Closing balance Loan balances Opening balance Charged to the statement of comprehensive income Closing balance Plant and equipment Opening balance Charged to the statement of comprehensive income Closing balance NOTE 10 – OTHER ASSETS Prepayments NOTE 11 - INVENTORIES Current At cost -Finished goods -Provision for impairment	6,328,467 (3,484,843) 2,843,624 648,518 1,613,155 2,261,673 - 1,271,387 1,271,387 762 (762) - 290,050 290,050 43,280 - 43,280
		-
		- -
		-
		- -
		-
		- -
		-
		34,023
		34,023
		- - -
		-

ARMIDALE INVESTMENT CORPORATION LIMITED ABN 58 100 854 788 AND ITS CONTROLLED ENTITIES

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

CONSOLIDATED
GROUP	PARENT ENTITY
2012	2011
$	$

NOTE 12 – FINANCIAL ASSETS

Investments

a. Fair value of investments in unlisted corporations available for sale : HAL Data Services Pty Limited – Shares at cost Less Impairment b. Fair value of investments in loans and receivables : Riverwise Pty Limited – Convertible Loan Less Conversion to Shares HAL Data Services Pty Limited – Unsecured Notes at cost HAL Data Services Pty Limited – Loan Note at cost Less Impairment Current Lease receivables 12(b) Non-current* Investment in Riverwise Pty Limited – Converted from Loan 12(a) Lease receivables 12(b) Available-for-sale financial assets 12(c)	- - - 3,316,284 (3,316,284) - - - - 2,852,706 3,316,284 1,377,099 63,578 4,756,961	4,601,135 (4,507,929)
		93,206
		- - - 36,973,878 (25,789,565)
		11,184,313
		-
		- - -
		-

* All investments with HDS were eliminated on consolidation during the year.

12(a) Investment in Riverwise Pty Limited

On 29 February 2012, the loan to Riverwise Pty Limited was converted to shares in Riverwise at a conversion price of $7.00 per share.

12(b) Lease receivables

The above lease receivables have been discounted to present value using a monthly repayment profile based on the contracted rental streams only. The discount rate used is each implicit rate within the underlying leases. These receivables relate only to those which have been acquired by the Group.

12(c) Available-for-sale financial assets These are minority interests in listed and unlisted entities.

ARMIDALE INVESTMENT CORPORATION LIMITED ABN 58 100 854 788 AND ITS CONTROLLED ENTITIES

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

	CONSOLIDATED
	GROUP	PARENT ENTITY
	2012	2011
	$	$
NOTE 13 – PLANT AND EQUIPMENT
Computer equipment and furniture - at cost	2,118	2,118
Less accumulated depreciation	(2,061)	(1,946)
	57	172
Plant and equipment
Plant and equipment:
At cost	279,227	-
Accumulated depreciation	(228,601)	-
	50,626	-
Plant and equipment held for rental to customers:
Plant and equipment	28,969,210	-
Accumulated depreciation	(25,010,731)	-
	3,958,478	-

Total plant and equipment	4,009,161	172
Movements in Carrying Amounts
Movement in the carrying amounts for each class of plant and equipment between		the beginning and the
end of the current financial year.

Consolidated Group Balance at the beginning of year Additions Transferred from intangible assets Disposals Depreciation expense Carrying amount at 30 June 2012	Computer Equipment Plant and Equipment Plant and Equipment held for rental Total $ $ $ $ 172 60,800 9,154,380 9,215,352 - 4,684 1,922,997 1,927,681 - - 6,111,662 6,111,662 - - - - (115) (14,858) (13,230,561) (13,245,534)
	57 50,626 3,958,478 4,009,161

ARMIDALE INVESTMENT CORPORATION LIMITED ABN 58 100 854 788 AND ITS CONTROLLED ENTITIES

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

		PARENT ENTITY 2011 $
NOTE 14 - INTANGIBLES Software development costs Cost 635,675 - Accumulated amortisation (634,442) - Net carrying value 1,233 - Residual rights Opening Balance 12,965,518 - Transfer to Plant and Equipment (6,771,949) - Net carrying value 6,193,569 - Rental Stream Income Amount recognised on acquisition 1,202,562 - Accumulated Amortisation (367,541) - Net carrying value 835,021 - Goodwill Balance at 1 July - - Acquired through business combination 2,739,158 - Impairment 14(a) (187,160) - Balance at 30 June 2,551,998 - 9,581,821 - Reconciliation of intangible assets Software Development Costs Residual Rights Rental Stream Income Goodwill Total $ $ $ $ $ Consolidated Group Balance at the beginning of year 1,758 12,965,518 - - 12,967,276 Recongised on acquisition - - 1,202,562 - 1,202,562 Acquired through business combination - - - 2,739,158 2,739,158 Amortisation 525 - 367,541 187,160 555,226 Additions - - - - Transfer to plant and equipment - 6,771,949 - - 6,771,949 Carrying amount at 30 June 2012 1,233 6,193,569 835,021 2,551,998 9,581,821		- -
		-
		- -
		-
		- -
		-
		- - -
		-

		-
	1,233 6,193,569 835,021 2,551,998 9,581,821

ARMIDALE INVESTMENT CORPORATION LIMITED ABN 58 100 854 788 AND ITS CONTROLLED ENTITIES

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

NOTE 14 – INTANGIBLES

(a) Impairment testing for cash-generating units (“CGU”) containing goodwill

For the purposes of impairment testing, the goodwill is allocated to and directly relates to the Group’s investment in HDS. HDS is therefore the relevant CGU.

