CTI LOGISTICS LIMITED — Interim / Quarterly Report 2021

Mar 11, 2021

ASX: CLX

Half year December 2020 Financial Results February 2021

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This announcement has been authorised for release to the ASX by the CTI Logistics Limited Board of Directors

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Contents

December 2020 Headlines

1

2 Strategic Direction

3 December 2020 Financial Performance

4 December 2020 Financial Review

5 Customer Focused

• 6 FY21 Priorities

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7 What we do

2

CTI Financial Results 31 December 2020

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Fleet Investment
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CTI Financial Results 31 December 2020 3

1 December 2020 Headlines

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Strong cash flow, improved margins, operational investment

• ✓ Strong cash flows: Higher than expected margins in transport and logistics, increased volumes and significant operating leverage, as well as a strong focus on working capital and cost control

• ✓ Debt reduction: Long term debt reduction of $7.8m, reducing gearing to 55% (including AASB 16 lease liabilities)

• ✓ Additional activity: Improving retail sales, increased activity within QLD warehousing, significant volume increases of interstate freight into WA and increasing online volumes had a positive earnings impact

• This momentum more than offset the negative impacts of lockdown inefficiencies, driver shortages in WA, and supply chain disruptions due to interstate rail delays and cancellations

• ✓ Improved utilisation: Customers adjusted their supply chains in response to changing border restrictions by increasing product holdings across more locations, which resulted in improved warehouse utilisation

• ✓ Upgraded sites: Continued to grow the national footprint, including relocation of a CTI Interstate transport depot in NSW and a warehousing facility in SA to support immediate efficiencies and planned future growth

• ✓ Investment: Focused investment in transport equipment to improve utilisation and running costs

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CTI Financial Results 31 December 2020

2 Strategic Direction

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Profitable growth, maximise utilisation, national footprint

• ❑ Drive earnings growth: Organic growth amid increased demand for transport and logistics services across Australia, operational efficiencies, continued focus on winning quality revenue and maximising asset utilisation

• ❑ National expansion: Leverage the GMK flooring business and CTI Interstate freight footprint to continue the buildout of an integrated national transport and warehousing operation for local and national clients

• ❑ Property portfolio: Optimise the national property portfolio including owneroccupied property and quality leased facilities within strategic locations

• ❑ Property returns: Develop remaining 95,000sqm of strategic landholding at Hazelmere WA, consolidating complementary operations to reduce leasing footprint and drive productivity[1]

• ❑ Systems: Implement industry leading integrated warehouse and transport management systems, supported by skilled personnel, to drive operational efficiencies and superior customer service

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Governance Systems
Transport
Melbourne Sydney
Adelaide
Operational
Excellence Brisbane
Perth
Logistics
Property People
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Note 1: Company-owned facility in Hazelmere WA presently covers 54,000sqm (total site is 149,000sqm)

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CTI Financial Results 31 December 2020

3 December 2020 Financial Performance

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Headline Results for the half year to 31 December 2020

Leasing standard AASB 16 adopted

Revenue EBITDA NPBT $118.6m $19.7m $6.8m profit FY19: $109.8m Up 8% FY19: $14.2m Up 39% FY19: $1.2m profit Up 453% NPAT EPS DPS $5.2m profit 6.93 cps profit 2.0 cps FY19: $1.1m profit Up 362% FY19: 1.50 cps profit Up 362% FY19: 0 cps

Note: December 2020 EBITDA and NPBT includes JobKeeper receipts of $1.3m pre tax

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CTI Financial Results 31 December 2020

4 December 2020 Financial Review

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Transport Segment

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Revenue
Up 9%
$69.9m
$69.9 m
$64.1 m
Dec-20 Dec-19
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NPBT
Up 72%
$3.3m
$3.3 m
$1.9 m
Dec-20 Dec-19
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• ➢ Revenue up 9% on last year

• ➢ The WA market has strengthened over the period

• ➢ Interstate freight revenue has continued to grow on both new and existing lanes into WA

• ➢ Interstate freight margins have remained under pressure due to inefficiencies created from natural disasters and ongoing rail issues

• ➢ WA metro and regional freight volumes have benefited from increased inbound volume into WA

• ➢ WA metro and regional freight margins have improved as a result of better quality of revenue and increased utilisation of equipment

• ➢ Parcel revenue has grown in part due to COVID activity and increased home deliveries

