CTI LOGISTICS LIMITED — Interim / Quarterly Report 2004

Feb 25, 2004

CTI Logistics Limited

ABN 69 008 778 925

Appendix 4D Half year report

Half-year ended 31 December 2003

	For announcement to the market Extracts from this report for announcement to the market				SA'000
Revenues from ordinary activities		down.	-6.1%	to.	45,776
Profit from ordinary activities after tax attributable to members		up	1313%	to.	1,469
Net profit for the period attributable to members		up	1313%	to.	1,469
Dividends			Amount per security	Franked amount per security
Final dividend	Year ended 30 June 2003		1c		1¢
	Previous corresponding period		1¢		1¢.
Interim dividend	Current period		1¢		1¢
	Previous corresponding period		-C		-0.
30 April 2004 *Record date for determining entitlements to the dividend

NTA backing

	Current period
		corresponding period
Net tangible asset backing per ordinary security	$85.20$ cents	$62.93$ cents

Dividend

Details of dividends declared or paid during or subsequent to the period ended 31 December 2003 are as follows:

	Payment date	Amount per security	Total dividend	Franked amount per security	Foreign sourced dividend amount per security
Final dividend $-$ year ended 30	21 November
June 2003 (fully franked at 30%)	2003	cent	\$253,299	cent.
Interim dividend – Current period
(fully franked at $30\%$ )	14 May 2004	cent	\$253.299	cent

The Dividend Re-investment Plan and Bonus Share Plan are currently suspended.

Controlled entities acquired or disposed of

There were no acquisitions or disposals of controlled entities during the current period.

Directory

Directors David Robert Watson (Executive Chairman)

Jonathan David Elbery (Executive)

David Anderson Mellor (Executive)

Bruce Edmond Saxild (Executive)

Peter James Leonhardt (Non-Executive)

Secretary David Anderson Mellor

Contents

Directors' Report Consolidated statement of financial performance Consolidated statement of financial position Consolidated statement of cash flows Notes to the consolidated financial statements Directors' declaration Independent review report

Auditors

PricewaterhouseCoopers OV1, Level 19 250 St. George's Terrace Perth Western Australia 6000

Share registry Computershare Investor Services Pty Ltd Level 2, 45 St. George's Terrace Perth Western Australia 6000

Telephone (08) 9323 2000

Registered office and principal place of business 328 Aberdeen Street West Perth

Western Australia 6005

Telephone (08) 9227 6333 Facsimile (08) 9227 8000 E-mail corporate@ctilogistics.com Web www.ctilogistics.com

CTI Logistics Limited is a company limited by shares incorporated and domiciled in Australia

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Page	8-11
Page	12
Page	13

Directors' Report

Your directors present their report on the consolidated entity consisting of CTI Logistics Limited and the entities it controlled at the end of, or during, the half-year ended 31 December 2003.

Directors of the Company in office during the whole of the half-year and up to the date of this report, except as noted, are:

David Robert Watson

Mr Watson is the founder and executive chairman of the consolidated entity.

Trevor John Kennedy

Mr Kennedy was the non-executive deputy chairman of CTI Logistics Limited. He retired from the board of CTI Logistics Limited on 17 November 2003.

David Anderson Mellor

Mr Mellor is a chartered accountant who has been with the consolidated entity since 1978. He is responsible for the consolidated entity's finances and accounts.

Bruce Edmond Saxild

Mr Saxild has been with the consolidated entity since 1977. He is responsible for the consolidated entity's logistics and transport operations.

Jonathan David Elbery

Mr Elbery is a chartered accountant who has been with the consolidated entity since 1992. He is responsible for the consolidated entity's security operations. Mr Elbery is a member of the audit committee.

Peter James Leonhardt

Mr Leonhardt is a non-executive director of CTI Logistics Limited and has been with the consolidated entity since 1999. He is also chairman of Voyager Energy Limited, a director of Alliance Finance Corporation Limited and a former managing partner of Coopers & Lybrand. Mr Leonhardt is the chairman of the audit committee and remuneration committee.

