2016 REGISTRATION DOCUMENT

Transcription

1 2016 REGISTRATION DOCUMENT Annual financial report OFFSHORE.COM Building together a sea of trust

2 Contents 1 2 IN Key figures 4 Corporation SA stock market data 5 Management bodies 7 GENERAL INTRODUCTION TO THE GROUP 9 timeline 10 Simplified overview of s business activities 11 Activities 11 Innovation 13 Competitive environment 14 Main market trends COMPANY FINANCIAL STATEMENTS 165 Parent company balance sheet Corporation SA 166 Income statement 168 Notes to the Company financial statements 169 Statutory Auditors report on the financial statements (year ended December 31, 2016) 184 Statutory Auditors special report on regulated agreements and commitments 186 REPORT OF THE CHAIRMAN OF THE BOARD OF DIRECTORS MANAGEMENT REPORT 17 Activities and highlights 18 Results 20 Corporate governance 26 Risk factors 49 Social and environmental information 65 Corporation and its shareholders 78 Report explaining the Board s resolutions proposed to the Combined General meeting of May 23, Financial results of the parent company over the last five years 87 Summary table of delegations of power and current authorizations granted by the General Meeting to the Board of Directors for capital increases 88 Report by one of the Statutory Auditors, appointed as independent third party, on the consolidated human resources, environmental and social information included in the management report 89 CONSOLIDATED FINANCIAL STATEMENTS 91 Financial position statement 92 Statement of comprehensive income 93 Statement of consolidated cash flows 95 Statement of changes in equity 96 Notes to the consolidated financial statements 100 Statutory Auditors report on the consolidated financial statements (year ended December 31, 2016) Report of the Chairman of the Board of Directors on the Modus Operandi of the Board of Directors and on internal control and risk management procedures 190 Statutory Auditors report prepared in accordance with Article L of French company law (Code de commerce) on the report prepared by the Chairman of the Board of Directors of the company Corporation 203 OTHER LEGAL AND FINANCIAL INFORMATION 205 General information about Corporation SA and its share capital 206 Trademarks, licenses, patents, property, plant and equipment 217 Agenda of the Combined General Meeting of May 23, Draft resolutions for the Combined General Meeting of May 23, Statutory Auditors report on the share capital reduction 228 Statutory Auditors report on the issue of shares and various marketable securities with cancellation of preferential subscription rights 229 Statutory Auditors report on the issue of ordinary shares and/or various marketable securities reserved for members of a company savings plan 230 Statutory Auditors report on the authorisation to grant share subscription and/or share purchase options 231 Persons responsible for the Registration Document and for the financial statement audit 232 Cross reference tables 233

3 2016 REGISTRATION DOCUMENT Annual financial report Corporation A French Société anonyme with capital of 48,493,096 euros Company registration: RCS PARIS Corporate office: 33, rue du Louvre Paris - France Tél. : +33 (0) Fax : +33 (0) This Registration Document is an unoffi cial translation of the French Document de référence, which was fi led with the French Autorité des marchés fi nanciers (AMF) on April 25, 2017, in accordance with Article of the AMF General Regulation. This unoffi cial translation has been prepared by Corporation for the information and convenience of English-speaking readers and has not been reviewed or registered with the AMF. The French Document de référence may only be used for the purposes of a fi nancial transaction if supplemented with an offering memorandum approved by the AMF. In the event of any ambiguity or discrepancy between this unoffi cial translation and the French Document de référence, the French version shall prevail. The French Document de référence was prepared by the issuer and its signatories are liable for its content. The Registration Document can be viewed in its entirety on and downloaded from com/en/investors/regulated-information. 1

4 2

5 IN KEY FIGURES 4 2. CORPORATION SA STOCK MARKET DATA 5 3. MANAGEMENT BODIES 7 3

6 1 Key IN 2016 figures 1. KEY FIGURES 3 REVENUES* (IN MILLIONS) 3 BREAKDOWN OF 2016 REVENUE BY ACTIVITY 1,421 1,437 20% Subsea Services 1,103 78% Marine Services 2% Other * Adjusted EBITDAR* (IN MILLIONS) 3 EBITDA* (IN MILLIONS) * Adjusted * Adjusted EBIT* (IN MILLIONS) NET INCOME, GROUP SHARE (IN MILLIONS) (76.6) (165.1) (279.6) 4 * Adjusted. * The adjusted fi nancial 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 (IFRS 8). As of January 1, 2015, the internal reporting (and thus the adjusted fi nancial information) records the performance of operational joint ventures on which the group has joint control using the full integration method. The adjusted comparative data are restated accordingly for

7 IN 2016 Corporation SA stock market data 3 VESSELS OPERATED BY * 3 NET DEBT (IN MILLIONS) ,349 1,395 1, Owned Bareboat leases * Excluding Endeavor. 2. CORPORATION SA STOCK MARKET DATA (in euros) Stock price as of February 24, Initial public offering October 21,

8 1 IN 2016 Corporation SA stock market data 2.1 HISTORICAL DATA Number of shares as of December 31 76,342,603 71,606,331 74,559,688 Closing share price (in ) - high low as of December Stock market capitalization as of December 31 (in millions) 935 1,071 1,432 Net earnings per share (in ) (3.68) (1.01) 1.03 Dividend per share (in ) Total dividend (in millions) Shareholders calendar May 4, 2017 Publication of fi rst quarter revenue for 2017 May 23, 2017 Annual General Meeting of Shareholders August 2, 2017 Publication of second quarter revenue for 2017 September 7, 2017 Publication of the results for the fi rst half of 2017 November 9, 2017 Publication of third quarter revenue for 2017 Investor relations analysts shareholders Corporation SA 33 rue du Louvre Paris Tel: +33 (0) Fax: +33 (0) investor-relations@bourbon-online.com 6

9 IN 2016 Management bodies 3. MANAGEMENT BODIES 3.1 SENIOR MANAGEMENT AS OF DECEMBER 31, 2016 Jacques d Armand de Chateauvieux Chairman and Chief Executive Offi cer Christian Lefèvre Executive Vice President Gaël Bodénès Executive Vice President On the proposal of the Chairman and Chief Executive Offi cer, Jacques de Chateauvieux, and having received the opinion of the Nominating, Compensation and Governance Committee, Corporation s Board of Directors appointed Astrid Lancrau de Bréon as Chief Financial Offi cer as of February 1, BOARD OF DIRECTORS AS OF DECEMBER 31, 2016 Jacques d Armand de Chateauvieux Chairman and Chief Executive Offi cer Guillaume d Armand de Chateauvieux Astrid de Lancrau de Bréon Christian Lefèvre Baudouin Monnoyeur Agnès Pannier-Runacher (1) Philippe Salle (1) Bernhard Schmidt (1) Mahmud Tukur (1) Xiaowei Wang Board of Directors meetings are also attended by Henri d Armand de Chateauvieux, in an advisory capacity. 3.3 COMMITTEES OF THE BOARD OF DIRECTORS The Board of Directors is assisted in preparing its work by two special committees. These committees have a research and preparation role for various Board deliberations and they submit their opinion, proposals or recommendations to the Board of Directors. 3.4 NOMINATING, COMPENSATION AND GOVERNANCE COMMITTEE The purpose of this committee is to study and submit to the Board proposals concerning the selection of Directors, the succession plan for members of the management team, and the compensation of the corporate offi cers, including allocations of stock options for new or existing shares, where applicable. As of December 31, 2016, the Nominating, Compensation and Governance Committee was composed of three members: 3 Philippe Salle, Independent Director, who serves as Chairman; 3 Astrid de Lancrau de Bréon; 3 Bernhard Schmidt, Independent Director. 3.5 AUDIT COMMITTEE The mission of the Audit Committee is to assist the Board of Directors so that it can monitor the accuracy and consistency of Corporation s company and consolidated fi nancial statements, the quality of internal control and the information available to shareholders and the markets. As of December 31, 2016, the Audit Committee was composed of three members: 3 Agnès Pannier-Runacher, Independent Director, Chairperson of the committee; 3 Guillaume d Armand de Chateauvieux; 3 Mahmud Tukur, Independent Director. 1 (1) Independent Directors. 7

10 1 IN

11 GENERAL INTRODUCTION TO THE GROUP 2 1. TIMELINE SIMPLIFIED OVERVIEW OF S BUSINESS ACTIVITIES ACTIVITIES Geographical footprint Marine services Subsea Services INNOVATION COMPETITIVE ENVIRONMENT Marine services Subsea Services MAIN MARKET TRENDS 15 9

12 2 GENERAL INTRODUCTION TO THE GROUP timeline offers a broad range of offshore oil and gas marine services. The Company has a large fl eet of innovative and highly productive offshore vessels to guarantee the safest and highest quality services to the most demanding oil and gas customers worldwide. also protects the French coastline for the French Navy. Classifi ed by ICB (Industry Classifi cation Benchmark) in the Oil Services sector, as of December 31, Corporation was listed in capitalization compartment B of NYSE Euronext Paris, since January TIMELINE Established in 1948, Corporation SA (then known as Sucreries de ) was a sugar company based in Réunion Island when Jacques d Armand de Chateauvieux was appointed Chairman in to 1989: Industrial restructuring of the Sugar activity. Diversifi cation of activities into food-processing, then distribution and marine services : Acquisition of the Compagnie Chambon and its subsidiary Surf, dedicated to offshore oil and gas marine services : Initial Public Offering on the Paris secondary market : The Group steadily disengaged from its historic activities in Foods, Distribution and Sugar and began to concentrate on marine services : Implementation of the strategic plan, which stepped up the Group s shift toward the sole business of marine services : was classifi ed by Euronext in the Oil Services sector : Group became and the head offi ce was transferred from La Réunion to Paris : was added to the SBF 120 index. completed the plan a year ahead of schedule and launched a new strategic plan: Horizon : extended its strategic plan and outlook within the new strategic plan: Horizon positioned itself in the offshore oil fi eld IMR (Inspection, Maintenance and Repair) market: the Group extended its range of services by launching a new Subsea Services business : announced its new strategic plan, the 2015 Leadership Strategy, which furthered the objectives of the previous plan: a new, USD2 billion investment program to support growth in the deepwater offshore sector while continuing to upgrade its shallow water offshore fl eet : Changes in s governance: the roles of Chairman of the Board of Directors and Chief Executive Offi cer were separated : Bourbon Offshore Surf celebrated 40 years of professionalism in client service : implemented its Transforming for beyond plan, to prepare for its future growth. As part of the transformation project, announced its intention to sell supply vessels for up to USD2.5 billion, while continuing to operate them for ten years under a bareboat chartering contract : After a takeover bid, JACCAR Holdings, controlled by Jacques d Armand de Chateauvieux, jointly holds with other shareholders 55.8% of s capital and voting rights. successfully completed its fi rst bond issuance, for 100 million : SA became Corporation SA. Changes in governance: the roles of Chairman of the Board of Directors and Chief Executive Offi cer were combined. 10

13 GENERAL INTRODUCTION TO THE GROUP Activities 2. SIMPLIFIED OVERVIEW OF S BUSINESS ACTIVITIES - Offshore installation supply Marine Services - Offshore installation anchor handling, towage and positioning - Offshore oil and gas production and storage terminal support - Personnel transport - Assistance, salvage and pollution remediation provides its clients with marine resources, equipment, Remotely Operated Vehicles, and crews, billing its clients for daily charters under chartering contracts ranging from spot to fi ve-year charters. 15 affi liates in charge of ship management ensure the reliability of the fl eet on a daily basis, supported by a centralized maintenance organization based in Dubai, to ensure that each vessel is certifi ed, manned, supplied and properly maintained. Further, as part of its Subsea Services business, offers its clients integrated contracts which limit the number of interfaces with the client while providing a quality, reliable and accessible service Subsea Services - Offshore operations engineering, supervision and management - Offshore fi eld and wind farm development support - Inspection, Maintenance and Repair (IMR) of submarine infrastructure - Remotely Operated Vehicles - Subsea well stimulation at optimized cost. These contracts include: the provision of IMR vessels and Remotely Operated Vehicles operated by personnel, as well as engineering and management services. Some services can be provided on a fi xed-price basis with a performance commitment. These services account for less than 20% of Subsea revenue. The list of companies that make up the Group as well as their geographical locations are presented in note 5.7 of the Notes to the consolidated fi nancial statements (pages 153 to 157) ACTIVITIES As a services company which is close to its clients, is committed to a constant pursuit of operational excellence as part of its maritime support offer for offshore gas and oil fi elds. The Group offers a wide range of maritime services for offshore exploration, production and development in diffi cult environments, in both shallow and deepwater offshore. offers local services through its 37 operating subsidiaries, which are close to clients and their operations. It meets the highest operational excellence and risk management standards all over the world. The Group has two Activities, Marine Services and Subsea Services. For over 30 years, it has also been protecting the French coast on behalf of the French navy. 3 A modern, diverse fl eet of 513 offshore vessels predominantly built in series; 3 more than 9,000 employees working Under The Flag of Excellence; 3 a unique organization with complete management systems. 3.1 GEOGRAPHICAL FOOTPRINT operates in the main oil producing areas, apart from the US section of the Gulf of Mexico. is present in: 3 Africa, in particular the Gulf of Guinea; 3 the North Sea; 3 the Mediterranean Sea; 3 Brazil, Mexico and the Caribbean; 3 India and the Middle-East; 3 Australia; 3 South-East Asia. 3.2 MARINE SERVICES is a leader in the offshore oil maritime services industry which relies on a sustainable strategy and modern, evolving technology. s added value comes from its ability to provide solutions to all oil and gas clients through a range of maritime services which refl ect its operational excellence and risk management priorities based on: applies very high international quality standards when supplying maritime services. 11

14 GENERAL INTRODUCTION TO THE GROUP 2 Activities Having made operational risk management its main priority, the Marine Services activity has established a client satisfaction chain. This unique organizational model focuses on the vessel which is in line with the four pillars of operational excellence: 3 safety of people and equipment, while respecting the environment, both on land and at sea; 3 competence to ensure service quality; 3 technical availability of the vessels, to ensure service continuity; 3 optimization of costs and fuel consumption The fleet Offshore support Anchor Handling Tug Supply vessels (AHTS) s AHTS are used to set up and maintain oil platforms. They have powerful engines and winches, can tow drilling rigs and barges, lay and lift anchors, and deploy various pieces of equipment related to oil production. Platform Supply Vessels (PSV) These vessels supply offshore rigs with special equipment and products. In addition to their large deck area, which enables them to transport all types of equipment such as irregular sized parcels, they have considerable storage capacity and optimized fuel consumption. also provides seismic support services via a new generation of seismic support vessels (SSV), a series of dedicated vessels specially designed for CGG. Terminal Tugs s fl eet of terminal tugs is used for assistance, standby and intervention operations on offshore oil and gas terminals, and is specialized in FPSO (fl oating production, storage and unloading unit) assistance. Crew Boats The FSIVs (Fast Support Intervention Vessels) provide urgent supplies and transport of response teams. The surfers are fast crew boats that can transport personnel rapidly to offshore oil sites and serve platforms located in an oil or gas fi eld. Since 1986, thanks to the skills of its teams, has offered a safe and reliable personnel transport service, making the Group the world s leading provider of this key service to the oil industry The fleet Coastal protection Assistance & salvage tugs Assistance and salvage tugs are used to protect French coasts (refl oatation, assistance and rescue of vessels in distress, and cleanups) Types of contract used Maritime services are governed by vessel time chartering contracts according to which the service is billed on the basis of daily rates. These services include the provision of the vessel and its crew to the oil operator for a period of time agreed in advance. These periods can vary from a few days to several years. Long-term contracts (over six months) are favored by. The standard terms of these contracts are set out in a sample contract created by the BIMCO (Baltic and International Maritime Council), which is commonly used in the industry. However, also signs framework agreements with the oil majors (Exxon, Chevron, Total, BP, etc.), through its role as a strategic supplier of leading oil companies. From the start of operations, the performance of the service is closely monitored by the Contracts Manager who is the client s main point of contact. His or her role is to be available at any time to meet client expectations and enable operational excellence targets to be met. 3.3 SUBSEA SERVICES offers its clients (oil operators or contractors) a range of resources for Inspection, Maintenance and Repair (IMR) and construction activities. This range includes: 3 specialized vessels; 3 underwater robots which can perform operations at depths of up to 4,000 meters; 3 teams of engineers and technicians to provide solutions for the installation and maintenance of offshore platforms and subsea fi elds, in addition to the installation of equipment and cables for the offshore renewable energy business. Therefore, the service is contracted as follows: 3 bareboat vessel chartering; 3 chartering with vessel crew, crane operator and hotel service or chartering with vessel navigation equipment, crane operator, hotel service, underwater robots and operations management; 3 on a fi xed-price basis for some installation contracts, with a performance commitment and limitation of liability. Chartering of underwater robots is billed on a per-day basis, and may include positioning and survey services or diving services. These services are subcontracted. Vessel and robot chartering contracts involve an obligation to provide resources and have limits on recourse liability. Engineering services are mostly provided on a package basis and their liability extends to repeating the study in the event of a defect. Engineering surveys performed on chartered vessels are essentially lifting surveys so that can ensure the integrity and proper use of the equipment made available to the charterer. 12

15 GENERAL INTRODUCTION TO THE GROUP Innovation For some contracts, particularly in the fi eld of renewable energy, provides fi xed-price installation services subject to limitation of liability The Subsea fleet IMR vessels These are multipurpose vessels mainly used for ultra-deepwater Installation and Inspection, Maintenance and Repair (IMR) operations. They can also provide support for wind farms. offers a wide range of vessels with cranes from 10 t to 250 t at depths of up to 3,000 m. They have dynamic positioning technology and cranes with built-in swell compensation systems. s IMR vessels have a large cargo capacity and sizable deck space and they can accommodate over 100 people. This range of vessels has been specially developed to meet the needs of oil operators during: 3 exploration for test wells; 3 fi eld development by engineering contractors; 3 surface or subsea maintenance of offshore oil and gas fi elds; 3 emergency situations, including fi re protection, surface and subsea anti-pollution, and personnel safety. The new generation Evolution 800 vessels benefi t from the support of and synergies with the Marine Services activity, and the standardization of propulsion and communication equipment. Remote Operated Vehicles (ROV) Subsea Services fl eet of underwater robots (ROV) includes three main categories: 3 ROVs for light observation; 3 compact ROVs used for instrumental surveys and light construction work at depths of between 600 and 2,000 m; 3 ROVs of the UHD (Ultra Heavy Duty) and HD (Heavy Duty) Work Class type, which enable crews to work and handle packages on all types of sites at depths of up to 4,000 m with great stability and precision Engineering and management services also offers recognized IMR project engineering expertise for oil fi elds in operation (replacement of undersea connections, well heads, cables, narrow diameter pipelaying, etc.). This activity is complementary to the provision of vessels and robots, enabling to establish itself as a single provider for preparing and performing operations required on offshore fi elds. This service includes the more or less complex project management and planning of procedures, as well as the provision of specialized personnel to manage the operations in question on board the vessels INNOVATION Innovation is at the heart of s model and strategy. This approach is refl ected in technological concepts, new techniques and operational innovations. keeps a constant watch on technological developments, supports research and development with its main subcontractors, and supports innovative developments such as French marine clusters. For example, this approach has made it possible to develop the Bourbon Liberty 100, 150, 200 and 300 series. These vessels have many innovative characteristics in common: reduced fuel consumption, approximately 30% more cargo capacity (compared with vessels of comparable size), reduced operational times and considerable maneuverability. Finally, a high level of availability can be guaranteed because the maintenance of these modern vessels is facilitated by standardization. All these assets generate signifi cant productivity gains on operations conducted for clients, effi ciently and over the long term. support vessels are set apart by the standardized installation of high tech equipment, such as dynamic positioning, which is essential to the safety of towing, anchoring, and refueling operations. also took the decision to equip most of its support vessels with a diesel-electric propulsion system, which is more fuel effi cient for offshore oil support operations and equally more environmentally friendly. Under the 2015 Leadership Strategy plan, work continued on building the new series of vessels. This was completed in 2015, apart from one vessel in the Bourbon Explorer 500 series and another in the Bourbon Evolution 800 series. In 2016, launched its fi rst digital transformation projects. The aim is to reduce operating costs, improve safety and strengthen client relationships by offering new digital tools. 13

16 2 Competitive GENERAL INTRODUCTION TO THE GROUP environment 5. COMPETITIVE ENVIRONMENT 5.1 MARINE SERVICES There are two types of operators: 3 international companies present in the major global markets (at least two); these represent about 24% (1) of the total fl eet (including ). The main companies are as follows: Tidewater (United States), Seacor (United States), Farstad (Norway), Solstad (Norway), Maersk Supply (Denmark), Gulfmark (United States), Edison Chouest (United States), and Swire Pacifi c (Hong Kong); 3 over 500 local operators, each with a fl eet made up of a limited number of vessels. is the world leader in the offshore oil and gas services market owing to the size of its fl eet and its geographical positioning. The industry requirement is for a modern fl eet, which has addressed through its new-build program. s vessels are standardized and equipped with Dynamic Positioning (DP2), diesel electric propulsion and satellite communication systems. Based on its number of vessels of less than 30 years, Corporation has the largest fl eet. Then there are three companies with more than 150 vessels, six companies with a fl eet of 50 to 70 vessels, 13 companies with a fl eet of 30 to 50 vessels, 66 companies with a fl eet of 10 to 30 vessels, and more than 500 other players with a fl eet of less than 10 vessels. 3 GEOGRAPHICAL POSITIONING Number of supply vessels Competitor #1 Competitor #2 Competitor #3 Competitor #4 Competitor #5 Competitor #6 Competitor #7 Competitor #8 Competitor #9 Competitor #10 Asia Med/Middle-East North Sea Americas Africa x x x x x Competitor #1 x x x x x Competitor #2 x x x x Competitor #3 x Competitor #4 x x x x Competitor #5 x x x x Competitor #6 x x Competitor #7 x x x x Competitor #8 Competitor #9 x x x x Competitor #10 x x x Source: Clarksons. (1) Source: Clarksons (excluding vessels that are more than 30 years old). 14

17 GENERAL INTRODUCTION TO THE GROUP Main market trends 5.2 SUBSEA SERVICES The Subsea Services business has a special position on the oil fi eld maintenance and development market, as it offers chartering of vessels, mostly long-term, as well as underwater robots and its team of engineers and technicians. Specializing in raising operations, the Subsea Services business has developed its expertise in cranes and the installation of packages at extreme depths. The raising resources installation and maintenance support teams regularly do work on the vessels. A global operator, the Subsea Services business benefi ts from the nearby location of all subsidiaries. Therefore, competition is established principally according to the type of services required by the local end-client, taking into account internationally recognized standards. s Subsea business focuses on the Caribbean (Mexico/Trinidad), Mediterranean, Persian Gulf, Africa, Asia and emerging countries such as India. Customers are primarily oil companies (accounting for more than 60% of revenue), oil fi eld construction companies and production stimulation support companies. Depending on the region, the competition primarily includes ship owners such as Maersk Supply (Denmark), Tidewater (United States), Solstad (Norway), Sealion (UK) or Farstad (Norway) for straight chartering, and integrated service operators such as DOF Subsea (Norway), DeepOcean (Norway), Oceaneering (United States) and EMAS (Singapore) MAIN MARKET TRENDS The Energy Information Administration (EIA) is forecasting a stabilization of the oil and gas market from 2017 (source: EIA Short Term Energy Outlook). The surplus oil supply should subside gradually, in part due to a rise (+1.3 million b/d in 2017) in overall demand, from 96.3 million b/d in 2016 to 97.6 million b/d in 2017, as well as the reduction in supply following the agreement by OPEC and other producer countries to scale back production by 1.2 million b/d from January 1, This reduction should lower global stocks and help oil prices to recover. The price per barrel fell from USD112 in June 2014 to USD31 in January 2016, reaching its lowest level since the beginning of 2009 (the average price was USD99 in 2014, USD52 in 2015 and USD44 in 2016). As a result, the amount spent by oil companies on exploration and production fell by 24% worldwide in However, investment is expected to rise by 5% in 2017, assuming that the oil price remains between USD50 and USD60 per barrel (source: IFP). The EIA expects oil prices to climb to USD55 per barrel in INVESTMENT IN EXPLORATION AND PRODUCTION (IN BILLIONS OF US DOLLARS) USD billion % % % % Forecasts Middle-East Europe CIS Asia-Pacific Latin America Africa United States and Canada (Source: IFP) 15

18 2 GENERAL INTRODUCTION TO THE GROUP Deepwater offshore Oil companies reacted swiftly to the collapse in oil price with cuts to spending on exploration and production, notably by signifi cantly reducing drilling programs. The utilization rate of semi-submersible drilling rigs and drillships continued to fall in 2016 to 63% (source: Clarksons). All regions where operates have been affected by this slowdown. Semi-submersible drilling rigs and drillships Utilization rate % of worldwide fleet Units under construction 63% (-14 pts) (2016 vs. 2015) 17% 54 Further, of the 245 vessels ordered worldwide in 2016 (source: Clarksons), s share is not signifi cant, with only two vessels due to be delivered. For the record, s share was 5% in 2012 and 4.2% in 2013, < 2.7% in 2014 and 0.5% in The average age of s deepwater offshore fl eet is 9.3 years, in a global fl eet estimated at more than 1,700 units, 7% of which are over 25 years old (source: Clarksons/). Shallow water offshore The utilization rate of jack-ups also continued to fall in The shallow water offshore market has particularly suffered in West Africa. However, the market has begun to stabilize in the MMI region and Asia. The utilization rate of this fl eet in 2016 was 65% (source: Clarksons). Jack Up Utilization rate % of worldwide fleet Units under construction 65% (-10 pts) (2016 vs. 2015) 18% 100 To meet the requirements of oil operators in terms of risk management, the phenomenon of replacing vessels which are old or deemed obsolete with more recent vessels continues, as the use of more powerful vessels equipped with dynamic positioning technology is necessary for use at the new drilling rigs. The average age of s shallow water offshore fl eet is 6.5 years, in a global fl eet estimated at more than 2,000 units, 35% of which are over 25 years old (source: Clarksons/). 16

19 MANAGEMENT REPORT 3 1. ACTIVITIES AND HIGHLIGHTS Highlights Significant events after the end of the reporting period RESULTS Financial performance Results by business Others category Growth strategy Corporation SA results Change in accounting methods Outlook: principal trends CORPORATE GOVERNANCE Merger of the roles of Chairman and Chief Executive Officer Terms of office and functions of corporate officers Executive compensation Application of the AFEP-MEDEF Code summary table Report on the principles and criteria for the determination, distribution and allocation of fixed, variable and exceptional items composing total compensation and benefits of any kind attributable to corporate officers in Fees paid to the Statutory Auditors and members of their networks RISK FACTORS Risks related to the offshore oil and gas marine services markets Risks relating to s business Legal risks Risks associated with ethics and non-compliance Financial risk management objectives and policy Insurance cover for risks SOCIAL AND ENVIRONMENTAL INFORMATION Social information Societal information Environmental information Note on social and environmental reporting methodology Cross-reference table of social and environmental information CORPORATION AND ITS SHAREHOLDERS Capital stock and shareholder base Dividends paid for the last three years Transactions on company stock Factors that could have an impact in the event of a public offer REPORT EXPLAINING THE BOARD S RESOLUTIONS PROPOSED TO THE COMBINED GENERAL MEETING OF MAY 23, Approval of financial statements for the year ended December 31, Appropriation of income Related party agreements Terms of office of the Statutory Auditors Renewal of Directors terms of office Approval of the principles and criteria for determining, allocating and granting the elements of the compensation of the Executive Directors Say on pay Buyback program cancellation of acquired shares Financial delegations Realignment of memorandum and articles of association 86 FINANCIAL RESULTS OF THE PARENT COMPANY OVER THE LAST FIVE YEARS 87 SUMMARY TABLE OF DELEGATIONS OF POWER AND CURRENT AUTHORIZATIONS GRANTED BY THE GENERAL MEETING TO THE BOARD OF DIRECTORS FOR CAPITAL INCREASES 88 REPORT BY ONE OF THE STATUTORY AUDITORS, APPOINTED AS INDEPENDENT THIRD PARTY, ON THE CONSOLIDATED HUMAN RESOURCES, ENVIRONMENTAL AND SOCIAL INFORMATION INCLUDED IN THE MANAGEMENT REPORT 89 17

20 3 Activities MANAGEMENT REPORT and highlights 1. ACTIVITIES AND HIGHLIGHTS 1.1 HIGHLIGHTS Oil prices sank to a low of USD26 a barrel in January 2016, before closing the year at a high of USD55. This second consecutive year of muted investment from oil companies caused a sharp decline in offshore business and overcapacity of deepwater offshore PSVs. s 2016 results were strongly impacted by an unprecedented crisis in offshore oil and gas services: 3 adjusted revenues of 1.1 billion (consolidated revenues of billion); 3 adjusted EBITDAR of 383 million (consolidated EBITDAR of million); 3 EBIT impacted by a 36 million impairment loss ; 3 net income, group share of million; 3 positive free cash fl ow of 64.7 million. Ongoing cost control efforts, which include both effi ciency gains and proactive vessel stacking, have delivered a signifi cant cost-reduction (in operating and general costs) of 19% compared with For the full year 2016, 70.6 supply vessels full time equivalent were stacked, i.e. 29% of the supply fl eet. Following impairment tests carried out as of December 31, 2016, a 36 million impairment loss was recognized on goodwill and assets allocated to the Deepwater offshore segment. As part of the Stronger for longer action plan, which is designed to preserve and strengthen the Company s cash fl ow so that it can emerge stronger from the current market downswing in marine offshore oil and gas marine services, signed an agreement with its fi nancial partners to reschedule most of its fi nancial debt. The key features of the arrangement are as follows: 3 out of long and medium-term debt totaling 692 million, 365 million of repayments due between 2016 and 2018 have been rescheduled and reduced to an amount of 63 million not repayable until The remainder of the debt, i.e. 629 million, will henceforth be repaid progressively between 2019 and 2025; the weighted average of the spreads applicable to these facilities will initially represent approximately 2.1% from October 1, 2017, then approximately 3.1% from January 1, 2020 and lastly approximately 4% from January 1, 2022; 3 short-term facilities amounting to million will be refi nanced and maintained at this level from 2017 to 2020 inclusive, before being repaid progressively afterwards, while 22 million in shortterm credits will be maintained and repaid progressively as from 2018; the weighted average of the spreads applicable to these facilities will initially and from the completion date represent 1.9%, then 2.9% from January 1, 2020 and lastly 3.9% from January 1, In 2016, more than 3 million passengers were transported on board crew boats between oil fi elds and logistics bases onshore and between oil fi eld platforms. The 100 th subsea well connection was carried out by the MPSV Vissolela for the same client. Over 450 subsea connections have been made since fi rst established its Subsea business. Employed on a term contract by Lundin Petroleum in the Barents sea, the Bourbon Arctic successfully performed more than 130 anchors operations since June 2016, proving its versatile capabilities (AH, PSV, ROV, Stand-by/Oil Recovery Operations) in harsh and remote areas. continues to enjoy a strong presence in the Mediterranean with several successes on the Egyptian sector in Its Bourbon Liberty 200 series have been supporting several offshore projects, with phases up to eight vessels mobilized on fi elds. An innovative and economical solution for the stimulation of deepsea oil wells was deployed in Nigeria, in response to the need to optimize the yield of existing fi elds. 1.2 SIGNIFICANT EVENTS AFTER THE END OF THE REPORTING PERIOD On March 6, 2017, the Group signed an agreement with a number of fi nancial institutions and partners to restructure its principal debt in the amount of million. In this context, thus restructured its debt as set out in note of consolidated fi nancial statements. This restructuring agreement, which was signed on March 6, 2017, will enter into force by June 30 and at the latest by July 15, 2017, once the conditions precedent and subsequent have been satisfi ed: the signature of agreements to reschedule 143 million in balloon 18

21 MANAGEMENT REPORT Activities and highlights loans, the Group obtaining fi nancing in the amount of 60 million and agreements in principle for an additional 60 million, the renegotiation of the agreement with ICBC Financial Leasing and obtaining the repayment of an advance granted to JACCAR Holdings during the negotiations for the acquisition of gas business activities, as well as the satisfaction of certain administrative and documentary conditions. As of the closing date, the Group had already taken various initiatives to fulfi ll the conditions precedent for the agreement. The Group initiated discussions with all the fi nancial partners concerned by the signature of rescheduling agreements of the 143 million in balloon loans; it should be borne in mind that such loans are generally refi nanced when they fall due so as to be aligned with the useful life of the funded economic asset. As of the closing date, the Group had obtained an agreement in principle regarding a fi ve-year fi nance lease agreement making it possible to refi nance a PSV Bourbon Explorer for 23.3 million. The entry into force of this agreement remains subject to the satisfaction of certain conditions precedent aligned with those of the restructuring agreement signed on March 6. A term sheet has also been signed with the fi nancial partners for the fi nancing of three vessels under fi nance leases in the amount of 18 million, and a mandate letter has been signed covering fi nancing in the amount of 60 million. Other fi nancing is being discussed with foreign fi nancial partners. It is expected that these discussions will be concluded in the second half of As of the closing date, the Group had also fi nalized the renegotiation of the agreement with ICBC Financial Leasing and had obtained a formal repayment commitment for the advance granted to JACCAR Holdings during the negotiation of the acquisition of the gas business activities. It should also be noted that, as of the balance sheet date, no event specifi ed in the conditions subsequent of the agreement (notably the administrative and documentary conditions) had occurred; the Group further believes that the risk of any of these events occurring before the entry into force of the agreement is weak. As announced on April 12, 2017, in line with the negotiations that led to the restructuring of its principal debt, also reached an agreement to reorganize lease payments on the vessels covered by the sale and bareboat chartering contracts concluded with ICBC Financial Leasing in 2013 and This agreement provides for a USD240 million reduction in s charter payments between 2016 and 2018 in consideration for the two-year extension of the initial bareboat charter period at a rate of 8% and more favorable commercial terms for ICBC Financial Leasing. This agreement will not have a material impact on the Group s consolidated fi nancial statements since it does not affect the qualifi cation of the bareboat chartering contract of the vessels. In accordance with IFRS, bareboat charter expenses will be recognized on a straight-line basis from the date of renegotiation and for the remaining term of the contract. In connection with the restructuring of its debt, the Group performed an analysis of the modifi cations made to the loans in question, in accordance with IAS As of the closing date, the Group analyzed the principal loans representing the majority of the restructured debt; the result was that the changes made are not considered signifi cant and there is no extinction of the loans in question. The loans in question will therefore remain on the balance sheet. A substantive analysis of the other loans will be carried out once the remaining documentation has been fi nalized. 3 19

22 MANAGEMENT REPORT 3 Results 2. RESULTS 2.1 FINANCIAL PERFORMANCE Segment information and the reconciliation of adjusted fi nancial information with the consolidated fi nancial statement are presented in note 4 of the Notes to the consolidated fi nancial statements (pages 145 to 147). (in millions, unless stated otherwise) Change 2016/2015 Adjusted revenues (1) 1, , % Adjusted EBITDAR (1) (excl. capital gains) % % of adjusted revenue 34.7% 38.1% -3.4 pts Adjusted EBITDA (1) % Impairment (36.0) Adjusted EBIT (1) (Operating result) (165.1) 66.1 n/s IFRS 11 restatement (2) (10.2) (18.3) -44.4% EBIT (Operating income) (175.3) 47.8 n/s Net income (263.0) (43.4) n/s Net income, group share (279.6) (76.6) n/s Number of vessels (end of period) (3) Average utilization rate (4) excluding crew boats 61.6% 79.1% pts Average daily rate excluding crew boats (in USD per day) 15,466 18, % (1) The adjusted fi nancial 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 (IFRS 8). The internal reporting (and thus the adjusted fi nancial information) records the performance of operational joint ventures on which the Group has joint control using the full integration method. (2) Effect of the consolidation of jointly controlled companies by the equity method. (3) Vessels operated by (including vessels owned or on bareboat charter). (4) Utilization rate: over a period, number of revenue-generating days divided by the number of calendar days. Adjusted revenues reached 1.1 billion in 2016, a decrease of 23.3% compared with 2015 in a strongly declining market. Adjusted EBITDAR was 383 million, down 30.1% from Adjusted EBIT was million, compared with 66.1 million in Net income, group share was million, versus million in Oil prices sank to a low of USD26 a barrel in January 2016, before closing the year at a high of USD55. This second consecutive year of muted investment from oil companies caused a sharp decline in offshore business and overcapacity of deepwater offshore PSVs. Ongoing cost control efforts, which include both effi ciency gains and proactive vessel stacking, have delivered a signifi cant cost-reduction (in operating and general costs) of 19% compared with For the full year 2016, 70.6 supply vessels full time equivalent were stacked, i.e. 29% of the supply fl eet. Following impairment tests carried out as of December 31, 2016, a 36 million impairment loss was recognized on goodwill and assets allocated to the Deepwater offshore segment. Change (in millions) /2015 Adjusted revenue 1, , % Africa % Europe & Mediterranean/Middle East % American continent % Asia % 20

23 MANAGEMENT REPORT Results 2.2 RESULTS BY BUSINESS Marine Services Change 2016/2015 Number of vessels (end of period) (1) Average utilization rate (2) 62.9% 75.9% pts (1) Vessels operated by (including vessels owned or on bareboat charter). (2) Utilization rate: over a period, number of revenue-generating days divided by the number of calendar days. Contractualization methods are presented in section of page 12. Change Adjusted financial performance (in millions) /2015 Revenue , % Direct costs and general and administrative costs (585.9) (744.7) -21.3% EBITDAR (excl. capital gains) % EBITDAR (excl. capital gains)/revenue 32.2% 36.2% -4.0 pts EBITDA % Impairment (36.0) EBIT (155.7) 41.5 ns 3 The resilience of the crew boats segment and a cost-reduction of more than 21% enabled the Marine Services activity maintain an adjusted EBITDAR/revenue margin of 32.2% (down 4 points from last year). The Crew boats activity is essentially linked to fi eld production/maintenance and deepwater offshore fi eld construction phases, while the Supply vessels business essentially depends on drilling, which fell to a low in The fall in adjusted EBITDAR coupled with the increase in bareboat charter costs explains the signifi cant decline in adjusted EBITDA. Following impairment tests performed as of December 31, 2016, a 36 million impairment loss was recognized on Deepwater offshore goodwill and assets, impacting adjusted EBIT for the Marine Services activity Deepwater offshore vessels Change 2016/2015 Number of vessels (end of period) (1) Average utilization rate (2) 68.4% 83.1% pts Average daily rate (in USD per day) 16,524 19, % (1) Vessels operated by (including vessels owned or on bareboat charter). (2) Utilization rate: over a period, number of revenue-generating days divided by the number of calendar days. Adjusted financial performance Change (in millions) /2015 Revenue % Direct costs and general and administrative costs (221.7) (260.2) -14.8% EBITDAR (excl. capital gains) % EBITDAR (excl. capital gains)/revenue 34.2% 39.7% -5.5 pts EBITDA % The sharp decline in drilling activity and vessel overcapacity in this segment have signifi cantly impacted utilization rates (-14.7 points) and daily rates (-16.6%). 21

24 MANAGEMENT REPORT 3 Results Cost reduction and proactive vessel stacking cushioned the fall in EBITDAR margin on adjusted revenues of 5.5 points. The 6.9% increase in bareboat charter costs refl ects the full-year effect of the latest vessels delivered at the end of the fi rst half of This affected adjusted EBITDA, which stood at 47.4 million in 2016, down 56.9% from the previous year Vessels (shallow water offshore) Change 2016/2015 Number of vessels (end of period) (1) Average utilization rate (2) 57.9% 78.7% pts Average daily rate (in USD per day) 10,848 13, % (1) Vessels operated by (including vessels owned or on bareboat charter). (2) Utilization rate: over a period, number of revenue-generating days divided by the number of calendar days. Adjusted financial performance Change (in millions) /2015 Revenue % Direct costs and general and administrative costs (187.2) (285.8) -34.5% EBITDAR (excl. capital gains) % EBITDAR (excl. capital gains)/revenue 33.0% 36.5% -3.5 pts EBITDA % Drilling activities in the Shallow water offshore segment saw a signifi cant reduction in Average fl eet utilization rates fell by 20.8 points, while daily rates were down 17.4%. Good fl eet management, with technical availability reaching 99% during the year, together with effective cost control and vessel stacking policy, limited the fall in margin to 3.5 points. Adjusted EBITDA was 25.6 million, down 73.9% Crew boats Change 2016/2015 Number of vessels (end of period) Average utilization rate (1) 63.6% 72.3% -8.7 pts Average daily rate (in USD per day) 4,394 4, % (1) Utilization rate: over a period, number of revenue-generating days divided by the number of calendar days. Adjusted financial performance Change (in millions) /2015 Revenue % Direct costs and general and administrative costs (177.0) (198.8) -11.0% EBITDAR (excl. capital gains) % EBITDAR (excl. capital gains)/revenue 28.6% 30.4% -1.8 pts EBITDA % 22

25 MANAGEMENT REPORT Results The Crew boats segment proved more resilient in the cyclical downturn. Average utilization rates and daily rates only slipped by 8.7 points and 6.5% respectively. The lower operating costs enabled to contain the 1.8 point contraction in EBITDAR margin; adjusted EBITDA stood at 71.2 million, down 18%. This performance confi rms s expertise in this segment Subsea Services Change 2016/2015 Number of vessels (end of period) (1) Average utilization rate (2) 57.1% 65.6% -8.7 pts Average daily rate (in USD per day) 38,634 48, % (1) Vessels operated by (including vessels owned or on bareboat charter). (2) Utilization rate: over a period, number of revenue-generating days divided by the number of calendar days. Contractualization methods are presented in section 3.3 of page 12. Adjusted Financial Performance Change (in millions) /2015 Revenue % Direct costs and general and administrative costs (119.0) (132.7) -10.3% EBITDAR (excl. capital gains) % EBITDAR (excl. capital gains)/revenue 45.2% 47.4% -2.2 pts EBITDA % EBIT (6.6) 22.7 ns 3 The utilization rate in the second half of 2016 was 6 points higher than in the fi rst half. This was due to more intense spot activity and diversifi cation of geographical areas in Asia and the Middle East. Adjusted EBITDAR/revenue margin for Subsea Services activity is 45.2%, a slide of only 2.2 points from the previous year. The lower costs partly offset the fall of 8.7 points in utilization rates and 20.1% in average daily rates. 2.3 OTHERS CATEGORY Adjusted Financial Performance Change (in millions) /2015 Revenue % Direct costs and general and administrative costs (14.6) (12.1) +21.2% EBITDAR (excl. capital gains) % EBITDAR (excl. capital gains)/revenue 31.4% 33.3% -1.9 pts EBITDA % EBIT (2.8) 1.9 ns Activities included are those that do not fi t into either Marine Services or Subsea Services. Making up the majority of the total are earnings from such items as miscellaneous ship management activities, logistics as well as from the cement carrier Endeavor. 23

26 MANAGEMENT REPORT 3 Results 2.4 GROWTH STRATEGY Previous strategic plans Under the Horizon 2012 and Leadership Strategy investment plans, two vessels were due to be delivered in Given the current cyclical downswing of the oil and gas market and vessel overcapacity, decided to delay delivery of the vessels until 2017 or The Asset Smart fi nancial element of the Transforming for Beyond plan (launched in 2013) was designed to dispose of modern vessels built in series for a total of USD2.5 billion. In all, 57 vessels were sold during the period for USD1.7 billion. The tougher market conditions in 2016 ruled out the prospect of additional sales. Beyond In view of the direction taken by its clients in response to the new energy transition, has looked to diversify its activities to keep pace with these new trends and create solid growth prospects. At its meeting on January 22, 2016, the Corporation Board of Directors launched a project to acquire the gas-related holdings of JACCAR Holdings, Corporation s majority shareholder. These mainly comprise an operating company in the business of gas transport and gas tanker vessels, together with a platform in China dedicated to technological developments and the manufacture of mega-tanks in this business sector. With this investment, sought to diversify its business into the fi eld of gas transport and related logistics services. This diversifi cation is consistent with the objective of value creation in growth sectors, through an activity where revenue is substantially generated through long-term contracts. At a meeting on March 28, 2016, acting in accordance with the recommendations of the ad hoc committee, in the light of the report from the independent expert on valuation and solvency and in consideration of the results of the due diligence reviews undertaken, the Corporation Board of Directors decided unanimously, on the basis of all the Directors participating in the vote, that this investment venture by the Company into JACCAR Holdings business in the gas fi eld was in the corporate interest and authorized the signature of the investment contract and its appendices. The scope of the subsidiaries to be acquired was as follows: 3 100% of Greenship Gas, a Singapore-based shipping trust which owns, directly or indirectly: 3 a fl eet of 17 vessels (13 of which in service), purpose-built for carrying ethane, ethylene and mid-size LNG - average age: 3.5 years old; 3 100% of Evergas, an operating and service company in the gas transportation sector; 3 100% of Greenship Gas Manager Pte. Ltd., the entity which manages the Greenship Gas shipping trust; 3 acquisition of 80% of JHW Engineering & Contracting Limited, through a reserved increase of capital. This investment would enable to develop business in the growth fi eld of logistics and transport services for the gas production industry, notably as regards ethane. The overall investment totaled USD320 million, composed of: i) USD372.8 million for Greenship Gas; and ii) USD16.2 million for JHW. It also included net debt and fi nancing arranged for vessels to be transferred as part of the transaction. To fi nance the deal, the Company was to benefi t from an interest-free deferred payment of USD100 million, payable within a maximum of three years from completion of the transaction. In accordance with governance best practice, the transaction was subject to shareholder approval at the Ordinary General Meeting of May 26, At its meeting on May 16, 2016, Corporation s Board of Directors noted that the necessary fi nancing for the acquisition of JACCAR Holdings natural gas activities could not be obtained within the necessary period of time under the agreement governing the investment. Therefore, the Board of Directors decided to remove the resolutions relating to ratifi cation of the planned transaction from the agenda of the General Meeting of Shareholders of May 26, At this point, completion of the transaction is no longer one of the options for diversifi cation, which remains a prospect that the Company intends to consider as opportunities arise. Initiation of a transformation plan for 2017 became the leader in offshore oil and gas marine services following a long development program marked by signifi cant investments in innovative vessels, built in series and enabling better control over operations and customer costs. The oil industry crisis, which is the most serious in the past 30 years, pushed to meet the challenge by adapting and evolving its processes. is convinced that the Oil and Gas (O&G) sector s current model will change in the near future, once the crisis has ended. Beyond the Stronger for longer action plan aimed at decreasing costs and protecting cash fl ow, therefore, it is necessary to go further and transform the Company to respond to the observed changes in client expectations. 24

