EXCELSIOR CAPITAL LTD — Proxy Solicitation & Information Statement 2009

Oct 19, 2009

==> picture [132 x 80] intentionally omitted <==

Booklet of meeting material for Members for meetings on Friday 20 November 2009 at Brisbane

This Document is important:

If you do not understand it or are in any doubt about the action which you are required to take, you should consult your legal or financial or other professional adviser immediately.

The Directors of CMI strongly recommend that you vote in favour of the resolutions regarding the Selective Capital Reduction to be considered at the Meetings.

CMI Limited ACN 050 542 553

==> picture [132 x 80] intentionally omitted <==

Notices of Meetings of: Ordinary and Class A Shareholders

These meetings of the Ordinary Shareholders and the Class A Shareholders are being held to modify and streamline the capital structure of CMI Limited by way of a selective capital reduction of Class A Shares, to occur. You are invited to attend in person the relevant meetings of the Company. There are two meetings.

• The first meeting will involve voting by both the Ordinary and Class A Shareholders.

• The second meeting of the Class A Shareholders will involve voting by Class A Shareholders only.

Summary of Important Information

Summary of Important Information
Date of Meetings	Friday, 20 November 2009
Venue of Meetings	Brisbane Riverview Hotel, Corner Kingsford Smith Drive and Hunt Street Hamilton, Brisbane Queensland 4007
Time of Meetings	10am for the combined Ordinary and Class A Shareholders’ meeting followed immediately by the Class A Shareholders’ meeting (expectedly 10.30am).
Last time by which proxy forms for the Meetings can be lodged	10.30am on Wednesday, 18 November 2009
Voting Record Date	The Company has determined in accordance with regulation 7.11.37 of the Corporations Regulations 2001 (Cth), that all securities of the Company that are quoted securities at 7.00pm (Brisbane time) on 18 November 2009 are taken, for the purposes of the above Meetings, to be held by the persons who held them at that time. Only those persons will be entitled to vote at the Meetings on 20 November 2009.
Payment Record Date	Monday, 29 December 2009

Table of contents

Table of contents --------------------------------------------------------------------------------------------2 Chairman’s letter---------------------------------------------------------------------------------------------3 Definitions ----------------------------------------------------------------------------------------------------4 Notice of meeting of combined Ordinary and Class A Shareholders ------------------------------------6 Notice of meeting of Class A Shareholders ----------------------------------------------------------------7 Explanatory Memorandum ----------------------------------------------------------------------------------8

CMI Limited | Notices of meetings

Page 2

Chairman’s letter

CMI Limited ACN 050 542 553

14 October 2009

Dear Shareholder

These Meetings are solely about the Board’s proposal to cancel all of the Class A shares by way of selective capital reduction in consideration for the payment of 63 cents per share to Class A Shareholders registered on the Payment Record Date.

The Board proposed a similar transaction in respect of the Class A Shares at about this time last year. The Company did not proceed with the proposal at that time because of the uncertainty caused by the collapse in the world financial markets. The Board believes that this was the prudent decision in those circumstances. However, the markets are now more stable and although asset values and profitability have been reduced we believe that it is appropriate to reintroduce the proposal. The Board strongly believes the proposal is in the best interests of all shareholders.

The Class A shares have traded at price levels significantly below the proposed Transaction consideration of 63 cents and there is very little volume in the stock. In addition, the Company has been unable to pay dividends on the Class A shares for some time and it is uncertain when dividend payments will resume. The proposed Transaction allows Class A shareholders to receive consideration for their shares at a price much higher than the price for those shares prior to the capital reduction announcement.

The Company has reached voting agreements with the major Class A shareholders (Trojan Equity Limited, MMC Asset Management and Zazu Holdings Pty Ltd) who support the proposal and will agree to the proposed Transaction.

The Transaction is to be funded by a Loan Facility from the Company’s bankers. It is a condition of that facility that there be a reduction of $4 million by 28 February 2010 which is to be raised by way of a non-renounceable Rights Issue. The Company proposes to offer shortfall facility subject to obtaining shareholder approval for Director participation, obtaining a waiver from ASX in respect of the issue of shares to directors under Listing Rule 10.11 outside the one month time frame and receiving ASIC relief for any issues which may breach the takeover provisions. The Rights Issue will be fully underwritten by RP Prospects Pty Ltd, an entity associated with Raymond Catelan. The drawdown of the Loan Facility and the Rights Issue will only proceed if the Transaction is approved by shareholders at both Meetings.

The Board strongly recommends that you vote in favour of the proposal. It is important that if you support the proposal that you vote accordingly, either by proxy or in person at the meeting. The Company’s constitution requires 75% of those voting in each of the separate Class A and combined shareholders Meetings to vote in favour of the relevant resolution for the Transaction to be approved. In addition, those Class A Shareholders voting in favour of the resolution are not able to be counted for the 75% test for the Combined Meeting. It is therefore very important for the Ordinary Shareholders in particular who support the Transaction to vote in the Combined Meeting.

The Directors have engaged the financial consulting firm InterFinancial Corporate Finance Limited to prepare an expert’s report to assess whether the proposed Transaction is fair and reasonable. InterFinancial has concluded that it is fair and reasonable. A copy of its Report is attached for your information.

Further information in relation to the proposed Transaction is set out in the attached explanatory memorandum. Please read this information carefully. If you have any queries you should consult your legal, financial or other professional adviser immediately.

Yours faithfully

==> picture [96 x 43] intentionally omitted <==

Colin Ryan AM Chairman

14 October 2009

CMI Limited | Notices of meetings

Page 3

Definitions

A number of capitalised terms are used throughout the Notices of Meetings and Explanatory Memorandum.

Except to the extent the context otherwise requires:

Term	Definition
Act	means the Corporations Act 2001 (Cth).
Associates	has the meaning given to it in the Act.
Capital Reduction	means the selective reduction of Class A Shares in the Company to be considered at the Meetings.
Chairman’s Letter	means the letter to Shareholders signed by Mr Colin Ryan which is contained in this booklet.
Class A Share	means a Class A share in the Company formerly known as a CPS or convertible preference share.
Class A Shareholder	means a holder of Class A Shares in the Company.
Combined Meeting	means the combined Ordinary and Class A Shareholders of the Company to be held on 20 November 2009.
Company	means CMI Limited ACN 050 542 553.
Directors	means the directors of the Company.
Expert	means InterFinancial Corporate Finance Limited ACN 136 962 966.
Expert’s Report	means the report prepared by InterFinancial Corporate Finance Limited in relation to the fairness and reasonableness of the Capital Reduction, a copy of which is attached.
Explanatory Memorandum	means the explanatory memorandum accompanying the Notices of Meetings.
Listing Rules	means the Listing Rules of Australian Securities Exchange (ASX).
Loan Facility	means a loan facility of approximately $18 million to fund the Transaction.
Meetings	means the meetings of the combined Ordinary and Class A Shareholders of the Company and the meeting of Class A Shareholders of the Company to be held on 20 November 2009.
Member	means a Shareholder.
Notices of Meetings	means the notices of meetings contained in this booklet dated 14 October 2009.
Option	means a right to subscribe for an Ordinary Share.
Ordinary Resolution	means a resolution that will be passed if more than 50% of votes cast by Shareholders entitled to vote on the resolution are cast in favour of the resolution.
Ordinary Shares	means fully paid ordinary shares in the Company.
Ordinary Shareholder	means a holder of Ordinary Shares.
Payment Record Date	means 7.00pm on 29 December 2009 subject to the passing of the Resolutions as Special Resolutions (on the basis that the sum of 63 cents per share will be paid by the Company on cancellation to the holder or holders of Class A Shares registered in the Company’s register of members at this time and date).
Capital Reduction Resolutions	means the resolutions to approve the Capital Reduction to be considered at the Meetings, being Resolution 1 in each Notice of Meeting.
Rights Issue	means the non-renounceable rights issue of Ordinary Shares proposed to be undertaken by the Company to raise approximately $4 million.

CMI Limited | Notices of meetings

Page 4

Term	Definition
Share	means an Ordinary Share in the Company and a Class A Share in the Company.
Shareholder	means a holder of Shares.
Shortfall Facility	means the shortfall facility which the Company proposes to conduct under the Rights Issue as explained in section 6 of the Explanatory Memorandum.
Special Resolution	means a resolution that will be passed if 75% or more of the votes cast by Shareholders entitled to vote on the resolution vote in favour of the resolution.
Transaction	means the Capital Reduction involving the cancellation of all Class A Shares on issue for a consideration of 63 cents per Class A Share.
Underwriting Agreement	means the agreement to underwrite the proposed Rights Issue between the Company and RP Prospects Pty Ltd ACN 010 774 651 (an entity associated with Raymond Catelan, a Director).
Voting Power	has the meaning given to it in the Act.
Voting Record Date	In accordance with regulation 7.11.37 of the Corporations Regulations 2001 (Cth), all securities of the Company that are quoted securities at 7.00pm (Brisbane time) on 18 November 2009 are taken, for the purposes of the above Meetings, to be held by the persons who held them at that time. Only those persons will be entitled to vote at the Meetings on 20 November 2009.

CMI Limited | Notices of meetings

Page 5

Notice of meeting of combined Ordinary and Class A Shareholders

CMI Limited ACN 050 542 553

Notice is given that a meeting of all Shareholders of CMI Limited ( Company ) will be held at Riverview Hotel, Corner Kingsford Smith Drive and Hunt Street, Hamilton, Brisbane Queensland 4007 on Friday 20 November 2009 at 10am (Brisbane time).

Agenda

Special business

Resolution 1 – Capital Reduction

To consider and, if thought fit, pass the following resolution as a Special Resolution:

• ‘That, subject to the Class A Shareholders and the combined Ordinary Shareholders and Class A Shareholders of the Company separately approving the cancellation of Class A Shares (and having regard to the other information provided in the Notices of Meetings of Ordinary and Class A Shareholders), IT IS RESOLVED that the Company’s share capital be reduced by the cancellation of all Class A Shares on issue on the Payment Record Date for the consideration of 63 cents per Class A Share.’

Voting exclusion

At this combined Ordinary and Class A Shareholders meeting, in accordance with section 256C(2)(a) of the Act, any votes cast by Ordinary Shareholders that are also holders of Class A Shares on the Voting Record Date (or their Associates) in favour of Resolution 1 will be disregarded and only votes cast {Against} Resolution 1 by Class A Shareholders will be counted.

However, the Company need not disregard any such vote in favour of Resolution 1 if:

• (a) it is cast by any person referred to above as a proxy for a person who is entitled to vote in accordance with the directions on the proxy form; or

• (b) it is cast by the person chairing the meeting as a proxy for a person who is entitled to vote, in accordance with a direction on the proxy form to vote as the proxy decides.

Notes

• (a) A Member who is entitled to attend and cast a vote at the meeting is entitled to appoint a proxy.

• (b) The proxy need not be a Member of the Company. A Member who is entitled to cast 2 or more votes may appoint 2 proxies and may specify the proportion or number of votes each proxy is appointed to exercise.

• (c) If you wish to appoint a proxy and are entitled to do so, then complete and return the enclosed proxy form.

• (d) A corporation may elect to appoint a representative in accordance with the Act in which case the Company will require written proof of the representative’s appointment which must be lodged with or presented to the Company before the meeting.

• (e) If you have any queries on how to cast your votes contact Sharyn Williams on 07 3865 9969 during business hours.

Note: The Company requests that, in order to provide the Company with information on the views on this issue of all the Shareholders, Shareholders in favour of the Capital Reduction Resolution should still vote {FOR} the Capital Reduction Resolution even though in accordance with section 256C(2)(a) of the Act the votes may be disregarded.

Dated 14 October 2009 Sharyn Williams

==> picture [112 x 29] intentionally omitted <==

By Order of the Board

Company Secretary

CMI Limited | Notices of meetings

Page 6

Notice of meeting of Class A Shareholders

CMI Limited ACN 050 542 553

Notice is given that a meeting of the Class A Shareholders of CMI Limited ( Company ) will be held at Riverview Hotel, Corner Kingsford Smith Drive and Hunt Street, Hamilton, Brisbane Queensland 4007 on Friday 20 November 2009 immediately after the meeting of the combined Ordinary and Class A Shareholders (expectedly 10.30am – Brisbane time).

Agenda

Special business

Resolution 1 – Capital Reduction

To consider and, if thought fit, pass the following resolution as a Special Resolution:

‘That, subject to the Class A Shareholders and the combined Ordinary Shareholders and Class A Shareholders of the Company separately approving the cancellation of Class A Shares (and having regard to the other information provided in the Notices of Meetings of Ordinary and Class A Shareholders), IT IS RESOLVED that the Company’s share capital be reduced by the cancellation of all Class A Shares on issue on the Payment Record Date for the consideration of 63 cents per Class A Share.’

Notes

• (a) A Member who is entitled to attend and cast a vote at the meeting is entitled to appoint a proxy.

• (b) The proxy need not be a Member of the Company. A Member who is entitled to cast 2 or more votes may appoint 2 proxies and may specify the proportion or number of votes each proxy is appointed to exercise.

• (c) If you wish to appoint a proxy and are entitled to do so, then complete and return the enclosed proxy form.

• (d) A corporation may elect to appoint a representative in accordance with the Act in which case the Company will require written proof of the representative’s appointment which must be lodged with or presented to the Company before the meeting.

• (e) If you have any queries on how to cast your votes contact Sharyn Williams on 07 3865 9969 during business hours.

Voting exclusion

Ordinary Shareholders are not eligible to vote at the Class A Shareholders’ Meeting.

Dated: 14 October 2009

By Order of the Board

Sharyn Williams

==> picture [113 x 28] intentionally omitted <==

Company Secretary

CMI Limited | Notices of meetings

Page 7

Explanatory memorandum

CMI Limited ACN 050 542 553

The information in this Explanatory Memorandum is provided to Members in compliance with the Act and the Listing Rules.