Review of operations

In the half-year under review the consolidated revenue has decreased from \$48,753,784 to \$45,775,942. The reduction in revenues as a result of the sale of the Freight Forwarding and Customs Broking businesses in May 2003 and the sale of the Eastern States transport businesses in October 2003, have been partially offset by the one-off revenues on the sale of businesses and assets as set out in note 2 to the consolidated financial statements.

Net profit attributable to members of the Company has increased from \$103,938 to \$1,469,352. The profit from ordinary activities before income tax expense has been affected by a one-off surplus of \$395.387 being the aggregate of the results of the operations sold up until October 2003, and the profits and losses on disposal of businesses and assets. Also included in that result is a one-off profit of \$134,017 on the sale of a property. The profit from ordinary activities before income tax expense for the corresponding period last year was affected by an aggregate loss of \$613,012 predominantly relating to previously reported writedowns.

In the six months under review, interest bearing liabilities have reduced from \$18.933,446 to \$10,769,835. Borrowing costs have declined from \$1,016.761 in the previous corresponding period to \$645,185 for the period under review.

Cash flows from operating activities have increased from \$2,267,145 to \$3,174,869 with part of this increase relating to the recoupment of working capital in businesses sold prior to and during the period under review.

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

DAVID MELLOR Director

Perth, 26 February 2004

Consolidated statement of financial performance For the half-year ended 31 December 2003

	Notes	Current period S	Previous corresponding period S
Revenue from ordinary activities	2	45,775,942	48,753,784
Borrowing costs expense Other expenses from ordinary activities	2	645,185 43,337,371	1,016,761 47,179,595
Profit from ordinary activities before income tax expense		1,793,386	557,428
Income tax expense		324,034	453,490
Net profit attributable to members of the Company		1,469,352	103,938
		Cents	Cents
Basic earnings per share Diluted earnings per share		5.80 5.80	0.41 0.41

The above consolidated statement of financial performance should be read in conjunction with the accompanying notes.

Consolidated statement of financial position As at 31 December 2003

	31 December 2003	30 June 2003
	\$	S
Current assets
Cash assets	766,117
Receivables	13,737,561	14,957,818
Inventories	1,478,518	1,354,737
Tax assets	1,014,425	1,162,200
Property held for resale	1,946,874	3,545,077
Other assets	1,070,837	1,252,962
Total current assets	20,014,332	22,272,794
Non-current assets
Receivables	3,545,979	1,837,155
Other financial assets	327,753	327,753
Property, plant and equipment	20,163,623	25,734,877
Tax assets	223,825	271,644
Intangible assets	687,950	3,357,114
Other assets	8,342	4,952
Total non-current assets	24,957,472	31,533,495
Total assets	44,971,804	53,806,289
Current liabilities
Payables	8,443,515	8,817,301
Interest bearing liabilities	1,447,833	10,752,685
Tax liabilities	284,771	454,242
Provisions	1,144,171	1,923,109
Total current liabilities	11,320,290	21,947,337
Non-current liabilities
Payables	250,000	416,668
Interest bearing liabilities	9,322,002	8,180,761
Tax liabilities	1,437,937	1,697,926
Provisions	371,715	509,789
Total non-current liabilities	11,381,654	10,805,144
Total liabilities	22,701,944	32,752,481
Net assets	22,269,860	21,053,808
Equity
Contributed equity	20,044,219	20,044,219
Retained profits	2,225,641	1,009,589
Total equity	22,269,860	21,053,808

The above consolidated statement of financial position should be read in conjunction with the accompanying notes.