The amortisation of the separately identifiable intangibles in HDS was determined based on value-inuse calculations, covering a detailed three-year forecast, followed by an extrapolation of expected cash flows using the growth rates determined by management. The present value of the expected cash flows is determined by applying a suitable discount rate.

		Growth Rates	Growth Rates		Discount	Rates
	2015	2014	2013	2015	2014	2013
Cash Flows Forecast	N/A	N/A	N/A	17%	17%	17%

Growth rates

Due to the nature of the operations of Hal Data Services and controlled entities, the projected cash flows are based primarily on rental stream and fee income from existing and future lease contracts. Cost projections are based primarily on overheads plus staff requirements driven by the number of lease contracts under management. Therefore, there has been no application of a growth rate when preparing the cash flow projections.

Discount rates

The discount rates reflect appropriate adjustments relating to market risk and specific risk factors of each entity.

Cash flow assumptions

HDS has prepared cash flow forecasts on the basis of origination of new leases. A funding line with an overseas bank has been secured by HDS during the 2012 financial year. In addition, HDS has raised some funding via its debenture program and has also used working capital to finance new leases. The continuation of external funding is an inherent assumption within the forecast model. Over the next two years, a key source of cash inflows continues to be derived from the existing lease book. There are a number of key assumptions underlying those inflows, which are consistent with historic performance of the lease book.

The Directors have written-off the goodwill amount on acquisition of LCA to $nil on the basis that there was a deficiency in equity in LCA at the time of acquisition and there were no separately identifiable intangible assets.

ARMIDALE INVESTMENT CORPORATION LIMITED ABN 58 100 854 788 AND ITS CONTROLLED ENTITIES

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

	CONSOLIDATED GROUP 2012 $	PARENT ENTITY 2011 $ 141,939 90,401 48,500 - -
NOTE 15 – TRADE AND OTHER PAYABLES Unclaimed shareholder distributions Trade payables Sundry payables and accrued expenses GST Payable Income in Advance	76,667 374,367 2,019,472 190,550 837,571 3,498,627
		280,840

Terms and conditions:

Trade creditors as at 30 June 2012 represent unpaid supplier invoices which are usually settled within 30 days.

Accrued expenses are settled within the terms of payment offered, which are usually within 30 days.

Trade and other payables are unsecured and non-interest bearing.

All amounts are short term and the carrying values are considered to be a reasonable approximation of fair value.

NOTE 16 – FINANCIAL LIABILITIES

Current Loans secured Loans unsecured Debentures secured Total current borrowings Non-current Loans secured Loans unsecured Debentures secured Total non-current borrowings	1,786,394 2,019,600 765,352 4,571,346 645,394 2,222,164 407,343 3,274,901	- - - -
		- - -
		-

The financiers for the consolidated group are as follows:

Financier Wallace Absolute Opportunity Fund Fortress Credit Corporation (Australia) II Pty Limited Other financiers Total repayable to financiers	Current 155,100 1,786,394 2,629,852 4,571,346	Non-Current 2,010,450 657,349 607,102
		3,274,901

ARMIDALE INVESTMENT CORPORATION LIMITED ABN 58 100 854 788 AND ITS CONTROLLED ENTITIES

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

CONSOLIDATED
GROUP	PARENT ENTITY
2012	2011
$	$

NOTE 16 – FINANCIAL LIABILITIES (CONTINUED)

The Fortress debt is repayable over a period of approximately 18 months which is linked to the profile of the collections on the underlying lease book. The interest rate on the debt is 16%.

The terms of the debentures vary from 18 months to 36 months, and interest rates range from 0% to 17%. The weighted average rate as at 30 June 2012 is 12%.

NOTE 17 - PROVISIONS

Analysis of total provisions

Current Non-Current Consolidated Group Opening balance at 1 July 2011 Additional provisions raised during the year Amounts used Balance at 30 June 2012	Employee Benefits Lease Incentive $ $ 133,581 106,872 - - (6,399) (106,872)	324,612 51,008 375,620 Warranty Protection Cover $ $ 12,388 22,711 2,966 5,438 - -	- - - Lease Provision Total $ $ - 275,552 204,935 213,339 - (113,271)
	127,182 -	15,354 28,149	204,935 375,620

Provision for Employee Benefits

A provision is recognised for employee benefits relating to annual leave and long service leave for employees. In calculating the present value of future cash flows in respect of long service leave, the probability of long service leave being taken is based upon historical data. The measurement and recognition criteria for employee benefits have been included in Note 1(u).

Provision for Protection Cover

A provision is recognised for estimated protection cover in respect of leases with protection cover provided by the consolidated group attached to them. The provision for protection cover has been based upon total sales for the past five years and the total percentage of claims made in relation to total sales.

Provision for Warranties

A provision is recognised for estimated warranty claims in respect of leases with warranties provided by the consolidated group attached to them. The provision for warranties has been based upon total sales for the past five years and the total percentage of claims made in relation to total sales.