1 Purpose of the Resolutions

• 1.1 The information in this Explanatory Memorandum is provided to Shareholders in compliance with:

• (a) the regulatory requirements of Chapter 2J Division 1 of the Act and the Listing Rules which relate to capital reductions and participation in new issues; and

• (b) for the purposes of Resolution 2, the notice requirements set out in Chapter 10 of the Listing Rules

2

Investment advice

• 2.1 This Explanatory Memorandum does not take into account individual investment objectives, financial situations or particular needs. Shareholders are advised to obtain independent financial, investment, legal and taxation advice before deciding whether or not to attend a relevant meeting or to vote in favour of, or against the Capital Reduction Resolutions.

3 Capital Reduction

Background

• 3.1 Under section 256B of the Act, a company is able to return capital to its shareholders if:

• (a) the proposal is fair and reasonable to the shareholders as a whole;

• (b) the proposal does not materially prejudice the company’s abilities to pay its creditors; and

• (c) the proposal is approved by the company’s shareholders under section 256C of the Act.

• 3.2 The Expert has concluded that the Transaction is fair and reasonable to the Shareholders by:

• (a) comparing the value of consideration offered to the Class A Shareholders with the fair value of Class A Shares;

• (b) determining the remaining net asset value of the Company (following the proposed Transaction) available for the remaining Ordinary Shareholders; and

• (c) assessing the reasonableness of the proposed Transaction in terms of the advantages and disadvantages to all Shareholders of accepting the Capital Reduction and the advantages and disadvantages to all Shareholders if the Capital Reduction is not accepted.

• 3.3 In the opinion of the Directors, the Transaction will not materially prejudice the ability of the Company to pay its creditors.

• 3.4 Similarly, the Directors do not consider the solvency of the Company will be in any way materially prejudiced by the Transaction.

CMI Limited | Notices of meetings

Page 8

• 3.5 Section 256C(2) of the Act requires that the terms of the Transaction be approved by:

• (a) a Special Resolution passed at the combined meeting of all entitled Ordinary and Class A Shareholders (Capital Reduction Resolution of Combined Ordinary and Class A Shareholders); and

Important notes on voting at the combined meeting of Ordinary and Class A Shareholders

• the votes of the Class A Shareholders voting in favour of the resolution at this meeting will not be counted as they stand to receive consideration as part of the selective capital reduction; only votes against will be counted; and

• Ordinary Shareholders that are also holders of Class A Shares on the Record Date will not be entitled to vote as they stand to receive consideration as part of the selective capital reduction.

Note: The Company requests that, in order to provide the Company with information on the views on this issue of all the Shareholders, Shareholders in favour of the Capital Reduction Resolution should still vote {FOR} the Capital Reduction Resolution even though in accordance with section 256C(2)(a) of the Act the votes may be disregarded.

• (b) a Special Resolution passed at the Class A Shareholders’ Meeting (Capital Reduction Resolution of Class A Shareholders).

• 3.6 The Transaction will proceed only if both the Capital Reduction Resolution of the combined Ordinary and Class A Shareholders and the Capital Reduction Resolution of the Class A Shareholders are passed. If only one of the Capital Reduction Resolutions is passed, or if neither are passed, then:

• (a) Class A Shareholders will not receive any consideration for their Class A Shares and will remain Class A Shareholders, and

• (b) the Transaction will not proceed.

Consideration

• 3.7 The consideration for the Transaction payable to the Class A Shareholders will be $0.63 per Share, which will be paid to them in cash. The total amount which will be paid to Class A Shareholders will be $17,643,346 if the Transaction proceeds.

Effect on the Company

• 3.8 The Company currently has 33,752,634 Ordinary Shares on issue and 28,005,311 Class A Shares on issue. Additionally, 600,000 Options are on issue through which one Ordinary Share will issue for each Option exercised before the expiry date. The Options held by Directors Colin Ryan and Danny Herceg have an exercise price of $1.20 per Option and expire 15 April 2013.

• 3.9 If Shareholders approve the Transaction, then all 28,005,311 Class A Shares will be cancelled and 33,752,634 Ordinary Shares will remain on issue, together with the additional shares issued to ordinary Shareholders under the Rights Issue of (at this stage anticipated to be approximately 9,570,000 Ordinary Shares). The Options on issue will be unaffected.

CMI Limited | Notices of meetings

Page 9

Capital structure table

• 3.10 Following the completion of the Transaction and the Rights Issue (further described below) it is anticipated that the capital structure of the Company will change in the following manner:

Shareholder	Number of current shares held in CMI	Number of shares held in CMI post Transaction and Rights Issue
Class A Shareholders	28,005,311	0
Ordinary Shareholders	33,752,634	33,752,634
Subscribers under the Rights Issue	0	9,570,000 (approximately)

Directors interests

• 3.11 As at the date of the Meetings (20 November 2009), the Directors expect to have and to maintain a relevant interest in the following numbers and percentages of Shares and Options immediately before and immediately after the Capital Reduction:

Name	Before Capital Reduction	After Capital Reduction
Colin Ryan	Ordinary – 0 (0%) Class A – 0 (0%) Options – 300,000	Ordinary – 0 (0%) Options – 300,000
Danny Herceg	Ordinary – 500,000 (1.5%) Class A – 0 (0%) Options – 300,000	Ordinary – 500,000 (1.5%) Options – 300,000
Raymond Catelan	Ordinary – 12,263,062 (36.3%) Class A – 0 (0%) Options – Nil	Ordinary – 12,263,062 (36.3%)
Richard Catelan	Ordinary – 851,632 (2.5%) Class A – 0 (0%) Options – Nil	Ordinary – 851,632 (2.5%)

• 3.12 Each of the Directors holding Ordinary Shares at the time of the Rights Issue will also have an entitlement to subscribe for further Ordinary Shares on the same basis as all other holders of Ordinary Shares. An entity associated with Raymond Catelan, RP Prospects Pty Ltd, may also obtain additional Shares in accordance with the Underwriting Agreement.

Disclosure of relevant information

• 3.13 This Explanatory Memorandum has been issued to satisfy the requirements of section 256C(4) of the Act and contains all information known to the Company that is material to the decision whether to approve the Transaction.

4 Funding the Transaction

• 4.1 The Company intends to fund the Transaction by way of a loan. The Loan Facility requires the repayment of $4 million to the lender by no later than the end of February 2010. It is intended that these funds will be raised under the Rights Issue (described below). The Loan Facility is otherwise made on normal commercial bill facility terms reviewable in October 2012.

• 4.2 The total consideration payable to Class A Shareholders will be $17,643,345. The interest expense on the funds borrowed (based on a total debt of $18 million approximately) is expected to be around $1.26 million per annum (based on current interest rates).

CMI Limited | Notices of meetings

Page 10

• 4.3 The costs to the Company, because of the need to pay interest on the loan, are expected to increase in the longer term. Paragraph 4.4 summarises what the likely impact of the interest payments would be based on the earnings of the Company’s continuing operations for the financial year ending 30 June 2009 ( Financial Year ).

• 4.4 During the Financial Year, the Company’s continuing operations produced a loss of $944,000 before tax. This included impairment expenses of $8.386 million. If the Company had borrowed in the Financial Year an amount equal to that necessary to fund the Transaction, approximately $1.3 million extra would have been added to its interest bill for the Financial Year, which would have increased the Company’s loss before tax to $2.244 million.

• 4.5 The information provided in paragraph 4.4 is provided for illustrative purposes only and is not intended to provide an indication as to the precise impact that interest on the loan would have on the Company’s earnings for future financial years, or in any way serve as a forecast as to what those earnings are likely to be.

5 Proposed Rights Issue

• 5.1 A condition of the Loan Facility (described above) once drawn down by the Company is the repayment of $4 million to the lender by the end of February 2010. It is intended that these funds will be raised under the Rights Issue.

• 5.2 The Ordinary Shares to be issued under the Rights Issue will be offered to existing Ordinary Shareholders on a pro rata basis to the number of Ordinary Shares held by those Shareholders on the relevant record date. The Company intends to operate a shortfall facility for the Rights Issue which is described in more detail, in section 6 below.

• 5.3 The Rights Issue will be fully underwritten in accordance with the Underwriting Agreement. Further details regarding the Rights Issue will be released by the Company once known.

• 5.4 It is anticipated that the Shares issued under the Rights Issue will be quoted on ASX by the end of February 2010.

6 Shortfall Facility

• 6.1 Subject to obtaining the approvals detailed in sections 6.2 and 6.3, the Company intends to provide a Shortfall Facility for those Shareholders wishing to take up more than their entitlement under the Rights Issue. The Company will allocate Ordinary Shares under the Shortfall Facility on a pro rata basis until all applications for Ordinary Shares are exhausted.

• 6.2 Unlike the Rights Issue, Shares issued under the Shortfall Facility will not be exempt from the takeover provisions of the Act unless relief is obtained from ASIC. In order to enable all Ordinary Shareholders to participate in the Shortfall Facility on a pro rata basis, the Company will apply to ASIC for relief in accordance with ASIC Regulatory Guide [199] which sets out ASIC’s policy guidelines for obtaining case-by-case relief for certain shortfall facilities from the takeover provisions.

• 6.3 ASX Listing Rule 10.11 requires shareholder approval for any issue of Shares to a related party which includes Directors. In order for Directors (or their nominees) to participate equally with other Ordinary Shareholders in the Shortfall Facility (should ASIC grant relief for the Shortfall Facility from the takeover provisions), the Company intends to seek approval under Listing Rule 10.11 at the Company’s AGM on 27 November 2009.

• 6.4 ASX Listing Rule 10.13 requires Shares to be issued within one month of Shareholder approval under Listing Rule 10.11. It is not possible to issue the shares under the Shortfall Facility within one month, accordingly, the Company has applied to ASX for a waiver of this requirement.

• 6.5 If ASIC does not grant the requested relief, if ASX does not provide the requested waiver, or if the participation of Directors in the Shortfall Facility is not approved by shareholders at the

CMI Limited | Notices of meetings

Page 11

Company’s AGM to be held on 27 November 2009, the Company will not operate the Shortfall Facility and the maximum number of Shares Ordinary Shareholders will be able to take up under the Rights Issue will be their pro rata entitlement.

• 6.6 The Company will make an announcement as soon as it receives ASIC’s decision in relation to the relief application, and also ASX’s decision in respect of the Listing Rule 10.13 waiver application.

• 6.7 Any Shares not taken up under the Rights Issue and Shortfall Facility (if it proceeds) will be subscribed for by the underwriter pursuant to the terms of the Underwriting Agreement.

7 Voting Agreements with Major Shareholders

• 7.1 CMI has entered into agreements with Trojan Equity Limited, the largest CMI Class A shareholder, and other major Class A Shareholders representing 23.83% of the total Class A shares. Under these agreements, CMI must use its best endeavours to call a meeting of the shareholders of CMI to approve a buy back of all Class A shares at 63 cents per share. Each of the Class A shareholders that have entered in to agreements with CMI have agreed to support the buy back and will vote in favour of the relevant resolutions.

• 7.2 CMI has a number of institutional investors on its share register for both the ordinary and Class A shares. In particular, Trojan Equities holds 11.03% and MMC Asset Management Limited (MMC) holds 4.69% of the Class A shares. Trojan Equity, a publicly listed company itself, announced to ASX that it will support the Proposed Capital Reduction when given the opportunity to vote on the resolutions, effectively indicating that as professional market participants, they were supportive of the value of $0.63 offered for the Class A shares. MMC (and its holding vehicles) have indicated their support for the Proposed Capital Reduction by signing voting deeds that they will support the Proposed Capital Reduction when given the opportunity to vote on the resolutions.

8 Effect on the Company and Shareholders if the Transaction proceeds

• 8.1 If the Transaction is approved by Shareholders, the Conditions are satisfied and the Transaction proceeds, the Directors are of the view that the main effects will be:

• (a) a simplified share capital structure, which will make it easier for Shareholders to understand their investment in the Company;

• (b) the loan will increase the Company’s debt to equity ratio and increase costs to the Company because of the need to service and repay the loan;

• (c) the Company will, under the proposed Rights Issue, issue additional shares to existing Shareholders;

• (d) based on the current interest rates, the expected interest (and bank fee expenses) for the loan, borrowed to pay the Class A Shareholders, is considered to be cost effective for the Company; and

• (e) the possibility of an improvement in the ASX Share price for Ordinary Shares in the medium to long term.

9 Effect on the Company and Shareholders if the Transaction does not proceed

• 9.1 If the Transaction is not approved and the Company continues existence in its current form, the Directors consider that it is likely that:

• (a) the Class A Shares will continue to trade at similar prices to which they traded in the period prior to the proposed Transaction;

CMI Limited | Notices of meetings

Page 12

• (b) it is highly unlikely that Class A Shareholders will be able to realise a more favourable price for their shares in the short to medium term than the price offered under the Transaction;

• (c) due to the illiquidity of the Class A Shares and price sensitivity when trying to sell reasonable volumes, the ability of a Class A Shareholder to dispose of all of their Class A Shares at a known price may not present itself again in the short to medium term.

• 9.2 The Directors have not declared a dividend to the Class A Shareholders for the past seven quarters. If the Transaction does not proceed, it remains uncertain as to whether when future dividends on the Class A Shares will be declared, and it is likely that this will compound the current lack of liquidity in the market for Class A Shareholders.

10 Tax consequences

• 10.1 The following tax discussion is a simplified outline of the income tax position for those Australian resident Class A Shareholders discussed below, based on current tax law. The information set out hereunder reflects the Australian income tax law as at 8 October 2009.

• 10.2 The discussion is general in nature only and should not be regarded as tax advice as to a particular Class A Shareholders position. Accordingly, it is recommended that all Class A Shareholders seek professional advice from a qualified taxation advisor specific to their own circumstances.

• 10.3 Class A Shareholders may make a gain or loss as a result of the selective capital reduction and subsequent cancellation of their shares by the Company. Any gain made in respect of the cancellation of the Class A Shares, which were acquired by Class A Shareholders for long-term investment and held on capital account, should not be assessed as income according to ordinary concepts, but rather as a capital gain. The capital gain should be calculated as the difference between the capital proceeds received and the cost base of the Shares.