Consolidated statement of cash flows For the half-year ended 31 December 2003

	Current period	Previous corresponding period
	S	S
Cash flows from operating activities
Receipts from trade and other debtors (inclusive of goods and
services tax)	42,192,724	58,273,745
Payments of accounts payable and to other suppliers and creditors
and employees (inclusive of goods and services tax)	(37, 849, 322)	(55,008,548)
Interest received	32,897	69.161
Borrowing costs	(645, 185)	(1,016,761)
Dividends received	1,656	1,518
Income taxes paid	(557,901)	(51,970)
Net cash flows from operating activities	3,174,869	2,267,145
Cash flows from investing activities
Loan repayments received	9,000	6,000
Payments for property, plant and equipment	(379, 427)	(776, 927)
Payments for purchase of business	(166, 666)	(83, 333)
Proceeds from sale of property, plant and equipment	1,924,679	253,995
Proceeds from sale of business	4,656,382	998,099
Net cash flows from investing activities	6,043,968	397,834
Cash flows from financing activities
Repayment of borrowings	(8,130,685)	(4,234,366)
Dividends paid	(253, 299)	(248, 800)
Net cash flows from financing activities	(8, 383, 985)	(4,483,166)
Net increase/(decrease) in eash held	834,852	(1,818,187)
Cash at the beginning of the period	(68, 735)	756,322
Cash at the end of the period	766.117	(1,061,865)

The above consolidated statement of cashflows should be read in conjunction with the accompanying notes.

1. Basis of financial report preparation

This general purpose financial report for the interim half-year reporting period ended 31 December 2003 has been prepared in accordance with Accounting Standard AASB 1029 Interim Financial Reporting, other mandatory professional reporting requirements (Urgent Issues Group Consensus Views), other authoritative pronouncements of the Australian Accounting Standards Board and the Corporations Act 2001.

This interim financial report does not include all the notes of the type normally included in an annual financial report. Accordingly, this report is to be read in conjunction with the annual report for the year ended 30 June 2003 and any public pronouncements made by CTI Logistics Limited during the interim reporting period in accordance with the continuous disclosure requirements of the Corporations Act 2001.

The accounting policies adopted are consistent with those of the previous financial year and corresponding interim reporting period.

	Current period S	Previous corresponding period S
2. Revenue and expenses from ordinary activities
Revenue from operating activities	35,388,087	47,677.102
Revenue from sale of business	3,400,000
Revenue from sale of property, plant and equipment	6,303,890	253,196
Revenue from outside the operating activities	683.965	823,486
Total revenue from ordinary activities	45,775,942	48,753,784
Expenses from ordinary activities
Changes in inventories of finished goods and
Work in progress	123,502	53,149
Raw materials and consumables used	4,609,657	4,627,668
Employee benefits expense	11,459,839	13,446.022
Subcontractor expense	10,539,894	19,985,072
Depreciation of non-current assets	1,714,883	1,831,761
Amortisation of non-current assets	108.245	299,852
Motor vehicle and transportation costs	3,114,683	2,832,138
Property costs	545.752	798,684
Write-down of investment		461,580
Provision for share scheme loan		381,000
Carrying value of businesses sold	2,647,355
Carrying value of property, plant and equipment sold	5,876,281	137,882
Other expenses from operating activities	2,597,280	2,324,787
Expenses from ordinary activities, excluding borrowing costs expense	43,337,371	47,179,595

3. Segment information

The consolidated entity operates predominantly in Australia and is involved in the production and sale of the following products and services:

$\blacktriangleright$ Logistics and Transport services

$\mathbb{R}^2$ Manufacturing, Security and other services

	Logistics and Transport 2003	Manufacturing, Security and Other 2003	Intersegment eliminations 2003	Consolidated 2003
	\$	\$	\$	\$
Sales to customers outside the consolidated entity	33,220,481	12,555,461		45,775,942
Intersegment sales	81,149	15,091	(96,240)
Total segment revenue	33,301,630	12,570,552	(96,240)
Unallocated Sales
Consolidated revenue from ordinary activities				45,775,942
Segment result	1,592,992	1,616,482	(31,708)	3,177,766
Unallocated result
Interest Expense				(504, 812)
Other Finance Costs				(140,373)
Other				(739, 195)
Consolidated profit from ordinary activities before income tax				1,793,386
Income tax expense				324,034
Net profit				1,469,352