27 MANAGEMENT REPORT Results The digital revolution provides an excellent opportunity to combine operational safety, improvement in the quality of client service, and cost reduction. It will also enable us to strengthen our relationships with our partners by providing them with new, custom services, a platform of high-performance digital tools and a single standard. My: transforming the client relationship Deeply rooted in s DNA, client satisfaction has always been central to the Company s actions and services. has therefore developed an innovative service called my, which gives its clients instant access to key performance indicators for the vessels operated on their behalf via a secure digital platform. Operational since 2015, my refl ects the Company s ongoing commitment to transparency and quality of service. Smart vessels: harnessing digital technology for operations is working on two pilot projects which will enable its vessels to improve real-time onshore communication (video, communications, operational and technical data). The system has been installed on board two vessels a BE 800 type MPSV and BE 500 type PSV to enable them to collect as much data as possible. By analyzing the data, the Company will be able to improve the quality of its operations, optimize costs and offer clients new services. 2.5 CORPORATION SA RESULTS The Company had no revenue in The 8.5 million loss from operating activities is up 3.6 million from the previous year, mainly due to payroll taxes of 3.8 million (bonus stock award to fi scal residents French employees). Financial income was positive at 34 million, down 17.7 million from the previous year. This decrease is primarily related to the fall in fi nancial income from investments for 21.8 million over the previous year, partly offset by lower fi nancial expenses. Non-recurring income was negative at 8 million. As a result, the net income of 28.4 million posted for the year was down 35.3 million compared with No expense referred to in Articles 39.4 and 223 quarter of the French General Tax Code was identifi ed. Information on Corporation payment terms In accordance with Article L of the French Commercial Code, and pursuant to the law on the modernization of the economy (LME), we inform you that as of December 31, 2016, there were no outstanding debts to suppliers. As of December 31, 2015, the outstanding trade payables balance totaled 629,629.50, broken down as follows: 3 100% of invoices payable from the date of issue of the invoice. At that date, the balance did not include any signifi cant overdue debt. 2.6 CHANGE IN ACCOUNTING METHODS There is no change in accounting method to report. 2.7 OUTLOOK: PRINCIPAL TRENDS Positive signs are now visible of a recovery in exploration and production investment, especially in onshore, while offshore is expected to rebound at the end of 2017 and in These are the result of stabilizing oil prices and the need for oil and gas majors to maintain production levels and fi nd new reserves in the medium term. Production support activity and maintenance operations on existing fi elds are expected to resume gradually over the next few quarters. In this context, the progress made in the Subsea and Crew boats segments in terms of utilization rates is set to continue. However, the Deepwater and Shallow Water Offshore segments will continue to feel the effects of the cyclical downturn in is therefore pursuing its efforts to streamline operations, cut costs and protect cash, while maintaining its focus on operational excellence. At the next General Meeting of Shareholders on May 23, 2017, the Board of Directors will propose payment of a dividend of 0.25 per share, either in shares or in cash, with an ex-dividend date set at June 8, 2017 and a payment date of July 17,

28 3 Corporate MANAGEMENT REPORT governance 3. CORPORATE GOVERNANCE 3.1 MERGER OF THE ROLES OF CHAIRMAN AND CHIEF EXECUTIVE OFFICER During the fi ve-year period from 2011 to 2016, the roles of Chairman of the Board of Directors and Chief Executive Offi cer were separated. On May 26, 2016, the Annual General Meeting of Shareholders re-elected Jacques d Armand de Chateauvieux to the Board of Directors. At a Board meeting held the same day, the Company s Directors resolved to combine the roles of Chairman of the Board of Directors and Chief Executive Offi cer of the Company and to appoint Jacques d Armand de Chateauvieux as Chairman and Chief Executive Offi cer of the Corporation. The choice of governance model, which the Board announced to the market before the General Meeting of May 26, 2016, is part of the effort to diversify the Company s activities and open up new growth prospects. It was also dictated by the need given the current crisis in offshore oil and gas to facilitate the Group s operational management by a Chairman and Chief Executive Offi cer who has the power to respond swiftly to any situation and to act on behalf of the Company. The Board also concluded that combining the two roles was especially appropriate given the current confi guration of the Company s shareholder base. The Board has ten members, four of whom are independent. It has two specialized committees chaired by Independent Directors, which meet without the Chairman and Chief Executive Offi cer being present. Lastly, the Board of Directors has set authorization limits, particularly with regard to investments and divestments, which are specifi ed in its internal regulations. Together, these factors militate for balanced and satisfactory corporate governance. The Chairman and Chief Executive Offi cer organizes and directs the work of the Board of Directors, and provides the General Meeting with a report on said work. He supervises the proper functioning of the Company s administrative bodies and ensures, in particular, that the Directors are in a position to perform their mission. Under the Company s bylaws on the roles of Director, Chairman of the Board of Directors and Chief Executive Offi cer, the Chairman and Chief Executive Offi cer must be less than 70 years old. In accordance with Article of the Company s bylaws, on a proposal from the Chairman and Chief Executive Offi cer, the Board of Directors appointed Christian Lefèvre and Gaël Bodénès as Executive Vice Presidents at its meeting on May 26, Like the Chairman and Chief Executive Offi cer, the Executive Vice Presidents represent the Company in its dealings with third parties and have the power to act on behalf of the Company in any situation. The Chairman and Chief Executive Offi cer and Executive Vice Presidents exercise their powers subject to the prior authorization of the Board of Directors in areas defi ned by its internal regulations. These are available on the Company s website at under Group Corporate governance Board of Directors. By coordinating the operational and fi nancial strategy, the Chairman and Chief Executive Offi cer can provide clarifi cation for the Group s fi nancial communication. He also protects the Company s image through the media. The Executive Vice Presidents oversee the implementation of the strategic guidelines, especially during the current transformation period. Together with the Chairman and Chief Executive Offi cer, they are responsible for the Company s day-to-day and operational management. 3.2 TERMS OF OFFICE AND FUNCTIONS OF CORPORATE OFFICERS Directors in office as of December 31, 2016 It is specifi ed in the introduction that section 1.1 of the report from the Chairman of the Board of Directors on the Board s Modus Operandi and internal control and risk management procedures, should indicate which of the AFEP-MEDEF Code criteria were used by the Board of Directors in order to assess Directors independence. 26

29 MANAGEMENT REPORT Corporate governance Mr. Jacques d Armand de Chateauvieux Born February 13, 1951 Chairman and Chief Executive Officer Business address: Corporation 33 rue du Louvre Paris First term of offi ce: October 14, 1977 Term expires on: General Meeting called to approve the fi nancial statements for the year ended December 31, 2018 A graduate of the Institut Supérieur de Gestion de Paris and holder of an MBA from the University of Columbia, New York. Chairman of since 1979, Jacques d Armand de Chateauvieux has been the leading force in the transformation of the Company from a conglomerate involved in a variety of activities to an international group devoted to marine services, particularly for offshore oil and gas. Jacques d Armand de Chateauvieux was appointed Chairman and Chief Executive Offi cer of Corporation on May 26, 2016 following the decision to combine the roles of Chairman and CEO. Jacques d Armand de Chateauvieux is Chairman and Managing Director of JACCAR Holdings SA, the majority shareholder of Corporation. Positions held outside the Group - Manager of CT LUX - Chairman and Managing Director of JACCAR Holdings SA (Luxembourg) - Chairman of SAGES - Chairman of Sapmer SA (listed on Euronext Paris) - Chairman of Sapmer Holding (Singapore) - Chairman and Director of GREENSHIP Holdings (Singapore) - Director of SINOPACIFIC Shipbuilding Group (China) Positions currently held in the Group s main subsidiaries None. Positions that have expired in the past five years Chairman of Sapmer SA (listed on Euronext Paris) - Advisor to CBo Territoria SA (listed on NYSE Euronext Paris) - Director, AXA - Director, SINOPACIFIC Offshore and Engineering (China) - Director, Evergas (Denmark) 3 Mr. Guillaume d Armand de Chateauvieux Born July 28, 1978 Positions held outside the Group None Positions that have expired in the past five years None Director Member of the Audit Committee Business address: Andros Biars-Sur-Cère First term of offi ce: May 21, 2015 Term expires on: General Meeting called to approve the fi nancial statements for the year ended December 31, 2016 Guillaume d Armand de Chateauvieux graduated from ESC Rouen in Finance and began his career in 2002 at Nestlé. He then joined PwC in 2003, fi rst as External Auditor in pharmaceutical, industry and consumer goods sectors then, from 2007, as senior manager in Transaction Services Department. Since 2013 he is the Group fi nancial controller at the Holding level of Andros/Bonne Maman. 27

30 3 Corporate MANAGEMENT REPORT governance Ms. Astrid de Lancrau de Bréon Born December 23, 1979 Positions held outside the Group None Positions that have expired in the past five years None Director Member of the Nominating, Compensation and Governance Committee Business address: BNP Paribas Neuilly-Sur-Seine Niece of the Chairman of the Board of Directors First term of offi ce: May 20, 2014 Term expires on: General Meeting called to approve the fi nancial statements for the year ended December 31, 2016 Following her appointment as Chief Financial Offi cer effective February 1, 2017, Astrid de Lancrau de Bréon resigned from her position as Director. Having graduated from the ESSEC business school in 2004, with a major in Finance, Astrid de Lancrau de Bréon has since worked for BNP Paribas, fi rst as a chargée d affaires within the Group s fi nance division, where she then took over the Emerging Markets area. In 2010, she became Head of Group Strategy, reporting to the general management of BNP Paribas. From 2014 to 2017, she served as Head of Corporate and Institutional Clients at the Paris Étoile Entreprises Business Centre. Director Business address: Corporation 33 rue du Louvre Paris First term of offi ce: May 28, 2013 Mr. Christian Lefèvre Born August 27, 1957 Positions held outside the Group - Chairman of Marine SAS - Director of Sapmer Holding (Singapore) Positions currently held in the Group s main subsidiaries (1) - Representative of Bourbon Offshore SASU and Chairman of Bourbon Supply Investissements SASU - Chairman of Bourbon Maritime SASU Appointments that have expired in the past five years - Director of Sapmer SA (company listed on Euronext Paris) - Director of ENSM Term expires on: General Meeting called to approve the fi nancial statements for the year ended December 31, 2018 Christian Lefèvre gained a postgraduate degree from the National Merchant Navy School in He began his career at as an offi cer then Chief Engineer and Captain of offshore vessels before becoming Head of Agencies in Gabon then Cameroon. He was then successively appointed Chief Operating Offi cer at Bourbon Offshore Surf (an indirect subsidiary of Corporation) from 1990 to 1995, then CEO of Bourbon Offshore Surf from 1996 to He was appointed CEO, Offshore Division in 2001, Chief Operating Offi cer of Corporation in December 2005, and Chief Executive Offi cer in January Since May 26, 2016, when the roles of Chairman and Chief Executive Offi cer were combined, he has served as Deputy Chief Executive Offi cer of the Company. (1) Based on the main subsidiaries listed on page 211 of the 28

31 MANAGEMENT REPORT Corporate governance Mr. Baudouin Monnoyeur Born April 24, 1949 Positions held outside the Group - Chairman of the Monnoyeur group SAS - Chairman of Pleyel Investissements SA Appointments that have expired in the past five years - Member of the Fonds Quelium Policy Committee (CDC) Director Business address: Monnoyeur SAS 117 rue Charles-Michels Saint-Denis First term of offi ce: May 30, 2008 Term expires on: General Meeting called to approve the fi nancial statements for the year ended December 31, 2016 A graduate of the Paris Institut d Études Politiques and holder of an MBA from INSEAD. Baudouin Monnoyeur is Chairman of the Monnoyeur group, a French family company created in 1906, specializing in building and engineering distribution and services, which is now established in several countries as distributor of brands such as Caterpillar, Mercedes Benz and John Deere. As of December 31, 2016, Baudouin Monnoyeur held 5.8% of Corporation s capital through his company Monnoyeur SAS. 3 Independent Director Chairman of the Audit Committee Business address: Compagnie des Alpes 50/52 Boulevard Haussmann Paris Date fi rst appointed: August 24, 2009 Ms. Agnès Pannier-Runacher Born June 19, 1974 Positions held outside the Group - Executive Vice President of Compagnie des Alpes (listed company France) - Member of the Supervisory Board of Futuroscope - Director of CMB - Member of the Supervisory Board of ELIS SA (listed company France) - Director of AFP Positions that have expired in the past five years None Term expires on: General Meeting called to approve the fi nancial statements for the year ended December 31, 2017 Agnès Pannier-Runacher is a graduate of the HEC and ENA and holder of a CEMS (Community of European Management Schools) Masters. Inspector of Finance at the Ministry of the Economy, Finance and Industry, then Cabinet Director and Member of the Management Committee at Assistance Publique-Hôpitaux de Paris; in 2006, she joined the Caisse des Dépôts as Deputy Director for Finance and Strategy Manager of the Equity Investments and Development Department. In 2009, she became a member of the Executive Committee and Director for Finance and Strategy for the FSI portfolio. In 2011, she joined Faurecia as Director of the Tata-JLR, GME and Volvo Clients division at Faurecia Systèmes d Intérieur. Agnès Pannier-Runacher has been Chief Executive Offi cer of Compagnie des Alpes since

32 3 Corporate MANAGEMENT REPORT governance Mr. Philippe Salle Born May 17, 1965 Independent Director Chairman of the Nominating, Compensation and Governance Committee Business address: Elior Groupe 11 allée de l Arche Paris La Defense Cedex First term of offi ce: May 20, 2014 Term expires on: General Meeting called to approve the fi nancial statements for the year ended December 31, 2017 Positions held outside the Group - Chairman and Chief Executive Offi cer and Director of Elior (company listed on Euronext Paris) - Chairman and Chief Executive Offi cer and Director of Elior Restauration et Services - Chairman and Chief Executive Offi cer and Director of Areas Worldwide (Spain) - Director of Elior UK Holdings Limited (UK) - Chairman of Finellas SAS - Permanent representative of CIC Associés, Banque Transatlantique - Director of GTT Positions that have expired in the past five years - Chairman and Chief Executive Offi cer and Director of Altran Technologies (company listed on Euronext Paris) - Chairman of the Altran Innovation Foundation - Chairman of Altimus Philippe Salle is a graduate of École des Mines in Paris and holds an MBA from the Kellogg Graduate School of Management at Northwestern University (Chicago, United States). He began his career at Total in Indonesia before joining Accenture in He joined McKinsey in 1995, where he became associate partner in He joined Vedior France in 1999, becoming Chairman and Chief Executive Offi cer in 2002, then in 2006, he became Chairman for southern Europe (France, Spain, Italy and Switzerland). He remained in this position until 2007, when he joined the Geoservices Group, fi rst as Executive Vice President, then as Chairman and Chief Executive Offi cer until March He then became Chairman and Chief Executive Offi cer of the Altran group, before joining the Elior group as Chairman and Chief Executive Offi cer in April

33 MANAGEMENT REPORT Corporate governance Mr. Bernhard Schmidt Born September 19, 1960 Independent Director Member of the Nominating, Compensation and Governance Committee Business address: Petroleum Equity group Berkeley Square London W1J 6BD First term of offi ce: May 20, 2014 Positions held outside the Group - Member of the Supervisory Board, Tougas Gmbh (Germany) - Member of the Supervisory Board, Metargo AG (Austria) - Chairman of Ryco Energy Solutions Inc. (United States) - Member of the Rohölaufsuchungsgesellschaft AG advisory Board (Austria) Positions that have expired in the past five years None Term expires on: General Meeting called to approve the fi nancial statements for the year ended December 31, 2016 Bernhard Schmidt has 30 years experience in the international oil sector as an executive, entrepreneur and academic. He was awarded a Master s in petroleum engineering from the Montanuniversität in Leoben (Austria) and an MBA from the Insead business school in Fontainebleau. He started his career at Shell in the Netherlands, the United Kingdom and Oman, before joining Honeywell International and becoming a member of the Wintershall Executive Committee, a BASF company, responsible for exploration-production for eight years. In addition, he was a university lecturer in petroleum economics at the Montanuniversität in Leoben and a speaker at industry events. He is currently founding partner and Executive Chairman of Petroleum Equity, a new private investment fund focused on the oil and gas market. 3 31

34 3 Corporate MANAGEMENT REPORT governance Independent Director Member of the Audit Committee Business address: Eterna plc 5a Oba Adeyinka Oyekan Avenue Lagos Nigeria Date fi rst appointed: June 1, 2012 Mr. Mahmud Tukur Born February 19, 1973 Positions held outside the Group - CEO and Director of Eterna Plc (Nigeria) - Director of Daddo Maritime Services Ltd (Nigeria) - Director of ECM Terminals Ltd (Nigeria) - Director of Independent Energy Ltd (Nigeria) - Director of Lenux Group (Nigeria) - Director of Dragnet Solutions Ltd (Nigeria) - Director of Micro Access Ltd (Nigeria) Positions that have expired in the past five years None Term expires on: General Meeting called to approve the fi nancial statements for the year ended December 31, 2017 A Nigerian national, Mahmud Tukur is a joint honors graduate of Accounting & Management from the Business School of the University of Wales College, Cardiff. Vice Chairman of Ecomarine Group, a shipping line and Terminal Operator in West Africa, he is also an Independent Director of Independent Energy Limited (IEL), an indigenous Oil Exploration and Production company. IEL is the operator of the Ofa marginal fi eld. Mahmud Tukur has also served for a number of years as Chief Executive Offi cer and Managing Director of Daddo Maritime Services Limited. Since June 2010, he has been Chief Executive Offi cer and Managing Director of Eterna Plc. Ms. Xiaowei Wang Born November 28, 1968 Positions held outside the Group - Chairperson and Director of SYWG Alternative Investment Co (China) Positions that have expired in the past five years None Director Business address: Shenyin & Wanguo Securities Co., Ltd (SYWS) Shanghai, China First term of offi ce: M ay 20, 2014 Term expires on: General Meeting called to approve the fi nancial statements for the year ended December 31, 2018 Xiaowei Wang is a graduate of the University for Finance and Economics of the North-East, China. She also holds an Executive MBA from the China Europe International Business School (CEIBS) in Shanghai. Xiaowei Wang has occupied senior executive fi nance and accounting positions for over 22 years, including a position as Finance Director at Baosteel in New York, United States, for seven years. She was responsible for successfully managing and growing many investment management funds and trust services. She is now Chairperson of Shenyin & Wanguo Alternative Investment Co, a subsidiary of one of the largest fi nancial companies in China. 32

35 MANAGEMENT REPORT Corporate governance The Board is also assisted by an advisor, as allowed by the bylaws: Advisor since August 25, 2014 Mr. Henri d Armand de Chateauvieux Born August 17, 1947 Positions held outside the Group - Chairman of Mach-Invest SAS - Chairman and Managing Director of Mach Invest International (Luxembourg) - Director of Sapmer Holding Pte Ltd (Singapore) Positions that have expired in the past five years - Director of Sapmer SA (company listed on Euronext Paris) Brother of the Chairman and Chief Executive Officer A pilot for Air France for over 30 years, Henri d Armand de Chateauvieux was a Director at from 1987 to As of December 31, 2015, through the companies Mach-Invest and Mach Invest International, Henri d Armand de Chateauvieux held 7.6% of Corporation s capital Individuals whose provisional or initial appointment to the Board is subject to ratification by the General Meeting of the Shareholders of May 23, Ms. Adeline Challon-Kemoun Born March 6, 1967 Positions held outside the Group - Independent Director of Econocom Group - Director of Air France Foundation Positions that have expired in the past five years None Independent Director Business address: AIRFRANCE-KLM 45 rue de Paris Roissy CDG Cedex Ratifi cation of the provisional appointment by the General Meeting of May 23, 2017 Adeline Challon-Kemoun is a graduate of Sciences Po Paris and a member of the French Society of Financial Analysts (SFAF). From 1989 to 2002, Adeline Challon-Kemoun was partner at Image 7. In 2003, she was appointed Deputy Chief Executive Offi cer of Euris Group and Company Secretary of Rallye. In 2006, she held the post of Communications Director of the Casino Group. In 2011, she became Director of External Communications and Marketing for France Télévisions. Since 2012, Adeline Challon-Kemoun has been Communications and Brand Director for Air France. Since 2015, she has also served as Deputy Director of Marketing, Digital & Communication at Air France-KLM. 33

36 3 Corporate MANAGEMENT REPORT governance Elisabeth Van Damme Born March 17, 1966 Positions held outside the Group - Independent Director of the Elior Group Positions that have expired in the past five years None Independent Director Business address: Redwood Finance Dahlialaan, Overijse Belgium Elisabeth Van Damme, a graduate in applied economics, is currently a partner in Redwood Finance, a fi nancial services consulting company. She is also an Independent Director of the Elior Group and a member of the Audit Committee. She previously held positions as CFO for over ten years with Bureau van Dijk Editions Electroniques, Air Creative Associates and Villa Eugenie. She was also a Financial Controller at Coca-Cola Services and an Auditor at KPMG Other corporate officers of Corporation at December 31, 2016 Mr. Gaël Bodénès Born April 3, 1968 Executive Vice President Operations Since January 1, 2011 Business address: Corporation 33 rue du Louvre Paris Term expires on: General Meeting called to approve the fi nancial statements for the year ended December 31, 2018 Gaël Bodénès is a naval engineer who graduated from ENSIETA (Naval Engineering School) in He also has an MBA awarded by HEC (Business School) Paris in He began his career with the French Navy (DGA) as a naval engineer in the Newbuilding Design Department, then joined the Sales Department of the DCN in Brest (France). In 1998, he joined Barry Rogliano Salles as an offshore shipbroker. In September 2002, Gaël Bodénès joined as Marketing and Business Development Manager for the Offshore Division. In line with the growth of the business, he contributed to the structuring of the Offshore Division and to the development of the Marketing Department of Offshore. In September 2005, he was appointed Deputy CEO of Offshore, before becoming Deputy CEO of the Offshore Division, in charge of Business Management, in Since January 2011, he has been Executive Vice President of Corporation. Positions held outside the Group None Positions currently held in the Group s main subsidiaries (1) - Representative of Bourbon Offshore SASU and Chairman of Bourbon Offshore Surf SAS - Chief Executive Offi cer of Bourbon Supply Investissements SASU - Chief Executive Offi cer of Bourbon Maritime SASU - Director of Bourbon Supply Asia PTE LTD Positions that have expired in the past five years None (1) Based on the main subsidiaries listed on page 207 of the. 34

37 MANAGEMENT REPORT Corporate governance Additional information on the corporate officers To the Company s knowledge, in the past fi ve years, no corporate offi cer: 3 has been found guilty of fraud; 3 has been involved in a bankruptcy, receivership or liquidation; 3 has been found guilty of any offense or been subject to any offi cial public sanction issued by any statutory or regulatory authority; 3 has ever been prevented by a court of law from acting as a member of any administrative, management or supervisory body of any issuer, or from participating in the management or conduct of the business of any issuer Shares held by corporate officers Pursuant to the provisions of Article 13 of the bylaws in force at the date of this Registration Document, each Director is required to own at least 300 shares of the Company. These must be held in registered form. As of December 31, 2016, as far as the Company was aware, the members of the Board of Directors and the corporate offi cers held the following number of shares in registered form: Number of shares held in registered form Directors Jacques d Armand de Chateauvieux 28,257 Guillaume d Armand de Chateauvieux 3,454 Astrid de Lancrau de Bréon 2,418 Christian Lefèvre 247,730 Baudouin Monnoyeur 399 Agnès Pannier-Runacher 363 Philippe Salle 12,000 Bernhard Schmidt 300 Mahmud Tukur 300 Xiaowei Wang 300 Advisor Henri d Armand de Chateauvieux 423,230 Corporate officers Jacques d Armand de Chateauvieux, Chairman and Chief Executive Offi cer (see above) Christian Lefèvre, Executive Vice President and Director (see above) Gaël Bodénès, Executive Vice President 6,256 3 TOTAL 725, EXECUTIVE COMPENSATION Executive compensation policy The executive compensation and benefi ts policy set by the Board of Directors on the recommendation of the Nominating, Compensation and Governance Committee, are based on the following principles: 3 the compensation policy refl ects the responsibilities of each person and ensures that the compensation components are in line with the Group s overall compensation policy for executives in key positions; 3 the compensation policy must be on a par with other companies of the same size and for similar positions, and with international companies operating in the same business sector; 3 the Executive Directors receive fi xed and variable compensation; 3 the criteria for variable compensation are reviewed annually to ensure that they continue to refl ect the Company s strategy. The amount of variable compensation may not exceed a certain percentage of the fi xed compensation; 3 Directors fees paid by Corporation are retained by the Executive Director; 3 any stock options or bonus shares granted should refl ect a proportionate distribution policy which does not solely concentrate on the Executive Directors. These are subject to performance criteria. If they exercise their options, the Executive Directors will have to retain 20% of the shares until the end of their tenure. The Board s deliberations on any item pertaining to the calculation or assessment of their performance take place without Executive Directors being present. 35

38 3 Corporate MANAGEMENT REPORT governance Compensation of the Chairman and Chief Executive Officer Until May 26, 2016, Jacques d Armand de Chateauvieux, in his capacity as Chairman of the Board of Directors, received no direct compensation from Corporation other than Directors fees. On May 26, 2016, the General Meeting of Shareholders re-elected Jacques d Armand de Chateauvieux to the Board. At a Board meeting held the same day, the Company s Directors re-elected him as Chairman and resolved to combine the roles of Chairman of the Board of Directors and Chief Executive Offi cer of the Company and to appoint him as Chairman and Chief Executive Offi cer of Corporation SA. For fiscal year 2016 At its meeting on July 4, 2016, the Board of Directors of Corporation, on the proposal of the Nominating, Compensation and Governance Committee, decided that the components of Jacques d Armand de Chateauvieux s compensation as of July 1, 2016 would be as follows: 3 a fi xed annual salary of 144,000; 3 variable compensation, entirely linked to the Company s performance, corresponding to 1% of surplus net income (group share) for the year in question and limited to a maximum of 500,000; 3 Directors fees paid by Corporation. With respect to variable compensation, the Board of Directors did not follow the recommendation of the AFEP-MEDEF Code, which provides that variable compensation must be subject to the achievement of specifi c objectives, but instead granted variable compensation with terms similar to the compensation terms of the other shareholders (that is to say, a percentage of net income where it is positive). This decision was based on the fact that the objectives set for the two other corporate offi cers, linked to quantitative and qualitative performance criteria, cannot apply to the Chairman and CEO, who is the Company s principal shareholder. Jacques d Armand de Chateauvieux has no other commitments from the Company. At its meeting on March 13, 2017, the Board, after approving the Company s fi nancial statements, noted that net income (group share) was negative. Therefore, no variable compensation will be paid to Jacques d Armand de Chateauvieux for fi scal year Compensation of Executive Vice Presidents The compensation paid to Executive Vice Presidents has a fi xed component and a component which is variable annually. Some years they are also allocated stock options or stock purchase options linked to performance. For the variable portion, several years ago the Board of Directors defi ned a calculation procedure based on fi xed compensation; variable compensation can reach 50% of fi xed compensation if the objectives are achieved, and up to 70% if the objectives are exceeded. The objectives are reviewed and voted on each year by the Board of Directors upon the proposal of the Nominating, Compensation, and Governance Committee, and aligned in part with the objectives of the Group s key executives as well as with the objectives relating to the Group s strategic priorities. The degree to which each objective must be achieved is precise and progressive, but is not made public for reasons of confi dentiality. The two Executive Vice Presidents also have the use of a Company car. For fiscal year 2016 On the basis of the objectives defi ned at the meeting of March 7, 2016, the Board of Directors, having heard the opinion of the members of the Nominating, Compensation, and Governance Committee, which examined the extent to which the various performance criteria had been achieved and analyzed the personal contribution of each of the Executive Vice Presidents, and after deliberations, fi xed the variable compensation to be paid for fi scal year This component is 10% of the gross annual fi xed compensation, compared to 41% for Achievement of objectives for fiscal year 2016 % target % granted ECONOMIC PARAMETERS: 40% 0 - Target for free cash fl ow 20% Not achieved - Target for EBITDA excl. capital gains 20% Not achieved OPERATIONAL PARAMETERS/HSE: 40% 0 - Target for average fl eet utilization rate 20% Not achieved - Target for Group TRIR 20% Not achieved PERSONAL CONTRIBUTION 20% 20% TOTAL 100% 20% 36

39 MANAGEMENT REPORT Corporate governance Summary table of the compensation, stock options and shares granted to each Executive Director in office as of December 31, 2016 (in euros) Jacques d Armand de Chateauvieux, Chairman and Chief Executive Officer Year 2015 Year 2016 Compensation due for the year (detailed in table ) 30, ,000 Variable long-term compensation allocated over the year - - Value of stock options awarded during the year (detailed in ) - - Value of the performance stock granted during the year - - TOTAL 30, ,000 Christian Lefèvre, Executive Vice President Year 2015 Year 2016 Compensation due for the year (detailed in table ) 556, ,162 Variable long-term compensation allocated over the year - - Value of stock options awarded during the year (detailed in ) - - Value of the performance stock granted during the year - - TOTAL 556, ,162 Gaël Bodénès, Executive Vice President Year 2015 Year 2016 Compensation due for the year (detailed in table ) 389, ,825 Variable long-term compensation allocated over the year - - Value of stock options awarded during the year (detailed in ) - - Value of performance shares awarded during the year (detailed in 3.3.4) TOTAL 389, ,825 37

40 3 Corporate MANAGEMENT REPORT governance Summary table of the compensation of each Executive Director in office as of December 31, 2016 (in euros) Jacques d Armand de Chateauvieux, Chairman and Chief Executive Officer Due for the year Year 2015 Year 2016 Paid over the year Due for the year Paid over the year Fixed compensation ,000 72,000 Variable compensation (1) Variable long-term compensation Exceptional compensation Directors fees (2) 30,000 29,000 30,000 30,000 Benefi ts in kind TOTAL 30,000 29, , ,000 (1) Variable compensation is payable the following year, after approval of the fi nancial statements by the General Meeting. (2) The amount due is likely to vary according to the number of Board meetings following the combined General Meeting. Christian Lefèvre, Executive Vice President Due for the year Year 2015 Year 2016 Paid over the year Due for the year Paid over the year Fixed compensation 370, , , ,006 Variable compensation (1) 153, ,750 37, ,550 Variable long-term compensation Exceptional compensation Directors fees (2) 30,000 29,000 30,000 30,000 Benefi ts in kind (3) 3,044 3,044 6,156 6,156 TOTAL 556, , , ,712 (1) Variable compensation is payable the following year, after approval of the fi nancial statements by the General Meeting. (2) The amount due is likely to vary according to the number of Board meetings held following the Combined General Meeting. (3) Company car. Gaël Bodénès, Executive Vice President Due for the year Year 2015 Year 2016 Paid over the year Due for the year Paid over the year Fixed compensation 265, , , ,005 Variable compensation (1) 109,975 99,375 26, ,975 Variable long-term compensation Exceptional compensation Directors fees for terms of offi ce served in the Group Benefi ts in kind (2) 14,740 14,740 18,320 18,320 TOTAL 389, , , ,300 (1) Variable compensation is payable the following year, after approval of the fi nancial statements by the General Meeting. (2) Company car + unemployment insurance for senior executives. No supplementary pension scheme has been granted by Corporation, nor any benefi t in kind other than those mentioned in the tables above, for the Chairman and Chief Executive Offi cer and for each of the Executive Vice Presidents. 38

41 MANAGEMENT REPORT Corporate governance Summary table of compensation for Executive Directors whose term of office ended in 2016 (in euros) At its meeting on January 5, 2016, the Board of Directors terminated the appointment of Nicolas Malgrain as Executive Vice President. The terms and conditions of his departure are part of a confi dential agreement and therefore have not been disclosed. Nicolas Malgrain, Executive Vice President Due for the year Year 2015 Year 2016 Paid over the year Due for the year Paid over the year Fixed compensation 220, ,012 2,085 2,085 Variable compensation (1) 91,300 23,092-91,300 Variable long-term compensation Exceptional compensation Directors fees Benefi ts in kind (2) 10,246 10, TOTAL 321, ,350 2,085 93,385 (1) Variable compensation is payable the following year, after approval of the fi nancial statements by the General Meeting. (2) Company car + unemployment insurance for senior executives Directors fees Members of the Board of Directors receive, as their only compensation, Directors fees up to the overall amount set by decision of the Combined General Meeting. These fees are paid based on attendance at the meetings held between two Ordinary General Meetings. The Combined General Meeting of May 20, 2014 decided to allocate an overall amount of 400,000 for 2014 and subsequent years. The procedures for distributing Directors fees are now as follows: 3 fi xed compensation of 10,000; 3 variable compensation which takes into account actual participation by each Director in the work of the Board of Directors and its committees, consisting of: 3 5,000 for attendance at strategic and operational Board meetings and 3,000 for attendance at other Board meetings, 3 5,000 for attendance at committee meetings. Under these terms, the amount paid in 2016 to the members of the Board of Directors (before withholding tax for foreign Directors) totaled 374,

42 3 Corporate MANAGEMENT REPORT governance (in ) Directors fees paid in 2015 Directors fees paid in 2016 Current members of the Board Jacques d Armand de Chateauvieux 29,000 30,000 Guillaume d Armand de Chateauvieux - 40,000 Astrid de Lancrau de Bréon 39,000 37,000 Christian Lefèvre 29,000 30,000 Baudouin Monnoyeur 26,000 30,000 Agnès Pannier-Runacher 44,000 45,000 Philippe Salle 39,000 40,000 Bernhard Schmidt 39,000 40,000 Mahmud Tukur 36,000 42,000 Xiaowei Wang 26,000 25,000 Advisor Henri d Armand de Chateauvieux 14,500 15,000 Director whose term expired Christian Munier 27,000 TOTAL 365, ,000 Members of the Board of Directors did not benefi t from any other compensation or benefi t during the year Stock options awarded and/or exercised during Policy for allocating stock options The stock option plans for new or existing shares relate exclusively to shares of Corporation. The stock options granted for new and/or existing shares refl ect a policy of proportional distribution which is not concentrated on one category of benefi ciaries and, more particularly, on the Executive Directors, in accordance with the recommendations of the AFEP- MEDEF Code. Each plan is decided by the Board of Directors, as delegated by the General Meeting, on the recommendation of the Nominating, Compensation and Governance Committee, which is specifi cally responsible for recommending the number of options to be awarded to management as well as setting any performance criteria. Stock options can only be exercised after the expiration of a period of four years, subject to presence conditions. Their exercise price corresponds to the average price of the share for the 20 stock market trading sessions prior to the date of award of the options, with no discount applied. Allocation to corporate officers In accordance with the AFEP-MEDEF Code, to which the Company refers, stock option plans for corporate offi cers have been subject to performance conditions since stock option plan The 2011 plan has been exercisable since December 5, The Board of Directors had decided that the defi nitive allocation of options to the Chief Executive Offi cer and the Executive Vice Presidents would be subject to the following performance conditions: 3 1 st criterion: TRIR = 0.70 on average over the period; 3 2 nd criterion: average annual revenue growth over the period. The reference value is the same as the target in the 2015 Leadership Strategy plan; 3 3 rd criterion: EBITDA/Average capital employed excl. advances in The reference value is the same as the target in the 2015 Leadership Strategy plan. The Board of Directors, on the recommendation of the Nominating, Compensation and Governance Committee, having taken note of the results achieved versus the targets set, decided that only the fi rst criterion for the average safety rate for had been achieved (average result of 0.63). The corporate offi cers will therefore be able to exercise a third of the options granted to them in December 2011 between December 2015 and December No options had been exercised as of December 31, If the options are exercised, and in accordance with Article L of the French Commercial Code, the corporate offi cers will have to retain 20% of the shares resulting from exercising their options until the end of their tenure. 40

43 MANAGEMENT REPORT Corporate governance 2013 stock option plan The Board of Directors decided that the defi nitive allocation of options to the Chief Executive Offi cer and the Executive Vice Presidents would be subject to the following performance conditions: 3 10% will be paid if the 2013/2014/2015 TRIR (Total incidents recorded per million hours worked based on a 24-hour day) average does not exceed 0.65 in 2015; 3 10% will be paid if the fl eet availability rate is at least 95% in 2015; 3 20% will be paid if the EBITDAR/revenue ratio is at least 38% in 2015; 3 20% will be paid if the EBITDA/capital employed ratio is at least 20% at the end of 2015; 3 40% will be paid if the annual average increase in share prices, over the four years of the plan, is at least 8% (based on the allocation price). The Board reserves the option to adjust performance conditions in the event of major changes to exchange rates, in the event of exceptional circumstances requiring and justifying such a change, subject to approval by the Nominating, Compensation and Governance Committee, to neutralize, as far as possible, the consequences of major changes to the targets set at the time of initial allocation. All existing options allocated to corporate offi cers still in offi ce as of December 31, 2016 represent 0.18% of the Company s potential share capital to date. In accordance with Article L of the French Commercial Code, as of 2008 the Board of Directors decided that corporate offi cers would have to retain 20% of shares resulting from an exercising of options until the end of their tenure. Also, corporate offi cers must not use any hedging instruments on any stock options or shares allocated to them by the Company. Corporate offi cers must also honor a duty of care and vigilance, as well as an obligation to take extra precautions in any personal transactions on company securities. In particular, they must not carry out any speculative short-term transactions or trades on Company shares, in the following cases: 3 when they are in possession of information that could, when published, affect the price of these shares; 3 during periods explicitly indicated to them by the Company, especially during the month preceding the preliminary announcement of the annual and half-yearly results of the Company, and two weeks prior to the publication of the Company s quarterly revenues; 3 during this period, only the simple exercise of options is permitted Stock options awarded during the year to each Executive Director No stock options were awarded in Stock options exercised during the year by each Executive Director No stock options were exercised in Stock options or stock purchase options awarded to the first ten non-corporate officer employees/ stock options or stock purchase options exercised by the first ten non-corporate officer employees during the year No stock options were granted or exercised in Performance shares awarded and/or that became available in 2016 No performance shares were awarded or became available in History of stock option grants or stock purchase options awarded The table below shows all the information related to stock option plans granted by the Company in force as of December 31,

44 3 Corporate MANAGEMENT REPORT governance Meeting date June 1, 2011 Plan No.9 (1) Plan No.10 (1) Plan No. 11 Date of Board meeting December 5, 2011 November 30, 2012 December 2, 2013 Start date for exercising options December 5, 2015 November 30, 2016 December 2, 2017 Expiration date December 4, 2017 November 29, 2018 December 1, 2019 Original number of benefi ciaries 1, Total number of stock subscription or purchase options: 2,789,050 29,700 1,037,000 a) Corporate officers (2) 110,000 (3) 140,000 (3) Jacques d Armand de Chateauvieux Christian Lefèvre 71,500-80,000 Gaël Bodénès 38,500-60,000 b) Top ten employee beneficiaries 2,211,000 29, ,000 Subscription or purchase price Discounts granted no no no Options exercised at 12/31/ Options canceled or voided at 12/31/ ,241-84,000 Options remaining to be exercised as of 12/31/2016 2,240,809 29, ,000 3,223,509 (1) Numbers of options and exercise prices are adjusted values, as required under applicable regulations, following trading in Corporation stock. (2) List of corporate offi cers in offi ce at December 31, (3) Options related to performance conditions (see of the management report). Total History of bonus share allocations in force as of December 31, 2016 In 2013, the Board of Directors authorized a restricted stock award of existing or new shares to salaried members of staff, or certain categories of them, of all of s subsidiaries. The vesting of the shares was subject to fulfi llment of the conditions and criteria laid down by the Board of Directors, as described below: 3 60% of the shares were contingent on employment at the end of two (2) years: recipients still employed by on December 2, 2015 fulfi lled this condition; 3 40% of the shares were contingent on employment at the end of two (2) years and the attainment of performance criteria: 3 20% was awarded if the 2013/2014/2015 average TRIR (Total incidents recorded per million hours worked based on 24 hours per day) was 0.65 or less; 100% of this criterion was attained with an average of 0.60, 3 20% was awarded if the fl eet availability rate in 2015 was 95% or more; 100% of this criterion was attained with an average of 96.4%. The allotted shares were covered by the share buy-back that took place in Meeting date June 1, 2011 Date of Board meeting December 2, 2013 Number of benefi ciaries 2,103 Total number of bonus shares allocated 767,400 Corporate offi cers - Vesting date of the shares for French residents December 2, 2015 (1) Vesting date of the shares for foreign residents December 2, 2017 (1) End of lock-up period December 2, 2017 Total number of canceled or voided shares 135,600 Shares awarded (1) to French residents after two years 312,000 Bonus shares still to be allotted to foreign residents in ,400 (1) The vesting period is two years for French residents (followed by a two-year lock-up period) and four years for foreign residents (with no lock-up period). 42

45 MANAGEMENT REPORT Corporate governance Commitments of any kind made by the Company to its corporate officers Executive Directors affected by the recommendation of AFEP-MEDEF Jacques d Armand de Chateauvieux, Chairman and Chief Executive Offi cer Start of term of offi ce: End of term of offi ce: General Meeting called to approve the fi nancial statements for the year ended Christian Lefèvre, Executive Vice President Start of term of offi ce: End of term of offi ce: General Meeting called to approve the fi nancial statements for the year ended Gaël Bodénès, Executive Vice President Start of term of offi ce: End of term of offi ce: General Meeting called to approve the fi nancial statements for the year ended Employment contract Supplementary pension scheme Indemnity or benefits payable or potentially payable Indemnity as a result due to termination or of a non-competition change of function clause Yes No Yes No Yes No Yes No x x x x Not applicable x x x Not applicable x x x 3 43

46 3 Corporate MANAGEMENT REPORT governance 3.4 APPLICATION OF THE AFEP-MEDEF CODE SUMMARY TABLE As part of the Apply or Explain rule referred to in Article L of the French Commercial Code and Article 25.1 of the AFEP-MEDEF Code, Corporation believes that it complies with the recommendations of the AFEP-MEDEF Code. However, some provisions have been left out for the reasons stated in the table below: AFEP-MEDEF recommendations not applied Explanations Reference Variable compensation Section of the AFEP-MEDEF Code states that variable compensation should be subject to the achievement of specifi c and predefi ned objectives. Departure of Executive Directors Legal information Section of the AFEP-MEDEF Code states that when an Executive Director leaves the company, the fi nancial terms of his or her departure shall be fully disclosed. Composition of the Board of Directors Article 6.4: In terms of gender representation, the aim is for the Board to reach and then maintain a percentage of at least 20% of women within a period of three years and at least 40% of women within a period of six years, with effect from the 2010 General Meeting or the admission of the Company s shares to trading on a regulated market, whichever is later. These percentages include permanent representatives of Corporate Directors and Directors representing employee shareholders, but not Directors representing employees. If the Board is composed of fewer than nine members, the difference at the end of six years between the number of Directors of each gender may not be more than two. The only performance criterion used for the variable compensation of the Chairman and Chief Executive Offi cer, decided by the Board of Directors, is based on the amount of net income (i.e. variable compensation equal to 1% of net income, group share when this is positive, capped at 500,000). This decision is based on the fact that the objectives set for the other two corporate offi cers, linked to quantifi able and qualitative performance criteria, cannot apply to the Chairman and Chief Executive Offi cer, who is the principal shareholder of the Company. The Board has sought to award him variable compensation with terms similar to the compensation terms of the other shareholders (that is to say, a percentage of net income, where this is positive). At its meeting on January 5, 2016, the Board of Directors terminated the appointment of Nicolas Malgrain as Executive Vice President. The terms and conditions of his departure are part of a confi dential agreement and therefore have not been disclosed. The Board of Directors will propose the appointment by the Combined General Meeting of May 23, 2017, of the profi les of two female candidates for the offi ce of Directors. If the meeting so decides, the Board of Directors will thus be composed of four women and six men, representing 40% of women, ensuring the proper representation of women within it and the Company s compliance with the provisions of Law No of January 27, 2011, the so-called Copé-Zimmermann Law. Management report Compensation of the Chairman and Chief Executive Offi cer Management report Summary table of compensation for Executive Directors whose term of offi ce ended in 2016 Chairman s report 1.1 Composition of the Board of Directors 44