• 10.4 Alternatively, a capital loss may arise where the reduced cost base of a Class A Share exceeds the proceeds received by the Shareholder for the cancellation of the Shares. A capital loss cannot be offset against other income, but can be carried forward indefinitely to be offset against future capital gains.

• 10.5 The cost base of the Shares should generally be equal to the amount paid for the Shares.

• 10.6 If a Class A Shareholder makes a capital gain as a result of the cancellation of their Class A Shares, the Class A Shareholder may be eligible to claim the CGT discount. Generally, an individual Class A Shareholder or a Class A Shareholder who is the trustee of a trust (that is treated as a flow-through entity for tax purposes) may be entitled to a 50% CGT discount if the Class A Shares have been held for greater than 12 months at the time of the CGT event (being the cancellation of the Shares). A superannuation fund may be entitled to a one-third discount in the same circumstances.

• 10.7 For a Class A Shareholder who had a cost base of more than 63 cents per Class A Share, they will incur a loss to the extent that their cost base exceeds 63 cents per Class A Share. In this situation, the loss can be offset against other capital gains realised in a financial year or carried forward and offset against future capital gains.

• 10.8 For Class A Shareholders who hold their Class A Shares as trading stock or on revenue account, different tax consideration will apply and separate advice should be sought.

• 10.9 The Income Tax Assessment Act 1936 (Cth) (the 1936 Act) contains various integrity measures (in particular section 45B) which can operate to deem a capital payment (such as a return of capital paid by a company) to be a dividend for tax purposes. The Directors of the Company have considered the risks of section 45B applying and are of the opinion that section 45B of the 1936 Act should not apply given all of the circumstances of the selective capital reduction.

CMI Limited | Notices of meetings

Page 13

• 10.10 There should be no taxation consequences for the Company from the share capital reduction. This assumes that Section 45B will not apply (refer to 10.9 above).

11 Recommendation of the Directors

• 11.1 The Directors recommend that:

• (a) eligible Shareholders vote in favour of the Capital Reduction Resolution in the Notice of Meeting of combined Ordinary and Class A Shareholders; and

• (b) Class A Shareholders vote in favour of the Capital Reduction Resolution in the Notice of Meeting of all Class A Shareholders.

• 11.2 To the extent that they are eligible to do so, each of the Directors intends to vote in favour of the Resolutions in respect of the Shares that they control.

• 11.3 Shareholders who are unable to attend are urged to complete the proxy form and return it as soon as possible, and in any event, not later than 48 hours before the time appointed for the meeting.

12 Date

This Explanatory Memorandum is dated 14 October 2009.

CMI Limited | Notices of meetings

Page 14

==> picture [45 x 46] intentionally omitted <==

InterFinancial Corporate Finance Limited

Financial Services Guide issued by InterFinancial Corporate Finance Limited ACN 136 968 966

Issue date: 18 September 2009

About us

InterFinancial Corporate Finance Limited ( IFL or we or us or our ) (Authorised Representative number 337476) has been engaged by CMI Limited ( CMI or Company ) to provide general financial product advice in the form of an independent expert’s report ( Report ) in connection with the proposed selective capital reduction relating to the Company’s Class A shares.

The Corporations Act 2001 (Cth) requires us to provide this Financial Services Guide ( FSG ) in connection with the attached Report prepared for the benefit of CMI. You are not the party who engaged us to prepare this Report and we are not acting for any person other than CMI. This FSG provides important information designed to assist retail clients in their views of any general financial product advice provided by IFL in this Report. It is not intended to comprise personal retail financial product advice to retail investors or market-related advice to retail investors. This FSG contains information about our engagement by the directors of CMI to prepare this Report in connection with the proposed capital reduction ( Engagement ), the financial services we are authorised to provide, the remuneration we (and any other relevant parties) may receive in connection with the Engagement, and details of our internal and external dispute resolution systems and how these may be accessed.

Financial services we are authorised to provide

Tolhurst Limited ( TL ) ACN 003 237 536, a holder of an Australian Financial Services Licence, AFSL 238444, has granted IFL authorisation to provide specific financial services on behalf of TL. TL is responsible to you for the services provided under this FSG. As an authorised representative of TL, we provide the following services to both retail and wholesale clients:

• financial product advice in relation to securities, and government debentures, stocks and bonds;

• underwriting an issue of securities; and

• deal in a financial product by arranging for another person to apply for, acquire, vary or dispose of the abovementioned financial products.

The distribution of this FSG has been authorised by TL. The contact details of TL are as follows:

Level 15, 333 Collins Street Melbourne, Victoria 3001 Tel: 03 9242 4197

General financial product advice

This Report contains only general financial product advice. It was prepared without taking into account your personal objectives, financial situation or needs. Where the advice relates to the application for or acquisition of a financial product, you should also obtain and read carefully the relevant offer document or explanatory memorandum provided by the issuer or seller of the financial product before making a decision regarding the application for or acquisition of the financial product.

Page 1

Remuneration, commissions and other benefits

==> picture [45 x 46] intentionally omitted <==

IFL charges fees for its services, and will receive a fee for its work on this Report. These fees have been agreed on, and will be paid solely by CMI, which has engaged our services for the purpose of providing this Report. IFL may seek reimbursement of any out of pocket expenses incurred in providing these services. Our advisers are Directors and Employees of IFL and are paid salaries and dividends and may also receive bonuses and other benefits from IFL. Our advisers may alternatively be paid by means of commission determined by a percentage of revenue written by the adviser. TL does not receive any fees from IFL. Further details on our fees are set out in Section 12.3 of this Report

Associations and relationships

Other than as set out in this FSG or this Report, IFL and TL have no associations or relationships with any person who might reasonably be expected to be capable of influencing it in providing advice under the Engagement. IFL and TL, their officers and employees and other related parties have not and will not receive, whether directly or indirectly, any commission, fees, or benefits, except for the fees to be paid to IFL for services rendered in producing this Report. IFL and TL, their directors and executives do not have an interest in securities, directly or indirectly, which are the subject of this Report. IFL may perform paid services in the ordinary course of business for entities which are the subject of this Report.

Risks associated with our advice

This FSG is provided in connection with the attached Report relating to the CMI’s proposed selective capital reduction in relation to its Class A shares. The Report comprises general product advice and does not comprise personal retail financial product advice to retail investors or marketrelated advice to retail investors. The Report is an expression IFL’s opinion as to whether the proposed capital reduction is fair and reasonable. However, IFL's opinion should not be construed as a recommendation as to whether or not to approve the Proposed Capital Reduction. Approval or rejection of the Proposed Capital Reduction is a matter for individual shareholders based on their own circumstances, including risk profile, liquidity preference, investment strategy, portfolio structure and tax position. Shareholders who are in any doubt as to the action they should take in relation to the Proposed Capital Reduction should consult their own independent professional adviser.

For further information on the risks, assumptions and qualifications associated with the Report, please read sections 3.5, 11.2, 12.2 and 12.6 of the Report.

Compensation arrangements

The law requires IFL and TL to have arrangements in place to compensate certain persons for loss or damage they suffer from certain breaches of the Corporations Act by IFL or TL or its representatives. IFL and TL have internal compensation arrangements as well as professional indemnity insurance that satisfy these requirements.

Complaints

As an authorised representative under an Australian Financial Services Licence, we are required to have an internal complaints-handling mechanism. All complaints must be addressed to us in writing. If we are not able to resolve your complaint to your satisfaction, you may contact the Tolhurst Complaints Manager on (03) 9242 4197 or put your complaint in writing and send it to The Complaints Manager, Tolhurst Limited, Level 15, 333 Collins St, Melbourne Vic 3000. If you do not a satisfactory outcome of your complaint within 45 days of first lodging it you are entitled to have your matter referred to the Financial Ombudsman Service ( FOS ). You will not be charged for using the FOS service.

Page 2

To contact IFL:

==> picture [45 x 46] intentionally omitted <==

Level 34, Central Plaza One 345 Queen Street GPO Box 975 Brisbane, Qld 4000 Tel: 07 3218 9100 Fax: 07 3218 9199

To contact the FOS:

GPO Box 3, MELBOURNE, VIC 3001 Tel: 1300 78 08 08 Fax: (03) 9613 6399

Privacy & use of information

We do not collect personal information on individual clients and are bound by the TL Privacy Policy in the way that it governs personal information collected on clients. If you have any questions on privacy please contact the TL Privacy Officer at level 15, 333 Collins St, Melbourne Vic 3000.

Who are our advisers?

The principal person responsible for preparing this Report on behalf of IFL is Paul Keehan who is a Director of IFL and an Authorised Representative (No. 252691) of Tolhurst Limited. He has over 20 years of experience in relevant corporate advisory matters.

Page 3

18 September 2009

The Directors CMI Limited 150 Robinson Road Geebung, Brisbane QLD 4000

Dear Directors

INDEPENDENT EXPERT’S REPORT TO CMI SHAREHOLDERS – PROPOSED SELECTIVE CAPITAL REDUCTION

1. Introduction

This Report is both an Independent Expert’s Report ( IER ) and Financial Services Guide ( FSG

On 31 July 2009, CMI Limited ( CMI or the Company ) announced a proposal to reduce the share capital of the Company through a selective capital reduction and cancellation of all of its Class A shares ( Proposed Capital Reduction ).

CMI is an Australian public company listed on the Australian Securities Exchange ( ASX ), with a market capitalisation for its ordinary shares of approximately $20.4 million as at 17 September 2009. CMI’s business operations were consolidated in April 2008 when the Company divested its engineering division (excluding TJM Products). The Company also divested its finance business, Capitalcorp Finance and Leasing Pty Ltd ( CFLPL ) in August 2009. Today, CMI’s remaining business units comprise its electrical business ( Electrical Business ) and TJM Products ( TJM Products ).

CMI is now seeking the approval of its shareholders for the Proposed Capital Reduction to proceed. Under the terms of the Proposed Capital Reduction, CMI’s 1,497 Class A shareholders ( Class A Shareholders ) holding 28,005,311 shares will receive $0.63 per Class A share. Further specific terms of the resolutions to be considered by CMI shareholders are set out in the Notices of Meeting and Explanatory Memorandum to which this Report is attached.

There is no statutory requirement for CMI to commission an independent expert’s report in the present circumstances but ASIC Regulatory Guide 111 indicates that an expert’s report should usually accompany the explanatory memorandum for a selective capital reduction to satisfy the information requirements under section 256C(4) of the Corporations Act 2001 (Cth) ( Act ). For this reason, and in order to ensure that all CMI shareholders are fully informed in making any decision as to whether or not to support the Proposed Capital Reduction, CMI’s Directors have requested InterFinancial Corporate Finance Limited ( IFL ) to prepare an independent expert’s report as to whether the Proposed Capital Reduction is fair and reasonable to all CMI shareholders, that is, to both the Class A Shareholders and the remaining ordinary shareholders ( Continuing Shareholders ).

This Report has been prepared exclusively for the purpose of assisting CMI shareholders entitled to vote on the resolutions in their consideration of those resolutions. This IER must not be used for any other purpose. This Report should be read in full, including all of the assumptions upon which our work is based, together with the Notices of Meeting and the Explanatory Memorandum and any other information provided to CMI shareholders in connection with the Proposed Capital Reduction.

Page 4

2. Summary of Opinion

IFL has concluded that the Proposed Capital Reduction is fair and reasonable to both Class A Shareholders and Continuing Shareholders.

The Proposed Capital Reduction cash consideration of $0.63 per share is within the assessed market valuation range of $0.60 to $0.70 per share.

Recent trading in Class A shares, both prior to and following the announcement of the Proposed Capital Reduction, indicates that Class A Shareholders would not achieve a value comparable to the consideration offered by the Company if they were to reject the Proposed Capital Reduction, particularly if the Company continues to refrain from paying dividends on Class A shares in the near term.

Implementation of the Proposed Capital Reduction will give Continuing Shareholders ownership of a Company with a greatly simplified capital structure. They will have priority for the distribution of future potential profits, and will obtain the benefit of future franking credits should dividends be resumed.

IFL considers that these and other advantages of the Proposed Capital Reduction outweigh the disadvantages of the Proposed Capital Reduction from the perspective of the Continuing Shareholders.

Page 5

Table of Contents

==> picture [45 x 46] intentionally omitted <==

1.	Introduction.......................................................................................................................................4	Introduction.......................................................................................................................................4
2.	Summary of Opinion.........................................................................................................................5
3.	This Report.......................................................................................................................................3
	3.1	Scope of the Report...............................................................................................................3
	3.2	Purpose of the Report............................................................................................................3
	3.3	Basis of Evaluation ................................................................................................................3
	3.4	Previous Proposal for a Selective Capital Reduction ............................................................4
	3.5	Sources of Information...........................................................................................................5
	3.6	Conclusion .............................................................................................................................5
4.	Background Information ...................................................................................................................6
	4.1	Company Information.............................................................................................................6
	4.2	Historical Financial Position...................................................................................................6
	4.3	Capital Structure ....................................................................................................................8
	4.4	Financial Structure following the Proposed Capital Reduction..............................................8
5.	Valuation of Class A shares .............................................................................................................8
	5.1	Methodology for assessing the value of Class A shares.......................................................9
	5.2	Future Dividends....................................................................................................................9
	5.3	Discounted Future Dividend Values ....................................................................................10
	5.4	Market-based Values...........................................................................................................10
	5.5	Trading Activity ....................................................................................................................11
	5.6	Institutional and Sophisticated Investors .............................................................................12
	5.7	Valuation Summary..............................................................................................................12
6.	Assessment of the fairness and reasonableness of the Proposed Capital Reduction ..................13
	6.1	General ...........................................................................................................................13
	6.2	Advantages and Disadvantages from Class A Shareholder’s perspective .........................13
	6.3	Advantages and Disadvantages from a Continuing Shareholder’s perspective .................14
7.	Consequences if Proposed Capital Reduction is not approved.....................................................14
8.	Assessment of Fairness and Reasonableness..............................................................................15
9.	Director’s Position ..........................................................................................................................15
10.	Largest Holders of Class A shares.................................................................................................15
11.	Limitations, Representations and Reliance on Information............................................................15
	11.1	Sources of Information.........................................................................................................15
	11.2	Assumptions ........................................................................................................................16
12.	Qualifications, Declarations and Consents ....................................................................................17
	12.1	Qualifications .......................................................................................................................17
	12.2	Declarations .........................................................................................................................17
	12.3	Independence ......................................................................................................................17
	12.4	Indemnity ...........................................................................................................................18
	12.5	Consents ...........................................................................................................................18
	12.6	Other ...........................................................................................................................19
Appendix A: Summary terms of Class A shares 20
Appendix B: Calculation of Discount Rates 24

3. This Report

3.1 Scope of the Report

Section 256B(1) of the Act permits a reduction in share capital in a company, in a way that is not otherwise authorised by law, if the reduction:

• is fair and reasonable to the company’s shareholders as a whole;

• does not materially prejudice the company’s ability to pay its creditors; and

• is approved by shareholders.