• ➢ Parcel efficiencies remain under pressure in WA mainly as a result of increased volumes and significant driver shortages

• ➢ WA courier volumes have fallen by 10%

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CTI Financial Results 31 December 2020

4 December 2020 Financial Review

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Logistics Segment

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Revenue
Up 7%
$45.6m
$45.6 m
$42.4 m
Dec-20 Dec-19
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NPBT
Up 717%
$3.1m
$3.1 m
$0.4 m
Dec-20 Dec-19
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• ➢ Revenue for the segment for the December 20 half year is $3.2m up on last year, spread across all sites nationally in part due to changes in customer supply chains as a result of COVID and new work

• ➢ Minerals and Energy activity decreased in line with expectations due to expected deferral of projects

• ➢ Flooring business operating leverage improved as a result of increased transport and warehouse utilisation in part due to COVID related activity

• ➢ Increased warehouse volume associated with changes to customer supply chains where local in-state storage was required due to COVID restrictions across state borders

• ➢ Growth in new markets including QLD and improved utilisation of existing WA facilities

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CTI Financial Results 31 December 2020

4 December 2020 Financial Review

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Property Segment

Assets Liabilities Up <1% Down 14% Gearing $67.0m $33.0m $193.2 m $193.4 m $67.0 m $66.9 m $38.6 m $33.0 m $111.8 m $106.4 m Gearing % Dec 20 - 55% Jun 20 - 58% Dec-20 Jun-20 Dec-20 Jun-20 Dec-20 Jun-20 ➢ No material movement in assets in the period ➢ Reduction in liabilities due to the ➢ The gearing ratio after including AASB 16 repayment of bank debt lease liability has decreased to 55% ➢ CTI accounts for property at cost; at 31 following $7.8m repayment of long-term December 2020 the property was valued at ➢ Backed by $23.3m of land at Hazelmere debt in the period $78.1m, amounting to $11.1m of value not WA site for future development recognised on the Balance Sheet ➢ Total bank borrowings excluding Net debt - Total borrowings (including AASB 16 lease guarantees and lease liabilities is liabilities) less cash and cash equivalents - $35.0m Total capital Total equity plus net debt

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CTI Financial Results 31 December 2020

4 December 2020 Financial Review

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Consolidated Balance Sheet

Assets Cash and cash equivalents Receivables and prepayments Inventories Current Assets Other Property, plant and equipment Investment properties Deferred tax assets Right-of-use assets Intangibles Non-current assets Total assets Liabilities Trade and other payables Loans and borrowings Lease liabilities Provisions Current liabilities Lease liabilities Loans and borrowings Provisions and other liabilities Non-current liabilities Total liabilities Total net assets Number of shares on issue NTA per share at valuation (cps)	Dec 2020 ($M) June 2020 ($M) Commentary 6.3 7.6 ➢Strong cash generation during the period with focus on available cash to increase liquidity 30.9 29.9 ➢Debtors include trade and other receivables, prepayments and expected tax refunds 0.2 0.2 37.4 37.7 0.1 0.1 88.4 90.0 ➢Movement includes $2.8m of asset additions and net of disposals and depreciation for the period 2.2 2.2 ➢One remaining non-core investment property 3.7 4.0 ➢Deferred tax asset including asset related to AASB 16 46.2 43.2 ➢Right-of-use asset per AASB 16 31.9 32.8 ➢Goodwill, customer relationships, brand and trade names net of amortisation of intangible assets 172.5 172.3 209.9 210.0 17.8 2.0 17.7 ➢Movement includes reduction in trade payable and accruals offset by increase in current tax ➢Short term portion of loans and borrowings 15.7 14.9 ➢Short term portion of lease liabilities per AASB 16 including hire purchase liabilities 6.6 6.7 ➢Short term portion of leave provisions 42.1 39.3 45.4 44.1 ➢Long term portion of lease liabilities per AASB 16 including hire purchase liabilities 33.0 42.8 ➢Repayment of $7.8m of bank borrowings in the period net of $2.0m classified as short term 2.6 2.2 ➢Long term portion of leave provisions 81.0 89.1 123.1 128.4 86.8 81.6 ➢Increase in net assets as a result of the after tax profit for the period to 31 December 2020 77.7 0.85 77.7 0.78 ➢No issue of shares during the half year to 31 December 2020 ➢$11.1m of property value not recognised on the Balance Sheet	Dec 2020 ($M) June 2020 ($M) Commentary 6.3 7.6 ➢Strong cash generation during the period with focus on available cash to increase liquidity 30.9 29.9 ➢Debtors include trade and other receivables, prepayments and expected tax refunds 0.2 0.2 37.4 37.7 0.1 0.1 88.4 90.0 ➢Movement includes $2.8m of asset additions and net of disposals and depreciation for the period 2.2 2.2 ➢One remaining non-core investment property 3.7 4.0 ➢Deferred tax asset including asset related to AASB 16 46.2 43.2 ➢Right-of-use asset per AASB 16 31.9 32.8 ➢Goodwill, customer relationships, brand and trade names net of amortisation of intangible assets 172.5 172.3 209.9 210.0 17.8 2.0 17.7 ➢Movement includes reduction in trade payable and accruals offset by increase in current tax ➢Short term portion of loans and borrowings 15.7 14.9 ➢Short term portion of lease liabilities per AASB 16 including hire purchase liabilities 6.6 6.7 ➢Short term portion of leave provisions 42.1 39.3 45.4 44.1 ➢Long term portion of lease liabilities per AASB 16 including hire purchase liabilities 33.0 42.8 ➢Repayment of $7.8m of bank borrowings in the period net of $2.0m classified as short term 2.6 2.2 ➢Long term portion of leave provisions 81.0 89.1 123.1 128.4 86.8 81.6 ➢Increase in net assets as a result of the after tax profit for the period to 31 December 2020 77.7 0.85 77.7 0.78 ➢No issue of shares during the half year to 31 December 2020 ➢$11.1m of property value not recognised on the Balance Sheet

