STAR REEFERS INC STRATEGY AND ACTION PLANS REVISITED STRONGER SERVICES AND EARNINGS RECOVERY OSLO 4 NOVEMBER 2003

STAR REEFERS INCSTAR REEFERS INC

STRATEGY AND ACTION PLANS REVISITED

STRONGER SERVICES AND EARNINGS RECOVERY

OSLO 4 NOVEMBER 2003

STAR Reefers AS, as managers for STAR Reefers Inc Rådhusgaten 23, N-0158 Oslo, Norway

slide no. 2

OutlineOutline

Reefer market fundamentals Brief introduction to the Reefer industry and its characteristics

Star Reefers IncStar Reefers in brief

Fleet and market position

Key financial figures

Market drivers and outlookDemand and supply

Structural changes

Star Reefers – Strategy and action plans revisited

1.1. Reefer market fundamentalsReefer market fundamentals


slide no. 4

Conventional reefer landscapeConventional reefer landscape

MAJOR REEFER OPERATORS (Post split)

Source: Drewry

Source: Star

Reefer commodities Conventional reefer vessels distance volume

Bananas43 %

Deciduous10 %

Citrus11 %

Exotics2 %

Fish21 %

Meat10 %

Others2 %

Dairy1 %


slide no. 5

Market share – Reefer import & exportMarket share – Reefer import & export

Market share - Reefer Import Seaborne distance volume

W. Europe39 %

Asia29 %

N. America14 %

Lat. America3 %

Med5 %

Baltic9 %

Other1 %

Market share - Reefer Export Seaborne distance volume

Lat. America42 %

Asia16 %

W. Europe16 %

N. America13 %

Africa6 %

Med6 %

Others1 %

Source: UN


slide no. 6

Trade patterns (Banana trade)Trade patterns (Banana trade)

Source: UN

2.2. Star Reefers IncStar Reefers Inc


slide no. 8

Star Reefers in briefStar Reefers in brief

A leading provider of reefer transportation services

Operating a fleet of 37 large reefer vessels

Leading market position

Largest shareholders No of shares Pct stakeSiem Industries Group 5 612 015 73.4 %Maas Capital Investment B.V. 552 505 7.2 %Hafslund Invest AS 478 955 6.3 %Vestey Group Limited 210 500 2.8 %DnB Markets 200 000 2.6 %Aage Thoen Ltd AS 175 000 2.3 %Danske Bank AS 77 576 1.0 %Other 339 649 4.4 %Total 7 646 200 100.0 %

Management Board of DirectorsCEO Aage Thoen Chairman, Kristian SiemCFO Terje Aschim Ole Martin Siem

Per Chr. HaukenesMike Delouche


slide no. 9

Historic highlightsHistoric highlightsJan. 01 : New equity USDM 44. Creditor write off USDM 55

Jul. 01 : Acquisition Star Reefers London- Commercial operator

- 6 owned and 18 chartered vessels

Aug. 01 : Pool with NYK

Nov. 02 : Renegotiation of long term t/c

Nov. 02 : Dividend pay out of USD 0.10

2001 - 03 : Sold 11 vessels for USDM 52

2002 - 03 : Acquisition of 9 vessels (incl. 2 options) for USDM 114

2003 : Stand alone from Jan. 04 (Pool with NYK terminated)

Development in share price and volume

-

10.00

20.00

30.00

40.00

50.00

60.00

70.00

12.0

6.20

01

19.0

6.20

01

23.0

7.20

01

06.0

8.20

01

21.0

8.20

01

31.0

8.20

01

06.0

9.20

01

08.1

0.20

01

03.1

2.20

01

06.0

2.20

02

12.0

3.20

02

15.0

5.20

02

20.0

6.20

02

27.1

2.20

02

03.0

3.20

03

03.0

9.20

03

Sh

are

pri

ce (

NO

K)

-

10 000

20 000

30 000

40 000

50 000

60 000

Vo

lum

e

Share price Volume


slide no. 10

Current fleetCurrent fleet

CLASS NAME CBFTC-Class Cote D'Ivorian Star 550 600

Colombian Star 550 600Caribbean Star 550 600Costa Rican Star 550 600

Total C-Class 2 202 400

Polar Class Polar Argentina 526 044Polar Brasil 528 891Polar Colombia 536 890Polar Chile 525 891Polar Ecuador 526 044