Under section 256C of the Act, a selective capital reduction must be approved by either:

• a special resolution of shareholders at a general meeting of the company, with no votes being cast in favour of the resolution by any person who is to receive consideration as part of the reduction or whose liability to pay amounts unpaid on shares is to be reduced, or by their associates; or

• a resolution agreed to, at a general meeting, by all ordinary shareholders.

Further, where the selective capital reduction involves the cancellation of shares, the reduction must also be approved by a special resolution at a separate meeting of shareholders whose shares are to be cancelled.

This Report has been prepared to assist CMI shareholders (both Class A Shareholders and Continuing Shareholders) in voting on the resolutions required by section 256(C) of the Act. While there is no statutory requirement for CMI to commission this Report in relation to the Proposed Capital Reduction, ASIC Regulatory Guide 111 recommends that an expert’s report should be provided in relation to a selective capital reduction. For this reason, and to ensure that CMI’s shareholders are fully informed, the CMI Board has elected to provide this Report.

3.2 Purpose of the Report

The directors of CMI have engaged IFL to prepare an independent expert’s report setting out whether, in its opinion, the Proposed Capital Reduction is fair and reasonable to both the Class A Shareholders and the Continuing Shareholders. This Report will accompany Notices of Meeting and an Explanatory Memorandum which will be sent to all CMI shareholders.

IFL's opinion should not be construed as a recommendation as to whether or not to approve the Proposed Capital Reduction. Approval or rejection of the Proposed Capital Reduction is a matter for individual shareholders based on their own circumstances, including risk profile, liquidity preference, investment strategy, portfolio structure and tax position. Shareholders who are in any doubt as to the action they should take in relation to the Proposed Capital Reduction should consult their own independent professional adviser.

3.3 Basis of Evaluation

There is no statutory definition of the expressions “fair and reasonable”, and the expression has different meanings for different regulatory purposes.

According to ASIC Practice Note 29 “Selective capital reductions” (this Practice Note has now been withdrawn by ASIC), an independent expert reporting on a selective capital reduction should (making appropriate adjustments) prepare a report as if it were a report for shareholders voting on a resolution under section 623 of the Act (now section 611 of the Act). While Practice Note 29 has now been withdrawn by ASIC, we believe that this approach remains relevant and provides the best guide of the basis upon which a selective capital reduction should be evaluated.

Page 3

ASIC Regulatory Guide 74 “Acquisitions Agreed to by Shareholders” deals with independent expert reports prepared for the purpose of section 611 of the Act. While the relevant sections of this Regulatory Guide have been superseded by ASIC Regulatory Guide 111, we consider that Regulatory Guide 74 continues to provide the most relevant guidance in the context of a selective capital reduction, particularly as Regulatory Guide 111 provides little clear guidance on the approach to be taken by an expert in relation to a selective capital reduction which is not also a control transaction. Regulatory Guide 74 provides that:

• what is considered fair and reasonable for non-associated shareholders should be judged in all circumstances of the proposal;

• the report must compare the likely advantages and disadvantages for the non-associated shareholders if the proposal is agreed to, with the advantages and disadvantages if it is not; and

• comparing the value of the shares to be acquired under the proposal and the value of the consideration to be paid is only one element of this assessment.

A selective capital reduction must not only be assessed in light of non-associated shareholders. According to ASIC Practice Note 29, an independent expert’s report prepared in respect of a selective capital reduction should state whether a proposed capital reduction is fair and reasonable to:

• the holders of the shares to be cancelled (in this case the Class A Shareholders); and

• those that remain shareholders in the company (in this case the Continuing Shareholders),

in that it strikes a fair balance between the interests of the persons whose shares are to be cancelled and those who will remain in the company.

According to the Explanatory Memorandum to the Company Law Review Bill 1997, the term “fair and reasonable” in the context of 256B(1) of the Act is intended to be a composite requirement (paragraph 10.24). That is, a capital reduction will either be fair and reasonable, or not fair and not reasonable.

In assessing whether the Proposed Capital Reduction is fair and reasonable to CMI shareholders, we have evaluated the Proposed Capital Reduction from the perspective of both the Class A Shareholders and the Continuing Shareholders. In doing so, we have assessed:

• the advantages and disadvantages of the Proposed Capital Reduction to Class A Shareholders; and

• the advantages and disadvantages of the Proposed Capital Reduction to the Continuing Shareholders.

As part of making the assessments outlined above, we have assessed the consideration to be paid by CMI for the cancellation of the Class A shares in comparison with the value of those shares as determined by IFL.

In the process of making an assessment of the Proposed Capital Reduction, IFL has made certain assumptions. Where these assumptions are material to our work, we have set them out in this Report.

3.4 Previous Proposal for a Selective Capital Reduction

The CMI Board announced a selective capital reduction on 4 September 2008 on similar terms to the Proposed Capital Reduction the subject of this Report ( 2008 Proposed Capital Reduction ). The purchase price to be offered for the Class A shares in the 2008 Proposed Capital Reduction was $1.00. At the time this represented a premium of approximately 60% above the 90-day VWAP of the Class A Shares (calculated to be $0.63) prior to the announcement of the 2008 Proposed

Page 4

Capital Reduction.

On the 24 October 2008, the Company announced that it had decided not to proceed with the 2008 Proposed Capital Reduction (before shareholders were required to vote on the capital reduction). In the announcement the Board cited “…the continued deterioration of and uncertainty remaining in the financial markets …” as the reason for the cancellation of the capital reduction.

An independent expert’s report ( 2008 IER ) was prepared in relation to the 2008 Proposed Capital Reduction by Tolhurst InterFinancial Limited ( Tolhurst InterFinancial ), the corporate advisory business of TL. In May 2009, the Tolhurst InterFinancial employees responsible for preparing the 2008 IER acquired Tolhurst InterFinancial’s Brisbane based corporate advisory business through an entity controlled by those employees, IFL. In the 2008 IER, Tolhurst InterFinancial concluded that the 2008 Proposed Capital Reduction was fair and reasonable to both the Class A Shareholders and the Continuing Shareholders.

In the period between the 2008 IER being issued and the Company cancelling the 2008 Proposed Capital Reduction, significant deterioration occurred within Australian and world markets, the effects of which are continuing to impact the current economic environment. On the date of the 2008 IER, the ASX All Ordinaries Index closed at 4,770, down from 5,051 on 4 September 2008 when the 2008 proposed transaction was announced. On the date that the 2008 proposed transaction was cancelled the ASX All Ordinaries Index had fallen a further 938 points to 3,832, a fall of 19.7% in a period of just over 5 weeks. In March 2009, the ASX All Ordinaries Index had fallen to a further low of 3,053. While there has been something of a recovery in both local and international share markets in recent weeks, commentators are divided as to whether these recent improvements are sustainable.

3.5 Sources of Information

This Report is based upon financial and other information provided by or on behalf of CMI. We have considered and relied upon this information and believe the information provided is reliable, complete and not misleading, and have no reason to believe that material facts have been withheld. The information provided to IFL has been evaluated through analysis, inquiry and review for the purposes of forming an opinion as to whether the Proposed Capital Reduction is fair and reasonable to CMI shareholders. However, IFL does not warrant that its inquiries have identified or verified all of the matters that an audit, extensive examination or due diligence investigation might disclose.

An important part of the information used in forming an opinion as to fairness and reasonableness is comprised of the opinions and judgment of CMI management and directors. As indicated above, this type of information was evaluated through analysis, inquiry and review. However, such information is often not capable of external verification or validation and has not been independently verified.

The financial estimates used in the preparation of this report reflect the judgment of directors and management of CMI based on present circumstances, as to both the most likely set of conditions and the course of action CMI is most likely to take. It is sometimes the case that events and circumstances do not occur as expected or are not anticipated. Accordingly, actual results during the forecast period can differ from the forecast and such differences may be material. To the extent that our conclusions are based on forecasts, we express no opinion on the achievability of those forecasts.

3.6 Conclusion

We have considered the Proposed Capital Reduction and, taking account of the matters outlined in this Report, we believe that the Proposed Capital Reduction is fair and reasonable to Class A Shareholders and Continuing Shareholders.

Page 5

4. Background Information

4.1 Company Information

CMI is an Australian public company listed on ASX. Its current operations are conducted through two business units, namely:

• the Electrical Business – the manufacture, distribution and marketing of specialist cabling and electrical products for a range of industry sectors.

• TJM Products – distributes an extensive range of vehicle bull bars, side and rear protection bars, sports bars, roof racks, side steps, tyre carriers, and canopies. The accessory range includes recovery equipment, winches, suspension, wheel arch flares, snorkels and air operated differential locks.

Electrical Business operations are expected to continue on the same basis in the short term but there will be significant changes in the method of operation at TJM Products.

Prior to 30 June 2009, TJM Products manufactured a significant portion of its products at its facility in Geebung, Brisbane. In the future, production at Geebung will be replaced by production at a factory facility in Shenzhen China (winches) and by sourcing product from other suppliers.

Off-shore subcontract manufacture of core products is expected to offer TJM Products significant cost reductions.

On 15 June 2009, the Company entered into a Sale Agreement for the disposal of CFLPL. The sale completed on 20 August 2009.

4.2 Historical Financial Position

On 28 August 2009, the directors of CMI announced a loss of approximately $1.5 million after tax for the financial year ending 30 June 2009 ( FY2009 ). The results are shown in Table 4.1 below.

The financial Performance in FY2009 has been normalised to more accurately reflect the future maintainable earnings of the business. Normalisations made include impairment charges relating to goodwill, research and development, property, and plant and equipment. One-off expenses in relation to the closure of the TJM Products manufacturing facility have also been normalised. These expenses include the sale of factory assets, stock write-off and redundancies. A positive adjustment has been made for increases in vendor loans associated with the sale of the engineering division of CMI sold in April 2008.

Both financial year results have been adjusted to reflect continuing operations. Continuing operations of the business include the Electrical Business and TJM Products. The entire loss from discontinued operations of $514,000 in FY2009 related to CFLPL, while $18.51 million of the $32.87 million loss from discontinued operations in FY2008 related to CFLPL. The balance of the loss from discontinued operations in FY2008 related to the engineering division.

Table 4.1 over the page shows the full year financial results for the financial year ending 30 June 2008 ( FY2008 ) and for FY2009.

Page 6

Table 4.1 – CMI Consolidated Historic Financial Performance

Table 4.1 – CMI Consolidated Historic Financial Performance
$000	FY2009	FY2008
Revenue from Continuing Operations	83,185	96,245
Cost of Goods Sold	(50,608)	(56,288)
Gross Profit	32,577	39,957
Other income	891	451
Other Expenses	(25,096)	(24,461)
EBITDA	8,372	15,947
Depreciation & Amortisation	(2,078)	(1,882)
EBIT	6,294	14,065
Net interest	808	(162)
Income Tax	(21)	(3,931)
Profit/(Loss) from Continuing Operations(pre abnormal adjustments)	7,081	9,972
Normalisation adjustments	(8,046)
Profit/(Loss) from Continuing Operations	(965)	9,972
Profit/(Loss)from Discontinued operations	(514)	(32,869)
Reported Profit/(Loss) for theperiod	(1,479)	(22,897)

Source: ASX, CMI Company Reports

The following table shows the reported financial position of the Company as at 30 June 2009 after the impairment charges discussed above.

Table 4.2 – Balance Sheet at 30 June 2009

$000
Current Assets
Cash and cash equivalents	1,342
Trade Receivables & Inventories	34,006
Total Current Assets	35,348
Non Current Assets
Property,Plant & Equipment	4,662
Receivables	16,500
Goodwill & Other Intangibles	7,990
Deferred Tax Assets	820
Total Non-current Assets	29,972
Current Liabilities
Trade & Other Payables	7,455
Borrowings	490
Provisions	2,005
Total Current Liabilities	9,950
Non Current Liabilities
Borrowings	1,570
Provisions	550
Total Non-current Liabilities	2,120
Total Equity	53,250

Source: ASX, CMI Company Reports

Page 7

4.3 Capital Structure

Table 4.3 – CMI Capital Structure

Type	Amount	Rights	ASX Code	Last Price
OrdinaryFullyPaid	33,752,634	Ordinaryshares	CMI	$0.605
Class A	28,005,311	A more detailed summary of the terms of the	CMIPC	$0.52
		Class A shares isgiven inAppendix A.
Employee Options	600,000	Directors options exercisable at $1.20 and		Unlisted
		expire at 15 April 2013. Convert into ordinary
		shares.

Source: Reuters, ASX; Last Prices: 17 September 2009

4.4 Financial Structure following the Proposed Capital Reduction

If the Proposed Capital Reduction is approved by shareholders, the Class A shares will be cancelled by the Company. The funding for the transaction, approximately $17.64 million, will be provided by an additional facility from National Australia Bank Limited ( NAB ) ( Facility Agreement ).

The following table compares the financial structure of CMI before and after the Proposed Capital Reduction. Enterprise values are expected to remain largely unchanged, although CMI net debt is expected to increase by $17.64 million.

