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                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                             ---------------------
                                   FORM 10-K
(MARK ONE)

    [X]      ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
             EXCHANGE ACT OF 1934

               FOR THE FISCAL YEAR ENDED DECEMBER 31, 2000

                                       OR

    [  ]      TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
              SECURITIES EXCHANGE ACT OF 1934

               FOR THE TRANSITION PERIOD FROM ________ TO ________

                         COMMISSION FILE NUMBER 0-25821
                          STATIA TERMINALS GROUP N.V.
             (Exact name of registrant as specified in its charter)

<TABLE>
  <S>                                  <C>
         NETHERLANDS ANTILLES               52-2003016
    (State or other jurisdiction of      (I.R.S. Employer
    incorporation or organization)     Identification No.)
</TABLE>

                             C/O COVENANT MANAGERS
                               L.B. SMITHPLEIN 3
                         CURACAO, NETHERLANDS ANTILLES
                               (011) 599-31-82300
  (Address, including zip code, and telephone number, including area code, of
                   registrant's principal executive offices)

          Securities registered pursuant to Section 12(b) of the Act:

                                      NONE

<TABLE>
<CAPTION>
                   TITLE OF CLASS                      NAME OF EXCHANGE ON WHICH REGISTERED
                   --------------                      ------------------------------------
<S>                                                    <C>
</TABLE>

          Securities registered pursuant to Section 12(g) of the Act:
                             CLASS A COMMON SHARES

     Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.  Yes [X]  No [ ]

     Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.  ____

     The aggregate market value of registrant's class A common shares held by
nonaffiliates was approximately $55.8 million as of March 5, 2001.

     As of March 5, 2001 6,092,053 class A common shares of the registrant were
outstanding.

     The information required by Part III, Items 10 through 13 of this Form 10-K
is incorporated herein by reference to our definitive proxy statement filed with
the U.S. Securities and Exchange Commission on or about March 12, 2001.

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                          STATIA TERMINALS GROUP N.V.

                           ANNUAL REPORT ON FORM 10-K

                               TABLE OF CONTENTS

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<S>                                                           <C>
PART I......................................................    1
Item 1. Business............................................    1
Item 2. Properties..........................................   11
Item 3. Legal Proceedings...................................   13
Item 4. Submission of Matters To a Vote of Security
  Holders...................................................   13

PART II.....................................................   14
Item 5. Market for Registrant's Common Equity and Related
  Security Matters..........................................   14
Item 6. Selected Financial Data.............................   16
Item 7. Management's Discussion and Analysis of Financial
  Condition and Results of Operations.......................   20
Item 7a. Quantitative and Qualitative Disclosures About
  Market Risk...............................................   35
Item 8. Financial Statements and Supplementary Data.........   35
Item 9. Changes in and Disagreements with Accountants on
  Accounting and Financial Disclosure.......................   35

PART III....................................................   36

PART IV.....................................................   36
Item 14. Exhibits, Financial Statement Schedules and Reports
  on Form 8-K...............................................   36
</TABLE>

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     You should carefully consider the risks and uncertainties described
throughout this Annual Report on Form 10-K (the "Report") before deciding to
invest in our publicly-traded shares. The risks and uncertainties described in
this Report are not the only ones facing us. Additional risks and uncertainties
not presently known to us or that we currently deem immaterial may also impair
our business operations. If any of the risks and uncertainties described in this
Report occur, our business, financial condition, results of operations or
ability to make the target quarterly distribution could be adversely affected.
In such case, the trading prices of our publicly-traded shares could decline,
and you may lose all or part of your investment.

     This Report contains forward-looking statements within the meaning of 27A
of the Securities Act of 1933, as amended. Discussions containing such
forward-looking statements may be found in Items 1, 2, 3 and 7 hereof, as well
as within this Report generally. In addition, when used in this Report, the
words "believes," "anticipates," "expects" and similar expressions are intended
to identify forward-looking statements. Such statements are subject to a number
of risks and uncertainties. Actual results in the future could differ materially
from those described in the forward-looking statements as a result of
fluctuations in the supply of and demand for crude oil and other petroleum
products, changes in the petroleum terminaling industry, added costs due to
changes in government regulations affecting the petroleum industry, inability to
maintain our tax status, the loss of a major customer or customers, the loss of
a major vendor or supplier of petroleum products, the financial condition of our
customers, interruption of our operations caused by adverse weather conditions,
changes to our contract labor arrangement, the condition of the U.S. and certain
foreign economies, and other matters included in this Report. We do not
undertake any obligation to publicly release the results of any revisions to
these forward-looking statements that may be made to reflect any future events
or circumstances.

     Frequently in this Report, especially when discussing our operations, we
refer to ourselves, Statia Terminals Group N.V. and our subsidiaries, as "we" or
"us".

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                                     PART I

                                ITEM 1. BUSINESS

                            INTRODUCTION AND HISTORY

     We believe we are one of the five largest independent marine terminaling
companies in the world as measured in terms of storage capacity. At the end of
2000, our tank capacity was 18.8 million barrels. We believe we are the largest
independent marine terminal operator handling crude oil imported into the
Eastern United States. Our two terminals are strategically located at points of
minimal deviation from major shipping routes. We provide terminaling services
for crude oil and refined petroleum products to many of the world's largest
producers of crude oil, integrated oil companies, oil traders, refiners,
petrochemical companies and ship owners. Our customers include a subsidiary of
Saudi Aramco and Tosco Corporation. Our customers transship their products
through our facilities to the Americas and Europe. We own and operate one
storage and transshipment facility located on the island of St. Eustatius,
Netherlands Antilles, and one located at Point Tupper, Nova Scotia, Canada. In
connection with our terminaling business, we provide related value-added
services, including crude oil and petroleum product blending and processing,
berthing of vessels at our marine facilities, and emergency and spill response.
In addition to our terminaling services, we sell bunkers, which is the fuel
marine vessels consume, and bulk petroleum products to various commercial
interests.

     Our operations began in 1982 as Statia Terminals N.V., with an oil products
terminal located on the island of St. Eustatius, Netherlands Antilles. In 1984,
CBI Industries, Inc., an industrial gases and contracting services company,
acquired a controlling interest in Statia Terminals N.V. We purchased Statia
Terminals Southwest, Inc. with its facility at Brownsville, Texas, in 1986. In
1990, CBI Industries became the sole owner of Statia Terminals N.V. and Statia
Terminals Southwest. In 1992 and 1993, we acquired an interest in, and
ultimately all of, the predecessor of Statia Terminals Canada, Incorporated,
which owns the facility located at Point Tupper, Nova Scotia, Canada. In 1996,
Praxair, Inc. acquired CBI Industries. In November 1996, Castle Harlan Partners
II L.P., members of our management and others acquired from Praxair all of the
outstanding capital stock of Statia Terminals N.V., Statia Terminals, Inc.,
their subsidiaries and certain of their affiliates. Castle Harlan Partners II
L.P. is a private equity investment fund managed by Castle Harlan, Inc., a
private merchant bank. At the same time, Statia Terminals Point Tupper,
Incorporated was amalgamated into Statia Terminals Canada, Incorporated. Statia
Terminals Group N.V. and certain of its subsidiaries were organized for purposes
of facilitating the acquisition. In connection with the November 1996
acquisition, two of our subsidiaries issued to the public $135 million of
11 3/4% First Mortgage Notes which mature on November 27, 2003. In July 1998, we
sold Statia Terminals Southwest to an unaffiliated third party purchaser.

     On April 28, 1999, we completed our initial public equity offering of 7.6
million class A common shares. The offering price was $20 per share raising
gross proceeds of $152 million. The gross proceeds of the offering were used
primarily to redeem all of our outstanding Series A, B, C, D and E preferred
stock and pay accrued dividends, underwriters' discounts, fees, and other costs
directly associated with the offering. In addition, proceeds from the offering
were used during May 1999, along with existing cash, to repurchase in the open
market a principal amount of $34 million of the 11 3/4% First Mortgage Notes,
leaving $101 million outstanding. In connection with the repurchase of the
11 3/4% First Mortgage Notes, we incurred a $4.7 million loss on the early
extinguishment of debt.

     Subsequent to the offering, during 1999, we declared distributions on our
class A common and class B subordinated shares aggregating $0.7665 per share.
Only the declared distributions on our class A common shares were paid during
1999. During 2000, we declared and paid distributions on our class A common
shares aggregating $0.45 per share.

     Our day-to-day operations are managed at the respective terminal locations.
Our management team and employee base possess a diverse range of experience and
skills in the terminaling industry. This experience has permitted us to better
understand the objectives of our customers and to forge alliances with those
customers at our terminals to meet those objectives. Thus, we believe that our
operations extend beyond the traditional approach to terminaling. We are a
premier provider of the core services offered by other terminal operators. In

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addition, unlike many of our competitors, we refrain from competing with our
customers and provide ancillary, value-added services tailored to support the
particular needs of our customers.

                                    INDUSTRY

  Terminaling

     We believe the petroleum terminaling industry consists of two market
segments. One segment is characterized by the ownership and management of
terminals inland along major crude oil or petroleum product pipelines. This
segment is primarily engaged in the distribution of crude oil to inland
refineries or petroleum products via pipeline, rail or truck. The second segment
of the industry is marine terminaling. This segment is primarily engaged in bulk
storage and transshipment of crude oil and petroleum products of domestic and
overseas producers, integrated oil companies, traders, refiners and
distributors. "Transshipment" is the process whereby customers transfer their
products either from a vessel to storage tanks for subsequent transfer to other
vessels for delivery to other destinations, or from one ship to another ship
across the dock. We are primarily engaged in marine terminaling.

     A substantial portion of crude oil and petroleum products storage terminals
are captive, in other words, they are owned by producers, refiners, utilities
and pipeline operators and used almost exclusively for their own operations. The
independent terminaling operator segment of the marine terminaling industry,
which is described in this Report, excludes these captive terminals. Captive
terminal storage is only occasionally made available to the general market and
lacks some of the competitive advantages of independent operations, the most
important of which is confidentiality.

     Companies generally use marine terminals for various reasons including:

     - to take advantage of economies of scale by transporting crude oil or
       petroleum products in bulk to a terminal as near to the ultimate
       destination as economically possible;

     - to blend crude oil or petroleum products to meet market specifications;

     - to process products to add value for a specific downstream market;

     - to temporarily store crude oil or petroleum products; and

     - to access bunker fuels and lube oils for consumption by marine vessels.

  Bulk Cargo Movement

     Due to significant economies of scale, petroleum companies ship crude oil
from locations such as the Middle East, North Sea and West Africa in very-large
or ultra-large crude carriers to a transshipment point such as one of our
terminals. These very-large and ultra-large crude carriers, however, are too
large to deliver their cargo directly to many ports, including virtually all
U.S. ports. Therefore, most petroleum companies are forced to either partially
or completely "lighter" their cargo, which is the process by which liquid cargo
is transferred to smaller vessels, usually while at sea, or transship their
cargo through a terminal to smaller vessels that can enter U.S., Canadian and
Caribbean ports. Both of our facilities can handle substantially all of the
world's largest fully-laden very-large and ultra-large crude carriers.

     We believe that terminaling offers several advantages over lightering.
Terminaling generally provides more flexibility in the scheduling of deliveries
and allows our customers to deliver their products to multiple locations.
Terminaling is also generally safer and more environmentally sound than
lightering which is conducted at sea and may be impacted by vessel movement,
adverse weather and sea conditions. Lightering in U.S. territorial waters also
creates a risk of liability for owners and shippers of oil. Under the U.S. Oil
Pollution Act of 1990 and other state and federal legislation, significant
liability is imposed for spills in U.S. territorial waters. In Canada, similar
liability exists under the Canadian Shipping Act. Terminaling also provides
customers with the ability to access value-added terminal services.

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     Lightering generally takes significantly longer than discharging at a
terminal. For example, a fully-laden ultra-large crude carrier may require four
or more days to fully discharge by lightering, but only 24 to 36 hours to fully
discharge at our terminals. In addition, terminals allow oil producers to store
oil and benefit from value-added services. The advantages of terminaling may be
offset in market conditions where the direct costs of terminaling are higher
than those of lightering. The direct cost differential of lightering versus
terminaling changes as charter rates change for ships of various sizes. Under
current market conditions, lightering in most instances costs less than
terminaling, primarily by allowing very-large and ultra-large crude carriers to
cover the longest portion of the total journey.

  Blending

     Increasingly stringent environmental regulations create additional demand
for facilities that can blend a variety of components into finished products
that meet such regulations as well as meet customer specific requirements.
Precise blending requires specialized equipment, expertise, and availability of
a full range of blendstocks. The evolving reformulated gasoline market in the
U.S., resulting primarily from emission-reduction regulations, including the
U.S. Clean Air Act, as amended, tightening specifications for distillates and
the increasing need for blended residual fuel are expected to enhance the growth
of the product blending segment of the terminaling industry. We regularly blend
components to make finished gasolines and various grades of residual fuel. Crude
oils are blended for various refiners.

  Strategic Storage

     Some crude oil producers, integrated oil companies, refiners and others
have a continuing need to store crude oil and petroleum products to supply a
specific downstream demand, such as to supply feedstock to a refinery or
utility. The need for strategic storage is generally not as sensitive to changes
in market conditions as is seasonal and opportunity storage and usually results
in our realization of longer term contracts. We have several customers who use
our facilities for strategic purposes. In Canada, a large independent U.S.
refiner leases and utilizes 3.6 million barrels of storage for gathering crude
oil from various locations to feed two of its refineries on the U.S. East coast.
A second customer, consisting of a consortium of major oil companies, sends
natural gas liquids via pipeline to certain processing facilities on land leased
from us. After processing, certain products are stored with us under a long-term
contract. At St. Eustatius, an oil producer leases 5.0 million barrels of
storage from us and uses these tanks to supply its customers.

  Seasonal and Opportunity Storage

     Refiners, traders and others use storage facilities to take advantage of
seasonal movements and anomalies in the crude oil and petroleum products
markets. When the forward prices for crude oil and petroleum products that we
store fall below spot prices for any length of time, this market condition is
called "backwardation." When forward prices exceed spot prices for any length of
time the market is said to be in "contango." When crude oil and petroleum
product markets are in contango by an amount exceeding storage costs, the time
value of money, the cost of a second vessel plus the cost of loading and
unloading at a terminal, the demand for storage capacity at terminals usually
increases. When crude oil and petroleum products markets are in backwardation
for any length of time, the opportunity users of terminal storage facilities are
less likely to store product, thereby reducing storage utilization levels.
Historically, heating oil has been in contango during the summer months and
gasoline has been in contango during the winter months. As a result, demand for
heating oil storage is typically strongest during the summer, fall and winter
months and demand for gasoline storage is typically strongest in the winter,
spring and summer months. However, during the summers of 1999 and 2000, and
winters of 1999/2000 and 2000/2001, the heating oil and gasoline markets have
not followed this historical pattern, and we can give no assurance that the
crude oil and petroleum products markets will follow these patterns in the
future.

     Beginning in late 1997 and until the current period of backwardation
started during the spring of 1999, all segments of the crude oil and petroleum
products markets were generally in contango. As a result, previously available
storage tank capacity began to diminish, and storage tank lease rates began to
rise during 1998. The

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shift toward contango was due in part to the worldwide excess supply of crude
oil, which existed at that time, and which resulted in a sharp decrease in spot
prices for most petroleum products.

     Members of the Organization of Petroleum Exporting Countries ("OPEC"), in
conjunction with certain non-OPEC members, entered into an agreement in March
1999 to reduce worldwide crude oil production with the intent of supporting
market prices for crude oil and petroleum products. In accordance with the one
year accord, which became effective April 1, 1999, the signatories significantly
reduced their production of crude oil which resulted in a significant increase
in spot prices and a reduction of crude oil and petroleum products inventories.
Since shortly after the accord was reached in March 1999, generally all segments
of the crude oil and petroleum products markets have been in backwardation. We
believe that market conditions related to the accord had an adverse effect on
our business primarily during the second half of 1999 and the first half of
2000.

     Several times during 2000 and early 2001, after the termination of the
initial one year accord, the signatories adjusted their production levels in an
attempt to maintain the price of crude oil within a target range. These actions
caused uncertain conditions in the crude oil and petroleum products markets
primarily during the second half of 2000 and continuing into the first quarter
of 2001, which created trading opportunities for several of our customers. These
customers in turn leased storage from us on a short-term basis.

  Bunker Sales

     "Bunkering" is the sale and delivery of fuels to marine vessels to be used
for their own engines. The customer base and suppliers of bunker fuel are
located worldwide. Sales of bunker fuel, which includes diesel oil, gas oil and
intermediate fuel oil, are driven primarily by the proximity of the supply
location to major shipping routes and ports of call; the amount of cargo carried
by marine vessels; and the price, quantity, and quality of bunker fuel.

     Bunker fuel is sold under international standards of quality that are
recognized by both fuel suppliers and ship operators. Raw materials for bunker
fuels are purchased in bulk lots of various grades and then blended to meet
customer specifications. Each supplier is responsible for quality control and
other merchantability aspects of the fuel they sell.

     Traditionally, the bunker fuel business was concentrated in those ports
with high ship traffic and near primary sources of refined marine fuels. In
recent years, the number of refiner/suppliers in many ports has diminished and
stricter environmental laws have been enacted, primarily in the U.S., Canada and
Europe. As a result, the sale of bunker fuel has increased at locations outside
the U.S., Canada and Europe.

     Our bunker fuel revenues and related direct costs are variable and linked
to global oil prices. Our product costs are also impacted by market supply
conditions, types of products sold and volumes delivered. The increase in global
oil prices, which resulted from the accord, has caused our bunker fuel revenues
and related direct costs to increase significantly, as compared to recent years,
beginning in the spring of 1999 and continuing through the present.

  Processing

     Atmospheric distillation is a process that applies heat to separate the
hydrocarbons in crude oil into certain petroleum products. Most simple
distillation units, including ours, produce at least three product streams:
naphtha, distillate (heating oil) and residual fuel. The profitability of
atmospheric distillation is dependent on feedstock, operating and other costs
compared to the value of the resulting products. From time to time, we process
petroleum products with our atmospheric distillation unit.

                             SERVICES AND PRODUCTS

     We provide storage services which are designed to meet our customers'
specifications and a full range of terminaling-related services, including
product blending, heating, mixing, separation, and removal of water and other
impurities. Our facilities can handle a variety of petroleum materials,
including light, medium and

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heavy crude oils, residual fuel oil, gasoline, gasoline blending components,
diesel, marine gas oil, marine diesel oil, aviation fuel, bunker fuel, and
natural gas liquids. Residual fuel oil is comprised of the residue from the
distillation of crude oil after the light oils, gasoline, naphtha, kerosene, and
distillate oils are extracted. We also handle petroleum diluents, lubricating
oils, and various other petroleum products.

     We own seven berthing locations where vessels may load and discharge crude
oil or petroleum products at our St. Eustatius facility and two berthing
locations at our Point Tupper facility. With these berthing locations and our
uniquely designed mooring facilities and piping configurations, we can handle
oil tankers of various sizes, from relatively small to some of the largest in
the world and provide services such as simultaneous discharging and loading of
vessels and "across the dock" transfers. We charter tugboats and own other
marine equipment to assist with docking operations and provide port services.

     We specialize in "in-tank" or "in-line" blending with computer-assisted
blending technology that assures product integrity and homogeneity. Our
facilities can blend and mix a full range of petroleum products including
gasoline, residual fuel oils, bunker fuel, and crude oil. We believe our
blending capabilities have attracted certain customers who have leased capacity
primarily for blending purposes and who have contributed to our bunker fuel and
bulk product sales. We have worked closely with residual fuel oil market
participants to assist them with their blending operations.

     We own storage spheres for butane at both of our facilities that enhance
our gasoline blending capabilities. We also own an atmospheric distillation unit
for refining at St. Eustatius. We use the storage spheres and the distillation
unit to improve product quality and add value to our customers' products.

     Notwithstanding periods of unusually adverse market conditions, including
the current period of backwardation, the average percentage of our available
capacity that we leased at the St. Eustatius facility for each of the years
ended 1998, 1999, and 2000 was 92%, 90% and 88%, respectively. The average
capacity leased at the Point Tupper facility over each of the last three years
ended 1998, 1999, and 2000 was 93%, 79%, and 68%, respectively. We believe that
cost advantages associated with the location of our facilities, shipping
economies of scale, product blending capabilities, and the availability of a
full range of ancillary services at the facilities have driven the demand for
our storage services.

     As part of our petroleum product marketing, we supply bunker fuels in the
Caribbean and periodically in Nova Scotia, Canada. At and around St. Eustatius,
our bunkering business has evolved from offering fuels to ships at the terminal
berths to a delivery system utilizing specially modified barges, which provide
fuels to vessels at anchor. Recently, we have concentrated our marketing efforts
on finding additional customers, particularly those with regular routes through
the Caribbean, and on customers requiring larger volumes of fuel per vessel
call. As part of these efforts, during 1999 we began chartering a barge capable
of delivering larger volumes of fuel in a single load. This barge complements
four barges that we own. As a result of these efforts, the average volume of
bunker fuel delivered per vessel and the total volume delivered increased during
1998 and 1999. During 2000, both the average bunker fuel delivered per vessel
and the total volume delivered decreased over the record amounts of 1999, but
remained above the levels of 1998. At Point Tupper, we are able to deliver
bunker fuels via pipeline at the terminal berths and by truck in the surrounding
Strait of Canso area. Recently, we have been generally unable to secure an
adequate source of supply; therefore, we have periodically leased the storage
capacity that we had previously allocated to storage of bunker fuel.

     We purchase small quantities of petroleum products primarily to maintain an
inventory of certain blendstocks and bunker fuel. The blendstocks allow us to
assist our customers with meeting their quality requirements. From time to time
we purchase and sell products to accommodate customers who wish to source or
dispose of small quantities of product, and to assist customers' sales
activities. Further, we sell to a customer that utilizes the product to supply
its distribution network in the northeastern Caribbean. Other relatively small
product sales are made to Caribbean wholesalers.

     Netherlands Antilles and Canadian environmental laws and regulations
require ship owners, vessel charterers, refiners and terminals to have access to
spill response capabilities. At St. Eustatius, we own and operate the M/V Statia
Responder, a 194 foot multi-function emergency response and maintenance vessel
with spill response, firefighting, and underwater diving support capabilities.
The Statia Alert, a barge that is

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capable of recovering 200 gallons of oil/water mixture per minute, and two
response boats that can deploy booms to contain a spill within a certain area
and release absorbent materials, support our emergency and spill response
capabilities at St. Eustatius. The St. Eustatius facility also has three tugs on
time charter and owns two mooring launches, all of which are available for safe
berthing of vessels calling at the terminal and for emergency and spill
response.

     In Canada, we own and operate two fully equipped spill response vessels on
Cape Breton Island, one located at Point Tupper and the other located in Sydney,
Nova Scotia. In the event of an oil spill, these vessels can deploy containment
and clean-up equipment, including skimmers to retrieve product from the surface
of the water, booms to contain spills, and absorbents to absorb spilled product.
We charter tugs, mooring launches and other vessels to assist with the movement
of vessels through the Strait of Canso and the safe berthing of vessels at Point
Tupper and to provide other services to vessels.

     We believe that the presence of fully equipped spill response vessels in
port is important in attracting customers to our facilities. Our customers
benefit by ready access to this equipment, and we charge each vessel that calls
at our facilities a fee for this capability.

     We are continuously seeking development opportunities in our business
segments. We believe one such opportunity involves the natural gas development
offshore Nova Scotia and elsewhere in the Canadian Maritime provinces. In 1998,
we entered into a 25 year agreement to lease approximately 65 acres of our land
at Point Tupper and a 12 year product storage agreement for over 500,000 barrels
of our existing storage tank capacity with Sable Offshore Energy, Inc. Sable is
a Canadian corporation, which is currently extracting natural gas liquids from
the Sable Island region of Nova Scotia. The land lease provides Sable options to
extend for two additional 25 year periods. Sable has built a natural gas liquids
fractionation plant, storage, and rail handling facilities on the land. The
fractionation plant has the ability to process an average of 20,000 barrels per
day of natural gas liquids, which are delivered via pipeline to the
fractionation plant from Sable's Goldboro Gas Processing Plant in Guysborough
County, Nova Scotia. The fractionation plant produces propane, butane, and
condensate. Condensate is stored at our facilities and, when sold by Sable, is
loaded by us onto marine vessels. The propane and butane are presently loaded by
Sable into railroad tank cars and shipped elsewhere.

     A salt deposit has been identified on a parcel of land very near our Point
Tupper facility. Frequently, salt caverns can be developed from such deposits.
Salt caverns are used around the world for storing hydrocarbon products, such as
the propane and butane produced by the Sable fractionation plant. Propane and
butane are gases at atmospheric temperatures and pressure and become liquids
when stored under pressure underground or at very low temperatures. We have been
investigating this salt deposit, which is known as the Port Richmond salt
deposit, for approximately three years and plan to continue to investigate it
during 2001. To date, we have obtained a license from governmental authorities
to perform work to further analyze the usefulness of the property and the
deposit for the storage of natural gas or other hydrocarbons. At this point in
time, we have not established sufficient information to determine whether or not
this project will ever produce income. However, it is anticipated that should
the project prove successful, it would not produce revenues until at least three
years from now. This project, like any project in which we become involved, must
produce adequate prospective returns in order to be developed. To date, we have
expended management time on this project and capitalized approximately $867,000
of third-party costs.

                                    PRICING

  Terminaling Services

     Storage and throughput pricing in the marine terminaling industry is
subject to a number of factors, including variations in petroleum product
production and consumption, economic conditions, political developments,
expected weather conditions, seasonality of demand for certain products and the
geographic sector of the world being serviced. At the customer level, terminal
selection focuses primarily on:

     - location;

     - quality of service; and

     - range of services offered.
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     Although price is always an issue, price differentials among competing
terminals are frequently less important to the customer because terminaling
costs represent only a small portion of the customer's total distribution costs.

     In developing our pricing strategy, we consider petroleum market conditions
and oil price trends. We also take into consideration the quality and range of
our services compared to those of competing terminals, prices prevailing at the
time in the terminaling market in which we operate, cost savings from shipping
to our terminal locations, our incremental costs to provide the services
required by the customer, and the cost of other options available to the
customer. In situations requiring special accommodations for the customer (e.g.
unique tank modification or construction of new tanks or other facilities), we
may price on a rate-of-return basis.