Total Polar Class 2 643 760

BB-Class Belgian Reefer 690 880Brazilian Reefer 690 880

Total BB Classs 1 381 760

Penguin Class Tauranga Star 411 008Welligton Star 424 307

Total Penguin Class 835 315

Tundra Class Tundra King 596 160Tundra Princess 596 160Tundra Queen 596 157Tundra Consumer 576 064Tundra Trader 576 064

Total Tundra Calss 2 940 605

R-Class Regal Star 520 000Regent Star 520 000

Total R-Class 1 040 000

CLASS NAME CBFTS-Class Solent Star 485 000

Southampton Star 485 000Total S-Class 970 000

Chacabuco Class Chaiten 673 748Swan Chacabuco 677 143

Total Cha Class 1 350 891

H+W Class Auckland Star 465 164Canterbury Star 465 164English Star 465 164Scottish Star 465 164

Total H & W Class 1 860 656

Harvester Class Harvester 378 055

Trojan Class Trojan Star 477 757Tudor Star 477 757

Total Trojan Class 955 514

New Zealand Class Chiquita Brenda 479 367Chiquita Joy 479 834Napier Star 486 761Nelson Star 479 450

Total NZ Class 1 925 412

Reef Class Cape Town Star 515 862Durban Star 516 530

Total Reef Class 1 032 392

Total Cbft Star 19 516 760


slide no. 11

Tonnage analysis – Sale & Purchase 2003Tonnage analysis – Sale & Purchase 2003

OLD NEW

Swan class Durban Star

Built 1979 1993

Capacity cbft 473 000 517 000

Revenue cent ¢ 28,0 ¢ 54,0

Ships opex per day 4 100 4 300

Revenue 1,6 3,4

Opex excl. drydock -1,5 -1,6

EBITDA 0,1 1,8

Asset Value $ 2,7 $ 11,0

EBITDA / Investment 3,4 % 16,2 %

ROE negative 36 %


slide no. 12

Fleet changesFleet changesDisposal of Vessels

Vessels name Capacity (cbft.) Built Price (USD million) Date Sold / Bought

Canadian Reefer 597 000 1979 3 Nov-01

Ecuadorian Reefer 597 000 1980 3 Nov-01

Belgian Reefer 691 000 1983 6,5 May-02

Brazilian Reefer 691 000 1984 6,5 May-02

Anglian Reefer 703 000 1988 10 Mar-03

Argentinean Reefer 703 000 1988 10 Mar-03

Swan Lagoon 474 998 1980 2,65 Aug-03

Swan Ocean 474 998 1980 2,65 Aug-03

Swan Strean 474 998 1980 2,6 Aug-03

Swan River 467 315 1978 2,4 Dec-03

Swan Bay 466 322 1979 2,4 Dec-03

6 340 631 51,7

Acquisition of Vessels

Chiquita Brenda 486 761 1993 11 Oct-02

Chiquita Joy 486 761 1994 11 Oct-02

Napier Star 486 761 1994 11 Oct-02

Nelson Star 486 761 1993 11 Oct-02

Tauranga Star 425 777 1992 10 Oct-02

Durban Star 516 530 1993 10,5 Jul-03

Cape Town Star 514 095 1993 10,5 Sep-03

Costa Rican Star 564 000 1998 19,9 Option

Caribbean Star 564 000 1997 19,9 Option

4 531 446 114,8


slide no. 13

.

YTD YTD Jan-Dec Jan-Dec

30-Jun-03 30-Jun-02 2002 2001

Net operating revenues 64.9$ 66.7$ 109.0$ 85.5$ Ships operating expenses -20.6 -19.8 -40.3 -35.2 Charter hire expenses -26.3 -23.5 -41.7 -22.1 Administrative expenses -1.8 -1.2 -3.5 -3.5 EBITDA 16.2 22.2 23.5 24.7Depr. and amortization -4.5 -6.0 -11.0 -11.5 Gain sale ships subsidiary 0.4 -0.7 1.5Operating profit 12.1 15.5 14.0 13.2Interest expense -3.4 -4.1 -7.8 -10.3 Other financial items -0.1 0.2 0.3 1.8Net income 8.6$ 11.6$ 6.5$ 4.7$

EPS 1.13$ 1.53$ 0.86$ 0.65$

Profit & Loss AccountProfit & Loss Account


slide no. 14

.

