CTI LOGISTICS LIMITED — Interim / Quarterly Report 2007

Feb 26, 2007

ABN 69 008 778 925

1 Drummond Place West Perth WA 6005

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

27 February 2007

Dear Shareholder

The Company today announced its results for the half year ending 31 December 2006 to the Australian Stock Exchange. Net after tax profit for the six months was \$2,500,388, up 47.5% on the previous corresponding period. Revenue was up 6.1% to \$30,417,000.

Earnings per share, adjusted for the 3 for 1 share split on 18 December 2006, was 7.3 cents.

Based on the above results, and in the expectation that market conditions continue to remain bouyant, the directors have resolved to pay an increased fully franked interim dividend of 3 cents per share, payable on 4 May 2007.

Finally, may we remind shareholders that the current share buy-back offer will close on 18 April 2007. The buy-back was initiated at the same time as the shares were split on 18 December 2006, tripling the number of shares held by each shareholder. The buy-back has given shareholders the opportunity to reduce their increased shareholding, by ensuring a ready purchaser for their shares. You may wish to discuss this matter before 18 April 2007 with your stockbroker, or with the Company's purchasing stockbroker, Euroz Securities (08) 9488 1400, in Perth.

Yours faithfully

David Watson

EXECUTIVE CHAIRMAN

CTI Logistics Limited

ABN 69 008 778 925

Appendix 4D Half year report

Half-year ended 31 December 2006

	For announcement to the market Extracts from this report for announcement to the market			\$A'000
Revenue		uρ	$6.1\%$ to	30,417
Profit after tax attributable to members		up	$47.5%$ to	2,500
	Net profit for the period attributable to members	up	$47.5%$ to	2,500
Dividends			Amount per security	Franked amount per security
Final dividend	Year ended 30 June 2006		$3.0$ cents	$3.0$ cents
	Previous corresponding period		$1.5$ cents	$1.5$ cents
Interim dividend	Current period		$3.0$ cents	$3.0$ cents
	Previous corresponding period		2.0 cents	$2.0$ cents
	+ Record date for determining entitlements to the dividend		20 April 2007

NTA backing

	Current period	Previous
		corresponding period
Net tangible asset backing per ordinary security	46 cents	$106$ cents

Dividend

Details of dividends declared or paid during or subsequent to the period ended 31 December 2006 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 June 2006 (fully franked at 30%)	l December 2006	$3.0$ cents	$ $ \$313.873	$3.0 \text{ cents}$
Interim dividend - Current period (fully franked at 30%)	4 May 2007	$3.0$ cents	\$1,026,193	$3.0$ cents

The interim dividend has not been recognised as a liability at the half-year end.

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.

$\sim 10^{-10}$

$\sim$

CTI Logistics Limited

ABN 69 008 778 925

Half-year Report - 31 December 2006

Lodged with the ASX under Listing Rule 4.2A

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 2006 and any public announcements made by CTI Logistics Limited during the interim reporting period in accordance with the continuous disclosure requirements of the Corporations Act 2001.

Directors' Report

YOUR DIRECTORS PRESENT THEIR REPORT ON THE GROUP CONSISTING OF CTI LOGISTICS LIMITED AND THE ENTITIES IT CONTROLLED DURING THE HALF YEAR ENDED 31 DECEMBER 2006.

Directors

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

David Robert Watson (Chairman) Jonathan David Elberv Peter James Leonhardt David Anderson Mellor Bruce Edmond Saxild

Principal activities of the Group

The principal activities of the Group during the halfyear were the provision of logistics, transport and security services, printing, manufacturing of plastic products and investment.

Dividends

The directors have declared a fully franked interim dividend of 3 cents per ordinary share subsequent to the end of the half-year. This dividend is not recognised as a liability at half-year end. During the financial period a 3 cent fully franked final dividend for the year ended 30 June 2006 was paid to members.

Review of operations and results

Profit after tax attributable to the members of the Company was \$2,500,388 compared to \$1,695,141 in the previous corresponding period. Revenue from ordinary activities was \$30,417,371, compared to \$28,678,000. Net cash flows from operating activities were \$1,384,723 down from \$3,384,661 in the prior period which is primarily due to the timing of tax payments.

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.

Share buy-back

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.

