CTI LOGISTICS LIMITED — Proxy Solicitation & Information Statement 2006

Nov 15, 2006

ABN 69 008 778 925

328 Aberdeen Street 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

16 November 2006

Dear Shareholder,

Please find enclosed a Notice of General Meeting, together with an associated Explanatory Memorandum and Proxy Form, for a meeting of shareholders to be held at 2.00pm on Monday 18 December 2006 at the Company's premises at 1 Drummond Place West Perth Western Australia.

At the Company's Annual General Meeting on 14 November, the directors announced a proposed share split and buy-back of the Company's shares, and the purpose of the 18 December meeting is to place these proposals in front of shareholders for resolution.

The purpose of the 3 for 1 share split is to provide some liquidity in the market for the stock, by increasing the number of shares on issue. Each of your existing shares will be split and replaced by 3 new shares. Immediately after the split, each shareholder will still hold the same proportion of the Company's share capital and net assets as before the split.

If shareholders approve the share split, it is then proposed to initiate a buy-back, to help absorb any share overhang and selling if some shareholders wish to reduce their tripled shareholding in the stock.

As you would be aware from the Company's annual report, the 2006 financial year was a record one in terms of profit. Based on the first quarter's results, the directors believe that the results for the 6 months to 31 December 2006 should be between 20% and 25 % up on last year's corresponding period. Providing market conditions continue this increase is likely to be maintained for the full year. Given these indications, the directors plan to maintain the current 5 cent annual dividend on each of the new shares.

Yours faithfully.

David Watson EXECUTIVE CHAIRMAN

NOTICE OF GENERAL MEETING

CTI LOGISTICS LIMITED ABN 69 008 778 925

Notice is hereby given that a General Meeting of the members of CTI Logistics Limited ("the Company") will be held at 1 Drummond Place, West Perth, Western Australia at 2.00pm on Monday, 18 December 2006.

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

• 1. For the purposes of Section 254H of the Corporations Act and for all other purposes, approval is given for the company to subdivide the issued capital of the Company on the basis that every one (1) fully paid share be subdivided into 3 (three) fully paid ordinary shares
• 1. The Company is authorised at any time during the four months ending 18 April 2007 to purchase up to a maximum of 12.38% of its issued fully-paid ordinary shares onmarket at a price on any day not exceeding 5% more than the average price paid onmarket in the previous 5 days on which trades took place.

This Notice of Meeting should be read in conjunction with the attached Explanatory Memorandum which contains information in relation to the resolution. A Proxy Form also accompanies this Notice of Meeting.

By order of the board.

D A Mellor SECRETARY

14 November 2006

• A member of the Company entitled to attend and vote is entitled to appoint not more than two Proxies to attend the General NOTE: . Meeting and vote on his/her behalf. Where more than one Proxy is appointed, each Proxy must be appointed to represent a specified proportion of the member's voting rights. A Proxy need not be a member of the Company.
• To be effective, the Proxy Form must be properly completed and signed by the member or his Attorney duly authorised in writing or, if the member is a body corporate, either in any manner permitted by the Corporations Law or under the hand of an officer or attorney duly authorised in writing by the member.
• The Proxy Form and any Power of Attorney under which it is signed or a notarially certified copy thereof, or a facsimile transmission copy thereof must be received by the Company at its registered office not less than 48 hours before the time of the General Meeting.

CTI LOGISTICS LIMITED ABN 69 008 778 925

EXPLANATORY MEMORANDUM ACCOMPANYING NOTICE OF MEETING

DATE OF MEETING - 18 DECEMBER 2006

This is an important document and you should read it in its entirety, in conjunction with all the accompanying documents. It has been prepared for the information of shareholders to provide a reasonable amount of information for them to decide how to vote upon the Resolutions to be put at the meeting of shareholders on 18 December 2006. At that meeting of shareholders the Company is seeking to subdivide its issued capital on the basis that every one (1) fully paid ordinary share be subdivided into three (3) fully paid ordinary shares (the Share Split). If the Share Split resolution (Resolution 1) is approved, the Company proposes to offer to buy back up to 4,237,380 post split shares. If these shares are purchased, the effect would be to reduce the total number of post split shares to 30,000,000. As explained below the proposed share buy-back will only proceed if shareholders approve the proposed Share Split. The information set out herein assumes that the Share Split is approved by shareholders prior to consideration of the buy-back Resolution. If you are unsure about any of the contents of this Explanatory Memorandum and accompanying documents please consult your professional advisers.

