Chairman's Statement

Net earnings more than doubled those of 2003, while revenue increased 19%. APL, our liner business, had an excellent year, while APL Logistics continued to improve on its performance.

While the Group benefited from healthy global demand, the strong results also reflect positive contributions by the management team in focusing on improving efficiency, asset utilization and, most importantly, operating margins and, hence, profits.

Our positive operating performance was mirrored in the market capitalisation of the Company, which rose significantly during the year. In February 2004 our market capitalisation was S$2.9 billion; a year later it sat at S$5.1 billion - an increase of 76%.

In terms of earnings per share (EPS), we have seen a steady improvement over the past two years and for 2004 EPS increased 85% to 65.47 US cents (S$1.11).

We remain committed to continuing to provide our shareholders with value in the long term. The shipping industry may be cyclical, but our intention is to remain among the top performing global transportation and logistics providers worldwide through the cycles.

To underline that, last year we announced our dividend policy - an annual dividend of eight Singapore cents per share net, or a full year dividend payment of 20% of net profits, whichever is higher.

At our interim results in 2004, we announced shareholders would receive an interim dividend of seven Singapore cents per share net. In keeping with our dividend policy, NOL is proposing a final tax exempt dividend of 14.69 Singapore cents per share.

In addition, in view of the strong performance in 2004, the Group is also recommending a special tax exempt dividend of 21.69 Singapore cents per share.

Together with the interim dividend, proposed dividends for 2004 therefore total 43.38 Singapore cents per share, or 40% of the Group's reported net profits.

This will be voted on by shareholders at the 2005 Annual General Meeting (AGM).

During 2004, we were pleased to welcome Mr Christopher Lau to the Board.

Mr Lau has been in legal practice for around 30 years and has extensive experience in maritime and commercial law. He is a member of the Governing Board of the International Maritime Law Institute of the International Maritime Organisation (IMO).

Four Board members have announced they are retiring at the 2005 AGM: Non-Executive Directors Mr Lock Sai Hung, Mr Timothy J Rhein, Mr Gan Chee Yen and Executive Director and Group Chief Financial Officer Mr Lim How Teck.

Lock Sai Hung has been with the Board since mid-2002 and, with his extensive financial and business experience, he has made a significant contribution as Chairman of the Audit Committee and as a member of the Executive Resource and Compensation Committee.

Tim Rhein has served as a Director of NOL on two separate occasions: he was on the Board from 1998 to 2001 and then kindly consented to return to the Board in 2002 for a further three year term. He also served as the Chairman of APL Logistics and American President Lines.

With more than four decades in the shipping industry, he has been an invaluable expert resource for the Board and for the management of NOL to draw upon.

Gan Chee Yen joined the Board in 2003, and with a long career in the finance arena, he has contributed considerable experience and insights to NOL and the Board during his time with us.

On behalf of the Board, I would like to thank Mr Lock, Mr Rhein and Mr Gan for their contribution to NOL.

Early in 2005, it was announced that Group Chief Financial Officer Mr Lim How Teck would retire from the end of June and would retire as a Director at the 2005 AGM.

Lim How Teck has been with NOL for 25 years and was a key player in the moves that saw NOL grow from small beginnings to the leading role it now has in the industry.

He has made a strong and valuable contribution to the Company and I would like to thank him for his many years of dedicated service.

During 2004, the management team built on the results of 2003, continuing to turn in strong results quarter after quarter, and setting the Company on a strategic path designed to continue that robust performance into the future. On behalf of the Board, I thank them and the whole NOL team globally for their hard work.

I would also like to thank our business partners and the unions for their support and co-operation over the past year, and also our customers for their business and for putting their trust in us. I am also grateful for the guidance of the various industry and regulatory organisations who we have worked with through 2004. We look forward to working with all these groups in 2005 and beyond.

With the positive business environment and our continued focus on yield management and cost containment, the performance of the Group is expected to be strong in 2005, barring any unforeseen circumstances.

Cheng Wai Keung

Chairman