Green Reefers 3Q Report

Maritime Activity Reports, Inc.

November 17, 2008

Green Refers ASA third quarter 2008 report highlights:
•    Reefer market lower in 3Q compared to last year
•    EBITDA at $2.2m in 3Q vs $.8m in 3Q 07
•    So far 2008, 4.3 percent of the world reefer fleet scrapped
•    Four vessels of 375,000 cubic feet fixed on time charter for 12 months, deal done subsequent to the end of the quarter

The company experienced a loss of USD 12.8 million in 3Q 2008, against a loss of USD 11.3 million in 3Q 2007. The result for 3Q 2008 includes a gain on sale of assets USD 1.4 million (USD 0.0 million), an unrealized currency gain on long term debt USD 2.6 million (USD -1.5 million), and a write-off on vessels of USD 8.7 million (USD 0.0 million).

The gross operating income was USD 56.1 million in 3Q compared to USD 45.8 million the same period last year. Operating result before depreciation (EBITDA) was USD 2.2 million (USD 0.8 million).

The vessels contributed USD 2.6 million (USD 2.2 million) to the EBITDA, whilst the terminals contributed USD -0.4 million (USD -1.4 million) before elimination of internal transactions.

The result for the first nine months was USD -11.6 million (USD -4.7 million), while the EBITDA for the period was USD 24.0 million (USD 29.5 million).

A slow reefer market impacted 3Q figures, particularly towards the end of the quarter. Spot market rates were 7 % lower than the same period last year. However, Green Reefers' time charter equivalent earnings showed an improvement of 14 %, due partly from fixtures made in the strong spot market in June and July.

Average daily vessel operating expenses so far in 2008 were USD 6,800 (including dry-docking) compared to USD 5,800 in 2007. Vessel operating expenses in the quarter were 10 % higher than 3Q 2007, but lower than 1Q and 2Q 2008. 12 vessels were drydocked so far this year.

An independent review of vessel values concluded that 10 vessels were assessed as having market values below book values. During the quarter these vessels were drydocked at extraordinarily high cost which cost were partly capitalized and added to the book values of said vessels. Consequently, the company decided to write off USD 8.7 million. The aggregate value of the fleet however exceeded the book value also before the write-off.

During the period under review, the company operated 42 vessels of which 35 are fully owned and 3 partially owned. The remaining vessels were bareboat chartered (2) and time chartered (2). In-house ship management totaled 24 vessels with the remaining vessels operated by third party ship managers. In the fourth quarter, the company will transfer an additional 7 vessels to in-house ship management.  Through a review of all operations the company has concluded that it is in its best interest to transfer vessels from third party management to in house management, either at head office or to a recently established fully owned subsidiary, Green Management Sp zoo in Poland.

Green Atlantic was delivered to new owners in July, and is now on time-charter to the company. The sales profit of about USD 1.4 million has been booked in 3rd quarter.

So far in 2008 the company has entered into 7 time charter contracts, each for one year.  Currently, the contract coverage is estimated to 33 percent as against 23 percent this time last year.

Green Reefers also operates seven cold stores. The cold stores in Norway (2) and the Baltic region (3) are linked to the company’s involvement in the East-European fish- and meat import trades, while the cold stores in Guatemala and Florida serve own and third party requirements.

Activity and results at the terminals continue to show improvements compared to 2007.

Finance and capital structure
Interest-bearing debt totals USD 177.9 million as of 30 September 2008 (USD 190.3 million as of 30 September 2007). Of the company's debt, 85 % is in USD, 14 % in EUR and 1 % in NOK. Cash position was USD 17.2 million (USD 21.8 million). Average interest rate paid was 5.7 % during 3Q 2008.

Book equity 30 September 2008 was USD 130.0 million (USD 161.6 million), which translates into USD 0.51 (USD 0.64) per share. Equity ratio was 38 % (45 %).

The Market and prospects
The spot market was strong in June and part of July, but from week 28 onwards the market dropped to the same off-season level as last year, averaging 7 % lower than last year's 3Q average. The market is currently stronger than this time last year, and the company is seeking further contract coverage.

World financial turmoil is having an effect also on the reefer market, notably on the company's core trade from Norway to Baltic and Black Sea, as well as on the meat trade from USA and Brazil to Russia and Ukraine. Nevertheless, the company expect net time charter earnings in 4Q to be fairly close to 4Q 2007.

The strengthening of the USD is having a positive effect on operating expenses, which in part are nominated in EUR. The slowdown in the ship newbuilding industry is expected to ease price pressure on spare parts, crew availability and yard capacity in the coming years.

Orders for newbuildings totals 3.3 percent of the world reefer fleet, while scrapping has reached 4.3 percent so far this year, which compares to 0.8 percent same time last year.

The credit crisis and the volatility in the global financial markets adversely impacts world trade. Estimates for worldwide GDP growth and expectations of trade flows have been cut back significantly. However, demand for transport of food is likely to be less influenced by reduced growth something which, together with more extensive scrapping, is expected to favour the supply/demand equation.

The company continues its efforts to optimize resources and is committed to improving results moving forward.


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