RESOLUTION 1-THREE (3) FOR ONE (1) SHARE SPLIT

The Corporations Act 2001 enables a company to convert all or any of its shares into a larger number of shares by way of a resolution passed at a general meeting.

If Resolution 1 is approved, each existing share will be subdivided into 3 shares. As each existing share is effectively multiplied by a factor of 3, there can be no resultant fractions to either round up or down. Immediately after the Share Split, each shareholder will hold the same proportion of the Company's share capital and net assets as before the Share Split. The current rights attaching to the shares will not be affected.

If Resolution 1 is approved, the number of shares in the Company will increase from 11,412,460 to 34,237,380.

The Share Split is recommended by the Directors because it is believed that it will increase the liquidity and affordability to retail investors of the Company's listed shares. Following the Share Split it is logical to expect that the price for each share in the Company as quoted on the Australian Stock Exchange (ASX) will decrease to one third of its price immediately prior to the Share Split. However, the extent of this reduction in price will depend on the market forces from trading day to trading day. The directors plan to maintain the current annual dividend rate of 5 cents per share on the post split shares.

As from the effective date of the Resolution (being the date of the Meeting), all holding statements for shares will cease to have any effect, except as evidence of entitlement to a certain number of post-Share Split shares. From 20 December 2006, shareholders will be able to trade in post-Share Split shares on a deferred settlement basis.

After the Share Split becomes effective, the Company will dispatch a notice to shareholders advising them of the number of shares held by each shareholder both before and after the Share Split. The Company will also arrange for new holding statements to be issued to shareholders.

If the Share Split is approved by shareholders, the following timetable will apply:

18 December 2006	Shareholder approval
20 December 2006	Trading commences in the reorganised securities on a deferred settlement basis. ASX CODE: CLXDA - Fully paid ordinary shares
28 December 2006	Last day for the Company to register transfers on a pre-reorganisation basis.
29December 2006	First day for the Company to register securities on a post-reorganisation basis.
5 January 2007	Despatch of holding statements. Deferred settlement trading ends.
	ASX CODE: CLX - Fully paid ordinary shares
8 January 2007	Trading on a T+3 basis commences.
$\sqrt{11}$ January 2007	Settlement of trades conducted on a T+3 basis.

It is not expected that there will be any taxation consequences for shareholders arising out of the Share Split. However, shareholders are advised to seek their own tax advice on the effect of the Share Split and neither the Company nor the directors accept any responsibility for any individual shareholder's taxation consequences of the Share Split.

RESOLUTION 2 - SHARE BUY-BACK

Number of Share on Issue

At the date of this Explanatory Memorandum there are 11,412,460 fully paid ordinary shares on issue. After the 3 for 1 Share Split there will be 34,237,380 ordinary shares in issue.

Number and Percentage of Shares to be Bought Back

The Company is proposing to buy back up to a maximum of 12.38% of the shares on issue after the Share Split, or 4,237,380 shares.

Terms of the Buy-Back

The Company will buy the shares back on-market on a first-come first-served basis. The Company will buy the shares over a period of 4 months commencing on 19 December 2006 and finishing on 18 April 2007 or earlier by the completion of the purchase of the amount authorised. Euroz Securities Limited is the name of the Perth broker who will act on the Company's behalf and shareholders deciding to sell their shares on-market can expect to receive proceeds 3 days after the sale transaction has been processed (subject to the deferred settlement basis which will exist until the Company dispatch of new holding statements after the Share Split).

The Company can only buy shares on-market to the extent that there are shares offered for sale at a price the Company is prepared and able to pay on the day. There is no certainty that the Company will be able to buy back the full 12.38%.

Offer Price

Shares may be bought on-market by the Company at a price on any day not exceeding 5% more than the average price paid on-market in the previous 5 days on which trades took place.