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CTI Financial Results 31 December 2020

4 December 2020 Financial Review

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Corporate Dashboard

			Percentage
		Number of
	Shareholders at 31 January 2021		of Issued
		FPO
			Capital (%)
1	David R Watson	25,335,776	32.60%
2	JP Morgan Nominees Australia Ltd	9,931,723	12.78%
3	Simon Dirk Kenworthy-Groen	3,906,399	5.03%
4	David A Mellor	3,712,564	4.78%
5	Parmelia Pty Ltd	3,488,551	4.49%
6	Bruce E Saxild	3,336,364	4.29%
7	CITI Corp Nominees Pty Ltd	2,550,426	3.28%
8	HSBC Custody Nominees Ltd	2,007,394	2.58%
9	Dixson Trust Pty Ltd	1,686,633	2.17%
10	NCH Pty Ltd	1,090,484	1.40%
	Other	20,666,106	26.59%
	Total	77,712,420	100.00%

Corporate Information ASX Code CLX Shares on Issue 77.7M Options on Issue Nil Share Price at 2 March 2021 $0.83 Market Capitalisation $64.5M

CTI Logistics Limited – share price and trading volume

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Source: asx.com.au

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CTI Financial Results 31 December 2020

5 Customer Focused

CTI Logistics working with leading brands

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CTI Financial Results 31 December 2020

6 FY21 Priorities

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Customer focus, operational efficiencies, property development

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CTI Logistics: While first half trading was strong, we remain cautious on future trading conditions particularly in light of the COVID situation and progress of the economic recovery

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WA Regional Freight: The business has been repositioned following a period of strengthening systems and processes, equipment renewal and network optimisation, which will allow CTI to continue to capitalise on improved volumes

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Warehousing: Continuing to take advantage of an enhanced system capability and national footprint to capitalise on a growing pipeline of opportunities expected to generate increased utilisation and margins

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Interstate Freight: Significant revenue growth has been achieved by focusing on growing new lanes and customer service, with the focus towards further improving freight profiles and margins following site relocations in WA and NSW

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Flooring: Following improvement in transport utilisation and cost reductions, attention will be directed towards realising streamlined customer service and efficiencies from the recently installed operations system

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Cash Flow: Improved utilisation, receivables management and sustainable productivity measures have supported margins, providing for ongoing debt reduction in preparation for future investment

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Property Development: Planning and early preparation works are underway to expedite the development of company owned land at the strategically located Hazelmere WA site

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CTI Financial Results 31 December 2020

CTI Financial Results 31 December 2020 14

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GMK Flooring Services
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CTI Wrapping Services
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7 What we do

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Transport

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Couriers

▪ On demand express services

▪ Technical services (eftpos and computer swap-outs)

