CTI LOGISTICS LIMITED — Share Issue/Capital Change 2004

Dec 19, 2004

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

20 December 2004

Dear Shareholder,

Accompanying this letter is a notice of a General Meeting to be held at the Company's registered office, 1 Drummond Place, West Perth on Wednesday, 19 January 2005 at 10.00am. A resolution is to be put to that meeting authorising the Company to buy back up to 15 percent of its issued fully paid shares on-market.

Under the Corporations Act 2001, the Company cannot buy back more than 10 percent of its shares in any 12 month period without shareholder approval by ordinary resolution. The Company recently completed a 10 percent buy-back in a relatively short time.

In extending the initial 10 percent buy-back by a further 15 percent, the Company is simply continuing to provide the means by which current shareholders may sell some or all of their shares without flooding the very limited market for the Company's shares and reducing the price they may receive.

If you would like to discuss the buy-back with one of the Company's directors please call either David Mellor, Jon Elbery or myself on (08) 9227 6333.

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 10.00am on Wednesday, 19 January 2005.

To consider and if thought fit, pass the following resolution as an ordinary resolution.

The Company is authorised at any time during the twelve months ending 18 January 2006 to purchase up to a maximum of 15% 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

20 December 2004

• NOTE: + A member of the Company entitled to attend and vote is entitled to appoint not more than two Proxies to attend the Annual 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 Annual General Meeting.

CTI LOGISTICS LIMITED ABN 69 008 778 925

EXPLANATORY MEMORANDUM ACCOMPANYING NOTICE OF MEETING

DATE OF MEETING 19 JANUARY 2005

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 Resolution to be put at the meeting of shareholders on 19 January 2005. If you are unsure about any of the contents of this Explanatory Memorandum and accompanying documents please consult your professional advisers.

Number of Share on Issue

At the date of this Explanatory Memorandum there are 22,796,938 fully paid ordinary shares on issue.

Number and Percentage of Shares to be Bought Back

The Company is proposing to buy back up to a maximum of 15% of the shares in issue or 3.419.540 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 12 months commencing on 19 January 2005 and finishing on 18 January 2006 or earlier by the completion of the purchase of the amount authorised. Euroz Securities Limited is the name of the 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.

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 15 percent.

Offer Price

Shares may be bought on-market 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.

Reasons for the Buy-Back

On 31 August 2004 the Company wrote to shareholders announcing its intention to commence an on-market buy-back of ten percent of its issued shares over the ensuing the twelve months. In that letter to shareholders the Chairman stated that "The board recognises that the Company is too small to be on the radar screens of brokers and analysts and there is little liquidity in the market for the Company's shares, the price of which suffers accordingly. It is difficult for current shareholders to exit the register without affecting the share price, so subject to operating requirements and market conditions, the Company is proposing to buy back up to ten percent of its issued share capital over the next twelve months" This buy-back was successfully completed more quickly than initially anticipated and was finalised on 8 December 2004. Under that buy-back, 2,532,993 shares were acquired on-market for a total outlay of \$1,525,904, representing an average price per share of 60.24 cents. The rapid take-up by shareholders may indicate that there are more shareholders who would like to sell if a buver were available.

Under the Corporations Act 2001, a company can only buy back 10% of its shares in any 12 month period without obtaining shareholder approval. The directors believe that it is likely that there are other shareholders who would also like the ability to sell their shares at prevailing market prices. In the past, the lack of substantial buying support for the Company's shares has meant that quite small parcels of shares offered for sale have led to a decline in the market price. The share buy-back gives shareholders who want to sell their shares the ability to sell at prevailing market prices.

Source of Funds for the Buv-Back

The Company's operations are generating cash at a faster rate than current capital expenditure requirements and the buy-back will be funded using current cash reserves and undrawn debt facilities. The Company has undrawn bank facilities at the date of this Explanatory Memorandum of \$4.8 million. Based on the last sale price of the Company's shares prior to the date of this Explanatory Memorandum, of 61 cents, the Company would expect to pay \$2,085,919 to buy back 15% of the issued shares. In the last Annual Report for the year ended 30 June 2004 the Company's operating cash flows were reported at \$5,918,135. 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 61 cents each, and using a funding cost of 8 percent, the notional funding cost after tax would be \$116.811 annually. For every 1 cent variation in the average price paid, the funding cost after tax varies by \$1,914. These figures also assume that the full 15 percent 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 15 percent is bought-back, the saving in dividend cash outflow would be \$34,195 for every one cent dividend paid. In respect of the year ended 30 June 2004, the Company declared dividends aggregating 2 cents per share.

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. At 30 June 2004 the Statement of Financial Position showed the Company's gearing to be at its lowest level for many years with the ratio of interest bearing debt to total equity at just under 40 percent. The Directors do not believe that there will be any material adverse effect on the prospects of the Company arising out of a small increase in gearing.

All other factors being constant, the effect of a reduction in the number of shares on issue will tend to increase both the net tangible asset value of the remaining shares and 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.

Interests of Directors

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

Information Regarding Current Share Market Price

In the period from 1 January 2004 to 20 September 2004 (when the initial 10 per cent buy-back commenced) 1,640,932 of the Company's shares were traded from a low of 48 cents to a high of 65 cents.

Month	Volume Traded	High-Low Price
		(cents)
January 2004	144,143	$48 - 54$
February 2004	172,351	53-60
March 2004	419,596	54-60
April 2004	189,633	53-56
May 2004	203,030	55-57
June 2004	188,283	54-56
July 2004	46,000	55-60
August 2004	463,155	$61-65$
September 2004 (part)	114,753	$55 - 62$

During the period of the initial 10 per cent buy-back (20 September 2004 to 8 December 2004), the Company purchased 2,532,993 shares the lowest price paid being 58 cents and the highest being 61 cents. During that period another 269,820 shares were sold to other parties at prices ranging from 58 cents to 63 cents.

Since 8 December 2004 and to the date of this Explanatory Memorandum (20 December 2004), 88,875 shares have been traded at prices ranging from 61 cents to 62 cents.

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

I/We
of
being a member/members of CTI Logistics Limited
hereby appoint
of
or failing him/her
of

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 Wednesday 19 January 2005 at 10.00am 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

FOR AGAINST ABSTAIN

The Company is authorised at any time during the twelve months ending 18 January 2006 to purchase up to a maximum of 15% 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 Annual 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 Annual 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.