Reasons for the Buy-Back

Recent share trading has highlighted that shares in the Company are very illiquid. In order to facilitate growth and to have access to capital, the Company requires a share price that reflects its true worth, and a structure that is attractive in terms of size and liquidity.

Resolution 1 proposes a 3 for 1 Share Split which would increase the number of shares to 34,237,380 and, presumably reduce the resultant market price per share accordingly. It is likely, under this scenario that, with increased liquidity, some shareholders may want to partially reduce their holdings. In order to ensure that there is a ready purchaser for those shares, the Company proposes to commence a share buy-back, after the Share Split. If Resolution 1 is not approved, the buy-back proposal will not proceed. The proposal is to buy back a total of up to 4,237,380 shares (1,412,460 prior to the Share Split). If the share buy-back is successfully completed the resultant number of shares on issue will be 30,000,000.

Although the Company continues to pursue suitable growth strategies, in the current market environment sensibly priced acquisitions are not readily identifiable. Apart from the matters outlined above, this proposed buy-back also presents an opportunity to increase the Company's earnings per share as illustrated below in the paragraph headed "Financial Effect of the Buy-Back on the Company."

Source of Funds for the Buv-Back

The Company's operations continue to generate cash at a faster rate than current capital expenditure requirements and the buy-back will be funded using cash reserves and undrawn debt facilities. Based on the last sale price of the Company's shares prior to the date of this Explanatory Memorandum, of 196 cents, the Company would expect to pay \$2,768,422 to buy back 12.38% of the issued shares. Due to the uncertain timing of share purchases it is not possible to predict whether purchases will be made from cash resources or from bank facilities.

Financial Effect of the Buy-Back on the Company

There will be a "funding cost" relating to the acquisition of shares under the buy-back. This will be a combination of interest on bank facilities and interest income foregone. Assuming a worst case scenario of full debt funding, at an average share price of 196 cents each, and using a funding cost of 8 percent, the notional funding cost after tax would be \$155,032 annually. For every 1 cent variation in the average price paid, the funding cost after tax varies by \$2,373. These figures also assume that the full 12.38% is bought back.

There is a compensating cash flow benefit to the Company in respect of any future dividends that may be paid. Assuming the full 12.38% is bought-back, the saving in dividend cash outflow would be \$42,374 for every one cent dividend paid. In respect of the year ended 30 June 2006, the Company declared dividends aggregating 5 cents per share, and the directors plan to maintain the current annual dividend rate of 5 cents per share on the post split shares.

The amount spent on the buy-back will also reduce the Company's total equity and thereby have the effect of increasing balance sheet gearing. In addition, the amount of the buy-back which is funded out of borrowings will increase debt levels accordingly. Any additional borrowings would not be drawn for the full year as normal operating cash inflows will be applied to reduce debt levels.

Based on the consolidated statement of financial position at 30 June 2006 which showed total equity of \$14,332,171 and total liabilities of \$20,875,724 it is estimated that, as a consequence of this proposed transaction, total equity would reduce to \$11,563,749 and total liabilities would increase to \$23,644,146. These figures do not take into account the results for the consolidated entity in the period after 30 June 2006. Any profits earned subsequent to 30 June 2006 will increase total equity and further improve gearing. A further factor in considering gearing is that land and buildings are carried at cost in the accounts rather than at the independent market valuation noted in the 2006 annual report. The unbooked revaluation increment amounts to \$10.484 million.

The Directors do not believe that there will be any material adverse effect on the prospects of the Company arising out of the proposed increase in gearing.

All other factors being constant, the effect of a reduction in the number of shares on issue will tend to increase the Company's earnings per share because the weighted average number of shares used in the calculation is reduced by the number bought back. It is not possible to calculate the future effect of these factors as the number of shares bought back and the total amount likely to be outlaid is not known. However, based on a 196 cent average share buy-back price, if the proposed share buy-back effects are applied to the results for the financial year ended on 30 June 2006, earnings per share increases from $27.12$ cents (based on the actual number of shares on issue at 30 June 2006) to 29.41 cents (based on the number of shares on issue after successful completion of the share buy-back). The earnings per share on a post Share Split basis would be 9.04 cents and 9.80 cents respectively.

