BOURBON: First Half 2017 Results

Paris, September 7, 2017

            BOURBON First Half 2017 Results:

        Performance still largely impacted by a continuously challenging

        Offshore oil and gas services market

"In a cyclical downturn whose duration remains uncertain, BOURBON is committed to creating the necessary conditions to face the challenge on all fronts, particularly when it comes to implementing the transformation plan, maintaining operational excellence for clients and ensuring autonomous financing capacity in a low-activity market context," declares Jacques de Chateauvieux, Chairman and CEO of BOURBON Corporation. "From this standpoint, the debt reorganization concluded at the end of July is an important step in the 'Stronger for longer' action plan".

(***) Effect of consolidation of jointly controlled companies using the equity method.

 (a) Adjusted data:
The adjusted financial information is presented by Activity and by Segment based on the internal reporting system and shows internal segment information used by the principal operating decision maker to manage and measure the performance of BOURBON (IFRS 8). The internal reporting (and thus the adjusted financial information) records the performance of operational joint ventures on which the group has joint control using the full integration method.

The reconciliation between the adjusted data and the consolidated data can be found in Annex I on page 10.

Market highlights and 1^st Half 2017 operations

• In the first half of 2017, the Offshore services market continued to face a standstill on investment by the oil companies and consequently, a reduction in activity. The Offshore PSV market continues to be affected by significant overcapacity and strong pressure on daily rates.
   
• Successful first well clean-up for the Bourbon Evolution 801: contracted by TOTAL, the MPSV conducted a well restarting operation on the Nigerian OFON field, lasting some thirty hours in January 2017. 
   
• BOURBON carried out the mooring installation of the first floating wind turbine in France for Ecole Centrale de Nantes (ECN) as part of the European project FLOATGEN* on the SEM-REV experimental test site, off Le Croisic. Responsible for the overall project management, BOURBON supervised the surveys and engineering, the site preparation and the execution of the mooring system installation, thereby confirming its expertise in the renewable energy market.
   
• BOURBON and Kongsberg Maritime, who have been partners for many years, signed a strategic agreement to jointly develop autonomous connected vessels.

1^st Half 2017 results highlights

• Sustained cost control efforts enabled a significant reduction of 10% in direct and general costs compared with the second half of 2016 and 15.1% compared with the first half of 2016. Proactive vessels stacking policy was maintained: 100 supply vessels were stacked as of June 30, 2017.
• Financial income was impacted by unrealized foreign exchange losses amounting to €50 million, mainly due to the weakening of the US dollar.
• BOURBON improved its free cash flow generation which stands up at €76 million for the first semester 2017 against €58 million for the second half of 2016, thanks in particular to a decrease in capital expenditure and dry docks costs, divided by 2.
  

MARINE SERVICES

The reduction in revenue reflects strong pressure on daily rates and slightly lower utilization rates. The Shallow water Offshore segment has been the most affected in these difficult market conditions.

Sustained cost-reduction efforts enabled the Marine services business to preserve an EBITDAR/adjusted revenue margin of 27.5%.

Marine Services : Deepwater offshore vessels

The decline in drilling activity and vessel overcapacity in this segment continued to impact utilization rates (-2.8 points) and daily rates (-5.8%) compared to the second semester 2016.

Cost reduction and proactive vessel stacking allowed to slightly improve the EBITDAR/adjusted revenue margin by 3.6 points compared to the previous half year.

Marine Services : Shallow water offshore vessels

In the context of a weak drilling activity, the main driver of this segment, revenue decreased by 31% and margins dropped by 8 points compared with the second half of 2016. After hitting a low in the first quarter, activity recovered in the second quarter, mainly driven by Egypt and the end of the monsoon season in Asia. The segment recorded revenue growth of 5.3% and a rise of 4.3 points in utilization rates between the first and second quarters of 2017.

Marine Services : Crew boat vessels

The Crew boats segment saw a decrease in revenue this half-year, mainly due to the reduction in contractors' activity in West Africa. Average utilization rates and daily rates fell by 2.7 points and 0.2% respectively compared with the second half of 2016.

The EBITDAR/adjusted revenue margin was stable compared with the previous half-year due to effective cost control and the proactive stacking of vessels.
Subsea Services

The average utilization rate held up well with a rise of 1.5 points in this half-year compared with the previous semester.
Turnkey projects in Africa and Asia contributed to revenue growth in this half-year, as well as to the increase in EBITDAR compared with the second half of 2016. 
Despite significant pressure on daily rates, the IMR (Inspection, Maintenance and Repair) market remained indeed stable due to its essential nature in maintaining production in Deepwater offshore. 

Other

Activities included are those that do not fit into either Marine Services or Subsea Services. For the most part, they correspond to the results of various ship management and logistics activities and to the cement carrier Endeavor, which was sold in July 2017.