     We enter into storage and throughput contracts with customers. During 2000,
approximately 73% of our tank capacity was leased pursuant to long-term
contracts and 65% of our storage and throughput revenues, excluding related
ancillary services, were attributable to long-term storage and throughput
agreements of one year or more. Our long-term storage and throughput agreements
are individually negotiated with each customer. The typical agreement specifies
tank storage volume, the commodities to be stored, a minimum monthly charge, an
excess throughput charge for throughput volume in excess of the volume specified
in the storage contract, and a price escalator. In addition, there may be
charges for certain additional services such as the transfer, blending, mixing,
heating, decanting and other processing of stored commodities. The minimum
monthly charge is due and payable without regard to the volume of storage
capacity, if any, actually utilized. For the minimum monthly charge, the user is
generally allowed to deliver, store for one month and remove the specified tank
storage volume of commodities. As an incentive for the user to throughput
additional barrels through their leased tanks, the excess throughput charge is
typically a lower rate per barrel than the rate per barrel utilized in
establishing the minimum monthly charge. Year-to-year escalation of charges is
typical in long-term contracts.

     Charges for marine services at St. Eustatius and Point Tupper, including
dock usage fees and stand-by emergency response fees at St. Eustatius, are
primarily determined by market conditions existing at facilities and ports with
which we compete. We determine our pricing based on the underlying direct and
indirect costs of providing these services, which include tug, pilot, and line
handling costs, among others. After addition of a profit margin, these rates are
compared to the market, and further adjustments may be made. Stand-by emergency
response fees at Point Tupper are submitted for approval every three years to a
Canadian government authority. The government's review process includes public
comment. Our charges for marine services and stand-by emergency response fees
have not increased significantly during the last three years. If we respond to
an oil spill or other emergency involving a marine vessel, the vessel operator
is generally charged additional amounts based on an established fee schedule.

  Bunker Sales

     The pricing of bunker fuels is subject to a number of factors, including
general economic conditions and the geographic sector of the world being
serviced. Substantially all bunker sales are negotiated on an individual vessel
basis as the vessel has a specific requirement for fuel. As many vessels have
sufficient fuel capacity that allows them to travel long distances between
refueling stops, worldwide market conditions and the specific ports along the
vessel's intended route dictate individual sale prices. Factors such as cost of
supply, type and quality of fuel, quantity, method and location of delivery, and
other factors determine our pricing.

                                  COMPETITION

     The main competition to crude oil storage at our facilities is from
lightering. Under current market conditions, lightering in most instances costs
less than terminaling. The price differential between lightering and terminaling
is primarily driven by the charter rates for vessels of various sizes. A
very-large or ultra-large crude carrier is generally at a berth at our terminals
for a shorter period of time than is required for the lightering of that vessel.
A very-large crude carrier can be lightered in approximately four days if
lightering vessels are available for continuous back-to-back operations and the
weather is good. If not, a longer period is

                                        7
<PAGE>   11

required. Depending on charter rates, the longer charter period associated with
lightering is generally offset by various costs associated with terminaling
including storage costs, dock charges and spill response fees. However,
terminaling reduces the risk of environmental damage associated with lightering.

     The independent terminaling industry is fragmented and includes both large,
well-financed companies that own many terminal locations and smaller companies
that may own a single terminal location. We are a member of the Independent
Liquid Terminals Association ("ILTA") which, among other functions, publishes a
directory of terminal locations of its members throughout the world. Customers
with specific geographic and other logistical requirements may use the ILTA
directory to identify the terminals in the region available for specific needs
and to select the preferred providers on the basis of service, specific terminal
capabilities and environmental compliance.

     In addition to the terminals owned by independent terminal operators, many
state-owned oil producers and major energy and chemical companies also own
extensive terminal facilities, and these terminals often have the same
capabilities as terminals owned by independent operators. While the purpose of
such terminals is to serve the operations of their owners, and they do not
customarily offer terminaling services to third parties, these terminals
occasionally are made available to the market when they have unused capacity on
a short-term and irregular basis. Such terminals lack certain competitive
advantages of independent operators, the most important of which is
confidentiality.

     In many instances, major energy and chemical companies that own storage and
terminaling facilities are also significant customers of independent terminal
operators. Such companies typically have strong demand for terminals owned by
independent operators when independent terminals have more cost-effective
equipment and locations near key transportation links such as deep-water ports.
Major energy and chemical companies also need independent terminal storage when
their captive storage facilities are inadequate, either because of size
constraints, the nature of the stored material or specialized handling
requirements.

     Terminal owners and operators compete based on the location and versatility
of their terminals, service and price. A favorably located terminal will have
access to cost-effective transportation both to and from the terminal. Possible
transportation modes include waterways, railroads, roadways and pipelines.

     Terminal versatility is a function of the operator's ability to offer safe
handling for a diverse group of products with potentially complicated handling
requirements. The primary service function provided by the terminal is the safe
storage and return of all of the customer's product while maintaining product
integrity. Terminals may also provide additional services, such as heating,
blending, water removal and processing with assurance of proper environmental
handling procedures or vapor control to reduce evaporation.

     In our bunkering business, we compete with ports offering bunker fuels to
which, or from which, each vessel travels or are along the route of travel of
the vessel. We also compete with bunker delivery locations around the world. In
the Western Hemisphere, there are significant alternative bunker locations,
including ports on the U.S. East coast and Gulf coast and in Panama, Puerto
Rico, the Bahamas, Aruba, Curacao and Halifax. In addition, we compete with
Rotterdam and various North Sea locations.

                                   CUSTOMERS

     Our customers include many of the world's largest producers of crude oil,
integrated oil companies, oil traders, refiners, petrochemical companies, and
ship owners and operators.

     We presently have significant long-term contracts at St. Eustatius,
including a storage and throughput agreement with Bolanter Corporation N.V., a
subsidiary of Saudi Aramco, which had an initial five-year term that ended on
January 30, 2000 and was recently renewed and amended to extend the agreement,
among other changes, until January 30, 2005. The terminal enables Bolanter to
transport various grades of crude oil closer to market at competitive
transportation rates. This contract commits all of the St. Eustatius facility's
current crude oil storage capacity to Bolanter, which represents approximately
44% of the terminal's total capacity and 4.0% of our 2000 revenues, including
revenues derived from affiliates of Bolanter as an indirect result of this
contract. An additional 7.7% of our 2000 revenues were derived from parties
unaffiliated with Bolanter but

                                        8
<PAGE>   12

generated by the movement of Bolanter's crude oil, or crude oil sold by
Bolanter, through the St. Eustatius terminal. In addition, revenues from an
affiliate of Bolanter, which received bunker fuels at our St. Eustatius
facility, accounted for 2.5% of our total 2000 revenues.

     We presently have significant long-term contracts at Point Tupper,
including an agreement with a large independent refiner, Tosco Corporation,
which had an initial five-year term that ended July 31, 1999 and was amended and
extended through July 31, 2004. At the end of the current term, the contract may
be renewed for another five-year term at the customer's discretion. This
contract commits approximately 48% of the present tank capacity at Point Tupper.
It represented approximately 4.9% of our 2000 revenues, including revenues
derived from an affiliate of Tosco as an indirect result of this contract. An
additional 1.2% of our 2000 revenues were derived from parties unaffiliated with
Tosco, but generated by the movement of Tosco's products through the Point
Tupper terminal.

     In addition, we have another terminaling customer, which represented 8.9%
of our 2000 revenues. We also supply bunker fuel to two customers, which
represented 5.7% and 5.6% of our 2000 revenues, respectively. No other customer
accounted for more than 5% of our total 2000 revenues.

                                   SUPPLIERS

     At St. Eustatius, we are currently purchasing a majority of the fuel oil
necessary to support our bunker sales requirements pursuant to a contract with a
major state-owned oil company. This contract became effective in 1993, and has
been renewed annually thereafter through June 30, 2001. We believe that suitable
alternate sources of supply are available from which we can procure fuel oil
should our current contract be interrupted or not be renewed.

     We purchase the remainder of the bunker fuel and bulk product sold by our
product sales segment from various other suppliers. Inventories of these
products are held for short periods, generally not exceeding 90 days. During the
period we hold this inventory, we are subject to market risk from changes in the
global oil markets which may cause the value of this inventory to increase or
decrease from the amounts we paid. Such changes are reflected in the gross
margins of this segment.

                   ENVIRONMENTAL, HEALTH, AND SAFETY MATTERS

     Our subsidiaries are subject to comprehensive and periodically changing
environmental, health and safety laws and regulations within the jurisdictions
of our operations, including those governing oil spills, emissions of air
pollutants, discharges of wastewater and storm waters, and the disposal of
non-hazardous and hazardous waste. The nature of our business is such that
spills of crude oil or refined products may, although infrequently, occur at the
terminals. We believe we are presently in substantial compliance with applicable
laws and regulations governing environmental, health and safety matters. We have
taken measures to mitigate our exposure to environmental risks including
acquiring automated and monitoring equipment, training employees, maintaining
our own emergency and spill response equipment at each terminal, and maintaining
liability insurance for certain accidental spills. Additional information
regarding our environmental, health and safety matters is presented under ITEM
7. "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS -- Environmental, Health and Safety Matters."

  St. Eustatius

     The St. Eustatius terminal was built and, since its construction, operated
substantially in accordance with U.S. or European environmental, health, and
safety standards. Prior to enactment in 1993 of the St. Eustatius Nuisance
Ordinance, the St. Eustatius terminal was not subject to significant
environmental, health, and safety regulations, and environmental, health, and
safety audits have not been required by law. No environmental or health and
safety permits are required for the St. Eustatius terminal except under the St.
Eustatius Nuisance Ordinance. A license under the St. Eustatius Nuisance
Ordinance was issued to us in February 1997 subject to compliance with certain
requirements. The requirements established by the license set forth
environmental standards for operation of the facility, including monitoring of
air emissions, limits on
                                        9
<PAGE>   13

and monitoring of wastewater discharges, establishment of a wastewater treatment
system, standards for above-ground storage tanks and tank pits, reporting and
clean-up of any soil or water pollution and certain site security measures. To
date, we have generally complied with the license requirements, and do not
expect further compliance to have a material adverse effect on our business and
financial condition, results of operations, or our ability to make
distributions. We will address future improvements to the facility that may be
necessary to comply with new environmental, health and safety laws and
regulations, if any, as they arise.

     At St. Eustatius, terminal management, with the advice of certain
consultants, supervises the on and off-site disposal and storage of hazardous
waste materials. Over the past three years ending December 31, 2000, there were
no significant spills. All spills at the St. Eustatius terminal were reported to
the appropriate environmental authorities and have not resulted in any citations
by such authorities for violations of law. We have remediated all such spills to
the satisfaction of the applicable authorities. In addition, two government
inspections were performed during each of 1997 and 1998 with no citations
issued.

  Point Tupper

     The Point Tupper terminal is subject to a variety of environmental, health
and safety regulations administered by the Canadian federal government and the
Nova Scotia Department of Environment ("NSDOE"). While air emission monitoring
is not required by the NSDOE, surface water and groundwater monitoring are
required and are performed on a routine basis in accordance with the
requirements of Industrial Approval permit #92-IAE 013 which was issued by
NSDOE, in March 1999 and expires March 8, 2008. We believe we have all requisite
environmental permits. The Point Tupper facility, pursuant to the Canadian
Shipping Act, has been designated as an Oil Handling Facility. The facility is
compliant with regulations respecting the procedures, equipment and resources,
including an arrangement with a certified response organization, to mitigate any
incidents with respect to oil pollution which may occur out of the loading or
unloading of crude oil and petroleum products to or from a ship at the facility.
Over the past three years ended December 31, 2000, there were no significant
spills. All spills at the Point Tupper terminal were reported and remediated or
are being remediated to the satisfaction of the applicable agencies and have not
resulted in any citations by such authorities.

     Past use of the facility by others, including its past operation by others
as an oil refinery, have resulted in certain on-site areas of known and
potential contamination, as described under ITEM 7. "MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS -- Environmental,
Health and Safety Matters."

                                   EMPLOYEES

     As of February 28, 2001, excluding contract labor, we employed 214 people.
Forty-three employees were located in the U.S., 100 on St. Eustatius, and 71 at
Point Tupper. A majority of our employees at both the St. Eustatius and Point
Tupper facilities are unionized. We believe that our relationships with our
employees are good. We have never experienced a material labor related business
disruption.

  St. Eustatius

     The Windward Islands Federation of Labor ("WIFOL") represents the majority
of our hourly workers at St. Eustatius. We entered into an agreement with WIFOL
on June 1, 1993, which extended to May 31, 1996. The agreement provided for
automatic one year extensions if neither party requested an amendment. We have
not requested or received any requests for an amendment. We believe that the
agreement no longer binds us, but we continue to provide pay and benefits to the
hourly workers as if the agreement were still in effect.

  Point Tupper

     The Communications, Energy and Paperworkers Union represents a majority of
Point Tupper's hourly work force. During 1999, we signed a new agreement with
the union which expires on September 30, 2003. We have experienced no
operational work stoppages in the last five years.

                                        10
<PAGE>   14

                             GEOGRAPHIC INFORMATION

     Certain information with respect to our operations by geographic location
is provided in Note 14 of the notes to consolidated financial statements
contained in ITEM 14. "EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
FORM 8-K" and generally throughout ITEM 7. "MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS" included elsewhere in this
Report.

                               ITEM 2. PROPERTIES

                      ST. EUSTATIUS, NETHERLANDS ANTILLES

     We own an 11.3 million barrel petroleum terminaling facility located on the
Netherlands Antilles island of St. Eustatius which is located at a point of
minimum deviation from major shipping routes. St. Eustatius is approximately
1,900 miles from Houston, 1,500 miles from Philadelphia, 550 miles from Amuay
Bay, Venezuela, and 1,100 miles from the Panama Canal. This facility is capable
of handling a wide range of petroleum products, including crude oil and refined
products. A three-berth jetty, a two-berth monopile with platform and buoy
systems, a floating hose station and an offshore single point mooring buoy with
loading and unloading capabilities serve the terminal's customers' vessels.

     This facility has 24 tanks with a total capacity of 4.7 million barrels
dedicated to fuel oil storage, 18 tanks with a total capacity of 1.6 million
barrels dedicated to petroleum products storage, and eight tanks totaling 5.0
million barrels dedicated to multigrade crude oil storage. The facility also has
a 15,000 barrel butane sphere. The fuel oil and petroleum product facilities
have in-tank and in-line blending capabilities and were constructed in various
phases from 1980 to 1992. Construction of the crude storage facility was
completed in early 1995 by a subsidiary of Chicago Bridge & Iron Company. The
storage tanks comply with construction standards that meet or exceed American
Petroleum Institute, National Fire Prevention Association and other material
industry standards. Crude oil movements at the terminal are fully automated. In
addition to the storage and blending services at St. Eustatius, this facility
has the flexibility to utilize certain storage capacity for both feedstock and
refined products to support its atmospheric distillation unit, which is capable
of processing up to 15,000 barrels per day of feedstock, ranging from
condensates to heavy crude oil.

     The St. Eustatius facility can accommodate the world's largest vessels for
loading and discharging crude oil. The single point mooring system can handle a
single fully-laden vessel of up to 520,000 deadweight tons, which is a marine
vessel's cargo carrying capacity, with a draft of up to 120 feet. The single
point mooring system can discharge or load at rates in excess of 100,000 barrels
of crude oil per hour. There are six pumps connected to the single point mooring
system, each of which can pump up to 18,000 barrels per hour from the single
point mooring system to the storage tanks. The jetty at St. Eustatius can
accommodate three vessels simultaneously. The south berth of the jetty can
handle vessels of up to 150,000 deadweight tons with a draft of up to 55 feet.
The north berth of the jetty can handle vessels of up to 80,000 deadweight tons
with a draft of up to 55 feet. There is also a barge loading station on the
jetty. At the south and north berths of the jetty, 25,000 barrels per hour of
fuel oil can be discharged or loaded. To accommodate the needs of our gasoline
and diesel oil customers, in July 1998, we completed installation of a monopile
with platform that can handle vessels of up to 40,000 deadweight tons with a
draft of up to 46 feet. The monopile with platform can handle two vessels
simultaneously and can discharge or load 12,000 barrels per hour of refined
products. In addition, this facility has a floating hose station that we use to
load bunker fuels onto our barges for delivery to customers. We believe that the
speed at which our facility at St. Eustatius can discharge or load vessels with
crude oil and petroleum products gives us a competitive advantage due to
reductions in the time ships spend in port.

     We own and operate all of the berthing facilities at our St. Eustatius
terminal for which we charge vessels a dock charge. Vessel owners or charterers
may incur separate charges for berthing facilities use and associated services
such as pilotage, tug assistance, line handling, launch service, emergency and
spill response and ship services.

                                        11
<PAGE>   15

     Recognizing the strategic advantage of its location in the Caribbean near
major shipping lanes, we deliver bunker fuel to vessels at our St. Eustatius
facility. The bunkering business has evolved from offering fuels to ships at the
berth to a delivery system utilizing specially modified barges that provide fuel
to vessels at anchorage. The location of the terminal on the leeward side of the
island, which provides natural protection for ships, generally favorable
year-round weather conditions, and deep navigable water at an anchorage
relatively close to shore, attracts ships to this facility for their bunker fuel
requirements. We own four barges and charter one barge, which support the bunker
fuel sales operation.

                       POINT TUPPER, NOVA SCOTIA, CANADA

     We own a terminaling facility located at Point Tupper in the Strait of
Canso, near Port Hawkesbury, Nova Scotia, Canada, which is located at a point of
minimal deviation from major shipping routes. Point Tupper is approximately 700
miles from New York City, 850 miles from Philadelphia and 2,500 miles from
Mongstad, Norway. This facility operates the deepest independent ice-free marine
terminal on the North American Atlantic coast, with access to the U.S. East
coast, Canada, and the Midwestern U.S. via the St. Lawrence Seaway and the Great
Lakes system. The Point Tupper facility can accommodate substantially all of the
world's largest fully-laden very-large and ultra-large crude carriers for
loading and discharging.

     We renovated our facilities at Point Tupper and converted a former oil
refinery site into an independent storage terminal. This work, performed
primarily by a subsidiary of Chicago Bridge & Iron Company, began in 1992 and
was completed in 1994. The tanks were renovated to comply with construction
standards that meet or exceed American Petroleum Institute, National Fire
Prevention Association and other material industry standards.

     We believe that our dock at Point Tupper is one of the premier dock
facilities in North America. The outer berth of the Point Tupper facility's
dock, Berth One, can handle fully-laden vessels of up to 400,000 deadweight tons
with a draft of up to 84 feet. At Berth One, approximately 75,000 barrels per
hour of crude oil, approximately 17,000 barrels per hour of diesel or gasoline,
or 50,000 barrels per hour of fuel oil can be discharged or loaded. Berth Two
can accommodate certain vessels of up to 99,000 deadweight tons with drafts of
up to 40 feet. At Berth Two, approximately 25,000 barrels per hour of crude oil,
approximately 12,000 barrels per hour of diesel or gasoline, or approximately
12,000 barrels per hour of fuel oil can be discharged or loaded. Liquid movement
at the terminal is fully automated. The Point Tupper facility can accommodate
two vessels simultaneously. We charge separately for the use of the dock
facility as well as associated services, including pilotage, tug assistance,
line handling, launch service, spill response and ship services.

     The berths at the dock of the Point Tupper facility connect to a 7.5
million barrel tank farm. The terminal has the capability of receiving and
loading crude oil, petroleum products and certain petrochemicals. This facility
has 16 tanks with a combined capacity of 5.0 million barrels dedicated to
multigrade crude oil storage, three tanks with a combined capacity of 0.5
million barrels dedicated to fuel oil storage and 17 tanks with a combined
capacity of 2.0 million barrels dedicated to petroleum products, including
gasoline, gasoline blend components, diesel and distillates. During 1997,
approximately two-thirds of the storage tanks dedicated to petroleum products
were converted to crude oil storage. The facility also has a 55,000 barrel
butane storage sphere that is one of the largest of its kind in North America.

     In order to comply with our safe handling procedures and Canadian
environmental laws, we own and operate two fully equipped spill response vessels
on Cape Breton Island, one located at Point Tupper and the other located in
Sydney, Nova Scotia. In addition to these vessels, we have the capability to
respond to spills on land or water with a combined spill response capability of
over 2,500 metric tons at this terminal location. An additional 7,500 metric ton
spill response capability is immediately available at Point Tupper by agreement
with another response organization. Our customers benefit by ready access to the
equipment. In 1995, one of our subsidiaries was granted Canadian Coast Guard
certification as a response organization with spill response capabilities.
Consequently, vessels calling in the Strait of Canso are required to pay us a
subscription fee for access to the services provided by the spill response
organization, even if they do not dock at our terminal.

                                        12
<PAGE>   16

     There are two truck racks at the Point Tupper facility. The north truck
rack has the capability to load up to 550 barrels per hour of fuel oil and the
south truck rack has the capability to load up to 550 barrels per hour of fuel
oil or diesel.

     We are continuing to negotiate a land exchange agreement with the Province
of Nova Scotia conveying certain land we own at the Point Tupper terminal site
to the Province of Nova Scotia in exchange for the conveyance by the Province of
Nova Scotia of certain unused rights-of-way on our remaining property at Point
Tupper. We presently own approximately 3,000 acres of land at this location.
However, we are prohibited by law from using the approximately 1,296 acres
comprising Landrie Lake and adjacent watershed land. The land anticipated to be
transferred to the Province is principally the Landrie Lake and adjacent
watershed lands.

                           ITEM 3. LEGAL PROCEEDINGS

     We are involved in various claims and litigation related to the ordinary
conduct of our business. Based upon our analysis of legal matters and our
discussions with legal counsel, we believe that these matters will not
materially impact our business and financial condition, results of operations,
or ability to make distributions.

          ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     Not applicable.

                                        13
<PAGE>   17

                                    PART II

   ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED SECURITY MATTERS

                        MARKET FOR CLASS A COMMON SHARES

     Our class A common shares are traded on the NASDAQ National Market System
under the symbol STNV. The following table sets forth the range of high and low
bid information for our class A common shares as reported by the NASDAQ National
Market System for the indicated quarters during the period from the date of
completion of our initial public offering of equity on April 28, 1999, through
December 31, 2000.

<TABLE>
<CAPTION>
                                                              HIGH       LOW
                                                             -------   -------
<S>                                                          <C>       <C>
Quarter ended June 30, 1999................................  $18.250   $14.500
Quarter ended September 30, 1999...........................   15.625    12.250
Quarter ended December 31, 1999............................   12.625     5.125
Quarter ended March 31, 2000...............................    7.875     4.750
Quarter ended June 30, 2000................................    7.250     5.375
Quarter ended September 30, 2000...........................    8.125     6.125
Quarter ended December 31, 2000............................    9.000     5.938
</TABLE>

     As of February 28, 2001, there were 91 holders of record of our class A
common shares. This figure does not include those holders maintaining ownership
in street name.

                                 DISTRIBUTIONS

     As required by our Articles of Incorporation, we will make distributions to
our shareholders for each of our fiscal quarters prior to liquidation in an
amount equal to 100% of our available cash, if any, for that quarter. We expect
to make distributions of all available cash within approximately 45 days after
the end of each quarter to holders of record on the applicable record date.
Available cash, as defined in our Articles of Incorporation, generally means:

     - all cash and cash equivalents on hand at the end of any quarter; and

     - borrowings, if any, after the end of any quarter for working capital
       purposes

     less:

     the amount of cash reserves necessary or appropriate in the reasonable
     discretion of our board of directors to:

     - provide for the proper conduct of our business;

     - comply with applicable law or any of our debt instruments or other
       agreements; or

     - provide funds for distributions for any one or more of the next four
       fiscal quarters.

     The reserves our board of directors may establish are not limited to
reserves under U.S. generally accepted accounting principles.

     For each quarter during the subordination period (as defined in our
Articles of Incorporation), to the extent we have enough available cash, a
holder of class A common shares will have the right to receive the target
quarterly distribution (as defined in our Articles of Incorporation), plus any
common share arrearages, prior to any distribution of available cash to the
holders of class B subordinated shares. Upon expiration of the subordination
period, which generally will not occur prior to June 30, 2004, all class B
subordinated shares will be converted on a one-for-one basis into class A common
shares and will participate pro rata with all other class A common shares in
future distributions of available cash. Under particular circumstances, a
portion of the class B subordinated shares, not exceeding 50%, may convert into
class A common shares before the expiration of the subordination period. Class A
common shares will not accrue arrearages for distributions for any quarter after
the end of the subordination period.

                                        14
<PAGE>   18

     The following table sets forth certain information with respect to
distributions paid on our class A common shares during the period from April 28,
1999 through March 5, 2001.

<TABLE>
<CAPTION>
                                                                                                               AGGREGATE
                                                                                                  ADDITIONAL   ARREARAGE
     QUARTER             DECLARATION            RECORD              PAYMENT        DISTRIBUTION   ARREARAGE       PER
      ENDED                 DATE                 DATE                DATE           PER SHARE     PER SHARE     SHARE*
------------------    -----------------    ----------------    -----------------   ------------   ----------   ---------
<S>                   <C>                  <C>                 <C>                 <C>            <C>          <C>
June 30, 1999         July 29, 1999        August 4, 1999      August 13, 1999       $0.3165        $  --        $  --
September 30, 1999    October 15, 1999     October 29, 1999    November 12, 1999      0.45             --           --
December 31, 1999     January 19, 2000     January 31, 2000    February 14, 2000      0.15           0.30         0.30
March 31, 2000        N/A                  N/A                 N/A                   --              0.45         0.75
June 30, 2000         July 19, 2000        July 31, 2000       August 14, 2000        0.15           0.30         1.05
September 30, 2000    October 24, 2000     October 31, 2000    November 14, 2000      0.15           0.30         1.35
December 31, 2000     January 24, 2001     January 31, 2001    February 14, 2001      0.20           0.25         1.60
</TABLE>

---------------

N/A -- Not applicable. No distribution was declared for the quarter.

* -- Payment of the aggregate arrearage per share is one of the requirements
that must be met for the subordination period to end.

     Statia Terminals Group is a holding company and depends on dividends from
Statia Terminals International for its cash flow. Statia Terminals
International's ability to pay dividends to Statia Terminals Group is subject to
restrictions contained in the indenture relating to its mortgage notes.
Additional information regarding such restrictions is presented under ITEM 7.
"MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS -- Liquidity and Capital Resources -- Cash Flow from Financing
Activities."

     Under Netherlands Antilles law we may make one or more distributions to our
shareholders out of legally available funds. These distributions can be made out
of our profits or reserves. We establish profits at our annual general meeting
of shareholders after we prepare and submit the balance sheet and profit and
loss account to our shareholders. Upon adoption of these financial statements at
the annual general meeting of shareholders, the profit, if any, is set as the
positive balance of the profit and loss account after allocation of amounts to
reserves or creation of one or more provisions. Our Articles of Incorporation
provide that we may distribute such profit as we deem fit. In addition, our
Articles of Incorporation provide that we may allocate, in whole or in part, any
profit amounts to the profit reserves and make distributions therefrom, as well
as to distribute out of reserves.