Based on the first quarter's results, the directors believe that the results for the 6 months to 31 December 2006 should be between 20% and 25% up on last year's corresponding period. Providing market conditions continue this increase is likely to be maintained for the full year.

Interests of Directors

At the date of this Explanatory Memorandum none of the directors intends to participate in the buy-back.

Excluding the effect of shares held jointly by several directors, the number of shares held by directors and the possible effect on their percentage holdings from today's date to the completion of this proposed share buyback is as follows:

NAME	NO OF SHARES AS	%	NO OF SHARES	$\%$	% ON COMPLETION
	AT 14 NOVEMBER		AFTER 3 FOR 1		OF PROPOSED BUY-
	2006		SHARE SPLIT		BACK
David Watson	5,233,228	45.86%	15,699,684	45.86%	52.33%
David Mellor	575,047	5.04%	1,725,141	5.04%	5.75%
Bruce Saxild	535,998	4.70%	1,607,994	4.70%	5.36%
Jonathan Elbery	493,653	4.33%	1,480,959	4.33%	4.94%
Peter Leonbardt	53,086	0.47%	159,258	0.47%	0.53%

Information Regarding Current Share Market Price

Since $1$ July 2006, 129,653 shares have traded between the prices of 117 cents and 198 cents. Of those 129,653 shares, 66,933 were acquired by executive directors.

14 November 2006

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CTI LOGISTICS LIMITED ABN 69 008 778 925 Registered Office: 1 Drummond Place West Perth, Western Australia 6005 Facsimile: (08) 9227 8000

The Secretary CTI Logistics Limited 1 Drummond Place WEST PERTH WA 6005

INC ………………………………………………………………………………………………
0.
being a member/members of CTI Logistics Limited
hereby appoint,
ОЕ степлатилизателищенно на полности по полно полности по стали постоящего постоящего полности по стали полности полности полности полности полности по
or failing him/her
01.

or failing him/her, the Chairman of the Meeting as my/our Proxy to vote for me/us and on my/our behalf at the General Meeting of the Company to be held at 1 Drummond Place, West Perth, Western Australia on Monday, 18 December 2006 at 2.00pm and at any adjournment thereof.

If two Proxies are being appointed the proportion of my/our voting rights that each Proxy is appointed to represent is as set out above.

Note: If you wish to direct your Proxy how to vote in respect of the proposed resolution, you should tick the appropriate box below. Otherwise your Proxy may vote as he/she thinks fit or abstain from voting.

ORDINARY RESOLUTIONS				AGAINST	ABSTAIN
1. For the purposes of Section 254H of the Corporations Act and for all other purposes, approval is given for the company to subdivide the issued capital of the Company on the basis that every one (1) fully paid share be subdivided into 3 (three) fully paid ordinary shares
2. The Company is authorised at any time during the four months ending 18 April 2007 to purchase up to a maximum of 12.38% of its issued fully-paid ordinary shares on-market at a price on any day not exceeding 5% more than the average price paid on-market in the previous 5 days on which trades took place.
		Signed this
		Signature of member(s)
NOTE:		* A member of the Company entitled to attend and vote is entitled to appoint not more than two Proxies to attend the General Meeting and vote on his/her behalf. Where more than one Proxy is appointed, each Proxy must be appointed to represent a specified proportion of the member's voting rights. A Proxy need not be a member of the Company.
	To be effective, the Proxy Form must be properly completed and signed by the member or his Attorney duly authorised in writing or, if the ≉. member is a body corporate, either in any manner permitted by the Corporations Law or under the hand of an officer or attorney duly authorised in writing by the member.
		* The Proxy Form and any Power of Attorney under which it is signed or a notarially certified copy thereof, or a facsimile transmission copy thereof

must be received by the Company at its registered office not less than 48 hours before the time of the General Meeting.

* Proxies lodged in favour of the Chairman which do not contain a direction on how to vote will be exercised by the Chairman in favour of the resolutions.