At the date of this report 40,145 shares out of a possible 4,237,380 have been purchased under the 12.38% buy-back scheme.

Changes in the state of affairs

No other significant changes in the state of affairs of the Group have occurred other than those matters referred to elsewhere in this half-yearly report.

Events subsequent to balance date

The directors are not aware of any other matters or circumstances not otherwise dealt with in this halfyearly report or the financial statements that has significantly or may significantly affect the operations of

the Group, the results of those operations, or the affairs of the Group in subsequent financial vears.

Likely developments

The major objectives encompassed in the Business Plan of the Group are:

• expansion of existing operations by aggressive $\binom{1}{1}$ marketing and by acquisition;
• $(ii)$ establishment or acquisition of businesses in fields related to or compatible with the Group's existing core operations; and
• maximise the profits and $(iii)$ to. returns to shareholders by constant review of existing operations.

Auditors' independence

A copy of the auditors' independence declaration as required under section 307C of the Corporations Act $2001$ is set out on page 2.

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

DAVID MELLOR Director

Porth 27 February 2007

PricewaterhouseCoopers ABN 52 780 433 757

OV₁ 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

Auditor's Independence Declaration

As lead auditor for the review of CTI Logistics Limited for the half year ended 31 December 2006, 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 review; and
• b) no contraventions of any applicable code of professional conduct in relation to the review.

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

Pierre Dreyer Partner PricewaterhouseCoopers

s

Perth 27 February 2007

Contents	Page
Consolidated Income Statement	4
Consolidated Balance Sheet	5
Consolidated Statement of Changes in Equity	6
Consolidated Cash Flow Statement	7
Notes to the Consolidated Financial Statements	8
Directors' Declaration	11
Independent Review Report to the Members	12

$\bar{a}$

Consolidated Income Statement For the half-year ended 31 December 2006

	Half-year
	2006 \$	2005 S
Revenue	30,417,371	28,678,000
Other income	327,596	314,627
Changes in inventories of finished goods and work in progress	(281, 356)	(201, 976)
Raw materials and consumables used	(5,452,139)	(5, 165, 501)
Employee benefits expense	(8,341,926)	(8,108,095)
Subcontractor expense	(7,798,592)	(7,092,373)
Depreciation and amortisation expense	(1,668,970)	(1,747,515)
Motor vehicle and transportation costs	(1,242,651)	(1,454,664)
Property costs	(124, 509)	(802, 979)
Finance costs	(499, 989)	(396, 396)
Other expenses	(1,743,574)	(1,646,580)
Share of net profit of joint venture partnership	108,892	104,133
Profit before income tax	3,700,153	2,480,681
Income tax expense	(1, 199, 765)	(785, 540)
Profit for the half-year	2,500,388	1,695,141
	Cents	Cents
Earnings per share for profit attributable to the ordinary equity holders of the Company as adjusted for the 3 for 1
shares split on 18 December 2006
Basic earnings per share	7.3	2.9
Diluted earnings per share	7.3	2.9

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

Consolidated Balance Sheet As at 31 December 2006

	31 December 2006 \$	30 June 2006 \$
ASSETS
Current Assets
Cash and cash equivalents	382,388	520,418
Trade and other receivables	12,019,876	9,682,076
Inventories	2,129,904	1,848,548
Total current assets	14,532,168	12,051,042
Non-current assets
Investments accounted for using the equity method	188,481	229,589
Available-for-sale financial assets	65,168	65,168
Property, plant and equipment	20,939,342	18,834,481
Investment properties Deferred tax assets	2,066,467 958,812	2,281,755 864,546
Intangible assets	794,785	881,314
Total non-current assets	25,013,055	23,156,853
Total assets	39,545,223	35,207,895
LIABILITIES
Current liabilities
Trade and other payables	7,258,225	6,892,609
Borrowings	3,904,852	2,172,149
Current tax liabilities	945,862	1,391,090
Total current liabilities	12,108,939	10,455,848
Non-current liabilities Borrowings	10,379,234	9,922,404
Provisions	566,586	497,472
Total non-current liabilities	10,945,820	10,419,876
Total liabilities	23,054,759	20,875,724
Net assets	16,490,464	14,332,171
EQUITY
Contributed equity	6,809,868	6,838,090
Reserves	(51,084)	(51,084)
Retained profits	9,731,680	7,545,165
Total equity	16,490,464	14,332,171