Lease Provision

The office premise for HDS is leased. This lease expires in August 2013. The Group has taken a new lease at a new premise and as such will bear the cost of the current lease, less any sub-let income earned to the end date of the lease. The onerous lease provision is reflective of the minimum cost which the Group will incur should there be no further sub-let income. This will be amortised over the period to August 2013.

ARMIDALE INVESTMENT CORPORATION LIMITED ABN 58 100 854 788 AND ITS CONTROLLED ENTITIES

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

	CONSOLIDATED GROUP 2012 $	PARENT ENTITY 2011 $
NOTE 18 – ISSUED CAPITAL Shares issued and fully paid: 161,758,429 (2011: 161,758,429) fully-paid ordinary shares issued Fully-paid ordinary shares Balance at the beginning of the reporting period Proceeds from rights issue and share placement Share issue costs net of tax Balance at the end of the reporting period Shares issued and fully paid (number of shares): Beginning of the year Share issue Balance at the end of the reporting period	92,448,555 92,448,555 - - 92,448,555 161,758,429 - 161,758,429	92,448,555 89,491,831 3,146,619 (189,895) 92,448,555 84,455,052 77,303,377 161,758,429

a. Options

No options have been issued by the Group during the financial year. At balance date the number of options over ordinary shares in the Group was nil.

b. Ordinary Shares

Ordinary shares participate in the dividends and the proceeds on winding up of the Group in proportion to the number of shares held. In the event of winding up of the Group, ordinary shareholders rank after unsecured creditors.

At shareholder meetings a shareholder is entitled to vote on a show of hands and when a poll is called they are entitled to one vote for each ordinary share held.

c. Capital Management

Management controls the capital of the Group to endeavour to provide the shareholders with adequate returns and ensure that the Group can fund its operations and continue as a going concern.

The Group’s debt and capital includes ordinary share capital, and financial liabilities, supported by financial assets.

There are no externally imposed capital requirements.

Management effectively manages the Group’s capital by assessing the Group’s financial risks and adjusting its capital structure in response to changes in these risks and in the market.

NOTE 19 – RESERVES

Equity Reserve Purchased Controlling Interest Reserve	93,206 (18,429,596) (18,336,390)	93,206 -
		93,206

On 29 June 2012, the Company’s shareholding in HDS increased from 11.5% to 86.92% and the change in non-controlling interest was recognised directly in equity to a purchased controlling interest reserve.

ARMIDALE INVESTMENT CORPORATION LIMITED ABN 58 100 854 788 AND ITS CONTROLLED ENTITIES

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

	CONSOLIDATED GROUP 2012 $	PARENT ENTITY 2011 $
NOTE 20 – ACCUMULATED LOSSES (Accumulated losses) at the beginning of the financial year (76,455,217) Recognition of non-controlling interest 26,287,131 Net profit/ (loss) attributable to members of the parent entity (363,223) (Accumulated losses) at the end of the financial year (50,531,309) There were no dividends paid during the year ended 30 June 2012 (2011 - $Nil). NOTE 21 – CASH FLOW INFORMATION a. Reconciliation of cash Note Cash at the end of the financial year as shown in the Statement of Cash Flows is reconciled to the related items in the Statement of Financial Position as follows: Cash at bank 7 6,427,941 6,427,941 b. Reconciliation of cash flow from operations with loss from ordinary activities after income tax (Loss)/ Profit from ordinary activities after income tax (2,378,461) Non-cash flows in loss from ordinary activities Depreciation and amortisation 14,128,775 Write-off goodwill 187,160 Gain on acquisition of receivables book (3,055,307) Profit on sale of assets (333,372) Amortisation of finance costs 249,583 Reversal of Impairment - Sale Proceeds from Receivables included in investing activities (525,446) Changes in assets and liabilities: Decrease/ (Increase) in receivables 1,327,805 (Increase)/ Decrease in other assets (36,457) Decrease in financial assets - Increase/ (Decrease) in other payables and accruals 1,896,928 (Decrease) in provisions (100,069) Increase/ (Decrease) in income tax payable 4,943 Cash flows from operations 11,366,082		(86,852,930) - 10,397,713
		(76,455,217)
		2,675,772
		2,675,772
		10,397,713 343 - - - - (11,184,313) - (26,642) 24,668 1,235,285 (331,759) - (1,911)
		113,384

ARMIDALE INVESTMENT CORPORATION LIMITED ABN 58 100 854 788 AND ITS CONTROLLED ENTITIES

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

CONSOLIDATED GROUP PARENT ENTITY 2012 2011 $ $

NOTE 22 – FINANCIAL RISK MANAGEMENT

Overview

The Group has exposure to the following risks from its use of financial instruments:

credit risk
liquidity risk
market risk

This note presents information about the Group’s exposure to each of the above risks and the Board’s objectives, policies and processes for measuring and managing risk. Further quantitative disclosures are included throughout this financial report.

The Board has overall responsibility for the establishment and oversight of the risk management framework.