3. Segment information (continued)

	Logistics and Transport	Manufacturing, Security and Other	Intersegment eliminations	Consolidated
	2002	2002	2002	2002
	\$	\$	\$	\$
Sales to customers outside the
consolidated entity	35,979,537	12,465,316		48,444,853
Intersegment sales	144,638	26,496	(171, 134)
Total segment revenue	36, 124, 175	12,491,812	(171, 134)
Unallocated Sales				308,931
Consolidated revenue from ordinary activities				48,753,784
Segment result	1,096,222	2,074,993	(65, 395)	3,105,820
Unallocated result
Interest Expense				(785, 320)
Other Finance Costs				(231, 441)
Provision for diminution of Investments				(461, 580)
Provision for restricted recovery
of share scheme loans				(381,000)
Other				(689, 051)
Consolidated profit from ordinary activities before income tax				557,428
Income tax expense				453,490
Net profit				103,938
4. Disposal of businesses During the period, the consolidated entity sold its Eastern States Logistics and Transport businesses:				Current period \$
Proceeds received or receivable:				4,656,382
Cash consideration received Deferred consideration				3,115,663
Total consideration				7,772,045
Carrying value of assets disposed of:
Plant and equipment Intangible assets				4,339,542 2,647,355
				6,986,897
Other costs on disposal				92,458
				7,079,355

5. Dividends

	Current period	Previous corresponding period
Ordinary Dividends provided for or paid during the half-year	253,299	248.799

Dividends not recognised at year end

Since the end of the half-year the directors have declared an interim dividend of 1 cent per ordinary share, fully franked at 30%. The aggregate amount of the dividend payable on 14 May 2004 out of retained profits at 31 December 2003, but not recognised as a liability at end of half-year is $\frac{$253,299}{2002 - nil}$ .

The Dividend Re-investment Plan and Bonus Share Plan are currently suspended.

6. Contingent liabilities

There have been no changes in contingent liabilities since the last annual report for the year ended 30 June 2003.

7. Events occurring after reporting date

No events have occurred since the end of the half-year that provide additional evidence of conditions that existed at the end of the half-year or that reveal for the first time a condition that existed at the end of the half-year, significant for disclosure in the half-year financial report.

Directors' Declaration

The directors declare that the financial statements and notes set out on pages 5 to 11:

• comply with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional $(a)$ reporting requirements; and
• $(b)$ give a true and fair view of the consolidated entity's financial position as at 31 December 2003 and of its performance, as represented by the results of its operations and its cash flows, for the half-year ended on that date.

In the directors' opinion:

• $(a)$ the financial statements and notes are in accordance with the Corporation Act 2001; and
• $(b)$ there are reasonable grounds to believe that CTI Logistics Limited will be able to pay its debts as and when they become due and payable.

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

DAVID MELLOR Director

Perth, 26 February 2004

PricewaterhouseCoopers ABN 52 780 433 757

$\alpha$ 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

Independent review report to the members of CTI Logistics Limited

Statement

Based on our review, which is not an audit, we have not become aware of any matter that makes us believe that the financial report of CTI Logistics Limited:

• does not give a true and fair view, as required by the Corporations Act 2001 in Australia, of the financial position of the CTI Logistics Group (defined below) as at 31 December 2003 and of its performance for the half-year ended on that date, and
• is not presented in accordance with the Corporations Act 2001, Accounting Standard AASB 1029: Interim Financial Reporting and other mandatory financial reporting requirements in Australia, and the Corporations Regulations 2001.

This statement must be read in conjunction with the rest of our review report.

