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STAR REEFERS INC

Explore the fundamentals of the reefer market, Star Reefers Inc., historical highlights, fleet analysis, financial figures, and market drivers for a leading provider of reefer transportation services. Delve into the strategy and action plans revisited by STAR Reefers AS for a brighter future.

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STAR REEFERS INC

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

  2. Outline • Reefer market fundamentals • Brief introduction to the Reefer industry and its characteristics • Star Reefers Inc • Star Reefers in brief • Fleet and market position • Key financial figures • Market drivers and outlook • Demand and supply • Structural changes • Star Reefers – Strategy and action plans revisited STAR Reefers AS, as managers for STAR Reefers Inc Rådhusgaten 23, N-0158 Oslo, Norway

  3. 1. Reefer market fundamentals

  4. Conventional reefer landscape MAJOR REEFER OPERATORS (Post split) Source: Star Source: Drewry STAR Reefers AS, as managers for STAR Reefers Inc Rådhusgaten 23, N-0158 Oslo, Norway

  5. Market share – Reefer import & export Source: UN STAR Reefers AS, as managers for STAR Reefers Inc Rådhusgaten 23, N-0158 Oslo, Norway

  6. Source: UN Trade patterns (Banana trade) STAR Reefers AS, as managers for STAR Reefers Inc Rådhusgaten 23, N-0158 Oslo, Norway

  7. 2. Star Reefers Inc

  8. Star Reefers in brief • A leading provider of reefer transportation services • Operating a fleet of 37 large reefer vessels • Leading market position STAR Reefers AS, as managers for STAR Reefers Inc Rådhusgaten 23, N-0158 Oslo, Norway

  9. Historic highlights • Jan. 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) STAR Reefers AS, as managers for STAR Reefers Inc Rådhusgaten 23, N-0158 Oslo, Norway

  10. Current fleet STAR Reefers AS, as managers for STAR Reefers Inc Rådhusgaten 23, N-0158 Oslo, Norway

  11. Tonnage analysis – Sale & Purchase 2003 STAR Reefers AS, as managers for STAR Reefers Inc Rådhusgaten 23, N-0158 Oslo, Norway

  12. Fleet changes STAR Reefers AS, as managers for STAR Reefers Inc Rådhusgaten 23, N-0158 Oslo, Norway

  13. Profit & Loss Account . STAR Reefers AS, as managers for STAR Reefers Inc Rådhusgaten 23, N-0158 Oslo, Norway

  14. Balance sheet . STAR Reefers AS, as managers for STAR Reefers Inc Rådhusgaten 23, N-0158 Oslo, Norway

  15. Sensitivities • Star Reefers – Sensitivities • Revenue +/- 5% = +/- USD 0.78 per share • Vessel opex. +/- 3% = +/- USD 0.16 per share STAR Reefers AS, as managers for STAR Reefers Inc Rådhusgaten 23, N-0158 Oslo, Norway

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

  17. 3 Market drivers and outlook

  18. Consumption pr. capita 14 A Theoretical Approach 12 10 8 6 4 2 0 B A C Russia 1930 Other E. Eur. 2355 Other EU 19755 Germany 25280 USA 25820 Other W. Eur.1) 25927 Saudi Arabia 6870 GDP per capita Factors influencing demand • Consumer expenditures and general economic conditions 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 STAR Reefers AS, as managers for STAR Reefers Inc Rådhusgaten 23, N-0158 Oslo, Norway

  19. Factors influencing demand cont. • Currency exchange rates • Since 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 variables • Changes 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 STAR Reefers AS, as managers for STAR Reefers Inc Rådhusgaten 23, N-0158 Oslo, Norway

  20. Factors influencing supply – Reefer vessels order book vs scrap 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 newbuilding • The 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 STAR Reefers AS, as managers for STAR Reefers Inc Rådhusgaten 23, N-0158 Oslo, Norway

  21. Reefer fleet age distribution – 2003 Global Source: Orion Shipping AS, Oslo SRI Owned 0 1 5 6 6 1 SRI Ch. In 0 0 2 8 4 4 SRI Fleet Average – 11.7 years STAR Reefers AS, as managers for STAR Reefers Inc Rådhusgaten 23, N-0158 Oslo, Norway

  22. Illustration of historic development of second-hand value Source: Orion Shipping STAR Reefers AS, as managers for STAR Reefers Inc Rådhusgaten 23, N-0158 Oslo, Norway

  23. 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/USWC NO IMPACT TO THE CONTAINER STRONGER LOGISTICAL BASE Strategic matrix – Reefers vs containers STAR Reefers AS, as managers for STAR Reefers Inc Rådhusgaten 23, N-0158 Oslo, Norway

  24. Projected Seaborne Trade Developments Source: Drewry Conventional reefer trade continues to grow steadily STAR Reefers AS, as managers for STAR Reefers Inc Rådhusgaten 23, N-0158 Oslo, Norway

  25. Projected Seaborne Trade Developments Reefers still dominate the important fruit trades Source: Drewry STAR Reefers AS, as managers for STAR Reefers Inc Rådhusgaten 23, N-0158 Oslo, Norway

  26. Historic rate developments Source: Orion Shipping • Influx of newbuildings during 80’s and mid 90’s • Impacts of El Niño and La Niña • USD appreciation of some 20% during 90’s • EU enacted a restrictive quota system for bananas in 1993 • Collapse of USSR during mid-90’s and Asian financial crisis • Fruit majors suffering at end of 90’s • Commission driven market players • High tech storage technology - controlled atmosphere • Container influx and penetration • The market during the years 1998 –2001 experienced many negative events simultaneously which disrupted the supply/demand balance in the reefer market STAR Reefers AS, as managers for STAR Reefers Inc Rådhusgaten 23, N-0158 Oslo, Norway

  27. Seasonal spot rates • Steady increase in rates from historic low levels STAR Reefers AS, as managers for STAR Reefers Inc Rådhusgaten 23, N-0158 Oslo, Norway

  28. 12 Months T/C rates Size: 350-550.000 cbft vessel Source: Orion Shipping STAR Reefers AS, as managers for STAR Reefers Inc Rådhusgaten 23, N-0158 Oslo, Norway

  29. 4. Strategy and action plans revisited

  30. Star Reefers - Strategy revisited TRANSFORMATION TO A STRONGER SERVICE PROVIDER • Ad hoc logistics / chain management • Reorganisation – overhead reduction – adjustment to strategy execution • Dedicated services • Trade 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 STAR Reefers AS, as managers for STAR Reefers Inc Rådhusgaten 23, N-0158 Oslo, Norway

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

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