The Board oversees how management monitors compliance with the Group’s risk management policies and procedures and reviews the adequacy of the risk management framework in relation to the risks faced by the Group.

a. Credit Risk

The carrying amount of the Group’s financial assets represents the maximum credit exposure. The Group’s maximum exposure to credit risk at reporting date was:

Cash and cash equivalents Trade and other receivables Financial assets - held for trading Financial assets - available for sale Financial assets - loans and receivables Other financial assets Total	6,427,941 8,419,969 - - - 7,609,667 22,457,577	2,675,772 2,374,955 - 93,206 11,184,313 -
		16,328,246

Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Group’s trade and other receivables.

The Group’s exposure to trade and other receivables credit risk is influenced mainly by the individual characteristics of each party.

The Group limits its exposure to investment credit risk on cash by investing all cash $6,427,941 (100%) in liquid securities with high credit rating financial institutions, and management does not expect any counterparty to fail to meet its obligations.

Credit risk for derivative financial instruments arises from the potential failure by counterparties to the contract to meet their obligations. As all derivative contracts are transacted through recognised exchanges, credit risk associated with these contracts is considered minimal.

ARMIDALE INVESTMENT CORPORATION LIMITED ABN 58 100 854 788 AND ITS CONTROLLED ENTITIES

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

NOTE 22 – FINANCIAL RISK MANAGEMENT (CONTINUED)

b. Liquidity Risk

The following are the contractual maturities of financial liabilities, including estimated interest payments and excluding the impact of netting agreements:

CONSOLIDATED GROUP – 30 JUNE 2012

Non-derivative financial liabilities Financial Liabilities Trade and other payables	Statement of Financial Position $ Contractual cash flows $ 6 mths or less $ 6-12 mths $ 1-2 years $ 2-5 years $ More than 5 years $ 7,846,247 (7,846,247) - (4,571,346) (3,274,901) - - 2,661,056 (2,661,056) (2,661,056) - - - -
	10,507,303 (10,507,303) (2,661,056) (4,571,346) (3,274,901) - -

PARENT ENTITY – 30 JUNE 2011

Non-derivative financial liabilities Unsecured Loans Debentures Trade and other payables	Statement of Financial Position $ Contractual cash flows $ 6 mths or less $ 6-12 mths $ 1-2 years $ 2-5 years $ More than 5 years $ - - - - - - - - - - - - - - 280,840 (280,840) (280,840) - - - -
	280,840 (280,840) (280,840) - - - -

Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Group’s reputation.

Typically, the Group ensures that it maintains at all times, levels equivalent to normal operating expenditure for at least one month to meet expected operational expenses including the servicing of financial obligations; this excludes the potential impact of extreme circumstances that cannot reasonably be predicted, such as natural disasters.

Liquidity risk represents the risk that an entity will encounter difficulty in meeting obligations associated with financial liabilities. The Group's major cash outflows are the purchase of securities and payment of operating expenses, the levels of which are managed by the Board. The Group's inward cash flows depend upon the level of sales of securities, dividends, interest received and any exercise of options that may be on issue.

The Group monitors its cash flow requirements by reference to known transactions to be paid or received.

ARMIDALE INVESTMENT CORPORATION LIMITED ABN 58 100 854 788 AND ITS CONTROLLED ENTITIES

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

NOTE 22 – FINANCIAL RISK MANAGEMENT (CONTINUED)

The Group holds a portion of its portfolio in cash and securities sufficient to ensure that it has cash available to meet all payments.

c. Market Risk

Market risk represents the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in the market place.

By its nature, as an investment Group that invests in tradeable securities, the Group will always be subject to market risk as it invests its capital in securities which are not risk free as the market price of these securities can fluctuate.

The Group is currently reviewing its Investment Guidelines.

d. Net Fair Values

The carrying amounts of financial instruments on the Statement of Financial Position approximate their net fair values.

Hierarchy Structure of Investments

The table below analyses financial instruments carried at fair value, by valuation method. The different levels have been defined as follows:

Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities
• Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (as prices) or indirectly (derived from prices)
Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).

CONSOLIDATED GROUP 30 June 2012 Listed investments held for trading Investments in unlisted corporations available for sale - at cost Less Impairment Investments in loans and securities - at cost Less Impairment Investment in Riverwise Pty Limited – at cost Less Impairment PARENT ENTITY 30 June 2011 Listed investments held for trading Investments in unlisted corporations available for sale - at cost Less Impairment Investments in loans and securities - at cost Less Impairment	Level 1 $ Level 2 $ Level 3 $ Total $ - - - - - - - - - - - - - - - - - - - - - - 3,316,284 3,316,284 - - - -
	- - 3,316,284 3,316,284
	- - - - - - 4,601,135 4,601,135 - - (4,507,929) (4,507,929) - - 36,973,878 36,973,878 - - (25,789,565) (25,789,565)
	- - 11,277,519 11,277,519

ARMIDALE INVESTMENT CORPORATION LIMITED ABN 58 100 854 788 AND ITS CONTROLLED ENTITIES

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

CONSOLIDATED
GROUP	PARENT ENTITY
2012	2011
$	$

NOTE 22 – FINANCIAL RISK MANAGEMENT (CONTINUED)

e. Sensitivity Analysis

The Group has performed a sensitivity analysis relating to its exposure to interest rate risk and price risk at balance date. This sensitivity analysis demonstrates the effect on the current year results and equity which could result from a change in these risks.