     Notwithstanding the above, we may declare and distribute one or more
interim distributions in the form of interim dividends, as an advance payment of
expected profits. We may make this declaration only if we have, at the time of
such declaration, the reasonable expectation that we will make sufficient
profits for the relevant financial year to justify the interim distributions.
However, at the time of the declaration of the interim distribution, we may
further determine that any amounts not covered by the profits shall be qualified
as distribution out of freely distributable reserves, if any, such as the
capital surplus, being the aggregate amounts paid in excess of the par value per
share by each holder of class A common shares, class B subordinated shares or
class C shares.

     We may make the distribution out of profits and/or reserves generally to
shareholders insofar as our equity exceeds the nominal value of the issued and
outstanding capital. In addition, if the profits and loss account shows a loss
for any given year, and that loss cannot be covered by the reserves or
compensated in another manner, no profit can be distributed in any subsequent
year until that loss has been recovered or has been offset by reserves.

     Under the laws of the Netherlands Antilles as currently in effect, a holder
of class A common shares who is not a resident or deemed a resident of, and
during the taxable year has not engaged in trade or business through a permanent
establishment in, or permanent representative or agent in, the Netherlands
Antilles will not be subject to Netherlands Antilles income tax on distributions
made with respect to the class A common

                                        15
<PAGE>   19

shares or on gains realized during that year on sale or disposal of such shares.
The Netherlands Antilles do not impose a withholding tax on distributions made
by Statia Terminals Group. There are no gift or inheritance taxes levied by the
Netherlands Antilles when at the time of such gift, or at the time of death, the
relevant holder of class A common shares was not domiciled or deemed domiciled
in the Netherlands Antilles. A person is not deemed a resident or deemed
domiciled in the Netherlands Antilles merely on the basis of being a holder of
class A common shares. No reciprocal tax treaty presently exists between the
Netherlands Antilles and the United States.

     Although there are Netherlands Antilles laws which may impose foreign
exchange controls on us and may affect the payment of distributions to
non-resident holders of our class A common shares, we have been granted an
exemption from such foreign exchange control regulations by the Central Bank of
the Netherlands Antilles. Other jurisdictions in which we conduct operations may
have various currency or exchange controls. As to our class A common shares,
Netherlands Antilles law imposes no limitations on the right of non-resident or
foreign owners to hold or vote such securities.

                        ITEM 6. SELECTED FINANCIAL DATA

     The following table sets forth selected financial data for the periods and
as of the dates indicated. In January 1996, our former parent, CBI Industries,
was acquired by Praxair. The statement of operations data for each of the years
ended December 31, 1998, 1999, and 2000, have been derived from and are
qualified by reference to our audited consolidated financial statements included
elsewhere in this Report. The statement of operations data for each of:

     - the period from January 1, 1996, through November 27, 1996;

     - the period from November 27, 1996, through December 31, 1996; and

     - the year ended December 31, 1997

have been derived from, and are qualified by reference to, our audited
consolidated financial statements not included in this Report. The summary of
historical consolidated financial data set forth below should be read in
conjunction with, and is qualified by reference to, ITEM 7. "MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS" and
our consolidated financial statements and accompanying notes thereto and other
financial information included elsewhere in this Report.

                                        16
<PAGE>   20

<TABLE>
<CAPTION>
                                 PRE-CASTLE
                                   HARLAN                     POST CASTLE HARLAN ACQUISITION
                                 ACQUISITION     --------------------------------------------------------
                               ---------------   NOVEMBER 27,
                               JANUARY 1, 1996       1996
                                   THROUGH         THROUGH              YEARS ENDED DECEMBER 31,
                                NOVEMBER 27,     DECEMBER 31,   -----------------------------------------
                                 1996(4)(8)       1996(4)(8)    1997(4)    1998(4)    1999(2)      2000
                               ---------------   ------------   --------   --------   --------   --------
                                              (DOLLARS IN THOUSANDS EXCEPT SHARE AMOUNTS)
<S>                            <C>               <C>            <C>        <C>        <C>        <C>
STATEMENT OF OPERATIONS DATA:
  Revenues...................     $140,998        $  14,956     $142,499   $136,762   $168,343   $210,455
  Costs of revenues..........      129,915           12,803      122,939    105,888    137,665    181,334
  Gross profit...............       11,083            2,153       19,560     30,874     30,678     29,121
  Administrative expenses....        8,282              664        7,735      9,500      8,745      9,717
  Operating income...........        2,801            1,489       11,825     20,574     16,084     19,404
  Interest expense (1).......        4,187            1,613       16,874     16,851     14,286     12,759
  Provision for income
     taxes...................          629              132          780        320        780        938
  Net income (loss) available
     to common
     shareholders............       (2,682)            (522)      (8,361)    (1,503)    (5,136)     6,094
  Diluted income (loss) per
     class A common share
     (2).....................           --               --           --         --      (0.17)      0.57
  Cash distributions declared
     per class A common share
     (2).....................           --               --           --         --     0.7665       0.45
BALANCE SHEET DATA:
  Total assets...............          N/M          260,797      246,479    245,610    236,297    240,738
  Long-term debt (2) (3).....          N/M          135,000      135,000    135,000    101,000    106,931
  Redeemable preferred stock
     Series A through C
     (2).....................          N/M           40,000       40,000     40,000         --         --
  Preferred stock Series D
     and E (2) (4)...........          N/M           61,000       61,000     54,824         --         --
  Total shareholders' equity
     (2).....................          N/M           58,982       50,621     43,331    109,698    106,406
NET CASH FLOW FROM (USED IN):
  Operating activities.......        9,108            2,235        9,770     18,190     13,665     23,410
  Investing activities.......     (102,890)        (178,033)     (12,935)    (4,092)    (8,578)    (9,078)
  Financing activities (2)...       92,998          185,076           --     (6,150)    13,490     (2,518)
OPERATING DATA:
  EBITDA (5).................       17,882            2,452       22,489     30,116     27,729     32,252
  Adjusted EBITDA (6)........       20,822            2,452       22,489     32,568     33,578     31,710
  Consolidated fixed charge
     coverage ratio under the
     indenture (7)...........           --             1.69x        1.45x       2.0x       2.0x       2.4x
  Operations sustaining
     capital expenditures....       12,887            1,203        4,401      9,000      7,591      8,148
  Total capital
     expenditures............      103,001            1,203        5,344     10,714      8,593      8,578
  Capacity (in thousands of
     barrels)................       20,387           20,387       20,387     19,566     18,738     18,835
  Percentage capacity
     leased..................           68%              74%          70%        91%        86%        80%
  Throughput (in thousands of
     barrels)................       81,994           13,223      118,275    119,502     99,230    133,134
  Vessel calls...............          922              108        1,030      1,027      1,028        987
</TABLE>

                                        17
<PAGE>   21

Notes to Selected Financial Data

N/M    Not meaningful -- various transactions occurred prior to and in
       contemplation of the Castle Harlan acquisition which cause the balance
       sheet data as of November 27, 1996 to be not meaningful in comparison to
       the other period end dates presented. Therefore, the information is not
       presented.

(1)    For certain periods, interest expense includes commitment fees on our
       revolving credit facility, amortization expense related to deferred
       financing costs, and certain bank charges.

(2)    On April 28, 1999, Statia Terminals Group completed its initial public
       equity offering of 7.6 million class A common shares. The offering price
       was $20 per share raising gross proceeds of $152,000. The gross proceeds
       of the offering were used primarily to redeem all of Statia Terminals
       Group's outstanding Series A, B, C, D and E preferred stock and pay
       accrued dividends, underwriters' discounts and fees, and certain other
       costs directly associated with the offering. The remaining proceeds were
       used during May 1999, along with existing cash, to repurchase in the open
       market a principal amount of $34,000 of Statia Terminals International's
       11 3/4% First Mortgage Notes for $39,522, including acquisition costs and
       accrued interest of $3,681 and $1,841, respectively. The acquisition
       costs and the unamortized deferred financing costs of $1,062 related to
       the repurchased debt were recorded as an extraordinary charge.

(3)    In December 2000, a subsidiary of Statia Terminals Group borrowed $7,000
       from an equipment financing company. The loan requires monthly payments
       of principal and interest and matures on January 1, 2007. Interest
       accrues at 3 month London InterBank Offered Rates plus 3.2% and adjusts
       monthly. These amounts exclude the current portion of long-term debt.

(4)    On July 29, 1998, a subsidiary of Statia Terminals International sold the
       Brownsville, Texas, facility, and a payment of $6,150 was made from
       Statia Terminals International to Statia Terminals Group for redemption
       of a portion of the Series D Preferred Stock.

       The selected financial data includes the results of operations and
       balance sheet data of the Brownsville, Texas, facility through June 30,
       1998.

(5)    EBITDA is defined as the sum of (a) income before provision for income
       taxes, (b) interest expense, (c) depreciation and amortization of certain
       intangible assets, and (d) certain lease payments that represent interest
       expense for the periods prior to the Castle Harlan acquisition. The
       amount of the lease related interest expense excluded from EBITDA was
       $5,600 for the period ended November 27, 1996. EBITDA includes $3,000 of
       non-cash, stock-based compensation recognized on November 27, 1996,
       immediately prior to consummation of the Castle Harlan acquisition. 1998
       EBITDA includes the loss recognized on the sale of Statia Terminals
       Southwest, Inc. and a hurricane charge of $1,652 and $800, respectively.
       1999 EBITDA includes the special compensation expense and a hurricane
       charge of $4,099 and $1,750, respectively. 2000 EBITDA includes $542 from
       the settlement of an insurance claim. EBITDA is presented not as an
       alternative measure of operating results or cash flow from operations (as
       determined in accordance with U.S. generally accepted accounting
       principles), but rather to provide additional information related to our
       debt servicing ability.

(6)    Adjusted EBITDA is defined as EBITDA adjusted for the effects of certain
       non-recurring transactions and represents the primary measure of profit
       and loss utilized by our management to make decisions about resources to
       be allocated to our operating segments. Adjusted EBITDA excludes $3,000
       of non-cash, stock-based compensation recognized on November 27, 1996
       immediately prior to the consummation of the Castle Harlan acquisition.
       1998 Adjusted EBITDA excludes the loss recognized on the sale of Statia
       Terminals Southwest, Inc. and a hurricane charge of $1,652 and $800,
       respectively. 1999 Adjusted EBITDA excludes the special compensation
       expense and a hurricane charge of $4,099 and $1,750, respectively. 2000
       Adjusted EBITDA excludes $542 from the settlement of an insurance claim.

(7)    The consolidated fixed charge coverage ratio is the ratio of Statia
       Terminals International's adjusted EBITDA to fixed charges, both computed
       as set forth in the indenture to the mortgage notes. Statia Terminals
       International's ability to pay dividends is restricted by the indenture
       to the mortgage notes which generally requires, among other things, that
       it pay dividends only when its consolidated fixed

                                        18
<PAGE>   22

       charge coverage ratio is at least 2.0 to 1. A fixed charge coverage ratio
       of less than 2.0 to 1 also limits the amount of indebtedness Statia
       Terminals International may incur.

(8)    Prior to January 12, 1996, we were a wholly owned subsidiary of CBI
       Industries. On January 12, 1996, pursuant to the merger agreement dated
       December 22, 1995, CBI Industries became a wholly owned subsidiary of
       Praxair. This transaction was reflected in our consolidated financial
       statements as a purchase, effective January 1, 1996. On November 27,
       1996, Castle Harlan, members of our management and others acquired us
       from Praxair. This transaction is reflected in our consolidated financial
       statements, effective November 27, 1996, as a purchase. The application
       of purchase accounting at each acquisition date resulted in changes to
       the historical cost basis of accounting for certain assets. Accordingly,
       the information provided for periods before and after each of these
       transactions is not comparable.

     The selected quarterly financial data required by this Item 6 is included
in note 19 of notes to consolidated financial statements beginning on page F-1
of this Report.

                                        19
<PAGE>   23

                ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                 FINANCIAL CONDITION AND RESULTS OF OPERATIONS

     For purposes of the discussion below, reference is made to our consolidated
balance sheets as of December 31, 1999 and 2000. Reference is also made to our
consolidated statements of operations, shareholders' equity and cash flows for
the years ended December 31, 1998, 1999, and 2000. Substantially all of our
transactions are denominated in U.S. dollars and all figures are in U.S. dollars
unless otherwise indicated. We prepare our financial statements in accordance
with U.S. generally accepted accounting principles.

OVERVIEW OF OPERATIONS

     We began our operations in 1982 as Statia Terminals N.V., a Netherlands
Antilles corporation, operating an oil products terminal located on the island
of St. Eustatius. In 1984, CBI Industries, an industrial gases and contracting
services company, acquired a controlling interest in Statia Terminals N.V. In
1986, Statia Terminals N.V. purchased Statia Terminals Southwest, with its
facility at Brownsville, Texas. In 1990, CBI Industries became the sole owner of
Statia Terminals N.V. and Statia Terminals Southwest. In 1993, we acquired full
control of Statia Terminals Point Tupper, Incorporated, located at Point Tupper,
Nova Scotia.

     In January 1996, Praxair acquired CBI Industries. In November 1996, Castle
Harlan Partners II L.P., our management and others acquired from Praxair all of
the outstanding capital stock of Statia Terminals N.V., Statia Terminals, Inc.,
their subsidiaries and certain of their affiliates. Castle Harlan Partners II
L.P. is a private equity investment fund managed by Castle Harlan, Inc., a
private merchant bank. At the same time, Statia Terminals Point Tupper was
amalgamated into Statia Terminals Canada, Inc. Statia Terminals Canada, Statia
Terminals International N.V. and Statia Terminals Group N.V. were organized for
purposes of facilitating the Castle Harlan acquisition. To assist with the
financing of the Castle Harlan acquisition, we sold $135 million of 11 3/4%
First Mortgage Notes. In July 1998, we sold Statia Terminals Southwest to an
unaffiliated third party purchaser.

     On April 28, 1999, we completed our initial public equity offering of 7.6
million class A common shares. The offering price was $20 per share, raising
gross proceeds of $152 million.

     Our operations are organized around several different factors, the two most
significant of which are services and products, and geographic location. Our
primary services and products are terminaling services (resulting in revenue
from storage, throughput, dock usage, emergency response, and other terminal
services) and product sales (including bunker fuels and bulk oil sales). A
majority of our revenues are generated by product sales, which fluctuate with
global oil prices. As a result, we experience volatility in our revenue stream,
which is not necessarily indicative of our profitability.

     Gross profit from terminaling services is generally higher than gross
profit from product sales. Our operating costs for terminaling services are
relatively fixed and generally do not change significantly with changes in
storage capacity leased. In addition, our operating costs are impacted by
inflationary cost increases, changes in storage capacity, and changes in
ancillary services offered by us. Additions or reductions in storage,
throughput, and ancillary service revenues directly impact our gross profit.
Costs for the procurement of petroleum products for sale are variable and linked
to global oil prices. Our product costs are also impacted by market supply
conditions, types of products sold, and volumes delivered.

     The following table sets forth for the periods indicated total capacity,
capacity leased, throughput and vessel calls for each of our operating
locations. "Total capacity" represents the average storage capacity available
for lease for a period. "Capacity leased" represents the storage capacity leased
to third parties weighted for the number of days leased in the month divided by
the capacity available for lease. "Throughput" volume is the total number of
inbound barrels discharged from a vessel, tank, rail car or tanker truck, not
including across-the-dock or tank-to-tank transfers. A "vessel call" occurs when
a vessel docks or anchors at one of our terminal locations in order to load
and/or discharge cargo and/or to take on bunker fuel. Such dockage or anchorage
is counted as one vessel call regardless of the number of activities carried on
by the

                                        20
<PAGE>   24

vessel. A vessel call also occurs when we sell and deliver bunker fuel to a
vessel not calling at our terminals for the above purposes. Each of these
statistics is a measure of the utilization of our facilities and equipment.

       CAPACITY, CAPACITY LEASED, THROUGHPUT AND VESSEL CALLS BY LOCATION
               (CAPACITY AND THROUGHPUT IN THOUSANDS OF BARRELS)

<TABLE>
<CAPTION>
                                                              FOR THE YEARS ENDED DECEMBER 31,
                                                              ---------------------------------
                                                                1998        1999         2000
                                                              --------     -------     --------
<S>                                                           <C>          <C>         <C>
Netherlands Antilles and the Caribbean:
  Total capacity............................................   11,334      11,334       11,334
  Capacity leased...........................................       92%         90%          88%
  Throughput................................................   74,158      61,737       81,632
  Vessel calls..............................................      864         936          854
Canada:
  Total capacity............................................    7,404       7,404        7,501
  Capacity leased...........................................       93%         79%          68%
  Throughput................................................   43,468      37,493       51,502
  Vessel calls..............................................      104          92          133
All locations (1):
  Total capacity............................................   18,738      18,738       18,835
  Capacity leased...........................................       92%         86%          80%
  Throughput................................................  117,626      99,230      133,134
  Vessel calls..............................................      968       1,028          987
</TABLE>

---------------

(1) The Brownsville, Texas, facility was sold on July 29, 1998. The statistics
    above exclude the operations of the Brownsville facility.

                                        21
<PAGE>   25

RESULTS OF OPERATIONS

     The following table sets forth, for the periods indicated, the percentage
of revenues represented by some items in our consolidated income statements.

                             RESULTS OF OPERATIONS
                             (DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
                                                           FOR THE YEARS ENDED DECEMBER 31,
                                          -------------------------------------------------------------------
                                                  1998                    1999                   2000
                                          --------------------    --------------------    -------------------
                                                        % OF                    % OF                   % OF
                                           DOLLARS    REVENUES     DOLLARS    REVENUES    DOLLARS    REVENUES
                                          ---------   --------    ---------   --------    --------   --------
<S>                                       <C>         <C>         <C>         <C>         <C>        <C>
Revenues:
  Terminaling services..................  $  66,625      48.7%    $  61,665     36.6%     $ 61,547     29.2%
  Product sales.........................     70,137      51.3       106,678     63.4       148,908     70.8
                                          ---------    ------     ---------    -----      --------    -----
         Total revenues.................    136,762     100.0       168,343    100.0       210,455    100.0
                                          ---------    ------     ---------    -----      --------    -----
Costs of revenues:
  Terminaling services..................     40,739      29.8        38,064     22.6        40,136     19.1
  Product sales.........................     65,149      47.6        99,601     59.2       141,198     67.1
                                          ---------    ------     ---------    -----      --------    -----
         Total costs of revenues........    105,888      77.4       137,665     81.8       181,334     86.2
                                          ---------    ------     ---------    -----      --------    -----
Gross profit:
  Terminaling services..................     25,886      18.9        23,601     14.0        21,411     10.2
  Product sales.........................      4,988       3.7         7,077      4.2         7,710      3.6
                                          ---------    ------     ---------    -----      --------    -----
         Total gross profit.............     30,874      22.6        30,678     18.2        29,121     13.8
                                          ---------    ------     ---------    -----      --------    -----
Administrative expenses.................      9,500       6.9         8,745      5.2         9,717      4.6
Special compensation expense............         --        --         4,099      2.4            --       --
Hurricane charges.......................        800       0.6         1,750      1.0            --       --
                                          ---------    ------     ---------    -----      --------    -----
  Operating income......................     20,574      15.1        16,084      9.6        19,404      9.2
Loss (gain) on disposition of property
  and equipment.........................      1,652       1.2            --       --            --       --
Interest expense........................     16,851      12.3        14,286      8.5        12,759      6.1
Interest income.........................        684       0.5           846      0.5           387      0.2
                                          ---------    ------     ---------    -----      --------    -----
Income (loss) before provision for
  income taxes, preferred stock
  dividends and extraordinary charge....      2,755       2.1         2,644      1.6         7,032      3.3
Provision for income taxes..............        320       0.2           780      0.5           938      0.4
Preferred stock dividends...............      3,938       2.9         2,257      1.4            --       --
Extraordinary charge related to early
  extinguishment of debt................         --        --         4,743      2.8            --       --
                                          ---------    ------     ---------    -----      --------    -----
  Net income (loss) available to common
    shareholders........................  $  (1,503)     (1.0)%   $  (5,136)    (3.1)%    $  6,094      2.9%
                                          =========    ======     =========    =====      ========    =====
</TABLE>

     During September 1998, Hurricane Georges caused $8.5 million in damage to
components of the St. Eustatius facility. Insulation on certain storage tanks,
electrical transmission systems, and roofs of several buildings sustained
damage. During the third quarter of 1998, we recorded a charge of $0.8 million
consisting of an insurance deductible of $0.5 million related to the hurricane
damage and other expenses. Insurance proceeds related to this storm aggregated
$7.7 million, of which $3.1 million was collected through December 31, 1999, and
the remaining $4.6 million was collected in 2000. Hurricane Georges did not
significantly impact operations of the facility, which returned to normal within
days of the storm. Repair work related to the damage caused by Hurricane Georges
is substantially complete.

     As a result of damages sustained to our St. Eustatius facility from
Hurricane Lenny in late November 1999, we incurred a one-time non-cash charge of
$1.5 million to partially reduce the carrying value of our shoreline protection
system and a one-time cash charge of $0.25 million to cover other hurricane
related

                                        22
<PAGE>   26

expenses. The damaged shoreline protection system was not covered by insurance
and, together with other civil work, was substantially replaced during 2000 at a
cost of $2.8 million.

     Our operations were not significantly impacted by adverse weather
conditions during 2000.

     The following tables set forth, for the periods indicated (a) the total
revenues and total operating income (loss), after allocation of administrative
expenses, at each of our operating locations and (b) the percentage such revenue
and operating income (loss) relate to our total revenue and operating income. We
sold our Brownsville, Texas, facility on July 29, 1998, and the figures above
and below and our consolidated financial statements include the Brownsville
facility through June 30, 1998.

                              REVENUES BY LOCATION
                             (DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
                                                       FOR THE YEARS ENDED DECEMBER 31,
                                            ------------------------------------------------------
                                                  1998               1999               2000
                                            ----------------   ----------------   ----------------
                                                       % OF               % OF               % OF
                                            DOLLARS    TOTAL   DOLLARS    TOTAL   DOLLARS    TOTAL
                                            --------   -----   --------   -----   --------   -----
<S>                                         <C>        <C>     <C>        <C>     <C>        <C>
Netherlands Antilles and the Caribbean....  $114,091    83.4%  $149,852    89.0%  $192,165    91.3%
Canada....................................    21,058    15.4     18,491    11.0     18,290     8.7
Brownsville, Texas, facility..............     1,613     1.2         --      --         --      --
                                            --------   -----   --------   -----   --------   -----
          Total...........................  $136,762   100.0%  $168,343   100.0%  $210,455   100.0%
                                            ========   =====   ========   =====   ========   =====
</TABLE>

                      OPERATING INCOME (LOSS) BY LOCATION
                             (DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
                                                        FOR THE YEARS ENDED DECEMBER 31,
                                              ----------------------------------------------------
                                                   1998               1999              2000
                                              ---------------    ---------------   ---------------
                                                        % OF               % OF              % OF
                                              DOLLARS   TOTAL    DOLLARS   TOTAL   DOLLARS   TOTAL
                                              -------   -----    -------   -----   -------   -----
<S>                                           <C>       <C>      <C>       <C>     <C>       <C>
Netherlands Antilles and the Caribbean......  $14,442    70.2%   $12,981    80.7%  $15,616    80.5%
Canada......................................    6,625    32.2      3,103    19.3     3,788    19.5
Brownsville, Texas, facility................     (493)   (2.4)        --      --        --      --
                                              -------   -----    -------   -----   -------   -----
          Total.............................  $20,574   100.0%   $16,084   100.0%  $19,404   100.0%
                                              =======   =====    =======   =====   =======   =====
</TABLE>

YEAR ENDED DECEMBER 31, 2000, COMPARED WITH YEAR ENDED DECEMBER 31, 1999

  Comparability

     Our initial public offering of equity, which was completed on April 28,
1999, has impacted our financial condition and results of operations and,
therefore, comparability between years.

REVENUES

     Total revenues for the year ended December 31, 2000, were $210.5 million
compared to $168.3 million for the year ended December 31, 1999, an increase of
$42.2 million, or 25.0%. The total revenue increase is primarily due to
increases in the average selling prices within our product sales segment.

     Revenues from terminaling services (resulting from revenue from storage,
throughput, dock usage, emergency response, and other terminal services), for
the year ended December 31, 2000, were $61.5 million, a small decrease from
$61.7 million for the previous year. We believe the small decrease in
terminaling services revenues for the year ended December 31, 2000, compared to
1999, was principally due to the adverse effects of the accord established
between many of the oil exporting nations, some of whom are our customers, to
raise crude oil prices by reducing supply. Members of the accord reduced their
production of crude oil during the period from April 1999 through late March
2000, which reduced the worldwide quantity of crude oil and petroleum products
in storage. The accord primarily impacted our terminaling services revenues
beginning with the second half of 1999 and continuing through most of the first
half of 2000. The impact of the

                                        23
<PAGE>   27

accord during the first half of 2000 was partially offset by uncertain
conditions in the crude oil and petroleum products markets during the second
half of 2000 which created trading opportunities for several of our customers
and resulted in these customers leasing storage capacity from us. Additionally,
during the second half of 2000, increased throughput of crude oil favorably
impacted our revenues.

     For the year ended December 31, 2000, approximately 73% of our tank
capacity was leased pursuant to long-term contracts at our St. Eustatius and
Point Tupper locations together. Approximately 65% of our storage and throughput
revenues, excluding related ancillary services, were derived from long-term
contracts during the same period.

     Revenues from terminaling services at St. Eustatius decreased approximately
$0.2 million, or 0.4%, during the year ended December 31, 2000, as compared to
the year ended December 31, 1999. Lower storage revenues, resulting from a lower
percentage capacity leased, were partially offset by increased revenues from
port charges. Port charges consist of dock charges, emergency response fees, and
other terminal charges. For the year ended December 31, 2000, the overall
percentage of capacity leased at this facility was 88% compared to 90% for the
same period of 1999, reflecting a decrease in the percentage of storage capacity
leased for both residual fuel oil and clean products. Total throughput increased
from 61.7 million barrels during the year ended December 31, 1999, to 81.6
million barrels during 2000 due primarily to increased throughput of crude oil.
Although 18 fewer cargo vessels called at the St. Eustatius facility during the
year ended December 31, 2000, than during the same period of 1999, the average
size of the vessels increased. The net result of these two factors was increased
revenues from port charges.

     Revenues from terminaling services at Point Tupper were virtually unchanged
during the year ended December 31, 2000, as compared to the year ended December
31, 1999. Lower storage revenues, resulting from a lower percentage capacity
leased, were offset by higher revenues from port charges. The percentage of tank
capacity leased at Point Tupper decreased from 79% for the year ended December
31, 1999, to 68% for the same period of 2000. This decrease is primarily the
result of the decision by a customer of this facility, which is a participant in
the accord, not to renew its crude oil storage contract at the end of the second
quarter of 1999. Another customer significantly increased its throughput of
crude oil during 2000. Forty-one more vessels called during the year ended
December 31, 2000, as compared to the same period of 1999, which led to higher
revenues from port charges at this facility.