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

Consolidated statement of changes in equity For the half-year ended 31 December 2006

	Half-year
	2006 S	2005 \$
Total equity at the beginning of the half-year	14,332,171	21,771,028
Available-for-sale financial assets, net of tax Profit for the half-year	2,500,388	(51,083) 1,695,141
Total recognised income and expense for the half-year	2,500,388	1,644,058
Transactions with equity holders in their capacity as equity holders:
Shares bought back	(28, 222)	(9,745,460)
Dividends provided for or paid	(313,873)	(193, 775)
Total equity at the end of the half-year	16,490,464	13,475,851
Total recognised income and expense for the half-year attributable to:
Members of CTI Logistics Limited	2,500,388	1,644,057

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

Consolidated cash flow statement For the half-year ended 31 December 2006

	Half-year
	2006 Ŝ	2005 S
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers (inclusive of goods and services tax) Payments to suppliers and employees (inclusive of goods and	31,296,537	31,148,271
services tax)	(27,899,701)	(27, 320, 217)
	3,396,836	3,828,054
Interest received	6,287	130,977
Dividends received	1,932	2,760
Joint venture partnership distributions received	150,000	56,000
Interest paid	(397, 701)	(396, 327)
Income taxes paid	(1,772,631)	(236, 803)
Net cash inflow from operating activities	1,384,723	3,384,661
CASH FLOWS FROM INVESTING ACTIVITIES
Payments for property, plant and equipment	(592, 260)	(573,055)
Payments for available-for-sale financial assets	(12,000)
Deferred payment for purchase of business		(83, 333)
Proceeds from sale of property, plant & equipment	644,773	77,533
Proceeds from sale of available-for-sale financial assets Deferred proceeds from sale of businesses	12,900	717,642
Net cash inflow from investing activities	53,413	138,787
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from borrowings		3,250,000
Repayment of borrowings	(1,234,071)	(1,058,405)
Payments for shares bought back	(28, 222)	(9,745,460)
Dividends paid to company's shareholders	(313, 873)	(193, 775)
Net cash outflow from financing activities	(1,576,166)	(7,747,640)
NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS	138,030	(4,224,192)
Cash and cash equivalents at the beginning of the half- year	520,418	1,887,896
CASH AT THE END OF THE HALF-YEAR	382,388	(2,336,296)

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

1. BASIS OF PREPARATION OF FINANCIAL REPORT

This general purpose financial report for the interim half-year reporting period ended 31 December 2006 has been prepared in accordance with Accounting Standard AASB 134 Interim Financial Reporting 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 2006 and any public announcements 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.

$2.$ SEGMENT INFORMATION

The Group operates predominantly 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 services.

Primary reporting format - business segments

Half-year 2006	Logistics and Transport	Manufacturing, Security and Other	Intersegment eliminations	Consolidated
	\$	\$	\$	\$
Total segment revenue	15,992,894	14,118,568		30,111,462
Intersegment sales	194,552	5,776	(200, 328)
	16,187,446	14,124,344	(200, 328)	30,111,462
Share of net profit of joint venture partnership				108,892
Unallocated revenue				633,505
Total revenue and other income				30,853,859
Segment result	2,621,305	2,220,026	(19, 731)	4,821,600
Unallocated revenue less unallocated expenses				(1, 121, 447)
Profit before income tax				3,700,153
Half-year 2005
Total segment revenue	14,447,985	13,875,528		28,323,513
Intersegment sales	172,932	2,597	(175, 529)
	14,620,917	13,878,125	(175, 529)	28,323,513
Share of net profit of joint venture partnership				104,133
Unallocated revenue				669,114
Total revenue and other income				29,096,760
Segment result	1,995,672	1,485,092		3,480,764
Unallocated revenue less unallocated expenses				(1,000,083)
Profit before income tax				2,480,681

$3.$ DIVIDENDS

	2006	2005
Ordinary shares	313.873	193.775
Dividends provided for or paid during the half-year		ing book bodynamics but it in a manufacture and in any and it runned

Dividends not recognised at the end of the half-year

In addition to the above dividends, since the end of the half-vear the directors have recommended the payment of a interim dividend of 3 cents per fully paid ordinary share, (2005 - 2 cents) fully franked based on tax paid at 30%. The aggregate amount of the proposed dividend expected to be paid on 4 May 2007 out of retained profits at 31 December 2006, but not recognised as a liability at year end, is \$1,026,193 $(2005 - $235,450)$ .

