BOURBON First Half 2018 Results

Marseilles, September 6, 2018

             

            BOURBON First Half 2018 Results

            Adjusted revenues down by 15.2% in a market environment that continues

            to be challenging

            Ongoing control of operating costs

                   

"While market conditions remained difficult in the first half of 2018, continued efforts made by our teams to bring costs under control combined with the continuing implementation of our strategic plan, #BOURBONINMOTION, enabled us to maintain our operational performance and prepare ourselves to take advantage of the expected turnaround," stated Gaël Bodénès, Chief Executive Officer of BOURBON Corporation.

(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). 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. Furthermore, internal reporting (and again the adjusted financial information) does not take into account IAS 29 (Financial Reporting in Hyperinflationary Economies), applicable for the first time in 2017 (retroactively from January, 1) to an operational joint venture in Angola.
The reconciliation between the adjusted data and the consolidated data can be found in Appendix I on page 10

• Income statement (adjusted data)

      
 Adjusted revenues came out at €340.1 million, a decline of 15.2% on the previous half year, impacted by an unfavorable exchange rate, together with delays to projects in the Subsea activity and a reduction in the number of chartering days. Recovery in daily rates continues to be difficult.
 The number of stacked vessels stabilized over the period reflecting the reactivation of certain vessels and the sale of some non-strategic assets.
  
 Operating costs (net of additional charges for stacked vessels) and general & administrative costs declined a further 8.3% compared to the previous half year despite additional charges related to ongoing renegotiations with financial partners. This positive trend was the consequence of the tight control of operating costs.
  
 As a result, adjusted EBITDAR margin amounted to 20.7%, down six points on the previous half year.
  
 Adjusted EBIT in the first half registers an impairment loss of -€44.7 million in the Marine & Logistics - Deepwater Offshore segment following impairment tests carried out at June 30, 2018. This impairment stems from a 0.5 point increase in the discount rate used to carry out impairment tests compared to  December 31, 2017, as well as the slower than expected recovery in activity.
  
Net income, group share, stood at -€197.1 million compared to -€406.1 million in the previous half year.

• Balance Sheet Statement

Consolidated Capital Employed	06/30/2018	12/31/2017
In € millions
Net non-current Assets	1,920.3	2,028.3
Non-current Assets held for sale	2.1	-
Working Capital	2.3	102.0
Total Capital Employed	1,924.7	2,130.3
Shareholders' equity	453.1	643.6
Non-current liabilities (provisions and deferred taxes)	131.5	121.5
Net debt	1,340.1	1,365.2
Total Capital Employed	1,924.7	2,130.3

The €205.6 million reduction in capital employed in the first half of 2018 was due mainly to the loss reported over the half year.

In accordance with IFRS, borrowings in the amount of €1,195.3 million were recognized as current liabilities as of June 30, 2018. These concern the loans which are the object of ongoing discussions and covered by a general waiver, as announced on July 10, 2018 (see below), borrowings for which payments have been suspended and borrowings that have contractual clauses which may entail early repayment acceleration. It is specified that these clauses have not been activated.

• Cash flow (see appendix IV: Simplified Consolidated Cash Flow Statement)

      
The group's consolidated cash position improved by €37.7 million over the six-month period, which was marked by:
         
        -          Positive cash flow from operating activities in the amount of €80.8 million, up €20.5 million compared to the second half of 2017. The non-payment of bareboat charter leases enabled cash generated by operations to be preserved despite the drop in activity;
               
        -          Cash inflow of around €10 million over the six-month period generated by the sale of 7 vessels (of which 5 non-smart and 2 non-strategic vessels). These partially offset costs related to dry docks of vessels, making for a total impact of €11.4 million over the period;
               
        -          Cash flow from financing in the amount of -€31.7 million, reflecting the servicing suspension of the majority of the group's debt within the context of ongoing negotiations with its lenders.
         
Indeed, the group has entered into further discussions with its lenders both in France and abroad, to balance the servicing of its debt with the expected but gradual recovery in the market recovery, and the corresponding upturn in the group's performance.
As announced on July 10, 2018, the group signed a general waiver with its leasers and debt holders representing the majority of its debt. This waiver authorizes it to postpone loan payments and debt servicing. Discussions are actively carrying on with its lenders.
             
In accordance with IFRS, the company had to reflect, at closing, the payability of its debt by reclassifying it as current liabilities.
             
This situation raises a material uncertainty with regards to the going concern. The group has however prepared its consolidated financial statements for the period ending June 30, 2018, maintaining the going concern assumption given: 

         -          The confidence it has in the outcome of the reopened discussions with its leasers and debt-holders

         -          The active research for new financial partners

         -          The cash flow generated by the business allowing the group to meet its current operating needs over the next 12 months.