Interest Rate Sensitivity Analysis

At 30 June 2012, the effect on loss and equity as a result of changes in the interest rate, with all other variables remaining constant would be as follows:

Change in loss after tax
- Increase in interest rate by 100 basis points	64,279	26,758
- Decrease in interest rate by 100 basis points	(64,279)	(26,758)
Change in equity
- Increase in interest rate by 100 basis points	64,279	26,758
- Decrease in interest rate by 100 basis points	(64,279)	(26,758)

NOTE 23 – RELATED PARTY TRANSACTIONS

a. Director’s transactions with the Group

Apart from the payment to Sandon Capital Pty Limited disclosed below, there were no other Director’s transactions with the Group during the year ended 30 June 2012.

b. Related party transactions

A fee of $5,500 was paid to Sandon Capital Pty Limited (“Sandon”) (in which Gabriel Radzyminski is a Director) in relation to costs for services pertaining to negotiation of loan and assignment of cash flows to Riverwise Pty Limited.

Sandon Capital Pty Limited has an arrangement with the entities controlled by Mark Smith (Director of the Company) whereby Sandon will be paid a fee equal to 10% of any profits those entities controlled by Mark Smith earn on the AIK shares they hold, either when they are sold or by May 2013. Payment can be made in either cash or AIK shares of an equivalent value.

A fee of $36,942 was earned following the sale of 32,123,261 AIK shares by entities controlled by Mark Smith on 19 November 2011, and Sandon agreed to accept the fee in shares priced at 7.5 cents per share which was the prevailing price on that date. These shares were not transferred to Sandon until 29 June 2012, as the Company was in trading restrictions until then.

ARMIDALE INVESTMENT CORPORATION LIMITED ABN 58 100 854 788 AND ITS CONTROLLED ENTITIES

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

NOTE 23 – RELATED PARTY TRANSACTIONS (CONTINUED)

c. Transactions with key management personnel

The key management personnel include the key executives of HDS that became controlled by the Company on 31 July 2011. Key management personnel remuneration includes the following expenses:

Short term employee benefits - Salaries including bonuses Total short term employee benefits Post employment benefits - Superannuation Total post employment benefits Total remuneration	2012 $ 441,429
	441,429 47,979
	47,979
	489,408

The Hal Directors’ Superannuation Fund holds 5,773,978 shares in the parent Company. George Matis and Andrew Grant have approximately 32% and 40% interest in the superannuation fund respectively.

The interest and principal repayments on debentures advanced by Secured Finance Limited, a wholly owned subsidiary of HDS during the year were as follows:

	Amount
	Advanced	Interest	Principal
	during the Year	Payment	Repayment
Entity	$	$	$
Chestech Pty Limited1 AJ and CA Grant2	138,750 -	16,366 31,397	113,675 187,603
Hal Directors’ Superannuation Fund3	-	289,822	85,178

1 This is a company controlled by George Matis

2 This is Andrew Grant and his spouse

3 Andrew Grant and George Matis are Directors of this superannuation fund

The following distributions were paid under Loan Note Agreements by HDS to entities controlled by George Matis and Andrew Grant:

	Distributions
	Paid
Entity	$
CAT One Investments Pty Limited1 Venagrow Pty Limited2	339,052 339,052

1 This is a company controlled by Andrew Grant

2 This is a company controlled by George Matis

ARMIDALE INVESTMENT CORPORATION LIMITED ABN 58 100 854 788 AND ITS CONTROLLED ENTITIES

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

NOTE 23 – RELATED PARTY TRANSACTIONS (CONTINUED)

Directors’ Shareholding

The movement during the year in the number of ordinary shares held, directly or indirectly, by each of the Directors, including their related parties, is as follows :

CONSOLIDATED GROUP AND PARENT ENTITY

2012 Directors Mark Smith Gabriel Radzyminski * Steve White Mark Schiliro (resigned 12 June 2012) ***	Balance 1 July 2011 Net Change Balance 30 June 2012 100,829,439 (35,389,276) 65,440,163 - 648,558 648,558 - 700,000 700,000 - 240,686 240,686
	100,829,439 (33,800,032) 67,029,407

held by indirect interest through Armidale Investment Company Pty Limited, Presmore Pty Limited ATF Smith Miller Family Trust and Presmore Pty Limited ATF Serendipity Trust
** held by indirect interest through Sandon Capital Pty Limited
*** held by indirect interest through SILJ Pty Limited ATF Schiliro Family Superannuation Fund

PARENT ENTITY 2011 Directors Mark Schiliro Mark Smith Gabriel Radzyminski Steve White Kenneth Barry Alan Liddle * Michael Birch **	Balance 1 July 2010 Net Change Balance 30 June 2011 - - - - 100,829,439 100,829,439 - - - - - - 54,724 (54,724) - 27,467 (27,467) - 143,350 (143,350) -
	225,541 100,603,898 100,829,439

held by indirect interest through Armidale Investment Company Pty Limited, Presmore Pty Limited ATF Smith Miller Family Trust and Presmore Pty Limited ATF Serendipity Trust
** not a director at 30 June 2011

ARMIDALE INVESTMENT CORPORATION LIMITED ABN 58 100 854 788 AND ITS CONTROLLED ENTITIES

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

NOTE 24 – ACQUISITION OF SUBSIDIARY AND NON-CONTROLLING INTEREST

Acquisition of HDS

On 1 July 2011, the parent Company held 11.5% of the issued capital of HDS for a purchase consideration of $93,206.

