CTI LOGISTICS LIMITED

ABN 69 008 778 925

30 JUNE 2007

ANNUAL ACCOUNTS

2 Directory
Directors' Report $3-7$
Auditor's Independence Declaration $\bf{8}$
9 Income Statements
Balance Sheets $10$
Statements of Changes in Equity $\mathbf{H}$
12 Cash Flow Statements
$13 52$ Notes to the Financial Statements
Directors' Declaration $53^°$
54-56 Independent Audit Report
Corporate Governance Statement $57 - 60$

	Board of Directors
	Number Held	Number Attended
J D Elbery	6	6
P Leonhardt	6	6
D A Mellor	6	6
B E Saxild	6	6
D R Watson	6	6

	Number Held	Number
		Attended
J D Elbery (retired 30.4.07)
P Leonhardt
B E Saxild (appointed 1.5.07)	н.	$\blacksquare$

	Direct	Indirect
	Holding	Holding
J D Elbery	497,577	983,382
P Leonhardt		159,258
D A Mellor	244,389	2,969,130
B E Saxild	200,880	2,418,879
D R Watson	10,452,945	5,918,583

						Share based
		Short-term		Post-employment		payment
	Cash salary	Cash	Non-monetary		Retirement
	and fees	bonus	benefits	Superannuation	benefits	Options	Total
2007	\$	\$	\$	\$	\$	\$	\$
Elbery (became non- ΙD
executive $-1.5.07$ )	205,999		11,316	150,000	87,960		455,275
P Leonhardt	38,000						38,000
D A Mellor	241,329		11,615	45,200		٠	298,144
B E Saxild	252,769		16,608	58,065			327,442
D R Watson	330,365		13,333	90,920			434,618
Total	1,068,462		52,872	344,185	87,960		1,553,479
2006
J D Elbery	224,688		10,352	16,386			251,426
P ] Leonhardt	35,000					$\overline{\phantom{a}}$	35,000
D A Mellor	223,522		12,324	16,752		$\blacksquare$	252,598
B E Saxild	225,696	٠	15,730	50,000		٠	291,426
D R Watson	334,031	٠	13,893	55,099		۰	403,023
Total	1,042,937	-	52,299	138,237		$\qquad \qquad \blacksquare$	1,233,473

PRICEWATERHOUSE COPERS

PricewaterhouseCoopers ABN 52 780 433 757

QV1 250 St Georges Terrace PERTH WA 6000 GPO Box D198 PERTH WA 6840 DX 77 Perth Australia www.pwc.com/au Telephone +61 8 9238 3000 Facsimile +61 8 9238 3999 www.pwc.com/au

Auditor's Independence Declaration

As lead auditor for the audit of CTI Logistics Limited for the year ended 30 June 2007, I declare that to the best of my knowledge and belief, there have been:

a) no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and
b) no contraventions of any applicable code of professional conduct in relation to the audit.

This declaration is in respect of CTI Logistics Limited and the entities it controlled during the period.

Pierre Dreyer Partner PricewaterhouseCoopers

Perth 27 September 2007

Income Statements for the Year Ended 30 June 2007

		Consolidated		Parent Entity
		2007	2006	2007	2006
	Notes	\$	\$	\$	\$
Revenue	5	59,673,866	55,337,492	7,118,577	3,863,755
Other income	6	527,425	667,383	10,216	41,063
Changes in inventories of finished goods and
work in progress		(60, 728)	162,739
Raw materials and consumables used		(10, 401, 124)	(9,711,278)
Employee benefits expense		(16,663,122)	(16, 117, 375)	(4,703,721)	(4,367,452)
Subcontractor expense		(15,706,898)	(14, 204, 606)
Depreciation, write-down and amortisation
expense	7	(3,222,508)	(3,848,442)	(330, 822)	(321, 487)
Motor vehicle and transport costs		(3,051,740)	(3,010,487)	(94, 011)	(94, 551)
Property costs		(211, 965)	(920, 584)	(152, 464)	(84, 502)
Finance costs	$\overline{1}$	(1,027,845)	(928, 567)	(193, 393)	(244, 512)
Other expenses		(3, 292, 484)	(3,188,037)	(467, 229)	(511, 535)
Shares of net profit of joint venture partnership		161,666	209,313
Profit (loss) before income tax		6,724,543	4,447,551	1,187,153	(1,719,221)
Income tax (expense) benefit	8	(2, 125, 464)	(1, 351, 782)	343,328	509,517
Profit (loss) for the year	25	4,599,079	3,095,769	1,530,481	(1, 209, 704)
			Cents
Earnings per share for profit attributable to the		Cents
ordinary equity holders of the Company as
adjusted for the 3 for 1 share split on 18
December 2006
Basic earnings per share	36	13.44	6.72
Diluted earnings per share	36	13.44	6.72

The above income statements should be read in conjunction with the accompanying notes.

Balance Sheets as at 30 June 2007

		Consolidated		Parent Entity
		2007	2006	2007	2006
	Notes	\$	\$	\$	\$
ASSETS
Current assets
Cash and cash equivalents	9	2,884	520,418	2,884	520,418
Trade and other receivables	10	11,691,621	9,682,076	4,057,400	2,976,048
Inventories	$\mathbf{H}$	2,302,237	1,848,548
Total current assets		13,996,742	12,051,042	4,060,284	3,496,466
Non-current assets
Investments accounted for using the equity
method	12	191,254	229,589
Available-for-sale financial assets	3	78,966	65,168	63,606	54,234
Other financial assets	4			8,334,141	8,334,141
Property, plant and equipment	15	20,251,402	18,834,481	2,757,645	2,881,456
Investment properties	16	4,201,972	2,281,755
Deferred tax assets	17	977,684	864,546	341,136	310,943
Intangible assets	18	712,089	881,314
Total non-current assets		26,413,367	23,156,853	11,496,528	11,580,774
Total assets		40,410,109	35,207,895	15,556,812	15,077,240
Current liabilities
Trade and other payables	19	7,726,647	6,892,609	2,069,234	1,672,608
Borrowings	20	3,965,238	2,172,149	1,883,580	389,862
Current tax liabilities		1,304,672	1,391,090	1,304,672	1,391,090
Total current liabilities		12,996,557	10,455,848	5,257,486	3,453,560
Non-current liabilities
Borrowings	21	9,516,992	9,922,404	1,408,393	2,966,511
Provisions	23	244,822	497,472	93,374	108,522
Total non-current liabilities		9,761,814	10,419,876	1,501,767	3,075,033
Total liabilities		22,758,371	20,875,724	6,759,253	6,528,593
Net assets		17,651,738	14,332,171	8,797,559	8,548,647
EQUITY
Contributed equity	24	6,785,807	6,838,090	6,785,807	6,838,090
Reserves	25a	(42, 467)	(51,084)	(29, 564)	(36, 124)
Retained profits	25 _b	10,908,398	7,545,165	2,041,316	1,746,681
Total equity		17,651,738	14,332,171	8,797,559	8,548,647

The above balance sheets should be read in conjunction with the accompanying notes.

$\hat{\mathcal{A}}$

Statements of Changes in Equity for the Year Ended 30 June 2007

	Consolidated			Parent Entity
		2007	2006	2007	2006
	Notes	\$	\$	\$	\$
Total equity at the beginning of the financial
year		14,332,171	21,771,028	8,548,647	20,278,017
Change in fair value of available-for-sale financial
assets, net of tax		8,617	(51,084)	6,560	(36, 124)
Recognised directly in equity	25	8,617	(51,084)	6,560	(36, 124)
Profit (loss) for the year	25	4,599,079	3,095,769	1,530,481	(1, 209, 704)
Total recognised income and expense for the year		4,607,696	3,044,685	1,537,041	(1, 245, 828)
Transactions with equity holders in their capacity as equity holders:
Shares bought back	24	(52, 283)	(10,091,800)	(52, 283)	(10,091,800)
Dividends provided for or paid	26	(1, 235, 846)	(391, 742)	(1, 235, 846)	(391, 742)
Total equity at the end of the financial year		17,651,738	14,332,171	8,797,559	8,548,647

The above statements of changes in equity should be read in conjunction with the accompanying notes.

Cash Flow Statements for the Year Ended 30 June 2007

			Consolidated	Parent Entity
		2007	2006	2007	2006
	Notes	\$	\$	\$	\$
Cash flows from operating activities
Receipts from customers (inclusive of goods and
services tax)		63,885,174	62,745,691	4,529,233	4,479,512
Payments to suppliers and employees (inclusive of
goods and services tax)		(55, 256, 517)	(53,993,623)	(5,528,745)	(5,890,928)
Dividends received		3,864	5,520	3,864	5,520
Interest received		24,066	180,038	23,163	96,265
Joint venture partnership distribution received		200,000	156,000
Interest paid		(831,901)	(741, 322)	(98, 625)	(129,096)
Income tax refund received		33,371	75,668	33,371	75,668
Income taxes paid		(2,362,086)	(427, 079)	(2,362,086)	(427, 079)
Reimbursements received from tax consolidated
entities				2,226,172	297,884
Net cash inflow (outflow) from operating activities	34	5,695,971	8,000,893	(1, 173, 653)	(1,492,254)
Cash flows from investing activities
Loan repayments received				2,239,342	7,992,477
Payments for property, plant and equipment		(1,075,796)	(1, 255, 632)	(273, 864)	(307, 162)
Payment for investment property		(2,210,245)
Payments for intangibles		(2, 912)	(42, 641)
Payments for available-for-sale financial assets		(14, 485)		(12,000)
Deferred payment for purchase of business			(83, 333)
Proceeds from sale of property, plant &
equipment Proceeds from sale of available-for-sale financial		745,091	261,908	42,273	35,455
assets		12,900		12,900
Deferred proceeds from sale of business			1,196,070
Net cash (outflow) inflow from investing activities		(2,545,447)	76,372	2,008,651	7,720,770

Cash flows from financing activities
Proceeds from borrowings Repayment of borrowings		(2, 923, 985)	3,025,000 (1,986,201)	(608, 459)	3,025,000 (137, 452)
Payments for shares bought back		(52, 283)	(10,091,800)	(52, 283)	(10,091,800)
Dividend paid to Company's shareholders		(1, 235, 846)	(391, 742)	(1,235,846)	(391, 742)
Net cash (outflow) from financing activities		(4,212,114)	(9, 444, 743)	(1,896,588)	(7,595,994)

Net decrease in cash and cash equivalents		(1,061,590)	(1,367,478)	(1,061,590)	(1,367,478)
Cash and cash equivalents at the beginning of
the financial year		520,418	1,887,896	520,418	1,887,896
Cash (deficit) and cash equivalents at the end of the financial year	9	(541, 172)	520,418	(541, 172)	520,418

The above cash flow statements should be read in conjunction with the accompanying notes.

$\mathbf{L}$ SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The principal accounting policies adopted in the preparation of the financial report are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated. The financial report includes separate financial statements for CTI Logistics Limited as an individual entity and the consolidated entity consisting of CTI Logistics Limited and its subsidiaries.

BASIS OF PREPARATION OF FINANCIAL REPORT $(a)$

This general purpose financial report has been prepared in accordance with Australian Accounting Standards, other authoritative pronouncements of the Australian Accounting Standards Board, Urgent Issues Group Interpretations and the Corporations Act 2001.

Compliance with IFRS

Australian Accounting Standards include Australian equivalents to International Financial Reporting Standards (AIFRS). Compliance with AIFRS ensures that the consolidated financial statements and notes of CTI Logistics Limited comply with International Financial Reporting Standards (IFRS). The parent entity financial statements and notes also comply with IFRS except that it has elected to apply the relief provided to parent entities in respect of certain disclosure requirements contained in AASB 132 Financial Instruments: Presentation and Disclosure.

Historical cost convention

These financial statements have been prepared under the historical cost convention, as modified by the revaluation of available-for-sale financial assets.