Scope

The financial report and directors' responsibility

The financial report comprises the statement of financial position, statement of financial performance, statement of cash flows, accompanying notes to the financial statements, and the directors' declaration for the CTI Logistics Group (the consolidated entity), for the half-vear ended 31 December 2003. The consolidated entity comprises both CTI Logistics Limited (the company) and the entities it controlled during that half-year.

The directors of the company are responsible for the preparation and true and fair presentation of the financial report in accordance with the Corporations Act 2001. This includes responsibility for the maintenance of adequate accounting records and internal controls that are designed to prevent and detect fraud and error, and for the accounting policies and accounting estimates inherent in the financial report.

Review approach

We conducted an independent review in order for the company to lodge the financial report with the Australian Securities and Investments Commission. Our review was conducted in accordance with Australian Auditing Standards applicable to review engagements.

We performed procedures in order to state whether, on the basis of the procedures described. anything has come to our attention that would indicate that the financial report does not present fairly, in accordance with the Corporations Act 2001, Accounting Standard AASB 1029: Interim Financial Reporting and other mandatory financial reporting requirements in Australia, a view which is consistent with our understanding of the consolidated entity's financial position, and its performance as represented by the results of its operations and cash flows.

We formed our statement on the basis of the review procedures performed, which included:

• inquiries of company personnel/the responsible entity's personnel, and
• analytical procedures applied to financial data.

When this review report is included in a document containing the directors' report, our procedures include reading the directors' report to determine whether it contains any material inconsistencies with the financial report.

These procedures do not provide all the evidence that would be required in an audit, thus the level of assurance provided is less than that given in an audit. We have not performed an audit, and accordingly, we do not express an audit opinion.

While we considered the effectiveness of management's internal controls over financial reporting when determining the nature and extent of our procedures, our review was not designed to provide assurance on internal controls.

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

Independence

In conducting our review, we followed applicable independence requirements of Australian professional ethical pronouncements and the Corporations Act 2001.

ficamberhouseloopers

PricewaterhouseCoopers

June 5-for

David Smith Partner

Perth 26 February 2004

ABN 69 008 778 925

328 Aberdeen Street West Perth WA 6005

Postal Address PO Box 400 West Perth Mestern Australia 6872 Telephone (08) 9227 6333 Facsimile (08) 9227 8000 Email corporate@ctilogistics.com Web www.ctilogistics.com

26 February 2004

Dear Shareholder,

The Company's results for the 6 months ended 31 December 2003 were released today to the Australian Stock Exchange.

Net profit attributable to the members of the Company was \$1,469,352, compared to \$103,938 in the previous corresponding period. Both periods' profit from ordinary activities before income tax expense were affected by one-off profits and losses which do not relate to normal operations. As reported in the 2003 Annual Report, the Eastern States transport operations were sold in October 2003 and included in this period's result is a one-off surplus of \$395.387 being the aggregate of the results of the operations sold up until the date of sale, and the profits and losses on disposal of businesses and assets. The current result also includes a profit of \$134,017 relating to the sale of property. The profit from ordinary activities before income tax expense for the corresponding period last year was affected by an aggregate loss of \$613,012 predominantly relating to previously reported write-downs.

Security, printing, plastics and the Western Australian courier operations showed acceptable returns in the period, but the wharf-related transport and parcel delivery businesses were below budget. Including the one-off non-operating profits outlined above, earnings per share in the six months was 5.80 cents.

Interest bearing liabilities have been reduced from \$18,933,446 at 30 June 2003 to \$10,769,835 at 31 December 2003. Borrowing costs in the period were \$645,185 compared to \$1,016,761 for the previous corresponding period. Cash flows from operating activities amounted to \$3,174,869, up from \$2,267,145 in the previous corresponding period.

Based on these half-year results the directors have resolved to declare the payment of an interim dividend of 1 cent per share, fully franked, payable on 14 May 2004.

Yours faithfully,

DAVID WATSON EXECUTIVE CHAIRMAN