Although oil prices have stabilized at over $65-70/barrel, the recovery in oil companies' investments in offshore projects is still slow but is expected to pick up throughout 2019, with a positive impact on vessel utilization rates.

The maritime services market will, however, continue to suffer from consistently low rates which are being heavily impacted by persistent Offshore Support Vessel (OSV) overcapacity. The global fleet of stacked vessels is assessed at more than 1,000 vessels which could take 3 years before returning to service. An increase in chartering prices is therefore expected in the medium term.

In this complex environment, BOURBON has chosen to review its existing business model in order to prepare for the expected recovery and is implementing its strategic plan, #BOURBONINMOTION, announced last February:

         -          To better serve its clients by steering its business model towards more integrated services and reorganizing the group around three stand-alone companies: Bourbon Marine & Logistics, Bourbon Subsea Services, and Bourbon Mobility;

         -          To deliver operational excellence at optimum cost by deploying the Smart shipping program, connecting the fleet of 132 modern Supply vessels (the smart fleet) and disposing of the fleet that can no longer be operated to BOURBON's new standards (the non-smart fleet);

         -          To rise to the human challenge through effective change management.

BOURBON MARINE & LOGISTICS

The group's half year results reflect market conditions that continue to be difficult and are being impacted by vessel overcapacity, continuing to curb our ability to raise daily rates. Costs remain well controlled (down 6% on the preceding half year) and reflect our strong employees' commitment to operating efficiency.

Reflecting a modest improvement in the market, the average utilization rate edged up to 51.9% compared with 51.1% in the second half of 2017, on the back of an increase of almost two points in the activity levels of Deepwater Offshore vessels. The sharp increase in the number of tenders in the second quarter bodes well for a recovery in activity in 2019.

Adjusted revenues lost around 8% on H2 2017 levels, due mainly to a 4% drop in average daily rates, with a more pronounced decline in the Deepwater Offshore segment (-5%).

Adjusted EBITDAR margin decreased marginally by 1.5 point compared to the second half of 2017, the drop in revenues being offset by good cost management.

BOURBON MOBILITY

Crew boat activity remained stable compared to the second half of 2017 on a constant exchange rate basis (down -1.4%), but fell by -6.9% owing to dollar weakness. This confirms stabilizing market trends which were already noted in the first quarter. The number of passengers transported in the first half of 2018 totaled 1,397,726, stable compared to the second half of 2017 (1,395,469 passengers). As such, average daily rates in H1 2018 also remained relatively stable at $4,391 (-1%) compared to the second half of 2017.

Fleet destacking began in the second quarter of 2018 (89.8 stacked vessels compared to 95.2 in the first quarter (FTE)) in order to meet growing demand for short-term contracts in the "Crewliner" and "Interfield" activities.

The adjusted operating margin declined by -6.9 points due to the impact of fleet destacking and exceptional maintenance activity.

BOURBON SUBSEA SERVICES

Business touched a low point in the first half of 2018, affected by weak contractor construction activity since the end of 2017 and by contracts underway being delayed to the third quarter of 2018. In addition, although average chartering rates have remained stable since the second half of 2017, they continue to be weakened by a difficult market environment.

These weaknesses, combined with the effect of an unfavorable currency exchange rate, were not offset by other services such as turnkey projects which represent only 5.4% of first half adjusted revenues.

This 36% drop in adjusted revenues at constant rate had a direct impact on profitability with an adjusted EBITDAR of €12.5 million, corresponding to an EBITDAR margin of 21.8%, down 13.4 points on the previous half year.

Bourbon Subsea Services won a contract to install the first semi-submersible floating wind farm off the coast of Scotland. This diversification activity will continue to bear fruit over the coming semesters.

OTHERS

Activities included are those that do not fit into either Marine & Logistics, Mobility or Subsea Services segments. The majority of the total represents earnings from miscellaneous ship management activities.

ADDITIONAL INFORMATION

• The Board of Directors of BOURBON approved on September 3, 2018 the interim consolidated financial statements for the first six-month period ending June 30, 2018, on upon the recommendation of the Audit Committee. The Statutory Auditors performed a limited review of the interim financial statements.
• BOURBON's results will continue to be affected by the €/US$ exchange rate.
• BOURBON recalls having announced on July 10^th the general waiver signature with its leasers and debt holders representing the majority of its debt, allowing the group to withhold the payments of its loans and the servicing of its debt.
• BOURBON Corporation's General management will comment on the results during an audio webcast scheduled today at 9:00 am Paris local time. The presentation will be followed by a Q&A session. The replay of the audio webcast will be available during the day on our website: http://www.bourbonoffshore.com/en/half-year-results-2018