     Revenues from product sales (including bunker fuels and bulk oil sales)
were $148.9 million for the year ended December 31, 2000, compared to $106.7
million for the same period in 1999, an increase of $42.2 million, or 39.6%.
This increase was primarily due to increases in average selling prices which
were partially offset by decreases in the volume of products delivered. Metric
tons of product sold decreased 12.0% during the year ended December 31, 2000, as
compared to the same period of 1999. Average selling prices increased 56.1% when
comparing the year ended December 31, 2000, with the same period of 1999. These
increases in average selling prices were primarily the result of significantly
higher oil market prices.

  Gross Profit

     Gross profit for the year ended December 31, 2000, was $29.1 million
compared to $30.7 million for the same period of 1999, representing a decrease
of $1.6 million, or 5.1%. The decrease in gross profit was primarily the result
of lower gross profits realized on terminaling services, which were partially
offset by higher dollar gross margins realized on product sales. Gross profit
from terminaling services decreased primarily as a result of lower percentage of
capacity leased and increases in the operating costs associated with the
providing of our terminaling services at both of our operating locations.
Additionally, during the three months ended March 31, 2000, we replaced certain
hoses attached to our single point mooring system. As a result, we changed the
estimated useful lives of certain hoses and incurred a non-cash charge of $0.8
million to depreciation expense during the first quarter of 2000, which is
included in costs of terminaling services revenues.

                                        24
<PAGE>   28

  Administrative Expenses

     Administrative expenses were $9.7 million for the year ended December 31,
2000, as compared to $8.7 million for the same period of 1999, representing an
increase of $1.0 million, or 11.1%. The increase during the year ended December
31, 2000, as compared to the same period of 1999, is primarily the result of
higher personnel and personnel related costs, and higher depreciation costs
primarily related to computer software. Administrative expenses primarily relate
to costs incurred at our U.S. administrative offices.

  Special Compensation Expenses

     As more fully discussed in notes 3 and 11 of the notes to consolidated
financial statements, we recorded special compensation expense during the year
ended December 31, 1999, of $4.1 million of which $2.2 million was a non-cash
charge related to the vesting of certain stock options.

  Hurricane Charges

     As a result of damages sustained to our St. Eustatius facility from
Hurricane Lenny in late November 1999, we incurred a one-time non-cash charge of
$1.5 million to partially reduce the carrying value of our shoreline protection
system and a one-time cash charge of $0.25 million to cover other hurricane
related expenses. The damaged shoreline protection system was not covered by
insurance and, together with certain other civil work, was substantially
replaced during 2000 at a cost of $2.8 million.

  Interest Expense

     During the years ended December 31, 2000 and 1999, we incurred $12.8
million and $14.3 million, respectively, of debt service costs consisting of
interest accrued on our long-term debt, interest expense and commitment fees on
our revolving credit facility, amortization expense related to deferred
financing costs, and bank charges. In May 1999, we repurchased $34.0 million of
the mortgage notes, which resulted in lower interest and amortization expense
related to this debt.

  Provision for Income Taxes

     Provision for income taxes was $0.9 million for the year ended December 31,
2000, as compared to $0.8 million for the same period of 1999. The provision for
income taxes was increased, as compared to the previous year, in contemplation
of potential additional income tax assessments from jurisdictions in which we
operate offset by the effect of certain tax benefits. For a further discussion
of income taxes, please see note 10 of the notes to consolidated financial
statements and the Tax Matters section below.

  Preferred Stock Dividends

     During 1999, we redeemed all of our outstanding preferred stock in
connection with our initial public offering of equity. Preferred stock dividends
accrued were $2.3 million for the year ended December 31, 1999.

  Extraordinary Charge Related to Early Extinguishment of Debt

     As more fully discussed in note 3 of the notes to consolidated financial
statements, we recognized an extraordinary charge of $4.7 million during the
year ended December 31, 1999, in connection with the repurchase of $34.0 million
of the mortgage notes. This charge represented the premium paid to acquire the
mortgage notes in the open market and other acquisition costs. There was no
income tax effect associated with this extraordinary charge.

  Net Income (Loss) to Common Shareholders

     Net income available to common shareholders was $6.1 million for the year
ended December 31, 2000, as compared to a net loss to common shareholders of
$5.1 million for the year ended December 31, 1999. The improvement in our
results is attributable to the elimination of the extraordinary charge and
preferred stock dividends, the reduction of our interest expense, and the net
effect of the operating factors discussed above.
                                        25
<PAGE>   29

YEAR ENDED DECEMBER 31, 1999, COMPARED WITH YEAR ENDED DECEMBER 31, 1998

  Comparability

     On July 29, 1998, we sold Statia Terminals Southwest to an unrelated third
party. Our consolidated financial statements include the operations of Statia
Terminals Southwest through June 30, 1998. Therefore, the year ended December
31, 1998, includes the operations of Statia Terminals Southwest for six months,
and the year ended December 31, 1999, includes no operations of Statia Terminals
Southwest. Additionally, our initial public offering of equity which was
completed on April 28, 1999, has impacted our 1999 financial condition and
results of operations and, therefore, comparability between years.

  Revenues

     Total revenues for the year ended December 31, 1999, were $168.3 million
compared to $136.8 million for the year ended December 31, 1998, an increase of
$31.5 million, or 23.1%. Revenues from terminaling services (resulting from
revenue from storage, throughput, dock usage, emergency response, and other
terminal services), for the year ended December 31, 1999, were $61.7 million
compared to $66.6 million for the previous year, a decrease of $4.9 million, or
7.4%.

     The decrease in terminaling services revenue for the year ended December
31, 1999, compared to the previous year was principally due to the adverse
effects of the accord established between many of the oil producing nations,
some of whom we do business with, to raise crude oil prices by reducing supply.
Members of the accord reduced their production of crude oil which, in turn,
reduced the worldwide quantity of crude oil and petroleum products in storage.
The accord was signed in March 1999 and became effective April 1, 1999, for a
one-year term. The accord primarily impacted our terminaling services revenues
beginning with the second half of 1999.

     For the year ended December 31, 1999, approximately 69% of our tank
capacity was leased pursuant to long-term contracts at our St. Eustatius and
Point Tupper locations together. Approximately 60% of our storage and throughput
revenues, excluding related ancillary services, were derived from long-term
contracts during the same period.

     Revenues from terminaling services at St. Eustatius decreased approximately
$1.4 million, or 3.2%, during the year ended December 31, 1999, as compared to
the year ended December 31, 1998, due to decreased throughput and a lower
percentage of capacity leased. Total throughput decreased from 74.2 million
barrels during the year ended December 31, 1998, to 61.7 million barrels during
1999 due primarily to decreased throughput of crude oil and petroleum products.
Twelve fewer cargo vessels called at the St. Eustatius facility during the year
ended December 31, 1999, than during the same period of 1998, resulting in lower
revenues from port charges. For the year ended December 31, 1999, the overall
percentage of capacity leased at this facility was 90% compared to 92% for the
same period of 1998, reflecting a decrease in the percentage of storage capacity
leased for residual fuel oil, which was partially offset by an increase in the
percentage of capacity leased for clean products.

     Revenues from terminaling services at Point Tupper decreased $2.3 million,
or 11.3% during the year ended December 31, 1999, as compared to the year ended
December 31, 1998. The decrease was due to a lower percentage capacity leased
and fewer vessel calls during the year ended December 31, 1999. The percentage
of tank capacity leased at Point Tupper decreased from 93% for the year ended
December 31, 1998, to 79% for the same period of 1999. This decrease is
primarily the result of the decision by a customer of this facility, which is a
participant in the accord, not to renew its crude oil storage contract at the
end of the second quarter of 1999. Fewer vessels called during the year ended
December 31, 1999, as compared to the same period of 1998 which led to lower
revenues from port charges at this facility.

     Revenues from product sales were $106.7 million for the year ended December
31, 1999, compared to $70.1 million for the same period in 1998, an increase of
$36.6 million, or 52.1%. This increase was primarily due to increases in the
volume of products delivered and increases in average selling prices. Metric
tons of product sold increased 19.2% during the year ended December 31, 1999, as
compared to the same period of 1998. Average selling prices increased 27.7% when
comparing the year ended December 31, 1999, with the

                                        26
<PAGE>   30

same period of 1998. These changes in average selling prices were primarily the
result of changes in the world oil markets which were significantly influenced
by the accord.

  Gross Profit

     Gross profit for the year ended December 31, 1999, was $30.7 million
compared to $30.9 million for the same period of 1998, representing a decrease
of $0.2 million, or 0.6%. The decrease in gross profit was primarily the result
of lower gross profits realized on terminaling services, which were partially
offset by higher dollar gross margins realized on product sales. Gross profit
from terminaling services decreased primarily as a result of certain customers
choosing not to renew their storage and throughput contracts due, in part, to
reduced supply resulting from the accord established among many of the oil
exporting nations.

  Administrative Expenses

     Administrative expenses were $8.7 million for the year ended December 31,
1999 as compared to $9.5 million for the same period of 1998, representing a
decrease of $0.8 million, or 7.9%. The decrease during the year ended December
31, 1999, as compared to the same period of 1998, was primarily the result of
the termination of the Castle Harlan management fee subsequent to our initial
public offering of equity which was partly offset by higher personnel and
related costs.

  Special Compensation Expenses

     As more fully discussed in notes 3 and 11 of the notes to consolidated
financial statements, we recorded special compensation expense during the year
ended December 31, 1999, of $4.1 million of which $2.2 million was a non-cash
charge.

  Hurricane Charges

     As a result of damages sustained to our St. Eustatius facility from
Hurricane Lenny in late November 1999, we incurred a one-time non-cash charge of
$1.5 million to partially reduce the carrying value of our shoreline protection
system and a one-time cash charge of $0.25 million to cover other hurricane
related expenses. The damaged shoreline protection system was not covered by
insurance and, together with certain other civil work, was substantially
replaced during 2000 at a cost of $2.8 million.

     During September 1998, Hurricane Georges damaged components of our St.
Eustatius facility. However, operations were not significantly impacted by the
hurricane and returned to normal within days of the storm. During 1998, we
recorded a charge of $0.8 million representing an insurance deductible of $0.5
million related to the hurricane damage and certain other costs resulting from
the hurricane which will not be recovered through our insurance policies.

  Loss on Sale of Assets

     As more fully discussed in note 16 of the notes to consolidated financial
statements, we recognized a loss on the sale of Statia Terminals Southwest, Inc.
during the year ended December 31, 1998, of $1.7 million.

  Interest Expense

     During the years ended December 31, 1999 and 1998, we incurred $14.3
million and $16.9 million, respectively, of interest expense from interest
accrued on our mortgage notes due in 2003, interest expense and commitment fees
on our revolving credit facility, amortization expense related to deferred
financing costs and bank charges. In May 1999, we repurchased $34.0 million of
the mortgage notes which resulted in lower interest and amortization expense
related to this debt. Interest expense and commitment fees on our revolving
credit facility were not significant for 1999 and 1998.

                                        27
<PAGE>   31

  Provision for Income Taxes

     Provision for income taxes was $0.8 million for the year ended December 31,
1999, as compared to $0.3 million for the same period of 1998. The provision for
income taxes was increased in 1999 in contemplation of potential additional
income tax assessments from jurisdictions in which we operate.

  Preferred Stock Dividends

     Preferred stock dividends accrued were $2.3 million for the year ended
December 31, 1999, as compared to $3.9 million for the same period of 1998. The
decrease during 1999 is primarily the result of the redemption of all
outstanding preferred stock in connection with our initial public offering of
equity.

  Extraordinary Charge Related to Early Extinguishment of Debt

     As more fully discussed in note 3 of the notes to consolidated financial
statements, we recognized an extraordinary charge of $4.7 million during the
year ended December 31, 1999, in connection with the repurchase of $34.0 million
of the mortgage notes. There was no income tax effect associated with this
extraordinary charge.

  Net Loss to Common Shareholders

     Net loss to common shareholders was $5.1 million for the year ended
December 31, 1999, as compared to a net loss to common shareholders of $1.5
million for the same period of 1998, an increase of $3.6 million. The increase
in the net loss to common shareholders is primarily attributable to transactions
associated with our initial public offering of equity, and the net effect of the
other factors discussed above.

SELECTED QUARTERLY FINANCIAL INFORMATION

     The following table sets forth selected unaudited quarterly operating
results for each of our last eight quarters. This information was prepared by us
on a basis consistent with our audited financial statements and includes all
adjustments, consisting of normal and recurring adjustments, that we consider
necessary for a fair presentation of the data. These quarterly results are not
necessarily indicative of future results of operations. This information should
be read in conjunction with our consolidated financial statements and notes
thereto included elsewhere in this Report and our quarterly reports on Form
10-Q.

<TABLE>
<CAPTION>
                                                     QUARTERS ENDED
                                                 (DOLLARS IN THOUSANDS)
                                     -----------------------------------------------
                                     MARCH 31   JUNE 30   SEPTEMBER 30   DECEMBER 31    TOTAL
                                     --------   -------   ------------   -----------   --------
<S>                                  <C>        <C>       <C>            <C>           <C>
1999
Total revenues.....................  $37,415    $42,267     $43,310        $45,351     $168,343
Operating income...................    4,333      4,369       4,113          3,269       16,084
EBITDA.............................    7,251      7,455       6,817          6,206       27,729

2000
Total revenues.....................  $42,305    $54,227     $57,542        $56,381     $210,455
Operating income...................    1,813      3,660       6,859          7,072       19,404
EBITDA.............................    5,428      6,684       9,940         10,200       32,252
</TABLE>

SELECTED PROJECTED FINANCIAL INFORMATION FOR 2001

     We are currently projecting that Adjusted EBITDA for the year ending
December 31, 2001, will fall between $28 million and $34 million and that
diluted earnings per class A common share will range between $0.12 and $0.77.
Any improvements in gross margins during 2001 as compared to 2000 are expected
to be offset by increases in expenses. We are projecting small increases in
interest expense and the provision for income taxes during 2001 as compared to
2000. The first quarter of 2001 is presently projected to be similar to the
fourth quarter of 2000, with Adjusted EBITDA falling between $7.5 million and
$9.5 million. Primarily due to the expiration of certain spot storage contracts
toward the end of the first quarter of 2001, we presently

                                        28
<PAGE>   32

anticipate that Adjusted EBITDA for the second quarter of 2001 will decrease as
compared to the first quarter of 2001. The third quarter 2001 and full year 2001
results will be dictated by market factors, including the global production of
crude oil and our ability to renew or replace long-term and short-term storage
contracts, which expire during the second quarter of 2001.

     As more fully discussed in note 6 of the notes to consolidated financial
statements, under particular circumstances the subordination period related to
our class B subordinated shares will end on June 30, 2004. Based on our current
projections, we do not anticipate that we will meet the financial tests
necessary for subordination to end on June 30, 2004.

LIQUIDITY AND CAPITAL RESOURCES

  Cash Flow from Operating Activities

     Net cash provided by operating activities was $18.2 million, $13.7 million
and $23.4 million for the years ended December 31, 1998, 1999, and 2000,
respectively. Cash flow from operations has been our primary source of liquidity
during these periods. Differences between net losses and positive operating cash
flow have resulted primarily from depreciation and amortization burdens,
non-cash charges, and changes in various working capital accounts.

     We periodically purchase refined petroleum products for resale as product
sales, and our inventory balances change based on these activities. As of
December 31, 1999 and 2000, our inventory balances were $3.2 million and $1.6
million, respectively.

  Cash Flow from Investing Activities

     Net cash used in investing activities was $4.1 million, $8.6 million and
$9.1 million for the years ended December 31, 1998, 1999, and 2000,
respectively. Investing activities during 1998, 1999, and 2000, included
purchases of property and equipment of $10.7 million, $8.6 million, and $8.6
million, respectively. See "Capital Expenditures" below. Additionally, as more
fully discussed in note 16 of the notes to consolidated financial statements, on
July 29, 1998, we received $6.5 million of cash proceeds from the sale of our
Brownsville, Texas, facility.

  Cash Flow from Financing Activities

     In December 2000, we borrowed $7.0 million (excluding direct costs of the
borrowing of $0.1 million) from an equipment financing company. The loan
requires monthly payments of principal and interest over six years. Interest
accrues at three month London InterBank Offered Rates plus 3.2% (8.28% at March
5, 2001) and adjusts each month. The loan is collateralized by a security
interest in the M/V Statia Responder, one of our emergency response and
maintenance support vessels, which is operating at our Caribbean terminal. We
will use the proceeds from the loan for general corporate purposes, which may
include capital expenditures, financing of various business development
projects, funding of our stock purchase program, and other business purposes.
The loan is subject to certain financial covenants, the most restrictive of
which, include, but are not limited to the following: (i) a debt service
coverage ratio of at least 1.50 to 1, (ii) the maintenance of $70.0 million of
net worth, and (iii) the maintenance of specified insurance coverage limits on
the collateral. We are in compliance with the financial covenants of the loan.

     Our cash flows from financing activities for the year ended December 31,
1999, were impacted by our initial public offering of equity which is more fully
discussed in note 3 of the notes to consolidated financial statements. The gross
proceeds of the offering were used primarily to redeem all of our outstanding
Series A, B, C, D and E preferred stock ($94.8 million) and pay accrued
preferred stock dividends ($9.7 million) and underwriters' discounts, fees, and
other costs directly associated with the offering ($15.2 million). In addition,
proceeds from the offering were invested and used during May 1999, along with
existing cash, to repurchase in the open market a principal amount of $34
million of the 11 3/4% First Mortgage Notes previously issued by two of our
subsidiaries ($37.7 million). In connection with the repurchase of the mortgage
notes, we incurred a $4.7 million loss on the early extinguishment of debt.

                                        29
<PAGE>   33

     During the years ended December 31, 1999 and 2000, we declared and paid
distributions on our class A common shares of $5.8 million ($0.7665 per share)
and $3.1 million ($0.45 per share), respectively. Additionally, during 1999,
distributions on our class B subordinated shares aggregating $2.9 million
($0.7665 per share) were declared. Distributions on the class B subordinated
shares were deferred and will remain deferred until expiration of the deferral
period as defined in our Articles of Incorporation. No distributions on our
class B subordinated shares were declared during 2000. Additional information
with regards to our distributions is provided in "Distributions" under Item 5 of
this Report.

     Our board of directors has authorized the open market purchase of up to two
million shares of our class A common shares. As of December 31, 2000, and March
5, 2001, we had acquired 1,300,247 and 1,507,947 class A common shares,
respectively, at an aggregate cost of $8.6 million and $10.4 million,
respectively. As conditions warrant, we intend to continue periodic open market
purchases of our class A common shares under the stock purchase program.

     During the year ended December 31, 1998, we utilized the net proceeds from
the sale of the Brownsville, Texas, facility to retire $6.15 million of Statia
Terminals Group's Series D Preferred Stock.

     We have a $17.5 million revolving credit facility secured by our accounts
receivable and oil inventory. The revolving credit facility is available for
working capital needs and letter of credit financing, and it permits us to
borrow in accordance with our available borrowing base, which was estimated at
$11.0 million at December 31, 2000. The revolving credit facility bears interest
at the prime rate plus 0.5% per annum (9.0% at March 5, 2001) and will expire on
November 27, 2001. During December 1999 and the first and second quarters of
2000, we borrowed against the revolving credit facility, and all of such
borrowings were repaid by May 2000. There was no outstanding balance at December
31, 2000.

     The debt service costs associated with the borrowings under the mortgage
notes impose a significant burden on our liquidity. The mortgage notes accrue
interest at 11 3/4% per annum payable semi-annually on May 15 and November 15.
The mortgage notes will mature on November 15, 2003. As further discussed in
note 5 of the notes to consolidated financial statements, the mortgage notes are
redeemable in whole or in part at our option at redemption prices set forth in
the indenture relating to the mortgage notes. Under the terms of the indenture,
we may also forego the redemption process and repurchase the mortgage notes in
the open market. Any time on or prior to November 15, 1999, we were allowed to
redeem or repurchase up to 35% of the aggregate principal amount of the mortgage
notes with the proceeds of one or more equity offerings. As further discussed
above and in note 3 of the notes to consolidated financial statements, during
May 1999, and in connection with our initial public offering of equity, we
repurchased in the open market a principal amount of $34 million of the mortgage
notes.

     The indenture generally limits the incurrence of additional debt by Statia
Terminals International, limits the ability of Statia Terminals International to
pay Statia Terminals Group dividends or make any other distribution to Statia
Terminals Group, and limits the ability of Statia Terminals International to
sell its assets. Statia Terminals International and its subsidiaries may incur
additional indebtedness as long as Statia Terminals International's consolidated
fixed charge coverage ratio is at least 2.0 to 1. The fixed charge coverage
ratio is the ratio of adjusted EBITDA to fixed charges, each computed as set
forth in the indenture with respect to the mortgage notes. The indenture
requires EBITDA for Statia Terminals International to be adjusted for specified
non-cash income and expense items to compute adjusted EBITDA. Adjusted EBITDA
for Statia Terminals International also excludes certain administrative
expenses, and prior to the termination of the Castle Harlan management fee,
excluded that fee incurred by Statia Terminals Group. Under the terms of the
indenture, Statia Terminals International may not pay Statia Terminals Group any
dividend if at the time of declaration:

     - a default or event of default under the indenture shall have occurred and
       be continuing or shall occur as a consequence thereof;

     - Statia Terminals International's consolidated fixed charge coverage ratio
       (as defined in the indenture) for the prior four full quarters is less
       than 2.0 to 1; or

                                        30
<PAGE>   34

     - the amount of such dividend, when added to the aggregate amount of all
       other dividends and specific other restricted payments made by Statia
       Terminals International after November 27, 1996, and not covered by other
       exceptions in the indenture, exceeds the sum specified below.

     Such sum is:

     50% of Statia Terminals International's consolidated net income, as defined
     in the indenture and taken as one accounting period, from November 27,
     1996, to the end of Statia Terminals International's most recently ended
     fiscal quarter for which internal financial statements are available at the
     time of such dividend or, if such aggregate consolidated net income is a
     deficit, minus 100% of such aggregate deficit,

     plus

     the net cash proceeds from the issuance and sale after November 27, 1996,
     of Statia Terminals International capital stock to Statia Terminals Group
     and/or third parties.

     Some other dividends, generally unrelated to operating cash flow, are
permitted notwithstanding the second and third items above.

     As of March 5, 2001, no event of default existed and was continuing. The
consolidated fixed charge coverage ratio as defined in the indenture was 2.4 to
1 at December 31, 2000. Additionally, at December 31, 2000, the sum of Statia
Terminals International's dividends, restricted payments, aggregate consolidated
net income (deficit) and capital stock proceeds was approximately $16.5 million.

     We believe that cash flow generated by operations and amounts available
under the revolving credit facility will be sufficient, until the maturity of
the mortgage notes, to fund working capital needs, capital expenditures and
other operating requirements, including any expenditures required by applicable
environmental laws and regulations, and to service debt. It is unlikely that we
will be able to repay the mortgage notes at maturity through projected operating
cash flow, and it will be necessary to refinance all or a portion of the
mortgage notes, or redeem the mortgage notes from additional equity funds, on or
before their maturity on November 15, 2003. We continuously monitor financial
market conditions and our financial position to determine when and whether we
will refinance or redeem all or a portion of the mortgage notes prior to their
maturity.

     Although we intend to refinance and believe that we will be able to
refinance the mortgage notes prior to November 15, 2003, our operating
performance and ability to service or refinance the mortgage notes and to extend
or refinance the revolving credit facility will be subject to future economic
conditions and to commercial, financial, and other factors, many of which are
beyond our control. There can be no assurances that we will be able to repay at
maturity or refinance our indebtedness in whole or in part, or at all, on terms
acceptable to us. If we are unable to repay or refinance the mortgage notes at
or prior to maturity, we will be forced to adopt alternative strategies that may
include seeking additional equity capital.

     It is anticipated that any common share arrearages will not adversely
impact our ability to repay or refinance the mortgage notes since the mortgage
notes are obligations of two of our subsidiaries, not of Statia Terminals Group.
Depending on the terms and conditions of any refinancing of the mortgage notes,
our ability to pay the target quarterly distributions and common share
arrearages may be impacted.

CAPITAL EXPENDITURES

     We spent $10.7 million, $8.6 million, and $8.6 million during the years
ended December 31, 1998, 1999, and 2000, respectively. These amounts include
$1.7 million, $1.0 million, and $0.4 million, respectively, which was spent to
enhance our ability to generate incremental revenues. During 1998, 1999, and
2000, a majority of capital expenditures were related to sustaining our existing
operations, including our terminal and marine maintenance programs. The amount
spent during 2000 also includes $2.8 million related to repairs to our shoreline
protection system at St. Eustatius which was damaged by Hurricane Lenny in 1999.

     A salt deposit has been identified on a parcel of land very near our Point
Tupper facility. Frequently, salt caverns can be developed from such deposits.
Salt caverns are used around the world for storing hydrocarbon

                                        31
<PAGE>   35

products. We have been investigating this salt deposit for approximately three
years and plan to continue to investigate it during 2001. To date, we have
obtained a license from governmental authorities for work to be done to further
analyze the usefulness of the property and the deposit for the storage of
natural gas and other hydrocarbons. At this point in time, we have not
established sufficient information to determine whether or not this project will
ever produce income. However, it is anticipated that should the project prove
successful, it would not produce revenues until at least three years from now.
This project, like any project in which we may become involved, will require
adequate prospective returns in order to be developed. To date, we have
capitalized $0.9 million related to this project. Should this or any other
project be abandoned, we may incur an immediate charge to write-off any amounts
capitalized.

     We are currently reviewing the status of our terminal operations software,
which is being developed internally. The ultimate outcome of this review is
uncertain buy may result in a decision to complete development of this system,
or a portion thereof, or replace the current system with commercially available
software. As of December 31, 2000, capitalized costs related to this internally
developed software were approximately $0.9 million.

     Our capital expenditure budget for 2001 is $12.0 million primarily for
items to sustain our existing operations. Spending for producing incremental
revenues is estimated at $2.0 million and contingent upon the securing of
additional business or continuation of certain development projects. Our 2001
maintenance-related capital expenditure forecast of $10.0 million includes
certain expenditures originally budgeted for prior periods, but which were not
completed in those prior periods.

     The following table sets forth capital expenditures by location and
separates such expenditures into those which produce, or have the potential to
produce, incremental revenue and those which sustain existing operations.

