Golden Ocean Group — Earnings Release 2015

Aug 27, 2015

Results Q2 - 2015

August 27, 2015

Forward-Looking Statements

• Matters discussed in this presentation may constitute forward-looking statements. The Private Securities Litigation Reform Act of 1995 provides safe harbor protections for forward-looking statements, which include statements concerning plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements, which are other than statements of historical facts. Words such as "believe," "anticipate," "intends," "estimate," "forecast," "project," "plan," "potential," "may," "should," "expect," "pending" and similar expressions identify forward-looking statements. The forward-looking statements in this presentation are based upon various assumptions. Although we believe that these assumptions were reasonable when made, because these assumptions are inherently subject to significant uncertainties and contingencies which are difficult or impossible to predict and are beyond our control, we cannot assure you that we will achieve or accomplish these expectations, beliefs or projections. The information set forth herein speaks only as of the date hereof, and we disclaim any intention or obligation to update any forward-looking statements as a result of developments occurring after the date of this communication.
• In addition to these important factors and matters discussed elsewhere herein, important factors that, in our view, could cause actual results to differ materially from those discussed in the forward-looking statements include the strength of world economies, fluctuations in currencies and interest rates, general market conditions, including fluctuations in charter hire rates and vessel values, changes in demand in the dry bulk market, changes in our operating expenses, including bunker prices, drydocking and insurance costs, the market for our vessels, availability of financing and refinancing, changes in governmental rules and regulations or actions taken by regulatory authorities, potential liability from pending or future litigation, general domestic and international political conditions, potential disruption of shipping routes due to accidents, political events or acts by terrorists, and other important factors described from time to time in the reports filed by the Company with the Securities and Exchange Commission.

• Certain shipping, steel, Chinese and global industry information, statistics and charts contained herein have been derived from several sources. You are hereby advised that such industry data, charts and statistics have not been prepared specifically for inclusion in these materials and Golden Ocean has not undertaken any independent investigation to confirm the accuracy or completeness of such information

• Highlights

• Recent developments
• Financials
• Fleet information
• Macro Update

• Q&A

• The merger between Knightsbridge Shipping Limited and the Former Golden Ocean Group Limited was completed on March 31, 2015, with Knightsbridge as the acquiring company. Following the merger the Company was renamed to Golden Ocean Group Limited. Results reported for the second quarter is for the merged company.

• In April, Golden Ocean completed several transactions in order to strengthen its cash position and balance sheet
• The current fleet of Golden Ocean as per August 27, 2015:

	Capesize	Kamsarmax /Panamax	Iceclass Panamax	Supramax
Sailing	17*	8	10	5
Newbuilding	20**	-	-	3
BB/TC in + JV	7 + 1(JV)	2	-	1
Total	45	10	10	9

* Of which 1 will be delivered to Ship Finance and chartered back on TC

** Of which 4 are sold and will be delivered to new owners upon completion

Recent development

• Fleet development:
• The Company took delivery of 1 Supramax and 1 Capesize newbuilding during Q2 2015. Debt on the Capesize vessel has been drawn in Q3 2015.
• The Company sold and delivered Channel Navigator in May and Channel Alliance in June 2015
• The Company decided not to declare optional periods for Golden Sakura and the vessel was redelievered in June 2015
• Newbuilding program:
• The Company agreed in April 2015 to sell four Capesize newbuilding contracts, upon delivery of the completed vessels
• The Company agreed during April 2015 to postpone delivery of several of its newbuilding contracts by 79 months in aggregate

Corporate transactions and financing

• In April 2015, the Company received the remaining receivable of \$40.1 million from Jinhaiwan in relation to the claim held by the Former Golden Ocean. In total \$215.8 million has been received between Q2 2014 and Q2 2015, of which \$40.5 million is interest.
• In April 2015, the Company agreed to a sale leaseback transaction with Ship Finance International Ltd (SFL) for eight Capesize vessels
• Sold enbloc for \$272 million
• Time charter at \$17,600 / day for 7 yrs and \$14,900 / day for last 3 yrs (including OPEX of \$7,000 / day) + profit split of 33% to SFL
• En-bloc purchase option of \$112 million after 10 yrs, or SFL has option to extend charter for 3 yrs at \$14,900 / day
• Seven vessels have been delivered so far in the third quarter and we expect the last vessel to be delivered during September.

