:: Chairman's Statement

Dear valued shareholders,
On behalf of the board of directors of NCB Holdings Bhd, I am pleased to present the annual report and the audited financial statements of the group for the financial year ended 31 December 2009.

Corporate Highlights

Business Review

The weak economy in the year 2009, coming as the spiraling effect of the financial crises in the United States and Europe have been directly translated into a market of reduced demands in terms of both goods and services associated with global trade. Consequently there was a reduced volume of demand for haulage and logistics service. This worsens a situation that is already characterized by stiff competition amongst the large number of service providers.

During the latter parts of the year there were discernable signs of recovery in Malaysia's trading activities and the gradual reversal in the trend in demand for the supporting services.

Companies in the NCB Group adjusted their operating plans and took fi rm measure to contain costs. The efforts were successful and the NCB Group was able to attain credible business performance, registering a respectable revenue figure that shrank by a far smaller margin than what has been initially anticipated.

The Group produced a satisfactory bottom line figure for the year. This has put the Group in a position to provide good dividend yield for its shareholders.

Financial Position

For the financial year ended 31 December 2009, the Group recorded a turnover of RM831.4 million, reflecting a decrease of 12.1% compared against the previous year's figure of RM946.2 million.

The pre-tax profit for the Group was RM167.9 million, reflecting an increase of 2.3% against last year's figure of RM164.1 million. This position was assisted to a degree by an amount of non-trading income realized through disposal of assets and generation of interest on surplus fund. The favourable profit figures were also the result of very strict cost control measures that were carried out during the year as the management's response towards the anticipated impact of the global financial crisis.

Northport (Malaysia) Bhd, the port operating subsidiary recorded a pre-tax profit of RM148.0 million against a revenue of RM611.9 million, whilst the haulage and logistics subsidiary, Kontena Nasional Berhad recorded a pre-tax profit of RM9.7 million against a revenue figure of RM219.5 million.

Dividend

The Group has remained committed towards the objective of providing good return to shareholders for the confidence and trust they have placed on the Board. For year 2008, the Company paid a total dividend of 25.0 sen per share where 8.0 sen was paid in the form of a special dividend. This involved a total pay-out of RM87.8 million net of tax.

For year 2009, the Company has already paid an interim dividend of 7.0 sen on 9th October 2009, with the total payout coming up to RM24.7 million, net of 25% tax. Beyond this, the Company is proposing at the coming Annual General Meeting, a similar payment of 10.0 sen per share as final dividend, accompanied by an improved figure for special dividend proposed at 11.0 sen per share, and payable on 7th May 2010. The final and special dividend will require a payout of RM74.1 million net of 25% income tax.

This will bring the total dividend pay-out for year 2009, based on an issued share capital of 470,252,708 ordinary shares, of RM98.7 million, net of 25% income tax.

Operational Performance

General Overview

Companies within the NCB Group showed strong resilience and faced up well to the challenge of managing their business activities under trying global and regional economic situations. I am pleased to report that all measures taken to achieve cut-back in costs, elimination of unprofitable activities and improvement of efficiency in processes and organisation structure have yielded good results which enabled both subsidiaries to register profits even at the reduced levels of revenue, compared against what they earned in the previous year.

Port Oprations

One of the greatest challenges faced by Northport was the retention of customers as most shipping lines were going through financial pressures in their operation which then caused direct knock-on pressures on the port operators, particularly considering the low level of tariff already in place before the crisis. Northport has managed to maintain strong relationship with its customers and this in turn enabled it to register speedy gains in volume as customers' throughput showed an increase in the second half of the year.

The total volume handled through Port Klang during year 2009 was 7,309,779 TEU's reflecting a decline of 8.3% compared to 7,973,579 TEU's recorded in year 2008. Northport's share of this throughput was 2,858,341 TEU's, a decrease of 5.0% compared with 3,005,920 TEU's recorded in 2008.

The container mix in Northport stood at 50% for both import and export containers. In volume terms, the total for inbound containers declined by 4.4% from 1,531,311 TEU's in year 2008 to 1,463,625 TEU's in year 2009. Outbound containers also registered a decline by 5.4%, from 1,474,609 TEU's in 2008 to 1,394,716 TEUs in 2009.