$(b)$ PRINCIPLES OF CONSOLIDATION

$\theta$ Subsidiaries

The financial statements incorporate the assets and liabilities of all entities controlled by CTI Logistics Limited ("Company") as at 30 June 2007 and the results of all subsidiaries for the year then ended. CTI Logistics Limited and its subsidiaries together are referred to in these financial statements as the group.

Subsidiaries are all those entities (including special purpose entities) over which the group has the power to govern the financial and operating policies, generally accompanying a shareholding of more than one-half of the voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the group controls another entity.

Subsidiaries are fully consolidated from the date on which control is transferred to the group. They are de-consolidated from the date control ceases.

The purchase method of accounting is used to account for the acquisition of subsidiaries by the group (refer to note 1(h)).

Intercompany transactions, balances and unrealised gains on transactions between group companies are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the group.

Investments in subsidiaries are accounted for at cost in the Company's financial statements.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued). I.

loint ventures (ii)

loint venture entities

The interest in a joint venture partnership is accounted for in the consolidated financial statements using the equity method. Under the equity method, the share of the profits or losses of the partnership is recognised in the income statement, and the share of movements in reserves is recognised in the balance sheet.

Profits or losses on transactions establishing the joint venture partnership and transactions with the joint venture are eliminated to the extent of the group's ownership interest until such time as they are realised by the joint venture partnership on consumption or sale, unless they relate to an unrealised loss that provides evidence of the impairment of an asset transferred.

SEGMENT REPORTING $\left( \mathrm{c} \right)$

Segment reporting details are set out in Note 4. A business segment is a group of assets and operations engaged in providing products or services that are subject to risks and returns that are different to those of other business segments. There is no geographical segmentation as all operations are within Australia.

$(d)$ FOREIGN CURRENCY TRANSLATION

Functional and presentation currency $\hat{u}$

All group entities are based in Australia. The consolidated financial statements are presented in Australian dollars, which is the group's functional and presentation currency.

(ii) Transactions and balances

Foreign currency transactions are translated into functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at yearend exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the income statement.

REVENUE RECOGNITION $(e)$

Revenue is measured at the fair value of the consideration received or receivable. Amounts disclosed as revenue are net of returns, trade allowances and duties and taxes paid. Revenue is recognised for the major business activities as follows:

$(i)$ Logistics and transport

A sale is recorded when the goods or services have been delivered to or collected by a customer in accordance with the arrangements made with the group.

Security, manufacturing and other $(ii)$

A sale is recorded when goods have been despatched to a customer pursuant to a sales order and the associated risks of ownership have passed to the customer. A sale is recorded for services when the service has been performed.

Interest income $(iii)$

Interest income is recognised on a time proportion basis using the effective interest method.

$(iv)$ Dividends

Dividends are recognised as revenue when the right to receive payment is established.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) I.

(v) Other revenue

Revenue from outside the operating activities includes rent. This revenue is recognised when the right to receive payment is established.

INCOME TAX $(f)$

The income tax expense or revenue for the period is the tax payable on the current period's taxable income based on the national income tax rate adjusted by changes in deferred tax assets and liabilities attributable to temporary differences between the tax bases of assets and liabilities and their carrying amounts in the financial statements, and to unused tax losses.

Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. However, the deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the balance sheet date and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.

Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses.

Deferred tax liabilities and assets are not recognised for temporary differences between the carrying amount and tax bases of investments in controlled entities where the parent entity is able to control the timing of the reversal of the temporary differences and it is probable that the differences will not reverse in the foreseeable future.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities and when the deferred tax balances relate to the same taxation authority. Current tax assets and tax liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.

Current and deferred tax balances attributable to amounts recognised directly in equity are also recognised directly in equity.

Tax consolidation legislation

CTI Logistics Limited and its wholly-owned Australian controlled entities have implemented the tax consolidation legislation as of I July 2003.

The head entity, CTI Logistics Limited, and the controlled entities in the tax consolidated group continue to account for their own current and deferred tax amounts. These tax amounts are measured as if each entity in the tax consolidated group continues to be a stand alone taxpayer in its own right.

In addition to its own current and deferred tax amounts, CTI Logistics Limited also recognises the current tax liabilities (or assets) and the deferred tax assets arising from unused tax losses and unused tax credits assumed from controlled entities in the tax consolidated group.

Assets or liabilities arising under tax funding agreements with the tax consolidated entities are recognised as amounts receivable from or payable to other entities in the group.

$\mathbf{L}$ SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Any difference between the amounts assumed and amounts receivable or payable under the tax funding agreement are recognised as a contribution to (or distribution from) wholly-owned tax consolidated entities.

LEASES $(g)$

Leases of property, plant and equipment where the group has substantially all the risk and rewards of ownership, are classified as finance leases. Finance leases are capitalised at the lease's inception at the lower of the fair value of the leased property and the present value of the minimum lease payments. The corresponding rental obligations, net of finance charges are included in other long term payables. Each lease payment is allocated between the liability and finance charges so as to achieve a constant rate on the finance balance outstanding. The interest element of the finance cost is charged to the income statement 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 retained by the lessor are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to the income statement on a straight-line basis over the period of the lease.

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

ACQUISITION OF ASSETS $(h)$

The purchase method of accounting is used to account for all acquisition of assets (including business combinations) regardless of whether equity instruments or other assets are acquired. Cost is measured as the fair value of the assets given, shares issued or liabilities incurred or assumed at the date of exchange plus costs directly attributable to the acquisition. Where equity instruments are issued in an acquisition, the value of the instruments is their published market price as at the date of exchange unless, in rare circumstances, it can be demonstrated that the published price at the date of exchange is an unreliable indicator of fair value and that other evidence and valuation methods provide a more reliable measure of fair value. Transaction costs arising on the issue of equity instruments are recognised directly in equity.

Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date, irrespective of the extent of any minority interest. The excess of the cost of acquisition over the fair value of the group's share of the identifiable net assets acquired is recorded as goodwill (refer to note 1(q)). If the cost of acquisition is less than the fair value of the net assets of the subsidiary acquired, the difference is recognised directly in the income statement, but only after a reassessment of the identification and measurement of the net assets acquired.

Where settlement of any part of cash consideration is deferred, the amounts payable in the future are discounted to their present value as at the date of exchange. The discount rate used is the entity's incremental borrowing rate, being the rate at which a similar borrowing could be obtained from an independent financier under comparable terms and conditions.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) $\mathbf{l}$ .

$(i)$ IMPAIRMENT OF ASSETS

Goodwill and intangible assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment or more frequently if events or changes in circumstances indicate that they might be impaired. Assets that are subject to amortisation or depreciation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset's fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash generating units). Non-financial assets, other than goodwill, are reviewed for possible reversal of the impairment at each reporting period.

$(i)$ CASH AND CASH EQUIVALENTS

Cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities on the balance sheet.

$(k)$ TRADE RECEIVABLES

Trade receivables are recognised initially at fair value and subsequently measured at amortised cost, less provision for impairment. Trade receivables are due for settlement not more than 30 days from the date of recognition.

Collectibility of trade receivables is reviewed on an ongoing basis. Debts which are known to be uncollectible are written off. A provision for impairment of trade receivables is established when there is objective evidence that the group will not be able to collect all amounts due according to the original terms of receivables. The amount of the provision is the difference between the asset's carrying amount and the present value of estimated future cash flows, discounted at the effective interest rates. The amount of the provision is recognised in the income statement.

INVENTORIES $(1)$

Raw materials, work in progress and finished goods are stated at the lower of cost and net realisable value. Cost comprises direct materials, direct labour and an appropriated proportion of variable and fixed overhead expenditure, the latter being allocated on the basis of normal operating capacity. Costs are assigned to individual items of inventory on the basis of weighted average costs. Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale.

INVESTMENTS AND OTHER FINANCIAL ASSETS $(m)$

Classification

The group classifies its investments in the following categories: loans and receivables, and available-for-sale financial assets. The classification depends on the purpose for which the investments were acquired. Management determines the classification of its investments at initial recognition and re-evaluates this designation at each reporting date.

$\mathbf{L}$ SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Loans and receivables $\theta$

Loans and receivables are non derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets, except for those with maturities greater than 12 months after the balance sheet date which are classified as non-current assets. Loans and receivables are included in receivables in the balance sheet.

$(ii)$ Available-for-sale financial assets

Available-for-sale financial assets, comprising principally marketable equity securities, are non-derivatives that are either designated in this category or not classified in any of the other categories. They are included in non-current assets unless management intends to dispose of the investment within 12 months of the balance sheet date.

Recognition and derecognition

Purchases and sales of financial assets are recognised on trade-date $-$ the date on which the group commits to purchase or sell the asset. Financial assets are initially recognised at fair value plus transaction costs. Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or have been transferred and the group has transferred substantially all the risks and rewards of ownership. When available-for-sale financial assets are sold, the accumulated fair value adjustments recognised in equity are included in the income statement as gains and losses from investment securities.

Subsequent measurement

Loans and receivables are carried at amortised cost using the effective rate method.

Available-for-sale financial assets are subsequently carried at fair value. Changes in the fair value of other monetary and nonmonetary securities classified as available-for-sale are recognised in equity.

Fair value

The fair values of quoted investments are based on current bid prices. If the market for a financial asset is not active (and for unlisted securities), the group establishes fair value by using valuation techniques. These include reference to the fair values of recent arm's length transactions, involving the same instruments or other instruments that are substantially the same, discounted cash flow analysis, and the option pricing models refined to reflect the issuer's specific circumstances.

Impairment

The group assesses at each balance date whether there is objective evidence that a financial asset or group of financial assets is impaired. In the case of equity securities classified as available-for-sale, a significant or prolonged decline in the fair value of a security below its cost is considered in determining whether the security is impaired. If any such evidence exists for available-for-sale financial assets, the cumulative loss (measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that financial asset previously recognised in profit and loss) is removed from equity and recognised in the income statement. Impairment losses recognised in the income statement on equity instruments are not reversed through the income statement.

FAIR VALUE ESTIMATION $(n)$

The fair value of financial assets and financial liabilities must be estimated for recognition and measurement or for disclosure purposes.

The fair value of financial instruments traded in active markets (such as publicly traded derivatives, and trading and available-for-sale securities) is based on quoted market prices at the balance sheet date. The quoted market price used for financial assets held by the group is the current bid price; the appropriate quoted market price for financial liabilities is the current ask price.

$\mathbf{I}$ . SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

The nominal value less estimated credit adjustments of trade receivables and payables are assumed to approximate their fair values. The fair value of financial liabilities for disclosure purposes is estimated by discounting the future contractual cash flows at the current market interest rate that is available to the group for similar financial instruments.

$(0)$ PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment other than freehold land is stated at historical cost less depreciation. Historical cost includes expenditure that is directly attributable to the acquisition of the items.

Subsequent costs are included in the asset's carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the group and the cost of the item can be measured reliably. All other repairs and maintenance are charged to the income statement during the financial period in which they are incurred.

Land is not depreciated. Depreciation on other assets is calculated using the straight line method to allocate their cost net of their residual values, over their estimated useful lives, as follows:

- Buildings	25 - 40 years
- Plant & equipment	$5 - 15$ years
- Motor vehicles	$5 - 10$ years
- Furniture and fittings	$3 - 8$ years

The assets' residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet 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 (note 1(i)).

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

INVESTMENT PROPERTY $(p)$

Investment property, principally comprising freehold land and buildings, is held for long-term rental yields and is not occupied by the group. Investment property other than freehold land is held at historical cost less depreciation. Investment buildings are depreciated using the straight line method over their estimated useful lives of 25 to 40 years.

I. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

INTANGIBLE ASSETS $(q)$

$(i)$ Goodwill

Goodwill represents the excess of the cost of an acquisition over the fair value of the group's share of the net identifiable assets acquired. Goodwill is not amortised. Instead, goodwill is tested for impairment annually, or more frequently if events or changes in circumstances indicate that it might be impaired, and is carried at cost less accumulated impairment losses. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold. Goodwill is allocated to cash-generating units for the purpose of impairment testing.