                  SUMMARY OF CAPITAL EXPENDITURES BY LOCATION
                             (DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
                                                        PRODUCE      SUSTAIN
                                                      INCREMENTAL    EXISTING
                                                       REVENUES     OPERATIONS    TOTAL    % OF TOTAL
                                                      -----------   ----------   -------   ----------
<S>                                                   <C>           <C>          <C>       <C>
YEAR ENDED DECEMBER 31, 1998
  Netherlands Antilles..............................    $  667        $5,990     $ 6,657      62.1%
  Canada............................................       829           476       1,305      12.2
  Brownsville, Texas, facility (1)..................       218            94         312       2.9
  All other United States (2).......................        --         2,440       2,440      22.8
                                                        ------        ------     -------     -----
          Total.....................................    $1,714        $9,000     $10,714     100.0%
                                                        ======        ======     =======     =====
YEAR ENDED DECEMBER 31, 1999
  Netherlands Antilles..............................    $  586        $4,613     $ 5,199      60.5%
  Canada............................................       416         1,602       2,018      23.5
  United States (2).................................        --         1,376       1,376      16.0
                                                        ------        ------     -------     -----
          Total.....................................    $1,002        $7,591     $ 8,593     100.0%
                                                        ======        ======     =======     =====
YEAR ENDED DECEMBER 31, 2000
  Netherlands Antilles..............................    $  136        $6,548     $ 6,684      77.9%
  Canada............................................       294           759       1,053      12.3
  United States (2).................................        --           841         841       9.8
                                                        ------        ------     -------     -----
          Total.....................................    $  430        $8,148     $ 8,578     100.0%
                                                        ======        ======     =======     =====
</TABLE>

---------------

(1) We sold our Brownsville, Texas, facility on July 29, 1998.
(2) Includes expenditures for U.S. flagged marine equipment utilized primarily
    in the Netherlands Antilles.

                                        32
<PAGE>   36

ENVIRONMENTAL, HEALTH AND SAFETY MATTERS

     We are subject to comprehensive and periodically changing environmental,
health, and safety laws and regulations within the jurisdictions of our
operations, including those governing oil spills, emissions of air pollutants,
discharges of wastewater and storm water, and the disposal of non-hazardous and
hazardous waste. In 1998, 1999, and 2000, our capital expenditures for
compliance with environmental, health and safety laws and regulations were
approximately $2.7 million, $2.5 million, and $1.8 million, respectively. These
figures do not include routine operational compliance costs, such as the costs
for the disposal of hazardous and non-hazardous solid waste, which were
approximately $0.9 million, $1.2 million and $0.3 million in 1998, 1999, and
2000, respectively. We believe we are presently in substantial compliance with
applicable laws and regulations governing environmental, health and safety
matters.

     The Castle Harlan acquisition agreement includes a covenant whereby Praxair
shall assume financial responsibility for some environmental investigation,
remediation, and upgrade costs at Point Tupper. With respect to seven identified
items of environmental investigation and remediation, this covenant is subject
to dollar limitations aggregating $4.2 million. With respect to all other costs
covered by the Praxair covenant there are no dollar limitations. However, we
cannot guarantee that Praxair will pay all of the indemnified amounts without
dispute or delay.

     Past use of the Point Tupper facility, including its past operation by
others as an oil refinery, have resulted in particular on-site areas of known
and potential contamination, as described below. Under Canadian environmental,
health and safety laws, we, as the owner and operator of the facility, can be
held liable for mitigation or remediation of, and damages arising from, these or
other as yet unknown environmental, health and safety conditions at the
facility.

     In connection with the Castle Harlan acquisition in 1996, Phase I and
limited Phase II environmental site assessments were conducted at the Point
Tupper terminal to identify potential environmental, health and safety matters.
Particular environmental matters and conditions that were likely to require the
incurrence of costs were identified, and Praxair agreed to pay the costs of
addressing some of these matters, subject in some cases to monetary limitations
as discussed above. Since then we have undertaken, in accordance with
environmental, health and safety laws, investigation, remediation and upgrade
actions to address these and other more recently identified matters.

     With respect to the foregoing environmental liabilities and costs, Praxair,
in connection with the Castle Harlan acquisition, has paid approximately $5.2
million through December 31, 2000. Based on the investigation conducted and
information available to date, the potential cost of additional remediation and
compliance related to the foregoing matters is currently estimated to be
approximately $13 million. Praxair is required under the Castle Harlan
acquisition agreement to pay the costs of this additional remediation and
compliance, and has been generally meeting its obligations.

     We accrued a total of $1.5 million during 1996 to cover environmental,
health, and safety costs we have identified as not being covered by the Praxair
agreement. Through December 31, 2000, $0.2 million of the $1.25 million
allocated to the Point Tupper terminal had been expended. We periodically review
the adequacy of this accrual and during 1999 determined $0.25 million originally
provided for environmental contingencies at our St. Eustatius facility were no
longer necessary. Accordingly, this portion of the accrual was eliminated and
credited to costs of terminaling revenues. We believe that environmental, health
and safety costs will not have a material adverse effect on the Company's
financial position, cash flows, or results of operations, subject to
reimbursements from Praxair. We can give no assurance that additional
liabilities discovered in the future, under existing or future environmental,
health, and safety laws and outside the scope of the Praxair agreement will not
be material. In addition, we can give no assurance that we will not have to
incur material expenses before Praxair pays amounts for which Praxair ultimately
would be responsible.

     We anticipate that we will incur additional capital and operating costs in
the future to comply with currently existing laws and regulations, amendments to
such laws and regulations, new regulatory requirements arising from recently
enacted statutes, and possibly new statutory enactments. As government
regulatory agencies have not yet promulgated the final standards for proposed
environmental, health and safety

                                        33
<PAGE>   37

programs, we cannot at this time reasonably estimate the cost for compliance
with these additional requirements, some of which will not take effect for
several years, or the timing of any such costs. However, we believe any such
costs will not have a material adverse effect on our business and financial
condition or results of operations.

POLITICAL, INFLATION, CURRENCY AND INTEREST RATE RISKS

     We periodically evaluate the political stability and economic environment
in the countries in which we operate. As a result of these evaluations, we are
not presently aware of any matters that may adversely impact our business,
results of operations or financial condition. The general rate of inflation in
the countries where we operate has been relatively low in recent years causing a
modest impact on operating costs. Typically, inflationary cost increases result
in adjustments to storage and throughput charges because long-term contracts
generally contain price escalation provisions. Product sales prices are based on
active markets, and we are generally able to pass any cost increases to
customers. Except for minor local operating expenses in Canadian dollars and
Netherlands Antilles guilders, and certain Canadian dollar-denominated revenues,
all of our transactions are in U.S. dollars. Therefore, we believe we are not
significantly exposed to exchange rate fluctuations.

     Most of our present debt obligations carry a fixed rate of interest. The
revolving credit facility varies with changes in the lender's prime lending
rate, and the loan collateralized by the M/V Statia Responder is indexed to
three month London InterBank Offered Rates. Therefore, we believe our exposure
to interest rate fluctuations is minimal.

TAX MATTERS

     Our St. Eustatius facility has qualified for designation as a free trade
zone and our Point Tupper facility has qualified for designation as a customs
bonded warehouse. Such status allows customers and us to transship commodities
to other destinations with minimal Netherlands Antilles or Canadian tax effects.

     Our Free Zone and Profit Tax Agreement with the island government of St.
Eustatius expired on December 31, 2000. The agreement required payment of a
minimum annual tax of 500,000 Netherlands Antilles guilders or approximately
$282,000. This agreement further provided that any amounts paid to meet the
minimum annual payment would be available to offset future tax liabilities under
such agreement to the extent that the minimum annual payment is greater than 2%
of taxable income. We have been adhering to the terms of this agreement since
its expiration. Discussions regarding modification and extension of this
agreement are in progress, and we believe that, although some terms and
conditions could be modified and that the amounts payable may increase or
decrease, extension of this agreement is likely. However, if the beneficial tax
status of our facilities is terminated, or if significant adverse modifications
are made to the tax agreement, our business, financial condition, results of
operations, and cash flows may be adversely affected.

     Tax rates in the jurisdictions in which we operate did not change
significantly between 1998 and 2000.

     The net operating tax loss carry-forwards available to offset Canadian
taxable income at December 31, 2000, were $48.7 million, the majority of which
expires during 2001. The investment tax credit carry-forwards available to
reduce Canadian income taxes was $1.8 million at December 31, 2000, and expire
in various amounts through 2009. The net operating tax loss carry-forwards
available to offset U.S. taxable income at December 31, 2000, were $4.1 million
and expire in various amounts through 2019. We have provided a full valuation
allowance against these deferred tax assets because it is not certain that any
deferred tax assets will be utilized in the future.

INSURANCE

     We maintain insurance policies on insurable risks at levels we consider
appropriate. At the present time, we do not carry business interruption
insurance due to, what we believe, are excessive premium costs for the coverage
provided. However, we do carry business interruption insurance for our offshore
single point mooring system. While we believe we are adequately insured, future
losses could exceed insurance policy limits, or

                                        34
<PAGE>   38

under adverse interpretations, be excluded from coverage. Future liability or
costs, if any, incurred under such circumstances could adversely impact cash
flow.

     Our property insurance covers damage to the real and personal property
located at our two terminals and administrative offices. The property loss limit
is $150 million with a $0.1 million deductible, except for a $0.5 million
deductible for certain losses (wind, flood, earthquake, etc.) at St. Eustatius.
We carry various layers of liability coverage of up to $200 million with a
deductible of approximately $0.3 million (including coverage for liabilities
associated with certain accidental spills). We carry $30 million of coverage on
the offshore single point mooring system at St. Eustatius with a deductible of
approximately $0.3 million. We have coverage up to scheduled values for damage
to our marine vessels with a $50,000 deductible. We also carry other insurance
customary in the industry.

     Our current insurance program commenced March 31, 2000, and generally
extends 12 months. We are currently in negotiations to extend our insurance
agreements upon their expiration and are exploring alternatives that may lead to
changes in the scope of coverage and premium costs.

ACCOUNTING STANDARDS AND POLICIES

     Effective January 1, 2001, we adopted Statement of Financial Accounting
Standards ("SFAS") No. 133 -- "Accounting for Derivative Instruments and Hedging
Activities" which establishes standards of accounting for derivative instruments
including specific hedge accounting criteria. The adoption of SFAS No. 133 did
not have a material impact on us.

     The Accounting Standards Executive Committee (AcSEC) of the American
Institute of Certified Public Accountants is currently formulating a new
accounting standard, which is expected to modify the accounting rules for major
repairs and maintenance expenditures, among other things. AcSEC has not yet
released a draft of this proposed standard for public comment, but is expected
to do so shortly. Therefore, we cannot determine at the present time whether or
not the ultimate implementation of the final standard by us will have a material
effect on our business, financial condition, results of operations, or cash
flows.

      ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     We periodically purchase refined petroleum products from our customers and
others for resale as bunker fuel, for small volume sales to commercial
interests, and to maintain an inventory of blend stocks for our customers.
Petroleum product inventories are held for short periods, generally not
exceeding 90 days. We do not presently have any derivative positions to hedge
our inventory of petroleum products. The following table indicates the aggregate
carrying value of our petroleum products on hand at December 31, 2000, computed
at average costs, net of any lower of cost or market valuation provisions, and
the estimated fair value of such products.

                      ON BALANCE SHEET COMMODITY POSITION
                             (DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                AS OF DECEMBER 31, 2000
                                                              ----------------------------
                                                              CARRYING AMOUNT   FAIR VALUE
                                                              ---------------   ----------
<S>                                                           <C>               <C>
Petroleum Inventory:
  Statia Terminals N.V......................................      $1,485          $1,692
  Statia Terminals Canada...................................          67             200
                                                                  ------          ------
          Total.............................................      $1,552          $1,892
                                                                  ======          ======
</TABLE>

              ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

     The financial statements and supplementary data are included herein
beginning on Page F-1.

                   ITEM 9. CHANGES IN AND DISAGREEMENTS WITH
               ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

     None.

                                        35
<PAGE>   39

                                   PART III.

     The information required by Items 10 through 13 of this Report is
incorporated herein by reference to our definitive proxy statement to be filed
with the U.S. Securities and Exchange Commission on or about March 12, 2001.

                                    PART IV.

                ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
                            AND REPORTS ON FORM 8-K

     (a) 1. Financial Statements Index

     The following consolidated financial statements of Statia Terminals Group
N.V. and its subsidiaries are filed in response to Item 8 of this Report:

<TABLE>
<CAPTION>
                                                              PAGE
                                                              ----
<S>                                                           <C>
Report of Independent Certified Public Accountants..........  F-1
Consolidated Balance Sheets as of December 31, 1999 and
  2000......................................................  F-2
Consolidated Statements of Operations for the years ended
  December 31, 1998, 1999, and 2000.........................  F-3
Consolidated Statements of Shareholders' Equity for the
  years ended December 31, 1998, 1999, and 2000.............  F-4
Consolidated Statements of Cash Flows for the years ended
  December 31, 1998, 1999, and 2000.........................  F-5
Notes to Consolidated Financial Statements..................  F-6
</TABLE>

     2. Financial Statement Schedules

     See Note 18 to our Consolidated Financial Statements for required financial
statement schedules.

     3. Exhibits Index

     See the Exhibits Index on Pages E-1 through E-3 following the signature
pages.

     (b) Reports on Form 8-K

     We filed no Reports on Form 8-K during the quarter ended December 31, 2000.

                                        36
<PAGE>   40

               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

To the Board of Directors of
  Statia Terminals Group N.V.:

     We have audited the accompanying consolidated balance sheets of Statia
Terminals Group N.V. (a Netherlands Antilles corporation) and subsidiaries as of
December 31, 1999 and 2000, and the related consolidated statements of
operations, shareholders' equity and cash flows for each of the three years in
the period ended December 31, 2000. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.

     We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

     In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Statia Terminals Group N.V.
and subsidiaries as of December 31, 1999 and 2000, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 2000, in conformity with accounting principles generally accepted
in the United States.

/s/ ARTHUR ANDERSEN LLP
West Palm Beach, Florida,
  January 24, 2001.

                                       F-1
<PAGE>   41

                  STATIA TERMINALS GROUP N.V. AND SUBSIDIARIES

                          CONSOLIDATED BALANCE SHEETS
                  (DOLLARS IN THOUSANDS EXCEPT SHARE AMOUNTS)

<TABLE>
<CAPTION>
                                                                    DECEMBER 31,
                                                                --------------------
                                                                  1999        2000
                                                                --------    --------
<S>                                                             <C>         <C>
                                       ASSETS
CURRENT ASSETS:
  Cash and cash equivalents.................................    $  5,658    $ 17,472
  Accounts receivable --
     Trade, less allowance for doubtful accounts of $804 and
      $953 in 1999 and 2000, respectively...................      12,957      13,482
     Other..................................................       3,704       1,156
  Inventory, net............................................       3,239       1,552
  Prepaid expenses..........................................       1,723       1,591
                                                                --------    --------
     Total current assets...................................      27,281      35,253
PROPERTY AND EQUIPMENT, net.................................     206,031     202,061
OTHER NONCURRENT ASSETS, net................................       2,985       3,424
                                                                --------    --------
     Total assets...........................................    $236,297    $240,738
                                                                ========    ========

                        LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
  Accounts payable..........................................    $ 14,086    $ 12,145
  Accrued interest payable..................................       1,516       1,535
  Other accrued expenses....................................       7,084       9,739
  Current maturities of long-term debt......................          --       1,069
                                                                --------    --------
     Total current liabilities..............................      22,686      24,488
DISTRIBUTIONS PAYABLE.......................................       2,913       2,913
LONG-TERM DEBT..............................................     101,000     106,931
                                                                --------    --------
     Total liabilities......................................     126,599     134,332
                                                                --------    --------
SHAREHOLDERS' EQUITY:
  Class A common shares, $0.01 par value, 20,000,000 shares
     authorized; 7,600,000 shares issued and 7,227,700 and
     6,299,753 shares outstanding at December 31, 1999 and
     2000, respectively. ...................................          76          76
  Class B subordinated shares, $0.01 par value, 7,800,000
     shares authorized; 3,800,000 shares issued and
     outstanding at December 31, 1999 and 2000..............          38          38
  Class C shares, $0.01 par value, 2,200,000 shares
     authorized; 38,000 shares issued and outstanding at
     December 31, 1999 and 2000. ...........................          --          --
  Additional paid-in capital................................     129,834     129,834
  Notes receivable from shareholders........................      (1,474)     (1,448)
  Accumulated deficit.......................................     (16,522)    (13,509)
  Class A common shares in treasury, at cost, 372,300 and
     1,300,247 shares at December 31, 1999 and 2000,
     respectively. .........................................      (2,254)     (8,585)
                                                                --------    --------
     Total shareholders' equity.............................     109,698     106,406
                                                                --------    --------
COMMITMENTS AND CONTINGENCIES
     Total liabilities and shareholders' equity.............    $236,297    $240,738
                                                                ========    ========
</TABLE>

          See accompanying notes to consolidated financial statements.

                                       F-2
<PAGE>   42

                  STATIA TERMINALS GROUP N.V. AND SUBSIDIARIES

                     CONSOLIDATED STATEMENTS OF OPERATIONS
                  (DOLLARS IN THOUSANDS EXCEPT SHARE AMOUNTS)

<TABLE>
<CAPTION>
                                                                       DECEMBER 31,
                                                              ------------------------------
                                                                1998       1999       2000
                                                              --------   --------   --------
<S>                                                           <C>        <C>        <C>
REVENUES:
  Terminaling services......................................  $ 66,625   $ 61,665   $ 61,547
  Product sales.............................................    70,137    106,678    148,908
                                                              --------   --------   --------
     Total revenues.........................................   136,762    168,343    210,455
                                                              --------   --------   --------
COSTS OF REVENUES:
  Terminaling services......................................    40,739     38,064     40,136
  Product sales.............................................    65,149     99,601    141,198
                                                              --------   --------   --------
     Total costs of revenues................................   105,888    137,665    181,334
                                                              --------   --------   --------
  Gross profit..............................................    30,874     30,678     29,121
ADMINISTRATIVE EXPENSES.....................................     9,500      8,745      9,717
SPECIAL COMPENSATION EXPENSE................................        --      4,099         --
HURRICANE CHARGES...........................................       800      1,750         --
                                                              --------   --------   --------
  Operating income..........................................    20,574     16,084     19,404
LOSS ON DISPOSITION OF PROPERTY AND EQUIPMENT...............     1,652         --         --
INTEREST EXPENSE............................................    16,851     14,286     12,759
INTEREST INCOME.............................................       684        846        387
                                                              --------   --------   --------
  Income before provision for income taxes, preferred stock
     dividends and extraordinary charge.....................     2,755      2,644      7,032
PROVISION FOR INCOME TAXES..................................       320        780        938
                                                              --------   --------   --------
  Income before preferred stock dividends and extraordinary
     charge.................................................     2,435      1,864      6,094
PREFERRED STOCK DIVIDENDS...................................     3,938      2,257         --
                                                              --------   --------   --------
  Income (loss) before extraordinary charge.................    (1,503)      (393)     6,094
EXTRAORDINARY CHARGE RELATED TO EARLY EXTINGUISHMENT OF
  DEBT......................................................        --      4,743         --
                                                              --------   --------   --------
     Net income (loss) available to common shareholders.....  $ (1,503)  $ (5,136)  $  6,094
                                                              ========   ========   ========
BASIC EARNINGS (LOSS) PER COMMON SHARE:
  Income before extraordinary charge........................  $     --   $   0.66   $   0.90
  Extraordinary charge......................................        --       0.92         --
                                                              --------   --------   --------
     Net income (loss) available to common shareholders.....  $     --   $  (0.26)  $   0.90
                                                              ========   ========   ========
DILUTED EARNINGS (LOSS) PER COMMON SHARE:
  Income before extraordinary charge........................  $     --   $   0.44   $   0.57
  Extraordinary charge......................................        --       0.61         --
                                                              --------   --------   --------
     Net income (loss) available to common shareholders.....  $     --   $  (0.17)  $   0.57
                                                              ========   ========   ========
BASIC AND DILUTED EARNINGS (LOSS) PER SUBORDINATED SHARE:
  Income (loss) before extraordinary charge.................  $  (0.45)  $  (1.04)  $     --
  Extraordinary charge......................................        --         --         --
                                                              --------   --------   --------
     Net income (loss) available to common shareholders.....  $  (0.45)  $  (1.04)  $     --
                                                              ========   ========   ========
</TABLE>

          See accompanying notes to consolidated financial statements.

                                       F-3
<PAGE>   43

                  STATIA TERMINALS GROUP N.V. AND SUBSIDIARIES

                CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
                  (DOLLARS IN THOUSANDS EXCEPT SHARE AMOUNTS)
<TABLE>
<CAPTION>
                                     PREFERRED STOCK --                                          NOTES
                                       SERIES D AND E         COMMON SHARES      ADDITIONAL    RECEIVABLE
                                     -------------------   -------------------    PAID-IN         FROM       ACCUMULATED
                                      SHARES     AMOUNT      SHARES     AMOUNT    CAPITAL     SHAREHOLDERS     DEFICIT
                                     --------   --------   ----------   ------   ----------   ------------   -----------
<S>                                  <C>        <C>        <C>          <C>      <C>          <C>            <C>
BALANCE, December 31, 1997.........   61,000    $61,000        41,000    $  4     $     --      $(1,500)      $ (8,883)
  Net loss to common
    shareholders...................       --         --            --      --           --           --         (1,503)
  Amortization expense related to
    stock options..................       --         --            --      --          363           --             --
  Retirement of Series D preferred
    stock..........................   (6,150)    (6,150)           --      --           --           --             --
  Forfeiture related to employment
    termination....................      (26)       (26)          (26)     --           --           26             --
                                     -------    -------    ----------    ----     --------      -------       --------
BALANCE, December 31, 1998.........   54,824     54,824        40,974       4          363       (1,474)       (10,386)
  Net loss to common
    shareholders...................       --         --            --      --           --           --         (5,136)
  Net proceeds from initial public
    offering of class A common
    shares.........................       --         --     7,600,000      76      136,681           --             --
  Exercise of stock options,
    reclassification of class B
    subordinated shares and
    issuance of additional class B
    subordinated shares and class C
    shares.........................       --         --     3,797,026      34           --           --             --
  Redemption of preferred stock....  (54,824)   (54,824)           --      --           --           --             --
  Compensation to Castle Harlan for
    services performed in relation
    to initial public offering of
    class A common shares..........       --         --            --      --         (778)          --             --
  Dividend of Panamanian
    investment.....................       --         --            --      --           --           --         (1,000)
  Vesting of compensatory stock
    options........................       --         --            --      --        2,152           --             --
  Amortization expense related to
    stock options..................       --         --            --      --          154           --             --
  Class A common shares and class B
    subordinated shares
    distributions declared.........       --         --            --      --       (8,738)          --             --
  Purchase of class A common shares
    as treasury stock..............       --         --            --      --           --           --             --
                                     -------    -------    ----------    ----     --------      -------       --------
BALANCE, December 31, 1999.........       --         --    11,438,000     114      129,834       (1,474)       (16,522)
  Net income available to common
    shareholders...................       --         --            --      --           --           --          6,094
  Class A common shares
    distributions declared.........       --         --            --      --           --           --         (3,081)
  Purchase of class A common shares
    as treasury stock..............       --         --            --      --           --           --             --
  Cancellation related to
    employment termination.........       --         --            --      --           --           26             --
                                     -------    -------    ----------    ----     --------      -------       --------
BALANCE, December 31, 2000.........       --    $    --    11,438,000    $114     $129,834      $(1,448)      $(13,509)
                                     =======    =======    ==========    ====     ========      =======       ========

<CAPTION>
                                      CLASS A
                                      COMMON
                                     SHARES IN
                                     TREASURY     TOTAL
                                     ---------   --------
<S>                                  <C>         <C>
BALANCE, December 31, 1997.........   $    --    $ 50,621
  Net loss to common
    shareholders...................        --      (1,503)
  Amortization expense related to
    stock options..................        --         363
  Retirement of Series D preferred
    stock..........................        --      (6,150)
  Forfeiture related to employment
    termination....................        --          --
                                      -------    --------
BALANCE, December 31, 1998.........        --      43,331
  Net loss to common
    shareholders...................        --      (5,136)
  Net proceeds from initial public
    offering of class A common
    shares.........................        --     136,757
  Exercise of stock options,
    reclassification of class B
    subordinated shares and
    issuance of additional class B
    subordinated shares and class C
    shares.........................        --          34
  Redemption of preferred stock....        --     (54,824)
  Compensation to Castle Harlan for
    services performed in relation
    to initial public offering of
    class A common shares..........        --        (778)
  Dividend of Panamanian
    investment.....................        --      (1,000)
  Vesting of compensatory stock
    options........................        --       2,152
  Amortization expense related to
    stock options..................        --         154
  Class A common shares and class B
    subordinated shares
    distributions declared.........        --      (8,738)
  Purchase of class A common shares
    as treasury stock..............    (2,254)     (2,254)
                                      -------    --------
BALANCE, December 31, 1999.........    (2,254)    109,698
  Net income available to common
    shareholders...................        --       6,094
  Class A common shares
    distributions declared.........        --      (3,081)
  Purchase of class A common shares
    as treasury stock..............    (6,331)     (6,331)
  Cancellation related to
    employment termination.........        --          26
                                      -------    --------
BALANCE, December 31, 2000.........   $(8,585)   $106,406
                                      =======    ========
</TABLE>

          See accompanying notes to consolidated financial statements.