Of the 2,994,100 TEU's of laden container traffic related to indigenous trade passing through Port Klang, 1,754,098 TEU's or 58.6% passed through facilities operated by Northport. This makes Northport the leading gateway for national trade.

Transhipment volume handled during the year was 1,104,243 TEU's, lower by 109,426 TEU's or 9.0% compared with the year 2008 volume of 1,213,669 TEU's. Transhipment volume made up 38.6% of the total volume handled by Northport in year 2009, indicating a decrease by 1.8% compared with the previous year's level of 40.4%. Port Klang handled a total transhipment volume of 4,315,679 TEU's, with the proportion serviced by Northport contributing 25.6% towards this total.

The conventional cargo business recorded a decline of 16.4% from 7.81 million FWT in year 2008 to 6.53 million FWT in year 2009. This was mainly due to weakening business and competition. Conventional business refers to activities associated with cargoes identified under the break bulk, dry bulk and liquid bulk categories.

Warehousing and Distribution Business

Northport Distripark Sdn Bhd (NDSB) a 100% owned subsidiary of Northport, is engaged in warehousing, storage and distribution activities. The company operates from within the Free Commercial Zone of North Port, and acts as support facility to Northport in the generation of containerized cargo arising out of activities of tenants and clients that offer an array of regional distribution centre, international procurement centre and multi-country consolidation centre services.

During the year under review, NDSB handled a total of 39,717 TEU's of containers, reflecting a decrease of 12.0% against the throughput of 45,133 TEU's handled in 2008.

Haulage and Logistics Operations

Kontena Nasional has been operating within a stiff competitive environment throughout the year. Serious efforts however continued to be put towards improving the internal efficiency, accountability and performance to enable the company to undertake new business ventures in towards the more rewarding sectors of logistics and related services. For the year under review the subsidiary has materially improved its position by registering a profit of RM9.7 million compared with RM3.9 million during the previous year.

However, the haulage arm of its business registered a decline in the scale of activity, handling a total box movement of 268,075 TEU's, 22.2% less than the 344,468 TEU's recorded during year 2008.

Strategy

Northport and its Subsidiaries

Northport continued to be the main gateway for the country for export and import laden boxes, handling a 58.6% share of the containerized indigenous traffic passing through Port Klang. It also continued to sustain its role as a strong player within the Port Klang environment, with a market reach of 39.1% out of the total container volume passing through the port.

Northport's strategy is to ensure that the available resources are gainfully employed to maximize yield and profitability and enhance shareholders value through strategic business decisions. In this context, the company has strived to improve its profitability both through the handling of containerized trade as well as cargo in conventional form.

Going forward, and subject to the economic environment showing sustainable signs of improvement, the Group remains ready to re-activate the planned construction of Wharf 8A to meet customers' demand for enhanced capacity to service their growth in business.

Kontena Nasional and its Subsidiaries

One of the more significant changes in the definition of the business model for the Group's logistics subsidiary is the placing of greater focus on expanding its services in the total logistics sector. This will however be done in parallel with continuing efforts to streamline and strengthen the haulage segment of the business.

As a result of the realignment in focus and the drive to contain and gradually reduce operating cost the subsidiary was able to produce a far more satisfactory result during the year under review. Going forward Kontena Nasional will push for greater progress in its long-term strategy to fully transform into a leading full-fledged 3PL logistics player.

Corporate Governance

The Board of NCB is committed to complying with and consistently upholding the standards set in the Malaysian Code of Practice on Corporate Governance in all its activities. A detailed account of the Board's approach in this matter is contained within the Statement on Corporate Governance appearing on pages 79 to 87 of this Annual Report.

Appreciation

On behalf of the Board, I would like to record my sincere appreciation to all the employees, the management of the company and the various subsidiaries within the Group for their support and dedication.

My thanks also go to our shareholders, customers, port users, Government authorities, business associates and other stakeholders. I would also like to record my appreciation to the media for their fair reporting on the business activities of the Group.

I also wish to place on record my thanks to my fellow directors as well as directors who sit on the boards of the subsidiaries for their valuable service during the year just ended.