$(ii)$ Purchased Security Lines

Security lines have a finite useful life and are carried at cost less accumulated amortisation and impairment losses. Amortisation is calculated using the straight line method to allocate the cost of security lines over their estimated useful lives, which vary from 5 to 7 years.

TRADE AND OTHER PAYABLES $(r)$

These amounts represent liabilities for goods and services provided to the group prior to the end of the financial year and which are unpaid. The amounts are unsecured and are paid based on the terms of trade which are usually 30 to 60 days from the date of recognition.

BORROWINGS $(s)$

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 income statement over the period of the borrowings using the effective interest method.

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 balance sheet date.

BORROWING COSTS $(t)$

Borrowing costs are recognised as expenses in the period in which they are incurred. Borrowing costs include interest on bank overdrafts, short-term and long-term borrowings and finance lease charges.

PROVISIONS (u)

Provisions for legal claims and service warranties are recognised when the group has a present legal or constructive obligation as a result of past events, it is more likely than not that an outflow of resources will be required to settle the obligation, and the amount has been reliably estimated. Provisions are not recognised for future operating losses.

Provisions are measured at the present value of management's best estimate of the expenditure required to settle the present obligation at the balance sheet date.

$\mathbf{I}$ . SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

EMPLOYEE BENEFITS $(v)$

Wages, salaries and annual leave (i)

Liabilities for wages, salaries, including non-monetary benefits and annual leave expected to be settled within 12 months of the reporting date are recognised in other payables in respect of employees' services up to the reporting date and are measured at the amounts expected to be paid when the liabilities are settled.

$(ii)$ Long service leave

The liability for long service leave is recognised in the provision for employee benefits and measured as the present value of expected future payments to be made in respect of services provided by employees up to the reporting date. Consideration is given to expected future wage and salary levels, experience of employee departures and periods of service. Expected future payments are discounted using market yields at the reporting date on national government bonds with terms to maturity and currency that match, as closely as possible, the estimated future cash outflows.

(iii) Retirement benefit obligations

Contributions to the defined contribution fund are recognised as an expense as they become payable. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in the future payments is available.

$(iv)$ Bonus plans

The group recognises a liability and an expense for bonuses where contractually obliged or when past events have created a constructive obligation.

CONTRIBUTED EQUITY $(w)$

Ordinary shares are classified as equity.

Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds. Incremental costs directly attributable to the issue of new shares or options, or for the acquisition of a business, are not included in the cost of the acquisition as part of the purchase consideration.

If the Company re-acquires its own ordinary shares, for example as a result of a share buy-back, those shares are deducted from equity and cancelled. No gain or loss is recognised in the profit or loss and the consideration paid including any directly attributable incremental costs (net of income taxes) is recognised directly in equity.

DIVIDENDS $(x)$

Provision is made for the amount of any dividend declared, determined or publicly recommended by the directors on or before the end of the year but not distributed at balance date.

$(y)$ EARNINGS PER SHARE

Basic earnings per share $(i)$

Basic earnings per share is determined by dividing profit for the year by the weighted average number of ordinary shares outstanding during the year.

$\mathsf{I}$ . SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

$(ii)$ Diluted earnings per share

Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account the after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares and the weighted average number of shares assumed to have been issued for no consideration in relation to dilutive potential ordinary shares.

GOODS AND SERVICES TAX (GST) $(z)$

Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not recoverable from the taxation authority. In this case it is recognised as part of the cost of acquisition of the asset or as part of the expense.

Receivables and payables are stated inclusive of the amounts of GST receivable or payable. The net amount of GST recoverable from, or payable to, the taxation authority is included with other receivables or payables in the balance sheet.

Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities which are recoverable from, or payable to the taxation authority, are presented as operating cash flow.

NEW ACCOUNTING STANDARDS AND INTERPRETATIONS $(aa)$

Certain new accounting standards and interpretations have been published that are not mandatory for 30 June 2007 reporting periods. The group's and the parent entity's assessment of the impact of these new standards and interpretations is set out below.

AASB 7 Financial Instruments: Disclosures and AASB 2005-10 Amendments to Australian Accounting Standards [AASB 132, $\left( \mathbf{i} \right)$ AASB 101, AASB 114, AASB 117, AASB 133, AASB 139, AASB 1, AASB 4, AASB 1023 & AASB 1038]

AASB 7 and ASSB 2005-10 are applicable to annual reporting periods beginning on or after 1 January 2007. The group has not adopted the standards early. Application of the standards will not affect any of the amounts recognised in the financial statements, but will impact the type of information disclosed in relation to the group's and the parent entity's financial instruments.

$(ii)$ AASB1-10 Interim Financial Reporting and Impairment

AASB-1 10 is applicable to reporting periods commencing on or after 1 November 2006. The group has not recognised an impairment loss in relation to goodwill, investments in equity instruments or financial assets carried at cost in an interim reporting period but subsequently reversed the impairment loss in the annual report. Application of the interpretation will therefore have no impact on the group's or the parent entity's financial statements.

AASB 8 Operating Segments and AASB 2007-3 Amendments to Australian Accounting Standards arising from AASB 8 (iii)

AASB 8 and AASB 2007-3 are effective for annual reporting periods commencing on or after 1 January 2009. AASB 8 will result in a significant change in the approach to segment reporting, as it requires adoption of a management approach to reporting on the financial performance. The information being reported will be based on what the key decision-makers use internally for evaluating segment performance and deciding how to allocate resources to operating segments. The group has not yet decided when to adopt AASB 8. Application of AASB 8 may result in different segments, segment results and different type of information being reported in the segment note of the financial report. However, it will not affect any of the amounts recognised in the financial statements.

$2.$ FINANCIAL RISK MANAGEMENT

The group's activities expose it to a variety of financial risks; market risk (fair value interest rate risk and price risk), credit risk, liquidity risk and cash flow interest rate risk. The group's overall risk management program focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the financial performance of the group.

Risk management is carried out by the director responsible for finance under policies approved by the board of directors. The board considers principles for overall risk management, as well as determining policies covering specific areas, such as mitigating foreign exchange, interest rate and credit risks and investing excess liquidity.

Credit risk $(a)$

The group has no significant concentrations of credit risk. The group has policies in place to ensure that sales of products and services are made to customers with an appropriate credit history. Cash transactions are limited to high credit quality financial institutions. The group has policies that limit the amount of credit exposure to any one financial institution.

$(b)$ Liquidity risk

Prudent liquidity risk management implies maintaining sufficient cash and marketable securities, the availability of funding through an adequate amount of committed credit facilities and the ability to close-out market positions. Due to the dynamic nature of the underlying businesses, the board of directors aims at maintaining flexibility in funding by keeping committed credit lines available.

$(c)$ Cash flow and fair value interest rate risk

As the group has no significant interest-bearing assets, the group's income and operating cash flows are substantially independent of changes in market interest rates.

The group's interest rate risk arises from long-term borrowings. Borrowings issued at variable rates expose the group to cash flow interest rate risk. Borrowings issued at fixed rates expose the group to fair value interest rate risk. Group policy is to maintain approximately 60% of its borrowings in short term reviewable or fixed rate instruments. At the year end, $77\%$ (2006 - $75\%$ ) of borrowings were at short term reviewable or fixed rates.

$3.$ CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS

Estimates, assumptions and judgements may be used to assess the measurement of certain items of income and expense, and assets and liabilities. Such estimates, assumptions and judgements are regularly evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

Where estimates and assumptions are made concerning the future, the resulting accounting estimates may not equal the related actual outcome. The estimates and assumptions which give rise to a risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.

$3.$ CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS (continued)

$(i)$ Estimated impairment of goodwill

The group tests annually whether goodwill has suffered any impairment, in accordance with the accounting policy stated in note 1(i). The recoverable amounts of cash-generating units have been determined based on value-in-use calculations. These calculations require the use of assumptions. Note 18 sets out the basis of these assumptions.

4. SEGMENT INFORMATION

$(a)$ Description of segments

The group operates solely in Australia and is involved in the production and sale of the following products and services:

Logistics and transport services includes the provision of courier, taxi truck, parcel distribution, fleet management, warehousing and distribution and document storage services.
Manufacturing, security and other services includes the provision of printing, manufacturing of plastic products and security $\bullet$ services.
$(b)$ Notes to and forming part of the segment information

$(i)$ Accounting policies

Segment information is prepared in conformity with the accounting policies of the entity as disclosed in note I and accounting standard AASB 114 Segment Reporting.

Segment revenues, expenses, assets and liabilities are those that are directly attributable to a segment and the relevant portion that can be allocated to the segment on a reasonable basis. Segment assets include all assets used by a segment and consist primarily of operating cash, receivables, inventories, property, plant and equipment and goodwill and other intangible assets, net of related provisions. While most of these assets can be directly attributable to individual segments, the carrying amounts of certain assets used jointly by segments are allocated based on reasonable estimates of usage. Segment liabilities consist primarily of trade and other creditors, employee benefits and provision for service warranties. Segment assets and liabilities do not include income taxes.

$(ii)$ Inter-segment transfers

Segment revenues, expenses and results include transfers between segments. Such transfers are priced on an "arm's-length" basis and are eliminated on consolidation.

$\overline{4}$ . SEGMENT INFORMATION (continued)

Primary reporting format - business segments

2007	Logistics and Transport S	Manufacturing, Security and Other \$	Intersegment Eliminations \$	Consolidated S
Sales to external customers	31,979,543	26,842,028		58,821,571
Intersegment sales	356,827	39,766	(396, 593)
Total sales revenue	32,336,370	26,881,794	(396, 593)	58,821,571
Share of net profit of joint venture partnership				161,666
Other revenue/income				1,379,720
Total segment revenue/income				60,362,957
Segment result	5,282,016	3,559,817	(50, 245)	8,791,588
Unallocated revenue less expenses				(2,067,045)
Profit before income tax expense				6,724,543
Income tax expense				(2, 125, 464)
Profit for the year				4,599,079
Segment assets	12,617,442	23,574,481	(4,304,337)	31,887,586
Unallocated assets				8,522,523
Total assets				40,410,109
Segment liabilities	2,025,646	3,888,004	(122, 592)	5,791,058
Unallocated liabilities				16,967,313
Total liabilities				22,758,371
Investment in joint venture partnership	191,254			191,254
Acquisition of property, plant and equipment,
intangibles and other non-current segment assets	628,238	6,154,457		6,782,695
Unallocated acquisitions				273,864
Total acquisitions				7,056,559
Depreciation, write-down and amortisation expense	989,999	1,901,687		2,891,686
Unallocated				330,822
Total depreciation, write-down and amortisation expense				3,222,508
Other non-cash activities	144,284	3,623,322		3,767,606

SEGMENT INFORMATION (continued) $\overline{4}$ .

2006	Logistics and Transport	Manufacturing, Security and Other \$	Intersegment Eliminations \$	Consolidated \$
Sales to external customers	29,633,265	25,431,315		55,064,580
Intersegment sales	299,065	35,150	(334,215)
Total sales revenue	29,932,330	25,466,465	(334,215)	55,064,580
Share of net profit of joint venture partnership				209,313
Other revenue				940,295
Total segment revenue				56,214,188
Segment result	4,692,246	2,238,992	(150, 011)	6,781,227
Unallocated revenue less expenses				(2, 333, 676)
Profit before income tax expense				4,447,551
Income tax expense				(1, 351, 782)
Profit for the year				3,095,769
Segment assets	12,482,475	18,389,024	(815, 306)	30,056,193
Unallocated assets				5,151,702
Total assets				35,207,895
Segment liabilities	2,124,100	3,989,912	(146, 457)	5,967,555
Unallocated liabilities				14,908,169
Total liabilities				20,875,724
Investment in joint venture partnership	229,589			229,589
Acquisition of property, plant and equipment, intangibles
and other non-current segment assets	1,068,219	1,219,845		2,288,064
Unallocated acquisitions				410,378
Total acquisitions				2,698,442
Depreciation and amortisation expense	866,425	2,660,530		3,526,955
Unallocated				321,487
Total depreciation and amortisation expense				3,848,442
Other non-cash activities	657,733	742,443		1,400,176

$5.$ REVENUE

	Consolidated		Parent Entity
	2007	2006	2007	2006
	\$	\$	\$	\$
Revenue
Sales revenue
Sale of goods	22,761,124	20,904,315
Services	36,547,529	33,848,817	599,100	561,074
Services to related companies			3,167,680	2,917,096
Other revenue
Interest	24,066	180,038	23,163	96,265
Dividends	3,864	5,520	3,864	5,520
Dividends from related companies			3,000,000
Rent	337,283	398,802
Rent charged to related companies			324,770	283,800
	59,673,866	55,337,492	7,118,577	3,863,755

OTHER INCOME 6.