OUTLOOK

With oil prices having stabilized at around US$50, oil companies have adapted and started again exploration-production projects. Demand remains low; however, signs of a gradual return to drilling and development of existing oilfields are visible in certain countries.

In this context, utilization rates can be expected to stabilize in the Subsea and Crew boats segments. The Deepwater offshore and Shallow water offshore segments will see a slight upturn in activity, however at prices that are expected to remain under heavy pressure due to the continued impact of vessel overcapacity on the market.

In order to face this major market change, the group has launched a transformation plan and is pursuing in particular its efforts to streamline operations, cut costs and protect cash, while maintaining its focus on operational excellence.

ADDITIONAL INFORMATION

• 1^st half of 2017 accounts were approved by the Board of Directors on the recommendation of the Audit Committee. They underwent a limited examination by the statutory auditors.
• BOURBON's results will continue to be influenced by the €/US$ exchange rate.
• As a reminder, on July 28, BOURBON finalized its debt rescheduling agreement with its financial partners. In accordance with IFRS, the loans in question have been retained under short-term debt at June 30, 2017. Finalization of the restructuring agreement will enable these loans to be reclassified under medium and long-term debt.
• BOURBON has set up €/US$ hedging contracts at an average exchange rate of €1 = US$ 1.10 to partially cover its estimated EBITDA exposure in 2017.
• In terms of financing, the Board of Directors decided not to exercise the option to redeem Perpetual Deeply Subordinated Notes in October 2017. Application of the step-up clause will then bring the coupon to "CMS EUR 3 years + 650 bp".

FINANCIAL CALENDAR

APPENDIX I

Reconciliation of adjusted financial information with the consolidated financial statements
The adjustment items are the effects of the consolidation of joint ventures according to the equity method. At June 30, 2017 and for the comparative period presented, adjustment elements are:

APPENDIX II

Consolidated Income Statement

APPENDIX III

Simplified Consolidated Balance Sheet

APPENDIX IV

Simplified Consolidated Cash Flow Statement

APPENDIX V

Quarterly average utilization rates for the BOURBON offshore fleet

Quarterly average daily rates for the BOURBON offshore fleet

Quarterly number of vessels (end of period)

*Vessels operated by BOURBON (including vessels owned or on bareboat charter)

Quarterly deliveries of vessels

Half-year adjusted revenue breakdown

*Effect of consolidation of joint ventures using the equity method

Half-year average utilization rates for the BOURBON offshore fleet

Half-year average daily rates for the BOURBON offshore fleet

Half-year deliveries of vessels

Contractualization rates for the BOURBON offshore fleet (end of period)

Breakdown of BOURBON revenues by geographical region

Other key indicators

Quarterly breakdown

Half-yearly breakdown

Financial Glossary

Adjusted data: internal reporting (and thus adjusted financial information) records the performance of operational joint ventures in which the Group has joint control by the full consolidation method. The adjusted financial information is presented by Activity and by Segment based on the internal reporting system and shows internal segment information used by the principal operating decision maker to manage and measure the performance of BOURBON (IFRS 8).

EBITDA: operating margin before depreciation, amortization and impairment.

EBITDAR: revenue less direct operating costs (except bare-boat rental costs) and general and administrative costs.

EBIT: EBITDA after increases and reversals of amortization, depreciation provisions and impairment and share in income/loss of associates, but excluding capital gains on equity interests sold.

Capital employed: including (i) shareholders' equity, (ii) provisions (including net deferred tax), (iii) net debt; they are also defined as the sum (i) of net non-current assets (including advances on fixed assets), (ii) working capital requirement, and (iii) net assets held for sale.

Average capital employed excl. installments: is understood as the average of the capital employed at the beginning of the period and end of the period, excluding installments on fixed assets.

Free cash-flows: net cash flows from operating activities after including incoming payments and disbursements related to acquisitions and sales of property, plant and equipment and intangible assets.

About BOURBON

Among the market leaders in marine services for offshore oil & gas, BOURBON offers the most demanding oil & gas companies a wide range of marine services, both surface and sub-surface, for offshore oil & gas fields and wind farms. These extensive services rely on a broad range of the latest-generation vessels and the expertise of more than 9,300 skilled employees. Through its 37 operating subsidiaries the group provides local services as close as possible to customers and their operations throughout the world, of the highest standards of service and safety.

BOURBON provides two operating Activities (Marine Services and Subsea Services) and also protects the French coastline for the French Navy.

In 2016, BOURBON'S revenue came to €1,102.6 million and the company operated a fleet of 514 vessels.

Placed by ICB (Industry Classification Benchmark) in the "Oil Services" sector, BOURBON is listed on the Euronext Paris, Compartment B.

Contacts

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