2006 was a year of solid performance in the face of more challenging market conditions for our industry.

We encountered the most difficult business environment of the past four years, with freight rates under pressure and significantly increased fuel costs.

However, NOL had anticipated these conditions and we approached the year with a determination to keep liner utilisation high, manage yields carefully, minimise costs and adopt a moderate approach to the introduction of new shipping tonnage.

The average reduction in freight rates for the year was 7% across all of our trades. Despite this, we worked hard to increase our container shipping volumes and to increase logistics revenues. As a result our overall revenues held steady at US$7.3 billion, in line with the prior year.

Our approach to 2006 enabled us to continue to create value for shareholders and deliver solid returns. We reported a Net Profit of US$364 million, representing a Return on Equity of 18%. Earnings per Share were 25 US cents.

Directors have recommended a final dividend of 4 Singapore cents per share net payable on 9 May 2007, on top of an interim dividend of 4 Singapore cents per share net paid in September 2006. This is in line with NOL’s dividend policy, which is to pay the higher of an annual dividend of 8 Singapore cents per share net, or a full-year dividend of 20% of net profits. In addition, NOL’s capital reduction and cash distribution to shareholders of 92 Singapore cents per share net was completed in February 2006. Combined, these capital management actions mean that more than S$1.46 billion (US$897 million) will have been returned to shareholders for the year 2006.

NOL has clearly demonstrated a commitment to delivering shareholder value and providing attractive long-term returns. This commitment will continue.

The company’s activities throughout the year were consistent with our strategy to build a liner shipping business which is differentiated from competitors, while developing our logistics business in a focused manner. We focus on the delivery of premium, high-quality cargo transportation services, providing tailored customer solutions built around the combined strengths of our liner and logistics capabilities. The company also aims to capitalise on strengths such as our market-leading footprint in Asia.

NOL conducts its business in accordance with the Code of Corporate Governance of the Singapore Stock Exchange. A revised Code came into effect from January 2007.

Our Corporate Governance Statement is set out in this Report, click here.

NOL’s diverse Board of Directors brings enormous experience and breadth of international expertise to our business, providing valuable insight and strategic guidance. I thank all Directors for their support and hard work in 2006.

On 19 April 2006, Willie Cheng retired as a Director and as Chairman of the Audit Committee, and I thank him for his contribution. Three new non-executive Directors, Bobby Chin, Simon Israel and Tan Pheng Hock, were appointed to the Board on 26 December 2006.

After three years and four months as Chief Executive Officer, David Lim stepped down as a Director on 31 October 2006. David was at the helm of our company through one of the most successful periods in its history. On behalf of the Board and shareholders, I thank him for his leadership and important contribution to that success.

Our new CEO, Dr Thomas Held, joined us on 1 November 2006 following a global search to identify an industry leader with the skills and experience to drive the next phase of our company’s development. Thomas has a formidable background in, and understanding of, the international transportation and logistics industry. Under his leadership, shareholders can anticipate a renewed commitment to growth and innovation, an emphasis on managing costs and increasing productivity and a continuing focus on shareholder value and excellence in customer service.

NOL’s performance during 2006 was underpinned by a highly disciplined effort on the part of our more than 11,000 employees. Our thanks go to all staff for the commitment they demonstrated throughout a demanding year.

Cheng Wai Keung
Chairman