Net gain on disposal of:
-Plant and equipment	78,953	91.810	$\blacksquare$	$\overline{\phantom{a}}$
-Equity securities	900	۰.	900
Other	447,572	575,573	9,316	41,063
	527,425	667,383	10,216	41,063

$\sim$

$\overline{7}$ . EXPENSES

	Consolidated		Parent Entity
	2007	2006	2007	2006
	\$	\$	\$	\$
Profit (loss) before income tax includes the following specific expenses:
Defined contribution superannuation expense	1,531,458	1,361,451	494,073	347,819
Write-down investment property	141,600
Depreciation
Buildings	471,207	397,225	59,752	59,752
Plant & equipment	2,437,562	3,280,189	271,070	261,735
Total depreciation	2,908,769	3,677,414	330,822	321,487
Amortisation
Purchased lines	172,139	171,028
Finance costs
Interest and finance charges paid/payable	1,027,845	928,567	193,393	244,512
Net loss on disposal of:
- Plant and equipment			24,580	705
Rental expense relating to operating leases
Minimum lease payments	24,291	656,031
8. INCOME TAX EXPENSE
(a) Income tax expense (benefit)
Current tax	2,169,294	1,653,215	(485, 125)	(555, 142)
Deferred tax	(116, 831)	(303, 663)	(33,005)	54,210
Under (over) provided in prior years	73,001	2,230	174,802	(8,585)
Income tax expense (benefit)	2,125,464	1,351,782	(343, 328)	(509, 517)
Deferred income tax (revenue) expense included in income tax expense comprises:
(Increase) decrease in deferred tax assets (note 17)	(79, 112)	(92, 414)	(33,005)	54,210
Decrease in deferred tax liabilities (note 22)	(37,719)	(211, 249)
	(116, 831)	(303, 663)	(33,005)	54,210

8. INCOME TAX EXPENSE (continued)

	Consolidated		Parent Entity
	2007	2006	2007	2006
	\$	\$	\$	\$
(b) Numeric reconciliation of income tax
expense to prima facie tax payable
Profit (loss) before income tax expense	6,724,543	4,447,551	1,187,153	(1,719,221)
Tax at the Australian rate of tax of $30\%$ (2006 - $30\%$ )	2,017,363	1,334,265	356,146	(515,766)
Tax effect of amounts which are not deductible (taxable) in
calculating taxable income:
Depreciation and amortisation	11,248	12,276	9,241	12,276
Sundry items	22,693	1,355	17,642	902
Rebatable dividends	1,159	1,656	(901, 159)	1,656
	2,052,463	1,349,552	(518, 130)	(500, 932)
Under (over) provision in prior years	73,001	2,230	174,802	(8,585)
Income tax expense (benefit)	2,125,464	1,351,782	(343, 328)	(509,517)
Amounts recognised direct in equity (c)
Aggregate current and deferred tax arising in the reporting
period and not recognised in net profit or loss but directly
debited or credited to equity
Net deferred tax -credited directly to equity
(note 17)	3,693	(21, 893)	2,812	(15, 482)

Tax consolidation legislation

CTI Logistics Limited and the controlled entities implemented the tax consolidation legislation as of I July 2003. The accounting policy relating to this legislation is set out in Note 1(f).

The entities have also entered into tax sharing and funding agreements. Under the terms of these agreements, the controlled entities will reimburse the Company for any current tax payable by the Company arising in respect of their activities and the Company will reimburse the controlled entities for any tax refund due to the Company arising in respect of their activities. The reimbursements are payable by the Company and will limit the joint and several liability of the controlled entities in the case of default by the Company.

9. CURRENT ASSETS - CASH AND CASH EQUIVALENTS

	Consolidated		Parent Entity
	2007	2006	2007	2006
	\$	\$	\$	\$
Cash at bank and in hand	2,884	520,418	2,884	520,418
(a) Reconciliation to cash at the end of the year
The above figures are reconciled to cash at the end of
the financial year as shown in the statement of cash
flows as follows:
Balances as above	2,884	520,418	2,884	520,418
Bank overdraft (note 20)	(544, 056)		(544, 056)
Balances per statement of cash flows	(541, 172)	520,418	(541, 172)	520,418
Cash at bank and on hand (b) Cash at bank earns interest at varying rates between nil and $6.25\%$ per annum (2006 - nil and 5.29% per annum).
CURRENT ASSETS - TRADE AND OTHER RECEIVABLES 10.
Trade receivables	10,703,900	9,264,034	24,955	35,988
Provision for doubtful receivables	(322, 893)	(442, 910)
	10,381,007	8,821,124	24,955	35,988
Loans to controlled entities			3,642,294	2,560,773
Other receivables	553,336	96,038
Prepayments	757,278	764,914	390,151	379,287
	1,310,614	860,952	4,032,445	2,940,060

Bad and doubtful trade receivables $(a)$

The group has recognised a loss of \$57,734 (2006 -\$45,048) in respect of bad and doubtful trade receivables during the year ended 30 June 2007. The loss has been included in 'other expenses' in the income statement.

$11,691,621$

$(b)$ Other receivables

These amounts generally arise from transactions outside the usual operating activities of the group. Interest is not normally charged and collateral is not normally obtained.

Effective interest rates and credit risk $\mathbf{c}$

Information concerning the credit risk of receivables is set out in note 2. Loans to controlled entities or trade receivables are interest free, unsecured and have no fixed terms of repayment.

2,976,048

4,057,400

9.682.076

H. CURRENT ASSETS - INVENTORIES

	Consolidated		Parent Entity
	2007 S	2006	2007	2006 Ş
Raw materials $-$ at cost	878,865	364,448	$\blacksquare$
Work in progress $-$ at cost	246,314	264,583
Finished goods $-$ at cost	1,177,058	1,219,517	٠	$\blacksquare$
	2,302,237	1,848,548	$\blacksquare$

NON-CURRENT ASSETS - INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD $12.$

		Consolidated		Parent Entity
	2007	2006	2007	2006
Interest in joint venture partnership (note 33)	191,254	229,589	$\blacksquare$	$\overline{\phantom{a}}$

$13.$ NON-CURRENT ASSETS - AVAILABLE-FOR-SALE FINANCIAL ASSETS

	Consolidated		Parent Entity
2007	2006	2007	2006

Other listed securities
78,966 Equity securities	65,168	63,606	54,234

$14.$ NON-CURRENT ASSETS - OTHER FINANCIAL ASSETS

	Consolidated		Parent Entity
	2007	2006	2007	2006
Shares in subsidiaries (note 31)	$\blacksquare$	$\blacksquare$	8,334,141	8,334,141

These financial assets are carried at cost.

$15.$ NON-CURRENT ASSETS - PROPERTY, PLANT AND EQUIPMENT

Consolidated	Freehold land	Freehold buildings	Plant and equipment	Motor Vehicles	Total
	\$	\$	\$	\$	\$
I July 2005
Cost	2,488,982	7,521,382	23,871,096	6,042,304	39,923,764
Accumulated depreciation		(1, 910, 666)	(15,700,430)	(2,508,496)	(20, 119, 592)
Net book amount	2,488,982	5,610,716	8,170,666	3,533,808	19,804,172
Year ended 30 June 2006
Opening net book amount	2,488,982	5,610,716	8,170,666	3,533,808	19,804,172
Additions		14,585	1,637,386	1,003,830	2,655,801
Disposals			(3,294)	(166, 804)	(170,098)
Depreciation charge		(175, 205)	(2,579,457)	(700, 732)	(3,455,394)
Closing net book amount	2,488,982	5,450,096	7,225,301	3,670,102	18,834,481
At 30 June 2006
Cost	2,488,982	7,535,967	25,338,265	6,534,981	41,898,195
Accumulated depreciation		(2,085,871)	(18, 112, 964)	(2,864,879)	(23,063,714)
Net book amount	2,488,982	5,450,096	7,225,301	3,670,102	18,834,481
Year ended 30 June 2007
Opening net book amount	2,488,982	5,450,096	7,225,301	3,670,102	18,834,481
Additions		82,714	4,417,341	343,347	4,843,402
Disposals			(511, 294)	(154, 844)	(666, 138)
Depreciation charge		(181, 179)	(1, 857, 345)	(721, 819)	(2,760,343)
Closing net book amount	2,488,982	5,351,631	9,274,003	3,136,786	20,251,402
At 30 June 2007
Cost	2,488,982	7,618,681	26,245,037	6,386,068	42,738,768
Accumulated depreciation		(2,267,050)	(16, 971, 034)	(3, 249, 282)	(22, 487, 366)
Net book amount	2,488,982	5,351,631	9,274,003	3,136,786	20,251,402
Parent Entity
1 July 2005
Cost	560,973	1,945,838	2,175,754	751,296	5,433,861
Accumulated depreciation		(555, 357)	(1, 847, 645)	(148, 641)	(2,551,643)
Net book amount	560,973	1,390,481	328,109	602,655	2,882,218
Year ended 30 June 2006
Opening net book amount	560,973	1,390,481	328,109	602,655	2,882,218
Additions			278,477	78,409	356,886
Disposals				(36, 161)	(36, 161)
Depreciation charge		(59, 752)	(158, 450)	(103,285)	(321, 487)
Closing net book amount	560,973	1,330,729	448,136	541,618	2,881,456

15. NON-CURRENT ASSETS - PROPERTY, PLANT AND EQUIPMENT (continued)

Parent Entity	Freehold land \$	Freehold buildings ¢	Plant and equipment	Motor Vehicles Ş	Total \$
At 30 June 2006
Cost	560,973	1,945,838	2,454,231	781,491	5,742,533
Accumulated depreciation		(615,109)	(2,006,095)	(239, 873)	(2,861,077)
Net book amount	560,973	1,330,729	448,136	541,618	2,881,456
Year ended 30 June 2007
Opening net book amount	560,973	1,330,729	448,136	541,618	2,881,456
Additions			167,617	106,247	273,864
Disposals				(66, 853)	(66, 853)
Depreciation charge		(59, 752)	(164, 187)	(106, 883)	(330, 822)
Closing net book amount	560,973	1,270,977	451,566	474,129	2,757,645
At 30 June 2007
Cost	560,973	1,945,838	2,621,848	712,174	5,840,833
Accumulated depreciation		(674, 861)	(2,170,282)	(238, 045)	(3,083,188)
Net book amount	560,973	1,270,977	451,566	474,129	2,757,645

$(a)$ Recent valuations of land and buildings

	Consolidated		Parent Entity
Aggregate recent valuations of freehold land and	2007	2006	2007	2006
buildings based on:
Directors' valuation - 2007	32,155,200		4,080,000
Independent valuation - 2006		17,200,000	٠	3,400,000
	32,155,200	17,200,000	4,080,000	3,400,000

The valuation basis of land and buildings is fair value being the amounts for which the properties could be exchanged between willing parties in an arm's length transaction, based on current prices in an active market for similar properties in the same location and condition. The 2007 valuations were made by the directors as at 30 June 2007. The 2006 valuations were based on independent assessments by an Associate of the Australian Property Institute as at 23 May 2006.

$(b)$ Non-current assets pledged as security

Refer to note 21 for information on non-current assets pledged as security by the parent entity and its controlled entities.