47 MANAGEMENT REPORT Corporate governance 3.5 REPORT ON THE PRINCIPLES AND CRITERIA FOR THE DETERMINATION, DISTRIBUTION AND ALLOCATION OF FIXED, VARIABLE AND EXCEPTIONAL ITEMS COMPOSING TOTAL COMPENSATION AND BENEFITS OF ANY KIND ATTRIBUTABLE TO CORPORATE OFFICERS IN 2017 Report required pursuant to Article L of the French Commercial Code and referred to in the 13 th resolution of the General Meeting of May 23, The payment of variable items and any exceptional items outlined in this report is subject to approval by an Ordinary General Meeting of the compensation items of the persons concerned within the conditions scheduled in Article L of the French Commercial Code as amended by Law No of December 9, The compensation of corporate offi cers is set by the Board of Directors on the recommendation of the Nominating, Compensation and Governance Committee, in accordance with the provisions of the AFEP-MEDEF Corporate Governance Code as amended in November The principles and criteria for the determination, distribution and allocation of fi xed, variable and exceptional items composing total compensation and benefi ts of any kind attributable to corporate offi cers in 2017 were agreed by the Board of Directors at its meeting of March 13, 2017 on the proposal of the Nominating, Compensation and Governance Committee set out as follows, subject to the approval of the General Meeting of May 23, General principles for determining the compensation of corporate officers The compensation of executive offi cers is set by the Board of Directors on the recommendation of the Nominating, Compensation and Governance Committee. 3 The compensation policy is tailored to refl ect the responsibilities of each person and ensures that the compensation components fi t the Group s overall compensation policy for executives in key positions. 3 The compensation policy must remain consistent with those of fellow companies of the same size and for similar positions, and with international companies operating in the same business sector. 3 The compensation of corporate offi cers is composed of a fi xed component and a variable component. 3 The remuneration criteria for the variable component are reviewed each year in order to remain aligned with the Company s strategy. The amount of the variable component may not exceed a given percentage of the fi xed component. 3 The allocation of stock options must refl ect a policy of proportional distribution which is not concentrated on the corporate offi cers. It is conditional on performance criteria. If the options are exercised the corporate offi cers will have to retain 20% of the shares resulting from exercising their options until the end of their tenure. 3 The compensation policy for corporate offi cers set by the Board of Directors may, under certain conditions, schedule the payment of severance payments or compensation for a non-compete undertaking capped at 36 months of annual compensation for the relevant executive. 3 The Board of Directors considers, in respect of other compensation, such as exceptional and standard compensation, indemnities or benefi ts due or likely to be due as a result of taking offi ce, that in the interest of and stakeholders, the principle of paying these to corporate offi cers under very specifi c circumstances should not rule out in principle. The payment of such compensation must be justifi ed and the grounds for its implementation laid down by the Board. In any event, such other compensation must meet the requirements of the AFEP-MEDEF Code of Corporate Governance and may only be paid after approval by a General Meeting in accordance with Article L of the French Commercial Code amended by Law of December 9, Directors fees: members of the Board of Directors receive, as their only compensation, Directors fees up to the overall amount set by decision of the Combined General Meeting. These fees are paid based on attendance at the meetings held between two Ordinary General Meetings. The Combined General Meeting of May 20, 2014 decided to allocate an overall amount of 400,000 for 2014 and subsequent years. The procedures for distributing Directors fees are as follows: fi xed compensation of 10,000; variable compensation which takes into account actual participation by each Director in the work of the Board of Directors and its committees, of 5,000 for attendance at strategic and operational Board meetings and 3,000 for attendance at other Board meetings as well as 5,000 for participation in committees. 3 45

48 3 Corporate MANAGEMENT REPORT governance Compensation of the Chairman and Chief Executive Officer For the 2017 financial year 3 Directors fees: The Chairman and Chief Executive Offi cer may receive and retain Director s fees paid by Corporation up to the limit set by the General Meeting in accordance with the allocation rule defi ned by the Board. The meeting of the Board of Directors of March 13, 2017, on the recommendation of the Nominating, Compensation and Governance Committee, decided to keep the same framework for fi xed and variable annual compensation for the 2017 fi nancial year, namely: 3 fi xed annual compensation: This would remain unchanged at an amount of 144,000; 3 variable compensation: This would remain fully linked to the Company s performance, corresponding to 1% of the surplus net income (group share) for the fi nancial year concerned and capped at 500,000; In any event, this compensation must meet the requirements of the AFEP-MEDEF Code of Corporate Governance and may only be paid after approval by a General Meeting in accordance with Article L of the French Commercial Code amended by Law of December 9, Compensation of the Executive Vice Presidents For the 2017 financial year 3 Directors fees: The Executive Vice Presidents holding a term of offi ce within Corporation may receive and retain Directors fees paid by the Company up to the limit set by the General Meeting in accordance with the allocation rule defi ned by the Board. The meeting of the Board of Directors of March 13, 2017, on the recommendation of the Nominating, Compensation and Governance Committee, decided to keep the same framework for fi xed and variable annual compensation for the 2017 fi nancial year, namely: 3 fi xed annual compensation: The fi xed compensation of Christian Lefèvre in the amount of 370,006 and of Gaël Bodénès in the amount of 265,005 will remain unchanged; 3 variable compensation: A calculation method based on the fi xed compensation will be retained, whereby the variable component may reach 50% of the fi xed compensation if objectives are met, and 70% if objectives are exceeded. The objectives for the 2017 fi nancial year based on the objectives of the 2017 budget would be as follows: Target % ECONOMIC PARAMETERS: 40% Target objective for EBITDA excl. capital gains(1) 20% Objective for Days Sales Outstanding (DSO)(2) 20% HSE/OPERATIONAL PARAMETERS: 40% Target objective for average fl eet rate(3) 20% Target objective for Total Recordable Incidents Rate (Group TRIR)(4) 20% PERSONAL CONTRIBUTION : 20% TOTAL 100% 46

49 MANAGEMENT REPORT Corporate governance The method used to determine the achievement of target objectives which is specifi c to each parameter (economic/operational) would continue to be based on the application of a graduation according to the result (R) reached of the target objective (TO). 1) R = 110% TO = 150% R = 100% TO = 100% R = 90% TO = 50% R < 90% TO = 0% 2) R = 110% TO = 150% R = 100% TO = 100% R = 90% TO = 50% R < 90% TO = 0% 3) R > 105% TO = 150% R = 100% TO = 100% R > 98% TO = 50% R < 98% TO = 0% 4) R = 110% TO = 140% R = 105% TO = 120% R = 100% TO = 100% R = 95% TO = 80% R < 95% TO = 0% In any event, this compensation must meet the requirements of the AFEP-MEDEF Code of Corporate Governance and may only be paid after approval by a General Meeting in accordance with Article L of the French Commercial Code amended by Law of December 9, STOCK OPTION (SUBSCRIPTION OR PURCHASE) AWARDS, AND BONUS SHARE AWARDS Meeting date June 1, 2011 Plan No. 9 (1) Plan No. 10 (1) Plan No. 11 Date of Board meeting December 5, 2011 November 30, 2012 December 2, 2013 Start date for exercising options December 5, 2015 November 30, 2016 December 2, 2017 Expiration date December 4, 2017 November 29, 2018 December 1, 2019 Original number of benefi ciaries 1, Total number of stock subscription or purchase options: 2,789,050 29,700 1,037,000 a) Corporate officers (2) 110,000 (3) 140,000 (3) Jacques d Armand de Chateauvieux Christian Lefèvre 71,500-80,000 Gaël Bodénès 38,500-60,000 b) Top ten employee beneficiaries 2,211,000 29, ,000 Subscription or purchase price Discounts granted no no no Options exercised at 12/31/ Options canceled or voided at 12/31/ ,241-84,000 Options remaining to be exercised as of 12/31/2016 2,240,809 29, ,000 3,223,509 (1) Numbers of options and exercise prices are adjusted values, as required under applicable regulations, following trading in Corporation stock. (2) List of corporate offi cers with this offi ce as of December 31, (3) Options related to performance conditions (see of the management report. Benefits of any kind Both Executive Vice Presidents have a Company car. One of them already benefi ts from unemployment insurance cover and will continue to benefi t from it, while in respect of the second Executive Vice President, the Board of Directors may be asked in 2017 to grant him the benefi t of said cover. Total 47

50 3 Corporate MANAGEMENT REPORT governance 3.6 FEES PAID TO THE STATUTORY AUDITORS AND MEMBERS OF THEIR NETWORKS EurAAudit CRC Deloitte Amount Percentage Amount Percentage (in thousands of euros) Audit Statutory Auditors, certification, examination of consolidated and separate financial statements Issuer (parent company) % 37% % 13% Fully consolidated subsidiaries % 63% % 80% Other procedures and services directly connected to the work of the Statutory Auditor Issuer (parent company) 0 0 0% 0% % 4% Fully consolidated subsidiaries 0 1 0% 1% % 3% Subtotal % 100% % 99% Other services rendered by the networks to the fully consolidated subsidiaries Legal, tax, corporate 0 0 0% 0% 5 4 1% 1% Other 0 0 0% 0% 0 1 0% 0% Subtotal 0 0 0% 0% 5 5 1% 1% TOTAL % 100% % 100% 48

51 MANAGEMENT REPORT Risk factors 4. RISK FACTORS s objective is to ensure that the entire internal control system can, as far as possible, prevent any risks to which it is exposed. With this in mind, a risk-mapping process was developed in In 2015, the Group updated its risk map, enabling it to pinpoint the most signifi cant risks it might face. The potential risks identifi ed were of many different kinds, both at the Group level and in terms of its operational activities. The inventoried risks are ranked based on their possible frequency (from frequent to improbable) and their impact (negligible to catastrophic), which would require an action plan to be implemented immediately by a crisis unit. The type and ranking of these risks are considered strategic and confi dential. Nevertheless, the principal risk factors are outlined below. The risk map was updated in These are fed back regularly to the Internal Control and Audit Committees. Investors are invited to take into consideration all the information contained in this Registration Document, including the risk factors described in this section, before deciding to invest. On the date of this Registration Document, these risks include such risks, the occurrence of which according to could have a signifi cantly prejudicial impact on the Group, its business, its fi nancial position, its results or its growth. Investors attention is drawn to the fact that there may exist other risks, which have not been identifi ed yet on the date of this Registration Document or whose occurrence was not considered on that same date as being likely to have a signifi cantly prejudicial effect on the Group, its business, its fi nancial position, its results or its growth. 4.1 RISKS RELATED TO THE OFFSHORE OIL AND GAS MARINE SERVICES MARKETS The Offshore Marine Services activity cycle depends on the demand from oil operators and the supply of vessels on the market. Demand from oil companies is linked to their exploration/development cycles. This activity is correlated with the ten year average price per barrel assumptions. Exploration investments may also be infl uenced by short-term barrel prices, and by the need for oil companies to maintain their reserve levels. However, the production activity on existing fi elds is much less sensitive. 3 3 PRICE OF OIL (BRENT) BRENT crude oil (London) Price in US dollars per barrel Source: Insee. 49

52 3 Risk MANAGEMENT REPORT factors Since June 2014, there has been a sharp drop in the barrel price. The average price of a barrel of Brent fell from USD99 in 2014 to USD52 in 2015, reaching a low of USD31 in January This fall in prices is due to an imbalance between supply and demand as the demand from importers was not as sustained as expected, due to slower growth in China. However, supply remained stable, with oil and shale gas production in the United States and Saudi Arabia maintaining its production levels. The barrel price was volatile throughout Prices began to recover shortly after OPEC members followed by other major producers announced their agreement to cut oil production. OPEC pledged to scale back production by 1.2 million barrels per day. This was swiftly followed by non-opec countries (558,000 barrels), resulting in an overall decrease in production of 1.8 million barrels per day in the fi rst half of In 2016, for the second consecutive year, the low oil price continued to impact strongly on investment from oil companies in exploration and production (E&P). According to the E&P global spending report published by IFP, oil companies cut spending by 24% in However, with the oil price forecast to remain at between USD50 and USD60 per barrel, investment is expected to recover by 5% in Deepwater offshore projects where production costs are over USD60 per barrel were the most affected (source: Wood Mackenzie). The offshore oil and gas marine services industry has seen levels of activity decline. A sharp slowdown in deepwater and shallow water offshore drilling resulted in a signifi cant fall in demand for supply vessels. With regard to supply, changes to the fl eet of offshore supply vessels depend on the rate at which old vessels are scrapped and investment is made in new vessels. These two factors are infl uenced by several things, including: 3 forecasts made by marine services suppliers with regard to changes in customer demand; 3 obsolescence of old vessels, this being dependent upon changes in oil companies expectations; 3 access to fi nancial resources enabling operators to invest. Unforeseen changes in oil companies demand cycle and changes in numbers of vessels available on the market, events which by their very nature are beyond s control and affect one or more of the markets on which has a presence, may have a signifi cantly prejudicial effect on s business, fi nancial position, results or outlook Risks related to changes in demand A reduction in investments in the oil sector could result in a decline in demand for offshore oil and gas services and therefore limit s capacity to increase or maintain its profits. The demand for offshore oil and gas services is dependent on the oil companies capacity to invest. The price of oil on world markets has a signifi cant infl uence over decisions to engage in new investments in this sector. In fact, new investment projects are based on future projections, internal to each company, of the price per barrel that will be needed to cover the cost of extraction. The price of oil in the short term has a lesser infl uence once oil projects have been launched and in the production phase. The potential impact remains limited to exploration phases which may be delayed or even canceled. Generally, oil investment cycles are long, between 10 and 20 years on average between the construction phase and the exploitation/ production phase. The price per barrel depends on demand, which is related to global growth and the production capacity of the producing countries. With forecasts for an increase in demand for oil and the accelerating decline in production at existing fi elds, the oil services activity is expected to grow in the long term. However, the fall in barrel prices will affect the sector s business in the short and medium term, as certain shallow water offshore projects are canceled or delayed. s strategy is to develop close relationship with the national and international oil majors that have sustained investment plans and to place particular importance on a policy of longterm contractualization of vessels. The long-term contractualization rate of offshore support vessels was 38.2% as of December 31, Active monitoring of the market in the fi eld of production and exploration/development has been set up to react quickly to changes in the market. The loss of one or more of its main clients could, however, have a signifi cantly prejudicial effect on s business, fi nancial position, results or outlook. Risks related to changes in technical requirements for marine oil and gas exploitation and related services. The already high demands of oil and gas companies, in terms of risk management, have gone up further in view of the incidents that took place aboard the oil rigs in the Gulf of Mexico and the North Sea. On this account, oil companies generally prefer cutting-edge, high performance vessels like those belonging to the fl eet. 50

53 MANAGEMENT REPORT Risk factors This made more than 25 years old vessels obsolete and increased the need to substitute these old vessels. has established long-term relationships with major oil companies, thereby enabling it to better understand their expectations. This has led to develop a four-pillar model of operational effi ciency, i.e. safety of people and materials, respecting the environment on land and at sea; monitoring skills to guarantee service quality; technical availability of vessels to ensure continuity of service; optimization of cost and fuel consumption through the use of low fuel consumption diesel-electric propulsion vessels, enabling net savings on diesel. It is important to note the increased attention of oil and gas companies and the industry in general towards reducing energy consumption not only to reduce air emissions but also to reduce the energy costs of the projects. In this context, s dieselelectric propulsion vessels are particularly appreciated for their low fuel consumption. As of December 31, 2016, 83.6% of the Offshore Supply Vessels and Subsea operated by, or on order, had both class 2 dynamic positioning and diesel-electric propulsion. cannot, however, guarantee that it will always be able to perfectly predict its clients expectations, nor discount the fact that, in one or more of the geographical areas where it has a presence, some of its competitors may, due to their size or expertise, have at their disposal fi nancial, commercial, technical or human resources that are equivalent, or superior, to those offered by and that are also likely to meet the requirements of the major oil companies, which could, under certain circumstances, lead to market losses for Risks related to changes in supply In the deepwater offshore vessels market, in the event of new ships being delivered faster than the growth in demand, a temporary over capacity may lead to experiencing a reduction in daily rates as well as a reduction in utilization rates for its deepwater offshore vessels in certain geographical regions. Investments by oil companies in offshore exploration and production fell by 34% in 2016 (source: Barclays). Most of the regions where operates have been affected by this slowdown. With an utilization rate of 68.4% in deepwater offshore and 57.9% in shallow water offshore in 2016, was able to maintain client confi dence despite the depressed market. s commercial strategy focuses on long-term contracts, which minimizes the risks of exposure to short-term market fl uctuations. Finally, in a deteriorating market with a very low barrel price, together with a sharp capital expenditure downtrend in the oil sector, reacted quickly by anticipating the stacking of vessels with very low utilization rates. Concerning strategic choices, it is possible that certain competitors may decide to develop their market share in specific geographical regions or with targeted clients through an aggressive commercial policy. The immediate consequences for would be the loss of new contracts or failure to renew existing ones in a particular area or vis-à-vis a client. This type of commercial approach would need substantial investment, both by the competitor providing availability of a dedicated fl eet of vessels corresponding to the needs of clients or of the targeted geographical region, by establishing a pricing policy that is considerably below the market price. Generally, a targeted attack from a competitor is a localized event and diffi cult to sustain over time as it is limited by operating costs and investments in vessels. In the context of the current decline in market demand, the risk of price attacks is not limited, with competitors being forced to be more aggressive on daily rates. In light of this risk, the fi rst measure taken by is to actively monitor the positioning of the fl eets of its principal competitors and their pricing policy. The second measure is to geographically diversify the positioning of its fl eet and the third is to screen its client portfolios, and thereby ensure diversifi cation of the client portfolio. s size and policy of investing in vessels constructed in series in shipyards at optimum costs enables it to counter such attacks, while maintaining some leeway to maneuver prices. Finally, the reinforcement of local teams in areas where the vessels operate, allows active monitoring of vessels working in production or exploration. The sales network monitors market trends on a permanent basis and is enhanced by a network of Contracts Managers who are in daily contact with the clients to respond to their requirements in real time. The task of these teams is to keep an eye on the vitality of the market and on client satisfaction in order to provide them with service that is always adapted to their needs. Increased competition and, in particular, the implementation of aggressive sales and/or pricing policies by some of our competitors, targeting geographical regions where has a presence or targeting some of our existing or potential clients, is likely to result in losing new contracts or failing to renew contracts for certain geographical regions which may result in a loss of one or more clients and a reduction in its market share. 3 51

54 3 Risk MANAGEMENT REPORT factors The need for to adopt a different approach in order to return to profitability in the new market conditions could be impeded due to a lack of energy and/or readiness for change among staff. To withstand the adverse market conditions, has implemented cost-cutting action plans which have been effective thanks to the intensive efforts of staff. is also endeavoring to radically transform its work methods in general so that it can return to profi tability in the new market conditions. The success of these initiatives will depend on the commitment, energy and skills agility of staff. The tools for measuring and strengthening this commitment, energy and skills agility could fall short if there are insuffi cient resources. This could lead to a lack of readiness for change and hamper the success of the initiative, which could potentially take longer or cost more. 4.2 RISKS RELATING TO S BUSINESS Non-compliance by with regulations applicable to its businesses or the deterioration in the quality of its services in terms of safety and reliability could potentially affect the Group in the conduct of its activities with certain clients or in certain geographical regions. s activities mainly involve the marine and shipping sectors, which are highly regulated. The Group is also subject to a considerable number of environmental laws and regulations. The regulatory framework applicable to marine activities are set by the laws and decrees of the vessel s operating fl ag country and of the neighboring coast country. The national rules are generally related to a set of conventions, drafted under the auspices of the International Maritime Organization (IMO), which has been given a mandate by the UN to deal with subjects specifi c to maritime activity. The main international standards are listed below: 3 the International Convention for the Safety of Life at Sea (SOLAS) mainly contains the technical provisions to be observed for the design, construction and fi tting-out of vessels; 3 the Convention on Standards of Training, Certifi cation and Watchkeeping for Seafarers (STCW) lists the qualifi cations required for crews; 3 the International Convention for the Prevention of Pollution from Ships (MARPOL Marine Pollution) lists all the factors concerning the prevention of pollution, both from the vessel and its cargo; 3 the Convention on the International Regulations for Preventing Collisions at Sea (COLREG Collision Regulations) defi nes the rules of navigation. These conventions refer to codes and directives drawn up by the IMO, supplemented by resolutions issued by specialized committees. 3 the ISM (International Safety Management) Code is central and it defi nes the fundamentals for safety management for marine shipowners and operators, on board the vessels and at offi ces on shore; 3 the ISPS (International Ship and Port facility Security) Code prescribes responsibilities to shipping companies and the coasted countries regarding security on board and on shore; 3 rules for the transport of dangerous goods are primarily covered in the IMDG (International Maritime Dangerous Goods) Code which contains information on precautions to be taken for packing, onboard stowing, handling, loading and unloading. The domain of marine employment is also covered by conventions drawn up by the International Labour Organization, such as the MLC (Maritime Labour Convention) which came into effect in The great majority of nations adhere to these conventions but they sometimes incorporate their own specifi c regulations, particularly for small vessels. Individual countries are responsible for applying conventions and stopping infractions. Controlling the implementation of the regulations and adherence to them by shipping companies is generally delegated by governments to independent organizations and classifi cation societies. Their sphere of infl uence covers the audit of organizations, monitoring construction and periodic visits to vessels in operation. The main classifi cation societies are members of the IACS (International Association of Classifi cation Societies), which monitors the harmonization of their rules and actions. Delegations of power to classifi cation societies are covered by formal agreements with individual countries. makes every effort to scrupulously adhere to the prevailing regulations and it tries wherever possible to take initiatives to improve its organization and methods in order to anticipate the rigorous standards laid down by the authorities. constantly monitors the situation and keeps up-to-date regulatory information at head offi ce and on board the vessels. It is clear that the requirements will become increasingly strict and that this trend will continue. However, these changes are generally predictable, as the authorities have allowed for an adaptation phase that is compatible with the realities of the marine industry. The changes may consist of: 3 new technical rules applicable to new vessels, especially as regards air emissions; 52

55 MANAGEMENT REPORT Risk factors 3 restrictions on navigation in certain regions, principally Europe and North America; 3 a tightening of controls and sanctions, especially in the above regions; 3 the establishment of an environmental tax system, as already applied in Norway. has a modern fl eet with an average age of 7.8, which is an advantage in responding to these changes. Although considers that these changes can largely be predicted and wherever possible tries to anticipate new regulatory requirements, tightening of regulations or their implementation would be likely to lead to new operating conditions for s activities and could lead to increased operating expenses, limitations on the scope of its business with certain clients or in certain geographical areas or, more generally speaking, may slow down its growth. cannot guarantee that signifi cant and/or rapid changes to current regulations would not, in the future, have a signifi cantly prejudicial effect on its business, fi nancial position, results or outlook. s activities may cause damage to people, property or the environment. This could also lead to it having to bear significant costs where such events are not covered either by the contract or by insurance. The risks of an environmental or human disaster largely relate to the presence of the vessel in an operational situation and the potential consequences of accidents associated with the cargo or the voyage. Although the accident rate has been cut by around half in the last 20 years, marine shipping is not risk-free. applies the regulations detailed above and has adopted a set of procedures, charters and codes of conduct which cover practices on-board the vessels. As is a service company, it is not directly responsible for any manufacturing processes except for the operation of its marine resources. does, however, follow good marine practice and complies with its clients demands whenever its vessels draw near to offshore installations, port facilities or any other sensitive or protected areas. In particular, rigorously adheres to the ISM Code as well as to industry standards including, in particular, those defi ned by the IMCA (International Marine Contractors Association), an association of which is a member and which is an umbrella body for companies active in offshore and marine and subsea engineering. Oil and gas clients have prepared an increasingly sophisticated regulatory framework via the OCIMF (Oil Companies International Marine Forum), which includes more than 80 oil and gas companies worldwide, by implementing third-party ship inspections, including the existing vetting on board tankers or supertankers. In 2016, continued developing its vessel operational management system so as to meet the requirements of the OCIMF (Oil Companies International Marine Forum) in more effective ways. thus places the concerns of its clients at the heart of its strategy. fi rmly believes that accidents can be avoided by prevention and that it is possible to avoid pollution. Training and exercises are designed to give personnel the best possible preparation for emergencies. Due respect by all employees to best work practices and procedures derived from the above principles is regularly verifi ed via internal audits. s performance regarding the safety of individuals is constantly monitored. According to a survey by the International Support Vessel Owner s Association (ISOA), which incorporates the leading players in offshore oil and gas marine services, s safety performances are among the best in the market. In 2016, s recordable incidents rate (TRIR) was 0.82 per million hours worked. s strategy in this area is described in section of the management report. Improving and centralizing fl eet maintenance management has made it possible to roll out industrial maintenance, greatly reducing technical unavailability, and thus the likelihood of emergency situations arising which could lead to a collision or wreck. Although it is not possible to completely nullify the impact of transport activities on the environment, makes every effort to improve its record through technical solutions and by acting to improve the attitudes of all those involved. The decision to opt for the diesel-electric propulsion system on its most recent vessels is thus aimed at signifi cantly reducing the consumption of fossil fuels, and consequently, the level of polluting air emissions. s strategy concerning the environment is described in section 5.3 of the management report. The activities of offshore services are governed by contracts placing a general obligation of due care on and shared responsibility with the client. This so-called knock for knock system is based on an agreement between a supplier of resources such as and its client, under the terms of which each agrees to bear the cost of damages that may be caused to its property and/or personnel during the performance of the supply contract. 3 53

56 3 Risk MANAGEMENT REPORT factors It is accompanied by a waiver of reciprocal recourse between the parties, extended to their respective insurance companies. This mechanism is essential in the Offshore activity, in particular by enabling each of the operators to keep its risks in proportion to the value of the assets it uses and/or owns as well as to its own fi nancial scope and consequently to limit the costs of the corresponding insurance. Despite the measures and mechanisms put in place, we cannot discount the possibility that, in the future, claims made against could result in a signifi cant level of liability for. cannot guarantee that all the claims made against it or all the losses that may be incurred will be effectively or suffi ciently covered by its insurance policies, this being to the detriment of s reputation and image and having a signifi cantly prejudicial effect on its business, fi nancial position, results and outlook. Marine risk Maritime piracy has been a major concern for all marine operators for several years now and has very rapidly put in place a number of measures and collaborative arrangements in order to assess this risk in its vessels operating and transit regions, all under the control of the Group s Safety Manager. For vessels in operation, applies a set of safety procedures adapted to each oilfi eld, coordinating with the oil companies and relevant authorities. In the Niger delta area, particularly Nigeria and Cameroon, a dedicated reinforced strengthened safety mechanism has been set up in order to ensure the best safety conditions for employees and vessels. For vessel transits in high-risk regions, fully adheres to the recommendations of the International Maritime Organization and systematically adopts dedicated security measures such as Piracy Best Management Practices and adapts its methods according to the particular transit region. Thus, in the rare cases of its vessels transiting the Gulf of Aden region, the area where it is currently most exposed to risk, has the support of the appropriate protection forces. is focusing on other high potential zones such as East Africa (Mozambique, Tanzania, etc.), where adapted means of protection are being studied. cannot, however, guarantee that the preventive measures taken and its recourse to these protection forces will be suffi cient, in the future, to guarantee the safety of its activities and its employees, which could have a negative impact on its business and its image. 4.3 LEGAL RISKS A preliminary inquiry was opened in Marseille after the former tax manager of the Company was stopped at Marseille-Provence airport in October 2012, on his return from Africa in possession of about 190,000, and brought in for questioning. This procedure notably concerns allegations of bribing public offi cials in Cameroon, Equatorial Guinea and Nigeria, within the framework of the tax audits of local entities in 2011 and The former tax manager, who was immediately dismissed, was placed under investigation and charged with actively bribing foreign public offi cials, leading in April 2015 to the placing of the legal entity Corporation SA under investigation on the same charge, with a surety of 1 million. As part of this procedure, members of the Company s General Management were also placed under investigation in April and November 2013 on the charge of complicity in bribery, after the former tax manager was placed under investigation. Corporation SA and its Management strongly contest the charges against them. Since the end of November 2014, a tax investigation based on the evidence gathered during the abovementioned preliminary inquiry has been carried out in Marseille into some of the Group s companies, including Corporation SA. To date, the investigation has not resulted in any action against the companies concerned. The Group operates in complex environments. Its activities are carried out in strict compliance with the laws of each country and the Group attaches the utmost importance to compliance with anticorruption regulations. Furthermore, one of the Group s subsidiaries is involved in legal proceedings following a dispute over a tax akin to an indirect tax on certain services invoiced, for an estimated total of 32 million in principal and 71 million in penalties and default interest. The claim by the local tax administration appears to be groundless, because it seems to rely on an erroneous classifi cation of the services invoiced by the subsidiary, which the court of fi rst instance in the country in question confi rmed in its judgment rendered on October 18, 2016, invalidating the adjustments notifi ed by the local tax administration. The local tax administration has appealed the judgment before the competent court of appeal. It should be noted that in 2013, in a similar matter, the Superior Court of Justice in the same country also ruled for the taxpayer and against the local tax administration. As a result, in the management s opinion, to the best of its knowledge of the matter and of the local legal and tax environment, and supported by the opinion of its counsel, this is a contingent liability 54

57 MANAGEMENT REPORT Risk factors for which the likelihood of a signifi cant payout is currently slight. These proceedings are mentioned in the notes to the consolidated fi nancial statements (see section 3.20 on contingent liabilities of this Registration Document). Apart from the proceedings described above, litigation for which provisions have already been recognized and/or those in which disclosure would be contrary to its legitimate interests, there are no other governmental, judicial or arbitration proceedings (including any pending or threatened proceedings, to the Company s knowledge) that are likely to have or that have had in the last 12 months any material impact on the Group s fi nancial position or profi tability. For each signifi cant dispute, a provision has been established to meet the estimated risk if the probability of occurrence of that risk is considered to be high. Otherwise, no provision has been established. 4.4 RISKS ASSOCIATED WITH ETHICS AND NON-COMPLIANCE Unethical behavior and behavior which infringes anti-fraud, corruption or any other applicable legal provisions, is likely to expose or its employees to criminal and civil penalties. Such events may damage the Group s reputation and decrease the value of its shares. The Group s policy is to conduct its activities with strict adherence to legal and ethical obligations as stated in the Group s Compliance and Ethics Policy. In 2013, the Group decided to strengthen its policies, procedures and training with regard to ethics and compliance, especially anticorruption. The Group has put in place a dedicated compliance program for all its entities. s compliance program is closely monitored and regularly updated to improve its effectiveness and to keep pace with regulatory change. The main measures used in this regard are outlined in the risk mapping part of the management report and in the internal control and risk management procedures section of the Chairman s report. 4.5 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICY The main risks to which the Group is exposed are credit/counterparty risks, liquidity risks and market risks. The Board of Directors has reviewed and approved the management policies of each of these risks. The policies are summarized below Credit/counterparty risk The Group s policy is to verify the fi nancial health of all customers seeking credit payment terms. Furthermore, the Group continually monitors client balances. The fi nancial soundness of its clients enables to avoid the use of COFACE-type credit insurance. Supermajor, major, national and independent oil companies account for nearly 65% of revenue. The Group has not therefore taken out this type of credit insurance agreement. The volume of business conducted with the top fi ve clients represented 447 million (43.8% of revenue) while the top ten clients accounted for nearly 67.8% ( 692 million). A statement of anteriority of credits and other debtors is presented in note of the Notes to the consolidated fi nancial statements. In 2016, the portion of s revenue generated in countries at risk politically, such as Equatorial Guinea, Libya, and Myanmar, was very marginal (less than 1% of total revenue). Concerning the credit risk on the Group s other fi nancial assets, i.e. cash and cash equivalents, available-for-sale fi nancial assets and certain derivative instruments, the Group works only with top-ranking banks, particularly with the major French banks, and pays particular attention to the choice of banking institutions Liquidity risks Financing comes under a Group policy implemented by the Finance and Administration Department. This policy consists of fi nancing the Group s needs through a combination of operating cash fl ows, disposal of assets, bank borrowings and market transactions, and in the context of the industry downturn, through a strategy of cash fl ow preservation that led to redefi ning s fi nancing platform for 2017 and the following years. The fi nancial component of the Transforming for beyond plan unveiled in March 2013 (sale of USD2.5 billion worth of vessels), has improved the Group s liquidity since The Stronger for longer action plan includes measures to improve the Company s liquidity and reduce new fi nancing needs for the years to come. provides support services to the oil industry; as a result, its business is signifi cantly infl uenced by that of its clients. However, since October 2014, the price of oil per barrel has dropped signifi cantly. The price of Brent crude fell from USD99 per barrel in 2014 to less than USD40 in late 2015, reaching a low of USD27 in the fi rst quarter of The collapse in oil price triggered an immediate response from oil companies, which cut global spending 3 55

58 3 Risk MANAGEMENT REPORT factors on exploration and production for the second consecutive year, by 25% in 2015 and 24% in 2016 (source: IFP Energies nouvelles). This cyclical downturn in the market affected the companies that provide services to oil companies. In the face of this economic slowdown in oil activity, was able to remain resilient thanks to its targeted positioning and strong operational measures (in particular, its cost control policy). Moreover, to manage this cyclical low point, the Group conducted discussions with its fi nancial partners in order to restructure its fi nancing for the coming years. These discussions resulted in the signature of an agreement on March 6, 2017 with a number of fi nancial institutions and partners to restructure its principal debt in the amount of million. As announced on April 12, 2017, in line with the negotiations that led to the restructuring of its principal debt, also reached an agreement to reorganize lease payments on the vessels covered by the sale and bareboat chartering contracts concluded with ICBC Financing Leasing in 2013 and This agreement provides for a USD240 million reduction in s charter payments between 2016 and 2018 in consideration for the two-year extension of the initial bareboat charter period at a rate of 8% and more favorable commercial terms for ICBC Financial Leasing. This agreement will not have a material impact on the Group s consolidated fi nancial statements since it does not affect the qualifi cation of the bareboat chartering contract of the vessels. In accordance with IFRS, bareboat charter expenses will be recognized on a straight-line basis from the date of renegotiation and for the remaining term of the contract. Under the terms of the agreement signed on March 6, 2017, thus restructured its debt as follows: 3 out of long and medium-term debt totaling 692 million, 365 million of repayments due between 2016 and 2018 have been rescheduled and reduced to an amount of 63 million not repayable until The remainder of the debt, i.e. 629 million, will henceforth be repaid progressively between 2019 and 2025; the weighted average of the spreads applicable to these facilities will initially represent approximately 2.1% from October 1, 2017, then approximately 3.1% from January 1, 2020 and lastly approximately 4% from January 1, 2022; 3 short term facilities amounting to million will be refi nanced and maintained at this level from 2017 to 2020 inclusive, before being repaid progressively afterwards, while 22 million in shortterm credits will be maintained and repaid progressively as from 2018; the weighted average of the spreads applicable to these facilities will initially and from the completion date represent 1.9%, then 2.9% from January 1, 2020 and lastly 3.9% from January 1, The agreement signed with the Group s main fi nancial partners therefore reschedules club deal loans, bilateral loans, leases and short-term loans, while providing for an increase in the margins of these loans, progressively over the extended repayment schedule, and the grant of additional sureties. In consideration of the restructuring, the Group agreed to a number of restrictions, in particular regarding its indebtedness, cash fl ow, asset disposals, investments and the dividend policy. The payment of dividends in cash is subject to a leverage ratio: if this ratio is not achieved, the payment in cash associated with the dividend shall not exceed 10 million, with the specifi cation that the dividends owed to JACCAR Holdings shall be not be paid in cash; dividend payments in cash may be made as soon as the leverage ratio has been achieved whereas payment in shares may be made without any limitations regardless of the leverage ratio. The restructured borrowings will include fi nancial covenants: (i) a ratio of net debt to equity that takes into account certain off-balance sheet items (until the date of application of IFRS 16), which must be less than [3.2], (ii) a liquidity ratio designed to ensure the creation of minimum cash balances within the Group, notably 50 million for the cash centralizing subsidiary, and (iii) a minimum adjusted EBITDAR commitment. This restructuring agreement, which was signed on March 6, 2017, will enter into force by June 30 and at the latest by July 15, 2017, once the conditions precedent and subsequent have been satisfi ed: the signature of agreements to reschedule 143 million in balloon loans, the Group obtaining fi nancing in the amount of 60 million and agreements in principle for an additional 60 million, the renegotiation of agreements with certain of its foreign fi nancial partners and obtaining the repayment of an advance granted to JACCAR Holdings during the negotiations for the acquisition of gas business activities, as well as the satisfaction of certain administrative and documentary conditions. As of the closing date, the Group had already taken various initiatives to fulfi ll the conditions precedent for the agreement. The Group initiated discussions with all the fi nancial partners concerned by the signature of rescheduling agreements of the 143 million in balloon loans; it should be borne in mind that such loans are generally refi nanced when they fall due so as to be aligned with the useful life of the funded economic asset. As of the closing date of accounts, the Group had signed a fi ve-year lease agreement making it possible to refi nance the Bourbon Explorer 517 for 23.3 million. The entry into force of this agreement remains subject to the satisfaction of certain conditions precedent aligned with those of the restructuring agreement signed on March 6. A term sheet has also been signed with the fi nancial partners for the fi nancing of three vessels under fi nance leases in the amount of 18 million, and a mandate letter has been signed covering fi nancing in the amount of 60 million. 56

59 MANAGEMENT REPORT Risk factors Other fi nancing is being discussed with foreign fi nancial partners. It is expected that these discussions will be concluded in the second half of As of the closing date, the Group had also fi nalized the renegotiation of the agreement with ICBC Financial leasing and had obtained a formal repayment commitment for the advance granted to JACCAR Holdings during the negotiation of the acquisition of the gas business activities. It should also be noted that, as of the balance sheet date, no event specifi ed in the conditions subsequent of the agreement (notably the administrative and documentary conditions) had occurred; the Group further believes that the risk of any of these events occurring before the entry into force of the agreement is weak. This agreement should enable the Group to manage the decline in business in the event that the low point of the cycle lasts longer, without hindering the planned transition toward new business models rendered possible by the digital revolution. In light of the steps that the Group has already taken, and given that the Management deems it highly probable that all of the conditions precedent and the resulting debt restructuring will occur and will be implemented by June 30, 2017, thus strengthening the Company s liquidity and reducing its need for new fi nancing for the coming years as a result of the restructuring and of other steps taken to reduce operating expenditures, the Management believes that it will have suffi cient liquidity to pay its obligations as they come due over the 12 months following the fi ling date of the Registration Document. Therefore, the parent company fi nancial statements as of December 31, 2016 were prepared on a going concern basis. In accordance with IAS 1.69 d, as of December 31, 2016: the noncurrent portion of the borrowings for which as of the closing date the Group does not have an unconditional right to defer payment for a period longer than 12 months was reclassifi ed in current liabilities (see note 3.14 the details of the reclassifi cations performed). s gross fi nancial debt amounted to 1,750 million, including 218 million at more than one year. The repayment schedule for the medium and long-term debt is presented in note 3.14 of the Notes to the consolidated fi nancial statements. The average residual term of the long- and mediumterm debt is 4 years and 3 months, before taking IAS 1 into account. The following table shows the composition of long and medium-term debt as of December 31, 2016 (excl. accrued interests not yet due): (in millions) Portion of medium/long-term debt under one year Medium/long-term debt Total CLUB DEAL loan 320 million CLUB DEAL loan 450 million CLUB DEAL loan 318 million CLUB DEAL loan 340 million EIG/SNC OUTSOURCED Financing Norway fl eet other bilateral loans TOTAL 1, ,449 As of December 31, 2016, short-term lines, in the form of overdrafts, spot credit or credit facilities (revolving), were used in the amount of 293 million. Accrued interest not yet due amounted to 7.7 million. The Group had cash assets of 282 million as of December 31,

60 3 Risk MANAGEMENT REPORT factors Non-discounted contractual fl ows on the outstanding balance of the net fi nancial liabilities by maturity date, including interest fl ows and taking into account the reclassifi cations performed pursuant to IAS 1, are as follows: 12/31/2016 (in millions) > five years Total Balance sheet total Bonds Commercial paper Draws on credit facilities Borrowings on fi nance leases Other bank loans 1, , ,386.3 Accrued interest Borrowings 1, , ,456.4 Bank overdrafts and cash current accounts Accrued interest Cash and cash equivalents (281.5) (281.5) (281.5) Net cash TOTAL NET FINANCIAL DEBT 1, , ,468.2 (in millions) > five years Total Interest on fi nance lease borrowings Interest on bonds* Interest on other bank borrowings * Amount used calculated over ten-year period from date the bond was issued, i.e. until Future variable-rate interest fl ows were determined using the predicted rates of the indexes in question at year-end. Interest fl ows on bonds take into account interest adjustment clauses (see note 3.9 to the consolidated fi nancial statements). 58

61 MANAGEMENT REPORT Risk factors 12/31/2015 (in millions) > five years Total Balance sheet total Bonds Commercial paper Draws on credit facilities Borrowings on fi nance leases Other bank loans , ,412.5 Accrued interest Borrowings , ,459.3 Bank overdrafts and cash current accounts Accrued interest Cash and cash equivalents (263.3) (263.3) (263.3) Net cash (63.8) (63.8) (63.8) TOTAL NET FINANCIAL DEBT , ,395.5 (in millions) > five years Total Interest on fi nance lease borrowings Interest on other bank borrowings Medium- and long-term borrowings Medium- and long-term borrowings comprise mainly club deal fi nancings and bilateral loans. The majority of these borrowings are backed by assets (vessels) held as security (fi rst-ranking mortgage or negative pledge). The vessels are clearly identifi ed when the loan contract is signed, details of which appear in note 5.1 Contractual obligations and other off-balance sheet commitments of the Notes to the consolidated fi nancial statements. During the performance of the loan contract, for technical reasons, may have to adjust the list of vessels initially assigned to the loan. Two options then arise either partial redemption of the loan or substitution with another vessel. Whichever is the case, an amendment to the loan contract is signed to refl ect the new guarantees. Between 2005 and 2015, concluded four club deal loans: 3 a 320 million club deal loan taken out in 2015 for which the redemption phase began in April 2017, with an outstanding balance of 32 million as of December 31, 2016; 3 a 450 million club deal loan taken out in the summer of 2007 for which the redemption phase began in January 2010, with an outstanding balance of 169 million as of December 31, 2016; 3 a 318 million club deal loan taken out in July 2009 for which the redemption phase began in 2011, with an outstanding balance of 16 million as of December 31, 2016; 3 a 340 million club deal loan taken out in 2015 for which the redemption phase began in June 2016, with an outstanding balance of 326 million as of December 31, These four club deal loans are affected by the agreement for indebtedness restructuring signed on March 6, 2017 and described above. In accordance with this agreement, the repayments for the club deal loans were restructured progressively over the extended payment schedule. In parallel, bilateral borrowings (in dollars, euros and Norwegian krones) are regularly signed. Therefore, in 2016: 3 a 53.9 million fi nancing was signed and drawn down in February for the vessel Bourbon Arctic; 3 a fi nance lease for 30.7 million was signed and drawn down in March and June to fi nance a fl eet of 12 ROVs; 3 a 5 million loan was signed and drawn down in June; 3 a 3.4 million loan was signed and drawn down in August to fi nance an ROV in Italy; 3 a USD56.1 million loan was signed and drawn down in July to fi nance the Indonesian fl eet. 59

62 3 Risk MANAGEMENT REPORT factors In many instances, contractual documentation includes a ratio of net debt to equity requirement of below The last Club Deal loan reduced this ratio to For some of the bilateral fi nancings, mainly tax-based lease fi nancing, of which the total amount outstanding at the end of 2016 was 62 million, the provisions of the tax-based leasing contracts specify a net fi nancial debt to equity ratio of below 1.90 and a Net Operating Debt to EBITDA ratio that must be below 4.0. The documentation relating to the loans affected by the restructuring agreement will be modifi ed to align the ratios with the requirements of those agreements. Short-term lines of credit In addition, the Group had unused short-term credit lines totaling around 24 million as of December 31, The Group has signed combined account agreements with two banking establishments, allowing it to merge the available dollar balances with overdrafts in euros. Cash management is coordinated at the Group s operating headquarters. Financière Bourbon, a partnership organized as a cash clearing house, offers its services to most of the Group s operating subsidiaries. These entities, under a cash agreement with Financière Bourbon, receive active support in the management of their cash fl ow, their foreign currency and interest rate risks, their operating risks and their short and medium-term debt, in accordance with the various laws in force locally. does not have a fi nancial rating from a specialist agency Market risks Market risks include the Group s exposure to interest rate risks, foreign exchange risks, risks on equities and risks on supplies. Interest rate risk The Group s exposure to the risk of interest rate fl uctuations is related to the Group s medium- and long-term variable rate fi nancial debt. regularly monitors its exposure to interest rate risk. This is coordinated and controlled centrally. It is the responsibility of the Assets, Finance and Treasury Director, who reports to the Chief Financial Offi cer. The Group s policy consists of managing its interest rate expense by using a combination of fi xed-rate and variable-rate borrowing. In order to optimize the overall fi nancing cost, the Group sets up interest rate swaps under which it exchanges, at pre-determined intervals, the difference between the amount of fi xed-rate interest and the amount of variable-rate interest calculated on a pre-defi ned nominal amount of borrowing. These swaps are assigned to hedge the borrowings. As of December 31, 2016, after taking into account interest rate swaps, approximately 60% of the Group s medium- and long-term debt had been contracted at a fi xed interest rate. As of December 31, 2016, the interest rate swap contracts were on the Group s borrowings, transforming variable rates into fi xed rates. These contracts were entered into in euros (EUR), Norwegian kroner (NOK) and US dollars (USD); they are broken down by maturity date as follows: Outstanding as of December 31, 2016 in foreign currency Outstanding as of December 31, 2016 in euros (in millions) Maturity Currency Fixed-rate borrowing swaps EUR EUR EUR EUR EUR EUR EUR EUR NOK * NOK USD USD USD TOTAL * Deferred interest rate swaps which will take effect on January 1,