4. EQUITY SECURITIES

	Half-year		Half-year
	2006	2005	2006	2005
	Shares	Shares	\$	\$
Balance at the beginning of the half-
year	11,412,460	22.041.583	6,838,090	16.929.890
Ordinary shares split - 3 for 1	22,824,920		$\bullet$
Ordinary shares purchased under share buy-back	(30, 957)	(10, 269, 055)	(28, 222)	(9,745,460)
Balance at the end of the half-year	34,206,423	11,772,528	6,809,868	7,184,430

5. CONTINGENT LIABILITIES

There are no known contingent liabilities for the Group at the end of the half-year.

EVENTS OCCURRING AFTER THE BALANCE SHEET DATE 6.

Subsequent to balance date, the Company has signed an offer to purchase a building for \$2,100,000.

The Company has purchased a further 9.188 shares at 98 cents under the share buy-back arrangement.

The directors have declared a fully franked, interim dividend of 3 cents per ordinary share (refer to Note 3).

The Company is in negotiation to sell a building to an external third party. The result of this negotiation is expected in the next reporting period and there is not expected to be any material gain or loss on this transaction.

Directors' Declaration

In the directors' opinion:

• (a) the financial statements and notes set out on pages 4 to 10 are in accordance with the Corporations Act 2001. includina:
• $(i)$ complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements; and
• (ii) giving a true and fair view of the Group's financial position as at 31 December 2006 and of its performance, as represented by the results of its operations, changes in equity and its cash flows. for the half-year ended on that date; 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 27 February 2007

PricewaterhouseCoopers ABN 52 780 433 757

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

INDEPENDENT AUDITOR'S REVIEW REPORT

to the members of CTI Logistics Limited

Report on the Half-Year Financial Report

We have reviewed the accompanying half-year financial report of CTI Logistics Limited, which comprises the balance sheet as at 31 December 2006, and the income statement, statement of changes in equity and cash flow statement for the half-year ended on that date, other selected explanatory notes and the directors' declaration for the CTI Logistics Limited Group (the consolidated entity). The consolidated entity comprises both CTI Logistics Limited (the company) and the entities it controlled during that half-year.

Directors' Responsibility for the Half-Year Financial Report

The directors of the company are responsible for the preparation and fair presentation of the halfyear financial report in accordance with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Act 2001. This responsibility includes designing. implementing and maintaining internal control relevant to the preparation and fair presentation of the half-year 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.

Auditor's Responsibility

Our responsibility is to express a conclusion on the half-year financial report based on our review. We conducted our review in accordance with Auditing Standard on Review Engagements ASRE 2410 Review of an Interim Financial Report Performed by the Independent Auditor of the Entity, in order to state whether, on the basis of the procedures described, we have become aware of any matter that makes us believe that the financial report is not in accordance with the Corporations Act 2001 including: giving a true and fair view of the consolidated entity's financial position as at 31 December 2006 and its performance for the half-year ended on that date; and complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001. As the auditor of CTI Logistics Limited, ASRE 2410 requires that we comply with the ethical requirements relevant to the audit of the annual financial report.

A review of a half-year financial report consists of making enguiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. It also includes reading the other information included with the financial report to determine whether it contains any material inconsistencies with the financial report. A review is substantially less in scope than an audit conducted in accordance with Australian Auditing Standards and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

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

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 have complied with the independence requirements of the Corporations Act 2001.

Conclusion

Based on our review, which is not an audit, we have not become aware of any matter that makes us believe that the half-year financial report of CTI Logistics Limited is not in accordance with the Corporations Act 2001 including:

• $(a)$ giving a true and fair view of the consolidated entity's financial position as at 31 December 2006 and of its performance for the half-year ended on that date: and
• complying with Accounting Standard AASB 134 Interim Financial Reporting $(b)$ and Corporations Regulations 2001.

Porce at house books

PricewaterhouseCoopers

Pierre Drever Partner

Perth 27 February 2007