Profit & Loss

2014	2015		2015	2014	2014
Apr-Jun	Apr-Jun	INCOME STATEMENT	Jan-Jun	Jan-Jun	Jan-Dec
		(in thousands of \$)
20,593	49,333	Operating revenues	67,416	40,698	96,715	• The result for Q2 is for the merged company
		Operating expenses				• Net operating income was
5,643	21,278	Voyage expenses	34,692	7,242	33,955
3,315	23,924	Ship operating expenses	30,974	6,357	18,676	reduced by \$8.1M (net) as a result
-	5,348	Charter hire expense	5,348	-	-	of the amortization of favourable
1,095	4,811	Administrative expenses	5,963	2,479	5,037	and unfavourable TC contracts.
-	-	Vessel impairment loss	140,962	-	-
3,745	14,778	Depreciation	24,596	6,392	19,561	• Second quarter vessel earnings
13,798	70,139	Total operating expenses	242,535	22,470	77,229	were inline with average spot
6,795	(20,806)	Net operating (loss) income	(175,119)	18,228	19,486	market rates for spot vessels
		Other income (expenses)
5	382	Interest income	385	10	29
(191)	(11,296)	Interest expense	(12,863)	(755)	(2,525)	• Interest expense includes
(141)	(1,752)	Other financial items	(2,167)	(255)	(737)	amortization of the difference
-	(2,073)	Bargain purchase gain arising on consolidation	78,876	-	-
(327)	(14,739)	Total other income (expenses)	64,231	(1,000)	(3,233)	between nominal value and fair
6,468	(35,545)	Net (loss) income from continuing operations	(110,888)	17,228	16,253	value of the CB at date of merger
(186)	-	Net loss from discontinued operations	-	(228)	(258)
6,282	(35,545)	Net (loss) income	(110,888)	17,000	15,995
		Basic (loss) earnings per share from continuing
0.15	(0.21)	operations (\$)	(0.86)	0.46	0.31
		Basic loss per share from discontinued
(0.01)	-	operations (\$)	-	(0.01)	-
0.14	(0.21)	Basic (loss) earnings per share (\$)	(0.86)	0.45	0.30

Balance Sheet

	2015 June 30	2014 June 30	2014 Dec 31
BALANCE SHEET (in thousands of \$)
ASSETS
Short term Cash and cash equivalents Restricted cash	83,216 1,593	18,130 -	42,221 -
Other current assets	113,193	16,247	22,058
Long term Restricted cash Vessels, net Newbuildings Other long term assets	58,245 1,731,191 325,274 127,923	15,000 527,898 99,047 3,946	18,923 852,665 323,340 3,533	• Vessels increased with deliveres of Golden Taurus and Golden Aso in Q2
Total assets	2,440,635	680,268	1,262,740
LIABILITIES AND EQUITY
Short term Current portion of long-term debt and obligations under capital lease	182,972	2,604	19,812
Other current liabilities	46,469	12,254	14,967
Long term Long-term debt and obligations under capital lease Other long term liabilities	941,970 5,785	122,396 -	343,688 -	• Debt increased with debt on Golden Taurus less debt repaid on two vessels
Equity	1,263,439	543,014	884,273	sold and ordinary debt repayments.
Total liabilities and equity	2,440,635	680,268	1,262,740	Debt on Golden Aso to be drawn in Q3

Amortization of long term TC contracts

• Operating revenues in the three months ended June 30, 2015 have been reduced by \$9.2 million as a result of the amortization of favourable time charter (out) contracts, which were acquired as a result of the merger of Knightsbridge and The Former Golden Ocean on March 31, 2015 and were valued at \$127.1 million. Charter hire expense in the same period has been reduced by \$1.1 million as a result of the amortization of unfavourable time charter (in) contracts, which were acquired as a result of the merger and were valued at \$7.6 million. The net effect was a \$8.1 million reduction in net income in the three months ended June 30, 2015.
• The amortization will affect the results for the remaining period of the TC contracts. Expected net amortization cost per quarter is on average:
• ~ 8.4 million per quarter in 2015
• ~ 6.4 million per quarter in 2016
• ~ 5.0 million per quarter in 2017
• ~ 4.5 million per quarter in 2018 and 2019
• ~ 2.9 million per quarter in 2020
• ~ 0.8 million per quarter in 2021
• ~ 0.2 million (income) per quarter in 2022-2024
• This has no cash effect on the company

Newbuildings: Delivery schedule

Yard	2015 (Q3-Q4)	2016	2017
Capesize	3	9	4
Supramax	0	3
Capesize (Sold)	2	2

• Five vessels unfinanced
• Three Supramax with delivery 2016
• Two Capesize with delivery 2017