As a result of HDS’s breach of the Loan Note Restructure agreement on 31 July 2011 and AIK’s ability to increase its shareholding to 86.82%, AIK obtained effective control as at 31 July 2011.

Separately identifiable intangibles for rental stream income of $1,202,562 in HDS were recognised on acquisition.

The purchase was satisfied by the parent Company’s existing holding in HDS with a fair value of $93,206.

The following summarises the major classes of consideration transferred, and the recognised amounts of assets acquired and liabilities assumed at the acquisition date:

Consideration transferred

Shares issued Cash consideration Total consideration	$93,206 -
	$93,206

Identifiable assets acquired and liabilities assumed at cost

Cash & Cash Equivalents
Trade and Other Receivables
Inventories
Property, Plant & Equipment
Financial Assets
Deferred Tax Assets
Intangibles
Rental Stream Income
Convertible Loan Note
Trade and Other Payables
Income in Advance
Financial Liabilities
Current Tax Liabilities
Deferred Tax Liabilities
Provisions
Total net identifiable assets
Non-controlling interest

Goodwill

Consideration settled in cash
Cash and cash equivalents acquired
Net cash (inflow) on acquisition
Acquisition costs
Net cash received relating to acquisition

3,030,652
9,828,242
182,922
7,240,385
953,908
3,125,900
12,536,322
1,202,562
(36,377,159)
(3,744,372)
(1,892,675)
(10,810,245)
(55,668)
(7,140,624)
(271,441)

(22,191,291)

19,639,293
2,551,998
-
(3,030,652)
(3,030,652)
-
(3,030,652)

ARMIDALE INVESTMENT CORPORATION LIMITED ABN 58 100 854 788 AND ITS CONTROLLED ENTITIES

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

NOTE 24 – ACQUISITION OF SUBSIDIARY AND NON-CONTROLLING INTEREST (CONTINUED)

Acquisition of LCA

On 1 June 2012, $100,000 was advanced by the parent Company to AIKPL, to acquire 100% of LCA, thereby obtaining control.

The following summarises the major classes of consideration transferred, and the recognised amounts of assets acquired and liabilities assumed at the acquisition date:

Consideration transferred

Shares issued Cash consideration Total consideration	$100,000 - $100,000

Identifiable assets acquired and liabilities assumed at cost

Cash & Cash Equivalents Trade and Other Receivables Trade and Other Payables Financial Liabilities Total net identifiable assets Goodwill on acquisition Consideration settled in cash Cash and cash equivalents acquired Net cash inflow on acquisition Acquisition costs Net cash received relating to acquisition	4,712 2,625,050 (20,697) (2,696,225) (87,160) 187,160 - (4,712) (4,712) - (4,712)

NOTE 25 – GROUP ENTITIES

	Country of Incorporation	Percentage	Owned (%)
		June 2012	June 2011
Parent Entity:
Armidale Investment Corporation Limited	Australia
Controlled Entities:
HAL Data Services Pty Limited *	Australia	86.82	11.5
Lease Company of Australia Limited	Australia	100	-
Armidale Investment Corporation (Australia) Pty Limited (subsidiary)	Australia	100	100

HDS was not controlled at 30 June 2011

ARMIDALE INVESTMENT CORPORATION LIMITED ABN 58 100 854 788 AND ITS CONTROLLED ENTITIES

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

NOTE 26 – PARENT ENTITY INFORMATION

NOTE 26 – PARENT ENTITY INFORMATION
Information relating to Armidale Investment Corporation Limited (“the parent entity”) 2012 $ Statement of financial position Current assets 2,994,077 Total assets 16,313,719 Current liabilities 143,258 Total liabilities 143,258 Issued capital 92,448,555 Retained earnings (76,371,300) Reserves 93,206 16,170,461 Statement of comprehensive income Profit for the year 83,916 Other comprehensive income - Total comprehensive income 83,916	2011 $ 2,755,212 16,367,384 280,840 280,840 92,448,555 (76,455,217) 93,206
	16,086,544
	10,397,713 93,206
	10,490,919

NOTE 27 – EVENTS SUBSEQUENT TO BALANCE DATE

Receipt of $1m from HDS under HDS Debt Facility

Appointment of new Director

On 24 July 2012, Andrew Grant was appointed as Executive Director of the Company.

Waterfall Arrangement

Under the terms of the restructured loan and security arrangements between HDS, AIK and the other noteholders, loan payments are made to the noteholders in the following proportions (“Waterfall Arrangement”):

(a)	The Company:	79.83%
(b)	Solar Fund:	5.17%
(c)	Entities related to Andrew Grant:	7.50%
(d)	Entities related to George Matis:	7.50%
		100.00%

At the date of this report, shares are yet to be allotted as they are subject to shareholder approval.