30-Jun-03 31-Dec-02

Vessels 144.6$ 168.3$ Other fixed assets 9.0 10.4 Other current assets 22.6 16.4 Bank deposits 23.4 17.7 Total assets 199.6$ 212.8$

Equity 67.9$ 59.2$ Provisions 1.9 1.9 Interest-bearing debt 112.1 134.2 Short term liabilities 17.7 17.5 Total equity and liabilities 199.6$ 212.8$

Equity ratio 34% 28%

Equity per share $8.88 $7.75

Balance sheetBalance sheet


slide no. 15

SensitivitiesSensitivities

Star Reefers – SensitivitiesRevenue +/- 5% = +/- USD 0.78 per shareVessel opex. +/- 3% = +/- USD 0.16 per share


slide no. 16

Star Reefers – 2004 platformStar Reefers – 2004 platform

Improved and modern fleet – Average 12 years / Banana Type

Improved operational cost base

Quality name

Dedicated and energized staff

Positive market outlook

Termination of NYKSTAR

Consolidation paused

37 ships fleet and ranked as a number 3 among reefer operators

33 Market drivers and outlookMarket drivers and outlook


slide no. 18

Factors influencing demandFactors influencing demandConsumer expenditures and general economic conditions

A Theoretical Approach

A B C

GDP per capita

Consumption pr. capita

0

2

4

6

8

10

12

14

Russia

1930

SaudiArabia6870

Germany

25280

USA

25820

OtherE. Eur.2355

OtherW. Eur.1)

25927

OtherEU

19755

A) Low income, basic need coverage

B) Rising income changing spending (eating) habit. Economy in focus by multinationals (Distribution network/promotion).

C) Consumption reaches top point. Rising income triggers substitution to more sophisticated fruits


slide no. 19

Factors influencing demand cont.Factors influencing demand cont.

Euro vs USD

0.5

0.6

0.7

0.8

0.9

1.0

1.1

1.2

1.3

1.4

1.5

80

82

84

86

88

90

92

94

96

98

2000

2002

EU

R/U

SD

Currency exchange ratesSince the main export areas are USD economies and the largest import areas are EUR economies, USD/EUR fluctuations have a significant impact on consumers demand of reefer products

Non economic variablesChanges in consumer preferences/taste/trends

The effect of political decisions (Import ban, taxes)

Availability of domestic volumes either from own production or from volumes in continued improved storage facilities

Climatic factors

Banana regime up for revision in 2006

Market access for developing countries


slide no. 20

Source: Orion Shipping

The reefer fleet (above 300 cub. ft.) consists of around 505 vessels, equivalent to around 233 million cub.ft. (Source: Drewry)The reefer fleet reached its peek in 1993, and has slowly been reduced due to historic low rates in the period from 1998 – 2002, and consequently very limited newbuildingThe order book is presently at 0.5 million cub.ft.The drop in second hand values for reefer ships has not been reflected in new building prices, hence little anticipated new building activity going forward

Factors influencing supply – Reefer vessels order book Factors influencing supply – Reefer vessels order book vs scrapvs scrap


slide no. 21

SRI Owned

Global

0 1 5 6 6 1

Reefer fleet age distribution – 2003Reefer fleet age distribution – 2003

Source: Orion Shipping AS, Oslo

SRI Fleet Average – 11.7 years

SRI Ch. In 0 0 2 8 4 4


slide no. 22

Illustration of historic development of second-hand valueIllustration of historic development of second-hand value

Development of secondhand value of a modern self sustained reefer vessel abt. 527.000 cbft, built 1991, contract price abt.