                                       F-4
<PAGE>   44

                  STATIA TERMINALS GROUP N.V. AND SUBSIDIARIES

                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                             (DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                      DECEMBER 31,
                                                              ----------------------------
                                                               1998       1999      2000
                                                              -------   --------   -------
<S>                                                           <C>       <C>        <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Income before preferred stock dividends and extraordinary
     charge.................................................  $ 2,435   $  1,864   $ 6,094
     Adjustments to reconcile income before preferred stock
      dividends and extraordinary charge to net cash
      provided by operating activities: --
       Depreciation, amortization, and certain non-cash
          charges...........................................   12,383     11,686    13,256
       Provision for possible bad debts.....................       72         20       149
       Hurricane charge.....................................       --      1,500        --
       Non-cash special compensation expense................       --      2,152        --
       Loss on disposition of property and equipment........    1,652         --        --
     Changes in operating assets and liabilities: --
       Accounts receivable -- trade.........................    2,458     (5,415)     (674)
       Accounts receivable -- other.........................       20     (1,376)    2,548
       Inventory............................................   (3,281)     1,289     1,687
       Prepaid expenses.....................................       72     (1,084)      132
       Other noncurrent assets..............................        6        (70)     (515)
       Accounts payable.....................................    1,574      4,780    (1,941)
       Interest payable and other accrued expenses..........      799     (1,681)    2,674
                                                              -------   --------   -------
          Net cash provided by operating activities.........   18,190     13,665    23,410
                                                              -------   --------   -------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Purchases of property and equipment.......................  (10,714)    (8,593)   (8,578)
  Proceeds from sale of property and equipment..............      122         15        --
  Investment in a limited liability corporation.............       --         --      (500)
  Proceeds from sale of Statia Terminals Southwest, Inc.....    6,500         --        --
                                                              -------   --------   -------
          Net cash used in investing activities.............   (4,092)    (8,578)   (9,078)
                                                              -------   --------   -------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Proceeds from borrowing...................................       --         --     7,000
  Borrowing costs paid......................................       --         --      (106)
  Net proceeds from initial public offering of class A
     common shares..........................................       --    136,757        --
  Redemption of preferred stock.............................   (6,150)   (94,824)       --
  Repurchase of 11 3/4% First Mortgage Notes................       --    (34,000)       --
  Acquisition costs related to the repurchase of 11 3/4%
   First Mortgage Notes.....................................       --     (3,681)       --
  Payment of preferred stock dividends......................       --     (9,697)       --
  Payment of class A common share distributions.............       --     (5,825)   (3,081)
  Purchase of class A common shares as treasury stock.......       --     (2,254)   (6,331)
  Issuance of additional class B subordinated shares and
     class C shares.........................................       --         34        --
                                                              -------   --------   -------
          Net cash used in financing activities.............   (6,150)   (13,490)   (2,518)
                                                              -------   --------   -------
          Increase (decrease) in cash and cash
            equivalents.....................................    7,948     (8,403)   11,814
CASH AND CASH EQUIVALENTS, at beginning of year.............    6,113     14,061     5,658
                                                              -------   --------   -------
CASH AND CASH EQUIVALENTS, at end of year...................  $14,061   $  5,658   $17,472
                                                              =======   ========   =======
SUPPLEMENTAL DISCLOSURES OF
 CASH FLOW INFORMATION:
  Cash paid for income taxes................................  $   369   $    677   $   671
                                                              =======   ========   =======
  Cash paid for interest....................................  $15,940   $ 14,012   $12,058
                                                              =======   ========   =======
</TABLE>

          See accompanying notes to consolidated financial statements.
                                       F-5
<PAGE>   45

                  STATIA TERMINALS GROUP N.V. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                  (DOLLARS IN THOUSANDS EXCEPT SHARE AMOUNTS)

1. ORGANIZATION AND OPERATIONS

     Statia Terminals Group N.V. was formed on September 4, 1996 by Castle
Harlan Partners II L.P. ("Castle Harlan"), a private equity investment fund
managed by Castle Harlan, Inc., a private merchant bank, certain members of
management and others, and commenced operations on November 27, 1996
("Inception"). Statia Terminals Group N.V. and Subsidiaries (the "Company") own
and operate petroleum blending, transshipment and storage facilities located on
the island of St. Eustatius, Netherlands Antilles and near Point Tupper, Nova
Scotia, Canada. The Company's terminaling services are furnished to many of the
world's largest producers of crude oil, integrated oil companies, oil traders,
refiners and petrochemical companies. In addition to storage, the Company
provides a variety of related terminal services including the supplying of
bunkering, crude oil and petroleum product blending and processing, emergency
and spill response, brokering of product trades and ship services. A subsidiary
of the Company provides administrative services for the Company from its office
in Deerfield Beach, Florida.

     The Company includes the following primary entities (collectively, the
"Statia Operations"): Statia Terminals Group N.V. ("Group"), Statia Terminals
International N.V. ("Statia"), Statia Terminals N.V. (each incorporated in the
Netherlands Antilles), Statia Terminals Canada, Inc. (incorporated in Nova
Scotia, Canada) and Statia Terminals Southwest, Inc. (incorporated in Texas, the
"Brownsville Facility") which was sold in July 1998 (see Note 16). Significant
intercompany balances and transactions have been eliminated.

     As further discussed in Note 3, on April 28, 1999, the Company completed
its initial public offering of equity.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

  Use of Estimates

     These consolidated financial statements have been prepared in conformity
with generally accepted accounting principles as promulgated in the United
States which require management to make estimates and assumptions that affect
the reported amounts of assets and liabilities. Significant estimates primarily
include: the accrual for environmental expenses, accruals for legal and
personnel related expenses, allowance for doubtful accounts, inventory reserve,
estimated useful lives of depreciable assets, and other valuation allowances
related to deferred tax assets. Management is also required to make judgments
regarding disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses during
the reporting periods. Actual results could differ from those estimates.

  Revenue Recognition

     Revenues from storage and throughput operations are recognized ratably as
the services are provided. Revenues and commissions from terminaling services,
bunkering services, and bulk product sales are recognized upon completion of
delivery of the service or product.

     During 2000, the Company adopted the U.S. Securities and Exchange
Commission's ("SEC") Staff Accounting Bulletin 101, "Revenue Recognition" ("SAB
101"), which provides guidance on the recognition, presentation, and disclosure
of revenue in financial statements filed with the SEC. The adoption of SAB 101
did not have a material effect on the Company's business, financial condition,
results of operations or cash flows.

  Foreign Currency Translation and Exchange

     Except for certain operating expenses denominated in Netherlands Antilles
guilders and Canadian dollars, and certain Canadian dollar-denominated revenues,
all of the Company's transactions are in U.S.

                                       F-6
<PAGE>   46
                  STATIA TERMINALS GROUP N.V. AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                  (DOLLARS IN THOUSANDS EXCEPT SHARE AMOUNTS)

dollars. Therefore, the functional currency of the Company and each of its
subsidiaries has been determined to be the U.S. dollar. In accordance with the
provisions of Statement of Financial Accounting Standards ("SFAS") No. 52
"Foreign Currency Translation", transaction gains and losses that arise from
exchange rate fluctuations are included in the results of operations as
incurred. Such transaction gains and losses have not been significant.

  Impairment of Long-Lived Assets

     SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed Of," requires that long-lived assets and
certain identifiable intangibles to be held and used by an entity be reviewed
for impairment whenever events or changes in circumstances indicate that the
carrying amount of any asset may not be recoverable. SFAS No. 121 also requires
that long-lived assets and certain identifiable long-lived assets to be disposed
of be reported at the lower of carrying amount or fair value less cost to sell.
The Company continually evaluates factors, events, and circumstances which
include, but are not limited to, its historical and projected operating
performance, specific industry trends, and general economic conditions to assess
whether the remaining estimated useful lives of long-lived assets may warrant
revision or that the remaining balance of long-lived assets may not be
recoverable. When such factors, events, or circumstances indicate that
long-lived assets should be evaluated for possible impairment, the Company uses
an estimate of undiscounted cash flow over the remaining lives of the long-lived
assets in measuring whether an impairment exists. The Company measures an asset
impairment loss as the amount by which the carrying amount exceeds the fair
market value of the asset.

  Stock-Based Compensation Plans

     SFAS No. 123, "Accounting for Stock-Based Compensation," allows for either
the adoption of a fair value method for accounting for stock-based compensation
plans or for the continuation of accounting under Accounting Principles Board
("APB") Opinion No. 25, "Accounting for Stock Issued to Employees," and related
interpretations with supplemental disclosures.

     The Company has chosen to account for its stock options using the intrinsic
value based method prescribed in APB Opinion No. 25 and, accordingly, does not
recognize compensation expense for stock option grants made at an exercise price
equal to or in excess of the fair market value of the stock at the date of
grant.

  Cash and Cash Equivalents

     The Company's cash and cash equivalents consist of short-term, highly
liquid investments with maturities of three months or less. Such short-term
investments are carried at cost, which approximates market value, and are
classified as cash and cash equivalents.

  Financial Instruments

     The Company uses various methods and assumptions to estimate the fair value
of each class of financial instrument. Due to their nature, the carrying value
of cash and cash equivalents (including restricted cash), accounts receivable,
accounts payable and variable rate debt approximates fair value. The fair value
of the Company's fixed rate debt is estimated based on market "bid" prices and
approximates carrying value as of December 31, 1999 and 2000. The fair value of
the notes receivable from shareholders is based on an independent appraisal of
the underlying collateral. The Company's other financial instruments are not
significant.

                                       F-7
<PAGE>   47
                  STATIA TERMINALS GROUP N.V. AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                  (DOLLARS IN THOUSANDS EXCEPT SHARE AMOUNTS)

  Concentrations of Credit Risk

     Financial instruments, which potentially subject the Company to a
concentration of credit risk, primarily consist of cash and cash equivalents
(including restricted cash), accounts receivable-trade, and notes receivable
from shareholders. The Company maintains cash and cash equivalents with various
major financial institutions. The Company performs periodic evaluations of the
relative credit standing of these financial institutions. Additionally, these
financial institutions and financial instruments must meet the qualifications
specified in certain of the Company's debt agreements. To reduce credit risk
related to its trade accounts receivable, the Company performs periodic credit
evaluations of its customers and has certain maritime lien rights against ships
to which it has sold bunker fuel. Additionally, virtually all customers of the
Company's terminaling services segment are required to pay in advance of
services being rendered.

     Substantially all of the Company's revenues are derived from customers in
the global petroleum industry. At December 31, 1999 and 2000, $11,440 and
$11,885 of the Company's accounts receivable-trade, respectively, were from
customers of the Company's product sales segment. Such receivables are typically
collected within thirty days of the product sale. A substantial portion of these
customers represent shipping concerns providing services to the global petroleum
industry.

  Inventory

     Inventory consists of oil products. Provision has been made to reduce
excess or obsolete inventory to the lower of weighted average cost or estimated
market value.

  Property and Equipment

     Property and equipment are stated at cost less accumulated depreciation.
Depreciation expense is computed using the straight-line method over the
estimated useful lives of the respective assets. Additions to property and
equipment, replacements, betterments, and major renewals are capitalized. The
Company capitalizes certain costs associated with software developed or obtained
for internal use in accordance with the American Institute of Certified Public
Accountants' ("AICPA") Statement of Position 98-1, "Accounting for the Costs of
Computer Software Developed or Obtained for Internal Use." Capitalized costs are
amortized using the straight-line method over the estimated useful lives of the
respective assets.

     Development costs, including costs of geological studies related to
projects whose completion as determined by management is probable, are
capitalized. Development costs are amortized using the straight-line method over
the estimated useful lives of the respective assets upon completion of the
project. Development costs related to projects, which are no longer probable of
completion, are expensed when such determination as to probability is made.
Development costs which are exploratory in nature are expensed as incurred.

     Repair and maintenance expenditures, which do not materially increase asset
values or extend useful lives, are expensed.

  Other Noncurrent Assets

     Other noncurrent assets primarily consist of deferred financing costs in
the amounts of $2,701 and $2,126, net of accumulated amortization of $2,108 and
$2,790, as of December 31, 1999 and 2000, respectively. The deferred financing
costs related to establishing debt obligations are amortized ratably over the
life of the underlying obligation. Debt cost amortization expense was $911,
$767, and $682 for the years ended December 31, 1998, 1999, and 2000,
respectively.

                                       F-8
<PAGE>   48
                  STATIA TERMINALS GROUP N.V. AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                  (DOLLARS IN THOUSANDS EXCEPT SHARE AMOUNTS)

     The Company's investment in a limited liability corporation is carried at
cost of $500, which approximates fair value, and is included in other noncurrent
assets.

     Other noncurrent assets as of December 31, 2000 also include cash of $620
restricted by terms of the indenture to the First Mortgage Notes. The Company
may seek release of this restriction by replacing certain fixed assets.

  Class A Common Shares in Treasury

     The Company accounts for purchases of treasury shares under the cost method
with the aggregate cost recorded as a reduction of shareholders' equity.

  Environmental, Health, and Safety Matters

     The Company is subject to comprehensive and periodically changing
environmental, health and safety laws and regulations within the jurisdictions
of its operations, including those governing oil spills, emissions of air
pollutants, discharges of wastewater and storm water, and the disposal of
non-hazardous and hazardous waste. Expenditures for environmental, health, and
safety matters, which benefit future periods and qualify as property and
equipment, are capitalized and depreciated over the respective lives of the
assets.

     The Company accrues for costs associated with environmental remediation
when it becomes probable that a liability has been incurred and the amount can
be reasonably estimated. The Company recognizes amounts recoverable from third
parties when the collection of such amounts is probable. Recoverable amounts and
accrued costs are included in Accounts receivable -- Other and Other accrued
expenses, respectively. See Note 12 for a further discussion of such matters.

  Income Taxes

     The Company determines its tax provision and deferred tax balances in
accordance with SFAS No. 109, "Accounting for Income Taxes." Under this
approach, the provision for income taxes represents income taxes paid or payable
for the current year adjusted for the change in deferred taxes during the year.
Deferred income tax assets and liabilities reflect the net tax effects of
temporary differences between the financial statement bases and the tax bases of
assets and liabilities and are adjusted for changes in tax rates and tax laws
when changes are enacted. The Company provides a valuation allowance against
deferred tax assets when it determines that it is not more likely than not that
the deferred tax asset will be utilized in the future.

  Earnings per Share

     In connection with its initial public offering of equity discussed in Note
3 below, the Company adopted SFAS No. 128, "Earnings per Share". Earnings per
share are computed based upon the "Participating Securities and Two-Class Common
Stock" methodology as required by SFAS No. 128. Earnings and losses have been
allocated to each class of shares based upon changes in the historical basis
liquidation values of the classes of shares during the periods presented as
determined in accordance with the Company's Articles of Incorporation. Under
this methodology, all of the earnings and losses prior to the closing of the
Company's initial public offering of equity on April 28, 1999 have been
allocated to the class B subordinated shareholders. All of the earnings and
losses subsequent to April 28, 1999 have been allocated to the class A common
shareholders.

     Basic earnings (loss) per share is computed by dividing the earnings and
losses allocated to each class of equity by the weighted average number of
shares outstanding for each class during the period. Diluted earnings (loss) per
share is computed the same as basic earnings (loss) per share except the
denominator is adjusted for the effect of class A common share and class B
subordinated share equivalents outstanding.

                                       F-9
<PAGE>   49
                  STATIA TERMINALS GROUP N.V. AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                  (DOLLARS IN THOUSANDS EXCEPT SHARE AMOUNTS)

     For periods prior to April 28, 1999, class B subordinated share equivalents
include, where appropriate, the assumed exercise of previously outstanding stock
options and the assumed conversion of the Company's previously outstanding
Series B preferred stock. The assumed conversion of the Company's previously
outstanding Series B preferred stock (330,653 class B subordinated shares) was
antidilutive for 1998 and 1999. For periods subsequent to April 28, 1999, class
A common share equivalents include, where appropriate, the assumed exercise of
outstanding stock options. Earnings per share amounts presented have been
adjusted to give retroactive effect, as of the beginning of 1998 and 1999, to
the reclassification and issuance of additional class B subordinated shares and
class C shares that occurred in connection with the initial public offering of
equity (see Note 3).

     The following additional information is presented with respect to the
Company's earnings per share amounts:

<TABLE>
<CAPTION>
                                                      FOR THE YEARS ENDED DECEMBER 31,
                                                    -------------------------------------
                                                       1998         1999         2000
                                                    ----------   ----------   -----------
<S>                                                 <C>          <C>          <C>
EARNINGS PER COMMON SHARE
Earnings and losses allocated to class A common
  shares:
  Income before extraordinary charge..............  $       --   $    3,410   $     6,094
  Extraordinary charge............................          --        4,743            --
                                                    ----------   ----------   -----------
  Net income (loss) available to common
     shareholders.................................  $       --   $   (1,333)  $     6,094
                                                    ==========   ==========   ===========
Weighted average class A common shares
  outstanding.....................................          --    5,156,421     6,794,192
Dilutive effect of weighted average class B
  subordinated shares outstanding.................          --    2,571,507     3,800,000
Dilutive effect of weighted average stock options
  outstanding.....................................          --           --        26,093
                                                    ----------   ----------   -----------
Diluted common shares outstanding.................          --    7,727,928    10,620,285
                                                    ==========   ==========   ===========
EARNINGS PER SUBORDINATED SHARE
Earnings and losses allocated to class B
  subordinated shares:
  Loss before extraordinary charge................  $   (1,503)  $   (3,803)  $        --
  Extraordinary charge............................          --           --            --
                                                    ----------   ----------   -----------
  Net income (loss) available to common
     shareholders.................................  $   (1,503)  $   (3,803)  $        --
                                                    ==========   ==========   ===========
Weighted average class B subordinated shares
  outstanding.....................................   3,305,022    3,641,144     3,800,000
Dilutive effect of stock options and preferred
  stock with conversion features..................          --           --            --
                                                    ----------   ----------   -----------
Diluted subordinated shares outstanding...........   3,305,022    3,641,144     3,800,000
                                                    ==========   ==========   ===========
</TABLE>

  Comprehensive Income

     SFAS No. 130, "Reporting Comprehensive Income" establishes standards for
the reporting and display of comprehensive income and its components in the
financial statements. The following types of items, among others, are to be
considered in computing comprehensive income: foreign currency translation
adjustments, pension liability adjustments and unrealized gain/loss on
securities available for sale. For all periods presented herein, there were no
differences between net income (loss) available to common shareholders and
comprehensive income (loss).

                                       F-10
<PAGE>   50
                  STATIA TERMINALS GROUP N.V. AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                  (DOLLARS IN THOUSANDS EXCEPT SHARE AMOUNTS)

  Reclassifications

     Certain reclassifications were made to the 1998 and 1999 financial
statements and notes thereto in order to conform to the 2000 presentation.

  Recent Accounting Pronouncements

     Effective January 1, 2001, we adopted SFAS No. 133, "Accounting for
Derivative Instruments and Hedging Activities" which establishes standards of
accounting for derivative instruments including specific hedge accounting
criteria. The adoption of SFAS No. 133 did not have a material impact on us.

     The Accounting Standards Executive Committee (AcSEC) of the AICPA is
currently formulating a new accounting standard which is expected to modify the
accounting rules for major repairs and maintenance expenditures, among other
things. AcSEC has not yet released a draft of this proposed standard for public
comment, but is expected to do so shortly. Therefore, we cannot determine at the
present time whether or not the ultimate implementation of the final standard by
the Company will have a material effect on the Company's business, financial
condition, results of operations, or cash flows.

3. INITIAL PUBLIC OFFERING OF EQUITY AND RELATED TRANSACTIONS

     On April 28, 1999, the Company completed its initial public equity offering
of 7.6 million class A common shares. The offering price was $20 per share
raising gross proceeds of $152,000. The gross proceeds of the offering were used
primarily to redeem all of the Company's outstanding Series A, B, C, D, and E
preferred stock and pay accrued dividends, pay underwriters' discounts and fees,
and pay certain other costs directly associated with the offering. The remaining
proceeds were used during May 1999, along with existing cash, to repurchase in
the open market a principal amount of $34,000 of the First Mortgage Notes for
$39,522, including acquisition costs and accrued interest of $3,681 and $1,841,
respectively. During the second quarter of 1999, the acquisition costs and the
unamortized deferred financing costs related to the repurchased First Mortgage
Notes ($1,062) were recorded as an extraordinary charge. There was no income tax
effect associated with this extraordinary charge.

     Immediately prior to the initial public offering of equity, the Company
transferred its ownership interest in a Panamanian investment, valued at $1,000,
to its shareholders as a dividend. In connection with a restructuring effected
contemporaneously with the offering, all outstanding stock options were
exercised and converted along with all existing common stock into 3.8 million
class B subordinated shares and 38,000 class C shares.

     During the three months ended March 31, 1999, the Company recorded as
special compensation expense a bonus in the amount of $1,947 for particular
members of the Company's management. The purpose of this special management
bonus was to partially reimburse these individuals with respect to adverse tax
consequences that resulted from the offering and other past compensation
arrangements.

                                       F-11
<PAGE>   51
                  STATIA TERMINALS GROUP N.V. AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                  (DOLLARS IN THOUSANDS EXCEPT SHARE AMOUNTS)

4. PROPERTY AND EQUIPMENT

     Property and equipment consisted of the following as of December 31:

<TABLE>
<CAPTION>
                                                                                  USEFUL
                                                                                  LIVES
                                                             1999       2000     IN YEARS
                                                           --------   --------   --------
<S>                                                        <C>        <C>        <C>
Land.....................................................  $  1,291   $  1,291
Land improvements........................................     6,872      7,832     5-20
Buildings and improvements...............................     3,446      3,985    20-40
Plant machinery and terminals............................   159,822    165,261     4-40
Mooring facilities and marine equipment..................    51,701     54,889     4-40
Field and office equipment...............................     4,068      4,784     3-15
Spare parts and hoses....................................     2,687        793
Capital projects in process..............................     6,501      5,017
                                                           --------   --------
          Total property and equipment, at cost..........   236,388    243,852
          Less accumulated depreciation..................    30,357     41,791
                                                           --------   --------
          Property and equipment, net....................  $206,031   $202,061
                                                           ========   ========
</TABLE>

     As of December 31, 1999 and 2000, capital projects in process include $378
and $605 of development costs, respectively, including costs of geological
studies related to a salt cavern storage project in Nova Scotia, Canada.

     During the three months ended March 31, 2000, the Company replaced certain
large hoses attached to its single point mooring system (the "SPM"). In
connection with this hose change-out, the Company adopted the component
depreciation method for the SPM and its hoses as of January 1, 2000, which
resulted in a change in the estimated useful lives for depreciation purposes for
these hoses. As a result, in addition to recurring depreciation charges, the
Company incurred a non-cash charge to depreciation expense of $832 during the
first quarter of 2000, which is included in costs of terminaling services
revenues and represents the full year effect of this change.

     The Company is currently reviewing the status of it terminal operations
software, which is being developed internally. The ultimate outcome of this
review is uncertain but may result in a decision to complete development of this
system, or a portion thereof, or replace the current system with commercially
available software. As of December 31, 2000, capitalized costs related to this
internally developed software were approximately $896.

5. DEBT

     The 11 3/4% $135,000, First Mortgage Notes due November 15, 2003, (the
"Notes") were issued by subsidiaries of the Company (the "Issuers") on November
27, 1996, in connection with the acquisition of certain companies from Praxair,
Inc. by Castle Harlan Partners II L.P. (the "Castle Harlan Acquisition") and pay
interest on May 15 and November 15 of each year. The Notes are redeemable, in
whole or, in part, at the option of the Issuers at any time on or after November
15, 2000, at the redemption prices listed below (expressed as percentages of
principal amount), together with accrued and unpaid interest, if any, thereon to
the redemption date, if redeemed during the 12-month period beginning November
15, in the year indicated.

                                       F-12
<PAGE>   52
                  STATIA TERMINALS GROUP N.V. AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                  (DOLLARS IN THOUSANDS EXCEPT SHARE AMOUNTS)

The Company may also forego the redemption process and repurchase Notes in the
open market on or after November 15, 2000.

<TABLE>
<CAPTION>
                                                                  OPTIONAL
YEAR                                                          REDEMPTION PRICE
----                                                          ----------------
<S>                                                           <C>
2000........................................................      105.875%
2001........................................................      102.938%
2002........................................................      100.000%
</TABLE>

     Notwithstanding the foregoing, any time on or prior to November 15, 1999,
the Issuers were allowed to redeem or repurchase up to 35% of the aggregate
principal amount of the Notes with the proceeds of one or more equity offerings,
plus accrued and unpaid interest, if any, to the date of redemption or
repurchase, provided that after giving effect to such redemption or repurchase,
at least 65% of the aggregate principal amount of the Notes would remain
outstanding. As further discussed in Note 3, during May 1999 and in connection
with its initial public offering of equity, the Company repurchased in the open
market a principal amount of $34,000 of the Notes.

     The Notes are guaranteed on a full, unconditional, joint and several basis
by each of the indirect and direct active subsidiaries of Statia. The Notes are
also subject to certain financial covenants as set forth in the indenture and
related security documents to these Notes, the most restrictive of which
include, but are not limited to the following: (i) a consolidated fixed charge
coverage ratio for the prior four full fiscal quarters of at least 2.0 to 1
which, if met, will permit the Company to make additional borrowings above the
Company's revolving credit facility discussed below, (ii) other limitations on
indebtedness, and (iii) restrictions on certain payments. In addition, the Notes
place restrictions on the Company's ability to pay dividends other than
distributions from the proceeds of assets held for sale and certain management
fees as discussed in Note 13 below. Except with the occurrence of an event of
default, subsidiaries of Statia have no restrictions upon transfers of funds in
the form of dividends, loans, or cash advances. The Company is in compliance
with the financial covenants set forth in the indenture.

     In December 2000, a subsidiary of the Company borrowed $7,000 (excluding
direct costs of the borrowing of $106) from an equipment financing company, (the
"Responder Loan"). The Responder Loan requires monthly payments of principal and
interest, and matures on January 1, 2007. Interest accrues at three month London
InterBank Offered Rates plus 3.2% and adjusts monthly. The Responder Loan is
collateralized by a security interest in the M/V Statia Responder, one of the
Company's emergency response and maintenance support vessels, which is operating
at the Company's St. Eustatius terminal. The proceeds from the Responder Loan
are available for general corporate purposes, which may include capital
expenditures, financing of various business development projects, funding of the
Company's stock purchase program, and other business purposes.

     The Responder Loan is subject to certain financial covenants, the most
restrictive of which include, but are not limited to the following: (i) a debt
service coverage ratio of at least 1.50 to 1, (ii) the maintenance of $70,000 of
net worth, and (iii) the maintenance of specified insurance coverage limits on
the collateral. The Company is in compliance with the financial covenants of the
Responder Loan.

                                       F-13
<PAGE>   53
                  STATIA TERMINALS GROUP N.V. AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                  (DOLLARS IN THOUSANDS EXCEPT SHARE AMOUNTS)

     At December 31, 2000, the scheduled maturities of the Company's long-term
debt were as follows:

<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31,
------------------------
<S>                                                           <C>
2001........................................................  $  1,069
2002........................................................     1,167
2003........................................................   102,167
2004........................................................     1,167
2005........................................................     1,167
Thereafter..................................................     1,263
                                                              --------
                                                              $108,000
                                                              ========
</TABLE>

     The Company has a revolving credit facility (the "Credit Facility"), which
allows certain of the Company's subsidiaries to borrow up to $17,500 or the
limit of the borrowing base as defined in the Credit Facility. The Credit
Facility calls for a commitment fee of 0.375% per annum on a portion of the
unused funds. The Credit Facility bears interest at a rate of prime plus 0.5%.
The Credit Facility constitutes senior indebtedness of the Company and is
secured by a first priority lien on certain of the Company's accounts receivable
and inventory. The Credit Facility is subject to certain restrictive covenants;
however, it is not subject to financial covenants. The Credit Facility does not
restrict the Company's subsidiaries from transferring funds to the Company in
the form of dividends, loans or cash advances; however, the failure to pay
interest when due constitutes an event of default under the Credit Facility and
such event of default, until cured, prohibits upstream dividend payments to be
made to the Company. The Credit Facility expires on November 27, 2001. At
December 31, 1999 and 2000, the Company had approximately $10,603 and $11,047,
respectively, available for borrowing under the Credit Facility, as limited by
the borrowing base computation, and no outstanding borrowings.

6. CAPITAL STRUCTURE

     Each class A common share and class B subordinated share is entitled to one
vote on issues brought before the Company's shareholders. The class C shares
have no voting privileges. Statia Terminals Holdings N.V. ("Holdings") owns all
of the Company's class B subordinated shares and class C shares.