• Vehicles range from push-bikes in CBD to two tonne capacity

Taxi Trucks

▪ On demand express services

▪ Exclusive hourly hire services

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Parcels

▪ Same day and overnight distribution

▪ E-commerce “last mile” B2B and B2C

▪ One, two and three runs a day services

Interstate Freight

▪ Scheduled road and rail services to and from Perth,

Adelaide, Melbourne, Sydney and Brisbane

▪ Vehicles range from two tonne capacity through to semi-trailers

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Regional Freight

▪ Scheduled road services to South West and North West of WA

▪ Vehicles range from rigid to triple road trains

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Specialised Services

▪ Rail and wharf container handling

▪ Truck mounted cranes

▪ Tail lift vehicles

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Fleet Management

• Provision of dedicated trucks and trailers on permanent hire

▪ Hot shot services

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CTI Financial Results 31 December 2020

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Upgraded Logistics Site
South Australia
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CTI Financial Results 31 December 2020 16

7 What we do

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Logistics

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Warehousing

• 3PL, 4PL, supply chain and overflow warehousing

• Contracted distribution centre services

• Bulk product storage

• Consolidation services

• Cross Docking

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E-commerce Fulfilment

• Inventory storage and management

• Pick and pack

• Labelling, reworking and kitting

• Order shipments

• Reverse logistics management

• Temperature controlled and food grade (HACCAP)

• Specialised warehousing

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CTI Projects

• Supply base warehousing and asset management

• Project labour services

• Plant and equipment hire

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Flooring Services (GMK)

• Specialised warehousing

• Carpet and vinyl cutting services

• Specialised Australia-wide distribution network

• Quarantine cleaning and fumigation

• Asset preservation shrink wrapping

• Minerals and energy projects

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CTI Financial Results 31 December 2020

7 What we do

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Other

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Document Management

▪ Document and Sample Storage:

Secure storage, cataloguing and retrieval of documents, computer media and mineral samples

▪ Document Destruction:

Supervised destruction of documents/media and recycling within a closed loop service utilising CTI transport and warehousing facilities

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Security

▪ Monitoring:

ASIAL A1 graded 24/7 control room monitoring of alarms,

lone worker protection, medical alerts and CCTV video

verification for CTI Security clients and third party security businesses

▪ Installation:

Installation and servicing of monitored alarms, CCTV and access control products for residential and commercial markets

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CTI Financial Results 31 December 2020

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Disclaimer

This presentation contains general and background information about CTI Logistics Limited (CTI, the Company) current as at the date of the presentation and should not be considered to be comprehensive or complete or to comprise all the information that an investor should consider when making an investment decision. It should be read in conjunction with the information provided to ASX. CTI is not responsible for providing updated information and assumes no responsibility to do so, except as required by the Corporations Act.

This presentation is not financial product advice, investment advice or a recommendation to acquire securities and has been prepared without taking into account the objectives, financial situation or needs of individuals.

This presentation is not, and should not be considered as, an offer or an invitation to acquire securities in CTI or any other financial products and neither this document nor any of its contents will form the basis of any contract or commitment. This presentation is not a prospectus.

Neither this presentation nor any of its contents may be reproduced or used without the prior written consent of CTI.

This presentation may contain forward looking statements and opinion. Any forward looking statements, opinion or estimates provided in this presentation are based on assumptions and contingencies which are subject to change without notice, as are statements about market and industry trends, which are based on interpretation of current market conditions. Any forward looking statements, including projections, forecasts and estimates, are provided as a general guide only and should not be relied on as an indication or guarantee of future performance and involve known and unknown risks, uncertainties and other factors, many of which are outside the control of CTI. Past performance is not necessarily a guide to future performance and no representation or warranty is made as to the likelihood of achievement or reasonableness of any forward looking statements or other forecast.

CTI and its related bodies corporate and each of their respective directors, agents, officers, employees and advisers expressly disclaim, to the maximum extent permitted by law, all liabilities (however caused, including negligence) in respect of, make no representations regarding, and take no responsibility for, any part of this presentation and make no representation or warranty as to the currency, accuracy, reliability or completeness of any information, statements, opinions, conclusions or representations contained in this presentation. In particular, this presentation does not constitute, and shall not be relied upon as, a promise, representation, warranty or guarantee as to the past, present or the future performance of CTI.

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CTI Financial Results 31 December 2020