Table 4.4 – Financial Structure

Table 4.4 – Financial Structure
	Pre-Capital Reduction	Post-Capital Reduction
OrdinaryShares on Issue(number 000)	33,753	33,753
Class A Shares on issue(number 000)	28,005
Net Debt($000)	718 *	18,361

Source: IFL Analysis, ASX, Reuters on 17 September 2009

• based on preliminary final accounts at 30 June 2009.

IFL has examined the financial covenants contained in the Facility Agreement to be entered into between CMI and NAB to fund the Proposed Capital Reduction. In particular we note that a requirement of the Facility is that a fully underwritten capital raising be undertaken such that a debt reduction of $4 million occurs before 28 February 2010.

After discussions with CMI management and directors, IFL believes it is likely that CMI will be able to meet its financial obligations during the financial year ending 30 June 2010 ( FY2010 ).

5. Valuation of Class A shares

The key terms of the Class A shares are:

• Holders have a preferential right to dividends ahead of other classes of shares;

• Holders have preference to the holders of ordinary shares if there is a return of capital;

• Holders have restricted voting rights;

• Holders are entitled to a quarterly dividend at a rate determined by the directors but not less than 14 cents each year;

• If dividends are not fully franked they must be ‘grossed up’ by a cash payment to give the effect to 100% franking; however

• The payment of a dividend to the Class A Shareholders is non-cumulative, at the discretion of the Directors and subject to there being funds available for the payment of dividends.

Page 8

As noted in the 2008 IER, referred to in Section 3.4 above, the value of a security of this nature depends upon the dividend policy set by the Directors. Dividends are not a right as is often the case in fixed income or loan facilities and are non-cumulative.

5.1 Methodology for assessing the value of Class A shares

The decision as to which of a range of valuation methodologies to apply generally depends on the nature of the security being valued, the most common method adopted within the market and the availability of appropriate information.

In the 2008 IER, Tolhurst InterFinancial adopted a discounted future dividend methodology to assess the value of the Class A shares. We have once again used this methodology, however we have also placed importance upon market-based methodologies given the significant deterioration in worldwide share price performance as described in Section 3.4. In our opinion, consideration of these market dynamics is necessary in determining the fair value of the Class A shares of the Company.

Our concern with using results obtained solely from discounted cash flow models is that while the theory underlying the practice is rigorous, the practical application of these models during times of considerable abnormality in capital markets can yield results that are not appropriate for the market at that point in time.

5.2 Future Dividends

A discounted future dividend analysis requires an understanding of the expected future profitability of the Company and the Company’s willingness to pay dividends.

To understand the Company’s anticipated profit for FY2010, IFL held discussions with the management of the various divisions of CMI. As a result of those discussions and our own analysis of Company budgets and other information, we have developed a range of expected profit results for CMI for FY2010. In modeling these profit results, we placed greater emphasis on recent trading results as an indicator of future events.

Table 5.1 – CMI Limited – Range of Expected Profit results FY2010

Consolidated	Low Case	High Case
($000)
Sales	78,700	86,600
EBITDA	6,000	8,800
NPAT	2,600	4,600

Source: CMI Management Discussions, IFL Analysis

The outcome of this analysis suggests that profits in the High Case (see Table 5.1 above) would be sufficient such that Class A dividends could be paid, but, in the Low Case, there would be insufficient profits from which to pay all Class A dividends, totalling approximately $3.9 million.

To anticipate future dividends it is necessary to understand the dividend policy of the Company. To understand CMI’s dividend policy, IFL has met with CMI’s Board members and management and considered CMI recent dividend policy. IFL has taken into account the level of retained profits, the existence of franking credits and the level of realised and unrealised capital profits and losses.

On 21 May 2009, the Company issued a market update that indicated that the Board felt that the Company would be unable to resume dividend payments in the medium term. The Board has since indicated to IFL that their interpretation of ‘medium term’ would be that they would not expect dividends to be resumed within the current financial year, and that the CMI Board would begin to consider the potential for resumption of distributions from the September 2010 quarter, contingent upon company performance and market conditions in place at that time.

Page 9

5.3 Discounted Future Dividend Values

We have adopted a modified discounted future dividend methodology as one means of deriving a value of the Class A shares.

Applying the discounted future dividend methodology involves the following procedures:

• we assessed the appropriate discount rate which reflects the risks associated with the dividend flows – the appropriate rate is the after tax cost of equity, in this case, 18.2% (see Appendix B) ;

• applied the discount rate to dividends over a five year time horizon, commencing dividend payments at various quarters after September 2010; and

• calculated the present value of the future cash flows.

As discussed previously, the greatest source of variability in value of the future dividend flows is when dividends will be paid. Following discussion with CMI Management, we have assumed that the earliest quarter for dividends to recommence will be September 2010, which equates to our High Case shown in Table 5.1. The following chart shows the value of a Class A Share depending on which quarter after September 2010 CMI recommences paying dividends:

Figure 5.1 – Discounted Future Dividend Values

==> picture [472 x 163] intentionally omitted <==

----- Start of picture text -----

Fair Value of A Class Shares
$0.75 Breakeven
Commencement
$0.70 Date
$0.65 Offer for CMI A Class
Share = $0.63
$0.60
$0.55
$0.50
$0.45
$0.40
90 Day VWAP of CMI A
$0.35 Class Share (prior to
announcement) = $0.32
$0.30
Sep-10 Dec-10 Mar-11 Jun-11 Sep-11 Dec-11 Mar-12 Jun-12 Sep-12 Dec-12 Mar-13 Jun-13 Sep-13 Dec-13 Mar-14 Jun-14
Source: IFL Analysis Date of Recommencement of A Class Dividend Stream
Corresponding Value/Share ($)
----- End of picture text -----

Figure 5.1 shows:

• the maximum value of a Class A share using IFL’s methodology is 70 cents;

• a value of 63 cents (the price the Class A shareholders will receive under the Proposed Capital Restructure) corresponds to a dividend recommencement date of March 2011 – two quarters after September quarter 2010;

• the price at which the Class A shares traded immediately prior to the announcement of the Proposed Capital Reduction (90-day volume weighted average price ( VWAP ) of 32 cents) implies a dividend recommencement date beyond June 2014. This would suggest that prior to the announcement of the Proposed Capital Reduction, the market was effectively valuing the Class A shares on the basis that dividends would not be resumed within the next 5 years.

5.4 Market-based Values

As indicated in Section 5.1 above, we consider it necessary to consider a market-based valuation methodology to place our discounted future dividend analysis in context.

For the purposes of our assessment, market value is defined as being the price within a range of prices available in an open and unrestricted market which might be negotiated between informed,

Page 10

prudent parties acting at arm’s length and under no compulsion to act, expressed in terms of money or money’s worth.

There are two clear indications of what the ‘unrestricted market’ considers to be the market value of the Class A shares:

• Trading subsequent to the announcement of the Proposed Capital Reduction (see Section 5.5); and

• Negotiations between the Company and a number of major Class A Shareholders (see Section 5.6.

5.5 Trading Activity

Both CMI’s ordinary shares and the Class A shares trade on ASX. They can be considered illiquid securities as they are traded infrequently and with large bid-ask spreads.

The impact of announcements of the 2008 Proposed Capital Reduction, its subsequent withdrawal and the general impact on markets of the global financial crisis is clearly evident in the following chart.

Class A shares suffered significant declines as a result of the uncertainty surrounding CMI’s dividend policy when the Company announced the suspension of dividends in February 2008. Following the cancellation of the 2008 Proposed Capital Reduction in October 2008, both ordinary and Class A shares again fell significantly.

Fig 5.2 – Class A shares – Prices and Volumes

==> picture [486 x 215] intentionally omitted <==

----- Start of picture text -----

1.40 Sale of engineering 450,000
division to Max
Hofmeister
Announces selective 400,000
1.20 Board resolves not to pay capital reduction of Discontinues selective capital reduction
Class A Dividends in light of Class A Shares for due to turmoil in financial markets
the losses of the May quarter. $1.00/share 350,000
Announces sale of Finance Board resolves not to
1.00 Division pay Class A Dividends Announces selective
capital reduction of 300,000
Class A Shares for
0.80 Board resolves not to pay Class A Dividends. Board resolves not to $0.63/share 250,000
pay Class A Dividends Board resolves not to
Board resolves pay Class A Dividends
0.60 not to pay Class 200,000
A Dividends in
light of trading
losses 150,000
0.40
100,000
0.20
50,000
0.00 0
Jan-08 Feb-08 Mar-08 Apr-08 May-08 Jun-08 Jul-08 Aug-08 Sep-08 Oct-08 Nov-08 Dec-08 Jan-09 Feb-09 Mar-09 Apr-09 May-09 Jul-09 Aug-09 Sep-09
Price Volume VWAP 30 day Price Close or Last Bid
Price ($) Volume (# Shares)
----- End of picture text -----

Source: Reuters as at 17 September 2009

The cancellation of the 2008 Proposed Capital Reduction removed an opportunity for holders of Class A shares to liquidate their investments, which immediately prior to the announcement were trading at $0.50 compared to the $1.00 offer price. The current offer of $0.63 represents a premium of approximately double the 90-day VWAP of the Class A shares prior to the announcement of the Proposed Capital Reduction.

Page 11

==> picture [226 x 9] intentionally omitted <==

----- Start of picture text -----

Fig 5.3 – CMI ordinary share and Class A share Trading
----- End of picture text -----

==> picture [502 x 180] intentionally omitted <==

----- Start of picture text -----

Announces selective capital
1.80 reduction of Class A Shares for
$1.00/share
1.60 Discontinues selective capital Announces selective capital
reduction due to turmoil in reduction of Class A Shares for
1.40 financial markets $0.63/share
1.20
1.00
0.80
0.60
0.40
0.20
0.00
Jan-08 Feb-08 Mar-08 Apr-08 May-08 Jun-08 Jul-08 Aug-08 Sep-08 Oct-08 Nov-08 Dec-08 Jan-09 Feb-09 Mar-09 Apr-09 May-09 Jun-09 Jul-09 Aug-09 Sep-09
CMI Ord Shares CMI A Class
Price ($)
----- End of picture text -----

Source: Reuters as at 17 September 2009

Over a similar period, CMI ordinary shares fell from $1.50 in January 2008 to $0.70 in July 2008. The shares then increased to $1.05 on the announcement of the 2008 Proposed Capital Reduction in September 2008, and fell to $0.50 following its cancellation in November 2008. Ordinary shares of CMI have increased from $0.38 (90-day VWAP) prior to the announcement of the current Proposed Capital Reduction to a VWAP of $0.55 since the announcement.

5.6 Institutional and Sophisticated Investors

CMI has a number of institutional investors on its share register for both the ordinary and Class A shares. In particular, Trojan Equity Limited holds 11.03% and MMC Asset Management Limited ( MMC ) holds 4.69% of the Class A shares. On 3 August 2009 Trojan Equity, a publicly listed company, announced to the ASX that it will support the Proposed Capital Reduction when given the opportunity to vote on the resolutions, effectively indicating that as professional market participants, they were supportive of the value of $0.63 offered for the Class A shares. Likewise, IFL has been provided with copies of voting deeds for MMC (and its holding vehicles) that indicate their support for the Proposed Capital Reduction, again suggesting that as a professional investor, it was prepared to sell its Class A shares at $0.63.

Between 4 September 2009 and 7 September 2009, Mr Raymond Catelan, a director and substantial shareholder of CMI sold 2,069,636 Class A Shares on market at an average price of $0.51 cents per share.

5.7 Valuation Summary

Base on our analysis we consider that the value of the Class A shares is between $0.60 and $0.70.

As discussed in Section 5.3, the major determinant of the value of the Class A shares is when dividends are likely to be paid. Through our analysis, and following discussions with the CMI Board, IFL would expect that CMI will most likely recommence paying dividends on Class A shares between September 2010 and June 2011.

The Class A shares have traded at a VWAP of $0.51 since the announcement of the Proposed Capital Reduction.

Page 12

6. Assessment of the fairness and reasonableness of the Proposed Capital Reduction

6.1 General

In the course of our analysis we have identified the advantages and disadvantages to CMI shareholders of approving the Proposed Capital Reduction.

We have assessed that in all cases the advantages and disadvantages of rejecting the Proposed Capital Reduction are the inverse of approving the Proposed Capital Reduction. Accordingly, for simplicity and ease of evaluation of the Proposed Capital Reduction, we have set out the significant factors only in the context of considering approval of the Proposed Capital Reduction. However, we have summarised the consequences of the Proposed Capital Reduction not proceeding in Section 7 below.

Note that a number of the advantages and disadvantages described below are the same as those described in the 2008 IER.

6.2 Advantages and Disadvantages from Class A Shareholder’s perspective

• The Proposed Capital Reduction cash consideration of $0.63 per share is within the assessed market valuation range of $0.60 to $0.70 per share.

• The Proposed Capital Reduction provides an opportunity for Class A Shareholders to immediately realise their interest in the Class A shares without incurring transaction costs, as the Proposed Capital Reduction involves the return and cancellation of the Class A shares rather than the on market sale of the shares and, accordingly, no brokerage fees will be incurred by the Class A Shareholders.

• It is important for Class A Shareholders to understand that the terms of the Class A shares mean that while Class A Shareholders have priority to dividends over Continuing Shareholders, the payment of dividends is subject to the approval of the Board and is therefore discretionary. Accordingly, the Proposed Capital Reduction allows the Class A Shareholders to realise an amount in respect of future dividends even though there is no guarantee that those dividends would be paid to the Class A Shareholders in the future.

• The Proposed Capital Reduction cash consideration of $0.63 per share is at a significant premium to the 90-day VWAP for the Class A shares prior to the Proposed Capital Reduction being announced. The Class A share price has not reached these levels since the announcement of the 2008 Proposed Capital Reduction.

• The Proposed Capital Reduction consideration is higher than our estimate of the likely stock market price of Class A shares in the absence of the Proposed Capital Reduction. Since the announcement, and in IFL’s opinion because of the announcement, the Class A share price has increased to $0.51 per share (VWAP since the announcement) enabling the Class A Shareholders to exit their investment by selling their investment on-market at a price that was not previously available to them.