$16.$ NON-CURRENT ASSETS - INVESTMENT PROPERTIES

	Freehold	Freehold
Consolidated	Land	buildings	Total
	\$	\$	\$
I July 2005
Cost	511,414	2,989,663	3,501,077
Accumulated depreciation		(997, 302)	(997, 302)
Net book amount	511,414	1,992,361	2,503,755
Year ended 30 June 2006
Opening net book amount	511,414	1,992,361	2,503,775
Depreciation charge		(222, 020)	(222, 020)
Closing net book amount	511,414	1,770,341	2,281,755
At 30 June 2006
Cost	511,414	2,989,663	3,501,077
Accumulated depreciation		(1, 219, 322)	(1, 219, 322)
Net book amount	511,414	1,770,341	2,281,755
Year ended 30 June 2007
Opening net book amount	511,414	1,770,341	2,281,755
Additions	1,930,245	280,000	2,210,245
Depreciation charge		(148, 428)	(148, 428)
Write-down		(141,600)	(141, 600)
Closing net book amount	2,441,659	1,760,313	4,201,972
At 30 June 2007
Cost	2,441,659	3,269,663	5,711,322
Accumulated depreciation		(1, 509, 350)	(1, 509, 350)
Net book amount	2,441,659	1,760,313	4,201,972

Parent Entity

The parent entity does not hold any investment property.

$(a)$ Amounts recognised in profit and loss for investment properties

	Consolidated		Parent Entity
	2007	2006	2007	2006

Rental income	301,924	221,170
Direct operating expenses from property that
generated rental income	(187,811)	(97, 054)
	114,113	124, 116

$16.$ NON-CURRENT ASSETS - INVESTMENT PROPERTIES (continued)

$(b)$ Valuation

	Consolidated		Parent Entity
	2007	2006	2007	2006
Aggregate recent valuations of freehold land and
buildings based on:
Directors' valuation - 2007	6,350,000	$\blacksquare$
Independent valuation - 2006	$\blacksquare$	3,505,000	$\overline{\phantom{a}}$

The basis of the valuation of investment properties is fair value being the amounts for which the properties could be exchanged between willing parties in an arm's length transaction, based on current prices in an active market for similar properties in the same location and condition and subject to similar leases. The 2007 valuations were made by the directors as at 30 June 2007. The 2006 valuations were based on independent assessments by an Associate of the Australian Property Institute as at 23 May 2006.

Non-current assets pledged as security (c)

Refer to note 21 for information on non-current assets pledged as security by the parent entity or its controlled entities.

$(d)$ Contractual obligations

There are no contractual obligations to purchase, construct or develop investment property or for repairs, maintenance or enhancements.

$(e)$ Leasing arrangements

The investment properties are leased to tenants on monthly operating leases or fixed 12 months term.

$17.$ NON-CURRENT ASSETS - DEFERRED TAX ASSETS

	Consolidated		Parent Entity
	2007	2006	2007	2006
	\$	\$	\$
The balance comprises temporary differences
attributable to:
Amounts recognised in profit or loss
Doubtful debts	110,146	132,874
Employee benefits	561,412	544,696	254,520	225,423
Depreciation	297,501	210,920	20,996	15,633
Other	59,549	61,006	52,950	54,405
	1,028,608	949,496	328,466	295,461
Amounts recognised directly in equity
Available-for-sale financial assets	18,200	21,893	12,670	15,482
	1,046,808	971,389	341,136	310,943
Set-off of deferred tax liabilities (note 22)	(69, 124)	(106, 843)
Net deferred tax assets	977,684	864,546	341,136	310,943

$17.$ NON-CURRENT ASSETS - DEFERRED TAX ASSETS (continued)

	Consolidated		Parent Entity
	2007	2006	2007	2006
		\$		\$
Deferred tax assets to be recovered within 12 months	731,107	738,576	307,470	279,828
Deferred tax assets to be recovered after more than
12 months	315,701	232,813	33,666	31,115
	1,046,808	971,389	341,136	310,943

Opening balance at I July	971.389	857,082	310,943	349,671
Credited (debited) to the income statement
(note 8)	79,112	92,414	33,005	(54,210)
(Debited) credited to equity	(3,693)	21,893	(2, 812)	15,482
Closing balance at 30 June	1,046,808	971,389	341,136	310,943

NON-CURRENT ASSETS - INTANGIBLE ASSETS $18.$

CONSOLIDATED	Goodwill	Security lines	Total
	\$	\$	S
At 1 July 2005
Cost	324,348	1,339,862	1,664,210
Accumulated amortisation and impairment		(654,509)	(654, 509)
Net book amount	324,348	685,353	1,009,701
Year ended 30 June 2006
Opening net book amount	324,348	685,353	1,009,701
Additions		42,641	42,641
Amortisation charge		(171, 028)	(171, 028)
Closing net book amount	324,348	556,966	881,314
At 30 June 2006
Cost	324,348	1,382,503	1,706,851
Accumulated amortisation and impairment		(825, 537)	(825, 537)
Net book amount	324,348	556,966	881,314
Year ended 30 June 2007
Opening net book amount	324,348	556,966	881,314
Additions		2,914	2,914
Amortisation charge		(172,139)	(172, 139)
Closing net book amount	324,348	387,741	712,089
At 30 June 2007
Cost	324,348	1,385,417	1,709,765
Accumulated amortisation and impairment		(997, 676)	(997, 676)
Net book amount	324,348	387,741	712,089

$18.$ NON-CURRENT ASSETS - INTANGIBLE ASSETS (continued)

Security lines are amortised in accordance with Note 1(q). Amortisation of \$172,139 (2006 - \$171,028) is included in depreciation and amortisation expense in the income statement.

Parent Entity

The parent entity does not carry any goodwill.

$(a)$ Impairment tests for goodwill

Goodwill is allocated to the group's cash-generating units (CGUs) identified according to business segment. The segment-level summary of goodwill allocation is presented below.

2007	Logistics and Transport 144,082	Manufacturing, Security and Other Ş 180,266	Total \$ 324,348
2006	144,082	180,266	324,348

The recoverable amount of a CGU is determined based on value-in-use calculations. These calculations use cash flow projections based on current sustainable earnings and financial budgets approved by management. Cash flows have not been discounted as they show that the carrying amounts are substantially recovered within a twelve month period.

$19.$ CURRENT LIABILITIES - TRADE AND OTHER PAYABLES

	Consolidated		Parent Entity
	2007	2006	2007	2006
	\$
Trade payables	6,065,609	5,574,427	1,314,207	1,029,720
Other payables	1,661,038	1,318,182	755,027	642,888
	7,726,647	6,892,609	2,069,234	1,672,608
20. CURRENT LIABILITIES - BORROWINGS Secured
Bills payable	1,225,000	225,000	1,225,000	225,000
Hire purchase liabilities (note 29)	2,196,182	1,947,149	114,524	164,862
Bank overdraft	544,056		544,056
Total current interest-bearing liabilities	3,965,238	2,172,149	1,883,580	389,862

Interest rate risk exposures $(a)$

Details of the group's exposure to interest rate changes on interest-bearing liabilities are set out in note 21.

Fair value disclosures $(b)$

Details of the fair value of interest-bearing liabilities for the group are set out in note 21.

CURRENT LIABILITIES - BORROWINGS (continued) $20.$

$(c)$ Security

Details of the security relating to each of the secured liabilities and further information on the bank overdrafts and bank loans are set out in note 21.

$21.$ NON-CURRENT LIABILITIES - BORROWINGS

	Consolidated		Parent Entity
	2007	2006	2007	2006
	\$	\$	\$	Ş
Secured
Bills payable	1,300,000	2,800,000	1,300,000	2,800,000
Hire purchase liabilities (note 29)	3,960,992	2,866,404	108,393	166,511
Other loans	4,256,000	4,256,000
Total secured non-current interest-bearing borrowings	9,516,992	9,922,404	1,408,393	2,966,511
(a) Total secured liabilities
The total secured liabilities (current and non-current)
are as follows:
Secured
Bank overdraft and bank loans	3,069,056	3,025,000	3,069,056	3,025,000
Hire purchase liabilities	6,157,174	4,813,553	222,917	331,373
Other loans	4,256,000	4,256,000

Assets pledged as security $(b)$

Total secured liabilities

Bank overdrafts and bank loans are secured by mortgages over the group's freehold land and buildings, and investment properties, and fixed and floating charges over the remaining group assets.

13,482,230

12,094,553

$3,291,973$

$3,356,373$

Hire purchase liabilities are effectively secured as the rights to the assets recognised in the financial statements revert to the financier in the event of default.

The other loans are secured mortgages over certain group freehold land and buildings. The carrying amounts of assets pledged as security for current and non-current interest-bearing liabilities are:

	Consolidated		Parent Entity
	2007 \$	2006	2007 Ş	2006 \$
Current
Floating charge
Cash and cash equivalents	2,884	520,418	2,884	520,418
Receivables	11,691,621	9,682,076	4,057,400	2,976,048
Inventories	2,302,237	1,848,548
Total current assets pledged as security	13,996,742	12,051,042	4,060,284	3,496,466

$21.$ NON-CURRENT LIABILITIES - BORROWINGS (continued)

	Consolidated		Parent Entity
	2007	2006	2007	2006
	\$	\$	\$	\$
Non-current
First mortgage
Freehold land and buildings	7,840,613	7,939,078	1,831,950	1,891,702
Investment properties	4,201,972	2,281,755
	12,042,585	10,220,833	1,831,950	1,891,702
Floating charge
Available-for-sale financial assets	78,966	65,168	63,606	54,234
Other financial assets			8,334,141	8,334,141
Plant and equipment	12,410,789	10,895,403	925,695	989,754
	12,489,755	10,960,571	9,323,442	9,378,129
Total non-current assets pledged as security	24,532,340	21,181,404	11,155,392	11,269,831
Total assets pledged as security	38,529,082	33,232,446	15,215,676	14,766,297
Financing arrangements $\left( 0 \right)$ Unrestricted access was available at balance date to the following lines of credit:
Credit standby arrangements
Total facilities
Bank overdrafts	1,600,000	1,600,000	1,600,000	1,600,000
Secured bill acceptance facility	3,025,000	3,025,000	3,025,000	3,025,000
	4,625,000	4,625,000	4,625,000	4,625,000
Used at balance date
Bank overdrafts	544,056		544,056
Secured bill acceptance facility	2,525,000	3,025,000	2,525,000	3,025,000
	3,069,056	3,025,000	3,069,056	3,025,000
Bank loan facility
Total facility	4,625,000	4,625,000	4,625,000	4,265,000
Used at balance date	(3,069,056)	(3,025,000)	(3,069,056)	(3,025,000)
Unused at balance date	1,555,944	1,600,000	1,555,944	1,600,000

The bank overdraft facilities may be drawn at any time and are subject to annual review. The bill acceptance facilities have defined maturity dates. Subject to the continuance of satisfactory credit ratings, the bank loan facilities may be drawn at any time.

The current interest rates are $6.64\%$ - $6.67\%$ on the bill facilities, 10.1% on the overdraft and 7.75% on the other loans (2006 -6.08% - 6.15%, 9.35% and 7.25% respectively).