     The class A common shares are entitled, to the extent there is sufficient
available cash as defined in the Company's Articles of Incorporation, to a
target quarterly distribution of $0.45 per share, before the Company makes any
distributions on its class B subordinated shares. In general, the Company will
make distributions of available cash, if any, first to the class A common shares
until each has received $0.45 per quarter plus any arrearages from prior
quarters and second to the class B subordinated shares until each has received
$0.45 per quarter. Class B subordinated shares do not accrue distribution
arrearages. If the Company makes quarterly distributions of available cash to
the class A common shares and class B subordinated shares above specified
additional distribution levels, the holders of class C shares will receive
distributions that represent an increasing percentage of the total distributions
made above those specified distribution levels. However, there are no assurances
that the Company will be able to pay distributions to any of its classes of
shares.

     The Company will defer making payment on the first $6,800 of distributions
that would otherwise have been made on the class B subordinated shares until the
end of the deferral period, as defined in the Company's Articles of
Incorporation. The subordination period will generally end once the Company
meets certain financial tests, which are defined in the Company's Articles of
Incorporation. The subordination period generally cannot end prior to June 30,
2004. Under particular circumstances, a portion of the class B subordinated
shares, not exceeding 50%, may convert into class A common shares before the
expiration of the subordination period. After the deferral period, the Company
will pay to the class B subordinated shares, until the deferred distributions
have been paid in full, all available cash from operating surplus remaining
after all

                                       F-14
<PAGE>   54
                  STATIA TERMINALS GROUP N.V. AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                  (DOLLARS IN THOUSANDS EXCEPT SHARE AMOUNTS)

common share arrearages are paid, and the target quarterly distribution is paid
on all class A common shares and class B subordinated shares, prior to any
further distribution.

     During the years ended December 31, 1999 and 2000, the Company declared and
paid distributions on the class A common shares of $5,825 ($0.7665 per share)
and $3,081 ($0.45 per share), respectively. Additionally, during 1999,
distributions on the class B subordinated shares aggregating $2,913 ($0.7665 per
share) were declared. Distributions on the class B subordinated shares were
deferred and will remain deferred until expiration of the deferral period as
described above. No distributions on our class B subordinated shares were
declared during 2000.

     On January 24, 2001, the Company's board of directors declared a
distribution of $0.20 per share on the class A common shares, payable on
February 14, 2001, for the benefit of shareholders of record at the close of
business on January 31, 2001. Pursuant to the Company's Articles of
Incorporation, the $0.25 per share difference between the declared distribution
and the target quarterly distribution of $0.45 per share represents an
arrearage, which must be paid from future available cash. After declaration of
this distribution, the aggregate arrearage per share on the class A common
shares was $1.60. No distribution was declared on the class B subordinated
shares.

     At the end of the subordination period as defined in the Company's Articles
of Incorporation, each class B subordinated share will convert to one class A
common share and will participate equally with the other class A common shares,
subject to the distribution rights of the class C shares, in future
distributions of available cash. The class A common shares will then no longer
accrue distribution arrearages.

     Should the Company undergo a dissolution and liquidation, its assets will
be sold or otherwise disposed of. The Company will apply the proceeds of
liquidation first to the payment of its creditors in order of their priority.
Then any remaining proceeds will be distributed to the holders of the class A
common shares, class B subordinated shares and class C shares in order of their
priority. In liquidation, the holders of class A common shares will be entitled
to receive their unrecovered initial price and the target quarterly distribution
due on such common shares plus any unpaid common share arrearages before any
distribution is made to holders of the class B subordinated shares.

     The Company's board of directors has authorized the open market purchase of
up to two million shares of the Company's class A common shares. As of December
31, 1999 and 2000, the Company had acquired 372,300 and 1,300,247 class A common
shares at an aggregate cost of $2,254 and $8,585, respectively, pursuant to this
program. On January 8, 2001, the Company purchased 61,000 class A common shares
pursuant to this program from Statia Terminals Cayman, Inc. ("Cayman") at an
aggregate fair value of $480. Cayman is owned by the same shareholders who own
Holdings.

7. PREFERRED STOCK

     Prior to its initial public offering of equity, the Company had authorized
preferred stock of $26,950 divided into 269,500 shares with a par value of $0.10
consisting of the following shares: (i) 20,000 shares of 8% Series A Cumulative
Preferred Stock (the "Series A Preferred Stock"); (ii) 10,000 shares of 8%
Series B Cumulative Preferred Stock (the "Series B Preferred Stock"); (iii)
10,000 shares of 8% Series C Cumulative Preferred Stock (the "Series C Preferred
Stock"); (iv) 20,000 shares of 2% Series D Preferred Stock (the "Series D
Preferred Stock"); and (v) 209,500 shares of 2% Series E Preferred Stock (the
"Series E Preferred Stock").

     The Series A, B and C Preferred Stock in the aggregate of $40,000 were
contributed from Praxair, Inc. as non-cash equity and contained provisions for
redemption beyond the control of the Company. As the Series B Preferred Stock
was not redeemed by the Company prior to November 27, 1998, the dividend rate on
the Company's Series A, B and C Preferred Stock increased from 8% to 14.75%
effective November 28, 1998, in
                                       F-15
<PAGE>   55
                  STATIA TERMINALS GROUP N.V. AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                  (DOLLARS IN THOUSANDS EXCEPT SHARE AMOUNTS)

accordance with the Company's preferred stock agreements and its prior Articles
of Incorporation. Dividends on the Series D and E Preferred Stock were waived.

     The indenture to the Notes permitted the sale of the Brownsville facility
and permitted a restricted payment from Statia to Group equal to the net
proceeds from such sale. Such amounts were required to be applied to redeem the
Series D Preferred Stock. On July 29, 1998 the Company sold the Brownsville
Facility (see Note 16) and a restricted payment of $6,150 was made from Statia
to Group to redeem a portion of the Series D Preferred Stock.

     All remaining preferred stock was redeemed and all accrued preferred stock
dividends were paid on April 28, 1999, with a portion of the proceeds from the
Company's initial public offering of equity.

8. NOTES RECEIVABLE FROM SHAREHOLDERS

     Notes receivable from shareholders represent nonrecourse loans made by the
Company to certain members of management and are indirectly secured by pledges
of certain of the Company's class B subordinated shares. The loans bear interest
at 5.17% and mature on the earlier of (i) April 28, 2009, or (ii) sale of the
pledged shares. These loans have been classified as a reduction to shareholders'
equity in the accompanying consolidated financial statements. The Company
recognized interest income related to these notes of $96, $79, and $77 during
the years ended December 31, 1998, 1999, and 2000, respectively. The fair value
of these loans, based on an independent appraisal of the underlying collateral,
was $362 at December 31, 2000.

     During 2000, in connection with the termination of an employee, $26 of
these notes were cancelled.

9. LEASES

     The Company rents certain facilities and marine equipment under cancelable
and noncancelable operating leases. Rental expense on operating leases was
$5,431, $5,518, and $6,307 for the years ended December 31, 1998, 1999, and
2000, respectively. Future rental commitments under noncancelable operating
leases during the years ending 2001 through 2004 are $5,341, $5,368, $4,257, and
$1,761, respectively. No such commitments exist after 2004.

10. INCOME TAXES

     The sources of income (loss) by jurisdiction before the provision for
income taxes, preferred stock dividends and extraordinary charge are:

<TABLE>
<CAPTION>
                                                                FOR THE YEARS ENDED
                                                                    DECEMBER 31,
                                                              ------------------------
                                                               1998     1999     2000
                                                              ------   ------   ------
<S>                                                           <C>      <C>      <C>
U.S.........................................................  $ (362)  $   41   $ (283)
Non-U.S.....................................................   3,117    2,603    7,315
                                                              ------   ------   ------
                                                              $2,755   $2,644   $7,032
                                                              ======   ======   ======
</TABLE>

                                       F-16
<PAGE>   56
                  STATIA TERMINALS GROUP N.V. AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                  (DOLLARS IN THOUSANDS EXCEPT SHARE AMOUNTS)

     The provision for income taxes consisted of:

<TABLE>
<CAPTION>
                                                              FOR THE YEARS ENDED
                                                                 DECEMBER 31,
                                                              -------------------
                                                              1998   1999    2000
                                                              ----   -----   ----
<S>                                                           <C>    <C>     <C>
Current:
  U.S.......................................................  $ --   $(123)  $ --
  State.....................................................    --      --     (1)
  Non-U.S...................................................   320     903    939
                                                              ----   -----   ----
                                                              $320   $ 780   $938
                                                              ====   =====   ====
</TABLE>

     A reconciliation of income taxes at the U.S. statutory rate of 35% to the
Company's provision for income taxes is as follows:

<TABLE>
<CAPTION>
                                                                 FOR THE YEARS ENDED
                                                                    DECEMBER 31,
                                                              -------------------------
                                                              1998     1999      2000
                                                              -----   -------   -------
<S>                                                           <C>     <C>       <C>
U.S. federal tax provision at U.S. statutory rate...........  $ 964   $   925   $ 2,461
U.S. state income taxes.....................................     --        --         1
Income not effectively connected to a U.S. trade or
  business..................................................   (961)   (1,048)   (2,461)
Non-U.S. tax provision......................................    317       903       939
                                                              -----   -------   -------
                                                              $ 320   $   780   $   938
                                                              =====   =======   =======
</TABLE>

     The principal temporary differences included in the accompanying balance
sheets, as of December 31, are:

<TABLE>
<CAPTION>
                                                                1999       2000
                                                              --------   --------
<S>                                                           <C>        <C>
Net operating loss and ITC carryforwards....................  $ 30,371   $ 24,565
Valuation allowance.........................................   (30,371)   (24,565)
                                                              --------   --------
                                                              $     --   $     --
                                                              ========   ========
</TABLE>

     The Company's net deferred tax assets primarily relate to Canadian
investment tax credits and net operating loss carry-forwards and U.S.
consolidated net operating loss carry-forwards. The Company has provided a full
valuation allowance against these tax assets, because it cannot determine that
it is likely that the deferred tax assets will be utilized in the future.

     The Company's Canadian subsidiaries are subject to a federal large
corporation tax based on 0.225% of the subsidiaries' total equity. As of April
1, 1997, Nova Scotia enacted a provincial capital tax based on 0.25% of the
subsidiaries' total equity. The net operating tax loss carry-forwards available
to offset Canadian taxable income at December 31, 2000, were $48,670, the
majority of which expires during 2001. The investment tax credit carry-forwards
available to reduce Canadian income taxes were $1,761 at December 31, 2000, and
expire in various amounts through 2009.

     The net operating tax loss carry-forwards available to offset U.S. taxable
income at December 31, 2000, were $4,118, and expire in various amounts through
2019.

     On June 1, 1989, the governments of the Netherlands Antilles and St.
Eustatius approved a Free Zone and Profit Tax Agreement retroactive to January
1, 1989, which expired on December 31, 2000. The Company has been adhering to
the terms of this agreement since its expiration. This agreement requires a
subsidiary of the Company to pay a 2% rate on taxable income, as defined, or a
minimum payment of 500,000 Netherlands Antilles guilders ($282). This agreement
further provides that any amounts paid in order to meet the

                                       F-17
<PAGE>   57
                  STATIA TERMINALS GROUP N.V. AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                  (DOLLARS IN THOUSANDS EXCEPT SHARE AMOUNTS)

minimum annual payment will be available to offset future tax liabilities under
the agreement to the extent that the minimum annual payment is greater than 2%
of taxable income. Currently, the subsidiary is renegotiating a new agreement
with the governments of the Netherlands Antilles and St. Eustatius that is
expected to be generally effective retroactively from January 1, 1998, through
December 31, 2010, with extension provisions to 2015. However, if the beneficial
tax status of the Company's facilities is terminated, or if significant adverse
modifications are made to the tax agreement, the Company's business, financial
condition, results of operations and cash flows may be adversely affected.

     Certain of the Company's Netherlands Antilles subsidiaries are not part of
the Free Zone and Profit Tax Agreement and accordingly pay Netherlands Antilles
federal income taxes at an effective tax rates of up to 45%. Approximately $28,
$48 and $55 of Netherlands Antilles profit tax is included in the Non-U.S. tax
provision for the years ended December 31, 1998, 1999, and 2000, respectively.

11. STOCK OPTIONS

     During 1997, the stockholders of the Company approved the 1997 Stock Option
Plan (the "1997 Plan"), which allowed up to 7,235 shares of $0.10 par value
common stock of the Company to be delivered pursuant to incentive stock option
award agreements or nonqualified stock option award agreements.

     During December 1998, 2,895 shares of common stock were granted to certain
employees of the Company pursuant to incentive stock options at an exercise
price of $0.10. The Company recorded the required compensation expense under APB
No. 25 on the date of grant representing the difference between the fair value
of the options and the exercise price of $0.10 per share amortized over the
vesting period of five years. The fair value of such options was determined to
be $810 per share based on an independent appraisal of the Company's common
stock on the date of grant. The total amount of compensation expense recognized
during 1998 and credited to additional paid-in capital related to such options
was $39 and is included in costs of revenues and administrative expense in the
accompanying statements of operations. During the period from January 1, 1999,
to April 28, 1999, $154 related to these options was amortized as compensation
expense and credited to additional paid-in capital.

     During 1998, the Company also granted 400 options to purchase common stock
to non-employee directors of the Company. These options vested immediately on
the date of grant. The Company recorded $324 of compensation expense under APB
No. 25 on the date of grant. This amount represented the difference between the
fair value of $810 per share and the exercise price of $0.10 per share. The
compensation expense is included in administrative expenses in the accompanying
statement of operations and credited to additional paid-in capital. In
connection with the initial public offering of equity discussed in Note 3, the
options granted in 1997 and 1998, less forfeitures of 45 options, were exercised
and converted along with all existing common stock into 3.8 million class B
subordinated shares and 38,000 class C shares. On April 28, 1999, the remaining
unamortized compensation expense associated with these options of $2,152 was
recorded as a non-cash special compensation expense and credited to additional
paid-in capital.

     In April 1999 in conjunction with the initial public offering of equity,
the shareholders of the Company approved the 1999 Share Option Plan (the "1999
Plan") and the 1997 Plan terminated. Under the 1999 Plan, the Company may
deliver up to 1,140,000 class A common shares to employees, directors and
consultants, subject to adjustment under certain conditions. Any such options
must have an exercise price at least equal to the fair market value of the
Company's class A common shares on the date of grant and must be exercisable
within ten years of the grant date. No options were granted during 1999 pursuant
to the 1999 Plan.

     On May 2, 2000, options on 228,000 shares of class A common shares were
granted to certain employees and non-employee directors of the Company at an
exercise price of $5.59 per share, representing the fair market value of the
Company's class A common shares on the date of grant. As such, no compensation

                                       F-18
<PAGE>   58
                  STATIA TERMINALS GROUP N.V. AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                  (DOLLARS IN THOUSANDS EXCEPT SHARE AMOUNTS)

expense was recognized under APB No. 25. The options may be exercised on or
after May 2, 2009; provided, however, that the option will become exercisable
sooner upon the conversion of the Company's class B subordinated shares into
class A common shares in accordance with the Company's Articles of
Incorporation. The percentage of the class A common shares for which the option
will become exercisable upon any such conversion equals the number of class B
subordinated shares converted pursuant to such conversion, divided by 3,800,000
shares. Immediately prior to any change in control, as defined in the Company's
Articles of Incorporation, any unexercised portions of the options become
exercisable. Under certain specified circumstances, which include the holder's
death or disability, involuntary termination of employment without substantial
cause, and normal retirement, the unexercised portions of the options may also
become exercisable by the holder or his or her beneficiary or heir, but only for
certain specified periods after the occurrence of such an event. During 2000,
7,500 of the options granted in May 2000 were forfeited.

     On January 24, 2001, options on 235,500 shares of class A common shares
were granted to certain employees and non-employee directors of the Company at
an exercise price of $8.094 per share, representing the fair market value of the
Company's class A common shares on the date of grant. As such, no compensation
expense was recognized under APB No. 25. The options may be exercised on or
after January 24, 2010, but are subject to the same terms and conditions as
described above for the options granted on May 2, 2000, including the
accelerated vesting provisions.

     As of December 31, 2000, and January 24, 2001, options on 919,500 and
684,000 shares of class A common shares, respectively, remained available for
grant under the 1999 Plan.

     The following information is presented with respect to the Company's stock
options:

<TABLE>
<CAPTION>
                                                               NUMBER        OPTION
                                                              OF SHARES      PRICE
                                                              ---------   ------------
<S>                                                           <C>         <C>
Outstanding at December 31, 1997............................     2,895       $0.10
  Granted...................................................     3,295        0.10
  Exercised.................................................        --          --
  Cancelled.................................................        45        0.10
                                                               -------       -----
Outstanding at December 31, 1998............................     6,145        0.10
  Granted...................................................        --          --
  Exercised.................................................     6,145        0.10
  Cancelled.................................................        --          --
                                                               -------       -----
Outstanding at December 31, 1999............................        --          --
  Granted...................................................   228,000        5.59
  Exercised.................................................        --          --
  Cancelled.................................................     7,500        5.59
                                                               -------       -----
Outstanding at December 31, 2000............................   220,500       $5.59
                                                               =======       =====
</TABLE>

                                       F-19
<PAGE>   59
                  STATIA TERMINALS GROUP N.V. AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                  (DOLLARS IN THOUSANDS EXCEPT SHARE AMOUNTS)

     Had compensation expense been recorded for the Company's awards based on
fair value at the grant dates consistent with the methodologies of SFAS No. 123,
the Company's reported net income (loss) available to common shareholders and
earnings per share would have been reduced to the pro forma amounts indicated
below:

<TABLE>
<CAPTION>
                                                               FOR THE YEARS ENDED DECEMBER 31,
                                                               --------------------------------
                                                                 1998        1999        2000
                                                               ---------   ---------   --------
<S>                                                            <C>         <C>         <C>
Net income (loss) available to common shareholders:
  As reported...............................................    $(1,503)    $(5,136)    $6,094
  Pro forma.................................................     (1,960)     (6,869)     6,075
Basic earnings (loss) per share:
  Class A common share as reported..........................         --       (0.26)      0.90
  Class A common share pro forma............................         --       (0.26)      0.89
  Class B subordinated share as reported....................      (0.45)      (1.04)        --
  Class B subordinated share pro forma......................      (0.59)      (1.52)        --
Diluted earnings (loss) per share:
  Class A common share as reported and pro forma............         --       (0.17)      0.57
  Class B subordinated share as reported....................      (0.45)      (1.04)        --
  Class B subordinated share pro forma......................      (0.59)      (1.52)        --
</TABLE>

     Under SFAS 123, the value of each option granted during 1997 and 1998 was
estimated on the date of grant using the Black Scholes model with the following
assumptions: Risk-free interest rate -- 6.3%, dividend yield -- 0%,
volatility -- 31.4% and expected life of the option -- 10 years. The value of
each option granted during 2000 was estimated on the date of grant using the
Black Scholes model with the following assumptions: Risk-free interest
rate -- 6.5%, dividend yield -- 10.7%, volatility -- 43.8% and expected life of
the option -- 10 years.

12. COMMITMENTS AND CONTINGENCIES

  Environmental, Health, and Safety Matters

     In connection with the Castle Harlan Acquisition, studies were undertaken
by and for Praxair, Inc. to identify potential environmental, health, and safety
matters. Certain matters involving potential environmental costs were identified
at the Point Tupper, Nova Scotia, Canada facility. Praxair, Inc. has agreed to
pay for certain of these environmental costs subject to certain limitations.
Praxair, Inc. has paid approximately $5,193 during the period from November 27,
1996, to December 31, 2000, related to such costs. Based on investigations
conducted and information available to date, the potential cost of additional
remediation and compliance is estimated at approximately $13,000, substantially
all of which the Company believes is the responsibility of Praxair, Inc. per the
Castle Harlan Acquisition agreement. The Company believes that environmental,
health, and safety costs will not have a material adverse effect on the
Company's financial position, cash flows, or results of operations, subject to
reimbursements from Praxair, Inc.

     The Company has also identified certain other environmental, health, and
safety costs not covered by the agreement with Praxair, Inc. for which $1,500
were accrued in 1996 in conjunction with the Castle Harlan Acquisition. Through
December 31, 2000, $182 of this amount had been expended. The Company
periodically reviews the adequacy of this accrual and during 1999 and 2000
determined $250 and $180 originally provided for environmental contingencies,
respectively, were no longer necessary. Accordingly, this portion of the accrual
was eliminated and credited to costs of terminaling revenues in the accompanying
statements of operations. In 2000, the Company identified certain other
environmental, health, and safety costs not covered by the agreement with
Praxair, Inc. and accrued $180 related to these costs.

                                       F-20
<PAGE>   60
                  STATIA TERMINALS GROUP N.V. AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                  (DOLLARS IN THOUSANDS EXCEPT SHARE AMOUNTS)

  Litigation

     The Company is involved in various claims and litigation arising in the
normal course of its business. Based upon analysis of legal matters and
discussions with legal counsel, the Company believes that the ultimate outcome
of these matters will not have a material adverse effect on the Company's
business, financial condition, results of operations, or cash flows.

  Other Accrued Expenses

     Other accrued expenses consist of the following as of December 31:

<TABLE>
<CAPTION>
                                                               1999     2000
                                                              ------   ------
<S>                                                           <C>      <C>
Personnel and related costs.................................  $2,061   $3,010
Professional fees...........................................     928      738
Environmental expenses......................................   1,208    1,068
Accrued taxes...............................................   1,493    1,760
Deferred revenue............................................     213    1,291
Other.......................................................   1,181    1,872
                                                              ------   ------
                                                              $7,084   $9,739
                                                              ======   ======
</TABLE>

13. RELATED PARTY TRANSACTIONS

     In November 1996, the Company entered into a ten-year management agreement
with Castle Harlan, Inc., to pay an annual management fee of $1,350, plus
out-of-pocket expenses, for advisory and strategic planning services in relation
to the day-to-day affairs of the Company. Such services were performed at the
discretion of Castle Harlan, Inc. The management agreement also entitled Castle
Harlan, Inc. to additional compensation should it perform services for the
Company related to certain financing activities, including initial public
offerings. The Company compensated Castle Harlan, Inc. $778 for services
performed in relation to the Company's initial public offering of equity and
such amount was charged to additional paid-in capital on April 28, 1999. This
management agreement was amended and restated at the closing of the Company's
initial public offering of equity on April 28, 1999, to eliminate the $1,350
management fee and require that any such services be provided only at the
request of the Company. The Company has not requested any such services
subsequent to April 28, 1999, nor has Castle Harlan, Inc. provided any such
services. Accordingly, no management fee expense has been recorded subsequent to
April 28, 1999.

     The amended and restated management agreement continues to provide for
reimbursement of ordinary and necessary expenses and a continuing indemnity for
the period up to the termination date of November 27, 2006, and any extension
thereto. During the years ended December 31, 1998, 1999, and 2000, the Company
reimbursed Castle Harlan, Inc. $98, $78, and $115, respectively, of expenses
under this agreement.

     The Company provides and receives other services from various other related
parties. The value of such services is not significant individually or in the
aggregate.

14. SEGMENT INFORMATION

     The Company is organized around several different factors, the two most
significant of which are services and products and geographic location. The
Company's primary services and products are terminaling services (resulting in
revenue from storage, throughput, dock usage, emergency response and other
terminal services) and product sales (including bunker fuels and bulk oil
sales).

                                       F-21
<PAGE>   61
                  STATIA TERMINALS GROUP N.V. AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                  (DOLLARS IN THOUSANDS EXCEPT SHARE AMOUNTS)

     The primary measures of profit and loss utilized by the Company's
management to make decisions about resources to be allocated to each segment are
earnings before interest expense, interest income, income taxes, depreciation,
amortization, and certain non-recurring income and expenses ("Adjusted EBITDA")
and earnings before interest expense, interest income, income taxes, and certain
non-recurring income and expenses ("Adjusted EBIT").

     The following information is provided for the Company's terminaling
services and product sales segments:

<TABLE>
<CAPTION>
                                                              FOR THE YEARS ENDED DECEMBER 31,
                                                              ---------------------------------
                                                                1998        1999        2000
                                                              ---------   ---------   ---------
<S>                                                           <C>         <C>         <C>
REVENUES:
  Terminaling services......................................  $ 66,625    $ 61,665    $ 61,547
  Product sales.............................................    70,137     106,678     148,908
                                                              --------    --------    --------
          Total.............................................  $136,762    $168,343    $210,455
                                                              ========    ========    ========
ADJUSTED EBITDA:
  Terminaling services......................................  $ 28,102    $ 26,994    $ 25,128
  Product sales.............................................     4,466       6,584       6,582
                                                              --------    --------    --------
          Total.............................................  $ 32,568    $ 33,578    $ 31,710
                                                              ========    ========    ========
DEPRECIATION AND AMORTIZATION EXPENSE:
  Terminaling services......................................  $ 11,218    $ 11,196    $ 12,452
  Product sales.............................................       203         371         691
                                                              --------    --------    --------
          Total.............................................  $ 11,421    $ 11,567    $ 13,143
                                                              ========    ========    ========
ADJUSTED EBIT:
  Terminaling services......................................  $ 16,884    $ 15,798    $ 12,676
  Product sales.............................................     4,263       6,213       5,891
                                                              --------    --------    --------
          Total.............................................  $ 21,147    $ 22,011    $ 18,567
                                                              ========    ========    ========
CAPITAL EXPENDITURES:
  Terminaling services......................................  $  8,274    $  7,572    $  7,528
  Product sales.............................................     1,212         161         753
  Other unallocated.........................................     1,228         860         297
                                                              --------    --------    --------
          Total.............................................  $ 10,714    $  8,593    $  8,578
                                                              ========    ========    ========
</TABLE>

<TABLE>
<CAPTION>
                                                                    AS OF DECEMBER 31,
                                                              ------------------------------
                                                                1998       1999       2000
                                                              --------   --------   --------
<S>                                                           <C>        <C>        <C>
NET ASSETS:
  Terminaling services......................................  $208,642   $203,781   $202,780
  Product sales.............................................    12,058     16,618     14,315
  Unallocated assets........................................    24,910     15,898     23,643
                                                              --------   --------   --------
          Total assets......................................  $245,610   $236,297   $240,738
                                                              ========   ========   ========
</TABLE>

                                       F-22
<PAGE>   62
                  STATIA TERMINALS GROUP N.V. AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                  (DOLLARS IN THOUSANDS EXCEPT SHARE AMOUNTS)

     A reconciliation of Adjusted EBIT to the Company's income before provision
for income taxes, preferred stock dividends, and extraordinary charge is as
follows:

<TABLE>
<CAPTION>
                                                        FOR THE YEARS ENDED DECEMBER 31,
                                                        --------------------------------
                                                          1998        1999        2000
                                                        --------    --------    --------
<S>                                                     <C>         <C>         <C>
Adjusted EBIT.........................................  $21,147     $22,011     $18,567
Interest expense excluding debt cost amortization
  expense.............................................  (15,940)    (13,518)    (12,077)
Special compensation expense..........................       --      (4,099)         --
Hurricane charges.....................................     (800)     (1,750)         --
Loss on sale of Statia Terminals Southwest, Inc.......   (1,652)         --          --
Settlement of insurance claim.........................       --          --         542
                                                        -------     -------     -------
          Income before provision for income taxes,
            preferred stock dividends and
            extraordinary charge......................  $ 2,755     $ 2,644     $ 7,032
                                                        =======     =======     =======
</TABLE>

     The following information is provided with respect to the geographic
operations of the Company based upon the location where the service is provided
or product delivered:

<TABLE>
<CAPTION>
                                                         FOR THE YEARS ENDED DECEMBER 31,
                                                         ---------------------------------
                                                           1998        1999        2000
                                                         ---------   ---------   ---------
<S>                                                      <C>         <C>         <C>
REVENUES:
  Caribbean............................................  $114,091    $149,852    $192,165
  Canada...............................................    21,058      18,491      18,290
  United States........................................     1,613          --          --
                                                         --------    --------    --------
          Total revenues...............................  $136,762    $168,343    $210,455
                                                         ========    ========    ========
</TABLE>

<TABLE>
<CAPTION>
                                                               AS OF DECEMBER 31,
                                                         ------------------------------
                                                           1998       1999       2000
                                                         --------   --------   --------
<S>                                                      <C>        <C>        <C>
LONG-LIVED ASSETS:
  Caribbean............................................  $180,275   $174,884   $171,689
  Canada...............................................    28,191     28,705     28,139
  United States........................................     1,504      2,442      2,233
                                                         --------   --------   --------
                                                         $209,970   $206,031   $202,061
                                                         ========   ========   ========
</TABLE>

     Long-lived assets primarily consist of net property and equipment.