Open positions including newbuildings

Capesize exposure - Core Fleet *

	2015	2016	2017
Total vessel days	3 917	13 988	15 793
Open vessel days	3 836	13 995	15 788
Open position (%)	98 %	100 %	100 %
Average net rate on fixed days	na	na	na
No of vessels	30	40	42
Panamax exposure - Core Fleet
	2015	2016	2017
Total vessel days	2 561	7 148	6 903
Open vessel days	1 188	4 376	5 285
Open position (%)	46 %	61 %	77 %
Average net rate on fixed days	15 872	19 331	22 152
No of vessels	20	20	19
Supramax exposure - Core Fleet
	2015	2016	2017
Total vessel days	846	3 102	3 589
Open vessel days	501	3 102	3 589
Open position (%)	59 %	100 %	100 %
Average net rate on fixed days	na	na	na
No of vessels	6	9	9

* Golden Opus included with 50%

Vessel operating expenses

Vessel type		Q2-15
Supramax	\$/d	4 699
Panamax	\$/d	5 929
Capesize	\$/d	5 395

• These numbers include dry dock expences of \$989k, mainly related to Golden Beijing, Golden Eminence and Golden Eclipse
• Based on 5 Supramaxes, 20 Panamax/Kamsarmax and 26 Capesize (Golden Aso only with 1 day)

Macro Update

Herman Billung, CEO Golden Ocean Management AS

Chinese Dry Bulk imports

Source: Custom data / Reuters (Clarkson Platou)

Chinese iron ore supply

	Assumptions base case
	steel Iron ore		Domestic	Iron ore
	production demand		lore prod	imports
2014	838	1215	290	933
2015	838	1215	263	960
2016	854	1230	240	1000
2017	872	1251	215	1045
			Assumptions downside risk scenario
	steel	Iron ore	Domestic	Iron ore
	production demand		lore prod	imports
2014	838	1215	290	933
2015	838	1215	290	933
2016	854	1230	290	948
2017	872	1251	290	969

Chinese iron ore mining companies closing down

Australian and Brazilian mining companies competing for Chinese mkt

Production Forecast

Source: Lorentzen & Stemoco Research, Pareto Securities

Chinese iron ore imports will surpass 1bn tons this year

Incremental increase in Chinese electricity production

China's coal demand – only 6 % covered by imports

Source: CNEB (Clarkson Platou)

Bulk carriers: Existing fleet and order book per August 2015

	Existing	On	Del.	Rest				Share of
Bulk carriers	fleet	order	YTD	2015	2016	2017	$2018+$	fleet
Handysize
10-14,999 dwt	3.9	0.1	0.0	0.1	0.0	0.0	0.0	3.7%
15-19,999 dwt	4.8	0.1	0.0	0.1	0.1	0.0	0.0	2.7%
20-29,999 dwt	29.0	0.4	0.2	0.3	0.0	0.0	0.0	1.3%
30-39,999 dwt	52.8	13.0	3.8	4.3	6.3	2.3	0.2	24.6%
Total	90.5	13.6	4.0	4.8	6.4	2.3	0.2	15.1%
Handymax/Supramax
40-52,999 dwt	58.3	2.9	1.0	1.7	1.0	0.2	0.0	4.9%
53-64,999 dwt (blt > 1999)	116.1	36.9	8.4	13.2	18.0	5.3	0.5	31.8%
Total	174.3	39.7	9.4	14.9	18.9	5.5	0.5	22.8%
Total	264.8	53.4	13.4	19.7	25.3	7.8	0.7	20.2%
Panamax/Kamsarmax
65-84,999 dwt**	157.7	26.1	6.0	10.6	11.4	3.5	0.7	16.5%
Post-Panamax
85-119,999 dwt	51.2	3.6	1.1	1.4	1.5	0.5	0.2	7.0%
Capesize
120,000 dwt +	294.1	52.6	10.8	16.2	28.4	7.1	0.9	17.9%
Grand total	767.8	135.6	31.2	47.8	66.6	18.8	2.4	17.7%
No. of vessels	10,534	1,667	412.0	625	782	233	27	15.8%

Underlying fleet growth - monthly

Source: Clarkson Platou

Bulk Carrier fleet trend –

Fleet development, Capesize bulk carriers

Vale will phase out VLCC-VLOC conversions

Chinese shipyards are making little or no money

Price quotations	USD 94.0 mill.
Total shipyard costs	USD 90.1 mill.
Overhead	$USD$ 6.5 mill.
Labour	USD 21.0 mill.
Marine equipment	USD 30.0 mill.
Engine	USD 11.6 mill.
Steel	USD 21.0 mill.

Thank you for your attention !