$21.$ NON-CURRENT LIABILITIES - BORROWINGS (continued)

$(d)$ Interest rate risk exposure

	Floating		Fixed interest rate
2007	Interest	l year or	Over 1 to 2	Over $2$ to $3$	Over 3 to
	rate	less	years	years	4 years	Total
		\$	\$	\$	\$	\$
Bank overdraft	544,056					544,056
Bank loans	2,525,000					2,525,000
Other loans		4,256,000				4,256,000
Hire purchase liabilities		2,196,182	1,927,365	934,407	1,099,220	6,157,174
	3,069,056	6,452,182	1,927,365	934,407	1,099,220	13,482,230
Weighted average
interest rate		7.57%	7.13%	7.25%	7.29%
	Floating		Fixed interest rate
2006	Interest	I year or	Over 1 to 2	Over 2 to 3	Over 3 to
	rate	less	years	years	4 years	Total
		\$	\$	\$	\$	\$
Bank loans	3,025,000					3,025,000
Other loans		4,256,000				4,256,000
Hire purchase liabilities		1,947,149	1,488,119	1,161,676	216,609	4,813,553
	3,025,000	6,203,149	1,488,119	1,161,676	216,609	12,094,553
Weighted average
interest rate		7.13%	6.93%	6.76%	6.95%

Fair value $(e)$

The carrying amounts and fair values of interest-bearing liabilities at balance date are:

		2007		2006
	Carrying amount \$	Fair value \$	Carrying amount \$	Fair value \$
On-balance sheet
Non-traded financial liabilities
Bank overdraft	544,056	544,056
Bank loans	2,525,000	2,525,000	3,025,000	3,025,000
Other loans	4,256,000	4,256,000	4,256,000	4,256,000
Hire purchase liabilities	6,157,174	6,157,174	4,813,553	4,813,553
Total secured liabilities	13,482,230	13,482,230	12,094,553	12,094,553

The fair value of interest-bearing liabilities is based upon market prices where a market exists or by discounting the expected future cash flows by the current interest rates for liabilities with similar risk profiles.

$22.$ NON-CURRENT LIABILITIES - DEFERRED TAX LIABILITIES

$\ddot{\phantom{a}}$

	Consolidated		Parent Entity
	2007 \$	2006 \$	2007 \$	2006 \$
The balance comprises temporary differences
attributable to:
Amounts recognised in profit or loss
Prepayments		3,340
Depreciation	69,124	103,503
	69,124	106,843
Set-off of deferred tax assets (note 17)	(69, 124)	(106, 843)
Net deferred tax liabilities

Deferred tax liabilities to be settled within 12 months		3,340
Deferred tax liabilities to be settled after more than
12 months	69,124	103,503
	69,124	106,843

Movements
Opening balance at I July	106,843	318,092
(Charged) to the income statement (note 8)	(37,719)	(211, 249)
Closing balance at 30 June	69,124	106,843
23. NON-CURRENT LIABILITIES - PROVISIONS
Employee benefits	244,822	497,472	93,374	108,522
24. CONTRIBUTED EQUITY
	Parent Entity		Parent Entity
	2007	2006	2007	2006
	Shares	Shares	\$	\$

$(a)$ Share capital

Ordinary shares (fully paid)	34,182,421	11.412.460	.785.807	6.838.090
Total contributed equity	34,182,421	11,412,460 _____	,785,807	6,838,090

24. CONTRIBUTED EQUITY (continued)

$(b)$ Movements in ordinary share capital:

Date	Details	Number of shares
$l$ July 2005	Opening balance	22,041,583	16,929,890
	Shares bought back on-market and cancelled	(10,629,123)	(10,091,800)
30 June 2006	Balance	11,412,460	6,838,090
	Ordinary shares split $-3$ for 1	22,824,920
	Shares bought back on-market and cancelled	(54, 959)	(52, 283)
30 June 2007	Balance	34,182,421	6,785,807

Ordinary shares $\left( \text{c} \right)$

All ordinary shares are fully paid and entitle the holder to participate in dividends and the proceeds on winding up of the Company in proportion to the number of shares held. On a show of hands every holder of ordinary shares present at a meeting in person or by proxy, is entitled to one vote, and upon a poll each share is entitled to one vote.

$(d)$ Share split

A shareholder meeting on 18 December 2006 approved that ordinary shares be split on a 3 for 1 basis. This split was effective from the date of the meeting.

$(e)$ Share buy-backs

The shareholder meeting on 18 December 2006 also approved that a further buy-back of up to 12.38% of the issued fully paid ordinary shares be made during the four months ending 18 April 2007. In total the Company bought back 54,959 shares during the year for a cumulative outlay of \$52,283. There is no current on-market buy-back.

25. RESERVES AND RETAINED PROFITS

	Consolidated		Parent Entity
	2007	2006	2007	2006
	\$	\$	\$	\$
(a) Reserves
Available-for-sale investments revaluation reserve	(42, 467)	(51,084)	(29, 564)	(36, 124)
Movements:
Available-for-sale investments revaluation reserve
Balance July	(51,084)		(36, 124)
Revaluation, net of tax	8,617	(51,084)	6,560	(36, 124)
Balance 30 June 2007	(42, 467)	(51,084)	(29, 564)	(36, 124)
(b) Retained profits
Movement in retained profits were as follows:
Balance I July	7,545,165	4,841,138	1,746,681	3,348,127
Net profit (loss) for the year	4,599,079	3,095,769	1,530,481	(1,209,704)
Dividends	(1, 235, 846)	(391, 742)	(1, 235, 846)	(391, 742)
Balance 30 June 2007	10,908,398	7,545,165	2,041,316	1,746,681

25. RESERVES AND RETAINED PROFITS (continued)

$\mathbf{c}$ Nature and purpose of reserves

Available-for-sale investments revaluation reserve

Changes in the fair value of investments, such as equities, classified as available-for-sale financial assets, are taken to the available-for-sale investments revaluation reserve, as described in note I(m). Amounts are recognised in profit and loss when the associated assets are sold or impaired.

$26.$ DIVIDENDS

	Parent Entity
	2007	2006
	\$	\$
(a) Ordinary shares
Final dividend for the year ended 30 June 2006 of 3 cents (2005 - 1.5 cents) per fully paid
share, paid on I December 2006 (2005 - 22 December 2005)
30% franked dividend (2005 $-$ 30% franked) based on tax paid $\omega$ 30%
- 3 cents $(2005 - 1.5 \text{ cents})$ per share	310,873	193,775
Interim dividend for the year ended 30 June 2007 of 3 cents $(2006 - 2 \text{ cents})$ per fully paid
share, paid on 4 May 2007 (2006 - 26 May 2006)
30% franked dividend (2006 $-$ 30% franked) based on tax paid $\omega$ 30%
$-3$ cents (2006 $-2$ cents) per share	930,973	228,717

Dividends not recognised at year end $(b)$

In addition to the above dividends, since year end the directors have recommended the payment of a final dividend of 3 cents per fully paid ordinary share, $(2006 - 3 \text{ cents})$ fully franked based on tax paid at 30%. The aggregate amount of the proposed dividend expected to be paid on 15 November 2007 out of retained profits at 30 June 2007, but not recognised as a liability at year end, is \$1,025,472.

Franked dividends $(c)$

The franked portion of the final dividend recommended after 30 June 2007 will be franked out of existing franking credits or out of franking credits arising from the payment of income tax in the year ending 30 June 2007.

	Consolidated		Parent Entity
	2007	2006	2007	2006
	S.
Franking credits available for subsequent financial years based on a tax rate of $30\%$ (2006 –
30%	4,393,019	2,735,284	4,393,019	2,735,284

26. DIVIDENDS (continued)

The above amounts represent the balance of the franking account as at the end of the financial year, adjusted for:

franking credits that will arise from the payment of the amount of the provision for income tax $(a)$
franking debits that will arise from the payment of dividends recognised as a liability at the reporting date, and $(b)$
franking credits that will arise from the receipt of dividends recognised as receivables at the reporting date. $(c)$

The consolidated amounts include franking credits that would be available to the parent entity if distributable profits of subsidiaries were paid as dividends.

The impact on the franking account of the dividend recommended by the directors since year end, but not recognised as a liability at year end, will be a reduction in the franking account of $$439,488$ (2006 - $$146,732$ ).

$27.$ KEY MANAGEMENT PERSONNEL DISCLOSURES

$(a)$ Directors

The following directors were considered to be the key management personnel of CTI Logistics Limited during the financial year ended 30 June 2007:

Chairman - executive $\left(\ddot{\theta}\right)$ D R Watson $(ii)$ Executive directors | D Elbery (from 1 July 2006 - 30 April 2007) D A Mellor B E Saxild $(iii)$ Non-executive directors P | Leonhardt [ D Elbery (from 1 May 2007 - 30 June 2007)

The Company has taken advantage of the relief provided by Corporations Regulation 2M.6.04 and has transferred the detailed remuneration disclosures to the directors' report. The relevant information can be found in sections A-C of the remuneration report on pages 6 to 7.

$(b)$ Key management personnel compensation

		Consolidated		Parent Entity
	2007	2006	2007	2006

Short-term	1, 121, 334	1,095,236	1, 121, 334	1,095,236
Post-employment	432,145	138,237	432,145	138,237
Share based payment			٠
	1,553,479	1,233,473	1,553,479	1,233,473

27. KEY MANAGEMENT PERSONNEL DISCLOSURES (continued)

$(c)$ Equity instrument disclosures relating to key management personnel

The numbers' of ordinary shares in the Company held during the financial year by each director of CTI Logistics Limited, including their personally-related entities, are set out below. There were no shares granted during the reporting period as remuneration.

	Balance at the start of	on the exercise of	Other changes during	Balance at the end of
2007	the year	options	the year	the year
J D Elbery	1,470,207	$\blacksquare$	10,752	1,480,959
P Leonhardt	159,258			159,258
D A Mellor	3,025,902		187,617	3,213,519
B E Saxild	2,455,467		164,292	2,619,759
D R Watson	16,371,528	÷		16,371,528
2006 (adjusted for the 3 for 1
share split on 18 December 2006)
J D Elbery	1,415,208		54,999	1,470,207
P J Leonhardt	159,258			159,258
D A Mellor	2,952,903		72,999	3,025,902
B E Saxild	2,321,541	٠	133,926	2,455,467
D R Watson	16,347,528		24,000	16,371,528

$(d)$ Loans to key management personnel

Details of loans made to directors of the Company, including their personally related parties, are set out below.

$\left(\ddot{\theta}\right)$ Aggregates for key management personnel

	Balance at the start of the year	Interest paid or payable for the year	Loan repayments received	Balance at the end of the year	Number in the group at the end of the year
2007	784,155	$\blacksquare$	126,000	658,155	4
2006	820,905		36,750	784,155	4

$(ii)$ Individuals with loans above \$100,000 during the year

2007	Balance at the start of the year	Interest paid or payable for the year	Loan repayments received	Balance at the end of the year \$	indebtedness during the year
D Elbery	208,635	$\blacksquare$	36,000	172,635	208,635
D A Mellor	208,635	$\blacksquare$	36,000	172,635	208,635
B E Saxild	208,635	$\blacksquare$	36,000	172,635	208,635
D R Watson	158,250		18,000	140,250	158,250
	784,155	$\blacksquare$	126,000	658,155	784,155

Highaet

$27.$ KEY MANAGEMENT PERSONNEL DISCLOSURES (continued)

	Balance at the start of the year	Interest paid or payable for the year	Loan repayments received	Balance at the end of the year	Highest indebtedness during the year
2006	S	\$	\$
D Elbery	219,135	$\blacksquare$	10,500	208,635	219,135
D A Mellor	219,135	$\blacksquare$	10,500	208,635	219,135
B E Saxild	219,135	$\blacksquare$	10,500	208,635	219,135
D R Watson	163,500	$\blacksquare$	5,250	158,250	163,500
	820,905		36,750	784,155	820,905

The loans were extended for an original term of 10 years. The first tranche of loans has a remaining life of 6 months, while the second tranche has a remaining term of 5 years. All loans to directors are repayable from dividends and are secured by a lien over the shares. These loans are not on the balance sheet in accordance with AIFRS.

In accordance with shareholder approval, these loans are interest-free and have not been included in the calculation of non-monetary benefits.

Other transactions with key management personnel $(e)$

A director, P J Leonhardt, is a director of Centrepoint Alliance Limited. During the year Centrepoint Alliance Limited provided the group with an insurance premium-funding loan on normal commercial terms and conditions.