63 MANAGEMENT REPORT Risk factors The following table shows the Group s net exposure to variable rates before and after risk management, based on the hedges in place and the sensitivity of the Group s income before taxes (related to changes in the fair value of monetary assets and liabilities) to a reasonable variation in interest rates, with all other variables remaining constant: As of December 31, 2016 Less than 1 year 1 to 2 years 2 to 3 years 3 to 4 years 4 to 5 years More than 5 years Total Fixed Variable Fixed Variable Fixed Variable Fixed Variable Fixed Variable Fixed Variable Fixed Variable (in millions) rate rate rate rate rate rate rate rate rate rate rate rate rate rate Cash Term deposits Loans and securities Financial assets Bank overdrafts and short-term lines - (293.2) (293.2) Deposits and securities received - - (0.3) (0.3) - Finance lease liabilities (26.5) (4.3) (10.1) - (9.1) (5.7) (2.9) - (3.9) - (58.2) (4.3) Bank borrowings (136.6) (1,062.8) (14.7) (22.0) (15.1) (20.3) (15.4) (7.7) (15.0) (8.6) (26.7) (41.1) (223.5) (1,162.6) Financial liabilities (163.1) (1,360.3) (25.1) (22.0) (24.1) (20.3) (21.1) (7.7) (17.9) (8.6) (30.6) (41.1) (282.0) (1,460.1) Net position before hedging (139.1) (1,078.8) 8.4 (22.0) 2.1 (20.3) 4.1 (7.7) 11.5 (8.6) 16.0 (41.1) (97.1) (1,178.6) Hedging (579.0) Net position after hedging (676.0) (599.6) 3 Assuming the position reached on December 31, 2016 to be constant over a year, a change in interest rates of 100 basis points (1%) would therefore result in increasing or decreasing the cost of the Group s fi nancial debt by 6.0 million over one year. 61

64 3 Risk MANAGEMENT REPORT factors As of December 31, 2015 Less than 1 year 1 to 2 years 2 to 3 years 3 to 4 years 4 to 5 years More than 5 years Total Fixed Variable Fixed Variable Fixed Variable Fixed Variable Fixed Variable Fixed Variable Fixed Variable (in millions) rate rate rate rate rate rate rate rate rate rate rate rate rate rate Cash Term deposits Loans and securities Financial assets Bank overdrafts and short-term lines - (199.5) (199.5) Deposits and securities received (0.9) (0.0) - (0.9) - Finance lease liabilities (5.3) (3.0) (5.5) (2.9) (5.6) (1.4) (5.8) - (4.3) - (6.0) - (32.4) (7.2) Bank borrowings (21.7) (294.8) (22.3) (323.9) (22.7) (165.9) (23.2) (217.1) (23.7) (112.1) (66.6) (117.4) (180.2) (1,231.3) Financial liabilities (26.9) (497.2) (27.8) (326.8) (29.3) (167.3) (29.0) (217.1) (28.0) (112.1) (72.6) (117.4) (213.6) (1,438.0) Net position before hedging (14.5) (233.8) 13.2 (326.8) (24.1) (167.3) (4.4) (217.1) (4.4) (112.1) 5.2 (117.4) (29.0) (1,174.7) Hedging (696.6) Net position after hedging (725.6) (478.1) Assuming the position reached on December 31, 2015 to be constant over a year, a change in interest rates of 100 basis points (1%) would therefore result in increasing or decreasing the cost of the Group s fi nancial debt by 4.8 million over one year. Foreign exchange risk Objectives The Group s policy is to reduce as far as possible the economic risk related to foreign currency fl uctuations over the medium term. The Group also tries to minimize the impact of the US dollar s volatility on annual operating income. Cash flows from operating activities The main foreign exchange risks on operations are related to invoicing clients. invoices a large portion (approx. 77%) of its services in US dollars. The Group has a natural foreign exchange hedge as it pays its expenses in dollars (representing about 29% of revenue). The policy is to maximize this natural hedge. The residual risk is partially hedged in the short term by using forward US dollar sales and/or currency puts. On the unhedged portion, and over time, offshore oil and gas marine services are directly exposed to foreign currency risks, particularly on the US dollar. Long-term cash flows Policy For vessel acquisitions in foreign currencies, the policy is to partly hedge the foreign exchange risk during the construction period by setting up currency futures call options. The policy is to fi nance these acquisitions in the currency in which the corresponding charters will be paid by the customers. However, in order to avoid accounting exchange differences in countries outside the euro zone and the US dollar zone (particularly in Norway), the entities fi nance their investments in their functional currency. Current practice As an exception, at the beginning of 2004, it was decided to temporarily abandon this practice and convert the majority of borrowings that were in US dollars at the time to euros. This was done to recognize the unrealized foreign exchange gains booked during previous fi scal years. Since then, most of the new borrowings (outside Norway) have been contracted in euros or US dollars. Where the euro/dollar exchange rate allows, borrowings in euros to fi nance assets generating revenue in US dollars will be converted to US dollars and future acquisitions will again be fi nanced in US dollars. 62

65 MANAGEMENT REPORT Risk factors The following tables show the Group s net exposure to changes in foreign exchange rates: 3 on income: transaction risk; 3 on shareholders equity: currency translation risk. a) Transaction risk As of December 31, 2016, foreign exchange derivatives mainly involved fl ows in US dollars (USD), Nigerian naira (NGN) and Norwegian kroner (NOK), broken down as follows: Outstanding (in millions of currency) Maturity Average exchange rate Futures contracts covering expected future sales EUR/USD 360 Between and NOK/USD Cross-currency swap USD/EUR 16 Between and USD/NGN The table below shows, as of December 31, 2016, the position of the Group s monetary assets and liabilities (denominated in a different currency from the entity s functional currency) before and after management: 3 (in millions) USD NOK EUR Other Monetary assets 1, Monetary liabilities (1,140.6) (17.7) (76.7) (17.6) Net position before management (2.5) (33.2) 55.6 Hedges (15.2) Net position after management (2.5) (33.2) 55.6 As of December 31, 2016, a 1% change in the euro exchange rate against all the currencies would represent a total impact at Group level of 1.6 million, after hedges are taken into account. It should be noted that currency futures hedges related to future transactions are not shown in this table since the hedged item does not yet appear on the balance sheet. b) Currency translation risk The table below shows a breakdown by currency of consolidated shareholders equity for the: years 2016 and 2015 (in millions) Euro (EUR) 1, ,577.8 Brazilian Real (BRL) (192.2) (195.4) Mexican Peso (MXN) Norwegian Kroner (NOK) US Dollar (USD) Swiss Franc (CHF) (0.2) 1.8 Nigerian Naira (NGN) - (52.0) Other TOTAL 1, ,564.3 As of December 31, 2016, a 1% change in the exchange rates would represent an impact on consolidated shareholders equity of 3.6 million ( 3.0 million as of December 31, 2015). 63

66 3 Risk MANAGEMENT REPORT factors Equity risks As of December 31, 2016, the Group had no cash investments. As indicated in note 3.12 to the consolidated fi nancial statements Treasury Shares, Corporation held 426,576 treasury shares as of December 31, Treasury shares are presented as a deduction from consolidated shareholders equity. A 10% change either up or down in the Corporation share price would result in a change in the market value of the treasury shares of 0.5 million. Supply price risk The Group s exposure to price risk is minimal. The change in the price of raw materials does not constitute a risk of signifi cant increase in operating costs. Clients generally take direct charge of the cost of fuel. 4.6 INSURANCE COVER FOR RISKS Nature and extent of cover For its marine activities, has a comprehensive insurance program for ordinary risks and war risks covering damage that could be incurred by its fl eet ( hull, machinery and equipment insurance) as well as its liabilities as a ship management company ( Protection & Indemnity or P&I insurance). supplements this insurance program with civil liability insurance covering risks not directly related to its Marine activity, through a top-up policy that comes into play for surpluses and condition differences. has also taken out civil liability insurance for its management. has a pecuniary loss insurance policy that comes into play for condition differences and limits on its ordinary risks and war risks, civil liability and P&I policies. The levels of cover of these insurance policies have all been taken at levels of guarantees and franchises appropriate to the risks of the organization. does not wish to disclose them for reasons of confi dentiality. Since January 1, 2016, the Group has retained part of the risk of damage to the fl eet and the pecuniary loss risks referred to above through a captive reinsurance company formed at the end of December The Company, known as CAP RE, is wholly owned by and is based in Luxembourg. Its management was entrusted to a captive manager approved by the Luxembourg Insurance Commission. This captive insurer underwrites high-frequency risks with a maximum annual commitment of USD11.25 million in regular risks and USD2 million in war risks. An annual stop-loss agreement protects the captive insurer from any change in risk frequency and/or intensity. Above these amounts, the risks are transferred to the Group s insurers. Insurance management Subject to constraints in local legislation or due to the Group s organizational structure, insurance management is centralized, which helps optimize coverage, both in terms of quality and value, and provides greater clarity of insurance costs. uses leading international insurance companies to insure its hull, machinery and equipment risk. is also a member of shipowners mutual insurers such as the Shipowners Club, Gard and Standard, which are all members of the International Group of P&I Clubs, covering its civil liability as a shipowner. The civil liability policy covering the non-marine activity is with Axa Corporate Solutions, Helvetia Assurances SA and Swiss Re. Civil liability insurance for the senior management of Corporation is with AIG. The period of insurance coverage is generally 12 months. It should be noted that some policies contain an escape clause allowing it to terminate the policy if Standard & Poor s cuts the insurer s fi nancial rating below a certain level. 64

67 MANAGEMENT REPORT Social and environmental information 5. SOCIAL AND ENVIRONMENTAL INFORMATION This section of the management report sets out the guidelines and action plans addressing sustainability issues. In 2016, the market conditions remained challenging for the oil & gas industry. s teams had to concentrate their efforts on priority actions, particularly in terms of corporate social responsibility, by focusing on safety, local commitment, fuel consumption, ethics and compliance (detailed in section 2.7 of the Chairman s report). As part of the ongoing improvement process, social and environmental reporting has once again this year enabled more extensive and more reliable quantitative indicators to be provided in relation to the Grenelle Act II. A cross-reference table at the end of this section (page 71-72) can be used to locate information on the basis of search criteria. All social and environmental information is audited annually by an independent third party. The relevant report can be found at the end of this section (page 84-86). 5.1 SOCIAL INFORMATION There are three main groups of personnel: 3 seagoing personnel (44% offi cers and 56% ratings); 3 specialized categories of onboard personnel (mainly crane operators, engineers and ROV operators) who are involved in hoisting operations, ROVs and managing onboard operations; 3 onshore personnel, of whom 20% are managerial staff. 3 DISTRIBUTION OF WORKFORCE BY AGE (3) CHART 45 % 40% 35% 30% 25% 39.7% 39.7% 28% 31% 3 All corporate indicators presented in Chapters 5.1 and 5.2 are calculated based on the workforce under contract at the end of December 2016, except for the personnel fl ows, training and absenteeism indicators, which take into account the entire workforce mobilized in % 15% 10% 18.5% 14% 12.4% 13.8% Employment Composition and distribution of the workforce s workforce has declined as did the onshore and offshore activities. At December 31, 2016, the service was delivered by around 9,300 (1) people, of which 7,667 (2) were under contract, with 1,706 people ashore and 5,961 people at sea. Between 2015 and 2016, the Group s combined contractual workforce shrank by 16%. 5% 0% 0.4% 0.2% <= > 60 December 2015 December % 1.2% At the end of 2016, the average age of personnel was 40 and 54% of employees were aged 40 or under. (1) This total workforce includes personnel under contract at the end of 2016, as well as seagoing personnel hired on a non-contractual basis (working rotating shifts and due back on board). (2) This total workforce includes personnel under contract at the end of 2016 (on a direct contract with a group entity or with a recruitment or placement agency). (3) People from 15 to

68 3 Social MANAGEMENT REPORT and environmental information 3 DISTRIBUTION OF WORKFORCE BY GENDER Women represent 7% of the Group s total workforce and 1% of crews. Split women/men Workforce Women Men Management 3 0% 100% Seagoing personnel 5,961 1% 99% Onshore all categories 1,706 30% 70% Onshore Managers % 81% TOTAL GROUP WORKFORCE 7,667 7% 93% 3 DISTRIBUTION OF WORKFORCE BY GEOGRAPHICAL ZONE AT % Europe 14% Asia-Oceania 16% Americas 59% Africa The percentage of s workforce working in their country of origin has remained unchanged at 58% Equal opportunities and fairness has an equal opportunities policy in place, which is supported by charters distributed at all levels, in addition to compliance with any existing regulations in certain operating zones. The monitoring of gender equality introduced in 2015 has revealed that at, like the marine sector in general, women are underrepresented in technical, operational and customer-facing roles. These are all careers in which the necessary skills and experience are by and large obtained in seagoing and vessel command roles an area that still tends to be male-dominated. Access to training and internal promotion has increased the proportion of women in onshore management posts by 19%, particularly in support functions. The surveys and skills assessment methods introduced in mid-2016 for computer-literate onshore personnel will help to identify gateways to these operational, technical and customer-facing roles, as well as to managerial positions. The work performed by employees is largely unsuitable for the employment and inclusion of people with disabilities (a fi t for duty certifi cate is required for seagoing personnel, and a signifi cant number of onshore jobs require employees to be able to visit the vessels) International recruitment policy In 2016, employed 82 different nationalities. The operational subsidiaries, acting either on their own account or as internal recruitment agencies, managed 71% of the workforce, with 29% of personnel provided by external recruitment and placement agencies. Outside recruitment and sourcing companies are selected according to criteria of compliance with international standards and standards. Internal sourcing and manning meet the same standards. Manning and sourcing agencies are audited in a yearly program, which is defi ned in s quality system. The aim of these audits is to ensure that selection, recruitment, training and management processes meet standards and that these agencies meet international standards, including specifi c MLC certifi cation. For onshore personnel, is improving its recruitment standards by including a skills assessment process, and identifying the training needs of all employees occupying new positions within the Group. To assist it in downsizing, has reinforced its internal sourcing policy aimed at leveraging the operational skills acquired within the Group, particularly for onshore personnel. In 2016, 66 internal promotions were recorded for onshore personnel Hiring and departures The analysis of changes in the workforce, covering all subsidiaries, shows that the workforce contracted in The subsidiaries recruited 230 personnel to onshore positions, while 396 personnel from this same category left the Group, including 124 due to dismissal or mutually agreed employment termination, i.e. a decrease of 8% for onshore personnel. These subsidiaries also took on 1,662 seagoing or onboard personnel, while in this category 3,023 people left the Company, 683 as a result of a dismissal or mutually agreed employment termination, resulting in a decrease of 14% for seagoing or onboard personnel. 66

69 MANAGEMENT REPORT Social and environmental information At December 31, 2016, the Group retention rate for the workforce as a whole, calculated over two years, was 87%, of which: 3 85% for onshore personnel; 3 83% (1) for offi cers Compensation As part of a drastic cost control policy, a Group directive imposed a wage freeze in 2016 for the Group s onshore personnel. For seagoing personnel, in keeping with both local and international regulations, as well as branch and collective agreements in force, subsidiaries have had to resort to wage cuts and/or to reorganizing onboard periods to reduce the cost of staff rotations on board vessels. Over the long term, will continue its policy of local compensation management, with each subsidiary being responsible for compliance with the regulations, agreements and practices in force in its area of activity. For seagoing personnel, compensation is established in each organization according to the onboard role and vessel type. For onshore personnel, 58% of subsidiaries must adhere to the minima imposed by legislation and 53% have their own salary scales in place. For 2016, only 34% of subsidiaries with onshore personnel and 27% of subsidiaries with seagoing personnel have a short-term variable compensation plan in place. In 84% of subsidiaries, onshore personnel are covered by health insurance, which also covers the families of employees in 65% of the subsidiaries. Lastly, 91% of the subsidiaries have health insurance in place for their seagoing personnel. The changes in personnel expenses for all group employees are presented in note 5.3 to the consolidated fi nancial statements A policy to promote operational excellence Organization of the Human Resources policy The Human Resources policy, approved by the Management, is implemented by the Group s Human Resources Department. It defi nes the guidelines for recruitment, compensation, training and career management for all personnel; the arrangements are then applied to s three main categories of staff through the operating subsidiaries that employ them. The integrated computer system (Onsoft Computer Systems AS) which manages Group personnel and its crewing activity (administrative management, planning, training, pay) continued to be developed in HORIZON, a complementary tool from Talentsoft, maps the business and streamlines and documents interactions and interviews on the basis of appraisals, training plans and mobility prospects. In total, the tools have enabled the integrated management of 93.2% of the workforce as at December 31, Development of collective competence continues to believe that excellence in service is possible through the development of collectively competent and committed teams. The systems for the evaluation of performance and/or individual skills are designed to be applied worldwide across all personnel categories. The need to cut costs has forced the Group to reduce its training expenditure: only compulsory training or training that has been contractually agreed with clients is funded. Nearly all training that does not meet these criteria has been postponed indefi nitely. Consequently, has embarked on a substantial project that consists of increasing access to skills development through digital learning, facilitating skills transfer in-house by training occasional trainers, and extending individual skills management to all managers. The training of onshore personnel totaled 11,677 hours (2) in 2016, including 12% in internal training (mainly job training) and 11% in e-learning training. Job training made up 68% of this training and mainly involved security and safety (evacuation, fi re prevention) and standards and regulations (ISM and ISPS, MCL, ISO 9001, etc.). In 2016, the training provided to seagoing personnel (122,896 hours) represented 60% of the training mandated by the STCW and MLC international regulations and of the training regarding Offshore industry standards and standards established by for its workforce. s standards are especially focused on the training of newly recruited crewboat personnel. In this respect, seafarers experts nominated as continued to share their expertise and know-how by coaching and training their peers onboard the vessels during specifi c missions. 3 (1) All offi cers (deck and engine offi cers) working on supply type vessels. (2) All mobilized onshore personnel, payroll & contracted. 67

70 3 Social MANAGEMENT REPORT and environmental information Organization of work Organization of work Seagoing personnel and specialized categories of onboard personnel work according to shift systems alternating periods onboard with onshore rest periods; these systems vary according to the operational zones, types of vessel, and depending on the Company or collective agreements in force. During onboard periods, the work of seagoing personnel is organized in a way that respects the rest times required by the conventions (STCW, MLC) and the regulations of fl ag authorities. Vessel captains and onshore teams are responsible for ensuring compliance with these regulations. The organization of work and rest time of onshore personnel depends on the legislative framework applicable and on the collective agreements entered into at a sector specifi c or local entity level. In 2016, 55% of subsidiaries reported that they referred to internal rules and 29% to collective agreements for managing the working time of their seagoing and/or onshore personnel. In 2016, two of the Group s French companies signed four new agreements on working hours and rest periods. In 2016, 29% of subsidiaries allowed a certain fl exibility in the working hours of their onshore personnel. In addition, 8% of subsidiaries allowed their staff to work from home, while 11% offered part-time opportunities. Some technical functions on the operational support bases require a continued presence. The personnel in these roles work according to specifi c shift systems alternating work and rest periods. During continuous working time, daily rest periods are respected and weekly rest time caught up on. The shift system was adopted by 8% of subsidiaries in Absenteeism and occupational illnesses In 2016, the absenteeism rate was assessed for all subsidiaries and consolidated by category of personnel: 3 seagoing and specialized categories of onboard personnel; 3 onshore personnel. For onshore personnel (1), absence due to sickness or occupational accident was measured, as was the number of unexplained absences. The observed rates were 1.98% for absence due to sickness or accident, and 0.06% for unauthorized absences. To ensure that the consolidated information was consistent, all subsidiaries calculated their absenteeism rate using the same method. Overall, the absenteeism rate recorded for onshore personnel was 2.26%. For offshore personnel, the absenteeism rate was measured by considering the following scope: personnel directly contracted by Group subsidiaries under a permanent contract. The absenteeism rate for this scope was 5.57%, of which 4.95% was absence due to sickness, 0.61% absence due to accident and only 0.01% unauthorized absences. In terms of occupational illnesses, the Group only publishes data for its French subsidiaries. Regulatory differences among the Group s host countries and the specifi c aspects of managing seagoing personnel effectively preclude the aggregation of data for this indicator. In 2016, nine cases of occupational illness were reported out of a total of 2,137 days of absence; 73% were due to articular and periarticular conditions and 27% to pulmonary conditions. Alongside the campaigns implemented at Group level (e.g. the Safety Takes Me Home campaign and use of personal protective equipment (PPE)), the subsidiaries have developed local safety or awareness campaigns both for onshore and seagoing personnel, designed to prevent operational risks and the health problems that could result (e.g. tropical diseases, correct movement and posture, water quality, etc.) Compliance with the fundamental conventions of the International Labour Organization (ILO) and human rights The MLC, Maritime Labour Convention, which was ratifi ed within the ILO in 2006, entered into force in August This convention, which is a new pillar of international maritime regulations after STCW, MARPOL and SOLAS, is similar to a Seafarers Charter, and sets minimum working standards onboard vessels of over 500 UMS. It brings together over 60 existing international conventions or regulations. All vessels must carry a (1) Onshore personnel directly contracted by one of the Group s subsidiaries (payroll). 68

71 MANAGEMENT REPORT Social and environmental information maritime labor certifi cate delivered by fl ag authorities, to prove that the convention is complied with. This certifi cate is valid for fi ve years. An interim audit is organized every two and a half years. As in previous years, a survey was carried out at the end of 2016 to ensure that all subsidiaries still comply with the fundamental conventions of the ILO on freedom of association, non-discrimination, elimination of forced or compulsory labor, and the effective abolition of child labor Focus on safety For, operational safety is paramount. The Group strives to ensure that operations are safe, effi cient and reliable for clients, who themselves have increasingly strict requirements to adhere to. Safety at includes safety of employees, that of the clients and of all those who work at or for the Group, as well as the protection of assets and the environment. In 2016, over 3 million passengers were safely transported to and from offshore sites. To better meet the increasingly stringent requirements of its clients, continues to implement its Operational Safety Management (OSM) standard at all its subsidiaries, which is aligned to the offshore industry program. This modern system integrates the complete operations management chain, defi ning the responsibilities and individual responsibilities required for safe, effi cient operations. s aim is to have zero incidents that could harm personal health and safety. To do this, the Group is constantly developing tools and indicators to educate and raise awareness on accident prevention and to encourage best practice. In 2016 for example, introduced its monthly safety post, a one-page comic strip recounting an actual incident occurring at one of the Group s workplaces. These A4 sheets, distributed regularly to all operational bases and vessels in the fl eet, are in addition to the existing material made available during the last three years as part of the fi rst, second and third Safety Takes Me Home campaigns. 3 The objective was to raise the awareness of all employees so that they adopt a responsible and proactive attitude. According to data from the International Support Vessel Owner s Association (ISOA) and the IMCA (International Marine Contractors Association), which includes the main offshore oil and gas maritime services players, s safety performance is very good. 3 Lost Time Injury Rate (LTIR): Frequency of accidents causing a stoppage of work per million hours worked. 3 Total Recordable Incidents Rate (TRIR): Frequency of reported accidents, including accidents with stoppage of work, injuries requiring time off or physical rest (reassignment, reduced hours, etc.) and injuries requiring appropriate medical care and monitoring, but which do not require time off or stoppage of work. This frequency is also expressed per million hours worked. In 2016, the LTIR was 0.35, and the TRIR was For 2016, recorded 13 Lost Time Injury (LTI) of the Lost Work Cases (LWC) type, 8 Restricted Work Cases (RWC) and 10 Medical Treatment Cases (MTC). As a reminder: 3 LTIs are accidents resulting in injuries which do not have after effects involving a temporary stoppage of work (Lost Work Cases or LWC), with partial permanent aftereffects (Permanent Partial Disability or PPD), with full aftereffects (Permanent Total Disability or PTD), or fatalities (or FATs); 3 RWCs are cases where the injured person is able to continue working but in an adapted or restricted form; 3 MTCs are cases where the injured person is able to resume their work as normal, but the type of injury they have sustained requires medical intervention as defi ned by oil industry rules. draws particular attention to the risks posed by the malaria, Ebola and Zika viruses by publishing educational material on its intranet. 3 69

72 3 Social MANAGEMENT REPORT and environmental information 5.2 SOCIETAL INFORMATION Involvement in the socio-economic development of the territories and relationships with stakeholders Local anchoring This is a basic value of that contributes towards benefi ting territories where it provides services towards a positive, and responsible, economic and social impact. 62% of the workforce in a country are nationals, up 4% from 2015 this fi gure rises to 78% for onshore positions. The regional anchoring (1) is 73% for the entire Group. 3 PERCENTAGE OF LOCAL WORKFORCE FOR EACH OPERATING ZONE 20.4% 79.6% % 77.8% 39.5% 60.5% 60.2% 39.8% Foreign workforce Local workforce Partnerships/sponsorships in France and overseas The Foundation, under the aegis of the Fondation de France, continued to sponsor its two key partners in Nigeria and Thailand, and also launched new support projects. The Foundation s mission is to develop and sponsor general-interest projects with direct links to education, training, health and local development, in France and other countries where the Group operates. Current projects: 3 in its second year, the partnership developed with the IECD (2) over a three-year period once again yielded tangible results. The overarching objective is to foster the inclusion of young people within the labor market in Nigeria. The fi rst intake of 56 students graduated in 2016; 3 second partnership with the Baan Dek Foundation in Thailand, primarily aimed at giving Birman migrants access to childcare, was also a success. More than 1,040 migrant children received educational support on topics relating to hygiene, health and the environment. Aside from the Foundation, the Group is also committed to humanitarian causes, notably through the Bourbon Argos AHTS vessel, which continued its mission to rescue migrants off the Libyan coast for Médecins Sans Frontières. The donation made to the charity helped to cover the cost of lifejackets and emergency (1) Regional anchoring: staff originating from the geographical region in which they work (Asia 78%, America 79%, Europe 97% and Africa 65%). (2) IECD: Institut Européen de Coopération et de Développement (European Institute for Cooperation and Development). 70

73 MANAGEMENT REPORT Social and environmental information blankets to protect the refugees from the cold. will have donated more than 45,000 in total, taking into account all the actions implemented in Finally, the open days held in 2016 showcasing the assistance, salvage and pollution remediation tugs operated by the company Les Abeilles along the French coast raised more than 20,000, which will be shared between: 3 L Association Des Œuvres Sociales de la Marine (Brest); 3 L Association Des Œuvres Sociales de la Marine (Cherbourg); 3 La Caisse des Péris en Mer de Cherbourg (Cherbourg); 3 La Recherche Contre la MUCOVISCIDOSE (Brest) Relations with stakeholders and fair practice has identifi ed its stakeholders as all people and organizations able to infl uence or be infl uenced by the Group s decisions and activities. The Group has maintained a close dialog with its employees, clients and shareholders i.e. its main stakeholders over a period of some years (e.g. by providing a free phone number for shareholders, asking clients to complete a satisfaction survey after each contract, etc.). This close collaboration permitted to improve its global performance, particularly in committing itself to continuous improvement through CSR with this method. In its code of conduct, defi nes the rules that apply to all Group employees and other stakeholders (suppliers, partners and clients), ensuring that they work together to respect local cultures, people, laws and ethics. The principles it contains show the way forward for ethical conduct. A supplier code of conduct sets out the commitments that the Group expects from its suppliers and subcontractors, particularly regarding respect for fundamental rights at work, health and safety, environmental protection, anti-corruption, and promoting economic and social development. At the Group level, local procurement is favored as much as possible to build lasting relationships with local suppliers and boost the local economy. The code of conduct is routinely included in contracts and is published on s website Local procurement attaches particular importance to the impact of its activities in the areas where it operates, especially with regard to the social and economic aspects. As part of its overall strategy, is continuing to develop local partnerships by integrating quality and international safety standards. In 2016, local procurement accounted for around 54% of purchases of parts and supplies (unchanged from the previous year) and directly helped to support the local economy. The proportion of local procurement is fairly consistent across the different geographical areas where operates. This type of procurement mainly focuses on routine supplies and services for vessel maintenance (engine oils, spare parts, services, ship repair yards) and operations (catering and other services). Prioritizing local procurement offers signifi cant added value in terms of response times and overall purchasing costs (including logistics) Suppliers and subcontractors In 2014, the Group Purchasing function was completely reorganized to improve international supplier management and to deploy tools and processes common to all subsidiaries worldwide. This enabled procedures and tools to be introduced to improve monitoring of suppliers, with the implementation of purchasing strategies by product category, supplier quality management and performance measurement through regular assessments and risk analysis. All of these processes factor in quality standards and ethical issues. More than 100 appraisals were carried out in These were used to generate action plans for each individual supplier. has defi ned a single scope for its suppliers and subcontractors. This includes, in addition to the procurement of parts and supplies, the following categories: fuel, classifi cation societies, fl ags, freight forwarders, telecommunications, travel agencies and external manning agents. Of these, two categories (external manning and ship repair yards) account for more than 15% and 8% of purchases respectively. In terms of risk management, therefore, it is essential that prioritizes its actions with these suppliers: 3 fi rstly, external manning agents: these subcontractors are closely monitored since they manage a signifi cant percentage of the Group s workforce (29% in 2016). They comply with international standards and with s standards (see section on international recruitment policy) and undergo annual internal audits; 3 secondly, ship repair yards: they perform maintenance on vessels in the fl eet, which are the Group s major assets. The nature of the work carried out by these subcontractors requires strict safety management. Accordingly, HSE criteria are given a higher weighting during annual appraisals Compliance program has set up a compliance program. As regards the specifi c corruption risk linked to the countries in which the Group operates, anti-corruption measures and procedures are an integral part of this program. Its main components are described in the internal control and risk management procedures section of the Chairman s report. The Group has also put in place a dedicated compliance organization with 26 compliance managers across the Group s subsidiaries who report to the Corporate compliance team. The Group also has a dedicated procedure for compliance requirements which it applies to third parties and its suppliers in particular. In 2015, the Group launched a Compliance E-learning Program for all of its onshore and offshore employees. The E-learning program continued in Very close attention is paid to seagoing personnel who have limited internet access. 3 71

74 3 Social MANAGEMENT REPORT and environmental information Professional relations, collective agreements and organization of social dialog Professional relations are governed by the employment laws applicable to each of the Group s subsidiaries with employees. Alongside the branch and collective agreements already in place as of December 31, 2015, the Group s French companies signed new agreements in 2015: 3 a branch agreement on professional equality for onshore personnel in France; 3 a branch agreement on professional equality for seagoing personnel in France; 3 fi ve collective agreements on working hours and a profi t-sharing agreement. In subsidiaries where it is not customary to sign an agreement, employee relations are governed by internal regulations established by the employer. Professional relations are also governed by the operational management standard. The high level of attention paid to the health and safety of personnel, via their division, the international and local regulations and the internal HSE policies has meant that it was not necessary to sign any additional health and safety agreements. 5.3 ENVIRONMENTAL INFORMATION General environmental policy To date, fi ve subsidiaries have been ISO certifi ed. With its Operational Safety Management (OSM) (1) standard, takes a harmonized approach towards operational safety and effi ciency, with a special section on the environment. The aim is for all entities to have a tool enabling them to measure and improve their management systems, via a self-assessment based on KPIs derived from industry best practice, both for onshore and offshore operations. In 2016, the team responsible for managing fuel use continued its efforts to improve the collection, processing, quality, verifi cation and sharing of environmental data from vessels. An application to collect operational data has been installed on board 262 Supply and Crew Boats of over 32 m. This application collects vessel operations daily, as well as engine hours which are directly linked to diesel consumption. Fuel, water, oil and waste consumption data are also collected daily. This data is automatically shared internally with over 520 users (Management and Captains/Head Mechanics) using dashboards developed by the Fuel Management and Business Intelligence teams. This information makes it possible to optimize consumption and minimize the environmental impact of s maritime activities. Since the client remains the initiator for operations, the scope for action may seem limited. Nevertheless, best practices have been introduced on board vessels to optimize consumption, reduce engine hours and lower emissions. In 2016, crew training in good operational practices continued, the aim being to minimize fuel consumption and therefore greenhouse gas emissions as much as possible. For example, captains are automatically notifi ed by when best practice for effi cient vessel management has not been followed. Finally, the reference offi cers provide onboard training in modules on the intranet. Reference offi cers and Internal Auditors also stress the importance of the quality of reporting for data reliability. All seagoing personnel have access to the various environmental regulations applicable on their vessel. All these measures raise the awareness of seagoing personnel on environmental protection. The daily monitoring of consumption on 262 vessels and monthly monitoring on the rest of the fl eet makes it possible to distinguish consumption by vessels during chartering and non-chartering periods, and also enables fi gures to be fed back on waste generation and freshwater consumption. The recommendations made by international bodies in this regard, particularly the International Maritime Organization (IMO), have been respected. The consumption of fuel (Marine Gas Oil) and lubricant oil in 2016 was 424,982 m 3, and 2,769 m 3 respectively. In 2016, consumption outside chartering periods represented 27,574 m 3, i.e. 6.5% of the Group s total consumption. The gross emissions for 2016 are presented in the table below: (in metric tons) Emissions CO 2 1,158,888 1,393,658 1,509,944 Emissions SO x * 1,646 2,211 2,820 Emissions NO x 25,390 29,910 30,884 * The sulfur rate is reported by seafaring personnel or failing this, estimated using the following ratios 0.1% per unit mass in Europe, the North Sea, and 0.5% per unit mass in the rest of the world. (1) OSM: Operational Safety Management defi ned by the Oil Companies International Marine Forum (OCIMF). 72

75 MANAGEMENT REPORT Social and environmental information Decree no was published in 2016 regarding environmental information in the context of the application of Article 173-IV of the law on energy transition. Accordingly, evaluated its indirect emissions throughout the entire value chain in addition to the direct emissions already reported earlier in this document. This means that emissions incorporating the upstream and downstream aspects of the Group s business have been taken into account in relation to the Green House Gas (GHG) Protocol. The objective of this protocol is to standardize the fi ght against climate change on a global scale. It is divided into three levels that correspond to specifi c emissions scopes. The tool provided by the GHG Protocol therefore calculates CO 2 emissions based on fi nancial data. It has facilitated the breakdown of emissions by scope and by main emissions category: 3 DISTRIBUTION OF C0 2 EMISSIONS BY SCOPE 30.49% Scope % Scope 2 3 MAIN CATEGORY OF INDIRECT EMISSIONS 47.70% Scope Purchase of goods and services Energy (excl. scopes 1 and 2) Shipping of merchandise Business travel Employee travel The most signifi cant categories for emissions in scope 3 are: 3 category 3 Energy (53%), which represents emissions associated with energy not included in scopes 1 and 2 (extraction, production and transportation of the energy sources used by ); 3 category 1 Purchase of goods and services (38%), which represents emissions associated with Group purchases (extraction, production and transportation). Currently, climate change has no impact on the activities of vessels. Depending on changes, emergency procedures will be reviewed and updated. To date, s accounts contain no signifi cant provision that represents an environmental risk. s position in this area is described in section 4.3 of the management report. Each vessel also has the Emergency and Contingency Plan on board which lists all the decontamination exercises done on board. requires each of its vessels to do at least four of these decontamination exercises per year. The offi cers issue instructions for each exercise. 73

76 3 Social MANAGEMENT REPORT and environmental information Management of resources operates a fl eet of modern vessels, for the most part equipped with diesel-electric propulsion technology that signifi cantly reduces consumption and atmospheric emissions for offshore oil and gas marine services. A dedicated Fuel Management team is responsible for reporting, monitoring and analyzing the environmental data and has designed ways to feed data back to the crews and various land-based teams (HSE, operations, central functions). The implementation of dashboards makes it possible to monitor environmental indicators every month (Marine Gas Oil, lubricant oil, waste, emissions etc.). This enables the Group to adopt operational behavior which is increasingly responsible. Freshwater production is 61,148 m 3 (produced by 47 vessels using osmosis fi lter systems). The consumption of fresh water on board the vessels includes water for sanitary use as well as water intended for rinsing vessel equipment. It was 345,399 m 3 across the whole fl eet excluding crew boats under 32 m. The consumption of bottled drinking water has not been reported, and neither has the indirect consumption of (electrical) energy by all the offi ces of the operational subsidiaries. Electricity consumption by offi ces in France is almost 800 MWh Pollution and waste management As far as the prevention of environmental risks is concerned, applies national and international rules as outlined in section 4.2 of the management report. Special attention needs to be paid to polluting waste that is accidentally discharged into the sea. In 2016, did not log a single major incident (1) of the kind that would cause environmental harm. The Bourbon Liberty 150 (15 vessels), Bourbon Liberty 300 (20 vessels), Bourbon Explorer 500 (10 vessels), Bourbon Evolution 800 (10 vessels), PX 105 (6 vessels) and P 105 (6 vessels) series meet the Oil Recovery classifi cation. This classifi cation indicates that these vessels can contain pollution and retrieve and store on board the hydrocarbons responsible for this pollution. s vessels are equipped with waste treatment systems that are compliant with the international regulations in force, in particular those of the IMO. The total volume of waste generated in 2016 was 16,200 m 3. The volume of used oil treated (2) amounted to 4,459 m 3 across the fl eet, excluding Crew Boats under 32 m. The waste generated and used oil discharged on land are processed by approved companies. The latest series of vessels delivered namely the Bourbon Liberty 300 (20 vessels), Bourbon Explorer 500 (9 vessels), Bourbon Evolution (10 vessels), P 105 (5 vessels) and PX 105 (4 vessels) satisfy the Cleanship classifi cation requirements. These vessels have been designed and constructed to address the stringent requirements of protecting fuel reserves, treating waste water and general waste, limiting discharges into the water and the risk of water pollution as well as the impact on biodiversity. 5.4 NOTE ON SOCIAL AND ENVIRONMENTAL REPORTING METHODOLOGY External standards The Group relies on Article 225 of the Grenelle II Act to report on and monitor its human resources, environmental and social indicators Tools used The Onsoft Computer Systems AS integrated information system was used to collect and process the social data for 2016 sent by the local entities. This information system was combined with the decision-making information system Business Intelligence, and the annual survey Human Resources - Crewing. The environmental data are obtained from the Surfer Reporting Application for Surfers below 32 m, while the Operational Data Application (ODA), a daily reporting tool launched in 2014, covers s fl eet of supply vessels and Surfers above 32 m Social indicators s social reporting is carried out over the fi scal year (January to December). The scope of the social indicators includes subsidiaries controlled operationally by the Group and carrying employees, as well as three associate subsidiaries (Bourbon Gulf, Bourbon Marine Services Manila LTD, Sonasurf (Angola), Companhia de Serviços Maritimos, LDA). The other three associate subsidiaries (EPD Yangzhou, EPD Asia, Southern Transformer and Magnetics) are not included within the scope of the social indicators, as their core business is not the same as s. All corporate indicators presented in Chapters 5.1 and 5.2 are calculated based on the workforce under contract at the end of December 2016, except personnel fl ows which correspond to the hiring and departure of mobilized personnel, i.e. personnel on a contract at the end of the year as well as personnel not on contracts and working rotating shifts and due back on board. Since 2015, the method used to account for departures changed; from now on, departures from December 31 of year n-1 to December 30 of year n are taken into account. (1) Major incident: release of more than 500 liters of products into the sea. (2) The reported quantity of treated used oil does not include the quantity of used oil incinerated onboard. 74

77 MANAGEMENT REPORT Social and environmental information Regional and local anchoring are established according to the geographical assignment of the employees. For some employees, primarily offshore personnel, location cannot be ascertained with precision. These indicators are therefore calculated for 94% of the workforce. The reporting of training hours covers 94% of the onshore workforce, excluding three entities (Naviera Bourbon Tamaulipas, Les Abeilles, Aries Marine), and 94% of the offshore workforce, excluding two subsidiaries (Naviera Bourbon Tamaulipas and Les Abeilles). The reporting of the absenteeism rate covers all directly contracted onshore personnel (payroll), i.e. 86% of onshore workforce, including all subsidiaries, and all offshore personnel (excluding the subsidiaries Naviera Bourbon Tamaulipas and Les Abeilles) on a permanent contract (permanent contract payroll), i.e. 29% of offshore workforce. The reasons for absence included in the calculation of absenteeism rate are: illness, accident, unauthorized absence, absence for industrial reasons (strike, etc.). Unpaid leave is also included for onshore personnel only. Accidentology indicators (LTIR, TRIR) are calculated using the OSHA s (Occupational Safety and Health administration) benchmark. Formula for calculating hours worked by offshore personnel: n umber of days when the vessel is in the fl eet* 24 hours of work per day x theoretical average number of persons on board x 105%. The theoretical average number of persons on board is defi ned in a table depending on the vessel sub-type and status. Formula for calculating the hours worked by onshore personnel: 8 hours of work per day x average workforce over the year x number of theoretical days worked. The number of theoretical days worked is defi ned in a table based on the legislation and collective agreements in force in each country where onshore personnel work. It excludes weekend days, holidays and annual leave. In terms of occupational illnesses, the scope is limited to the Group s French subsidiaries, i.e., 21% of the workforce at the end of the period Environmental indicators Environmental data, for indicators relating to greenhouse gas emissions (emissions of CO 2, SO x and NO x ) and energy use (Marine Gas Oil), cover 482 vessels out of 483 Marine Services and Subsea Services vessels operational in The impact of non-chartered vessels is not signifi cant. NO x emissions were reported for 471 vessels due to the exclusion of 11 vessels for which data reliability could not be verifi ed. The indicators on waste, the use of freshwater and used oil only cover 262 Supply and Surfer vessels under 32 m. They do not cover the 220 Surfer vessels under 32 m whose overall impact is not signifi cant. The indicator for the quantity of used oil incorporates 255 vessels following the exclusion of 7 vessels with unreliable data. The Group s environmental performance has been followed on the basis of relevant indicators with regard to its activities. The indicators have been calculated on the following principles: 3 CO 2 : fuel consumption, with an applied mass coeffi cient of 3.206, in compliance with circular MEPC/47111 of the International Maritime Organization (OMI). Fuel consumption is reported using the Surfer Reporting Application (SRA) and the Operational Data Application (ODA) by seagoing personnel; 3 SO x emissions are calculated on the basis of fuel use and the average sulfur rate; 3 NO x emissions are calculated on the basis of engine rating, hours of machine operation, load factor and emission factor of each engine; 3 the fuel density is reported by crew or, failing this, estimated using the ratio 0.85 metric ton/m Additional information on the application of the provisions of Article L of the French Commercial Code Given the specifi c nature of its business, does not consider the following issues referred to in Article L of the French Commercial Code to be applicable in view of their irrelevance with the Group s operations: consumer health and safety, use of raw materials, land use, noise pollution and food wastage. Furthermore, does not disclose the electricity consumption of its offi ces outside France, as this is considered to be immaterial in comparison with its fl eet s fuel consumption. 3 75

78 3 Social MANAGEMENT REPORT and environmental information 5.5 CROSS-REFERENCE TABLE OF SOCIAL AND ENVIRONMENTAL INFORMATION Reference Grenelle Act 2 Art. R (Decree No ) Management report page Management report reference Social Information Employment Total workforce and breakdown by gender, age and geographical zone Hiring and departures Compensation and change therein Organization of work Organization of work time Absenteeism Social relations Organization of social dialog (procedures for informing, consulting and negotiating with staff) Record of collective agreements Health and safety The conditions of health and safety at work The record of agreements on health and safety at work signed with labor organizations or staff representatives Accidents at work (frequency and seriousness) as well as occupational diseases Occupational illnesses Training Training policies implemented Total number of hours of training Equal treatment Measures taken to promote equality among women and men Measures taken to promote the employment and integration of disabled people Anti-discrimination policy Promotion of and compliance with the stipulations of the fundamental conventions of the International Labour Organization on respect for freedom of association and the right to collective bargaining On respect for freedom of association and the right to collective bargaining Elimination of discrimination in employment and occupation Elimination of forced or compulsory labor Effective abolition of child labor Environmental information General environmental policy The organization of the Company to take into account environmental issues, and, if required, measures taken for environmental assessment or certifi cation Activities carried out to train and inform employees regarding environmental protection Resources allocated to the prevention of environmental risks and pollution The amount set aside as provisions and guarantees for environmental risks, provided this information does not cause serious damage to the Company in an ongoing litigation