• Class A Shareholders will no longer be exposed to the risk of further falls in sentiment towards the overall share market. Although Class A Shareholders forgo any longer term upside potential where interest rates fall and Class A share prices increase, they have the opportunity to reinvest the cash they receive for their Class A shares in alternative investments or in cash.

• The Proposed Capital Reduction provides an opportunity for Class A Shareholders to exit from a relatively illiquid investment.

Page 13

• It is possible that CMI may pay dividends ahead of the period projected by IFL in its analysis. Should this be the case then Class A shareholders may exit their investment at a price below what they may have obtained if they had not sold.

6.3 Advantages and Disadvantages from a Continuing Shareholder’s perspective

• The Proposed Capital Reduction cash consideration of $0.63 per Class A share is within our assessed market valuation range of $0.60 to $0.70 per Class A share.

• The Proposed Capital Reduction may increase future dividends per share of Continuing Shareholders, because distributions out of profits will not first need to be made to the Class A Shareholders. The Continuing Shareholders would have first call on any future profits to be distributed by the Company by way of dividends.

• The directors have made a judgment about the value of the Class A shares by offering 63 cents. Given the trading VWAP for the Class A shares, the Company may have been able to buy-back the shares at a lower price. However, a lower price may have caused Class A Shareholders to vote against the Proposed Capital Reduction and prevented its implementation.

• Based on our analysis, interest paid on the loan facility to fund the Proposed Capital Reduction is less than would have been paid out as dividends to the Class A Shareholders in the future. IFL estimates the cash available to be distributed as dividends to Continuing Shareholders (if the Board resolved to do so) would be increased by the Proposed Capital Reduction by some $2.7 million in the first year following the Proposed Capital Reduction, after taking into consideration the additional interest payable to finance the Proposed Capital Reduction and the potential ‘savings’ by not paying dividends to Class A Shareholders.

• Following the Proposed Capital Reduction, the Continuing Shareholders will obtain the benefit of future franking credits that would otherwise have been attached to the dividend component of any distributions on the Class A shares.

• The capital structure of the Company will be simplified significantly through implementation of the Proposed Capital Reduction. The market generally accords greater value to simplicity in capital structures, which is reflected in share price. This is true in small-cap companies and especially in times of volatile investment markets. A simplified structure may also make the Company more attractive to potential acquirers and is likely to make it easier for the Company to raise capital, in the future.

• There will be a significant increase in the level of debt due to the nature of funding of the Proposed Capital Reduction and therefore an increase in the gearing ratio of the Company. This in turn increases the risk associated with an investment in the business. While the profits available to Continuing Shareholders improve due to the tax shield associated with debt as opposed to the payment of Class A dividends, the trade off is that the Company is exchanging a cash outflow that is discretionary (dividend payment) with another cash outflow that is not discretionary (interest).

• In addition, as part of the key terms of the NAB Facility Agreement, there is a requirement for a capital raising by way of a fully underwritten offer. The details of that offer have not been announced at the time of this Report and the impact on Continuing Shareholders can not therefore be assessed.

7. Consequences if Proposed Capital Reduction is not approved

It is difficult to be certain of the impact on CMI if the Proposed Capital Reduction is not approved by shareholders, but there are some key considerations that need to be addressed by shareholders in their deliberations. In IFL’s view, if the transaction is not approved, then:

Page 14

• it is likely that the market value of the Class A shares will retreat from their current trading value in excess of $0.51 (VWAP since the announcement) to similar levels as those experienced prior to the announcement;

• it is also likely the share price of ordinary shares which have increased to $0.55 (VWAP since announcement) from $0.38 (90-day VWAP) prior to the announcement of the Proposed Capital Transaction will retreat to similar levels as those experienced prior to the announcement;

• as the Class A shares currently have limited voting rights, there will be no change to the voting power attributable to each class of share;

• the capital structure of the Company would not be altered. While the level of gearing in the Company would not increase, the complexity inherent in the existing equity structure would remain as a hindrance to the Company raising future equity capital, and continue to limit the attractiveness of the Company as both an investment and as a takeover target.

8. Assessment of Fairness and Reasonableness

After due consideration of the advantages and the disadvantages of the Proposed Capital Reduction as detailed in Section 6 of this Report, it is IFL’s opinion that the Proposed Capital Reduction is fair and reasonable to both Class A Shareholders and Continuing Shareholders.

9. Director’s Position

The Directors have indicated that they intend to recommend the approval of the Proposed Capital Reduction.

10. Largest Holders of Class A shares

As discussed in section 5.6, two large institutional holders of Class A shares representing 15.72% of the Class A shares on issue, have indicated that they will be voting in favour of the Proposed Capital Reduction.

11. Limitations, Representations and Reliance on Information

11.1 Sources of Information

IFL has relied on the following information in the preparation of this Report:

• NAB Banking Facilities Agreement dated 16 September 2009;

• Draft Booklet of meeting material for Members including resolutions in regard to the Proposed Capital Reduction;

• CMI FY2010 internal budgets;

• CMI FY2009 management accounts;

• CMI FY2009 Preliminary Final Report as provided to the ASX;

• CMI Limited franking credits register;

• CMIPC shareholding register from Link Market Services;

• CMI shareholding register;

• CMI Class A shares Prospectus;

Page 15

• CMI Company Constitution;

• CMI press and ASX releases; and

• Other confidential correspondence, project presentations, material contracts, taxation advice, financial models, and working papers.

IFL has also held discussions with, and obtained information from, senior management and the directors of CMI.

In forming our opinions of the value of the Class A shares, we have reviewed and relied upon the following discussions and documents:

• publicly available information;

• discussions with management regarding general corporate strategy and dividend policy;

• preliminary financial statements for the year ended 30 June 2009; and

• internal budgets for FY2010.

11.2 Assumptions

IFL's opinion is based on economic, share market, business trading, financial and other conditions and expectations prevailing at the date of this Report. These conditions can change significantly over relatively short periods of time. If they did change materially subsequent to the date of this Report, our opinion could be different in these changed circumstances. However, IFL has no obligation, and gives no undertaking, to advise any person of any change in circumstances which comes to its attention after the date of this Report or to review, revise or update its Report or opinion.

This Report is also based on publicly available information and on financial and other information provided by CMI (either directly or through its advisers). IFL has considered and relied upon this information and its completeness, accuracy and fair presentation. CMI has represented in writing to IFL that, to its knowledge, the information provided by it was complete, accurate and not misleading in any material respect. The information provided to IFL has been evaluated through analysis, enquiry and review for the purposes of forming an opinion as to whether the Proposed Capital Reduction is fair and reasonable. However, in preparing reports such as this, time is limited and IFL does not warrant that its enquiries have identified or verified all of the matters that an audit, extensive examination or "due diligence" investigation might disclose. Except as expressly set out in this Report, IFL has not attempted to independently verify the completeness, accuracy or fair presentation of any of the information provided by CMI. In any event, an opinion as to whether a proposal is fair and reasonable is more in the nature of an overall review rather than a detailed audit or investigation. IFL confirms that its procedures and enquiries do not constitute an audit in accordance with Australian Accounting Standards ( AAS ), and do not constitute a review in accordance with AAS 902 applicable to review engagements.

IFL has no reason to believe that any material facts have been withheld and CMI has confirmed in writing that it believes it has provided all relevant information of which it is aware, but IFL does not represent that it has received all relevant information.

IFL believes that its opinion must be considered as a whole as the various elements of its analysis are often interdependent. IFL cautions against examination of individual elements of its analysis as this may create a misleading impression of the overall opinion.

An important part of the information used in forming an opinion of the kind expressed in this Report is comprised of the opinions and judgments of management. This type of information was also evaluated through analysis, enquiry and review to the extent practical. However, such information

Page 16

is often not capable of external verification or validation.

Preparation of this Report does not imply that IFL has audited in any way the management accounts or other records of CMI. It is understood that the accounting information that was provided was prepared in accordance with generally accepted accounting principles and in a manner consistent with the methods of accounting in previous financial years of CMI (except where noted or where required due to a change in accounting standards).

In forming its opinion, IFL has also assumed that:

• matters such as title, compliance with laws and regulations and contracts are in good standing and will remain so;

• the information set out in the accompanying Notices of Meeting and Explanatory Memorandum is complete, accurate and fairly presented in all material respects; and

• the public and confidential information relied on by IFL in its analysis was accurate and not misleading.

12. Qualifications, Declarations and Consents

12.1 Qualifications

IFL provides corporate advisory services in relation to mergers and acquisitions, capital raisings, corporate restructuring and financial matters generally. One of its activities is the preparation of company and business valuations and the provision of independent advice and expert's reports in connection with mergers and acquisitions, takeovers and schemes of arrangements. The principals of IFL have prepared a number of public expert's reports since commencing this type of work in 1987. The principal person responsible for preparing this Report on behalf of IFL is Paul Keehan who has over 20 years of experience in relevant corporate advisory matters. Mr Keehan is an authorised representative of TL pursuant to its Australian Financial Services Licence under Part 7.6 of the Corporations Act.

12.2 Declarations

It is not intended that this Report should be used or relied upon for any purpose other than as an expression of IFL’s opinion as to whether the Proposed Capital Reduction is fair and reasonable. IFL expressly disclaims any liability to any CMI shareholder who relies or purports to rely on this Report for any other purpose and to any other party who relies or purports to rely on this Report for any purpose.

This Report has been prepared by IFL with care and diligence and the statements and opinions given by IFL in this Report are given in good faith and in the belief on reasonable grounds that such statements and opinions are correct and not misleading. However, no responsibility is accepted by IFL or any of its directors, officers or employees for errors or omissions however arising in the preparation of this Report, provided that this shall not absolve IFL from liability arising from an opinion expressed recklessly or in bad faith (unless the law otherwise requires).

IFL has had no involvement in the preparation of the Notices of Meeting and Explanatory Memorandum and has not verified or approved any of the contents of the Notices of Meeting and Explanatory Memorandum. IFL does not accept any responsibility for the contents of the Notices of Meeting and Explanatory Memorandum or any other documents provided to CMI shareholders (except for this Report).

12.3 Independence

IFL is entitled to receive a fee of $27,000 (exclusive of GST) for the preparation of this Report. IFL

Page 17

is also entitled to be reimbursed for any out-of-pocket expenses incurred in the preparation of this Report. Except for this fee and the reimbursement of these expenses, IFL has not received and will not receive any pecuniary or other benefit, whether direct or indirect, in connection with the preparation of this Report.

Neither the signatories to this Report nor IFL holds securities in CMI. No such securities have been held at any time over the last two years.

Neither the signatories to this Report nor IFL have had within the past two years any business relationship material to an assessment of IFL’s impartiality with CMI, or its associates, other than in connection with the preparation of this Report. The principals of IFL were involved in providing an independent expert report for CMI in the preceding 12 months when employed by Tolhurst InterFinancial. Please see Section 3.4 for more details.

Prior to accepting this engagement, IFL considered its independence with respect to CMI and any of their respective associates with reference to ASIC Regulatory Guide 112 entitled “Independence of Experts". In IFL’s opinion it is independent of CMI and its associates.

A draft of this Report was provided to CMI and its advisors for confirmation of the factual accuracy of its contents. No significant changes were made to this Report as a result of this review and there was no alteration to the methodology, evaluation or opinions set out in this Report as a result of issuing the draft.

12.4 Indemnity

Under the terms of our engagement, CMI has agreed that no claim shall be made by CMI or any of its subsidiaries against IFL, any of their directors, officers, partners, employees or agents ( Indemnified Persons ) to recover any loss or damage which CMI or any of its subsidiaries may suffer by reason of or arising out of anything done or omitted in relation to the provision of the services by IFL, provided that such loss or damage does not arise from the negligence or default of any of the Indemnified Persons. CMI has unconditionally indemnified IFL and its related bodies corporate and their respective officers, employees and agents against any losses, claims, damages, liabilities, costs, expenses and outgoings whatsoever ( Losses ) which they may suffer or incur directly or indirectly arising out of:

• IFL relying on information provided by CMI or any of its employees, agents or advisers; or

• CMI failing to provide IFL with material information in relation to the Proposed Capital Reduction.

Further, CMI must pay and must indemnify IFL against any Losses in relation to any investigations, enquiries or legal proceedings by ASIC, ASX or any other competent regulatory body arising out of, or in connection with, the Proposed Capital Reduction, including reasonable legal expenses and disbursements incurred by IFL and fees payable to IFL attributable to time reasonably spent by its staff assessed at its hourly rates to the extent that investigation, enquiry or legal proceeding is not caused by an act or omission of the Indemnified Persons.

12.5 Consents

IFL consents to the issuing of this Report in the form and context in which it is to be included in the Notices of Meeting and Explanatory Memorandum to be sent to CMI shareholders. Neither the whole nor any part of this Report nor any reference thereto may be included in, or attached to, any other document without the prior written consent of IFL as to the form and context in which it appears.

IFL takes no responsibility for the content of the Notices of Meeting and Explanatory Memorandum or any other documents provided to CMI shareholders, other than this Report.

Page 18

12.6 Other

The opinion of IFL is made at the date of this Report and reflects circumstances and conditions as at that date. In particular, IFL provides no representations or warranties in relation to the future value of shares of CMI.

CMI shareholders who are in any doubt as to the action they should take should consult their own independent professional adviser.

IFL has prepared a Financial Services Guide as required by the Corporations Act. The Financial Services Guide is set out at the beginning of this Report.

Yours sincerely

InterFinancial Corporate Finance Limited

==> picture [168 x 50] intentionally omitted <==

Paul Keehan Executive Chairman

Page 19

Appendix A – Summary terms of Class A shares

The following is an excerpt from Rule 30 of the CMI Constitution.

Dividends

30.2 - A quarterly dividend ( Dividend ) is paid in respect of each Class A share calculated in accordance with the following formula:

Quarterly Dividend =[Annual Dividend]

4

Dividend Rate is for each year, ending on the anniversary of the Allotment Date, at such rate as determined by the Directors, but in any event, not less than 14¢ each year.