ARMIDALE INVESTMENT CORPORATION LIMITED ABN 58 100 854 788 AND ITS CONTROLLED ENTITIES

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

NOTE 27 – EVENTS SUBSEQUENT TO BALANCE DATE (CONTINUED)

Implementation of new employment agreements

The Company has taken steps to secure the continued services of key HDS executives.

Incorporation of Oceania Leasing Corporation Limited

Oceania Leasing Corporation Limited, a 100% subsidiary of the parent Company was registered on 9 August 2012.

NOTE 28 – CONTINGENT LIABILITIES

There are no contingent liabilities as at 30 June 2012.

NOTE 29 – COMPANY DETAILS

The registered office and principal place of business of the Company is: Armidale Investment Corporation Limited Level 11, 139 Macquarie Street Sydney NSW 2000

ARMIDALE INVESTMENT CORPORATION LIMITED ABN 58 100 854 788 AND ITS CONTROLLED ENTITIES

DIRECTORS’ DECLARATION

The Directors of Armidale Investment Corporation Limited (“the Company”) declare that:

The consolidated financial statements and notes as set out on pages 23 to 65 and the “Remuneration Report” in the Directors’ Report set out on pages 15 to 18, are in accordance with the Corporations Act 2001, including:
a) complying with Accounting Standards in Australia and the Corporations Regulations 2001 ;
b) complying with International Financial Reporting Standards, as stated in note 1 to the financial standards; and
c) giving a true and fair view of the financial position as at 30 June 2012 and of the performance for the year ended on that date of the Group;
In the Directors’ opinion there are reasonable grounds to believe that the Group will be able to pay its debts as and when they become due and payable.
The Directors’ have been given the declarations required by Section 295A of the Corporations Act 2001 from the chief executive officer and chief financial officer for the financial year ended 30 June 2012.

This declaration is made in accordance with a resolution of the Directors.

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Gabriel Radzyminski

Chairman

Dated this 29[th] day of August 2012

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ARMIDALE INVESTMENT CORPORATION LIMITED ABN 58 100 854 788 AND ITS CONTROLLED ENTITIES

TWENTY LARGEST SHAREHOLDERS AT 27 SEPTEMBER 2012

Rank	Name		A/C Designation	27 Aug 12	%IC
1	ARMIDALE INVESTMENT COMPANY	PTY LTD		50,561,700	31.26%
2	GEGM INVESTMENTS PTY LTD			34,896,718	21.57%
3	PRESMORE PTY LTD			6,137,905	3.79%
4	HAL DATA SERVICES PTY LIMITED			5,773,978	3.57%
5	SCOTTOW PTY LTD			5,491,700	3.40%
6	PRESMORE PTY LIMITED			5,170,629	3.20%
7	BAYSTREET PTY LTD			4,984,481	3.08%
8	PRESMORE PTY LTD		SERENDIPITY TRUST	3,569,929	2.21%
9	LEZAK NOMINEES PTY LTD		LEZAK NOMINEES P/L S/F	2,857,143	1.77%
10	SIDNEY HO& ASSOCIATES PTY LTD			2,486,218	1.54%
	HSBC CUSTODY NOMINEES (AUSTRALIA)
11	LIMITED - A/C 2			2,383,334	1.47%
12	PALICAVE PTY LIMITED		RANOGAJEL FAMILY	2,175,000	1.34%
	ABN AMRO CLEARING SYDNEY NOMINEES PTY
13	LTD			2,085,066	1.29%
14	NAVIGATOR AUSTRALIA LTD			2,000,000	1.24%
15	STUTTGART PTY LTD			1,529,383	0.95%
16	MR DAVID DOMINIC WALSH			1,425,000	0.88%
	MR ROGER FITZGERALD & MRS MARLENE ANN
17	FITZGERALD			1,185,715	0.73%
18	GATT HOLDINGS PTY LTD		RAYMOND GATT	1,040,000	0.64%
19	MR EDWARD HO & MS JIN XING HO			1,035,713	0.64%
20	FORMULAYTE PTY LTD			1,000,000	0.62%
		TOTAL		137,789,612	85.18%
	Balance of Register			23,968,817	14.82%
	Grand	TOTAL		161,758,429	100.00%

On 27 September 2012, there were 510 holders of ordinary shares in the capital of the Company. Holders of ordinary shares are entitled to one vote per share.

Distribution of Equity Securities

	No of	Total
Range	Holders	Securities	%
100,001 and
Over	71	154,031,761	95.22
10,001 to
100,000	187	6,633,977	4.11
5,001 to 10,000	87	711,637	0.44
1,001 to 5,000	124	358,715	0.22
1 to 1,000	41	22,339	0.01
Total	510	161,758,429	100.00

Unmarketable Parcels

The number of security investors holding less than a marketable parcel of 10,870 securities ($0.046) on 27 September 2012 is 255 and they hold 1,123,740 securities.