28. REMUNERATION OF AUDITORS

During the year the following fees were paid or payable for services provided by the auditor of the parent entity, its related practices and non-related audit firms:

	Consolidated		Parent Entity
	2007	2006	2007	2006
	\$	\$	\$	\$
(a) Assurance services
Audit services
PricewaterhouseCoopers Australian firm
Audit and review of financial reports and other
audit work under the Corporations Act 2001	93,520	118,220	73,280	109,220
Other assurance services
29. COMMITMENTS
Capital commitments (a)
Capital expenditure contracted for at the reporting
date but not recognised as liabilities:
Plant and equipment
Payable within one year	176,620	3,279,322

COMMITMENTS (continued) 29.

$(b)$ Lease commitments: group company as lessee

	Consolidated		Parent Entity
	2007	2006	2007	2006
	\$	\$	\$	\$
Commitments in relation to leases contracted for at
the reporting date but not recognised as liabilities:
Payable :
Within one year	401,482	301,039	12,479	17,640
Later than one year but not later than five years	465,773	325,217		10,222
Later than five years		24,292	6,634
	867,255	650,548	19,113	27,862
Representing:
Non-cancellable operating leases	130,292	156,792
Future finance charges on hire purchases	736,963	493,756	19,113	27,862
Commitments not recognised in the financial
statements	867,255	650,548	19,113	27,862
Operating leases $\left(\dot{\theta}\right)$
The group leases an office and warehouse under a
non-cancellable operating lease expiring within five
years. The lease has varying terms, escalation
clauses and renewal rights.
Commitments for minimum lease payments in
relation to non-cancellable operating leases are
payable as follows:
Within one year	26,500	26,500
Later than one year but not later than five years	103,792	106,000
Later than five years		24,292
	130,292	156,792
Hire purchase commitments (ii)
Commitments in relation to hire purchase are
payable as follows:
Within one year	2,571,164	2,221,314	127,003	182,503
Later than one year but not later than five years	4,322,973	3,085,995	115,027	176,732
Minimum payments	6,894,137	5,307,309	242,030	359,235
Future finance charges	(736, 963)	(493, 756)	(19, 113)	(27, 862)
Recognised as a liability	6,157,174	4,813,553	222,917	331,373
Representing:
Current	2,196,182	1,947,149	114,524	164,862
Non-current	3,960,992	2,866,404	108,393	166,511
Total hire purchase liabilities	6,157,174	4,813,553	222,917	331,373

$30.$ RELATED PARTY TRANSACTIONS

$(a)$ Parent entity

CTI Logistics Limited is the ultimate Australian parent entity of the group and head entity of the tax consolidated group.

Subsidiaries $(b)$

Interests in subsidiaries are set out in note 31.

$\mathbf{c}$ Key management personnel

Disclosures relating to key management personnel are set out in note 27.

$(d)$ Transactions with related parties

The following transactions occurred with related parties:

		Consolidated		Parent Entity
	2007	2006	2007	2006

Sales of goods and services		۰	3,167,680	2,917,096
Loans from related parties			2,239,342	7,992,477
Dividend revenue		$\bullet$	3,000,000
Rent charged		۰	324,770	283,800

Sales and rent between related parties are on normal commercial terms and conditions.

$(e)$ Outstanding balances

$\sim$ $\sim$ assuming swimper
The following balances are outstanding at the
reporting date in relation to transactions with related
parties:
Current receivables (loans)	$\bullet$	3.642.294	2.560,773

No provisions for doubtful debts have been raised in relation to any outstanding balances, and no expense has been recognised in respect of bad or doubtful debts due from related parties. These loans are interest free, unsecured and have no fixed terms of repayment.

$31.$ SUBSIDIARIES

All subsidiaries are incorporated in Australia.

$\tilde{\phi}$

The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries in accordance with the accounting policy described in note I(b):

	Equity holding
	(Ordinary shares)
Name of entity	2007	2006
	%	%
CTI Logistics Limited
Directly controlled by CTI Logistics Limited
Controlled entities
Bring Transport Industries Pty Ltd	100	100
Mercury Messengers Pty Ltd	100	100
CTI Security Services Pty Ltd	100	100
CTI Transport Systems Pty Ltd	100	100
CTI Taxi Trucks Pty Ltd	100	100
CTI Security Systems Pty Ltd	100	100
CTI Fleet Management Pty	100	100
CTI Freight Management Pty Ltd	100	100
CTI Business Investment Company Pty Ltd	100	100
CTI Freight Systems Pty Ltd	100	100
CTI Couriers Pty Ltd	100	100
CTI Swinglift Services Pty Ltd	100	100
CTI Xpress Systems Pty Ltd	100	100
CTI Investments Pty Ltd	100	100
Consolidated Transport Industries Pty Ltd	100	100
Other controlled entities
Directly controlled by CTI Investments Pty Ltd
Advance Press Pty Ltd	100	100
LCL Cargo Services Pty Ltd	100	100
Blackwood Industries Pty Ltd	100	100
CTI Fulfilment Services Pty Ltd	100	100
Directly controlled by Blackwood Industries Pty Ltd
Efal Pty Ltd	100	100
Ausplastics Pty Ltd	100	100
CTI Records Management Pty Ltd	100	100
CTI Waste Management Pty Ltd	100	100
Directly controlled by Consolidated Transport
Industries Pty Ltd
CTI Distribution Group Pty Ltd	100	100

$31.$ SUBSIDIARIES (continued)

These subsidiaries have been granted relief from the necessity to prepare financial reports in accordance with Class Order 98/1418 issued by the Australian Securities and Investments Commission. For further information refer to note 32.

$32.$ DEED OF CROSS GUARANTEE

CTI Logistics Limited and its wholly-owned entities are parties to a deed of cross guarantee under which each company guarantees the debts of the others. By entering into the deed, the wholly-owned entities have been relieved from the requirement to prepare a financial report and directors' report under Class Order 98/1418 (as amended) issued by the Australian Securities and Investments Commission. The above companies represent a 'Closed Group' for the purposes of the Class Order, and as there are no other parties to the Deed of Cross Guarantee, they also represent the Extended Closed Group.

$33.$ INTERESTS IN JOINT VENTURES

A controlled entity has a 50% (2006 - 50%) interest in the CTI Foxline Joint Venture, which is resident in Australia and the principal activity of which is the provision of parcel delivery services. The interest in the CTI Foxline Joint Venture is accounted for in the consolidated financial statements using the equity method of accounting and is carried at cost by the controlled entity. Information relating to the joint venture partnership is set out below:

	Consolidated		Parent Entity
	2007	2006	2007	2006
	\$	\$	\$	\$
Carrying amount of investment in joint venture
partnership	191,254	229,589
Share of partnership's assets and liabilities
Current assets	416,368	441,884
Non-current assets	16,607	2,230
Total assets	432,975	444,114
Current liabilities	228,991	211,974
Non-current liabilities	12,730	2,551
Total liabilities	241,721	214,525
Net assets	191,254	229,589
Share of partnership's revenue, expenses and results
Revenues	2,682,295	2,450,986
Expenses	(2,520,629)	(2, 241, 673)
Profit before income tax	161,666	209,313

Share of partnership's commitments

The CTI Foxline Joint Venture does not have any capital or lease commitments at balance date.

34. RECONCILIATION OF PROFIT (LOSS) AFTER INCOME TAX TO NET CASH INFLOW FROM OPERATING ACTIVITIES

	Consolidated		Parent Entity
	2007	2006	2007	2006
	\$	\$	\$	\$
Profit (loss) for the year	4,599,079	3,095,769	1,530,481	(1, 209, 704)
Depreciation and amortisation	3,080,908	3,848,442	330,822	321,487
Provision for doubtful debts	(120, 017)	(80,961)
Net (gain) loss on sale of non-current assets	(78, 953)	(91, 810)	24,580	705
Gain on disposal of available-for-sale financial assets	(900)		(900)
Write-down of equity securities	1,000
Write-down of investment property	141,600
Share of profits of joint venture partnership not
received as dividends or distributions	(161, 666)	(209,313)
Change in operating assets and liabilities
(Increase) in trade and other debtors	(1,689,528)	(12,007)	(3,320,691)	(2,188,247)
(Increase) in inventories	(453, 689)	(144, 646)
(Decrease) Increase in provision for income taxes
payable	(86, 418)	1,304,031	(86, 418)	1,304,031
(Decrease) increase in provision for deferred tax
assets	(116, 831)	(303, 662)	(33,004)	54,209
Increase in trade creditors, employee benefits
and other provisions	581,386	595,050	381,477	225,265
Net cash inflow (outflow) from operating activities	5,695,971	8,000,893	(1, 173, 653)	(1, 492, 254)

$35.$ NON-CASH INVESTING AND FINANCING ACTIVITIES

	Consolidated		Parent Entity
	2007	2006	2007	2006
Acquisition of plant & equipment by means of hire purchase	3,767,606	1,400,176	$\blacksquare$	49,724

$36.$ EARNINGS PER SHARE

	Consolidated
	2007	2006
	Cents per share
(a) Basic earnings per share
Profit attributable to ordinary equity holders of
the Company	13.44	6.72
(b) Diluted earnings per share Profit attributable to ordinary equity holders of
the Company	13.44	6.72

$36.$ EARNINGS PER SHARE (continued)

$\left( c\right)$ Weighted average number of shares used as the denominator

	Consolidated
	2007	2006
	Number	Number
Weighted average number of ordinary shares used as the denominator in calculating basic
and diluted earnings per share $(2006 -$ adjusted for the 3 for 1 share split on 18
December 2006)	34,212,649	46,160,169

37. EVENTS OCCURRING AFTER THE BALANCE SHEET DATE

Since the end of the financial year a subsidiary has purchased an investment property for \$2,700,000 plus costs. The financial effect of this transaction has not been brought to account at 30 June 2007.

On 20 September 2007 the Company accepted an offer to sell its printing business, Advance Press. The sale is expected to realise a profit in excess of \$4.5 million.

Directors' Declaration

In the directors' opinion:

the financial statements and notes set out on pages 9 to 52 are in accordance with the Corporations Act 2001, including: $(a)$
$(i)$ complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements; and
giving a true and fair view of the Company's and group's financial position as at 30 June 2007 and of their $(ii)$ performance for the financial year ended on that date;
there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and $(b)$ payable;
$(c)$ the audited remuneration disclosures set out on pages 6 to 7 of the directors' report comply with Accounting Standard AASB 124 Related Party Disclosures and the Corporations Regulations 2001; and
at the date of this declaration, there are reasonable grounds to believe that the members of the Extended Closed Group $(d)$ identified in Note 31 will be able to meet any obligations or liabilities to which they are, or may become, subject by virtue of the deed of cross guarantee described in Note 32.

The directors have been given the declarations by the chief executive officer and chief financial officer required by section 295A of the Corporations Act 2001.

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

DAVID MELLOR Director

Perth 27 September 2007

PRICEWATERHOUSE COPERS &

PricewaterhouseCoopers ABN 52 780 433 757

Independent auditor's report to the members of CTI Logistics Limited

QV1 250 St Georges Terrace PERTH WA 6000 GPO Box D198 PERTH WA 6840 DX 77 Perth Australia www.pwc.com/au Telephone +61 8 9238 3000 Facsimile +61 8 9238 3999 www.pwc.com/au

Report on the financial report and the AASB 124 remuneration disclosures contained in the directors' report

We have audited the accompanying financial report of CTI Logistics Limited (the company), which comprises the balance sheet as at 30 June 2007, and the income statement, statement of changes in equity and cash flow statement for the year ended on that date, a summary of significant accounting policies, other explanatory notes and the directors' declaration for both CTI Logistics Limited and the CTI Logistics Group (the consolidated entity). The consolidated entity comprises the company and the entities it controlled at the year's end or from time to time during the financial year.

We have also audited the remuneration disclosures contained in the directors' report. As permitted by the Corporations Regulations 2001, the company has disclosed information about the remuneration of directors and executives ("remuneration disclosures"), required by Accounting Standard AASB 124 Related Party Disclosures, under the heading "remuneration report" in pages 6 to 7 of the directors' report and not in the financial report.