79 MANAGEMENT REPORT Social and environmental information Reference Grenelle Act 2 Art. R (Decree No ) Management report page Management report reference Pollution and waste management Measures for preventing, reducing or repairing air, water and ground emissions seriously affecting the environment Measures for the prevention, recycling and elimination of waste Taking into account noise pollution and all other forms of pollution specifi c 74 N/A to an activity Sustainable use of resources Water consumption and supply according to local constraints Consumption of raw materials and measures taken to improve their effi cient use N/A N/A The consumption of energy, measures taken to improve energy effi ciency and and use renewable energies Use of land N/A N/A Climate change Greenhouse gas emissions Adaptation to the consequences of climate change Protection of biodiversity Measures taken to preserve or develop biodiversity Information on societal commitments in favor of sustainable development Territorial, economic and social impact of the Company s activity In terms of employment and regional development and 70 On local populations Relations with persons or organizations affected by or involved in the Company s activity, including integration associations, education institutions, environmental protection associations, consumer associations and local associations The conditions for dialog with these individuals or organizations Partnership or sponsorship activities Subcontracting and suppliers Taking into account social and environmental issues in the purchasing policy Importance of sub-contracting and consideration of social and environmental responsibility in relations with suppliers and sub-contractors Fair practices Measures taken to prevent corruption Measures taken in favor of consumer health and safety N/A N/A Other measures taken in favor of human rights

80 3 MANAGEMENT REPORT Corporation and its shareholders 6. CORPORATION AND ITS SHAREHOLDERS 6.1 SHARE CAPITAL AND SHAREHOLDER BASE As at January 1, 2016, the fi rst day of the fi scal year, the share capital of Corporation amounted to 45,484,599 divided into 71,606,331 fully paid-up shares. The share capital as at December 31, 2016 was 48,493,096, divided into 76,342,603 shares of the same class and representing 127,372,479 (1) theoretical voting rights (126,945,903* voting rights for the General Meeting, the difference corresponding to the number of shares held by the Company). Therefore, the breakdown of the Corporation shareholder base as at December 31, 2016 was as follows: Shareholder Number of shares % of the capital and theoretical voting rights % of the voting rights which can be exercised at the General Meeting Jacques de Chateauvieux & affi liated companies* 39,798, % 59.45% Henri de Chateauvieux & affi liated companies** 6,185, % 9.70% Total Collectively 45,984, % 69.15% Monnoyeur SAS 4,398, % 3.47% Treasury shares 426, % Employees 360, % 0.28% Public 25,172, % 27.10% TOTAL 76,342, % 100% * Jacques de Chateauvieux & affi liated companies: JACCAR Holdings SA + Cana Tera S.C.A. + Jacques de Chateauvieux. ** Henri de Chateauvieux & affi liated companies: Mach-Invest SAS + Mach Invest International + Henri de Chateauvieux. 6.2 DIVIDENDS PAID FOR THE LAST THREE YEARS We remind you that the dividends distributed for the last three years were as follows: Number of shares at year-end Net dividend per share (1) (in ) Total amount distributed (2) ,559, ,589, ,559, ,579, ,606, ,204, (1) Dividend eligible for the 40% tax deduction applicable to individual (non-corporate) shareholders who are French tax residents, as provided for in Article of the French Tax Code. (2) Treasury shares do not carry entitlement to dividends. (in ) (1) Application of Law No of March 29, 2014 to regain the real economy (the Florange Law ) as from April 3, 2016: registered shares held for more than two years receive double voting rights. 78

81 MANAGEMENT REPORT Corporation and its shareholders 6.3 TRANSACTIONS ON COMPANY STOCK Stock buyback program Portion of the capital held by the Company and breakdown by objective for holding the Company s treasury shares At December 31, 2016, the Company held 426,576 treasury shares, representing 0.56% of the capital. Objective for holding treasury shares Number of shares held at year-end Purchase value (in thousands) par value (in thousands) Stimulation of the market by an investment service provider 47, Hedging stock options or other employee shareholding systems 379,568 5, External expansion operations None - - Hedging securities giving access to the capital None - - Cancelation None - - TOTAL 426,576 5, Transactions made by the Company on treasury shares during the year, by acquisition, disposal or transfer At December 31, 2016, held 426,576 shares, including 47,008 via CM-CIC Securities, an investment service provider responsible for market stimulation under the AMAFI charter, in the context of its management of the liquidity contract. As part of this liquidity contract, 1,069,540 shares were thus acquired at an average purchase price of 11.65, while 1,025,232 shares were sold at an average price of These transactions did not incur any dealing costs. It is also noted that no derivative products were used to conduct these transactions and that no put or call position was open on December 31, Description of the share buyback program proposed to the Combined General Meeting on May 23, 2017 The General Meeting, resolving pursuant to the conditions of majority and quorum required for Ordinary General Meetings and in the light of the Directors report, authorizes the Board for a period of 18 months, as provided for under Articles L et seq. of the French Commercial Code, to proceed with the purchase, on one or more occasions and at any time it chooses, of the Company s shares, subject to the limit of 5% of the total number of shares comprising the authorized capital, this ceiling being adjusted where necessary to allow for possible increases or reductions of capital during the program. This authorization puts an end to that granted to the Board by the General Meeting of May 26, 2016 in its 12 th ordinary resolution. The shares may be purchased for any purpose permitted by law, including: 3 stimulating the secondary market or maintaining the liquidity of Corporation shares through an investment service provider under a liquidity contract in accordance with the AMAFI code of professional practice as approved by the French Financial Services Authority; 3 holding shares to cover stock option plans and/or bonus share allotment plans (or similar plans), for the benefi t of employees and/or representatives of the Group, and to allow allotments of shares within the scope of a company or group savings plan (or similar plan) or as part of employee participation in the results of the Company and/or any other form of share allotment to employees and/or representatives of the Group; 3 possibly canceling the shares thus acquired, subject to the authorization to be granted by the shareholders at this General Meeting in its seventeenth extraordinary resolution. These share purchases may be transacted by any means, including acquisition of blocks of shares, at such times as the Board may choose. 3 79

82 3 MANAGEMENT REPORT Corporation and its shareholders The Company reserves the right to use options and derivatives within the bounds of applicable regulations. The maximum purchase price is fi xed at 30 per share. In the event of any transaction affecting the capital, notably stock splits, consolidation of shares or allocation of bonus shares, the abovementioned sum will be adjusted proportionally (multiplication coeffi cient equal to ratio between the number of shares forming the capital prior to the transaction and the number of shares following the transaction). The ceiling for the operation is thus fi xed at 114,513,900. The General Meeting grants full powers to the Board of Directors, which may delegate those powers, to proceed with these operations, to fi x the terms and conditions thereof, to enter into any agreements and to satisfy all formalities. As at December 31, 2016, the Company had free reserves of 665,243 thousand. By law, the amount of the program cannot be higher than this fi gure until the closure of the parent company fi nancial statements for the current year. At January 31, 2017, the breakdown by objective of the treasury shares held was as follows: Objective for holding treasury shares Number of shares held Stimulation of the market by an investment service provider 34,415 Hedging stock options or other employee shareholding systems 379,568 External expansion operations None Hedging securities giving access to the capital None Cancelation None TOTAL 413, Transactions performed during 2016 on the Company s stock by the persons referred to in Article L of the French Monetary and Financial Code The Company has no knowledge of any transaction performed during 2016 on the Company s stock by the persons referred to in Article L of the French Monetary and Financial Code Employee shareholding As at December 31, 2016, through the employees mutual fund Bourbon Expansion, 831 employee shareholders held a total of 360,862 shares, representing 0.47% of the share capital. 6.4 FACTORS THAT COULD HAVE AN IMPACT IN THE EVENT OF A PUBLIC OFFER Pursuant to Article L of the French Commercial Code, the following factors may have an impact in the event of a public offer concerning the Company s shares. Statutory restrictions on the exercise of voting rights and stock transfers or contractual clauses of which the Company is aware pursuant to Article L of the French Commercial Code The Company s bylaws do not stipulate any restriction on the exercise of voting rights and stock transfers. Contractual clauses providing for shareholding commitments, brought to the knowledge of the Company, are included in the shareholders agreements mentioned below in the section Agreements between shareholders of which the Company is aware and which may entail restrictions on the transfer of shares and the exercise of voting rights and quoted in section 2.8 Other legal and fi nancial information of this Registration Document. Direct or indirect stakes in the Company s capital of which the Company was aware pursuant to Articles L and L of the French Commercial Code This information is detailed in section 6.1 of the management report. Capital structure of the Company The capital structure of the Company is described in section 6.1 of the management report. 80

83 MANAGEMENT REPORT Corporation and its shareholders List of holders of any security conferring special control rights and a description thereof The Company s bylaws do not contain any provision contrary to the application of Article 7 of Law No of March 29, 2014 (the Florange Law ), whereby in companies whose shares are admitted to trading on a regulated market, the double voting rights provided for in the fi rst paragraph [of Article L of the French Commercial Code] are valid, unless the Articles of Association contain a clause to the contrary adopted after the promulgation of the law, for all fully paid-up shares which have been registered in the name of the same shareholder for two years. The same applies for the double voting rights conferred upon issuance to bonus registered shares allocated under the second paragraph. Consequently, all fully paid-up shares that have been registered for at least two years in the name of the same shareholder are eligible for double voting rights. Subject to this caveat, there are no securities conferring the special rights of control referred to in section 4 of Article L of the French Commercial Code. Control mechanisms provided for by employee shareholding schemes, if any, where the employees do not exercise control themselves Corporation has an employee shareholding scheme via the mutual investment fund Expansion, which exercises the control rights. Agreements between shareholders of which the Company is aware and which may entail restrictions on the transfer of shares and the exercise of voting rights The Company was not aware of any agreements of this type between shareholders, other than: The shareholders agreement involving joint action vis-à-vis the Company, which was signed on June 26, 2014 between the Luxembourg company JACCAR Holdings, the SAS Cana Tera, Jacques d Armand de Chateauvieux, Henri d Armand de Chateauvieux, the SAS Mach-Invest and the Luxembourg company Mach Invest International. This shareholders agreement, which came into force on June 30, 2014 for fi ve years as of this date, includes commitments on the transfer of company stock (AMF decision No. 214C236 of June 30, 2014). Shareholders agreements relating to the collective commitment to hold shares signed under Articles 787 B and 885-I bis of the French General Tax Code, mentioned in section 2.8 Other legal and fi nancial information of this Registration Document. Rules applicable to the appointment and replacement of members of the Board of Directors and amendments to the bylaws The rules applicable to the appointment and replacement of members of the Board of Directors comply with current regulations and the AFEP-MEDEF Code on Corporate Governance of Listed Companies, as interpreted by the Application Guide for the AFEP- MEDEF Code published by the High Committee for Corporate Governance (version of November 2016). The internal rules of the Board of Directors can be found on the Company s website at under Group Corporate governance Board of Directors Related documents. Article 13 of the bylaws is reproduced in the section entitled Information about the Company in the Registration Document, which sets out the rules for the appointment of Directors. The rules applicable to amendments to the bylaws comply with prevailing regulations. Amendments to the bylaws, except in cases expressly stipulated by law, come under the exclusive competence of the Extraordinary General Meeting. The Company has not identifi ed any signifi cant impact concerning these rules in the event of a takeover. Powers of the Board of Directors, in particular concerning the issue or repurchase of stock A table summarizing currently valid delegations of authority and the powers granted by the General Meeting to the Board of Directors for capital increases is annexed to this management report. As regards the repurchase of stock, the Combined General Meeting of May 26, 2016 in its 12 th resolution, authorized the Board of Directors, with sub-delegation powers, for a period of 18 months, to buy company shares, up to 5% of the share capital, where necessary adjusted, in line with the provisions of Articles L et seq. of the French Commercial Code, in order to: 3 stimulating the secondary market or maintaining the liquidity of Corporation shares through an investment service provider, operating within the scope of a liquidity contract in accordance with the AMAFI code of professional practice as approved by the French Financial Services Authority; 3 holding shares to cover stock option plans and/or bonus share allotment plans (or similar plans), for the benefi t of employees and/or representatives of the Group, and to allow allotments of shares within the scope of a company or group savings plan (or similar plan) or as part of employee participation in the results of the Company and/or any other form of share allotment to employees and/or representatives of the Group; 3 81

84 3 MANAGEMENT REPORT Corporation and its shareholders 3 cancel any shares acquired, in accordance with the authorization granted by the General Meeting of Shareholders of May 26, 2016 in its thirteenth extraordinary resolution. These shares can be purchased by any means, including through the acquisition of blocks of shares, and at times to be decided by the Board of Directors. The Company reserves the right to use options and derivatives within the bounds of applicable regulations. The maximum purchase price was fi xed at 30 per share. In the event of any transaction affecting the capital, notably stock splits, consolidation of shares or allocation of bonus shares, the abovementioned sum will be adjusted proportionally (multiplication coeffi cient equal to ratio between the number of shares forming the capital prior to the transaction and the number of shares following the transaction). The ceiling for the operation is thus fi xed at 107,409,510. The General Meeting has granted full powers to the Board of Directors to proceed with these operations, to decide on the terms and conditions thereof, to enter into any agreements and to satisfy all formalities. It will be suggested at the General Meeting on May 23, 2017 that the share purchase program is renewed in accordance with the description of the share buyback program outlined in this Registration Document under Related transactions on company stock Stock buyback program. Agreements entered into by the Company that are amended or that terminate in the event of a change of control of the Company, disclosure of which, except where required by law, does not adversely affect its interests Most of the bank loans arranged by contain clauses allowing the bank to demand early repayment of the loan in the event of a change of control of. Most shareholder agreements signed by with its foreign partners, in the context of the establishment of joint ventures, contain exit clauses in the event of a change of control of one of the parties, allowing each of them to buy out the other or, in the absence of an agreement between them on the buyout of their respective interests, to liquidate the Company. Construction agreements contain no clause that could be invoked in the event of a change of control of. These agreements contain no provision that could jeopardize the fi nancial conditions, such as in the event of the departure of Jacques d Armand de Chateauvieux. Agreements providing for compensation for members of the Board of Directors or employees if they resign or are dismissed without just cause or if their employment is terminated due to a public offer None. 82

85 MANAGEMENT REPORT Report explaining the Board s resolutions proposed to the Combined General meeting of May 23, REPORT EXPLAINING THE BOARD S RESOLUTIONS PROPOSED TO THE COMBINED GENERAL MEETING OF MAY 23, APPROVAL OF FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2016 The shareholders are asked to approve the Company fi nancial statements for the year ended December 31, 2016, together with the consolidated fi nancial statements for the year ended on that same date. 7.2 APPROPRIATION OF INCOME The Board moves that the meeting appropriate the net income for the period as follows: Origin Net income for the period 28,371, Retained earnings 127,384, Appropriation Legal reserve 0.00 Other reserves 0.00 Dividends 19,085, Retained earnings 136,669, This appropriation would give rise to distribution of a gross dividend of 0.25 per share. The ex-coupon date would be June 8, 2017 and the dividend would be payable on July 17, In the event of any change in the number of shares giving entitlement to dividend, with regard to the 76,342,603 shares forming the authorized capital as at March 13, 2017, the overall amount of the dividend will be adjusted accordingly and the sum destined to be carried forward will be calculated on the basis of the dividend actually paid. It is proposed to the meeting that there be an option to receive payment of the dividend in cash or in shares for the entire dividend, net of any mandatory withholding relating to the shares held. The price of a share delivered in payment of the dividend will be equal to 90% of the average share price over the 20 trading sessions preceding the date of this General Meeting, less the net amount of the dividend, if necessary rounded to two decimal places to the nearest higher euro cent, in accordance with Article L of the French Commercial Code. If the amount of the net dividend with respect to which a shareholder has exercised the option does not correspond to whole number of shares, the shareholder will obtain the number of shares immediately below plus the balance in cash on the option exercise date. Shareholders wishing to opt for payment of the dividend in shares will have from June 8, 2017 and June 30, 2017 (inclusive) to make the request to the fi nancial intermediaries authorized to pay the dividend. As a result, any shareholder who has not opted for the payment of the dividend in shares at the end of that period will receive the payment in cash. For shareholders who opt for payment in cash, or for those who shall not have made their request for payment in shares during the period of time referred to in the previous paragraph, the amounts due to them will be paid on July 17, Delivery of the new shares, for shareholders who shall have opted for payment in shares, will take place on the same day as the payment of the dividend in cash, or July 17, The shares issued will carry dividend rights from their date of issuance. 7.3 RELATED PARTY AGREEMENTS No new related party agreements were submitted to the Board of Directors during the 2016 fi scal year. The meeting is asked to so note. In accordance with the law, the Board of Directors conducted the annual review of agreements entered into and authorized in previous years the performance of which continued during the year ended December 31, These agreements are presented to the General Meeting in the related Special Statutory Auditors report. The Special Statutory Auditors report on related party agreements and commitments is included in the and is available on the Company s website, 83

86 3 Report MANAGEMENT REPORT explaining the Board s resolutions proposed to the Combined General meeting of May 23, TERMS OF OFFICE OF THE STATUTORY AUDITORS Pursuant to the recommendation of the Audit Committee, the Board of Directors proposes to the meeting: The reappointment of SAS EurAAudit CRC as Principal Statutory Auditor for a term of six fi scal years, or until the close of the Annual Ordinary General Meeting called to vote on the fi nancial statements for the fi scal year ending December 31, 2022, to take place in EurAAudit CRC has stated that it accepts this appointment. The non-reappointment and the non-replacement of Mr. Jean- Marie Cadren as Alternate Statutory Auditor, since SAS EurAAudit CRC, the Principal Statutory Auditor, is neither an individual nor a unipersonal company, and subject to the adoption of the twentyfi fth resolution proposed to the Extraordinary General Meeting, intended to harmonize Article 21 of the bylaws relating to the Statutory Auditors with the new provisions of Law No of December 9, 2016, known as the Sapin II Law. 7.5 RENEWAL OF DIRECTORS TERMS OF OFFICE As the terms of Messrs. Guillaume d Armand de Chateauvieux, Baudouin Monnoyeur, and Bernhard Schmidt as members of the Board of Directors expire at the close of this meeting, the Board, having received the opinion of the Nominations, Compensation, and Governance Committee, proposes the following to you: 3 the reappointment of Mr. Guillaume d Armand de Chateauvieux as a Director; 3 the reappointment of Mr. Baudouin Monnoyeur as a Director; for a period of three years, or until the close of the meeting held in 2020 called to vote on the fi nancial statements for the elapsed fi scal year. In addition, you are asked to approve the following: 3 the ratifi cation of Ms. Adeline Challon-Kemoun s temporary appointment by the Board of Directors on March 13, 2017 to replace Ms. Astrid de Lancrau de Bréon, who stepped down, for the remainder of the latter s term, or until the close of the General Meeting held in 2017 called to vote on the fi nancial statements for the elapsed fi scal year; 3 the reappointment of Ms. Adeline Challon-Kemoun for a term of 3 years, or until the close of the General Meeting held in 2020 called to vote on the fi nancial statements for the elapsed fi scal year; 3 the appointment of Ms. Elisabeth Van Damme to replace Mr. Bernhard Schmidt as Director for a period of three years, or until the close of the General Meeting held in 2020 called to vote on the fi nancial statements for the elapsed fi scal year. Biographical information about these candidates is included in the on pages 33 and 34. The Board of Directors, having received the opinion of the Nominations, Compensation, and Governance Committee, decided at its meeting on March 13, 2017 that Ms. Agnès Pannier- Runacher and Ms Adeline Challon-Kemoun., Messrs. Philippe Salle, Bernhard Schmidt and Mahmud B. Tukur, could be considered independent under the independence criteria of the AFEP-MEDEF Code of Corporate Governance for listed companies, which the French Commercial Code as a reference with respect to corporate governance. 7.6 APPROVAL OF THE PRINCIPLES AND CRITERIA FOR DETERMINING, ALLOCATING AND GRANTING THE ELEMENTS OF THE COMPENSATION OF THE EXECUTIVE DIRECTORS Pursuant to Article L of the French Commercial Code de commerce, the Board proposes that you review the report prepared on Executive Directors compensation (Chairman and Chief Executive Offi cer and Executive Vice Presidents) and that you approve the principles and criteria for determining, allocating, and granting the fi xed, variable, and exceptional compensation and the benefi ts of all kinds that may be granted to the Executive Directors for their services as described in such report, included in section 3.5 on page 43 of the Company s. 7.7 SAY ON PAY In compliance with the recommendations of Article 24.3 of the AFEP-MEDEF Corporate Governance Code for listed companies (as amended in November 2016), adopted as the Company s code of reference, we submit for your mandatory approval the compensation packages owing or awarded, for the year ended December 31, 2016, to Mr. Jacques d Armand de Chateauvieux, Chairman and Chief Executive Offi cer, and Messrs. Christian Lefèvre and Gaël Bodénès, Executive Vice Presidents. For more information, please see the management report in the Company s on pages 37 and

87 MANAGEMENT REPORT Report explaining the Board s resolutions proposed to the Combined General meeting of May 23, BUYBACK PROGRAM CANCELLATION OF ACQUIRED SHARES The meeting is asked: 3 to authorize, for a period of 18 months, a new buyback program limited to 5% of the share capital. The maximum purchase price would be 30 per share, thus giving a maximum total budget of 114,513,900. These purchases may be made with a view to: 3 s timulate the secondary market or maintaining the liquidity of Corporation shares through an investment service provider, operating within the scope of a liquidity contract in accordance with the AMAFI code of professional practice as approved by the French Financial Markets Authority; 3 h old shares to cover stock option plans and/or bonus share allotment plans (or similar plans), for the benefi t of employees and/or representatives of the Group, and to allow allotments of shares within the scope of a Company or Group savings plan (or similar plan) or as part of employee participation in the results of the Company and/or any other form of share allotment to employees and/or representatives of the Group; 3 p otentially cancel shares thus acquired, subject to the adoption, by the shareholders at this General Meeting, of the seventeenth resolution for the Extraordinary Meeting. These share purchases may be transacted by any means, including acquisition of blocks of shares, at such times as the Board may choose. The Company reserves the right to use options and derivatives within the bounds of applicable regulations: 3 to authorize the Board, within the stated cancellation objective, to cancel as the Board sees fi t and in one or more steps, within the limit of 10% of the authorized capital per period of 24 months all or any of the shares which the Company holds or may come to hold after repurchases made in accordance its buyback program and to thereby reduce the legal capital accordingly. This authorization will be given for a period of 24 months, as of the date of the meeting. 7.9 FINANCIAL DELEGATIONS As regards fi nance, you will be requested to resolve on delegations and authorizations allowing the Board to proceed, as it sees fi t, with any issues which may be required for the development of the Company s business. You are thus requested to renew the following delegations and authorizations: Delegation of authority for the Board of Directors to issue ordinary shares and/or equity securities affording access to other equity securities or giving entitlement to allotment of debt securities and/or transferable securities affording access to equity securities to be issued, without pre-emptive subscription rights, by means of an offering to the public Determination of the procedures for setting the subscription price, up to a maximum of 10% of the capital Increase in the amount of issuances in the event of excess demand The General Meeting is asked to grant to the Board of Directors, for a period of 26 months, a delegation of authority to increase the capital, in accordance with Articles L , L , L and L of the French Commercial Code, by issuance of ordinary shares and/or equity securities giving access to other forms of equity securities or giving the right to acquire debt securities and/ or securities giving access to equity securities to be issued in a public offering. The overall nominal amount of the ordinary shares that could be issued may not exceed 8,000,000. The nominal amount of the debt securities on the Company that could be issued may not exceed 350,000,000. These ceilings would be independent of all other ceilings stipulated in the other resolutions of this meeting. This delegation is proposed to you in order to enable your Company to benefi t from all opportunities on the capital markets, and to quickly carry out a capital increase if necessary. You are therefore asked to eliminate the shareholders pre-emptive subscription right to the shares and other securities that may be issued under this delegation, while leaving the Board the ability to grant priority to the shareholders, in accordance with the law. 3 85

88 3 Report MANAGEMENT REPORT explaining the Board s resolutions proposed to the Combined General meeting of May 23, With the Board of Directors having the ability to decide whether to issue ordinary shares or securities giving access to the share capital, without pre-emptive subscription rights, by means of an offering to the public, the General Meeting is asked to authorize the Board of Directors to derogate within the limit of 10% of the capital per year, from the conditions for determining price set forth above and to determine the issuance price for comparable equity securities as follows: The issuance price for the comparable equity securities to be issued immediately or in the future may not be lower, at the option of the Board of Directors: 3 either than the average weighted stock price of the Company s shares on the day prior to determination of the issuance price, subject to a maximum discount of 15%, 3 or than the average stock price over fi ve consecutive trading days chosen from the last thirty trading days prior to determination of the issuance price, subject to a maximum discount of 10%. 3 The General Meeting is asked to grant the Board of Directors the ability to increase the number of securities provided for in the initial issuance subject to the conditions and limits provided for by laws and regulations. Delegation of authority to be given to the Board of Directors to increase the capital without preemptive subscription rights for the benefit of the participants in a Company savings plan pursuant to Articles L et seq. of the French Labor Code The General Meeting is asked to delegate authority to the Board of Directors, for a period of 26 months, to carry out one or more capital increases by issuance of ordinary shares or securities giving access to the capital for the benefi t of the participants in one or more Company or Group savings plans established by the Company and/ or its French or foreign related companies pursuant to Article L of the French Commercial Code and Article L of the French Labor Code, up to a maximum nominal amount of 5,000,000, such amount to be independent of any other ceiling provided for by the meeting. The implementation of such a capital increase would require elimination of the shareholders pre-emptive subscription rights in favor of the benefi ciaries of the issuance. It is noted that the price for the shares to be issued would be determined pursuant to the conditions and limits under applicable laws and regulations. This delegation is proposed to you in accordance with Article L section 2 of the French Commercial Code, in connection with the three-year obligation. Authorization to be given to the Board of Directors to grant stock subscription and/or purchase options to employees (and/or certain corporate officers) The General Meeting is asked to authorize the Board of Directors, for a period of 38 months, to grant employees and Group corporate offi cers stock subscription and/or purchase options up to a maximum of 5% of the existing share capital on the date of the meeting. The total number of options that may be so granted to the Executive Directors of the Company may not give the right to purchase or subscribe for a number of shares greater than 1% of the capital within the above-mentioned ceiling. (This specifi c ceiling is provided for in accordance with Article of the AFEP-MEDEF Code). Moreover, in the event of a grant of options to the Executive Directors, the exercise of such options must be subject to performance conditions. The subscription price would be determined by the Board based on the average stock price over the last 20 trading sessions prior to the grant with no discount allowed REALIGNMENT OF MEMORANDUM AND ARTICLES OF ASSOCIATION It is moved that the General Meeting: 3 delegate to the Board of Directors the ability to align the Company s Articles of Association with legislative and regulatory provisions, subject to ratifi cation of such modifi cations by the next Extraordinary General Meeting; 3 align section 2 of Article 4, Head Offi ce, of the Company s Articles of Association with Law No of December 9, 2016 on transparency, the fi ght against corruption, and the modernization of economic life, known as the Sapin II Law, with the rest of the Article to remain unchanged: It may be transferred to any other location in France by decision of the Board of Directors, subject to ratifi cation of such decision by the next Ordinary General Meeting ; 3 to delete section 2 of Article 21, Statutory Auditor, from the Company s Articles of Association, in order to align with Law No of December 9, 2016 on transparency, the fi ght against corruption, and modernization of economic life, known as the Sapin II Law, which removed the obligation to appoint Alternate Statutory Auditors when the Principal Statutory Auditor is a legal entity. Our recommendation is that you approve the resolutions proposed to this meeting. The Board of Directors. 86

89 MANAGEMENT REPORT Financial results of the parent company over the last five years FINANCIAL RESULTS OF THE PARENT COMPANY OVER THE LAST FIVE YEARS Description Capital stock at year-end Capital stock (in thousands) 48,493 45,485 47,361 47,361 43,055 Number of ordinary shares outstanding 76,342,603 71,606,331 74,559,688 74,559,688 67,781,535 Number of outstanding preferred dividend shares (without voting rights) Maximum number of future shares to be issued - by conversion of bonds by exercise of subscription rights and award of bonus shares 3,542,909 3,925,650 6,193,275 6,375,325 5,659,711 Operation and profit/loss for the year (in thousands) Revenues excluding taxes Income before tax, employee profi t-sharing and amortization, depreciation and provisions 22,295 53,114 50,593 51,495 60,366 Income tax (10,909) (11,980) (17,984) (4,320) (12,117) Employee profi t-sharing for the year Income after tax, employee profi t-sharing and amortization, depreciation and provisions 28,371 63,627 71,726 52,784 70,516 Distributed net income 18,979 (1) 71,207 (2) (3) 71,589 (4) 53,363 (5) Earnings per share (in ) Income after tax and employee profi t-sharing but before amortization, depreciation and provisions Income after tax, employee profi t-sharing and amortization, depreciation and provisions Dividend per share 0.25 (1) 1.00 (2) 1.00 (3) 1.00 (4) 0.82 (5) Personnel Average number of employees during the year Amounts paid in respect of employment benefi ts for the year (social security, social welfare, etc.) (1) i.e per share as recommended by the Board of Directors on March 13, (2) i.e. 1 per share as recommended by the Board of Directors on March 7, (3) i.e. 1 per share as recommended by the Board of Directors on February 23, (4) i.e. 1 per share as recommended by the Board of Directors on March 3, 2014, after deducting dividends attached to treasury shares. (5) i.e per share as recommended by the Board of Directors on March 4, 2013, after deducting dividends attached to treasury shares. 3 87

90 3 Summary MANAGEMENT REPORT table of delegations of power and current authorizations granted by the General Meeting to the Board of Directors for capital increases SUMMARY TABLE OF DELEGATIONS OF POWER AND CURRENT AUTHORIZATIONS GRANTED BY THE GENERAL MEETING TO THE BOARD OF DIRECTORS FOR CAPITAL INCREASES Date of the General Meeting Nature of the delegation/authorization Duration Use during 2016 Combined General Meeting of th resolution Combined General Meeting of th resolution Combined General Meeting of th resolution Combined General Meeting of th resolution Authorization for the Board of Directors to grant options to subscribe to new shares and/or purchase existing company shares. Maximum amount*: 5% of the share capital on the day of the meeting of May 20, 2014 and 1% within this ceiling for corporate offi cers. Delegation given to the Board of Directors to increase the capital by incorporating reserves, profi ts or premiums Maximum amount (1) : 7 million Delegation granted to the Board of Directors to proceed to share issues and/or issues of marketable securities with pre-emptive subscription right. Maximum amount (1) : Shares: 7 million. Debt securities: 250 million. Authorization for the Board of Directors to allot existing or new bonus shares to members of the salaried staff (and/or certain authorized corporate offi cers). Maximum amount (1) : 5% of the share capital on the day of the meeting of May 26, 2016 and 1% within this ceiling for Executive Directors. 38 months, i.e. until months, i.e. until months, i.e. until months, i.e. until * Separate ceiling given the renewal of the authorization granted to the Board of Directors to allot existing or new bonus shares to salaried employees and/or certain corporate offi cers at the Combined General Meeting of May 26, 2016, which no longer imposes a common ceiling (unlike the previous authorization granted at the General Meeting of May 20, 2014). (1) Separate ceilings. None None None None 88

91 MANAGEMENT REPORT Report by one of the Statutory Auditors, appointed as independent third party REPORT BY ONE OF THE STATUTORY AUDITORS, APPOINTED AS INDEPENDENT THIRD PARTY, ON THE CONSOLIDATED HUMAN RESOURCES, ENVIRONMENTAL AND SOCIAL INFORMATION INCLUDED IN THE MANAGEMENT REPORT This is a free English translation of the Statutory Auditors report issued in French and is provided solely for the convenience of Englishspeaking readers. This report should be read in conjunction with, and construed in accordance with, French law and professional standards applicable in France. To the Shareholders, In our capacity as Statutory Auditors of Corporation (formerly ), (the Company ), appointed as independent third party and certifi ed by COFRAC under number(s) (1), we hereby report to you on the [when applicable consolidated] human resources, environmental and social information for the year ended December 31 st, 2016 included in the management report (hereinafter named «CSR Information»), pursuant to article L of the French Commercial Code (Code de commerce). COMPANY S RESPONSIBILITY The Board of Directors is responsible for preparing a company s management report including the CSR Information required by article R of the French Commercial Code in accordance with the reporting protocols and guidelines used by the Company (hereinafter the «Guidelines»), summarised in the management report and available on request from the company s head offi ce. INDEPENDENCE AND QUALITY CONTROL Our independence is defi ned by regulatory texts, the French Code of ethics (Code de déontologie) of our profession and the requirements of article L of the French Commercial Code. In addition, we have implemented a system of quality control including documented policies and procedures regarding compliance with the ethical requirements, French professional standards and applicable legal and regulatory requirements. 3 STATUTORY AUDITOR(S) S RESPONSIBILITY On the basis of our work, our responsibility is to: 3 attest that the required CSR Information is included in the management report or, in the event of non-disclosure of a part or all of the CSR Information, that an explanation is provided in accordance with the third paragraph of article R of the French Commercial Code (Attestation regarding the completeness of CSR Information); 3 express a limited assurance conclusion that the CSR Information taken as a whole is, in all material respects, fairly presented in accordance with the Guidelines (Conclusion on the fairness of CSR Information). Our work involved six persons and was conducted between November 2016 and March 2017 during a six week period. We were assisted in our work by our sustainability experts. We performed our work in accordance with the order dated 13 May 2013 defi ning the conditions under which the independent third party performs its engagement and the professional guidance issued by the French Institute of statutory auditors (Compagnie nationale des commissaires aux comptes) relating to this engagement and with ISAE 3000 (2) concerning our conclusion on the fairness of CSR Information. Attestation regarding the completeness of CSR Information Nature and scope of our work On the basis of interviews with the individuals in charge of the relevant departments, we obtained an understanding of the Company s sustainability strategy regarding human resources and environmental impacts of its activities and its social commitments and, where applicable, any actions or programmes arising from them. We compared the CSR Information presented in the management report with the list provided in article R of the French Commercial Code. For any consolidated information that is not disclosed, we verifi ed that explanations were provided in accordance with article R , paragraph 3 of the French Commercial Code. We verifi ed that the CSR Information covers the scope of consolidation, i.e., the Company, its subsidiaries as defi ned by article L and the controlled entities as defi ned by article L of the French Commercial Code within the limitations set out in the methodological note, presented in section 5.4 of the management report. Conclusion Based on the work performed and given the limitations mentioned above, we attest that the required CSR Information has been disclosed in the management report. (1) Whose scope is available at (2) ISAE 3000 Assurance engagements other than audits or reviews of historical fi nancial information. 89

92 3 Report MANAGEMENT REPORT by one of the Statutory Auditors, appointed as independent third party Conclusion on the fairness of CSR Information Nature and scope of our work We conducted around twenty interviews with the persons responsible for preparing the CSR Information in the departments in charge of collecting the information and, where appropriate, responsible for internal control and risk management procedures, in order to: 3 assess the suitability of the Guidelines in terms of their relevance, completeness, reliability, neutrality and understandability, and taking into account industry best practices where appropriate; 3 verify the implementation of data-collection, compilation, processing and control process to reach completeness and consistency of the CSR Information and obtain an understanding of the internal control and risk management procedures used to prepare the CSR Information. We determined the nature and scope of our tests and procedures based on the nature and importance of the CSR Information with respect to the characteristics of the Company, the human resources and environmental challenges of its activities, its sustainability strategy and industry best practices. Regarding the CSR Information that we considered to be the most important (3) : 3 at the consolidating entity level, we referred to documentary sources and conducted interviews to corroborate the qualitative information (organisation, policies, actions), performed analytical procedures on the quantitative information and verifi ed, using sampling techniques, the calculations and the consolidation of the data. We also verifi ed that the information was consistent and in agreement with the other information in the management report; 3 at the level of a representative sample of entities/divisions/sites selected by us on the basis of their activity, their contribution to the consolidated indicators, their location and a risk analysis, we conducted interviews to verify that procedures are properly applied and we performed tests of details, using sampling techniques, in order to verify the calculations and reconcile the data with the supporting documents. The selected sample represents 20% of headcount and between 16% and 21% of quantitative environmental data disclosed. For the remaining consolidated CSR Information, we assessed its consistency based on our understanding of the company. We also assessed the relevance of explanations provided for any information that was not disclosed, either in whole or in part. We believe that the sampling methods and sample sizes we have used, based on our professional judgement, are suffi cient to provide a basis for our limited assurance conclusion; a higher level of assurance would have required us to carry out more extensive procedures. Due to the use of sampling techniques and other limitations inherent to information and internal control systems, the risk of not detecting a material misstatement in the CSR information cannot be totally eliminated. Conclusion In terms of safety, the company uses the international benchmark of the «Marine Injury Reporting Guidelines» OCIMF but the mode of application limits the reliability of frequency rate accidents (LTIR and TRIR). Based on our work, except for the matters described above, no other material misstatements have come to our attention that causes us to believe that the CSR Information, taken as a whole, is not presented fairly in accordance with the Guidelines. Neuilly-sur-Seine, 21 April 2017 One of the Statutory Auditors, Deloitte & Associés Hugues Desgranges Partner (3) Quantative information Social: Total workforce as at December 31, 2016 (staff under contract as well as seagoing personnel hired on a non-contractual basis working rotating shifts and due back on board); Distribution of the workforce under contract on land, at sea and by geographical zone; Number of recruitments by category; % of subsidiaries with a salary grid in place; Absenteeism rate by population type; % of subsidiaries declaring as referring to collective agreements for the management of working time; % of subsidiaries employing use of part-time; % of subsidiaries proposing usage of teleworking; Total Recordable Incidents Rate (TRIR) ; Lost Time Injury Rate (LTIR); Number of training hours by category ; Number of occupational diseases recognised in 2016; Environmental: Number of major incidents likely to cause harm to the environment; Total volume of waste generated; Volume of used oil treated; Marine gas oil consumption; CO2 emissions: SOx emissions; NOx emissions; Societal: Weight of local purchases in purchases of parts and supplies. Qualitative information Social: Monitoring the equality between men and women; Review of the collective agreements signed in 2016 ; Deployment of the Operational Safety Management Standard (OSM) to all subsidiaries; Environmental: Training in good operational practices of crews (environment); Societal: Anti-corruption measures and procedures, Program dedicated to compliance; Survey on the respect of the fundamental conventions on human rights. (4) Bourbon Offshore Maritima (BOM) and Bourbon Offshore Surf (BOS). 90

93 CONSOLIDATED FINANCIAL STATEMENTS 4 FINANCIAL POSITION STATEMENT 92 STATEMENT OF COMPREHENSIVE INCOME 93 STATEMENT OF CONSOLIDATED CASH FLOWS 95 STATEMENT OF CHANGES IN EQUITY 96 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 100 STATUTORY AUDITORS REPORT ON THE CONSOLIDATED FINANCIAL STATEMENTS (YEAR ENDED DECEMBER 31, 2016) 163 I. Opinion on the consolidated financial statements 163 II. Justification of our assessments 163 III. Specific verification

94 4 Financial CONSOLIDATED FINANCIAL STATEMENTS position statement FINANCIAL POSITION STATEMENT (in millions) Notes December 31, 2016 December 31, 2015 Goodwill Intangible assets Property, plant and equipment 3.3 2, ,503.0 Investments in affi liates under the equity method Non-current fi nancial assets Deferred taxes Total non-current assets 2, ,779.7 Inventories and work in progress Trade and receivables Current fi nancial assets Other current assets Cash and cash equivalents Total current assets Non-current assets held for sale TOTAL ASSETS 3, ,691.1 Capital Share premiums Consolidated reserves, group share (including profi t for the year) 1, ,339.7 Total shareholders equity, group share 1, ,433.4 Non-controlling interests Total shareholders equity 1, ,564.3 Borrowings and fi nancial liabilities ,127.5 Employee benefi t obligations Other provisions Deferred taxes Other non-current liabilities Total non-current liabilities ,286.3 Borrowings and fi nancial liabilities (< one year) , Bank overdrafts and short-term lines Provisions (< one year) Trade and other payables Tax liabilities Other current liabilities Total current liabilities 1, Liabilities directly associated with non-current assets classified as held for sale Total liabilities 2, ,126.8 TOTAL LIABILITIES AND SHAREHOLDERS EQUITY 3, ,

95 CONSOLIDATED FINANCIAL STATEMENTS Statement of comprehensive income STATEMENT OF COMPREHENSIVE INCOME (in millions) Notes Revenue 4 1, ,329.6 Direct costs excluding bareboat leases 4 (538.8) (678.2) General and administrative costs 4 (115.0) (131.0) Bareboat leases 4 (188.7) (179.1) Capital gains EBITDA Increases and reversals of amortization, depreciation and provisions (316.4) (299.7) Impairment (36.0) - Capital gains on equity interests sold - - Operating income (EBIT) (173.9) 42.0 Share of results from affi liates under the equity method 3.4 (1.4) 5.8 Operating income (EBIT) after share of results from companies under equity method (175.3) 47.8 Cost of net debt 3.15 (43.0) (44.9) Other fi nancial expenses and income 3.15 (20.8) (15.9) Income from current operations before income tax (239.1) (13.0) Income tax 3.17 (23.9) (30.5) Net income before discontinued operations net income (263.0) (43.4) Net income from discontinued operations/operations held for sale - - NET INCOME (263.0) (43.4) Group share (279.6) (76.6) Non-controlling interests Basic net earnings per share (3.68) (1.01) Diluted net earnings per share (3.67) (1.00) Net earnings per share excluding income from discontinued operations/ operations held for sale (3.68) (1.01) Diluted net earnings per share excluding income from discontinued operations/ operations held for sale (3.67) (1.00) Net earnings per share income from discontinued operations/ operations held for sale Diluted net earnings per share income from discontinued operations/ operations held for sale Net dividend allocated to each share adjusted 0.25 (1) 1.00 (1) Further to the proposal made by the Board of Directors meeting of March 13,

96 4 Statement CONSOLIDATED FINANCIAL STATEMENTS of comprehensive income (in millions) Notes Profit (loss) for the year (263.0) (43.4) Other comprehensive income (8.6) 29.4 of which share of other comprehensive income from affi liates under the equity method 0.1 (0.2) Other components of comprehensive income that can be reclassified in the income statement in subsequent periods Change in the fi xed assets revaluation reserve - - Tax effect - - Profi ts and losses from the currency translation of the statements of foreign subsidiaries (7.8) 17.5 Profi ts and losses from the revaluation of available-for-sale fi nancial assets - - Tax effect - - Effective portion of gains and losses on cash fl ow hedge instruments Tax effect (3.2) (1.4) Other components of comprehensive income that cannot be reclassified in the income statement in subsequent periods Actuarial differences 3.13 (0.9) 1.5 Tax effect TOTAL PROFIT/LOSSES (271.6) (14.1) of which group share (281.8) (49.7) of which portion made up of non-controlling interests

97 CONSOLIDATED FINANCIAL STATEMENTS Statement of consolidated cash flows STATEMENT OF CONSOLIDATED CASH FLOWS (in millions) Notes Consolidated net income (263.0) (43.4) Share of results from affi liates under the equity method (5.8) Tax (expense)/income Net amortization, depreciation and provisions Gains and losses from changes in fair value (18.6) 25.1 Calculated income and expenses related to stock options and similar benefi ts Gains and losses on disposals (0.6) (0.1) Income tax paid (25.9) (37.5) Dividends received from affi liates under the equity method Other Cash flows Effect of changes in working capital Dividends received (0.1) (0.2) Cost of net debt Cash flows from operating activities (A) Acquisition of consolidated companies, net of cash acquired (0.1) (0.3) Sale of consolidated companies, including cash transferred - - Effect of other changes in the consolidation scope (0.2) (0.5) Payments for property, plant and equipment and intangible assets (154.3) (298.2) Proceeds from disposals of property, plant and equipment and intangible assets Payments for acquisitions of long-term fi nancial assets - - Proceeds from disposal of long-term fi nancial assets - - Dividends received Change in loans and advances granted (28.8) 8.5 Cash flows from invesment activities (B) (178.0) (231.5) Capital increase Capital repayment Net sales (acquisition) of treasury shares (4.5) (4.8) Proceeds from borrowings Repayments of borrowings 3.18 (309.2) (438.7) Issue of Perpetual Deeply Subordinated Notes Dividends paid to parent company shareholders (25.5) (71.6) Dividends paid to non-controlling interests (18.5) (21.9) Net fi nancial interest paid (47.2) (49.3) Cash flows from financing activities (C) (111.8) (209.6) Impact from the change in exchange rates (D) Effect of changes in accounting principles - - Change in net cash (A) + (B) + (C) + (D) (75.6) (106.9) Cash at beginning of period Cash at end of period* (11.8) CHANGE IN CASH (75.6) (106.9) * of which: - Marketable and other securities Cash and cash equivalents Bank overdrafts 3.14 (293.3) (199.6) 95

98 4 Statement CONSOLIDATED FINANCIAL STATEMENTS of changes in equity STATEMENT OF CHANGES IN EQUITY Capital and related reserves Share premium Perpetual and reserves Reclassification Deeply related to of treasury Subordinated (in millions) Notes Capital share capital shares Notes Shareholders equity as of January 1, (5.0) Net income for the period Other comprehensive income (net of tax): Cash fl ow hedge (IAS 39) Employee benefi t obligations Profi ts and losses from the currency translation of the statements of foreign subsidiaries Comprehensive income for the period Capital increase Dividends paid in cash Dividends paid in shares Capital repayment Issue of Perpetual Deeply Subordinated Notes Recognition of share-based payments Reclassifi cation of treasury shares (4.5) - Other changes - - Total transactions with shareholders (0.7) - SHAREHOLDERS EQUITY AS OF DECEMBER 31, (5.7)