ARMIDALE INVESTMENT CORPORATION LIMITED ABN 58 100 854 788 AND ITS CONTROLLED ENTITIES

SUBSTANTIAL SHAREHOLDINGS

As at 27 September 2012, the names and holdings of substantial shareholders are as follows:

Substantial Shareholders

Substantial Shareholders No. of shares % of Total Presmore Pty Limited ATF Smith Miller Family Trust Presmore Pty Limited ATF Serendipity Trust 65,440,163 40.46% Armidale Investment Company Pty Limited GEGM Investments Pty Limited 34,963,384 21.61%

DIRECTORS

Gabriel Radzyminski – Executive Chairman Mark Smith – Non-Executive Director Steve White – Independent Non-Executive Director Andrew Grant – Executive Director

SECRETARY

David Franks

MANAGEMENT

Armidale Investment Corporation Limited Level 11 139 Macquarie Street Sydney NSW 2000 Tel (02) 8014 1188 Fax (02) 8084 9918

REGISTERED OFFICE

Level 11 139 Macquarie Street Sydney NSW 2000 Tel (02) 8014 1188 Fax (02) 8084 9918

AUDITORS

Grant Thornton Audit Pty Limited Chartered Accountants Level 17 383 Kent Street Sydney NSW 2000 Email: [email protected] Internet: www.grantthornton.com.au

SHARE REGISTRY

Link Market Services Limited Locked Bag A14 Sydney South NSW 1235 Phone: (02) 8280 7111 Fax: (02) 9287 0303 Email: [email protected] Internet: www.linkmarketservices.com.au

KEY DATES

Annual General Meeting Date:

14 November 2012

AI assistant

COG FINANCIAL SERVICES LIMITED — AGM Information 2012

64684_rns_2012-10-09_a7486e0e-94f1-495f-9cdf-0569c11eb2ba.pdf

ARMIDALE INVESTMENT CORPORATION LIMITED ABN 58 100 854 788

NOTICE OF ANNUAL GENERAL MEETING

CONTENTS PAGE

TIME AND PLACE OF MEETING AND HOW TO VOTE

VENUE

YOUR VOTE IS IMPORTANT

VOTING IN PERSON

VOTING BY PROXY

Proxy forms received later than this time will be invalid.

NOTICE OF ANNUAL GENERAL MEETING

AGENDA

BUSINESS

Financial Statements

RESOLUTION 1 – ADOPTION OF REMUNERATION REPORT

RESOLUTION 2 – RE-ELECTION OF MR STEVE WHITE

RESOLUTION 3 – RE-ELECTION OF MR ANDREW GRANT

RESOLUTION 4 – APPROVAL OF ISSUE OF SECURITIES TO GEORGE MATIS AS CONSIDERATION FOR WATERFALL ARRANGEMENT

RESOLUTION 5 – APPROVAL OF ISSUE OF SECURITIES TO ANDREW GRANT AS CONSIDERATION FOR WATERFALL ARRANGEMENT

RESOLUTION 6 – APPROVAL OF ISSUE OF SECURITIES TO ANDREW GRANT UNDER INCENTIVE SHARE SCHEME

DATED: 28 SEPTEMBER 2012

BY ORDER OF THE BOARD

Voting Exclusion Statement:

EXPLANATORY STATEMENT

FINANCIAL REPORT AND REPORTS OF THE DIRECTORS AND AUDITORS

Written questions for the auditor

RESOLUTIONS 1 - ADOPTION OF REMUNERATION REPORT

The 'two strikes' rule

RESOLUTION 2 – RE-ELECTION OF MR STEVE WHITE

Directors Recommendations on Resolution 2

RESOLUTION 3 – RE-ELECTION OF MR ANDREW GRANT

Directors Recommendations on Resolution 3

RESOLUTION 4 – APPROVAL OF ISSUE OF SECURITIES TO GEORGE MATIS AS CONSIDERATION FOR WATERFALL ARRANGEMENT

Background

Application of Listing Rules

Listing Rule Information

Voting Exclusion Statement

Directors’ Recommendation and Reasons for Recommendation in relation to Resolution 4

Background

Application of Listing Rules

Listing Rule and Chapter 2E Information

Voting Exclusion Statement

Directors’ Recommendation and Reasons for Recommendation in relation to Resolution 5

RESOLUTION 6 – APPROVAL OF ISSUE OF SECURITIES TO ANDREW GRANT UNDER INCENTIVE SHARE SCHEME

Background - General

Background – Annual Incentive Scheme for Mr Grant

Application of Listing Rules and Corporation Act

(a) Application of Listing Rules

Listing Rule and Chapter 2E Information

Voting Exclusion Statement

Directors’ Recommendation and Reasons for Recommendation in relation to Resolution 6

GLOSSARY

ONLINE

X99999999999

X99999999999

ShAREhOLDER VOTING FORM

STEP 4

SIGNATURE OF ShAREhOLDERS – ThIS MUST BE COMPLETED

Your Name and Address

Appointment of a Proxy

Votes on Items of Business – Proxy Appointment

Appointment of a Second Proxy

Signing Instructions

Corporate Representatives

Lodgement of a Proxy Form

ONLINE

www.linkmarketservices.com.au

by fax:



by hand:

ARMIDALE INVESTMENT CORPORATION LIMITED ABN 58 100 854 788 AND ITS CONTROLLED ENTITIES

Table of Contents

CHAIRMAN’S LETTER

EXECUTIVE CHAIRMAN’S REPORT

Change of Company Name

HDS Obligations to the Company

Comment

EXECUTIVE CHAIRMAN’S REPORT

COG FINANCIAL SERVICES LIMITED AGM Information 2012