Directors' responsibility for the financial report and the AASB 124 remuneration disclosures contained in the directors' report

The directors of the company are responsible for the preparation and fair presentation of the financial report in accordance with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Act 2001. This responsibility includes establishing and maintaining internal control relevant to the preparation and fair presentation of the financial report that is free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. In Note 1(a), the directors also state, in accordance with Accounting Standard AASB 101 Presentation of Financial Statements, that compliance with the Australian equivalents to International Financial Reporting Standards ensures that the consolidated financial statements and notes comply with International Financial Reporting Standards.

The directors of the company are also responsible for the remuneration disclosures contained in the directors' report.

Liability limited by a scheme approved under Professional Standards Legislation

PRICEWATERHOUSE COPERS

Auditor's responsibility

Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in accordance with Australian Auditing Standards. These Auditing Standards require that we comply with relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance whether the financial report is free from material misstatement. Our responsibility is to also express an opinion on the remuneration disclosures contained in the directors' report based on our audit.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report and the remuneration disclosures contained in the directors' report. The procedures selected depend on the auditor's judgement, including the assessment of the risks of material misstatement of the financial report and the remuneration disclosures contained in the directors' report, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial report and the remuneration disclosures contained in the directors' report in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial report and the remuneration disclosures contained in the directors' report.

Our procedures include reading the other information in the Annual Report to determine whether it contains any material inconsistencies with the financial report.

For further explanation of an audit, visit our website http://www.pwc.com/au/financialstatementaudit.

Our audit did not involve an analysis of the prudence of business decisions made by directors or management.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.

Independence

In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001.

PRICEWATERHOUSE COPERS

Auditor's opinion on the financial report

In our opinion:

the financial report of CTI Logistics Limited is in accordance with the Corporations Act $(a)$ 2001, including:
giving a true and fair view of the company's and consolidated entity's financial $(i)$ position as at 30 June 2007 and of their performance for the year ended on that date: and
complying with Australian Accounting Standards (including the Australian $(ii)$ Accounting Interpretations) and the Corporations Regulations 2001; and
$(b)$ the consolidated financial statements and notes comply with International Financial Reporting Standards as disclosed in Note 1(a).

Auditor's opinion on the AASB 124 remuneration disclosures contained in the directors' report

In our opinion, the remuneration disclosures that are contained in pages 6 to 7 of the directors' report comply with Accounting Standard AASB 124.

Porcesto has boks

PricewaterhouseCoopers

Pierre Dreyer Partner

Perth 27 September 2007

The Australian Stock Exchange Corporate Governance Council has published 10 principles and best practice recommendations relating to the direction and management of companies. These guidelines form a corporate governance framework intended to provide a practical guide for listed companies and their investors.

Adoption of the principles and associated best practice recommendations is not mandatory and the Australian Stock Exchange recognises that they may not be applicable to all companies. Under the Australian Stock Exchange Listing Rules companies are required to provide a statement disclosing the extent to which they have followed all the recommendations and identify the recommendations that have not been followed and give reasons for not following them.

Board of directors

Role of the board

As mentioned in the Directors' Report, due to the size and structure of the group and the nature of its operations, the three executive directors have a close involvement with the management of the businesses. Consequently, a Board Charter has not been formally adopted. The formal adoption of a Board Charter will be considered again in the current year.

The board's primary objective is to oversee the group's business activities and management for the benefit of all stakeholders by:

$\overline{a}$ setting objectives, goals and strategic direction with management with a view to maximising shareholder value;
overseeing the financial position and monitoring the business and financial affairs of the Company;
establishing corporate governance, ethical, environmental and health and safety standards; $\overline{a}$
ensuring significant business risks are identified and appropriately managed; $\overline{a}$
monitoring management's performance and implementation of strategy;
ensuring appropriate resources are available; and $\overline{a}$
ensuring the composition of the board is appropriate, selecting directors for appointment to the board and reviewing the $\overline{a}$ performance of the board and the contribution of individual directors.

The board has delegated responsibilities and authorities to management to enable management to conduct the Company's day to day businesses. Matters which are not within these delegations, such as expenditure and activity approvals which exceed certain parameters, require separate board approval.

For the reasons set out below, the board is mainly composed of management personnel who have been employed by the Company for many years. Formal director's letters of appointment were not issued on commencement and are not considered necessary at this stage.

Board composition

The board comprises five directors including three executive directors. Due to the small size of the Company and its operations, and to avoid additional layers of management, the directors are necessarily involved in the day to day operations of the group businesses. The Company's ability to appoint appropriate non-executive directors who can add value is limited and the costs involved are considered prohibitive in relation to the potential benefits obtainable. The board has, and will continue to consider the appointment of additional non-executive directors. A nomination committee is not considered necessary due to the small number of directors on the board and the relative infrequency of board changes.

Due to the executive directors' individual separate operational functions, the board is able to effectively review the performance of management and exercise independent judgement.

The directors have a broad range of qualifications, experience and expertise and details of individual directors are set out in the Directors' Report. The role of chairman and chief executive officer is filled by the founder of the business who is also a substantial shareholder. His knowledge, experience and understanding of the businesses comprising the group are considered essential to perform these roles. The board considers that no value could be added by separating the roles.

Due to the difficulty in finding appropriate independent directors the provision of a specific term for independent directors is not considered appropriate.

The board has adopted a formal policy on access to independent professional advice which provides that directors are entitled to seek such advice for the purposes of the proper performance of their duties. The advice is at the Company's expense and is made available to all directors.

Ethical and responsible decision making

The Company has clarified the ethical behaviour expected of directors and staff, as well as its attitude towards trading in the Company's securities.

The Company's business conduct and ethics policy along with the policy on trading in Company securities are published on the Company's web site, www.ctilogistics.com.

Integrity in financial reporting

The Company has formed an audit committee consisting of independent director Peter Leonhardt (chair) and executive director Bruce Saxild. Meetings are also attended by David Mellor (finance director) and the chief group accountant. The audit committee has a formal charter which has been approved by the board of directors. The charter is published on the Company's website, www.ctilogistics.com. The size and composition of the audit committee is considered to be appropriate for the size and complexity of the Company.

The committee reports directly to the board of directors and has unlimited access to the Company's external auditors and Company employees. The committee meets regularly with the external auditors and reviews all comments and findings therefrom.

The external auditors meet with the board of directors at least twice a year to review their audit procedures and findings. It is the policy of the external auditors to rotate the audit partner and staff at regular intervals. The board is satisfied with the external auditor's competence and independence.

In accordance with the Australian Stock Exchange Corporate Governance Council best practices guidelines, the chief executive officer and the chief financial officer have written to the board giving assurances as to the accuracy and integrity of the Company's financial statements.

The Company's external auditors are always invited to attend the Company's Annual General Meeting and are available to answer shareholders' queries at that time.

Timely and balanced disclosure

The board is committed to ensuring that all matters which should be disclosed to the market are disclosed in a timely and balanced manner. All matters for disclosure are vetted and authorised by the board prior to disclosure.

Apart from matters arising at board meetings and audit committee meetings, the executive directors meet regularly as a subcommittee of the board of directors and consider any matters that may require disclosure.

Rights of shareholders

The board of directors encourages direct communication with shareholders.

Shareholders are encouraged to attend general meetings where formal and informal discussions can take place with board members, senior employees and the external auditors.

Shareholders may also communicate freely with board members at any time.

The Company's website will continue to be developed as a medium to facilitate communication with shareholders.

Risk recognition and management

The board has established policies and procedures to recognise, minimise and manage all aspects of risk affecting the Company. Although in many cases these policies are not formally documented, they are appropriate for a company of this size.

Industry risk is assessed at local management as well as board level.

The audit committee also has the ability to review internal financial control procedures.

A risk and disaster management plan covering the Company's electronic data facilities is in place and is reviewed periodically.

Whilst there is no formal internal audit function, the Company's finance director performs and delegates certain internal audit procedures on a rotational basis throughout the year.

The chairman and chief executive as well as the finance director sign a letter of representation to the external auditors in relation to the matters contained in the annual accounts.

The Australian Stock Exchange Corporate Governance Council best practices guidelines recommend that the chief executive officer and the chief financial officer write to the board giving assurances regarding risk recognition and management, so that the board is

assured of considering all relevant factors. This was not considered necessary as the chief executive officer is also the chairman of the Company's board of directors and the chief financial officer is also a member of the Company's board of directors.

Enhanced performance

The board evaluates the performance of key executives against a range of performance criteria.

The current composition of the board obviates a measurable review of the board's performance and the size of the Company does not warrant an independent assessment.

Board members have access to continuing education within their spheres of operation and the board encourages directors and staff to embark on continuing professional development.

Directors have access to all information required to efficiently discharge responsibility and may request additional information from management at any time. Board meetings are rotated around the Company's various locations and operational management are invited to attend board meetings to facilitate directors' understanding of operational matters.

Remuneration

The Company has established a remuneration committee comprising Peter Leonhardt (chair) and David Watson. This committee reviews and makes recommendations on remuneration policies for the Company including, in particular, those governing the directors. Directors' emoluments are set out in Note 27 of the financial statements.

Interests of stakeholders

The board acknowledges the legitimate interests of all stakeholders and its legal and other obligations to employees, clients and the community as a whole.

There is not a published code of conduct but the board has recognised these obligations through its policies on such matters as ethical standards, and occupational health and safety.

The board encourages all employees to conduct business in a fair and ethical manner and to report any instances where standards may be at risk.

AI assistant

CTI LOGISTICS LIMITED — Annual Report 2007

64663_rns_2007-09-26_ca4811c3-8855-4997-b8c2-0d4fb47089e2.pdf

CTI LOGISTICS LIMITED

30 JUNE 2007

ANNUAL ACCOUNTS

Contents

Directory

AUDITORS

SHARE REGISTRY

REGISTERED OFFICE AND PRINCIPAL PLACE OF BUSINESS

Directors

David Robert Watson

Ionathan David Elbery

Peter James Leonhardt

David Anderson Mellor

Bruce Edmond Saxild

Principal activities of the group

Dividends

Review of operations and results

Share split

Share buy-back

Changes in the state of affairs

Events subsequent to balance date

Likely developments

Company secretary

Directors' meetings

Audit committee

Remuneration committee

Particulars of directors' interests in shares of CTI Logistics Limited at the date of this report

Directors' and officers' indemnity insurance

Environmental regulation

Remuneration report

A. Principles used to determine the nature and amount of remuneration (audited)

₿. Details of remuneration (audited)

C. Service agreements (audited)

Loans to directors

Non-audit services

PRICEWATERHOUSE COPERS

Auditor's Independence Declaration

Income Statements for the Year Ended 30 June 2007

Balance Sheets as at 30 June 2007

Statements of Changes in Equity for the Year Ended 30 June 2007

Cash Flow Statements for the Year Ended 30 June 2007

$\mathbf{L}$ SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PREPARATION OF FINANCIAL REPORT $(a)$

Compliance with IFRS

Historical cost convention

$(b)$ PRINCIPLES OF CONSOLIDATION

$\theta$ Subsidiaries

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued). I.

loint ventures (ii)

loint venture entities

SEGMENT REPORTING $\left( \mathrm{c} \right)$

$(d)$ FOREIGN CURRENCY TRANSLATION

Functional and presentation currency $\hat{u}$

(ii) Transactions and balances

REVENUE RECOGNITION $(e)$

$(i)$ Logistics and transport

Interest income $(iii)$

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) I.

(v) Other revenue

INCOME TAX $(f)$

Tax consolidation legislation

$\mathbf{L}$ SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

LEASES $(g)$

ACQUISITION OF ASSETS $(h)$

$(i)$ IMPAIRMENT OF ASSETS

$(i)$ CASH AND CASH EQUIVALENTS

$(k)$ TRADE RECEIVABLES

INVENTORIES $(1)$

INVESTMENTS AND OTHER FINANCIAL ASSETS $(m)$

Classification

$\mathbf{L}$ SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Loans and receivables $\theta$

$(ii)$ Available-for-sale financial assets

Recognition and derecognition

Subsequent measurement

Fair value

Impairment

CTI LOGISTICS LIMITED Annual Report 2007