99 CONSOLIDATED FINANCIAL STATEMENTS Statement of changes in equity Related to currency translation differences Unrealized or deferred profit/loss Related to net investment in foreign operations Related to actuarial differences Change in the fair value of availablefor-sale assets Change in fair value of hedge derivatives Other reserves and income Total shareholders equity, group share Shareholders equity made up of noncontrolling interests Total consolidated shareholders equity (5.2) (28.8) (2.9) - (11.4) 1, , , (279.6) (279.6) 16.6 (263.0) (26.0) 24.0 (0.8) (2.2) (6.4) (8.6) (0.7) (0.8) (0.8) - (0.8) (26.0) (2.1) (5.7) (7.8) (26.0) 24.0 (0.8) (279.6) (281.8) 10.2 (271.6) (25.5) (25.5) (14.6) (40.1) (45.8) (1.8) (4.5) - (4.5) (14.6) (53.0) (7.9) (29.2) (37.2) (31.3) (4.8) (3.7) - (10.7) , ,

100 4 Statement CONSOLIDATED FINANCIAL STATEMENTS of changes in equity Capital and related reserves Share premium Perpetual and reserves Reclassifications Deeply related to of treasury Subordinated (in millions) Notes Capital share capital shares Notes Shareholders equity as of January 1, (78.4) 98.7 Net income for the period Other comprehensive income (net of tax): Cash fl ow hedge (IAS 39) Employee benefi t obligations Profi ts and losses from the currency translation of the statements of foreign subsidiaries Comprehensive income for the period Capital increase Dividends paid Capital repayment Issue of Perpetual Deeply Subordinated Notes Recognition of share-based payments Reclassifi cation of treasury shares 3.12 (1.9) Other changes - - Total transactions with shareholders (1.9) SHAREHOLDERS EQUITY AS OF DECEMBER 31, (5.0) In 2015, certain monetary items (loans and advances) had been considered by the Group as part of the net investment in a foreign subsidiary of the Group, their settlement being neither planned nor likely to occur in the foreseeable future (IAS 21.15). In accordance with IAS 21, from the date of their classifi cation as a net investment in a foreign operation, exchange differences on these monetary items, recognized in profi t or loss in the separate fi nancial statements of the subsidiaries, were recognized directly in Other Comprehensive Income (OCI) in the Group s fi nancial statements. The impact of foreign currency fl uctuations totaled 24.0 million as of December 31, 2016, as compared with million as of December 31, As decided by Corporation s Combined General Meeting of Shareholders held on May 26, 2016, payment of the dividend for fi scal year 2015, 1 per share, could be received in cash or in new shares. Shareholders could make their choice between June 15 and July 7, 2016, inclusive. At the close of the option period, shareholders having chosen payment of the dividend in shares represented 64.4% of Corporation s shares. 4,736,272 new shares were thus issued, representing approximately 6.6% of the share capital and 4.5% of the Company s voting rights on the basis of the share capital and voting rights as of May 31, Settlement and delivery of the shares and their listing on Euronext Paris occurred on July 18, 2016, effective immediately. They bear the same rights and are subject to the same obligations as the already issued ordinary shares and are entirely assimilated with the already issued shares. In 2016, the impact (after taking treasury shares into account) on Corporation s consolidated fi nancial statements was as follows: 3 capital increase and additional paid-in capital of 45.8 million; 3 payment in cash in the amount of 25.5 million. 98

101 CONSOLIDATED FINANCIAL STATEMENTS Statement of changes in equity Related to currency translation differences Unrealized or deferred profit/loss Related to net investment in foreign operations Related to actuarial differences Change in fair value of assets available for sale Change in fair value of hedge derivatives Other reserves and income Total shareholders equity, group share Shareholders equity made up of noncontrolling interests Total consolidated shareholders equity (50.0) - (4.4) - (21.0) 1, , , (76.6) (76.6) 33.2 (43.4) 44.7 (28.8) (28.8) (15.9) (28.8) (76.6) (49.7) 35.6 (14.1) (71.6) (71.6) (17.4) (88.9) (76.3) (4.8) - (4.8) (133.5) (42.1) (4.4) (46.6) (5.2) (28.8) (2.9) - (11.4) 1, , ,

102 4 Notes CONSOLIDATED FINANCIAL STATEMENTS to the consolidated financial statements NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 1/ Accounting policies and methods General information Basis of preparation of the consolidated financial statements Adoption of the new IFRS standards Use of estimates and assumptions Summary of accounting policies and methods Foreign currency translation Business combinations and goodwill Negative goodwill Intangible assets Property, plant and equipment Equity interests in associates and joint ventures Investments and other financial assets Inventories and work in progress Cash and cash equivalents Non-current assets held for sale and discontinued operations Treasury shares Provisions and contingent liabilities Employee benefits Financial liabilities Finance leases Revenue Current income tax and deferred tax Derivative instruments and hedge accounting Translation of the financial statements of foreign subsidiaries 111 2/ Significant information for the year ended December 31, Significant events over the period Changes in the scope of consolidation Newly consolidated companies Deconsolidated companies Transactions in non-controlling interests 113 3/ Notes to the consolidated financial statements Goodwill Intangible assets Property, plant and equipment Investments in affiliates under the equity method Aggregated financial information Commitments given or received for associated or joint venture companies Transactions with associates and joint ventures Non-current financial assets Inventories and work in progress Trade and other receivables, current financial assets and other current assets Cash and cash equivalents Shareholders equity Stock option subscription or purchase plans Bonus share allocation Treasury shares Employee benefit obligations and other provisions Gross financial liabilities Financial profit/loss Deferred taxes Income tax Financial risk management objectives and policy Credit/counterparty risk Liquidity risks Market risk Financial instruments Financial assets Derivative financial instruments Financial liabilities Fair value of the financial assets and liabilities Management of the risks related to financial instruments Contingent liabilities 145 4/ Operating segments 145 5/ Other information Contractual obligations and other off-balance sheet commitments Off-balance sheet commitments related to the Group scope of consolidation Off-balance sheet commitments related to financing Off-balance sheet commitments related to the Group s operating activities Net earnings per share Basic net earnings per share Diluted net earnings per share Workforce and payroll Significant events after the end of the reporting period Related-party transactions Executive compensation Compensation paid to the Chief Executive Officer and the Executive Vice Presidents Commitments of any kind made by the Company to its corporate officers Stock options exercised during the year by each Executive Director Scope of consolidation List of Corporation s fully consolidated companies List of companies consolidated by Corporation using the equity method 161 6/ Financial Glossary

103 CONSOLIDATED FINANCIAL STATEMENTS Notes to the consolidated financial statements 1/ Accounting policies and methods 1.1 GENERAL INFORMATION The consolidated fi nancial statements were approved by Corporation s Board of Directors on March 13, 2017 and then again on April 18, 2017 to take account of events after the reporting date. Corporation is an incorporated company registered in France, whose shares are listed for trading on Eurolist Compartment B of Euronext Paris. 1.2 BASIS OF PREPARATION OF THE CONSOLIDATED FINANCIAL STATEMENTS The consolidated fi nancial statements include the fi nancial statements of Corporation, its subsidiaries and companies controlled by the Group as of December 31 of each year. The fi nancial statements of the subsidiaries and companies controlled by the Group are prepared over the same reference period as those of the parent company, on the basis of homogeneous accounting policies. Going concern In accordance with IAS 1.25, when preparing fi nancial statements, management must assess the entity s capacity to continue as a going concern. When management is aware, in making its assessment, of material uncertainties related to events or conditions that may cast signifi cant doubt upon the entity s ability to continue as a going concern, the entity shall disclose those uncertainties. In assessing whether the going concern assumption is appropriate, management takes into account all available information about the future, which is at least, but is not limited to, twelve months from the end of the reporting period. The degree of consideration depends on the facts in each case. On March 8, 2017, announced a sustainable restructuring of most of its debt, or million, in connection with the Stronger for longer action plan. The Stronger for longer action plan includes measures to improve the Company s liquidity and reduce new fi nancing needs for the years to come. provides support services to the oil industry; as a result, its business is signifi cantly infl uenced by that of its clients. Since October 2014, the price of oil per barrel has dropped signifi cantly. The price of a barrel of Brent went from USD99 in 2014 to less than USD40 at the end of 2015, and reached USD27 in the fi rst quarter of The collapse in the price of oil set off an immediate response from the oil companies, which reduced their exploration and production expenses for the second consecutive year, for a reduction of 25% on a worldwide scale in 2015 and another 24% in 2016 (source: IFP Energies nouvelles). This cyclical downturn in the market affected the companies that provide services to oil companies. In the face of this economic slowdown in oil activity, was able to remain resilient thanks to its targeted positioning and strong operational measures (in particular, its cost control policy). To manage this cyclical low point, the Group conducted discussions with its fi nancial partners in order to restructure its fi nancing for the coming years. These discussions resulted in the signature of an agreement on March 6, 2017 with a number of fi nancial institutions and partners to restructure its principal debt in the amount of million. As announced on April 12, 2017, in line with the negotiations that led to the restructuring of its principal debt, also reached an agreement to reorganize lease payments on the vessels covered by the sale and bareboat chartering contracts concluded with ICBC Financial Leasing in 2013 and This agreement provides for a USD240 million reduction in s charter payments between 2016 and 2018 in consideration for the two-year extension of the initial bareboat charter period at a rate of 8% and more favorable commercial terms for ICBC Financial Leasing. This agreement will not have a material impact on the Group s consolidated fi nancial statements since it does not affect the qualifi cation of the bareboat chartering contract of the vessels. In accordance with IFRS, bareboat charter expenses will be recognized on a straight-line basis from the date of renegotiation and for the remaining term of the contract. Under the terms of the agreement signed on March 6, 2017, thus restructured its debt as follows: 3 out of long and medium-term debt totaling 692 million, 365 million of repayments due between 2016 and 2018 have been rescheduled and reduced to an amount of 63 million not repayable until The remainder of the debt, i.e. 629 million, will henceforth be repaid progressively between 2019 and 2025; the weighted average of the spreads applicable to these facilities will initially represent approximately 2.1% from October 1, 2017, then approximately 3.1% from January 1, 2020 and lastly approximately 4% from January 1, 2022; 3 short term facilities amounting to million will be refi nanced and maintained at this level from 2017 to 2020 inclusive, before being repaid progressively afterwards, while 22 million in shortterm credits will be maintained and repaid progressively as from 2018; the weighted average of the spreads applicable to these facilities will initially and from the completion date represent 1.9%, then 2.9% from January 1, 2020 and lastly 3.9% from January 1, As the discussions progressed, standstill agreements were entered into for dates on which capital was paid on the loans in question, whereas the interest related to these payments was paid. As of December 31, 2016, the payments in question totaled 90 million. The agreement entered into with the Group s principal fi nancial partners restructures the repayments of its club deal loans, its bilateral loans, its fi nance leases, and its short-term loans, while also 4 101

104 4 Notes CONSOLIDATED FINANCIAL STATEMENTS to the consolidated financial statements providing for an increase in the loans margins progressively over the extended payment schedule, as well the granting of additional sureties. In consideration of the restructuring, the Group agreed to a number of restrictions, in particular regarding its indebtedness, cash fl ow, asset disposals, investments and the dividend policy. Regarding the payment of dividends in cash, it is subject to a leverage ratio: if this ratio is not achieved, the payment in cash associated with the dividend shall not exceed 10 million, with the specifi cation that the dividends owed to JACCAR Holdings shall not be paid in cash; dividend payments in cash may be made as soon as the leverage ratio has been achieved whereas payment in shares may be made without any limitations regardless of the leverage ratio. The refi nanced loans will include fi nancial covenants: (i) a debtto-equity ratio taking into account certain off-balance sheet items (until the effective date of IFRS 16) that must be lower than 3.2, (ii) a liquidity ratio facilitating minimum cash position amounts within the Group, and specifi cally 50 million at the level of the subsidiary that centralizes the cash position as well as (iii) a minimum adjusted EBITDAR commitment. This restructuring agreement, which was signed on March 6, 2017, will enter into force by June 30 and at the latest by July 15, 2017, once the conditions subsequent have been lifted and the conditions precedent have been satisfi ed namely, the signature of agreements to reschedule 143 million in balloon loans, the Group obtaining fi nancing in the amount of 60 million and agreements in principle for an additional 60 million, the renegotiation of the agreemnt with ICBC Financial leasing and obtaining the repayment of an advance granted to JACCAR Holdings during the negotiations for the acquisition of gas business activities, as well as the satisfaction of certain administrative and documentary conditions. As of the closing date, the Group had already taken various initiatives to fulfi ll the conditions precedent for the agreement. The Group initiated discussions with all the fi nancial partners concerned by the signature of rescheduling agreements of the 143 million in balloon loans; it should be borne in mind that such loans are generally refi nanced when they fall due so as to be aligned with the useful life of the funded economic asset. As of the closing date, the Group had obtained an agreement in principle regarding a fi ve-year fi nance lease agreement making it possible to refi nance a PSV Bourbon Explorer for 23.3 million. The entry into force of this agreement remains subject to the satisfaction of certain conditions precedent aligned with those of the restructuring agreement signed on March 6. A term sheet has also been signed with the fi nancial partners for the fi nancing of three vessels under fi nance leases in the amount of 18 million, and a mandate letter has been signed covering fi nancing in the amount of 60 million. Other fi nancing is being discussed with foreign fi nancial partners. It is expected that these discussions will be concluded in the second half of As of the closing date, the Group had also fi nalized the renegotiation of the agreement with ICBC Financial Leasing and had obtained a formal repayment commitment for the advance granted to JACCAR Holdings during the negotiation of the acquisition of the gas business activities that specifi es the fi nancing methods JACCAR Holdings intends to use to make this repayment. It should also be noted that, as of the closing date, no event specifi ed in the conditions subsequent of the agreement (notably the administrative and documentary conditions) had occurred; the Group further believes that the risk of any of these events occurring before the entry into force of the agreement is weak. This agreement should enable the Group to manage the decline in business in the event that the low point of the cycle lasts longer, without hindering the planned transition toward new business models rendered possible by the digital revolution. Conclusion As indicated in note Liquidity risks, in light of the steps that the Group has already taken, and given that the Management deems highly probable that all of the conditions precedent and the resulting debt restructuring will occur and will be implemented by June 30, 2017 and at the latest by July 15, thus strengthening the Company s liquidity and reducing its need for new fi nancing for the coming years as a result of the restructuring and of other steps taken to reduce operating expenditures, the Management believes that it will have suffi cient liquidity to pay its obligations as they come due over the 12 months following the fi ling date of the Registration Document. Therefore the consolidated fi nancial statements as of December 31, 2016 were prepared on a going concern basis. Statement of compliance Corporation s consolidated fi nancial statements for the year ended December 31, 2016 have been prepared in accordance with the International Financial Reporting Standards (IFRS), as adopted in the European Union. The IFRS standard includes the IFRS, the International Accounting Standards (IAS) and the interpretations of the International Financial Reporting Interpretations Committee (IFRIC) and the Standing Interpretations Committee (SIC). The standards and interpretations used to prepare the consolidated fi nancial statements for the year ending December 31, 2016 are those published in the Offi cial Journal of the European Union, the application of which was mandatory as of December 31, Pursuant to Article 28 of European Regulation No. 809/2004 of April 29, 2004, the following information is included by reference: 3 the consolidated fi nancial statements for the year ended December 31, 2015 and the Statutory Auditors report on those statements, provided in the Registration Document fi led on April 22, 2016, with the Autorité des marchés fi nanciers (on pages 83 to 148 and 150); 3 the consolidated fi nancial statements for the year ended December 31, 2014 and the Statutory Auditors report on those statements, provided in the Registration Document fi led on April 21, 2015, with the Autorité des marchés fi nanciers (on pages 83 to 151 and 152 to 153). Consolidated financial statements Basis of preparation The Group s consolidated fi nancial statements have been prepared on the historical cost basis, with the exception of derivative instruments and available-for-sale fi nancial assets, which are 102

105 CONSOLIDATED FINANCIAL STATEMENTS Notes to the consolidated financial statements measured at fair value. The consolidated fi nancial statements are presented in millions of euros. The subsidiaries are consolidated from the effective date of acquisition, which is the date on which the Group obtains control, until the date on which this control ceases to be exercised. Non-controlling interests represent the share of profi t or loss and net assets which are not held by the Group. They are presented in the income statement and in shareholders equity on the consolidated balance sheet separately from the Group s share of income/loss and shareholders equity. All intercompany balances and transactions as well as the income, expenses and gains or losses included in the book value of assets which come from internal transactions, are fully eliminated. Pursuant to IAS 1, assets are presented as current assets on the consolidated balance sheet when they meet one of the following criteria: 3 the expected liquidation date is less than 12 months or less than the Group s normal business cycle; 3 they are essentially held for trading. All other assets are classifi ed as non-current assets. Liabilities are presented as current liabilities on the consolidated balance sheet when they meet one of the following criteria: 3 the expected settlement date is less than 12 months or less than the Group s normal business cycle; 3 they are essentially held for trading; 3 the Group does not hold an unconditional right to defer payment at least for a period of 12 months after closing. All other liabilities are classifi ed as non-current liabilities. 1.3 ADOPTION OF THE NEW IFRS STANDARDS The accounting policies applied as of December 31, 2016 are consistent with those of the previous year. The application of standards and interpretations that have become mandatory since January 1, 2016 has not had a signifi cant impact on the Group s fi nancial statements. In connection with the application of the rules on alternative performance indicators (ESMA Guideline AMF Position No ), the Group has included a fi nancial glossary in its disclosure since June 30, In this Registration Document, the Financial Glossary is included in note 6 hereto. The Group also decided not to opt for the early application of the standards and interpretations for which application was not mandatory as of January 1, 2016, namely: 3 IFRS 15 Revenue from contracts with customers ; 3 IFRS 9 Financial instruments. The potential impacts and practical consequences of the application of these standards and interpretations are currently being analyzed by the Group. Their application, which is mandatory as of January 1, 2018, is not expected to have a signifi cant impact on the Group s fi nancial statements; 3 IFRS 16 Leases. This standard which introduces the concept of control of the leased asset, fundamentally changes the way that lessees account for leases. At this point, the Group believes that application of IFRS 16, which becomes mandatory on January 1, 2019, will have a signifi cant impact on its consolidated fi nancial statements, on the balance sheet, with respect to the value of property, plant, and equipment, and on the income statement with respect to an improvement in EBITDA through a decrease in rent and, on the other hand, an increase in depreciation. As of December 31, 2016, leases relating to 57 vessels are liable to be affected by the application of this standard. 1.4 USE OF ESTIMATES AND ASSUMPTIONS Preparation of the fi nancial statements in accordance with the conceptual framework of the IFRS involves the use of estimates, assumptions and assessments that affect the amounts presented in those fi nancial statements. These estimates are based on past experience and on other factors considered to be reasonable given the circumstances. As the assumptions and assessments used and the circumstances existing on the date the statements are established may prove to be different in reality, the future results achieved may differ from the estimates used. The principal assumptions concerning future events, and other sources of uncertainty related to the use of estimates on the closing date, changes in which during a year could generate a risk of a change in the net book value of assets and liabilities, are presented below. Retirement benefit obligations The cost of defi ned benefi t plans and other post-employment medical coverage benefi ts is determined on the basis of actuarial valuations. Those valuations are based on assumptions about discount rates, salary increase rates, mortality rates, and the probability of employment in the Group at the time of retirement. The method for calculating discount rates has remained unchanged from previous years. The rates are calculated based on global indices such as Reuters. Because of the long-term nature of such plans, the uncertainty of those estimates is signifi cant. The net liabilities built up for these benefi ts granted to employees as of December 31, 2016 were 14.3 million ( 13.3 million in 2015). Further details are given in note Financial instruments measured at fair value For most of the instruments traded over the counter, the valuation is made using models that use observable market data. For example, the fair value of interest rate swaps is generally determined using rate curves based on the market interest rates observed on the 4 103

106 4 Notes CONSOLIDATED FINANCIAL STATEMENTS to the consolidated financial statements closing date. The fair value of buying forward exchange contracts is calculated by reference to the current forward exchange rates for contracts with similar maturities. The discounting future cash fl ows method is used to value other fi nancial instruments. Impairment test on goodwill At least once a year, the Group assesses whether it is necessary to depreciate goodwill by using impairment tests (see note 1.5.2). Those tests require an estimate of the recoverable value of the Cash Generating Units (CGUs) to which the goodwill is allocated. Recoverable value is defi ned as the higher of the useful value and the fair value (net of disposal costs). To determine the fair value of the CGUs (net of sales cost), the Group determines the fair value of the vessels attached to the CGUs. Useful value, defi ned as discounted total future cash fl ows, is determined based on the economic, business, and income assumptions deemed by the Group s management to be the most probable. The expected future cash fl ows used to calculate the useful value of each CGU are calculated based on the Group s six-year business plans, prepared using adjusted fi nancial data. The fl ows are discounted at a rate measured on the basis of the average weighted cost of the capital determined for the Group. Analyses are then done to determine the sensitivity of the values obtained to a variation in one or more of the assumptions in the business plan. Since by its nature the discounted cash fl ow method used to measure the useful value of the CGUs to which the goodwill is allocated is uncertain, the actual future cash fl ows can vary from the future cash fl ow projections used to determine the useful value. In accordance with IAS 36, the goodwill value must be tested at least once a year, and systematically as soon as indications of impairment appear. It should be noted that assessments of the recoverable value of CGUs in this case their fair value, are performed every year as part of the impairment test on goodwill, even if there are no indications of impairment. Impairment tests on assets Intangible assets with defi nite useful life and property, plant and equipment are tested for possible impairment as soon as there is any indication that the assets may be impaired (see notes and 1.5.6), i.e. when events or specifi c circumstances indicate a risk of impairment loss. In order to conduct these tests, non-current assets are grouped into CGUs and their net book value is compared to the recoverable value of said units. Recoverable value is defi ned as the higher of the useful value and the fair value (net of disposal costs). In order to determine the useful value, the Group must estimate the future cash fl ows expected from each CGU and an appropriate discount rate to calculate the present value of such cash fl ows. 1.5 SUMMARY OF ACCOUNTING POLICIES AND METHODS Foreign currency translation The consolidated fi nancial statements are disclosed in euros, which is the functional and presentation currency of the parent company. The functional currency of the foreign subsidiaries is generally the local currency. If the majority of the transactions and costs are executed in a different currency, that currency is used as the functional currency. The accounts of subsidiaries with a functional currency different from euro are translated by applying the closing rate method: 3 balance sheet items, with the exception of shareholders equity, which is maintained at the historical rate, are converted at the year-end exchange rate; 3 items on the income statement are translated at the average rate for the period; 3 the currency translation adjustment is included in consolidated shareholders equity and does not affect income/loss. Foreign currency transactions made by the companies of the Group are initially booked in the functional currency at the exchange rate prevailing on the date of the transaction. On the closing date, monetary assets and liabilities denominated in foreign currencies are translated into the functional currency at the exchange rate prevailing on the closing date. All exchange differences are recognized in the income statement, with the exception of those related to borrowings in foreign currencies which constitute a hedge of the net investment in a foreign entity. These differences are charged directly to shareholders equity until the disposal of the investment; on that date, they are recognized as income/loss. Pursuant to IAS 21, goodwill is expressed in the functional currency of the companies acquired and then translated at the closing rate (IAS 21.47). Monetary items receivable from or payable to a foreign business for which settlement is neither planned nor likely to occur in the foreseeable future is, in substance, a part of the entity s net investment in that foreign operation (IAS 21.15). Exchange differences arising on a monetary item that forms part of a net investment in a foreign business must be recognized in other comprehensive income and reclassifi ed from equity to profi t or loss on disposal of the net investment (IAS 21.48) Business combinations and goodwill Business combinations (revised IFRS 3) are recognized using the purchase method. This method implies the recognition at fair value of the identifi able assets (including intangible assets not previously recognized) and identifi able liabilities (including contingent liabilities, 104

107 CONSOLIDATED FINANCIAL STATEMENTS Notes to the consolidated financial statements with the exception of future restructurings) of the companies acquired. The goodwill arising on a business combination is initially recognized at cost, which represents the excess of the acquisition cost over the Group s interest in the net fair value of the identifi able assets, liabilities and contingent liabilities. After the initial recognition, goodwill is measured at cost less accumulated impairment losses. For the purpose of impairment tests, the goodwill acquired in a business combination is, as of the acquisition date, allocated to each of the Group s CGUs likely to benefi t from the synergies of the business combination. Impairment tests are performed once there are indices of a loss of value and at least once a year. When subsidiaries are sold, the difference between the sale price and the net asset sold plus accumulated currency translation adjustments and the net value of the goodwill is recognized in the income statement Negative goodwill Negative goodwill represents the surplus between the Group s interest in the fair value of the assets, liabilities and contingent liabilities acquired over the acquisition cost, on the acquisition date. It is booked directly as income/loss during the acquisition period Intangible assets Intangible assets acquired separately are initially reported at cost. The cost of an intangible asset acquired within a business combination is its fair value on the acquisition date. After the initial accounting, intangible assets are carried at cost less any accumulated amortization and accumulated impairment losses. The Group assesses whether the useful life of an intangible asset is fi nite or indefi nite. Intangible assets with a fi nite useful life are amortized over their economic useful life and are subject to an impairment test when there is an indication that the intangible asset is impaired. The amortization period and method for amortizing an intangible asset with a fi nite useful life are reviewed at least at the closing of each year. Any change in the expected useful life or the expected rate of consumption of the future economic benefi ts representing the asset is accounted for by modifying the amortization period or method, as applicable, and such changes are treated as changes in estimates. The amortization expense for intangible assets with a fi nite useful life is booked on the income statement in the appropriate expense category depending on the function of the intangible asset. The amortization periods of the main intangible assets are: 3 software: 3 years; 3 leasehold rights, over the period of the concessions: 38 to 50 years Property, plant and equipment Property, plant and equipment are booked at cost after deducting accumulated depreciation and any accumulated impairment losses. The residual values, useful lives and depreciation methods are reviewed at each year-end and changed if necessary. Vessels A) Gross value Property, plant and equipment consist primarily of vessels valued on the date they are included in the Group s assets at cost, i.e. the cost incurred to commission the asset for the projected use. The cost of a tangible asset consists of the purchase price paid to a third party (including customs duties and non recoverable taxes, but net of discounts and commercial rebates obtained from the supplier), plus the following acquisition costs: 3 directly attributable costs incurred to bring the asset into working order for the planned use; 3 installation costs; 3 mobilization costs to operating locations; 3 sea trial costs; 3 legal documentation costs; 3 professional fees (architects, engineers); 3 commissions; 3 costs for interim loans directly intended to fi nance the acquisition of the asset. A tangible asset may include several components with separate life cycles or rates of depreciation. In this case, the main elements of the asset are identifi ed and recognized separately using the componentbased approach. At, each vessel consists of two components: 3 a vessel component; 3 an overhaul component, representing the cost of an overhaul. An overhaul consists of maintenance operations performed at regular intervals, based on a multi-year plan designed to meet classifi cation requirements, international conventions or regulations. At the acquisition date, the value of the vessel component is the total cost price of the asset minus the overhaul component; this component is equal to the cost of the fi rst overhaul of the vessel. B) Depreciation Depreciation is calculated on the basis of the gross value of the component less its residual value

108 4 Notes CONSOLIDATED FINANCIAL STATEMENTS to the consolidated financial statements Residual value is the expected selling price (less selling costs) which the Group would obtain today from the sale of this asset at the end of its use by the Group. The depreciable amount of the vessel component is equal to its gross value in the consolidated accounts less its residual value. As the overhaul component has a zero residual value, its depreciable amount corresponds only to its gross value in the consolidated accounts. Each component is then depreciated using the straight-line method over its useful life. Useful life is defi ned according to the expected utility of the asset for based on the use planned by the Group. The main useful lives of the vessel component used at are between 8 and 30 years. The useful life of the overhaul component of a vessel depends on the multi-year maintenance schedule for the vessel. Moreover, if there are indications of impairment, an impairment test is then performed on the asset or group of assets by comparing its net book value with its recoverable value. The recoverable value is generally determined with reference to a market valuation. Such valuations are obtained from independent experts and reviewed by the Group s management. When the recoverable value turns out to be less than the net book value of the asset group, an impairment is recognized. Other property, plant and equipment (excluding vessels) Property, plant and equipment, other than the vessels and investment property, are carried at cost as defi ned by IAS These assets consist of a single component. The depreciable amount of other property, plant and equipment is equal to their purchase price, their residual value being zero, with the exception of certain buildings for which there is a residual value. Other assets are depreciated using the straight-line method over their useful life. The main useful lives for property, plant and equipment, excluding vessels, are as follows: 3 construction and buildings: between 8 and 40 years; 3 technical facilities: between 10 and 15 years; 3 other property, plant and equipment: between 2 and 10 years. Investment properties The investment properties held by the Group are recognized in the consolidated accounts at historical cost and depreciated using the straight-line method over 40 years Equity interests in associates and joint ventures Associates are companies over which the Group exercises a signifi cant infl uence; partnerships that solely provide control of the net assets of the Company are considered joint ventures. The Group s equity interests in its associates and joint ventures are recognized using the equity method. Investments in associates are recognized as assets on the balance sheet for the part of shareholders equity they represent. The related goodwill is included in the book value of the equity interest. A liability is recognized for the companies with a negative net asset and for which there exists a legal or implied obligation for the Group. Since these companies are directly and fully integrated in the Group s business activities, the net earnings of the associates are presented on a separate line from the operating income Investments and other financial assets Financial assets included in the scope of application of IAS 39 are classifi ed as fi nancial assets at fair value through profi t or loss, as loans and receivables, as held-to-maturity investments, or as available-for-sale fi nancial assets. When initially recognized, fi nancial assets are measured at fair value, plus transaction costs in the case of investments which are not recognized at fair value through profi t or loss. Initially, the Group analyzes the possible existence of embedded derivatives in the contracts. Embedded derivatives are separated from the host contract if the contract is not recognized in its entirety at fair value through the income statement, and if analysis shows that the economic features and the risks of the embedded derivatives are not closely related to those of the host contract. The Group determines the classifi cation of its fi nancial assets at the time of initial recognition and reviews this classifi cation at each yearly closing when this is authorized and appropriate. All normalized purchases and sales of fi nancial assets are recognized on the transaction date, i.e. the date on which the Group agrees to purchase the asset. Normalized purchases or sales are purchases or sales of fi nancial assets under a contract, the terms of which require the delivery of the asset within the period generally defi ned by the regulations or by a convention on the market in question. Financial assets at fair value through profit or loss The category of fi nancial assets at fair value through profi t or loss includes fi nancial assets held for trading purposes and fi nancial assets designated at the initial accounting as fi nancial assets at fair value through profi t or loss. Further details are given in note Loans and receivables Loans and receivables are non-derivative fi nancial assets, with fi xed or determinable payments, which are not listed on an active market. After initial recognition, loans and receivables are measured at amortized cost using the effective interest rate method, less, if applicable, an impairment loss. The amortized cost is calculated by taking into account any initial additional cost or discount, and includes commissions which are an integral part of the effective interest rate, as well as transaction costs. 106

109 CONSOLIDATED FINANCIAL STATEMENTS Notes to the consolidated financial statements Gains and losses are recognized as income/loss when the loans and receivables are derecognized or depreciated and through the mechanism of amortized cost. Held-to-maturity investments Held-to-maturity investments are non-derivative fi nancial assets, with fi xed and determinable payments and a fi xed maturity, which the Group has the positive intent and the ability to hold to maturity. After initial recognition, held-to-maturity investments are measured at amortized cost. Available-for-sale financial assets Available-for-sale fi nancial assets are non-derivative fi nancial assets that are designated as available for sale or that are not categorized in any of the three following categories: Financial assets at fair value through profi t or loss, Held-to-maturity investments, Loans and receivables. After initial recognition, available-for-sale fi nancial assets are measured at fair value, and the gains and losses on such assets are booked directly as shareholders equity in a separate line ( Unrealized net gains ) until the investment is derecognized or until the investment is identifi ed as being subject to impairment, in which case the cumulative gain or loss previously booked as shareholders equity is then included in profi t or loss. Determining the fair value of financial instruments The fair value of the fi nancial instruments that are actively traded on organized fi nancial markets is determined by reference to the market prices published on the closing date. For investments for which there is no active market, fair value is determined using valuation techniques. Such valuation techniques include: using recent arm s length market transactions between knowledgeable and willing parties, reference to the current fair value of another instrument that is substantially the same, discounted cash fl ow analysis and option pricing models. If applicable, fair value is assessed on the basis of the proportion of shareholders equity held. The assessment may also take into consideration the following parameters, to the extent that they can be reliably measured: 3 potential unrealized gains, particularly property gains; 3 prospects for profi tability. Impairment of financial assets On each closing date, the Group assesses whether a fi nancial asset or a group of fi nancial assets is impaired. Assets carried at amortized costs If there is objective evidence that an impairment loss on loans and receivables carried at amortized cost has been incurred, the amount of loss is measured as the difference between the asset s carrying amount and the present value of estimated future cash fl ows (excluding future credit losses that have not been incurred), discounted at the fi nancial asset s original effective interest rate (i.e. the effective interest rate computed at initial recognition). The carrying amount of the asset shall be reduced through the use of an allowance account. The amount of loss shall be recognized in profi t or loss. The Group fi rst assesses whether objective evidence of impairment exists on an individual basis for individually signifi cant fi nancial assets, and then, on an individual or collective base, for fi nancial assets which are not individually signifi cant. If it determines that there is no objective evidence of depreciation for a fi nancial asset considered individually, in a signifi cant or non-signifi cant amount, this asset is included in a group of fi nancial assets presenting similar credit risk characteristics, and this group of fi nancial assets is subject to a collective impairment test. Assets subject to an individual impairment test, for which impairment is recognized or continues to be recognized, are not included in a collective impairment test. If the amount of the impairment decreases during a subsequent year, and if this decrease can be objectively tied to an event that occurred after recognition of the impairment, the impairment previously recognized is reversed. A reversal of impairment is booked as income/loss provided the book value of the asset does not become greater than the amortized cost on the date the impairment is reversed. For trade receivables, impairment is recognized when there is an objective indication (such as a probability of bankruptcy or signifi cant fi nancial diffi culties for the debtor) that the Group will be unable to recover the amounts owed under the contractual terms of the invoice. The book value of the trade receivable is reduced using a valuation allowance account. Impaired outstanding amounts are recognized as a loss when they are deemed unrecoverable. Available-for-sale financial assets If an available-for-sale asset is impaired, an amount calculated as the difference between its acquisition cost (net of any repayment of principal and any depreciation) and its current fair value, less any impairment previously booked as income/loss, is transferred from shareholders equity to income. Impairment on equity instruments may not result in a reversal booked as income. Impairment on debt instruments is reversed as income if the increase in the fair value of the instrument may be objectively related to an event that occurred after recognizing the impairment in the income statement

110 4 Notes CONSOLIDATED FINANCIAL STATEMENTS to the consolidated financial statements Inventories and work in progress Inventories are measured at the weighted-average cost method for raw materials and at the production cost for work in progress and fi nished goods. When the production cost of fi nished goods is greater than the selling price at the inventory date, impairment is recognized in order to reduce the value of the inventories to their net realizable value Cash and cash equivalents Cash and cash equivalents consist of cash on hand and in banks, short-term deposits and marketable securities. Cash and cash equivalents are recorded at fair value Non-current assets held for sale and discontinued operations Non-current assets held for sale Pursuant to IFRS 5, non-current assets (or disposal groups) and the related liabilities are classifi ed as held for sale if their carrying amount will be recovered primarily through a sale transaction rather than continuing use. This classifi cation implies that the assets (or disposal groups) intended for sale are available for immediate sale, in their present condition, and that the sale is highly probable. The highly probable nature of the sale is assessed according to the following criteria: management is involved in an asset (or asset group) sale plan and a program to fi nd a buyer and fi nalize the plan that has been initiated. In addition, the assets must be actively marketed for sale at a reasonable price in relation to their fair value. The sale of the assets (or disposal group) is assumed to take place within one year from the date of being classifi ed as assets held for sale. Non-current assets (or disposal groups) intended to be sold and classifi ed as held for sale are measured at the lower of their previous carrying amount and fair value less costs to sell. They are no longer depreciated as of the date they are classifi ed as assets held for sale. Discontinued operations A discontinued operation is an activity or a signifi cant geographic region for the Group which is either being sold or classifi ed as an asset held for sale. The items of the income statement and the cash fl ow statement for these discontinued operations or operations being sold are presented on specifi c lines of the fi nancial statements for all periods presented. As a result, certain elements of the income statement and the cash fl ow statement for the previous year are restated in order to present comparative information for these discontinued operations Treasury shares When the Group purchases its own equity instruments (treasury shares), they are deducted from shareholders equity. No profi t or loss is booked in the income statement at the time of the purchase, sale, issue or cancellation of the Group s equity instruments Provisions and contingent liabilities Provisions Provisions are recognized when the Group has a present obligation resulting from a past event, when it is probable that an outfl ow of resources embodying economic benefi ts will be necessary to settle the obligation, and when the amount of the obligation can be reliably estimated. If the effect of the time value of the money is signifi cant, the provisions are discounted on the basis of a pre-tax rate which refl ects the risks specifi c to the liability, if any. When the provision is discounted, the increase in the provision related to the passage of time is recognized as a fi nance expense. Under certain operating leases, major periodic maintenance work of the vessels has to be done by the Group throughout the lease period. In this case, with a current obligation of future outfl ow of resources which can be reliably determined, the Group has set aside provisions for major maintenance, based on estimates of the future cost of said maintenance. Contingent liabilities Contingent liabilities are the subject of a note to the fi nancial statements (see note 3.20). They correspond to: 3 a possible obligation that arises from past events and whose existence will be confi rmed only by the occurrence or nonoccurrence of one or more uncertain future events not wholly within the control of the entity; or 3 a present obligation that arises from past events but is not recognized because: i) it is not probable that an outfl ow of resources embodying economic benefi ts will be required to settle the obligation; or ii) the amount of the obligation cannot be measured with suffi cient reliability Employee benefits Employee benefi ts include retirement indemnities, seniority awards, incentives and profi t-sharing. Retirement benefit obligations Group employees receive retirement indemnity in addition to the legal retirement benefi ts in effect in the countries in which they are employed. Pursuant to IAS 19 Employee benefi ts, retirement benefi t obligations are measured using the projected unit credit method. Under this method, the valuation of the commitment takes into consideration the pension rights that the employee will have acquired on the date of his retirement. However, the commitment is allocated proportionately between the employee s seniority on the calculation date, taking into 108

111 CONSOLIDATED FINANCIAL STATEMENTS Notes to the consolidated financial statements account the ratio between the employee s current seniority and his seniority projected at retirement date. These calculations include the following assumptions: 3 retirement age: legal age prevailing in each country; 3 average life expectancy: based on the mortality table applicable to each country; 3 discount rate; 3 infl ation rate; 3 turnover: established for each company using the average turnover observed over the last fi ve years; 3 assumptions on salary increases; 3 calculation of the rights based on collective agreements or specifi c agreements in force in each entity/country. Pursuant to IAS 19, the Group recognizes it actuarial differences directly in shareholders equity. Incentives Incentives are based on several types of criteria: 3 profi tability criteria; 3 cost control criteria; 3 operational criteria such as the availability of vessels, the speed of intervention and the reliability of operations; 3 the results for the relevant year in terms of personal safety. Two calculations are currently used: 3 the fi rst method incorporates a progressive incentive rate by salary category. The amount of the incentive is then calculated by applying the corresponding percentage to the annual payroll; 3 the second method consists in directly determining an overall bonus by combining several criteria. The amount thus calculated is then distributed uniformly according to employment longevity, or by a combination of longevity and a percentage of gross annual salary. Profit sharing Profi t sharing agreements are in place in all French subsidiaries in accordance with current legislation. Employee savings plan All French subsidiaries on French soil have implemented employee savings plans such as the Plan d Épargne Entreprise (Enterprise Savings Plan) and the Plan d Épargne Retraite Collectif (Collective Retirement Savings Plan). Employees may use these to deposit their incentives and profi t sharing and, for certain subsidiaries, to bank days in their work time savings account, subject to the statutory limits. These employee savings plans are topped up by employer s contributions. Stock option plans The cost of equity-settled share-based payment transactions with employees, granted after November 7, 2002, is measured at the fair value of the equity instruments granted at the grant date using the Black & Scholes method. This cost is recognized as personnel expenses as a contra entry to an equivalent increase in shareholders equity, using the straight-line method over the vesting period. This period ends on the date on which the employees obtain an unconditional right to the instruments ( the rights acquisition date ). The cumulative expense recorded for these transactions at the end of each year until the rights acquisition date takes into account the Group s best estimate, on that date, of the number of equity instruments that will be acquired. When stock subscription options are exercised by their benefi ciaries, the shares issued on that occasion will be remitted to them. The exercise price of the shares will be recognized as cash by the counterparty of the shareholders equity. In the case of stock purchase options, income from the sale at the time the options are exercised will be recognized as shareholders equity. Bonus shares The cost of equity-settled share-based payment transactions with employees, granted after November 7, 2002, is measured at the fair value of the equity instruments granted at the grant date. This cost is recognized as personnel expenses as a contra entry to an equivalent increase in shareholders equity, using the straight-line method over the vesting period. This period ends on the date on which the employees obtain an unconditional right to the instruments ( the rights acquisition date ) Financial liabilities Financial liabilities include borrowings and fi nancial debts, trade payables, derivative instruments and other current and non-current liabilities. All borrowings are initially recorded at fair value less directly chargeable transaction costs. After initial recognition, interest-bearing loans are measured at amortized cost, using the effective interest rate method. Profi ts and losses are recorded on the income statement when the debts are derecognized, and through the amortized cost mechanism. Derivative instruments are carried at their fair value at the closing date. The accounting methods for derivative instruments are described in note

112 4 Notes CONSOLIDATED FINANCIAL STATEMENTS to the consolidated financial statements Finance leases Assets held under fi nance leases are recognized as assets of the Group, i.e. when in substance, the contract grants to the Group most of the risks and benefi ts related to the asset. These assets are measured at the fair value or, if lower, at the present value of the minimum lease payments. The asset is depreciated using the Group s depreciation methods as defi ned in note Revenue Revenue is recognized when it is probable that the future economic benefi ts will fl ow to the Group and when the amount of revenue can be measured reliably. Revenue is measured at the fair value of the consideration received, excluding discounts, rebates, other taxes on sales and customs duties. Income from ordinary activities includes, in particular, chartering revenues and related services as well as assistance services Current income tax and deferred tax The income tax expense for the year includes: 3 the current income tax expense less tax deductions and tax credits actually used; 3 deferred tax, booked in the consolidated fi nancial statements based on the tax situation of each company. Deferred taxes result from: 3 temporary differences between taxable profi t and accounting profi t; 3 consolidation restatements and eliminations; 3 and tax defi cits that can be carried forward, which are likely to be recovered in the future. These taxes are calculated and adjusted using the balance sheet liability method in its broadest sense. Deferred tax assets and liabilities are not discounted. Deferred tax and current income tax relating to items booked directly as shareholders equity are recognized as shareholders equity and not in the income statement Derivative instruments and hedge accounting The Group uses derivative instruments such as forward exchange contracts, interest rate swaps, cross currency swaps and exchange options to manage its exposure to movements in interest rates and foreign exchange rates. These derivative instruments are initially recognized at fair value on the date on which the contracts take effect and are subsequently measured at fair value. Derivative instruments are booked as assets when the fair value is positive and as liabilities when the fair value is negative. All gains and losses from changes in the fair value of the derivative instruments which are not classifi ed as hedging instruments are recognized directly in the income statement for the year. The fair value of buying forward exchange contracts is calculated by reference to the current forward exchange rates for contracts with similar maturities. The fair value of interest rate swaps is generally determined using rate curves based on the market interest rates observed on the closing date. For the purposes of hedge accounting, hedges are classifi ed as: 3 fair value hedges when they hedge the exposure to changes in the fair value of a recognized asset or liability, or a fi rm commitment (except for the exchange risk); 3 cash fl ow hedges when they hedge the exposure to variability in cash fl ows that is attributable either to a specifi c risk associated with a recognized asset or liability, or to a highly probable forecast transaction or to the exchange risk on a fi rm commitment; 3 hedges of a net investment in a foreign operation. The hedge on the foreign currency risk of a fi rm commitment is recognized as a cash fl ow hedge. At inception of a hedge relationship, the Group formally designates and documents the hedge relationship to which the Group wants to apply the hedge accounting and the objective desired for risk management hedge strategy. The documentation includes the identifi cation of the hedging instrument, the item or transaction hedged, the nature of the risk being hedged and how the Group will assess the effectiveness of the hedging instrument in offsetting the exposure to the changes in fair value of the item hedged or cash fl ows attributable to the hedged risk. The Group expects that the hedge will be highly effective in offsetting changes in fair value or in cash fl ows. The hedge is assessed on an ongoing basis in order to demonstrate that it has actually been highly effective during all the years covered by the fi nancial statements for which it has been designated. The hedging instruments that meet the strict criteria for hedge accounting are recognized as follows: Fair value hedges Fair value hedges are hedges on the Group s exposure to changes in the fair value of a recognized asset or liability or an unrecognized fi rm commitment, or an identifi ed portion of such fi nancial assets or liabilities, which is attributable to a specifi c risk and which can affect the result for fair value hedges. The gain or loss on the hedged item attributable to the hedged risk adjusts the carrying amount of the item hedged, the hedging instrument is remeasured at fair value, and the resulting gains and losses are recognized for the two items on the income statement. When an unrecognized fi rm commitment is designated as a hedged item, the subsequent cumulative change in the fair value of the fi rm commitment attributable to the hedged risk is accounted for as an asset or a liability, and the corresponding profi t or loss is recognized on the income statement. The changes in the fair value of the hedging instrument are also accounted for as income/loss. The Group ceases to use hedge accounting if the hedge instrument reaches maturity or is sold, terminated or exercised, if the hedge no 110