FINANCIAL CALENDAR

APPENDIX I
Reconciliation of adjusted financial information with the consolidated financial statements
Adjustment items are related the consolidation of joint ventures according to the equity method as per IFRS 11. At June 30, 2018 and for the comparative period presented, adjustment items are as follows:

APPENDIX II

Simplified Consolidated Income Statement

APPENDIX III

Simplified Consolidated Balance Sheet

In € millions	06/30/2018	12/31/2017		06/30/2018	12/31/2017
			Shareholders' equity	453.1	643.6
Net property, plant and equipment	1,829.9	1,923.2	Financial debt > 1 year	87.3	183.8
Other non-current assets	87.4	90.3	Other non-current liabilities	119.4	122.9
TOTAL NON-CURRENT ASSETS	1,917.4	2,013.5	TOTAL NON-CURRENT LIABILITIES	206.8	306.8
Cash on hand and in banks	228.6	243.6	Financial debt < 1 year	1,481.4	1,425.0
Other currents assets	449.7	485.2	Other current liabilities	456.5	367.1
TOTAL CURRENT ASSETS	678.3	728.9	TOTAL CURRENT LIABILITIES	1,937.9	1,792.0
Non-current assets held for sale	2.1	-	Liabilities directly associated with non-current assets classified as held for sale	-	-
			TOTAL LIABILITIES	2,144.6	2,098.8
TOTAL ASSETS	2,597.8	2,742.4	TOTAL LIABILITIES & SHAREHOLDERS' EQUITY	2,597.8	2,742.4

APPENDIX IV

Simplified Consolidated Cash Flow Statement

APPENDIX V

Consolidated Sources and uses of Cash In € millions	H1 2018		H 2 2017		H1 2017
Cash generated by operations	71.1		49.8		81.6
Vessels in service (A)		60.9		28.1		79.0
Vessels sale		10.2		21.6		2.6
Cash out for :	(19.0)		(53.9)		(31.4)
Interest		(13.4)		(32.8)		(23.4)
Taxes (B)		(2.6)		(4.9)		(8.0)
Dividends		(3.0)		(16.1)		-
Net Cash from activity	52.1		(4.1)		50.2
Net debt change	(53.0)		(13.5)		(62.4)
Perpetual bond	-		-		-
Use of cash for	0.7		7.0		2.4
Investments		(21.8)		(30.1)		(17.0)
Working capital (C)		22.5		37.1		19.4
Other sources and uses of cash	0.2		10.6		9.8
Free cash flow	69.2		51.8		76.0
Net Cash flow from operating activities (A+B+C)		80.8		60.3		90.4
Acquisition of property, plant and equipment and intangible assets		(21.8)		(30.1)		(17.0)
Sale of property, plant and equipment and intangible assets		10.2		21.6		2.6

APPENDIX VI

Quarterly revenue breakdown

*Effect of consolidation of joint ventures using the equity method

Quarterly average utilization rates for the offshore fleet in operation

Quarterly average utilization rates for the offshore fleet

Quarterly average daily rates for the offshore fleet

Quarterly number of vessels (end of period)

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

Half-year adjusted revenue breakdown

*Effect of consolidation of joint ventures using the equity method

Half-year average utilization rates for the offshore fleet in operation

Half-year average utilization rates for the offshore fleet

Half-year average daily rates for the offshore fleet

Contractualization rates for the offshore fleet (end of period)

Breakdown of revenues by geographical region

Other key indicators

Quarterly breakdown

Half-year 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). In addition, internal reporting does not take account of IAS 29 (Financial Reporting in Hyper-inflationary Economies), which was applicable for the first time in 2017 to an operating joint-venture in Angola.

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.

Operating income (EBIT) after share of results from companies under equity method: EBIT after share of results from companies under equity method.

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.

Utilization rate: over a period, number of revenue-generating days divided by the number of calendar days.

Utilization rate of the fleet in operation: over a period, number of revenue-generating days divided by the number of calendar days, for non-stacked vessels.

Contractualization rate: ratio between the number of vessels under long term contract and total number of vessels operated by BOURBON, long term contract being defined as having a remaining term equal or superior to 6 months.

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 8,400 skilled employees. Through its 29 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 three operating activities (Marine & Logistics, Mobility and Subsea Services) and also protects the French coastline for the French Navy.

In 2017, BOURBON'S revenue came to €860.6 million and the company operated a fleet of 508 vessels.

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

Contacts

BOURBON	Media relations agency Publicis Consultants
Investor Relations, analysts, shareholders	Vilizara Lazarova
+33 140 138 607 Investor-relations@bourbon-online.com	+33 144 824 634 vilizara.lazarova@consultants.publicis.fr
Corporate Communication
Christelle Loisel
+33 491 136 732 christelle.loisel@bourbon-online.com