USD 47,5 per cbft

1618202224262830323436384042444648505254

1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003

(Values at the beginning of each year)

US

D p

er

cb

ft

Dep. over 25 years eco.life

2nd hand value



slide no. 23

Strategic matrix – Reefers vs containersStrategic matrix – Reefers vs containers

REEFERS

SOUTH – NORTH LANE

SPEED ADVANTAGE

PORT TO PORT

LOW DRAFT

GEAR

HIGH AVERAGE AGE

QUALITY PAYS

NO ORDER BOOK

HIGH VOLUME – LOW VALUE

BANANA TRADE

CHANGE OF BANANA REGIME 06

WEAK SERVICE & CHAIN MANAGEMENT

CONTAINERS

EAST – WEST LANE

SPEED IMPROVEMENTS TO COME

TERMINAL TO TERMINAL / DOOR TO DOOR

DRAFT LIMITATIONS

NO GEAR

LOW AVERAGE AGE

ESTABLISHED QUALITY

HIGH ORDER BOOK IN 3000 TEU RANGE

LOW VOLUME – HIGH VALUE

NO BANANA TRADE EXCEPT FOR BRAZIL/USWCNO IMPACT TO THE CONTAINER

STRONGER LOGISTICAL BASE


slide no. 24

Projected Seaborne Trade DevelopmentsProjected Seaborne Trade Developments

Conventional reefer trade continues to grow steadily

Growth trend for conventional reefer trade 2000 vs. 2010

13.84

3.17

30.15

11.54

27.48

0.46

5.84

0.29

2.710.64

2.873.12

0.21

6.36

0.22.35

0.52

3.51

0

5

10

15

20

25

30

Banan

as

Citrus

Decidu

ous

Exotic

sM

eat

Diary

Fish

Oth

ersTota

l

Se

ab

orn

e t

rad

e (

mil

lio

n t

on

ne

s)

2000 2010

Source: Drewry


slide no. 25

Projected Seaborne Trade Developments Projected Seaborne Trade Developments

Reefers still dominate

the important fruit trades

Source: Drewry


slide no. 26

Historic rate developmentsHistoric rate developments

Influx of newbuildings during 80’s and mid 90’sImpacts of El Niño and La NiñaUSD appreciation of some 20% during 90’sEU enacted a restrictive quota system for bananas in 1993Collapse of USSR during mid-90’s and Asian financial crisis Fruit majors suffering at end of 90’sCommission driven market players High tech storage technology - controlled atmosphereContainer influx and penetrationThe market during the years 1998 –2001 experienced many negative events simultaneously which disrupted the supply/demand balance in the reefer market

Timecharter spot rates for larger vessels

0

20

40

60

80

100

120

JAN FEB MAR APR MAY JUN JUL AUG SEPT OCT NOV DEC

USC / CBFT

1999

2000

2001

2002



slide no. 27

0

20

40

60

80

100

120

140

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Modern 02 Older 02 Small 02 Modern 03 Older 03 Small 03

Source: Orion Shipping AS, Oslo

Seasonal spot ratesSeasonal spot rates

Steady increase in rates from historic low levels


slide no. 28

12 Months T/C rates12 Months T/C ratesSize: 350-550.000 cbft vessel


4.4. Strategy and action plans revisitedStrategy and action plans revisited


slide no. 30

Star Reefers - Strategy revisitedStar Reefers - Strategy revisited

Ad hoc logistics / chain management

Reorganisation – overhead reduction – adjustment to strategy execution

Dedicated servicesTrade sectors

Reefer services

Creative customer solutions

Rates on quality ships will increase

Increase spot exposure

Worldwide representation

Improve operating efficiency

Market growth

Tapping the tonnage supply market

Alert to consolidation – opportunity knocks

Strategy of executing accretive acquisitions

TRANSFORMATION TO A STRONGER SERVICE PROVIDER


slide no. 31

Impact to Star ReefersImpact to Star Reefers

Improved operating margins

Increased market control

Increase in working capital needs

Increase fleet efficiency

Increased topline revenue growth

Continued quality improvements

Improved share liquidity and free float

STAR more attractive as a consolidation partner

Documents

STAR REEFERS INC STRATEGY AND ACTION PLANS REVISITED STRONGER SERVICES AND EARNINGS RECOVERY OSLO 4 NOVEMBER 2003