113 CONSOLIDATED FINANCIAL STATEMENTS Notes to the consolidated financial statements longer meets the criteria for hedge accounting, or when the Group cancels the designation. Cash flow hedge A cash fl ow hedge is a hedge on the exposure to changes in cash fl ow attributable to a specifi c risk associated with a recognized asset or liability or with a highly probably planned transaction, which can affect the results. The profi t or loss corresponding to the effective part of the hedging instrument is recognized directly as shareholders equity whereas the ineffective part is recognized as income/loss. The amounts recognized directly in shareholders equity shall be recognized in profi t or loss in the same period or periods during which the hedged item affects profi t or loss (for example, for assets that are hedged, at the rate of the amortization made). If the hedging instrument reaching maturity is sold, terminated or exercised without being replaced or renewed, or if its designation as a hedging instrument is revoked, the amounts previously recognized as shareholders equity are maintained as such until the execution of the planned transaction. If the transaction is no longer planned, this amount is recognized as income/loss. 1.6 TRANSLATION OF THE FINANCIAL STATEMENTS OF FOREIGN SUBSIDIARIES The exchange rates used are as follows: Currencies Average rate for 2016 Closing rate as of December 31, 2016 Closing rate as of December 31, 2015 AOA Angolan Kwanza AUD Australian Dollar BRL Brazilian Real CHF Swiss Franc CNY Yuan INR Indian Rupee MXP Mexican Peso MYR Malaysian Ringgit NGN Nigerian Naira NOK Norwegian Krone QAR Qatari Riyal RON New Romanian Leu RUB Ruble SGD Singapore Dollar TRY Turkish Lira UAH Ukrainian Hryvnia USD American Dollar XAF CFA Franc

114 4 Notes CONSOLIDATED FINANCIAL STATEMENTS to the consolidated financial statements 2/ Significant information for the year ended December 31, SIGNIFICANT EVENTS OVER THE PERIOD As of December 31, 2016: the oil industry s continuing reduction in investment for the second consecutive year and the resulting sharp drop in activity, combined with the fact that Corporation s market capitalization ( 935 million with a share price of as of December 31, 2016) is signifi cantly lower than its shareholders equity as of the same date ( 1,292 million before impairment), constitute indications of a loss in value pursuant to IAS 36. The Group therefore conducted tests, which resulted in recording a 36 million loss in the consolidated fi nancial statements (see note 3.1). On March 8, 2017, announced a sustainable restructuring of most of its debt, or million, in connection with its Stronger for longer action plan. In connection with that plan, which is intended to protect and strengthen the Company s cash fl ow so that it emerges stronger after the current downturn in the oil and gas marine services sector, announced that it had signed an agreement with its fi nancial partners to restructure the maturities of the majority of its indebtedness. The principal characteristics of the restructuring are as follows: 3 out of long and medium-term debt totaling 692 million, 365 million of repayments due between 2016 and 2018 have been rescheduled and reduced to an amount of 63 million not repayable until The remainder of the debt, i.e. 629 million, will henceforth be repaid progressively between 2019 and 2025; the weighted average of the spreads applicable to these facilities will initially represent approximately 2.1% from October 1, 2017, then approximately 3.1% from January 1, 2020 and lastly approximately 4% from January 1, 2022; 3 short term facilities amounting to million will be refi nanced and maintained at this level from 2017 to 2020 inclusive, before being repaid progressively afterwards, while 22 million in shortterm credits will be maintained and repaid progressively as from 2018; the weighted average of the spreads applicable to these facilities will initially and from the completion date represent 1.9%, then 2.9% from January 1, 2020 and lastly 3.9% from January 1, In the context of such agreements, additional debts due in 2017 in an amount of 143 million will be rescheduled in order to benefi t from progressive repayment until 2022, after the completion of discussions, some of which are to be fi nalized by June The agreements are subject to conditions that must be satisfi ed by June 30, and at the latest by July 15, More detail is provided in note During the fi rst half of 2013, as part of its active fl eet management plan initiated a sales process involving up to USD2.5 billion from its fl eet and the retention of the vessels on bareboat charters for a period of ten years. Pursuant to IFRS 5, the vessels to be sold were recognized as Non-current assets held for sale at their net book value as soon as the sales plan was announced. As they are single transactions, the vessels were considered as a group of assets held for sale. Some of these disposals came with a vendor loan. In accordance with IAS 18 Revenue, the sale price of these vessels was recorded at fair value, i.e. the fair value of the consideration received and of the consideration to be received. The vendor loan was recorded under fi nancial assets. At December 31, 2014, the total number of vessels transferred to ICBCL stood at 46, amounting to approximately USD1.435 billion. Following the fi nalization of the ICBC agreement and in accordance with the conditions of the transaction, the USD106.6 million vendor loan was recorded under fi nancial assets (see note 3.5). In 2014, also completed the transfer of vessels to SCB under the terms of the agreement signed in November This took the total number of vessels sold to six, for a total of around USD151 million. At the beginning of December 2014, signed an agreement with Minsheng Financial Leasing Co. for the sale with bareboat charter of eight vessels for a total of around USD202 million. In 2015, fi ve vessels were sold for USD110 million. The three vessels remaining to be sold as of December 31, 2015 were recorded in non-current assets held for sale in the amount of their NBV (net book value) as of the closing date, or 72.4 million. During the fi rst half of 2016, it was decided that the last three vessels delivered at the end of 2015 would not be sold. Under IFRS 5, these non-current assets were reclassifi ed in property, plant and equipment following the change in disposal plan. As of December 31, 2016, the Group no longer has any assets or groups of assets held for sale. On March , had announced that it intended to acquire the business of the world leader in ethane transport, which had a market share of more than 50% in a market expected to grow strongly. These companies, Greenship Gas, EVERGAS, Greenship Gas Manager Pte Ltd, and JHW Engineering & Contracting Ltd., are owned by s majority shareholder, JACCAR Holdings. 112

115 CONSOLIDATED FINANCIAL STATEMENTS Notes to the consolidated financial statements The acquisition, which was authorized by the Board of Directors on March 28 after review of the opinion of the Board s ad hoc committee and of the opinion of an independent expert, was subject to ratifi cation by the shareholders at the General Meeting to be held on May 26, At its meeting on May 16, 2016, Corporation s Board of Directors noted that the necessary fi nancing for the acquisition of JACCAR Holdings natural gas activities could not be obtained within the necessary period of time under the agreement governing the investment. Therefore, the Board of Directors decided to remove the resolutions relating to ratifi cation of the planned transaction from the agenda of the General Shareholders Meeting of May 26, At this point, completion of the transaction is no longer one of the options for diversifi cation, which remains a prospect that the Company intends to consider as opportunities arise. became the leader in offshore oil and gas marine services following a long development program marked by signifi cant investments in innovative vessels, built in series and enabling better control over operations and customer costs. The oil industry crisis, which is the most serious in the past 30 years, pushed to meet the challenge by adapting and evolving its processes. is convinced that the Oil and Gas (O&G) sector s current model will change in the near future, once the crisis has ended. Beyond the Stronger for longer action plan aimed at decreasing costs and protecting cash fl ow, therefore, it is necessary to go further and transform the Company to respond to the observed changes in client expectations. The digital revolution provides an excellent opportunity to combine operational safety, improvement in the quality of client service, and cost reduction. It will also enable us to strengthen our relationships with our partners by providing them with new, made-to-order services, a platform of high-performance digital tools and a single standard. Corporation s Combined General Meeting of Shareholders of May 26, 2016 decided that the dividend to be paid for fi scal year 2015 would be 1 per share, and that each shareholder would be able to choose between payment of the dividend in cash or in new shares. Shareholders could make their choice between June 15 and July 7, 2016, inclusive. The issue price of the new shares for the payment in shares was 9.66 after application of the maximum discount of 10%. The ex-coupon date would be June 15, At the close of the option period, shareholders having chosen payment of the dividend in shares represented 64.4% of s shares. 4,736,272 new shares were thus issued, representing approximately 6.6% of the share capital and 4.5% of the Company s voting rights on the basis of the share capital and voting rights as of May 31, Settlement and delivery of the shares and their listing on Euronext Paris occurred on July 18, 2016, effective immediately. They bear the same rights and are subject to the same obligations as the already issued ordinary shares and are entirely assimilated with the already issued shares. The impact (after taking treasury shares into account) on 2016 Corporation s consolidated fi nancial statements is as follows: 3 capital increase and additional paid-in capital of 45.8 million; 3 payment in cash in the amount of 25.5 million. 2.2 CHANGES IN THE SCOPE OF CONSOLIDATION Newly consolidated companies Four companies became part of the scope of consolidation during 2016 (including one acquisition), all consolidated using the full consolidation method. One company was acquired in 2016; the impact on the consolidated fi nancial statements is not signifi cant. The list of the consolidated companies is provided in note Deconsolidated companies No disposals took place in 2016, the only deconsolidations involve company liquidations/dissolutions Transactions in non-controlling interests completed transactions for the acquisition or disposal of certain non-controlling interests during In accordance with IFRS 10, their impact was recognized under consolidated reserves, as these transactions had no effect on the control exercised by over those companies, and hence they did not entail any changes in the way those companies are consolidated. The impact on shareholders equity, group share at December 31, 2016 was as follows: 4 in millions Acquisition price of the shares 0.7 Restated portion acquired 11.4 IMPACT ON SHAREHOLDERS EQUITY, GROUP SHARE

116 4 Notes CONSOLIDATED FINANCIAL STATEMENTS to the consolidated financial statements 3/ Notes to the consolidated financial statements 3.1 GOODWILL As of December 31, 2016, the net balance of goodwill totaled 25.2 million, broken down as follows: (in millions) Net Acquisitions - Disposals - Impairment - Currency translation adjustment - Change in consolidation scope - Reclassifi cation and other changes Acquisitions - Disposals - Impairment (8.2) Currency translation adjustment - Change in consolidation scope - Reclassifi cation and other changes Allocation of goodwill by CGU was as follows: (in millions) Impairment Marine Services Deep 8.2 (8.2) - Marine Services Shallow Marine Services Crew - - Subsea Services Other - TOTAL 33.5 (8.2) 25.2 The accounting method is detailed in note In accordance with IAS 36, the goodwill value must be tested at least once a year, and systematically as soon as indications of impairment appear. As of December 31, 2016, the continued reduction in investments in the oil sector for the second consecutive year and the resulting decline in activity, combined with the fact that s market capitalization ( 935 million with a share price of as of December 31, 2016) that is less than its shareholders equity as of the same date ( 1,292 million before impairment), constitute indications of a loss in value under IAS 36, section 12 (d). The Group conducted an impairment test on each cash-generating unit (CGU). The recoverable value of each CGU used for testing corresponds to the going concern value, defi ned as total discounted future cash fl ows. Determination of going concern values is based on economic assumptions and forecasts of activity and results deemed by Group management to be the most probable. The principal assumptions and forecasts are presented below: 3 business plan covering the period for each of the CGUs, prepared on the basis of adjusted fi nancial data; 3 use of standardized cash fl ows beyond the sixth year; the weight of the discounted standardized cash fl ows represents approximately 70% of total going concern value; 3 business plan over six years, providing more relevant standardized cash fl ows to match the business forecasts prepared by management; 3 perpetual growth rate of 2.5% (taking into account the regions of the world in which the Group does business and that have fairly high infl ation rates); 3 discount rate of 9%, considered to refl ect the Group s weighted average cost of capital (WACC) and representing the average WACC used by the fi nancial analysts following ; 3 exchange rate (business plan and standardized cash fl ows): 1 = USD

117 CONSOLIDATED FINANCIAL STATEMENTS Notes to the consolidated financial statements The signifi cant decrease in the price per barrel of Brent since October 2014, from an average of USD99 in 2014 to less than USD40 in 2015, with a low point of USD27 in the fi rst quarter of 2016, led the oil groups to reduce their exploration expenses for the second year in a row, by 25% worldwide in 2015 and then by another 24% in 2016 (source: IFP Energies nouvelles). This cyclical downturn in the market of course affected the companies that provide services to oil companies. In the face of this economic slowdown in the oil industry, was able to remain resilient thanks to its targeted positioning, with advantages that enable it to better weather the market s instability, including: its strong local presence, giving it better access to the markets, its position as a recognized leader, its fl eet of modern vessels, its competitive offers, and its segment-specifi c businesses. The recovery in oil prices the price per barrel of Brent gradually climbed past USD50 at the end of 2016 as well as an improved balance between supply and demand for oil predicted by the International Energy Agency (IEA) for the second half of 2017 following agreements to limit production entered into at the end of 2016 among petroleum producing countries and a forecast for increasing demand, should have a favorable effect on oil company investments. In connection with the preparation of the Group s business plan, the effect of this recovery on offshore activity is expected to be delayed, as the oil companies will increase their onshore activities fi rst. The 2017 fi scal year would thus see a progressive recovery in existing fi eld maintenance activities and then exploration and production activities would restart towards the end of 2017 and in The result of the valuation at going concern value is set forth below: The fi rst phase of the recovery should result in a progressive increase in utilization rate beginning in A fl eet of modern vessels and a strong local presence through partnerships should enable the Group to be among the fi rst to benefi t from the recovery. Daily charter rates should begin to climb later. The activity forecasts used in the business plan are based, in particular, on the assumptions that the price per barrel of Brent will stabilize at an average of USD50 in 2017 and then USD60 in 2018, reaching USD65-70 in 2020, with a possible insuffi cient supply as compared with demand following the historic reduction in exploration and production investments since mid The Crewboats segment has held up relatively well, as it is a less expensive and safer alternative to the helicopter, whereas the Subsea segment continues to diversify by expanding its range of activities (ROV construction support, diving, fl oatel, well stimulation, and turnkey projects). On the other hand, the Deepwater Offshore and Shallow Water Offshore segments are expected to recover more slowly due to the overcapacity of vessels affecting these convenience segments. Finally, the business plan was prepared taking into account the Group s policy to preserve cash fl ow through proactive management of the fl eet, leading to the decommissioning of vessels without shortterm commercial prospects; its policy of cost-reduction for operating vessels, making it possible to offset the costs of the decommissioned vessels, themselves managed strictly; and its policy of aligning structural costs with the activity. 4 Excess of estimated (in millions) Goodwill Economic assets as of including goodwill ( * ) ( ** ) Estimated going concern value ( * ) going concern value over the value ( * ) of assets including goodwill ( ** ) Marine Services DEEP (36.0) Marine Services SHALLOW Marine Services CREW Subsea Services (*) Adjusted data: operating joint ventures over which the Group exercises joint control are fully consolidated. (**) Economic assets = goodwill, intangible assets and property, plant and equipment, and working capital requirement. Taken together, these valuations of going concern value resulted in recording impairment on the Marine Services DEEP CGU in the amount of 36 million. In accordance with IAS 36 (IAS et seq.), the impairment must be allocated in the following order: 3 reduction in the book value of the goodwill allocated to the CGU or group of CGUs; 3 and then allocation to the other assets pro rata to the book value of each asset in the CGU, ensuring that the distribution of the impairment does not reduce the book value of an asset below the higher of its fair value minus costs of sale (if determinable) and its going concern value (if determinable) or zero. The amount of impairment that is not allocated to an asset as a result of these limits must be divided pro rata among the CGU s other assets. In the event that these limits do not apply because the fair value minus costs of sale and the going concern value cannot be determined individually for each asset, the impairment is allocated arbitrarily among the assets (other than goodwill) pro rata to their book value. 115

118 4 Notes CONSOLIDATED FINANCIAL STATEMENTS to the consolidated financial statements As a result, in the consolidated fi nancial statements as of December 31, 2016, impairment was allocated as follows: 3 goodwill for an amount of million, which resulted in the full write-off of the goodwill allocated to the DEEP CGU; 3 property, plant and equipment on the isolated assets, up to the limit of their fair value, for an amount of million; 3 pro rata to the other assets (excluding goodwill) up to the limit of their fair value, and pro rata to their book value as of December 31, 2016, for the remainder, or million. The amounts of provisions for impairment on assets other than goodwill are presented in notes 3.2 and 3.3 on intangible assets and property, plant and equipment. The results of the sensitivity analyses performed on individual changes to the assumptions used are presented below and represent the impacts as compared with the estimated going concern values presented in the previous table: (in millions) 0.5 pt decrease in the discount rate 0.5 pt increase in the discount rate Sensitivity of the going concern value measurement of the CGUs 0.5 pt decrease in the growth rate 0.5 pt increase in the growth rate 10% decrease in cash flows 10% increase in cash flows Marine Services DEEP 79.3 (68.0) (53.1) 79.3 (92.4) 92.4 Marine Services SHALLOW (85.7) (69.0) (96.2) 96.2 Marine Services CREW 57.3 (49.7) (36.3) 57.3 (90.7) 90.7 Subsea Services 78.2 (67.0) (52.3) 78.2 (88.4) 88.4 Under each scenario, the individual rates according to which an impairment would have to be recorded are the following: DEEP SHALLOW CREW SUBSEA Discount rate of: n/a 9.6% 23.6% 12.9% Growth rate of: n/a 1.8% no impairment even in the event of a growth rate of zero Decrease in cash fl ows of: n/a 9.9% 59.4% 39.6% 3.2 INTANGIBLE ASSETS Intangible assets can be analyzed as follows: (in millions) Gross Amortization and impairment Net (19.4) 16.0 Acquisitions 5.1 (4.5) 0.5 Disposals (0.2) 0.2 (0.0) Change in consolidation scope (0.0) Currency translation adjustment 0.9 (0.2) 0.7 Reclassifi cation and other changes (0.1) - (0.1) IFRS 5 reclassifi cation* (23.9) 17.2 Acquisitions 2.9 (6.4) (3.5) Disposals (0.0) Change in consolidation scope (0.0) 0.0 (0.0) Currency translation adjustment 0.4 (0.1) 0.3 Reclassifi cation and other changes IFRS 5 reclassifi cation* (30.4) 14.0 * Reclassifi cation of discontinued operations/operations held for sale. 116

119 CONSOLIDATED FINANCIAL STATEMENTS Notes to the consolidated financial statements The change in the gross value of the intangible assets is as follows: (in millions) R&D costs Concessions and patents Business goodwill Other intangible assets Intangible assets in progress Total Acquisitions Disposals - (0.1) - (0.1) - (0.2) Change in consolidation scope - (0.0) - - (0.0) Currency translation adjustment (0.0) 0.9 Reclassifi cation and other changes (4.7) (0.1) IFRS 5 reclassifi cation* Acquisitions Disposals - (0.0) (0.0) Change in consolidation scope Currency translation adjustment Reclassifi cation and other changes (0.1) (3.9) - IFRS 5 reclassifi cation* * Reclassifi cation of discontinued operations/operations held for sale. Amortizations and impairments of intangible assets break down as follows: (in millions) R&D costs Concessions and patents Business goodwill Other intangible assets Intangible assets in progress Total (0.1) (15.6) - (3.7) - (19.4) Acquisitions (0.0) (4.0) - (0.5) - (4.5) Disposals Change in consolidation scope Currency translation adjustment - (0.0) - (0.2) - (0.2) Reclassifi cation and other changes IFRS 5 reclassifi cation* (0.1) (19.5) - (4.3) - (23.9) Acquisitions - (3.9) - (0.5) - (4.4) Impairment - (0.5) - (1.1) (0.3) (1.9) Disposals Change in consolidation scope Currency translation adjustment - (0.0) - (0.1) - (0.1) Reclassifi cation and other changes - (0.1) IFRS 5 reclassifi cation* (0.1) (6.0) (0.3) (30.4) * The impairment recorded in 2016 is the result of allocating the impairment to the DEEP CGU, pro rata to their book value as of December 31, 2016 (see note 3.1). 117

120 4 Notes CONSOLIDATED FINANCIAL STATEMENTS to the consolidated financial statements 3.3 PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment was worth 2,437.6 million as of December 31, 2016, and broke down as follows: (in millions) Gross Depreciation, amortization and provisions Net ,776.0 (1,199.2) 2,576.8 Acquisitions (265.5) 82.9 Disposals (196.3) 71.6 (124.6) Change in consolidation scope (0.1) Currency translation adjustment Reclassifi cation and other changes (4.8) 0.8 (4.0) IFRS 5 reclassifi cation* (44.2) (44.2) ,883.9 (1,380.9) 2,503.0 Acquisitions (302.1) (109.4) Disposals (104.3) 59.4 (44.9) Change in consolidation scope 0.0 (0.0) 0.0 Currency translation adjustment 38.0 (23.7) 14.3 Reclassifi cation and other changes IFRS 5 reclassifi cation* ,084.9 (1,647.3) 2,437.6 * Reclassifi cation of discontinued operations/operations held for sale. Over fi scal year 2016, interim borrowing costs capitalized in the cost of the vessels amounted to 0.7 million. 3 Details of gross property, plant and equipment: Vessels, overhaul and capital expenditures on leased vessels Other property, plant and equipment Property, plant and equipment in progress (in millions) Land Buildings Investment properties Technical facilities Total , ,776.0 Acquisitions Disposals - (0.3) - (1.9) (126.6) (5.7) (61.7) (196.3) Change in consolidation scope (0.1) - (0.1) Currency translation adjustment (0.0) Reclassifi cation and other changes (2.3) (317.6) (4.8) IFRS 5 reclassifi cation* (72.4) (44.2) , ,883.9 Acquisitions Disposals (0.4) (57.8) (1.3) (44.8) (104.3) Change in consolidation scope Currency translation adjustment (0.3) (0.6) 38.0 Reclassifi cation and other changes - (0.3) (0.6) (103.0) 2.2 IFRS 5 reclassifi cation* , ,084.9 * Reclassifi cation of discontinued operations/operations held for sale. 118

121 CONSOLIDATED FINANCIAL STATEMENTS Notes to the consolidated financial statements 3 Details of depreciation and impairment on property, plant and equipment: Other property, plant and equipment Property, plant and equipment in progress (in millions) Land Buildings Investment properties Technical facilities Vessels and maintenance Total (8.9) - (8.4) (1,169.0) (12.8) - (1,199.2) Acquisitions - (3.2) - (1.3) (259.7) (1.3) - (265.5) Disposals Change in consolidation scope Currency translation adjustment - (0.6) (0.3) Reclassifi cation and other changes (0.4) IFRS 5 reclassifi cation* (12.6) - (7.7) (1,351.3) (9.4) - (1,380.9) Acquisitions - (3.1) - (1.1) (271.0) (1.0) - (276.3) Impairment - (2.0) - (0.3) (13.7) (0.1) (9.8) (25.8) Disposals Change in consolidation scope (0.0) - (0.0) Currency translation adjustment - (0.4) (23.3) (0.2) - (23.7) Reclassifi cation and other changes (0.1) (0.3) IFRS 5 reclassifi cation* (18.1) - (8.7) (1,601.8) (8.8) (9.8) (1,647.3) * Reclassifi cation of discontinued operations/operations held for sale. The disposals completed in 2015 were carried out in connection with the Group s active fl eet management program (see note 2). For the 2016 fi scal year, the line item disposals includes primarily the sale of overhaul components that had already been fully depreciated (and therefore had a net book value of zero) as well as the outright sale of two surfers that had also been fully depreciated, with such outright sale having generated a capital gain of 0.4 million. Impairment recorded in 2016 results from the allocation of impairment on the DEEP CGU (see note 3.1). Property, plant and equipment presented above include assets held under fi nance leases which break down as follows: 3 Details of gross property, plant and equipment held under fi nance leases: 4 (in millions) Land Buildings Technical facilities Vessels et maintenance Other property, plant and equipment Total Acquisitions Disposals (0.2) - (0.2) Change in consolidation scope Currency translation adjustment Reclassifi cation and other changes Acquisitions Disposals (1.7) - (1.7) Change in consolidation scope Currency translation adjustment (0.1) - (0.1) Reclassifi cation and other changes

122 4 Notes CONSOLIDATED FINANCIAL STATEMENTS to the consolidated financial statements Financial liabilities related to fi xed assets under fi nance lease arrangements correspond to the discounted value of the minimum payments for the lease. The amounts of the fi nancial liabilities as well as their due dates are presented in note Details of depreciation and impairment on property, plant and equipment under fi nance leases: (in millions) Land Buildings Technical facilities Vessels and maintenance Other property, plant and equipment Total (10.7) - (10.7) Acquisitions (5.0) - (5.0) Disposals Impairment Change in consolidation scope Currency translation adjustment Reclassifi cation and other changes (15.4) - (15.4) Acquisitions (8.4) - (8.4) Disposals Impairment Change in consolidation scope Currency translation adjustment Reclassifi cation and other changes (9.7) - (9.7) (31.9) - (31.9) 3.4 INVESTMENTS IN AFFILIATES UNDER THE EQUITY METHOD The interests in affi liates under the equity method include associates over which the Company has a signifi cant infl uence as well as jointly controlled joint ventures. As of December 31, 2016, investments in associates amounted to 14.8 million. Investments (in millions) in associates Share of net income 5.8 Dividends paid (4.5) Change in consolidation scope and other (6.3) Currency translation adjustment Share of net income 0.3 Dividends paid (2.3) Change in consolidation scope and other 0.0 Currency translation adjustment As of December 31, 2016, investments in affi liates under the equity method mainly consisted of equity interests held in joint ventures. It should be noted that, in accordance with revised IAS 28, the Group recognized a liability for the companies showing a negative net asset and for which there exists a legal or implied obligation for the Group. Liabilities thus recorded as of December 31, 2016 totaled 1.8 million. The share in income (loss) of affi liates under the equity method shown in the statement of comprehensive income includes the provision for the negative net assets recognized at December 31, 2016 (see note 3.13). Moreover, as of this date, there are no unrecognized liabilities associated with interests in companies consolidated by the equity method. 120

123 CONSOLIDATED FINANCIAL STATEMENTS Notes to the consolidated financial statements Aggregated financial information The main fi nancial items of the companies consolidated by the equity method are presented below (fi gures indicated at 100%, unless otherwise indicated); as well as individual data for the most signifi cant company: (in millions) of which Sonasurf Angola of which Sonasurf Angola Non-current assets Current assets Total assets Non-current liabilities Current liabilities Total liabilities Revenue Net income (2.6) (0.7) Other comprehensive income: share in income (loss) of affi liates under the equity method 0.1 ns (0.2) ns The principal subsidiary consolidated using the equity method is Sonasurf Angola, a 50% held operating joint venture under joint control. The list of companies recognized according to the equity method can be found in note Commitments given or received for associated or joint venture companies At December 31, 2016, loans guaranteed by mortgages or pledges of equipment or securities totaled 46.5 million, as against 54.7 million at December 31, The total value of pledged assets was 111 million Transactions with associates and joint ventures The fi nancial statements include certain commercial transactions between the Group and its associates and joint ventures. The main transactions were the following: 4 (in millions) Revenue Direct costs (13.9) (24.3) Trade receivables Trade payables NON-CURRENT FINANCIAL ASSETS The non-current portion of the fi nancial assets is detailed below: (in millions) Available-for-sale assets Receivables from non-consolidated companies - - Loans and securities Financial assets at fair value Other non-current fi nancial assets Derivative fi nancial instruments TOTAL Loans and securities mainly include vendor loans associated with certain vessel disposals (see note 2). 121

124 4 Notes CONSOLIDATED FINANCIAL STATEMENTS to the consolidated financial statements The following tables show the change in the gross values and impairment on the available-for-sale assets, loans and guarantees as well as the fi nancial assets at fair value. 3 Change in gross values: Availablefor-sale assets Other receivables from non-consolidated companies Loans, guarantees Financial assets at fair value (in millions) Total Acquisitions Disposals - - (3.2) - (3.2) Change in consolidation scope Currency translation adjustment (0.0) - (0.9) - (0.9) Reclassifi cation and other changes - - (3.4) - (3.4) Acquisitions Disposals (1.1) - (16.6) - (17.7) Change in consolidation scope Currency translation adjustment Reclassifi cation and other changes (16.0) - (15.3) Change in impairments: Availablefor-sale assets Other receivables from non-consolidated companies Loans, guarantees Financial assets at fair value (in millions) Total (0.2) - (0.0) - (0.2) Acquisitions Disposals Change in consolidation scope Currency translation adjustment Reclassifi cation and other changes (0.2) - (0.0) - (0.2) Acquisitions Disposals Change in consolidation scope Currency translation adjustment Reclassifi cation and other changes (0.2) - (0.0) - (0.2) Derivative instruments are outlined in note

125 CONSOLIDATED FINANCIAL STATEMENTS Notes to the consolidated financial statements 3.6 INVENTORIES AND WORK IN PROGRESS With a net value of 83.9 million as of December 31, 2016, inventories and work in progress broke down as follows: 3 Gross values: (in millions) Gross Raw materials and supplies Work in progress Finished and intermediate products Merchandise - - TOTAL Impairments: (in millions) Impairment Raw materials and supplies (0.2) - Work in progress - - Finished and intermediate products - - Merchandise - - TOTAL (0.2) TRADE AND OTHER RECEIVABLES, CURRENT FINANCIAL ASSETS AND OTHER CURRENT ASSETS Receivables with maturity of under one year are classifi ed as current assets. The current portion of the fi nancial assets is detailed below: (in millions) Gross Impairment Net Gross Impairment Net Trade and receivables (21.7) (15.7) Current fi nancial assets 35.0 (4.0) Other current assets TOTAL (25.7) (15.7) Current fi nancial assets and the other current assets break down as follows: (in millions) Loans and securities Accrued interest on loans and receivables Financial assets at fair value through profi t and loss - - Derivative fi nancial instruments TOTAL CURRENT FINANCIAL ASSETS State, Income tax Prepaid expenses TOTAL OTHER CURRENT ASSETS Derivative instruments are presented in note

126 4 Notes CONSOLIDATED FINANCIAL STATEMENTS to the consolidated financial statements 3.8 CASH AND CASH EQUIVALENTS Cash and cash equivalents break down as follows: (in millions) Marketable securities (0.0) (0.0) Other investments - - Accrued interest Cash and cash equivalents TOTAL SHAREHOLDERS EQUITY Share capital As of December 31, 2016, the share capital stood at 48,493,096 and was made up of 76,342,603 fully paid-up shares with a par value rounded to Other equity capital: issuance of Perpetual Deeply Subordinated Notes During the fi rst half of 2014, Corporation performed its fi rst bond issue of 100 million in the form of Perpetual Deeply Subordinated Notes (TSSDI). These perpetual securities give Corporation the right to repay them at par starting in October They will bear a coupon payable every 6 months at a fi xed rate of 4.70% for the fi rst three years. Following the fi rst three years, the loan will be repayable at par solely at the Company s initiative. In the event of non-repayment on such date, the coupon will be stepped up as follows: 3 years 4 to 6: Reseted 3-year Midswap Fixed Interest Rate +650 bps; 3 years 7 to 9: Reseted 3-year Midswap Fixed Interest Rate +850 bps; 3 years 10 and after: Floating Interest Rate 3mth Euribor +1,050 bps. Following year 10, the coupon will be payable on a quarterly basis instead of a half-year basis. The clauses that trigger payment of the coupons are as follows: 3 dividend payment on equity securities; 3 purchase of equity securities; 3 purchase or redemptions of any parity securities. Payment of interest remains optional in all other cases. In the event of non-payment of interest, the interest is capitalized. Unpaid, capitalized interest becomes payable: 3 on the date of the next coupon payment; 3 in the event that the loan is repaid; 3 in the event of a court-ordered liquidation (whether or not voluntary) of the issuer. Early repayment clauses were deemed not genuine within the meaning of IAS 32. In April 2015, Corporation decided to increase the amount of its Perpetual Deeply Subordinated Notes (TSSDI) issue by 20 million, in the form of a contribution of fungible securities. This new issue was also fully recognized in equity under IFRS, since it meets the criteria for classifi cation as an equity instrument defi ned by IAS 32. As of December 31, 2016, 1.1 million has been recognized as accrued interest not due (see note ) corresponding to the portion of the interest that will be paid during the fi rst half of Non-controlling interests The non-controlling interests stood at million as of December 31, (in millions) As of January Profi t (loss) for the period: share of non-controlling interests Dividends paid to non-controlling interests (14.6) (17.4) Portion of non-controlling interests in other comprehensive income: (6.4) 2.4 Cash fl ow hedge (IAS 39) (0.7) 0.8 Employee benefi t obligations - - Profi ts and losses from the currency translation of the statements of foreign subsidiaries (5.7) 1.6 Effect of changes in the percentage interest in consolidated affi liates (14.6) 12.9 As of December

127 CONSOLIDATED FINANCIAL STATEMENTS Notes to the consolidated financial statements 3.10 STOCK OPTION SUBSCRIPTION OR PURCHASE PLANS Corporation issued 11 stock option or purchase plans, three of which were in force as of December 31, 2016, representing 3,223,509 stock options at that date. The valuation and accounting methods for these stock option plans are shown in detail in note , and their main characteristics are shown in the table below: December 2011 November 2012 December 2013 Date of authorization by the Combined General Meeting June 1, 2011 June 1, 2011 June 1, 2011 Date of authorization by the Board of Directors December 5, 2011 November 30, 2012 December 2, 2013 Number of stock options authorized 2,789,050 29,700 1,037,000 Total number of allotted stock options adjusted as at ,240,809 29, ,000 Number of benefi ciaries 1, Start date December 2015 November 2016 December 2017 Expiration date December 2017 November 2018 December 2019 Subscription price in euros adjusted as at Subscription price in euros (before adjustment) Price per share: Price per share on the grant date (before adjustment) Fair value of options: Fair value of the options with no original market condition (before adjustment) Fair value of the options with original market condition (before adjustment) n/a n/a 2.67 Risk-free interest rate 3.19% 2.05% 0.82% Dividend yield 3.1% 3.4% 4.1% Volatility 41.30% % Contractual acquisition period Four years Four years Four years N.b.: the only ground for early exercise is the death of the employee. The expense recognized during the fi scal year for the stock option or purchase plans was million (- 3.1 million in 2015). categories of them, of all of s subsidiaries. The vesting of the shares was subject to fulfi llment of the conditions and criteria laid down by the Board of Directors, as described below: BONUS SHARE ALLOCATION The Combined General Meeting of June 1, 2011 authorized the Board of Directors, in its 18 th extraordinary resolution, in accordance with and under the conditions stipulated in Articles L to L of the French Commercial Code, to allocate, in one or several stages, to salaried Company employees or certain categories among them, and/or to the Directors referred to in Article L II of the French Commercial Code, and to salaried personnel and Directors of the companies or economic interest groupings linked to the Company under the conditions outlined in Article L of the French Commercial Code, free Company shares, existing or new. In 2013, the Board of Directors authorized a restricted stock award of existing or new shares to the salaried members of staff, or certain 3 60% of the shares were contingent on employment at the end of two years: recipients still employed by on December 2, 2015 fulfi lled this condition; 3 40% of the shares were subject to employment at the end of two years and the attainment of performance criteria: 3 20% was awarded if the 2013/2014/2015 average TRIR (Total incidents recorded per million hours worked based on 24 hours per day) was 0.65 or less; 100% of this criterion was attained with an average of 0.60, 3 20% was granted if the fl eet availability rate in 2015 was greater than or equal to 95%; 100% of this criterion was attained with an average of 96.4%. The allotted shares were covered by the share buy-back that took place in

128 4 Notes CONSOLIDATED FINANCIAL STATEMENTS to the consolidated financial statements The main features and assumptions used were as follows: December 2016 Date of authorization by the Combined General Meeting June 1, 2011 Date of authorization by the Board of Directors December 2, 2013 Total number of allotted bonus shares adjusted as at ,400 Number of benefi ciaries 2,103 Price per share: Price per share on the grant date (before adjustment) Fair value: Original fair value (before adjustment) 17.53/ Dividend yield 4.1% Contractual acquisition period 2 years/4 years N.b.: the only grounds for early exercise are the death or disability (subject to certain conditions) of the employee. The expense recognized during the fi scal year for the stock option plans was million (versus million in 2015) TREASURY SHARES The treasury shares held by the Group on the closing date were deducted from consolidated shareholders equity. The cumulative impact at the end of 2016 was million, as compared with million as of December 31, The number of treasury shares as of December 31, 2016 was 426,576. Of the treasury shares held as of December 31, 2016, 319,000 are reserved for the grant of Company shares EMPLOYEE BENEFIT OBLIGATIONS AND OTHER PROVISIONS Provisions can be analyzed as follows: Employee benefit obligations Other provisions for risks and contingencies Provisions for major maintenance Business Other tax (in millions) risks Tax audits risks Total of which current portion Provisions for the year Used during the year (0.7) (0.7) (2.3) (0.6) (0.6) (9.7) (14.6) Unused amount reversed (0.6) (0.2) (3.8) (6.5) (0.9) (1.9) (13.8) Change in consolidation scope Currency translation adjustment (0.0) (0.8) - (1.0) (0.5) 0.5 (1.9) Reclassifi cation and other changes of which current portion Provisions for the year Used during the year (0.9) (1.8) - (3.9) (1.7) (6.6) (15.0) Unused amount reversed (0.5) (0.1) (0.3) (1.9) (0.8) (2.1) (5.7) Change in consolidation scope Currency translation adjustment (0.0) Reclassifi cation and other changes (0.7) of which current portion

129 CONSOLIDATED FINANCIAL STATEMENTS Notes to the consolidated financial statements The change in provisions for major maintenance in 2016 mainly derives from the review and optimization of plans to overhaul vessels. The utilizations for the period correspond to the major classifi cation maintenance that actually took place during For the 2016 fi scal year, provisions for tax audits were recorded following an analysis of the adjustment notices received with respect to tax audits in France (with respect to which the Group is contesting the conclusions) as well as following the fi rst appeals. Following the most recent events in an old litigation in progress, an additional provision for litigation was also allocated during the year. It should be noted that the short-term portion (current portion) of the provisions is reported in the statement of fi nancial position on the line Provisions current portion. Employee benefit obligations Employee benefi t obligations include the provision for retirement benefi t obligations and the provision for long-service awards. Retirement benefit obligations The table below shows the main assumptions used in valuing retirement benefi t commitments: Discount rate: 1.45% 2.00% 1.50% 3.00% 2.60% Infl ation rate: Salary increase: Turnover: The change in the provision for pensions is as follows: 2% in most cases, except for certain countries where a different rate was used to take into account the local economic conditions inclusion of an average salary increase rate based on the salary policy within the various companies concerned turnover rate determined for each entity (in millions) Present value of the obligation at the beginning of the year Current service cost Interest cost Retirement indemnities paid (0.9) (0.7) Actuarial (gains)/losses Past service cost - - Currency translation adjustment (0.0) (0.0) Reclassifi cations - - Effects of changes in consolidation scope and changes in consolidation method - - Present value of the obligation at closing O/w less than 1 year The current service cost is the present value of benefi t attributed to the current year (cost of one additional year of work). Interest cost is the increase in the present value of the obligation resulting from the fact that it is one year closer to the date of payment of the benefi ts. It represents the cost of one year of non-discounting. The items recognized in the income statement over 2016 for retirement benefi t obligations were: (in millions) Current service cost (0.9) (0.9) Past service cost - - Interest cost (0.2) (0.2) TOTAL EXPENSES RELATED TO RETIREMENT OBLIGATIONS (1.1) (1.1) 127

130 4 Notes CONSOLIDATED FINANCIAL STATEMENTS to the consolidated financial statements 3.14 GROSS FINANCIAL LIABILITIES For the whole of this note, see also point Liquidity risks. On March 6, 2017, the Group signed an agreement with a number of fi nancial institutions and partners to restructure its principal debt, in the amount of million. thus restructured its debt as follows: 3 out of long and medium-term debt totaling 692 million, 365 million of repayments due between 2016 and 2018 have been rescheduled and reduced to an amount of 63 million not repayable until The remainder of the debt, or 629 million, will henceforth be repaid progressively between 2019 and 2025; the weighted average of the spreads applicable to these credits would then be in the range of 2.1% as of October 1, 2017; then in the range of 3.1% starting on January 1, 2020, and fi nally, in the range of 4% beginning on January 1, 2022; 3 short term facilities amounting to million will be refi nanced and maintained at this level from 2017 to 2020 inclusive, before being repaid progressively afterwards, while 22 million in shortterm credits will be maintained and repaid progressively as from 2018; the weighted average of the spreads applicable to these facilities will initially and from the completion date represent 1.9%, then 2.9% from January 1, 2020 and lastly 3.9% from January 1, The agreements will become fi nal at the latest on July 15, As the discussions progressed, standstill agreements were entered into for dates on which capital was paid on the loans in question, whereas the interest related to these payments was paid. As of December 31, 2016, the payments in question totaled 90 million. As of December 31, 2016, the Group examined all of its existing loans as of such date in light of the situation of each one and without taking into account the consequences of the restructuring agreement signed on March 6, 2017: 3 loans covered by standstill agreements, which are in place until March 10, 2017 and are replaced by the principles of the agreement signed on March 6, 2017; 3 compliance with the covenants applicable to each loan, where applicable; 3 review of contractual clauses of each loan, in particular crossdefault or similar clauses. Following this review, and in accordance with IAS 1.69 d, the noncurrent portion of the loans for which the Group did not have an unconditional right as of the fi nancial statement closing date to defer payment for more than 12 months were classifi ed in current liabilities. This lack of an unconditional right as of the closing date was noted: 3 on the loans covered by the standstill until March 10, 2017, as the restructuring agreement entered into with the banking partners was dated later than the closing date. In accordance with IAS 1.75, since the grace period had a duration of less than 12 months following the closing date, the non-current portion of these loans was reclassifi ed in current liabilities in the amount of million as of December 31, 2016; 3 on loans whose covenants were breached concerning: 3 the leverage ratio net operating debt/adjusted EBITDAR of less than 4, for loans whose long-term portion totaled 13.5 million as of December 31, It should be noted that another bilateral loan was in breach of covenant with respect to a leverage ratio, but since its initial maturity was less than one year, it was not reclassifi ed, 3 the DSCR (Debt Service Coverage Ratio, relating to the local accounts of the borrowing companies), for fi ve loans whose long-term portions totaled 78.1 million as of December 31, In addition, in accordance with IAS 1 (IAS 1.135B), the Groupe notes that it was in compliance with all of its covenants making reference to its shareholders equity (gearing: Net liabilities/shareholders equity) for the 2016 fi scal year. Finally, a review of the cross-default and similar clauses in the other loan agreements showed that the theoretical application of such clauses could lead to acceleration of the amounts due as of December 31, 2016, it being specifi ed that such clauses had not been triggered as of the closing date. The long-term portion of the loans subject to this theoretical acceleration totaled million as of December 31,

131 CONSOLIDATED FINANCIAL STATEMENTS Notes to the consolidated financial statements In accordance with IFRS 7.18, the details of the reclassifi cations are presented below: Before reclassification After reclassification Nature of the loan Balance as of December 31, 2016 of which current portion of which non-current portion Impact of reclassification on current liabilities of which current portion of which non-current portion Loans covered by standstill agreements with a duration of less than 12 months following the closing: CLUB DEAL - 318M CLUB DEAL - 320M CLUB DEAL - 340M CLUB DEAL - 450M Bilateral borrowings Borrowings with covenants that have been breached: Bilateral borrowings Borrowings containing cross-default or similar clauses: Bilateral borrowings Gross fi nancial liabilities ( 1,749.7 million as of December 31, 2016) appear on the balance sheet under Borrowings and fi nancial liabilities, Borrowings and fi nancial liabilities (portion less than one year), and Bank overdrafts and short-term lines. The closing of the restructuring agreement should permit the reclassifi cation of the debts as long and medium-term. a) Analysis by maturity The maturities on the gross fi nancial liabilities are as follows: (in millions) Bank overdrafts and short-term lines Debt < one year 1, Debt between 1 and 5 years Debt > 5 years TOTAL 1, ,658.8 Of which: Finance lease liabilities Debt < one year Debt between 1 and 5 years Debt > 5 years The signifi cant increase in fi nancial liabilities due in less than one year results essentially from the reclassifi cation into short-term of the loans for which, as of the closing date, the Group does not have an unconditional right to defer payment of the liabilities for at least 12 months after the current fi scal year (IAS 1.69 d). 129