Franking of Dividends

30.3 - If any Dividend is not franked to 100% under Part IIIAA of the Tax Act (or any provisions that revise or replace that Part) ( Applicable Franking Rate ), the Dividend will be calculated in accordance with the following formula:

D Dividend = 1 - [ Ti × (1 - f )]

where:

• D is the Dividend calculated under rule 30.2 in the CMI Constitution;

Ti is the Australian corporate tax rate applicable to the franking account of the Company from which the Dividend will be franked, expressed as a decimal; and

• f is the Applicable Franking Rate, expressed as a decimal to four decimal places.

Payment of Dividend

30.4 - The payment of a Dividend is subject to:

• (a) the Directors, at their discretion, declaring the Dividend to be payable; and

• (b) there being funds legally available for the payment of dividends.

Non-Cumulative Dividends

30.5 - If and to the extent that all or any part of a Dividend is not paid because of the provisions of rule 30.4 in the CMI Constitution, the holder has no claim in respect of such non-payment.

Dividend Payment Dates

30.6 - Dividends will be payable on the Class A share in arrears on that day being 3 months after the Allotment Date and thereafter quarterly.

Record Dates

30.7 - A Dividend is only payable to those persons registered as holders of Class A shares at the date on which the books of the Company close for Class A share holders in respect of each relevant Dividend.

No Entitlement to Other Dividends

30.8 - Class A shares shall have a preferential right to a Dividend determined in accordance with rules 30.2 and 30.3 in the CMI Constitution in priority to holders of Ordinary Shares as to the payment of dividends but shall, subject to payment of such Dividend under rules 30.2 and 30.3, have no other entitlement to any dividend which may be determined to be paid to holders of Ordinary Shares.

Page 20

Ranking

30.9 - Class A shares shall rank equally amongst shares in that class in all respects.

Return of capital

30.10 - If there is to be a return of capital on a winding up of the Company, holders of Class A shares will be entitled to receive, out of the assets of the Company available for distribution to holders of shares, in respect of each Class A share held, a cash payment equal to the sum of:

(a) the amount of any Dividend (whether declared or not) calculated on a daily basis (assuming a 365 day year) throughout the period from and including the date of the preceding Dividend Payment Date to the date of commencement of the winding-up; and

(b) the Face Value,

before any return of capital is made to holders of Ordinary Shares or any other class of shares ranking behind the Class A shares.

Class A shares do not confer on their holders any right to participate in profits or property except as set out in the provisions of Rule 30.

Shortfall on Winding Up

30.11 - If, upon a return of capital, there are insufficient funds to pay in full the amounts referred to in rule 30.10 in the CMI Constitution and the amounts payable in respect of any other shares in the Company ranking as to such distribution equally with the Class A shares on a winding-up of the Company, the holders of the Class A shares and the holders of any such other shares will share in any distribution of assets of the Company in proportion to the amounts to which they respectively are entitled.

Participation in Surplus Assets

30.12 - The Class A shares do not confer on their holders any further right to participate in the surplus assets of the Company on a winding-up.

Restrictions on Dividends and Other Issues

30.13 - The Company must not, without approval of a special resolution passed at a separate meeting of holders of the Class A shares:

(a) declare or pay a cash dividend or make any distribution on any share capital over which the Class A shares rank in priority for participation in profits if the Dividend payable in either of the four quarterly periods immediately preceding the cash dividend or distribution has not been paid or otherwise satisfied in full; or

(b) issue shares ranking in priority to the Class A shares but the Directors are at all times authorised to issue such further Class A shares ranking equally with any existing Class A shares and, subject to required shareholder approvals, to give effect to the conversion or variation of rights to other classes of Company shares on issue which may convert into Class A shares or which may have rights (as varied) identical or similar to Class A shares.

Takeovers and Schemes of Arrangement

30.14 - If a takeover bid is made for Ordinary Shares, acceptance of which is recommended by the Directors, or the Directors recommend a member's scheme of arrangement, the Directors will use reasonable endeavours to procure that equivalent takeover offers are made to Class A shares holders or that they participate in the scheme of arrangement.

Participation in New Issues

30.15 - Class A shares will confer rights to subscribe for new securities in the Company or to participate in any bonus issues, to the same extent as Ordinary Shares.

Page 21

Voting rights for Class A shares

30.16 - The holder of Class A shares is not entitled to vote at any general meeting of the Company except in the following circumstances:

• (a) on a proposal:

• (i) to reduce the share capital of the Company;

• (ii) that affects rights attached to the Class A shares;

• (iii) to wind up the Company; or

(iv) for the disposal of the whole of the property, business and undertaking of the Company;

(b) on a resolution to approve the terms of a buy-back agreement;

(c) during a period in which a Dividend or part of a Dividend on the Class A shares is in arrears; or

• (d) during the winding up of the Company.

In any circumstance where the holder of Class A shares may vote at a general meeting of the Company, each Class A share shall entitle the holder to one vote.

Listing

30.17 - The Company must use all reasonable endeavours and furnish all such documents, information and undertakings as may be reasonably necessary in order to procure, at its own expense, listing of the Class A shares on ASX and/or on each of the stock exchanges on which the other Ordinary Shares of the Company are listed, following the Effective Date.

Amendments to the terms of issue

30.18 - Subject to complying with all applicable laws, the Company may without the authority, assent or approval of Class A shareholders amend or add to these terms of issue if such amendment or addition is, in the opinion of the Company:

• (a) of a formal, minor or technical nature;

• (b) made to correct a manifest error; or

(c) not likely (taken as a whole and in conjunction with all other modifications, if any, to be made contemporaneously with that modification) to be materially prejudicial to the interests of the holders of the Class A shares.

Interpretation

30.19 - The following expressions shall have the following meanings:

`Allotment Date' means the date in respect of which a CPS shall have been allotted or have deemed to have been allotted by the Company. In any other instance, 21 August shall be deemed the relevant date and month on which Class A share is allotted (notwithstanding the date of actual allotment) for the purposes of determining the yearly Dividend Rate applicable at the time of allotment;

`Dividend Payment Date' means each date on which a Dividend is payable in accordance with rule 30.6 in the CMI Constitution whether or not a Dividend is paid on that date;

**Face Value'** means $1.20 per Class A share in respect of a CPS which shall have been converted into Class A share. In any other instance, where the termFace Value' is relevant, then, in the absence of any other definition or meaning, it shall mean the issue price paid or payable on the issue of such share;

'Franking Rate' in relation to a Dividend, means the franking percentage (within the meaning of Part IIIAA of the Tax Act or any part that replaces or revises that part) of the Dividend, expressed

Page 22

as a decimal;

`Ordinary Share' means an ordinary share in the capital of the Company;

`Tax Act' means:

(a) the Income Tax Assessment Act 1936 or the Income Tax Assessment Act 1997 as the case may be as amended and a reference to any section of the Income Tax Assessment Act 1936 includes a reference to that section as rewritten in the Income Tax Assessment Act 1997;

(b) any other Act setting the rate of income tax payable; and

(c) any regulation promulgated thereunder.

Page 23

Appendix B - Calculation of Discount Rates

Overview

Selection of an appropriate discount rate to apply to the forecast dividend flows of a company fundamentally is a matter of judgment. There is a formulaic approach that can and is derived by theory; however, a mechanistic application of financial theory can result in a discount rate that is not applicable in reality. Hence, it should be stressed that there is no "correct" discount rate. Despite the growing acceptance and application of various theoretical models, many companies may rely on less sophisticated approaches and use relatively arbitrary "hurdle rates" which do not vary significantly over time despite interest rate movements.

The discount rate that IFL has adopted is the cost of equity derived from the Capital Asset Pricing Model ( CAPM ) methodology. The CAPM is probably the most widely accepted and used methodology for determining the cost of equity capital. However, while the theory underlying the CAPM is rigorous, the practical application is subject to shortcomings and limitations and the results of applying the CAPM model should only be regarded as providing a general guide.

Overview of the CAPM Framework

The CAPM provides a theoretical basis for determining a discount rate that reflects the returns required by diversified investors in equities. CAPM is based on the assumption that investors require a premium for investing in equities above risk free investments (such as Australian government bonds). The premium is commonly known as the market risk premium and notionally represents the premium required to compensate for investment in the equity market in general.

The risks associated with an investment in a company can be classed as either specific risks or systematic risks. Specific risks are risks that are specific to a particular company or business and are unrelated to movements in equity markets. Systematic risk is the risk that returns from an investment or business will vary with market returns in general. If returns on an investment are expected to be perfectly correlated with returns on the market, then the return required on the investment would be equal to the return required from the market (i.e. the risk free rate plus the market risk premium).

CAPM postulates that the return required on investment or assets can be estimated by applying to the market risk premium a measure of systematic risk described as the equity beta factor. The equity beta for an investment reflects the covariance of the return from that investment with the return from the market as a whole. Covariance is a measure of relative volatility and correlation. The equity beta of an investment represents its systematic risk only. It is not a measure of the total risk of a particular investment. In general, an investment with an equity beta greater than 1 is riskier than the market and an investment with a beta of less than 1 is less risky.

The formula for deriving the cost of equity using CAPM is as follows:

Re = Rf + Beta (Rm - Rf)

Where
Re	is the expected return on equity;
Rf	is the risk free rate;
Beta	is the equity beta factor;
Rm	is the expected market return; and
Rm – Rf	is the market risk premium.

Page 24

The equity beta for a company is normally estimated by observing the historical relationship between returns from the company or comparable companies and returns from the market in general.

Risk-Free Rate

The risk-free rate can be defined as a theoretical return on risk-free assets. Although a truly riskfree asset exists only in theory, in practice most professionals and academics use government bonds of the currency in question to estimate the risk-free rate – in this case Commonwealth Government bonds.

While it is theoretically correct to apply a series of spot rates for each cash flow for the duration of the forecast period, IFL recognizes that valuation methodology typically applies a single risk-free rate estimated by the yield-to-maturity of 10-year Commonwealth Government bonds. Similarly it is common industry practice to ‘match’ the maturity profile of the proxy for the risk-free rate to the maturity of the cash flows over the forecast period. Where the forecast period exceeds ten years, a practical estimation issue arises as to the bond maturity to use as an appropriate proxy. While longer-maturity bonds exist, IFL views that 10-year Commonwealth Government bond as a widely used and accepted benchmark for the risk-free rate.

For the purpose of this report, IFL has adopted a risk free rate of 5.52%. The risk free rate approximates the yield to maturity on 10 year Australian Government bonds in the week ending 30 June 2009.

Market Risk Premium

The market risk premium (Rm - Rf) represents the additional return that investors require to invest in equity securities as a whole over a risk free investment which is not observable and therefore a historical premium is used as a proxy. Australian studies have been limited but indicate that the long run average premium has been in the order of 6% measured over more than 100 years of data.

The market risk premium is not constant and may change over time as investors perceive that equities are more risky than at other times and will increase or decrease their expected premium.

A market risk premium of 6.8% has been assumed which IFL believes is within the range of generally accepted figures of long term market risk premiums in the Australian capital market.

Equity Beta

Beta is a measure of the expected covariance (i.e. volatility and correlation of returns) between returns on an investment and returns on the market as a whole. The conventional practice for estimating beta is to calculate a historical beta using past share price and market returns data and use it as a proxy for the future.

Equity Beta estimate

To obtain an equity beta, IFL has considered Ordinary Least Squares ( OLS ) betas of CMI and other comparable companies listed on Australian Securities Exchange ( ASX ). The issue with considering CMI’s beta in isolation is the lack of liquidity in CMI’s shares, particularly in the context of the financial markets in the past twelve months.

To overcome the lack of liquidity issue in beta estimation, one method that is commonly applied to obtain a more reliable equity beta for CMI is to firstly de-lever equity betas of comparable companies to obtain a set of asset betas and then re-levering the asset betas to reflect the financing risk associated with CMI’s use of debt.

Asset betas represent the risk arising from the sensitivity of the operating cash flows generated by an entity’s assets compared with the market in general, that is, the market risk associated with an

Page 25

entity’s business.

Asset betas are not directly observable and therefore must be derived from equity betas. Asset betas do not reflect the additional financial risk to a shareholder arising from the use of debt to finance the entity’s assets. Accordingly, in order to estimate the asset beta for an entity, it is necessary first to assess the observable equity betas and adjust (de-lever) to remove the effect of financing risk from the equity beta.

A commonly applied formula for de-levering and re-levering is the Officer Formula:

==> picture [90 x 22] intentionally omitted <==

where: Be Equity beta Ba Asset beta T Corporate tax rate D/E Debt to equity ratio

IFL has considered the equity betas of other comparable companies with similar exposure to the mining services sector given the relative importance of the Electrical Business where the major customers are in the mining sector.

Table B.1 – Mining Services Beta Analysis

Company Name	Equity Beta	Debt-to-Equity (%)	Unlevered Equity Beta
Worleyparsons	1.79	54.9%	1.29
Clough	1.09	47.6%	0.82
Ausenco	1.70	62.0%	1.18
Sedgman	1.57	81.9%	1.00
GRD Minproc	1.93	103.4%	1.12
Coffey	1.24	82.5%	0.79
Cardno	1.38	40.9%	1.08
Lycopodium	1.42	14.3%	1.29
Leighton Holdings	1.76	67.4%	1.19
Macmahon	1.49	41.2%	1.16
Downer EDI	1.22	52.8%	0.89
United Group	1.29	62.0%	0.90
Transfield Services	1.81	79.8%	1.16
Monadelphous	1.65	22.0%	1.43
Programmed Maintenance Services	1.02	75.8%	0.67
Mac Services Group	1.26	20.4%	1.11
Servcorp	0.77	1.6%	0.76
Bradken	2.06	118.7%	1.12
Industrea	1.93	164.8%	0.90
RCR Tomlinson	1.51	34.6%	1.21
Emeco	1.37	56.7%	0.98
Boom Logistics	1.85	86.8%	1.15
Tutt Bryant Group	2.06	58.0%	1.47
**Average **	1.53	62.2%	1.07
Source: Reuters, IFL Analysis

Page 26

Using a target Debt-to-Equity Ratio of 105% for CMI if the buyback of the A Class shares were to be funded by debt facilities, the re-levered Beta for CMI is 1.86.