  Significant Customer

     The Company presently has a long-term storage and throughput contract with
Bolanter Corporation N.V. (a subsidiary of Saudi Aramco) at the Company's St.
Eustatius facility, which expires in 2005. The Company also derives revenues
from an affiliate of Bolanter as an indirect result of this storage and
throughput agreement. The Company derives revenues from parties unaffiliated
with Bolanter because of the movement of Bolanter's crude oil, or crude oil sold
by Bolanter, through the Company's St. Eustatius facility. Additionally, the
Company sells bunker fuels to an affiliate of Bolanter at its St. Eustatius
facility.

                                       F-23
<PAGE>   63
                  STATIA TERMINALS GROUP N.V. AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                  (DOLLARS IN THOUSANDS EXCEPT SHARE AMOUNTS)

     The following table sets forth such Saudi Aramco-related revenues as a
percentage of our total revenues:

<TABLE>
<CAPTION>
                                                              FOR THE YEARS ENDED
                                                                  DECEMBER 31,
                                                              --------------------
                                                              1998    1999    2000
                                                              ----    ----    ----
<S>                                                           <C>     <C>     <C>
Storage and throughput contract and related indirect
  revenues..................................................   7.4%    6.1%    4.0%
Unaffiliated third parties..................................   7.7     6.4     7.7
Bunker sales................................................   1.5     2.3     2.5
                                                              ----    ----    ----
          Total.............................................  16.6%   14.8%   14.2%
                                                              ====    ====    ====
</TABLE>

     Although the Company has a long-standing relationship and long-term
contract with this customer, if such long-term contract were not renewed or
replaced at the end of its term, or if the Company otherwise lost any
significant portion of its revenues from this customer, such
non-renewal/replacement or loss could have a material adverse effect on the
Company's business, financial condition, and ability to pay distributions. The
Company also has long-term contracts with other key customers, and there can be
no assurance that these contracts will be renewed at the end of their terms or
that the Company will be able to enter into other long-term contracts on terms
favorable to it, or at all.

     No other customer accounted for more than 10% of the Company's total
revenues in 1998, 1999, or 2000.

15. RETIREMENT PLANS

     The Company maintains an employee savings plan in accordance with Section
401(k) of the Internal Revenue Code. This plan covers all of the Company's
full-time U.S. employees and allows employees to contribute up to the lesser of
15% of eligible compensation or $10.5 for the 2000 calendar year. The Company
currently matches at a 50% rate up to 8% of an employee's base salary. In
addition, the employer may contribute, on a discretionary basis, up to 1% of an
employee's base salary per quarter. Amounts charged to expense for matching and
discretionary contributions for the years ended December 31, 1998, 1999, and
2000 were $314, $314 and $337, respectively. In addition, the Company sponsors
certain retirement plans for certain employees residing in the Netherlands
Antilles and Canada. Amounts charged to expense for non-U.S. plans for the years
ended December 31, 1998, 1999, and 2000, were $43, $73, and $875, respectively.

16. LOSS ON SALE OF STATIA TERMINALS SOUTHWEST, INC.

     On July 29, 1998, the Company sold Statia Terminals Southwest, Inc.
("Southwest") for $6,500 in cash resulting in net proceeds of approximately
$6,150. The Company retained certain of the pre-closing assets and liabilities
of Southwest consisting primarily of accounts receivable and accrued expenses
and agreed to indemnify the purchaser for certain contingent legal and
environmental matters up to a maximum of $500 through July 29, 1999. The
indemnification period lapsed with no liability to the Company. The net book
value of the assets and liabilities sold on July 29, 1998, was $7,802. The loss
on the sale of Southwest of $1,652 is included in loss on disposition of
property and equipment in the accompanying statements of operations, since
substantially all of the value of Southwest was originally recorded in this
account when the Company was acquired.

17. HURRICANE CHARGES

     As a result of damages sustained to the Company's St. Eustatius facility
from Hurricane Lenny in late November 1999, the Company incurred a one-time,
non-cash charge of $1,500 to partially reduce the carrying value of its
shoreline protection system and a one-time cash charge of $250 to cover other
hurricane related expenses. The damaged shoreline protection system was not
covered by insurance and, together with certain other civil work, was replaced
during 2000.

                                       F-24
<PAGE>   64
                  STATIA TERMINALS GROUP N.V. AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                  (DOLLARS IN THOUSANDS EXCEPT SHARE AMOUNTS)

     During September 1998, Hurricane Georges damaged components of the
Company's St. Eustatius facility. However, operations were not significantly
impacted by the hurricane and returned to normal within days of the storm.
During 1998, the Company recorded a charge of $800 representing an insurance
deductible of $500 related to the hurricane damage and certain other costs
resulting from the hurricane which was not recovered through the Company's
insurance policies. Repair work related to the damage caused by Hurricane
Georges is substantially complete.

18. VALUATION AND QUALIFYING ACCOUNTS

     The table below summarizes the activity in the valuation account, allowance
for possible uncollectible trade accounts receivable and the deferred tax asset
valuation allowance for the periods indicated.

<TABLE>
<CAPTION>
                                                   BALANCE,    CHARGES   DEDUCTIONS,   BALANCE,
                                                   BEGINNING     TO      WRITE-OFFS,    END OF
                                                   OF PERIOD   EXPENSE       NET        PERIOD
                                                   ---------   -------   -----------   --------
<S>                                                <C>         <C>       <C>           <C>
Trade Accounts Receivable Valuation Account:
  For the year ended December 31, 1998...........   $   830     $ 72       $  (117)    $   785
  For the year ended December 31, 1999...........       785       20            (1)        804
  For the year ended December 31, 2000...........       804      149            --         953
</TABLE>

<TABLE>
<CAPTION>
                                                  BALANCE,                EXPIRATIONS,   BALANCE,
                                                  BEGINNING                  OTHER,       END OF
                                                  OF PERIOD   INCREASES       NET         PERIOD
                                                  ---------   ---------   ------------   --------
<S>                                               <C>         <C>         <C>            <C>
Deferred Tax Asset Valuation Allowance:
  For the year ended December 31, 1998..........   $30,056      $371        $   790      $31,217
  For the year ended December 31, 1999..........    31,217        --           (846)      30,371
  For the year ended December 31, 2000..........    30,371        --         (5,806)      24,565
</TABLE>

                                       F-25
<PAGE>   65
                  STATIA TERMINALS GROUP N.V. AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                  (DOLLARS IN THOUSANDS EXCEPT SHARE AMOUNTS)

19. UNAUDITED QUARTERLY FINANCIAL INFORMATION

     The following is a summary of the unaudited quarterly results of operations
for 1999 and 2000:

<TABLE>
<CAPTION>
                                                             QUARTERS ENDED
                                           ---------------------------------------------------
                                           MARCH 31    JUNE 30    SEPTEMBER 30    DECEMBER 31     TOTAL
                                           ---------   --------   -------------   ------------   --------
<S>                                        <C>         <C>        <C>             <C>            <C>
1999
Total revenues...........................   $37,415    $42,267       $43,310        $45,351      $168,343
Gross profit.............................     8,815      8,468         6,382          7,013        30,678
Income (loss) before extraordinary
  charge.................................    (1,655)       237           999             26          (393)
Net income (loss) available to common
  shareholders...........................    (1,655)    (4,506)          999             26        (5,136)
BASIC EARNINGS (LOSS) PER COMMON SHARE:
Income before extraordinary charge.......        --       0.45          0.13           0.01          0.66
Net income (loss) available to common
  shareholders...........................        --      (0.44)         0.13           0.01         (0.26)
DILUTED EARNINGS (LOSS) PER COMMON SHARE:
Income before extraordinary charge.......        --       0.30          0.09             --          0.44
Net income (loss) available to common
  shareholders...........................        --      (0.29)         0.09             --         (0.17)
BASIC AND DILUTED EARNINGS (LOSS) PER
  SUBORDINATED SHARE:
Loss before extraordinary charge.........     (0.50)     (0.59)           --             --         (1.04)
Net loss to common shareholders..........     (0.50)     (0.59)           --             --         (1.04)

2000
Total revenues...........................   $42,305    $54,227       $57,542        $56,381      $210,455
Gross profit.............................     4,073      6,090         9,228          9,730        29,121
Net income (loss) available to common
  shareholders...........................    (1,538)       283         3,572          3,777         6,094
BASIC EARNINGS (LOSS) PER COMMON SHARE:       (0.22)      0.04          0.53           0.58          0.90
DILUTED EARNINGS (LOSS) PER COMMON SHARE:     (0.22)      0.03          0.34           0.36          0.57
BASIC AND DILUTED EARNINGS PER
  SUBORDINATED SHARE:                            --         --            --             --            --
</TABLE>

     Earnings per share are computed independently for each of the quarters
presented. Therefore, the sum of the quarterly earnings per share in 1999 and
2000 does not equal the total computed for the year. In accordance with SFAS No.
128, 1999 earnings per share amounts have been adjusted to give retroactive
effect, as of the beginning of each period of 1999 presented, to the
reclassification and issuance of additional class B subordinated shares and
class C shares that occurred in connection with the initial public offering of
equity (see Note 3).

     The Company's initial public offering of equity and related transactions
have affected the comparability of individual quarters (see Note 3).

                                       F-26
<PAGE>   66

                          STATIA TERMINALS GROUP N.V.

                        EXPLANATORY STATEMENT AND REPORT
                         ON THE BUSINESS OF THE COMPANY

To the Annual General Meeting of Shareholders:

     Attached hereto and incorporated herein are pages F-1 through F-26, which
include, as required by Netherlands Antilles law, as pages F-2 through F-3, the
balance sheet and profit and loss account (the "Annual Accounts") of Statia
Terminals Group N.V. (the "Company") for the period January 1, 2000, through
December 31, 2000. The movable and immovable assets of the Company have been
evaluated in accordance with U.S. generally accepted accounting principles.

     For the period ending December 31, 2000, the Company had net income of U.S.
$6,094,000, as more fully explained in the attached Annual Accounts.

     This statement may be executed in one or more counterparts and shall become
effective when all Directors of the Company have signed a counterpart hereof.

                                          /s/ JOHN K. CASTLE
                                          --------------------------------------
                                          John K. Castle

                                          /s/ DAVID B. PITTAWAY
                                          --------------------------------------
                                          David B. Pittaway

                                          /s/ JUSTIN B. WENDER
                                          --------------------------------------
                                          Justin B. Wender

                                          /s/ JAMES G. CAMERON
                                          --------------------------------------
                                          James G. Cameron

                                          /s/ FRANCIS JUNGERS
                                          --------------------------------------
                                          Francis Jungers

                                          /s/ ADMIRAL JAMES L. HOLLOWAY III
                                          --------------------------------------
                                          Admiral James L. Holloway III

                                          /s/ JONATHAN R. SPICEHANDLER, M.D.
                                          --------------------------------------
                                          Jonathan R. Spicehandler, M.D.

                                          /s/ ERNEST VOGES
                                          --------------------------------------
                                          Ernest Voges

                                       N-1
<PAGE>   67

                                   SIGNATURES

     Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

                                          Statia Terminals Group N.V.

                                          By: /s/ JAMES G. CAMERON
                                            ------------------------------------
                                            James G. Cameron
                                            Director
                                            March 9, 2001

                                          By: /s/ JAMES F. BRENNER
                                            ------------------------------------
                                            James F. Brenner
                                            Vice President and Treasurer
                                            March 9, 2001

     Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.

                                          By: /s/ JOHN K. CASTLE
                                            ------------------------------------
                                            John K. Castle
                                            Director
                                            March 9, 2001

                                          By: /s/ DAVID B. PITTAWAY
                                            ------------------------------------
                                            David B. Pittaway
                                            Director
                                            March 9, 2001

                                          By: /s/ JUSTIN B. WENDER
                                            ------------------------------------
                                            Justin B. Wender
                                            Director
                                            March 9, 2001

                                          By: /s/ JAMES G. CAMERON
                                            ------------------------------------
                                            James G. Cameron
                                            Director
                                            (As Principal Executive Officer)
                                            March 9, 2001

                                          By: /s/ FRANCIS JUNGERS
                                            ------------------------------------
                                            Francis Jungers
                                            Director
                                            March 9, 2001

                                       S-1
<PAGE>   68

                                          By:   /s/ ADMIRAL JAMES L. HOLLOWAY
                                                            III
                                              ----------------------------------
                                            Admiral James L. Holloway III
                                            Director
                                            March 9, 2001

                                          By:
                                            ------------------------------------
                                            Jonathan R. Spicehandler, M.D.
                                            Director
                                            March 9, 2001

                                          By: /s/ ERNEST VOGES
                                            ------------------------------------
                                            Ernest Voges
                                            Director
                                            March 9, 2001

                                          By: /s/ JAMES F. BRENNER
                                            ------------------------------------
                                            James F. Brenner
                                            Vice President and Treasurer
                                            March 9, 2001
                                            (As Principal Financial Officer and
                                            Principal Accounting Officer)
                                            March 9, 2001

                                       S-2
<PAGE>   69

                                 EXHIBITS INDEX

<TABLE>
<CAPTION>
EXHIBIT
NUMBER                                 DESCRIPTION
-------                                -----------
<C>       <C>  <S>
 3.1       --  Articles of Incorporation Statia Terminals Group
               N.V.*********
 4.1       --  Indenture, dated as of November 27, 1996, among Statia
               Terminals International N.V., Statia Terminals Canada,
               Incorporated, as Issuers, and Statia Terminals Corporation
               N.V., Statia Terminals Delaware, Inc., Statia Terminals,
               Inc., Statia Terminals N.V., Statia Delaware Holdco II,
               Inc., Saba Trustcompany N.V., Bicen Development Corporation
               N.V., Statia Terminals Southwest, Inc., W.P. Company, Inc.,
               Seven Seas Steamship Company, Inc., Seven Seas Steamship
               Company (Sint Eustatius) N.V., Point Tupper Marine Services
               Limited, Statia Laboratory Services N.V., Statia Tugs N.V.
               (collectively, the "Subsidiary Guarantors") and Marine
               Midland Bank.**
 4.1a      --  First Amendment, dated as of August 14, 1997, to the
               Indenture, dated as of November 27, 1996, among Statia
               Terminals International N.V., a Netherlands Antilles
               corporation, Statia Terminals Canada, Incorporated, a
               corporation organized under the laws of Nova Scotia, Canada,
               the Subsidiary Guarantors named therein and Marine Midland
               Bank.******
 4.1b      --  Second Amendment, dated as of February 25, 1998, to the
               Indenture, dated as of November 27, 1996, among Statia
               Terminals International N.V., a Netherlands Antilles
               corporation, Statia Terminals Canada, Incorporated, a
               corporation organized under the laws of Nova Scotia, Canada,
               the Subsidiary Guarantors named therein and Marine Midland
               Bank.****
 4.1c      --  Third Amendment, dated as of July 29, 1998, to the
               Indenture, dated as of November 27, 1996, among Statia
               Terminals International N.V., a Netherlands Antilles
               corporation, Statia Terminals Canada, Incorporated, a
               corporation organized under the laws of Nova Scotia, Canada,
               the Subsidiary Guarantors named therein and Marine Midland
               Bank.*
 4.1d      --  Fourth Amendment of Indenture and Consent Under Securities
               Pledge Agreement, dated April 26, 1999.*******
 4.2       --  Form of Guarantee of shares issued pursuant to the Indenture
               (included in Exhibit 4.1 hereto).**
 4.3       --  Guarantee issued pursuant to the Indenture, dated as of June
               28, 1999, made by Statia Terminals Antilles N.V.********
 4.4       --  Share Pledge Agreement, dated as of November 27, 1996, by
               and between Statia Terminals International N.V. and Marine
               Midland Bank.**
 4.5       --  Amendment, dated as of December 18, 1998, by and among
               Statia Terminals Delaware N.V., Marine Midland Bank and
               Statia Terminals Delaware Inc. to Share Pledge Agreement,
               dated as of November 27, 1996 by and between Statia
               Terminals International N.V. and Marine Midland Bank.*
 4.6       --  Share Pledge Agreement, dated as of November 27, 1996, by
               and between Statia Terminals N.V. and Marine Midland Bank.**
 4.7       --  Share Pledge Agreement, dated as of November 27, 1996, by
               and between Statia Terminals Corporation N.V. and Marine
               Midland Bank.**
 4.8       --  Share Pledge Agreement, dated as of November 27, 1996, by
               and between Seven Seas Steamship Company, Inc. and Marine
               Midland Bank.**
 4.9       --  Share Pledge Agreement, dated as of June 28, 1999, by and
               among Statia Terminals Antilles N.V., Statia Terminals
               Delaware, Inc. and HSBC Bank USA (formerly known as Marine
               Midland Bank).********
 4.10      --  Amendment to Share Pledge Agreement, dated as of June 28,
               1999, by and between Statia Terminals International N.V. and
               HSBC Bank USA (formerly known as Marine Midland
               Bank).********
</TABLE>

                                       E-1
<PAGE>   70

<TABLE>
<CAPTION>
EXHIBIT
NUMBER                                 DESCRIPTION
-------                                -----------
<C>       <C>  <S>
 4.11      --  Fiduciary Transfer of Tangible Assets Agreement, dated as of
               November 27, 1996, by and between Statia Terminals N.V.,
               Saba Trustcompany N.V., Bicen Development Corporation N.V.,
               Statia Laboratory Services N.V., Statia Tugs N.V., Seven
               Seas Steamship Company (Sint Eustatius) N.V. and Marine
               Midland Bank.**
 4.12      --  Fiduciary Assignment of Intangible Assets Agreement, dated
               as of November 27, 1996, by and between Statia Terminals
               International N.V., Statia Terminals Corporation N.V.,
               Statia Terminals N.V., Saba Trustcompany N.V., Bicen
               Development Corporation N.V., Statia Laboratory Services
               N.V., Seven Seas Steamship Company (Sint Eustatius) N.V.,
               Statia Tugs N.V. and Marine Midland Bank.**
 4.13      --  Deed of Mortgage, dated as of November 27, 1996, by and
               among Statia Terminals N.V., Statia Laboratory Services
               N.V., Saba Trustcompany N.V. and Bicen Development
               Corporation N.V. as mortgagors and Marine Midland Bank as
               mortgagee.**
 4.14      --  Fixed and Floating Charge Debenture, made as of November 27,
               1996, between Statia Terminals Canada, Incorporated and
               Marine Midland Bank.**
 4.15      --  Debenture Delivery Agreement, dated as of November 27, 1996,
               between Statia Terminals Canada, Incorporated and Marine
               Midland Bank.**
 4.16      --  Shares Pledge Agreement, made as of November 27, 1996,
               between Statia Terminals Canada, Incorporated and Marine
               Midland Bank.**
 4.17      --  Shares Pledge Agreement, dated as of November 27, 1996,
               between Statia Terminals Corporation N.V. and Marine Midland
               Bank.**
 4.18      --  Debt Allocation Agreement, dated as of November 27, 1996,
               between Statia Terminals International N.V. and Statia
               Terminals Canada, Incorporated.**
 4.19      --  United States Shares Pledge and Security Agreement, dated as
               of November 27, 1996, by and among Statia Terminals
               International N.V., Statia Delaware Holdco II, Statia
               Terminals Delaware, Inc., Statia Terminals, Inc., W.P.
               Company, Inc. and Marine Midland Bank.**
 4.20      --  Form of Registration Rights Agreement between Statia
               Terminals Group N.V. and Statia Terminal Holdings N.V.*
 4.21      --  Guaranty executed by Statia Terminals Group N.V. in favor of
               Transamerica Equipment Financial Services Corporation, dated
               as of December 20, 2000.
 4.22      --  Loan Agreement by and between Statia Marine, Inc. and
               Transamerica Equipment Financial Services Corporation, dated
               as of December 20, 2000.
 4.23      --  Promissory Note executed by Statia Marine, Inc. in favor of
               Transamerica Equipment Financial Services Corporation, dated
               as of December 20, 2000.
 4.24      --  First Preferred Ship Mortgage executed by Statia Marine,
               Inc. in favor of Transamerica Equipment Financial Services
               Corporation, dated as of December 20, 2000.
10.1       --  Marine Fuel Agreement, dated as of May 6, 1993 ("Marine Fuel
               Agreement").**
10.2       --  Amendment, dated as of January 1, 1996 to (i) the Storage
               and Throughput Agreement, dated as of May 6, 1993 ("Storage
               and Throughput Agreement") and (ii) the Marine Fuel
               Agreement.**
10.3       --  Extension to Marine Fuel Agreement, dated as of December 27,
               1996.**
10.3a      --  Amendment, dated as of December 27, 1996 to (i) the Storage
               and Throughput Agreement and (ii) the Marine Fuel
               Agreement.****
10.3b      --  Amendment, dated as of December 28, 1997 to (i) the Storage
               and Throughput Agreement and (ii) the Marine Fuel
               Agreement.****
10.3c      --  Amendment, dated February 26, 1999 to (i) the Storage and
               Throughput Agreement and (ii) the Marine Fuel Agreement.*
</TABLE>

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<PAGE>   71

<TABLE>
<CAPTION>
EXHIBIT
NUMBER                                 DESCRIPTION
-------                                -----------
<C>       <C>  <S>
10.3d      --  Amendment, dated June 28, 2000 to (i) the Storage and
               Throughput Agreement and (ii) the Marine Fuel Agreement.
10.4       --  Storage and Throughput Agreement, dated as of August 20,
               1993.**
10.4a      --  Amendment, dated as of October 1999 to the Storage and
               Throughput Agreement.**********
10.4b      --  Amendment, dated as of January 10, 2001 to the Storage and
               Throughput Agreement.
10.5       --  Storage and Throughput Agreement, dated as of August 1,
               1994.**
10.5a      --  Letter of extension, dated as of March 23, 1999 to the
               Storage and Throughput Agreement.*****
10.5b      --  Amendment, dated as of December 20, 2000 to the Storage and
               Throughput Agreement.
10.6       --  Amended and restated Employment Agreement, effective April
               28, 1999, between Statia Terminals Group N.V., Statia
               Terminals, Inc. and James G. Cameron.*******
10.7       --  Amended and restated Employment Agreement, effective April
               28, 1999, between Statia Terminals Group N.V., Statia
               Terminals, Inc. and Thomas M. Thompson, Jr.*******
10.8       --  Amended and restated Employment Agreement, effective April
               28, 1999, between Statia Terminals Group N.V., Statia
               Terminals, Inc. and Robert R. Russo.*******
10.9       --  Amended and restated Employment Agreement, effective April
               28, 1999, between Statia Terminals Group N.V., Statia
               Terminals, Inc. and John D. Franklin.*******
10.10      --  Amended and restated Employment Agreement, effective April
               28, 1999, between Statia Terminals Group N.V., Statia
               Terminals, Inc. and James F. Brenner.*******
10.11      --  Amended and restated Employment Agreement, effective April
               28, 1999, between Statia Terminals Group N.V., Statia
               Terminals, Inc. and Jack R. Pine.*******
10.12      --  Loan and Share Agreement, dated as of November 27, 1996
               between Congress Financial Corporation (Florida) and Statia
               Terminals N.V.**
10.13      --  Loan Agreement, dated as of November 27, 1996, by and among
               Congress Financial Corporation (Canada), Statia Terminals
               Canada, Incorporated and Point Tupper Marine Services
               Limited.**
10.15      --  Form of 1999 Share Option Plan.*
21.1       --  Subsidiaries of the Registrant.
</TABLE>

---------------

<TABLE>
<C>         <S>
         *  Incorporated by reference to our Registration Statement on
            Form S-1, dated February 12, 1999, and amendments thereto
            filed with the U.S. Securities and Exchange Commission
            (Registration Statement No. 333-72317), which became
            effective on April 26, 1999.
        **  Incorporated by reference to the Registration Statement of
            Statia Terminals International N.V. and Statia Terminals
            Canada, Incorporated on Form S-4, dated December 20, 1996,
            and amendments thereto filed with the U.S. Securities and
            Exchange Commission (Registration Statement No. 333-18455),
            which became effective on February 14, 1997.
       ***  Incorporated by reference to the December 31, 1996 Form 10-K
            of Statia Terminals International N.V. and Statia Terminals
            Canada, Incorporated, dated May 13, 1997.
      ****  Incorporated by reference to the December 31, 1997 Form 10-K
            of Statia Terminals International N.V. and Statia Terminals
            Canada, Incorporated, dated March 31, 1998.
     *****  Incorporated by reference to the December 31, 1998 10-K of
            Statia Terminals International N.V. and Statia Terminals
            Canada, Incorporated, dated March 31, 1999.
    ******  Incorporated by reference to the September 30, 1997 Form
            10-Q of Statia Terminals International N.V. and Statia
            Terminals Canada, Incorporated, dated November 14, 1997.
   *******  Incorporated by reference to our March 31, 1999 Form 10-Q,
            dated May 13, 1999.
  ********  Incorporated by reference to our June 30, 1999 Form 10-Q,
            dated August 12, 1999.
 *********  Incorporated by reference to our September 30, 1999 Form
            10-Q, dated November 15, 1999.
**********  Incorporated by reference to our December 31, 1999 Form
            10-K, dated March 17, 2000.
</TABLE>

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