IFL considers that an equity beta of 1.86 is appropriate for investors considering an investment in a company with exposure to the mining services sector.

Imputation Credits (Gamma)

The WACC set out above assumes a "classical" tax system. The CAPM model is constructed to derive returns to investors after corporate taxes but before personal taxes. Under the US classical tax system, interest expense is deductible to a company but dividends are not. Investors are also double-taxed on dividends received.

Under Australia's dividend imputation system, domestic equity investors now receive a taxation credit (franking credit) for any tax paid by a company, hence eliminating the double taxation associated with US dividends. There are schools of economic thought that argue that the taxation benefits of dividend imputation should be incorporated into any analysis of value. However, Australian studies of the relative value of dividend imputation are controversial and have produced mixed results.

It is worth noting that franking credits can only be utilised in the hands of domestic Australian investors and to a lesser extent, superannuation funds who are eligible for a refund of unused imputation credits (provided that franking credit trading rules are met). Foreign investors are unable to access attached franking credits and hence attribute no additional value to franking credits.

While a number of studies point towards the proposition that some value should be attributed to dividend imputation, IFL considers that the evidence provided by the different schools of thought as to the value that investors attributes to dividend imputation is unclear.

IFL considers that any adjustment to CAPM methodology to factor in an estimate of dividend imputation is unnecessary.

In IFL's opinion it is not appropriate to make any such adjustments in the valuation methodology and therefore assigned a value of zero.

Summary of WACC Parameters

Table B.2 – CMI Cost of Equity

Table B.2 – CMI Cost of Equity
Parameter/Estimate	Value
Equitybeta	1.86%
Gamma(γ )	0
Market riskpremium	6.8%
Risk-free rate	5.52%
Corporate tax rate	30%
Cost of equity	18.2%
Source: IFL Analysis

Page 27

All enquiries to:

==> picture [90 x 65] intentionally omitted <==

LODGe YOUR VOTe

By mail: 

CMI Limited C/- Link Market Services Limited Locked Bag A14 Sydney South NSW 1235 Australia



By fax: +61 2 9287 0309

==> picture [15 x 15] intentionally omitted <==

----- Start of picture text -----


----- End of picture text -----

Telephone: (02) 8280 7454

Combined Ordinary and Class A Shareholders Meeting

X99999999999

X99999999999

ShARehOLDeR VOTING FORM

I/We being a member(s) of CMI Limited and entitled to attend and vote hereby appoint:

STeP 1

APPOINT A PROXY

the Chairman OR if you are NOT appointing the Chairman of the of the Meeting Meeting as your proxy, please write the name of the (mark box) person or body corporate (excluding the registered shareholder) you are appointing as your proxy

or failing the person/body corporate named, or if no person/body corporate is named, the Chairman of the Meeting, as my/our proxy and to vote for me/us on my/our behalf at the Combined Ordinary and Class A Shareholders Meeting of the Company to be held at 10:00am on Friday, 20 November 2009, at Brisbane Riverview Hotel, Corner Kingsford Smith Drive and Hunt Street Hamilton, Brisbane Queensland 4007 and at any adjournment or postponement of the meeting.

Proxies will only be valid and accepted by the Company if they are signed and received no later than 48 hours before the meeting. Please read the voting instructions overleaf before marking any boxes with an X

VOTING DIReCTIONS

STeP 2

Resolution 1

That, subject to the Class A Shareholders and the combined Ordinary Shareholders and Class A Shareholders of the Company separately approving the cancellation of Class A Shares (and having regard to the other information provided in the Notices of Meetings of Ordinary and Class A Shareholders), IT IS RESOLVED that the Company’s share capital be reduced by the cancellation of all Class A Shares on issue on the Payment Record Date for the consideration of 63 cents per Class A Share.

For Against Abstain *

 * If you mark the Abstain box for a particular Item, you are directing your proxy not to vote on your behalf on a show of hands or on a poll and your votes will not be counted in computing the required majority on a poll.

SIGNATURe OF ShARehOLDeRS – ThIS MUST Be COMPLeTeD

STeP 3

Shareholder 1 (Individual) Sole Director and Sole Company Secretary

Joint Shareholder 2 (Individual) Joint Shareholder 3 (Individual) Director/Company Secretary (Delete one) Director

This form should be signed by the shareholder. If a joint holding, either shareholder may sign. If signed by the shareholder’s attorney, the power of attorney must have been previously noted by the registry or a certified copy attached to this form. If executed by a company, the form must be executed in accordance with the company’s constitution and the Corporations Act 2001 (Cth).

CMI PRX905

hOW TO COMPLeTe ThIS PROXY FORM

Your Name and Address

This is your name and address as it appears on the company’s share register. If this information is incorrect, please make the correction on the form. Shareholders sponsored by a broker should advise their broker of any changes. Please note: you cannot change ownership of your shares using this form.

Appointment of a Proxy

If you wish to appoint the Chairman of the Meeting as your proxy, mark the box in Step 1. If the person you wish to appoint as your proxy is someone other than the Chairman of the Meeting please write the name of that person in Step 1. If you leave this section blank, or your named proxy does not attend the meeting, the Chairman of the Meeting will be your proxy. A proxy need not be a shareholder of the company. A proxy may be an individual or a body corporate.

Votes on Items of Business – Proxy Appointment

You may direct your proxy how to vote by placing a mark in one of the boxes opposite each item of business. All your shares will be voted in accordance with such a direction unless you indicate only a portion of voting rights are to be voted on any item by inserting the percentage or number of shares you wish to vote in the appropriate box or boxes. If you do not mark any of the boxes on the items of business, your proxy may vote as he or she chooses. If you mark more than one box on an item your vote on that item will be invalid.

Appointment of a Second Proxy

You are entitled to appoint up to two persons as proxies to attend the meeting and vote on a poll. If you wish to appoint a second proxy, an additional Proxy Form may be obtained by telephoning the company’s share registry or you may copy this form and return them both together.

To appoint a second proxy you must:

• (a) on each of the first Proxy Form and the second Proxy Form state the percentage of your voting rights or number of shares applicable to that form. If the appointments do not specify the percentage or number of votes that each proxy may exercise, each proxy may exercise half your votes. Fractions of votes will be disregarded.

• (b) return both forms together.

Signing Instructions

You must sign this form as follows in the spaces provided:

Individual: where the holding is in one name, the holder must sign.

Joint holding: where the holding is in more than one name, either shareholder may sign.

Power of Attorney: to sign under Power of Attorney, you must lodge the Power of Attorney with the registry. If you have not previously lodged this document for notation, please attach a certified photocopy of the Power of Attorney to this form when you return it.

Companies: where the company has a Sole Director who is also the Sole Company Secretary, this form must be signed by that person. If the company (pursuant to section 204A of the Corporations Act 2001 ) does not have a Company Secretary, a Sole Director can also sign alone. Otherwise this form must be signed by a Director jointly with either another Director or a Company Secretary. Please indicate the office held by signing in the appropriate place.

Corporate Representatives

If a representative of the corporation is to attend the meeting the appropriate “Certificate of Appointment of Corporate Representative” should be produced prior to admission in accordance with the Notice of Meeting. A form of the certificate may be obtained from the company’s share registry.

Lodgement of a Proxy Form

This Proxy Form (and any Power of Attorney under which it is signed) must be received at an address given below by 10:30am on Wednesday, 18 November 2009, being not later than 48 hours before the commencement of the meeting. Any Proxy Form received after that time will not be valid for the scheduled meeting.

Proxy Forms may be lodged using the reply paid envelope or:



by mail:

CMI Limited C/- Link Market Services Limited Locked Bag A14 Sydney South NSW 1235 Australia



by fax:

+61 2 9287 0309

 by hand:

delivering it to Link Market Services Limited, Level 12, 680 George Street, Sydney NSW 2000.

If you would like to attend and vote at the Combined Ordinary and Class A Shareholders Meeting, please bring this form with you. This will assist in registering your attendance.

LODGe YOUR VOTe

All enquiries to:

==> picture [90 x 65] intentionally omitted <==

==> picture [51 x 15] intentionally omitted <==

----- Start of picture text -----

By mail:

----- End of picture text -----

CMI Limited C/- Link Market Services Limited Locked Bag A14 Sydney South NSW 1235 Australia

==> picture [15 x 15] intentionally omitted <==

----- Start of picture text -----


----- End of picture text -----

By fax: +61 2 9287 0309

==> picture [15 x 15] intentionally omitted <==

----- Start of picture text -----


----- End of picture text -----

Telephone: (02) 8280 7454

Class A Shareholders Meeting

X99999999999

X99999999999

ShARehOLDeR VOTING FORM

I/We being a member(s) of CMI Limited and entitled to attend and vote hereby appoint:

STeP 1

APPOINT A PROXY

the Chairman OR if you are NOT appointing the Chairman of the of the Meeting Meeting as your proxy, please write the name of the (mark box) person or body corporate (excluding the registered shareholder) you are appointing as your proxy

or failing the person/body corporate named, or if no person/body corporate is named, the Chairman of the Meeting, as my/our proxy and to vote for me/us on my/our behalf at the Class A Shareholders Meeting of the Company to be held at (expectedly) 10:30am on Friday, 20 November 2009, at Brisbane Riverview Hotel, Corner Kingsford Smith Drive and Hunt Street Hamilton, Brisbane Queensland 4007 and at any adjournment or postponement of the meeting.

Proxies will only be valid and accepted by the Company if they are signed and received no later than 48 hours before the meeting. Please read the voting instructions overleaf before marking any boxes with an X

STeP 2

Resolution 1

VOTING DIReCTIONS

For Against Abstain *

That, subject to the Class A Shareholders and the combined Ordinary Shareholders and Class A Shareholders of the Company separately approving the cancellation of Class A Shares (and having regard to the other information provided in the Notices of Meetings of Ordinary and Class A Shareholders), IT IS RESOLVED that the Company’s share capital be reduced by the cancellation of all Class A Shares on issue on the Payment Record Date for the consideration of 63 cents per Class A Share.

 * If you mark the Abstain box for a particular Item, you are directing your proxy not to vote on your behalf on a show of hands or on a poll and your votes will not be counted in computing the required majority on a poll.

SIGNATURe OF ShARehOLDeRS – ThIS MUST Be COMPLeTeD

STeP 3

Shareholder 1 (Individual) Sole Director and Sole Company Secretary

Joint Shareholder 2 (Individual) Joint Shareholder 3 (Individual) Director/Company Secretary (Delete one) Director

This form should be signed by the shareholder. If a joint holding, either shareholder may sign. If signed by the shareholder’s attorney, the power of attorney must have been previously noted by the registry or a certified copy attached to this form. If executed by a company, the form must be executed in accordance with the company’s constitution and the Corporations Act 2001 (Cth).

CMI PRX901

hOW TO COMPLeTe ThIS PROXY FORM

Your Name and Address

This is your name and address as it appears on the company’s share register. If this information is incorrect, please make the correction on the form. Shareholders sponsored by a broker should advise their broker of any changes. Please note: you cannot change ownership of your shares using this form.

Appointment of a Proxy

If you wish to appoint the Chairman of the Meeting as your proxy, mark the box in Step 1. If the person you wish to appoint as your proxy is someone other than the Chairman of the Meeting please write the name of that person in Step 1. If you leave this section blank, or your named proxy does not attend the meeting, the Chairman of the Meeting will be your proxy. A proxy need not be a shareholder of the company. A proxy may be an individual or a body corporate.

Votes on Items of Business – Proxy Appointment

You may direct your proxy how to vote by placing a mark in one of the boxes opposite each item of business. All your shares will be voted in accordance with such a direction unless you indicate only a portion of voting rights are to be voted on any item by inserting the percentage or number of shares you wish to vote in the appropriate box or boxes. If you do not mark any of the boxes on the items of business, your proxy may vote as he or she chooses. If you mark more than one box on an item your vote on that item will be invalid.

Appointment of a Second Proxy

You are entitled to appoint up to two persons as proxies to attend the meeting and vote on a poll. If you wish to appoint a second proxy, an additional Proxy Form may be obtained by telephoning the company’s share registry or you may copy this form and return them both together.

To appoint a second proxy you must:

• (a) on each of the first Proxy Form and the second Proxy Form state the percentage of your voting rights or number of shares applicable to that form. If the appointments do not specify the percentage or number of votes that each proxy may exercise, each proxy may exercise half your votes. Fractions of votes will be disregarded.

• (b) return both forms together.

Signing Instructions

You must sign this form as follows in the spaces provided:

Individual: where the holding is in one name, the holder must sign.

Joint holding: where the holding is in more than one name, either shareholder may sign.

Power of Attorney: to sign under Power of Attorney, you must lodge the Power of Attorney with the registry. If you have not previously lodged this document for notation, please attach a certified photocopy of the Power of Attorney to this form when you return it.

Companies: where the company has a Sole Director who is also the Sole Company Secretary, this form must be signed by that person. If the company (pursuant to section 204A of the Corporations Act 2001 ) does not have a Company Secretary, a Sole Director can also sign alone. Otherwise this form must be signed by a Director jointly with either another Director or a Company Secretary. Please indicate the office held by signing in the appropriate place.

Corporate Representatives

If a representative of the corporation is to attend the meeting the appropriate “Certificate of Appointment of Corporate Representative” should be produced prior to admission in accordance with the Notice of Meeting. A form of the certificate may be obtained from the company’s share registry.

Lodgement of a Proxy Form

This Proxy Form (and any Power of Attorney under which it is signed) must be received at an address given below by 10:30am on Wednesday, 18 November 2009, being not later than 48 hours before the commencement of the meeting. Any Proxy Form received after that time will not be valid for the scheduled meeting.

Proxy Forms may be lodged using the reply paid envelope or:



by mail:

CMI Limited C/- Link Market Services Limited Locked Bag A14 Sydney South NSW 1235 Australia



by fax:

+61 2 9287 0309

 by hand:

delivering it to Link Market Services Limited, Level 12, 680 George Street, Sydney NSW 2000.

If you would like to attend and vote at the Class A Shareholders Meeting, please bring this form with you. This will assist in registering your attendance.