132 4 Notes CONSOLIDATED FINANCIAL STATEMENTS to the consolidated financial statements b) Analysis by interest rate Gross fi nancial liabilities break down as follows: (in millions) Fixed rate or swapped-to-fi xed rate Bank overdrafts (fi xed or swapped-to-fi xed rate) - - Variable rate Bank overdrafts (variable rate) TOTAL BORROWINGS AND BANK LOANS 1, ,651.6 Accrued interest TOTAL FINANCIAL DEBT 1, ,658.8 c) Analysis by currency As of December 31, 2016, gross debt excluding accrued interest breaks down as follows: (in millions) EUR Euro 1, ,169.8 USD US Dollar NOK Norwegian Kroner TOTAL (EXCLUDING ACCRUED INTEREST) 1, ,651.6 d) Debt secured by collateral As of December 31, 2016, bank borrowings secured by mortgages, pledges of equipment or marketable securities represented a total of 1,308.7 million. The assets pledged are primarily vessels. These mortgages were recorded with the Bureau des Hypothèques (Mortgage Registry) between 2002 and 2016 for a total value of 2,376.1 million FINANCIAL PROFIT/LOSS Financial income/(loss) breaks down as follows: (in millions) Cost of net debt (43.0) (44.9) - cost of gross debt (53.9) (54.5) - income from cash and cash equivalents Other financial expenses and income (20.8) (15.9) - net foreign exchange income/loss (3.1) (13.3) - other fi nancial expenses (24.2) (14.9) - other fi nancial income net allocations to fi nancial assets and provisions (4.0) 0.0 Cost of net debt equals all interest expenses and income produced by the elements composing the fi nancial debt during the year. 130

133 CONSOLIDATED FINANCIAL STATEMENTS Notes to the consolidated financial statements Other fi nancial income and expenses include realized and unrealized exchange rate gains and losses as well as the fair value of derivative instruments. The other fi nancial income and expenses as of December 31, 2016 are broken down below: (in millions) Other financial expenses and income (20.8) - net foreign exchange income/loss (3.1) of which unrealized foreign exchange income/loss other fi nancial expenses (24.2) of which fair value of derivative instruments (16.5) - other fi nancial income 10.6 of which fair value of derivative instruments net allocations to fi nancial assets and provisions (4.0) 3.16 DEFERRED TAXES As of December 31, the balances for deferred tax assets and liabilities were as follows: (in millions) Deferred tax assets Deferred tax liabilities (30.8) (40.5) Net deferred tax (8.9) (13.9) Analysis of deferred taxes (in millions) Deferred tax assets Retirement benefi t obligations Consolidation restatements Restatements of depreciation and amortization Other temporary differences Deferred tax liabilities (30.8) (40.5) Consolidation restatements (4.4) (6.9) Restatements of depreciation and amortization (6.0) (9.1) Other temporary differences (20.3) (24.4) 4 As of December 31, 2016, based on the principle of prudence and in light of the tax position of the companies concerned, no deferred tax asset was recognized on the tax losses, which were million INCOME TAX (in millions) Current income tax (29.1) (31.4) Deferred taxes Tax (expenses)/income (23.9) (30.5) 131

134 4 Notes CONSOLIDATED FINANCIAL STATEMENTS to the consolidated financial statements As of December 31, 2016, the theoretical corporate income tax of 77.4 million was calculated by applying the prevailing tax rate in France to income before tax, the share in income/loss of affi liates under the equity method, net gains on equity interests sold and net income from discontinued operations: (in millions) Consolidated net income before tax, net income of companies under the equity method, capital gains on equity interests sold, and net income of discontinued operations: (237.7) (18.8) French domestic income tax prevailing as of : 33.33% % (1.9) (2.0) Theoretical income tax Income tax expense (23.9) (30.5) DIFFERENCE (101.3) (34.7) The difference between the tax recognized and the theoretical tax is as follows: (in millions) Companies not liable for corporate income tax (companies subject to tonnage tax, foreign companies not liable for taxation) (51.0) 9.0 Loss-making companies (tax consolidated and non-tax consolidated companies and foreign companies) (53.4) (51.5) Difference in tax rate Other differences (0.3) (0.8) TOTAL (101.3) (34.7) 3.18 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICY The main risks to which the Group is exposed are credit/counterparty risks, liquidity risks and market risks. The Board of Directors has reviewed and approved the management policies of each of these risks. The policies are summarized below Credit/counterparty risk The Group s policy is to verify the fi nancial health of all customers seeking credit payment terms. Furthermore, the Group continually monitors client balances. The fi nancial soundness of its clients enables to avoid the use of COFACE-type credit insurance. Supermajor, major, national and independent oil companies account for nearly 65% of revenue. The Group has not therefore taken out this type of credit insurance agreement. The volume of business conducted with the top fi ve clients represented 447 million (43.8% of revenue) while the top ten clients accounted for nearly 67.8% ( 692 million). A statement of anteriority of credits and other debtors is presented in note of the Notes to the consolidated fi nancial statements. In 2016, the portion of s revenue generated in countries at risk politically, such as Equatorial Guinea, Libya, and Myanmar, was very marginal (less than 1% of total revenue). Concerning the credit risk on the Group s other fi nancial assets, i.e. cash and cash equivalents, available-for-sale fi nancial assets and certain derivative instruments, the Group works only with top-ranking banks, particularly with the major French banks, and pays particular attention to the choice of banking institutions Liquidity risks Financing comes under a Group policy implemented by the Finance and Administration Department. This policy consists of fi nancing the Group s needs through a combination of operating cash fl ows, disposal of assets, bank borrowings and market transactions, and in the context of the industry downturn, through a strategy of cash fl ow preservation that led to redefi ning s fi nancing platform for 2017 and the following years. The fi nancial component of the Transforming for beyond plan unveiled in March 2013 (sale of USD2.5 billion worth of vessels), has improved the Group s liquidity since

135 CONSOLIDATED FINANCIAL STATEMENTS Notes to the consolidated financial statements The Stronger for longer action plan includes measures to improve the Company s liquidity and reduce new fi nancing needs for the years to come. provides support services to the oil industry; as a result, its business is signifi cantly infl uenced by that of its clients. However, since October 2014, the price of oil per barrel has dropped signifi cantly. The price of a barrel of Brent went from USD99 in 2014 to less than USD40 at the end of 2015, and reached USD27 in the fi rst quarter of The collapse in the price of oil set off an immediate response from the oil companies, which reduced their exploration and production expenses for the second consecutive year, for a reduction of 25% on a worldwide scale in 2015 and another 24% in 2016 (source: IFP Energies nouvelles). This cyclical downturn in the market affected the companies that provide services to oil companies. In the face of this economic slowdown in oil activity, was able to remain resilient thanks to its targeted positioning and strong operational measures (in particular, its cost control policy). Moreover, to manage this cyclical low point, the Group conducted discussions with its fi nancial partners in order to restructure its fi nancing for the coming years. These discussions resulted in the signature of an agreement on March 6, 2017 with a number of fi nancial institutions and partners to restructure its principal debt in the amount of million. As announced on April 12, 2017, in line with the negotiations that led to the restructuring of its principal debt, also reached an agreement to reorganize lease payments on the vessels covered by the sale and bareboat chartering contracts concluded with ICBC Financial Leasing in 2013 and This agreement provides for a USD240 million reduction in s charter payments between 2016 and 2018 in consideration for the two-year extension of the initial bareboat charter period at a rate of 8% and more favorable commercial terms for ICBC Financial Leasing. This agreement will not have a material impact on the Group s consolidated fi nancial statements since it does not affect the qualifi cation of the bareboat chartering contract of the vessels. In accordance with IFRS, bareboat charter expenses will be recognized on a straight-line basis from the date of renegotiation and for the remaining term of the contract. Under the terms of the agreement signed on March 6, 2017, thus restructured its debt as follows: 3 out of long and medium-term debt totaling 692 million, 365 million of repayments due between 2016 and 2018 have been rescheduled and reduced to an amount of 63 million not repayable until The remainder of the debt, i.e. 629 million, will henceforth be repaid progressively between 2019 and 2025; the weighted average of the spreads applicable to these facilities will initially represent approximately 2.1% from October 1, 2017, then approximately 3.1% from January 1, 2020 and lastly approximately 4% from January 1, 2022; 3 short term facilities amounting to million will be refi nanced and maintained at this level from 2017 to 2020 inclusive, before being repaid progressively afterwards, while 22 million in shortterm credits will be maintained and repaid progressively as from 2018; the weighted average of the spreads applicable to these facilities will initially and from the completion date represent 1.9%, then 2.9% from January 1, 2020 and lastly 3.9% from January 1, The agreement entered into with the Group s principal fi nancial partners therefore restructures the repayments of its club deal loans, its bilateral loans, its fi nance leases, and its short-term loans, while also providing for an increase in the loans margins progressively over the extended payment schedule, as well as the granting of additional sureties. In consideration of the restructuring, the Group agreed to a number of restrictions, in particular regarding its indebtedness, cash fl ow, asset disposals, investments and the dividend policy. Regarding the payment of dividends in cash, it is subject to a leverage ratio: if this ratio is not achieved, the payment in cash associated with the dividend shall not exceed 10 million, with the specifi cation that the dividends owed to JACCAR Holdings shall be not be paid in cash; dividend payments in cash may be made as soon as the leverage ratio has been achieved whereas payment in shares may be made without any limitations regardless of the leverage ratio. The refi nanced loans will include fi nancial covenants: (i) a debtto-equity ratio taking into account certain off-balance sheet items (until the effective date of IFRS 16) that must be lower than 3.2, (ii) a liquidity ratio facilitating minimum cash position amounts within the Group, and specifi cally, 50 million at the level of the subsidiary that centralizes the cash position as well as (iii) a minimum adjusted EBITDAR commitment. This restructuring agreement which was signed on March 6, 2017 will enter into force by June 30, and at the latest by July 15, 2017 o nce the conditions precedent and subsequent have been satisfi ed: the signature of agreements to reschedule 143 million in balloon loans, the Group obtaining fi nancing in the amount of 60 million and agreements in principle for an additional 60 million, the renegotiation of the agreement with ICBC Financial Leasing and obtaining the repayment of an advance granted to JACCAR Holdings during the negotiations for the acquisition of gas business activities, as well as the satisfaction of certain administrative and documentary conditions. As of the closing date, the Group had already taken various initiatives to fulfi ll the conditions precedent for the agreement. The Group initiated discussions with all the fi nancial partners concerned by the signature of rescheduling agreements of the 143 million in balloon 4 133

136 4 Notes CONSOLIDATED FINANCIAL STATEMENTS to the consolidated financial statements loans; it should be borne in mind that such loans are generally refi nanced when they fall due so as to be aligned with the useful life of the funded economic asset. As of the closing date, the Group had obtained an agreement in principle regarding a fi ve-year fi nance lease agreement making it possible to refi nance a PSV Bourbon Explorer for 23.3 million. The entry into force of this agreement remains subject to the satisfaction of certain conditions precedent aligned with those of the restructuring agreement signed on March 6. A term sheet has also been signed with the fi nancial partners for the fi nancing of three vessels under fi nance leases in the amount of 18 million, and a mandate letter has been signed covering fi nancing in the amount of 60 million. Other fi nancing is being discussed with foreign fi nancial partners. It is expected that these discussions will be concluded in the second half of As of the closing date, the Group had also fi nalized the renegotiation of the agreement with ICBC Financial Leasing and had obtained a formal repayment commitment for the advance granted to JACCAR Holdings during the negotiation of the acquisition of the gas business activities. It should also be noted that, as of the balance sheet date, no event specifi ed in the conditions subsequent of the agreement (the administrative and documentary conditions) had occurred; and the Group further believes that the risk of any of these events occurring before the entry into force of the agreement is weak. This agreement should enable the Group to manage the decline in business in the event that the low point of the cycle lasts longer, without hindering the planned transition toward new business models rendered possible by the digital revolution. Ultimately, in light of the steps that the Group has already taken, and given that the Management deems it highly probable that all of the conditions precedent and the resulting debt restructuring will occur and will be implemented by June 30, and at the latest by July 15, 2017, thus strengthening the Company s liquidity and reducing its need for new fi nancing for the coming years as a result of the restructuring and of other steps taken to reduce operating expenditures, the Management believes that it will have suffi cient liquidity to pay its obligations as they come due over the 12 months following the fi ling date of the Registration Document. Therefore the parent company fi nancial statements as of December 31, 2016 were prepared on a going concern basis. In accordance with IAS 1.69 d, as of December 31, 2016: the noncurrent portion of the borrowings for which as of the closing date the Group does not have an unconditional right to defer payment for a period longer than 12 months was reclassifi ed in current liabilities (see note 3.14 the details of the reclassifi cations performed). s gross fi nancial debt amounted to 1,750 million, including 219 million at more than one year. The repayment schedule for the medium and long-term debt is presented in note 3.14 of the Notes to the consolidated fi nancial statements. The average residual term of the long- and mediumterm debt is 4 years and 3 months, before taking IAS 1 into account. The following table shows the composition of long and medium-term debt as of December 31, 2016 (excl. accrued interests not yet due): (in millions) Portion of medium/long-term debt under one year Medium/long-term debt Total CLUB DEAL loan 320 million CLUB DEAL loan 450 million CLUB DEAL loan 318 million CLUB DEAL loan 340 million EIG/SNC OUTSOURCED Financing Norway fl eet other bilateral loans TOTAL 1, ,449 As of December 31, 2016, short-term lines, in the form of overdrafts, spot credit or credit facilities (revolving), were used in the amount of 293 million. Accrued interest not yet due amounted to 7.7 million. The Group had cash assets of 282 million as of December 31,

137 CONSOLIDATED FINANCIAL STATEMENTS Notes to the consolidated financial statements Non-discounted contractual fl ows on the outstanding balance of the net fi nancial liabilities by maturity date, including interest fl ows and taking into account the reclassifi cations performed pursuant to IAS 1, are as follows: As of (in millions) > 5 years Total Balance sheet total Bonds Commercial paper Draws on credit facilities Borrowings on fi nance leases Other bank loans 1, , ,386.3 Accrued interest Borrowings 1, , ,456.4 Bank overdrafts and cash current accounts Accrued interest Cash and cash equivalents (281.5) (281.5) (281.5) Net cash TOTAL NET FINANCIAL DEBT 1, , ,468.2 (in millions) > 5 years Total Interest on fi nance lease borrowings Interest on bonds* Interest on other bank borrowings * Withdrawn by construction over a period of 10 years from the date of the beginning of the loan, ie until Future variable-rate interest fl ows were determined using the predicted rates of the indexes in question at year-end. Interest fl ows on bonds takes into account interest adjustment clauses (See note 3.9). 4 As of (in millions) > 5 years Total Balance sheet total Bonds Commercial paper Draws on credit facilities Borrowings on fi nance leases Other bank loans , ,412.5 Accrued interest Borrowings , ,459.3 Bank overdrafts and cash current accounts Accrued interest Cash and cash equivalents (263.3) (263.3) (263.3) Net cash (63.8) (63.8) (63.8) TOTAL NET FINANCIAL DEBT , ,395.5 (in millions) > 5 years Total Interest on fi nance lease borrowings Interest on other bank borrowings

138 4 Notes CONSOLIDATED FINANCIAL STATEMENTS to the consolidated financial statements Medium- and long-term borrowings Medium- and long-term borrowings comprise mainly club deal fi nancings and bilateral loans. The majority of these borrowings are backed by assets (vessels) taken as guarantees (fi rst ranking mortgage or negative pledge). The vessels are clearly identifi ed when the loan contract is signed, details of which appear in note 5.1 Contractual obligations and other off-balance sheet commitments of the Notes to the consolidated fi nancial statements. During the performance of the loan contract, for technical reasons, may have to adjust the list of vessels initially assigned to the loan. Two options then arise either partial redemption of the loan or substitution with another vessel. Whichever is the case, an amendment to the loan contract is signed to refl ect the new guarantees. Between 2005 and 2015, contracted four club deal loans: 3 a 320 million club deal loan taken out in for which the redemption phase began in April 200 7, with an outstanding balance of 32 million as of December 31, 2016; 3 a 450 million club deal loan taken out in the summer of 2007 for which the redemption phase began in January 2010, with an outstanding balance of 169 million as of December 31, 2016; 3 a 318 million club deal loan taken out in July 2009 for which the redemption phase began in 2011, with an outstanding balance of 16 million as of December 31, 2016; 3 a 340 million club deal loan taken out in 2015 for which the redemption phase began in June 2016, with an outstanding balance of 326 million as of December 31, These four club deal loans are affected by the agreement for indebtedness restructuring signed on March 6, 2017 and described above. In accordance with this agreement, the repayments for the club deal loans were restructured progressively over the extended payment schedule. In parallel, bilateral borrowings (in US dollars, euros and Norwegian krones) are regularly signed. Thus, in 2016: 3 a 53.9 million fi nancing was signed and drawn down in February for the vessel Bourbon Arctic; 3 a fi nance lease for 30.7 million was signed and drawn down in March and June to fi nance a fl eet of 12 ROVs; 3 a 5 million loan was signed and drawn down in June; 3 a 3.4 million loan was signed and drawn down in August to fi nance an ROV in Italy; 3 a USD56.1 million loan was signed and drawn down in July to fi nance the Indonesian fl eet. In many instances, contractual documentation includes a ratio of net debt to equity requirement of below The last Club Deal loan reduced this ratio to For some of the bilateral fi nancings, mainly tax-based lease fi nancing, of which the total amount outstanding at the end of 2016 was 62 million, the provisions of the tax-based leasing contracts specify a net fi nancial debt to equity ratio of below 1.90 and a Net Operating Debt to EBITDA ratio that must be below 4.0. The documentation relating to the loans affected by the restructuring agreement will be modifi ed to align the ratios with the requirements of those agreements. Short-term lines of credit In addition, the Group had unused short-term credit lines totaling around 24 million as of December 31, The Group has signed combined account agreements with two banking establishments, allowing it to merge the available dollar balances with overdrafts in euros. Cash management is coordinated at the Group s operating headquarters. Financière Bourbon, a partnership organized as a cash clearing house, offers its services to most of the Group s operating subsidiaries. These entities, under a cash agreement with Financière Bourbon, receive active support in the management of their cash fl ow, their foreign currency and interest rate risks, their operating risks and their short and medium-term debt, in accordance with the various laws in force locally. does not have a fi nancial rating from a specialist agency. 136

139 CONSOLIDATED FINANCIAL STATEMENTS Notes to the consolidated financial statements Market risk Market risks include the Group s exposure to interest rate risks, foreign exchange risks, risks on equities and risks on supplies. Interest rate risk The Group s exposure to the risk of interest rate fl uctuations is related to the Group s medium- and long-term variable rate fi nancial debt. regularly monitors its exposure to interest rate risk. This is coordinated and controlled centrally. It is the responsibility of the Assets, Finance and Treasury Director, who reports to the Chief Financial Offi cer. The Group s policy consists of managing its interest rate expense by using a combination of fi xed-rate and variable-rate borrowing. In order to optimize the overall fi nancing cost, the Group sets up interest rate swaps under which it exchanges, at pre-determined intervals, the difference between the amount of fi xed-rate interest and the amount of variable-rate interest calculated on a pre-defi ned nominal amount of borrowing. These swaps are assigned to hedge the borrowings. As of December 31, 2016, after taking into account interest rate swaps, approximately 60% of the Group s medium- and long-term debt had been contracted at a fi xed interest rate. As of December 31, 2016, the interest rate swap contracts were on the Group s borrowings, transforming variable rates into fi xed rates. These contracts were entered into in euros (EUR), Norwegian kroner (NOK) and US dollars (USD); they are broken down by maturity date as follows: Outstanding as of December 31, 2016 (in millions) in foreign currency Currency Fixed-rate borrowing swaps Outstanding as of December 31, 2016 in euros Maturity EUR EUR EUR EUR EUR EUR EUR EUR NOK * NOK USD USD USD TOTAL * Deferred interest rate swap which will take effect on January 1,

140 4 Notes CONSOLIDATED FINANCIAL STATEMENTS to the consolidated financial statements The following table shows the Group s net exposure to variable rates before and after risk management, based on the hedges in place and the sensitivity of the Group s income before taxes (related to changes in the fair value of monetary assets and liabilities) to a reasonable variation in interest rates, with all other variables remaining constant: (in millions) As of December 31, 2016 Less than 1 year 1 to 2 years 2 to 3 years 3 to 4 years 4 to 5 years Fixed rate Variable rate Fixed Variable rate rate Fixed Variable rate rate Fixed Variable Fixed Variable Fixed Variable rate rate rate rate rate rate More than 5 years Total Fixed rate Variable rate Cash Term deposits Loans and securities Financial assets Bank overdrafts and short-term lines - (293.2) (293.2) Deposits and securities received - - (0.3) (0.3) - Finance lease liabilities (26.5) (4.3) (10.1) - (9.1) (5.7) (2.9) - (3.9) - (58.2) (4.3) Bank borrowings (136.6) (1,062.8) (14.7) (22.0) (15.1) (20.3) (15.4) (7.7) (15.0) (8.6) (26.7) (41.1) (223.5) (1,162.6) Financial liabilities (163.1) (1,360.3) (25.1) (22.0) (24.1) (20.3) (21.1) (7.7) (17.9) (8.6) (30.6) (41.1) (282.0) (1,460.1) Net position before hedging (139.1) (1,078.8) 8.4 (22.0) 2.1 (20.3) 4.1 (7.7) 11.5 (8.6) 16.0 (41.1) (97.1) (1,178.6) Hedging (579.0) Net position after hedging (676.0) (599.6) Assuming the position reached on December 31, 2016 to be constant over a year, a change in interest rates of 100 basis points (1%) would therefore result in increasing or decreasing the cost of the Group s fi nancial debt by 6.0 million over one year. 138

141 CONSOLIDATED FINANCIAL STATEMENTS Notes to the consolidated financial statements As of December 31, 2015 Less than one year 1 to 2 years 2 to 3 years 3 to 4 years 4 to 5 years More than 5 years Total Fixed Variable Fixed Variable Fixed Variable Fixed Variable Fixed Variable Fixed Variable Fixed Variable (in millions) rate rate rate rate rate rate rate rate rate rate rate rate rate rate Cash Term deposits Loans and securities Financial assets Bank overdrafts and short-term lines - (199.5) (199.5) Deposits and securities received (0.9) (0.0) - (0.9) - Finance lease liabilities (5.3) (3.0) (5.5) (2.9) (5.6) (1.4) (5.8) - (4.3) - (6.0) - (32.4) (7.2) Bank borrowings (21.7) (294.8) (22.3) (323.9) (22.7) (165.9) (23.2) (217.1) (23.7) (112.1) (66.6) (117.4) (180.2) (1,231.3) Financial liabilities (26.9) (497.2) (27.8) (326.8) (29.3) (167.3) (29.0) (217.1) (28.0) (112.1) (72.6) (117.4) (213.6) (1,438.0) Net position before hedging (14.5) (233.8) 13.2 (326.8) (24.1) (167.3) (4.4) (217.1) (4.4) (112.1) 5.2 (117.4) (29.0) (1,174.7) Hedging (696.6) Net position after hedging (725.6) (478.1) 4 Assuming the position reached on December 31, 2015 to be constant over a year, a change in interest rates of 100 basis points (1%) would therefore result in increasing or decreasing the cost of the Group s fi nancial debt by 4.8 million over one year. Foreign exchange risk Objectives The Group s policy is to reduce as far as possible the economic risk related to foreign currency fl uctuations over the medium term. The Group also tries to minimize the impact of the US dollar s volatility on annual operating income. Cash flows from operating activities The main foreign exchange risks on operations are related to invoicing clients. invoices a large portion (approx. 77%) of its services in US dollars. The Group has a natural foreign exchange hedge as it pays its expenses in US dollars (representing about 29% of revenue). The policy is to maximize this natural hedge. The residual risk is partially hedged in the short term by using forward US dollar sales and/or currency puts. On the unhedged portion, and over time, offshore oil and gas marine services are directly exposed to foreign currency risks, particularly on the US dollar. Long-term cash flows Policy For vessel acquisitions in foreign currencies, the policy is to partly hedge the foreign exchange risk during the construction period by setting up currency futures call options. The policy is to fi nance these acquisitions in the currency in which the corresponding charters will be paid by the customers. However, in order to avoid accounting exchange differences in countries outside the euro zone and the dollar zone (particularly in Norway), the entities fi nance their investments in their functional currency. Current practice As an exception, at the beginning of 2004, it was decided to temporarily abandon this practice and convert the majority of borrowings that were in US dollars at the time to euros. This was done to recognize the unrealized foreign exchange gains booked during previous fi scal years. 139

142 4 Notes CONSOLIDATED FINANCIAL STATEMENTS to the consolidated financial statements Since then, most of the new borrowings (outside Norway) have been contracted in euros or US dollars. Where the euro/dollar exchange rate allows, borrowings in euros to fi nance assets generating revenue in US dollars will be converted to US dollars and future acquisitions will again be fi nanced in US dollars. The following tables show the Group s net exposure to changes in foreign exchange rates: 3 on income: transaction risk; 3 on shareholders equity: currency translation risk. a) Transaction risk As of December 31, 2016, foreign exchange derivatives mainly involved fl ows in US dollars (USD), Nigerian naira (NGN) and Norwegian kroner (NOK), broken down as follows: Outstanding (in millions of currency) Average exchange rate Maturity Futures contracts covering expected future sales Between and EUR/USD NOK/USD Cross-currency swap Between and USD/EUR USD/NGN The table below shows, as of December 31, 2016, the position of the Group s monetary assets and liabilities (denominated in a different currency from the entity s functional currency) before and after management: (in millions) USD NOK EUR Other Monetary assets 1, Monetary liabilities (1,140.6) (17.7) (76.7) (17.6) Net position before management (2.5) (33.2) 55.6 Hedges (15.2) NET POSITION AFTER MANAGEMENT (2.5) (33.2) 55.6 As of December 31, 2016, a 1% change in the euro exchange rate against all the currencies would represent a total impact at Group level of 1.6 million, after hedges are taken into account. It should be noted that currency futures hedges related to future transactions are not shown in this table since the hedged item does not yet appear on the balance sheet. b) Currency translation risk The table below shows a breakdown by currency of consolidated shareholders equity for the years 2016 and 2015: (in millions) Euro (EUR) 1, ,577.8 Brazilian Real (BRL) (192.2) (195.4) Mexican Peso (MXN) Norwegian Kroner (NOK) US Dollar (USD) Swiss Franc (CHF) (0.2) 1.8 Nigerian Naira (NGN) - (52.0) Other TOTAL 1, ,564.3 As of December 31, 2016, a 1% change in the exchange rates would represent an impact on consolidated shareholders equity of 3.6 million ( 3.0 million as of December 31, 2015). 140

143 CONSOLIDATED FINANCIAL STATEMENTS Notes to the consolidated financial statements Equity risks As of December 31, 2016, the Group had no cash investments. As indicated in note 3.12 Treasury Shares, Corporation held 426,576 treasury shares as of December 31, Treasury shares are presented as a deduction from consolidated shareholders equity. A 10% change either up or down in the Corporation s share price would result in a change in the market value of the treasury shares of 0.5 million. Supply price risk The Group s exposure to price risk is minimal. The change in the price of raw materials does not constitute a risk of signifi cant increase in operating costs. Clients generally take direct charge of the cost of fuel FINANCIAL INSTRUMENTS Financial assets As of December 31, 2016 and December 31, 2015, fi nancial assets were as follows: Financial assets at fair value Availablefor-sale through Derivative profit and Loans and instruments Cash and cash Balance (in millions) assets loss receivables at fair value equivalents sheet total Non-current fi nancial assets Trade and receivables Current fi nancial assets Other current assets Cash and cash equivalents TOTAL Financial assets at fair value Availablefor-sale through Derivative profit and Loans and instruments Cash and cash Balance (in millions) assets loss receivables at fair value equivalents sheet total Non-current fi nancial assets Trade and receivables Current fi nancial assets Other current assets Cash and cash equivalents TOTAL a) Available-for-sale assets Available-for-sale assets held by the Group totaled 0.1 million as of December 31, The profi ts and losses recorded in shareholders equity and in net income on available-for-sale assets represented million in 2016 ( 0.2 million in 2015), which corresponds essentially to net income on the sale of shares held. b) Financial assets at fair value through profit and loss Financial assets at fair value through profi t and loss held by the Group totaled 0.1 million as of December 31, Profi ts and losses posted from fi nancial assets at fair value through profi t and loss are not signifi cant. 141

144 4 Notes CONSOLIDATED FINANCIAL STATEMENTS to the consolidated financial statements c) Loans and receivables at amortized cost Loans and receivables at amortized costs can be analyzed as follows: Valuation Valuation (in millions) Gross allowance Net Gross allowance Net Loans and receivables at amortized cost (4.0) Trade and receivables (21.7) (15.7) TOTAL (25.7) (15.7) Loans and receivables mainly include vendor loans associated with certain vessel disposals (see note 2). Profi ts and losses recorded as equity and as income/loss on loans and receivables at amortized cost were as follows: Subsequent valuation Currency (in millions) Interest translation adjustment Valuation allowance Income from sale Shareholders equity Income/loss (4.0) - TOTAL (4.0) - Proceeds from interest and impairment recorded relate primarily to payment for the seller loans associated with certain vessel sales Subsequent valuation Currency (in millions) Interest translation adjustment Valuation allowance Income from sale Shareholders equity - (0.6) - - Income/loss TOTAL 4.6 (0.6) - - The interest income recognized chiefl y corresponds to the payment of the vendor loans associated with certain vessel sales. d) Cash and cash equivalents Cash and cash equivalents totaled million as of December 31, 2016 versus million as of December 31, This item does not include liquid assets subject to restrictions. The policy for managing fi nancial risks is presented in note The cash and cash equivalents item is presented in note Derivative financial instruments The fair value of the derivative fi nancial instruments as of December 31, 2016 and December 31, 2015 can be analyzed as follows: Financial assets (in millions) Current Non-current Total Total Derivative instruments to hedge debt Derivative instruments to hedge revenue in foreign currencies and other TOTAL

145 CONSOLIDATED FINANCIAL STATEMENTS Notes to the consolidated financial statements Financial liabilities (in millions) Current Non-current Total Total Derivative instruments to hedge debt Derivative instruments to hedge foreign exchange rate and other TOTAL Hedging the interest rate risk As of December 31, 2016 and December 31, 2015, the Group held different swap contracts to cover changes in the rates on its variable rate borrowings. The swap contracts swap are used to hedge the rate risk for fi rm commitments. The terms of these agreements have been negotiated to coincide with the terms of the fi rm commitments. The ineffective portion of the interest rate hedges was recorded in profi t (loss) for the period. Hedging the foreign exchange risk As of December 31, 2016 and December 31, 2015, the Group held various forward contracts intended to cover future sales or future purchases for which the Group has fi rm commitments. The terms of the forward currency contracts have been negotiated to coincide with the terms of the fi rm commitments. The hedges on future cash fl ows related to purchases or sales were considered to be highly effective. Therefore, the changes in fair value of the effective portion of the hedging instrument are recognized as shareholders equity. For the year 2016, an unrealized loss of ( 6.7) million was booked under shareholders equity. The change in fair value of the derivative instruments booked directly under consolidated reserves (group and non-controlling interests) represented for 2016 essentially no net tax-deferred unrealized impact, broken down as follows: (in millions) Change in fair value of hedge derivatives of which: forward hedges on boats/revenue (6.7) 4.2 interest rate swaps and others Effect of deferred taxation (3.2) (1.4) 4 NET IMPACT The derivative instruments are put in place in accordance with the Group s risk management policy and are analyzed in note Financial liabilities As of December 31, 2016 and December 31, 2015, fi nancial liabilities were as follows: (in millions) Current Non-current Total Total Financial liabilities 1, , ,658.8 Derivative fi nancial instruments Trade and other payables Other liabilities TOTAL 1, , ,

146 4 Notes CONSOLIDATED FINANCIAL STATEMENTS to the consolidated financial statements a) Financial liabilities The fi nancial debt is analyzed in note It broke down as follows as of December 31, 2016 and December 31, 2015: (in millions) Current Non-current Total Total Bonds Commercial paper Draws on credit facilities Borrowings on fi nance leases Other bank loans 1, , ,412.5 Accrued interest Total borrowings 1, , ,459.3 Bank overdrafts and short-term lines Accrued interest TOTAL FINANCIAL DEBT 1, , ,658.8 As of December 31, 2016, accrued interest not due includes 1.1 million of accrued interest for the bond issue (see note 3.9). b) Derivative financial instruments Derivative fi nancial instruments recognized as liabilities on the balance sheet are presented in note c) Trade and other payables (in millions) Trade payables Debt on non-current assets Social security liabilities Tax liabilities Other liabilities Deferred income TOTAL The balance sheet value of all these debts represents a good approximation of their fair value Fair value of the financial assets and liabilities The method for valuing fi nancial assets and liabilities is detailed in notes to Management of the risks related to financial instruments The Group s risk management policy is presented in note a) Credit risk Receivables outstanding and non-impaired broke down as follows as of December 31, 2016 and December 31, 2015: (in millions) Assets outstanding at year-end < 30 days days days > 91 days Total Assets impaired Assets not impaired or outstanding Loans and receivables at amortized cost Trade and other receivables TOTAL Total 144

147 CONSOLIDATED FINANCIAL STATEMENTS Notes to the consolidated financial statements (in millions) Assets outstanding at year-end < 30 days days days > 91 days Total Assets impaired Assets not impaired or outstanding Loans and receivables at amortized cost Trade and other receivables TOTAL Total b) Liquidity risk The Group s exposure to liquidity risk is analyzed in note c) Market risk The Group s exposure to market risk is analyzed in note CONTINGENT LIABILITIES Pursuant to IAS 37 with regard to Provisions, contingent liabilities and contingent assets it should be noted that one of the Group s subsidiaries is involved in legal proceedings following a dispute regarding a duty similar to an indirect tax on certain invoiced services. The claim made by the local tax administration appears to be groundless, given the nature of the services invoiced by this subsidiary and the amounts demanded (approximately 103 million in principal, penalties, and late interest). The claim by the local tax administration appears to be groundless, because it seems to rely on an erroneous classifi cation of the services invoiced by the subsidiary, which the court of fi rst instance in the country in question confi rmed in its judgment rendered on October 18, 2016, invalidating the adjustments notifi ed by the local tax administration. The local tax administration has appealed from this judgment to the competent court of appeals. It should be noted that in 2013, in a similar matter, the Superior Court of Justice in the same country also ruled for the taxpayer and against the local tax administration. As a result, in management s judgment, to the best of its knowledge of the matter and of the local legal and tax environment, and supported by the opinion of its counsel, this is a potential liability for which the likelihood of a signifi cant payout is currently slight. Legal risks are described in Legal Risks in the Registration Document, in note / Operating segments The business segment fi nancial 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 (IFRS 8). The principles of internal reporting do not refl ect the application of the new consolidation standards (IFRS 10, 11, 12, IAS 27 (amended) and IAS 28 (amended)). Internal reporting (and thus adjusted fi nancial information) records the performance of operational joint ventures in which the Group has joint control by the full consolidation method. The operating segments as presented for purposes of providing segment information are as follows: Marine Services and Subsea Services. In turn, the Marine Services segment is broken down into Deep, Shallow and Crew. Income and expenses that cannot be charged to the operating segments are classifi ed as Other. 145

148 4 Notes CONSOLIDATED FINANCIAL STATEMENTS to the consolidated financial statements The capital employed as presented in the segment information includes the following items: 3 goodwill; 3 the consolidated net book value of the vessels; 3 installments on vessels under construction; 3 other intangible assets and property, plant and equipment; 3 non-current fi nancial instruments (assets and liabilities); 3 long-term fi nancial assets (mainly loans); 3 working capital, which includes current assets (with the exception of cash and cash equivalents) as well as current liabilities (with the exception of borrowings and bank loans and provisions). Commercial transactions between segments are established on a market basis, with terms and conditions identical to those in effect for supplying goods and services to customers outside the Group. The segment information for 2016 is as follows: (in millions) Total Marine Services Of which Deep Shallow Crew Total Subsea Services Other Adjusted total by activity/ segment Adjustments Consolidated total Revenue , ,020.6 Direct costs excluding bareboat leases (484.3) (182.1) (154.4) (147.9) (93.5) (12.8) (590.6) (51.8) (538.8) General and administrative costs (101.6) (39.6) (32.8) (29.1) (25.5) (1.9) (129.0) (13.9) (115.0) EBITDAR* excl. capital gains Bareboat leases (134.4) (67.9) (66.5) - (54.3) - (188.7) (0.0) (188.7) Capital gains (1.4) - (1.0) (1.4) 0.4 Gross operating income (EBITDA) EBIT (155.7) nc nc nc (6.6) (2.8) (165.1) 10.2 (175.3) Goodwill Vessels 1,962.0 nc nc nc , ,336.2 Installments on vessels under construction 11.6 nc nc nc Other non-current assets and liabilities nc nc nc (8.4) Working capital nc nc nc (15.7) Capital employed 2,270.7 nc nc nc , ,852.5 Capital employed excluding installments on vessels under construction 2,259.1 nc nc nc , ,793.7 * EBITDA excl. cost of bareboat leases. 146

149 CONSOLIDATED FINANCIAL STATEMENTS Notes to the consolidated financial statements The segment information for 2015 was as follows: (in millions) Total Marine Services Of which Deep Shallow Crew Total Subsea Services Other Adjusted total by activity/ segment Adjustments Consolidated total Revenue 1, , ,329.6 Direct costs excluding bareboat leases (626.1) (216.3) (240.0) (169.8) (107.0) (10.8) (743.8) (65.6) (678.2) General and administrative costs (118.7) (43.9) (45.7) (29.0) (25.7) (1.3) (145.6) (14.6) (131.0) EBITDAR* excl. capital gains Bareboat leases (127.7) (63.5) (64.2) - (51.4) - (179.1) 0.0 (179.1) Capital gains (1.7) Gross operating income (EBITDA) EBIT 41.5 nc nc nc Goodwill Vessels 1,989.4 nc nc nc , ,363.0 Installments on vessels under construction 33.2 nc nc nc Other non-current assets and liabilities nc nc nc (6.8) Working capital nc nc nc (16.3) Capital employed 2,400.3 nc nc nc , ,995.6 Capital employed excluding installments on vessels under construction 2,367.1 nc nc nc , ,905.4 Capital employed related to non-current assets held for sale and liabilities associated with non-current assets held for sale 72.4 nc nc nc * EBITDA excl. cost of bareboat leases. 4 The breakdown of s revenue by geographical region for 2016 and 2015 was as follows: (in millions) 2016 adjusted 2015 adjusted Africa Europe & Med./Middle East American Continent Asia

150 4 Notes CONSOLIDATED FINANCIAL STATEMENTS to the consolidated financial statements 5/ Other information 5.1 CONTRACTUAL OBLIGATIONS AND OTHER OFF-BALANCE SHEET COMMITMENTS Off-balance sheet commitments related to the Group scope of consolidation (in millions) Commitments given TOTAL COMMITMENTS GIVEN Commitments received - - TOTAL COMMITMENTS RECEIVED Off-balance sheet commitments related to financing a) Lines of credit Unused lines of credit are listed below by period: (in millions) Club deal loan million TOTAL COMMITMENTS RECEIVED (BORROWINGS) (in millions) Short-term lines of credit TOTAL COMMITMENTS RECEIVED (SHORT-TERM LINES) b) Guarantees relating to medium- and long-term debt (in millions) Commitments given Mortgages and pledges on loans (equipment or marketable securities used as collateral) 2, ,249.0 Guarantees given by the parent company on behalf of companies in the Group (excluding one mortgage) TOTAL COMMITMENTS GIVEN 2, ,317.1 Commitments received TOTAL COMMITMENTS RECEIVED In connection with certain bilateral and club deal fi nancings, the companies that own s vessels took out mortgages on some of their vessels with the lending institutions concerned to guarantee the repayment of said loans. 148

151 CONSOLIDATED FINANCIAL STATEMENTS Notes to the consolidated financial statements As of December 31, 2016, although the total amount of mortgages recorded with the appropriate authorities stood at 2,376.1 million, the total amount that may be called was limited to the remaining capital effectively owed by the Group for the loans guaranteed by these mortgages and personal pledges, i.e. 1,308.7 million. The mortgage is released when the loan guaranteeing it is repaid in full. Parent company guarantees were given on behalf of Group entities for million Off-balance sheet commitments related to the Group s operating activities a) Operating activities (in millions) Commitments given Commitments given related to the performance of client contracts Commitments given related to obligations towards the government Commitments given related to the performance of supplier contracts Other guarantees given TOTAL COMMITMENTS GIVEN Commitments received Installment return guarantees Subordinated guarantees on the vessel sales Other guarantees received TOTAL COMMITMENTS RECEIVED i. Commitments given In the competitive bidding process in which the Group participates, some clients ask the bidders to submit a bid guarantee with their bid to protect them if the call for bids is withdrawn. The validity period of this kind of guarantee usually varies between 6 and 12 months. If the contract is signed, the client may ask the bidder selected to protect it by setting up a performance guarantee valid for the duration of the contract, for a fi xed or unspecifi ed amount. As of December 31, 2016, all such guarantees given by the Group totaled 16.7 million. The Group issues commitments to the customs authorities of some countries in order to guarantee payment of the fees applicable to the vessels operating in those countries. Deposits were also made so that certain procedures could be initiated with administrative bodies. As of December 31, 2016, all such guarantees given by the Group totaled 35.7 million. ii. Commitments received In connection with orders placed with different shipyards, the Group receives installment return guarantees which guarantee it the reimbursement of all installments made during the construction period in the event the project is interrupted. These guarantees are issued either by the banks or by holding companies and totaled 43.5 million as of December 31, As part of the sale transactions for certain vessels, a vendor loan was granted to the acquiring company. In return for the vendor loans, the acquiring companies granted second-ranking mortgages for a maximum amount of USD106.6 million

152 4 Notes CONSOLIDATED FINANCIAL STATEMENTS to the consolidated financial statements b) Contractual obligations Contractual obligations are as follows: Payments due by period (in millions) Total < 1 year 1 to 5 years > 5 years Finance leases Operating leases (vessels) 1, Other operating leases Balance payable on orders for vessels under construction TOTAL 1, In connection with this fi nancing, the Group conducted fi nance lease operations under which the parent company of the entity signing the fi nance lease agreement guaranteed payment of the rents. The debt associated with these transactions amounted to 62.5 million as of December 31, As part of the sale and bareboat lease operations, the parent company of the entity that signed the bareboat lease, or the Group s holding company, guaranteed payment of the leases. The commitment regarding these operations was 1,315.2 million as of December 31, The commitment relating to other operating leases was 13.3 million. For the various orders placed with shipyards, the total amount of the installments remaining due while the vessels were being built amounted to million as of December 31, NET EARNINGS PER SHARE Basic net earnings per share The determination of the weighted average number of shares of common stock outstanding during each period is presented below: (restated) Weighted average number of shares over the period* 76,342,603 77,327,055 Weighted average number of treasury shares held over the period (435,935) (1,086,293) Weighted average number of shares outstanding during the period 75,906,668 76,240,762 * This number includes the 4,736,272 shares issued on July 18, 2016, effective immediately, in payment of the 2015 dividend. The weighted average number of shares outstanding in 2016 and 2015 takes into account the weighted average number of stock options exercised during each period, as the case may be. For each period presented, the basic net earnings per share were determined as follows: (restated) Weighted average number of shares used to calculate the basic net earnings per share 75,906,668 76,240,762 Net income (in millions) Consolidated, group share (279.6) (76.6) Consolidated, group share excluding income from discontinued operations/operations held for sale (279.6) (76.6) Net income from discontinued operations/operations held for sale group share - - Basic net earnings per share (in ) Consolidated, group share (3.68) (1.01) Consolidated, group share excluding income from discontinued operations/operations held for sale (3.68) (1.01) Net income from discontinued operations/operations held for sale group share

153 CONSOLIDATED FINANCIAL STATEMENTS Notes to the consolidated financial statements Diluted net earnings per share Pursuant to IAS 33, the number of shares used to calculate diluted earnings per share takes into account the diluting effect of the exercise of stock options (stock subscription and stock purchase options), determined on the basis of the share buyback method. It also includes the shares whose issue is conditional. The weighted average number of shares used to calculate net earnings per share is, therefore, increased by dilutive potential ordinary shares. Diluted earnings per share are established as follows: Number of potential shares: (restated) Weighted average number of shares outstanding during the period 75,906,668 76,240,762 Weighted average number of shares, the issue of which is conditional during the period 345, ,708 Weighted average number of dilutive stock options during the period - - Weighted average number of potential shares 76,252,068 76,907,470 In accordance with IAS 33, the determination of diluted net earnings per share for 2015 did not take into account the stock option plans authorized by the Board of Directors, as the options had an antidilution effect. Moreover, the determination of diluted net earnings per share for 2016 excludes all such share subscription or purchase option plans authorized by the Board of Directors, as they retained their anti-dilution effect. Diluted net earnings per share: (restated) Weighted average number of shares used to calculate diluted net earnings per share 76,252,068 76,907,470 Net income (in millions) Consolidated, group share (279.6) (76.6) Consolidated, group share excluding income from discontinued operations/operations held for sale (279.6) (76.6) Net income from discontinued operations/operations held for sale group share - - Diluted net earnings per share (in ) Consolidated, group share (3.67) (1.00) Consolidated, group share excluding income from discontinued operations/operations held for sale (3.67) (1.00) Net income from discontinued operations/operations held for sale group share WORKFORCE AND PAYROLL The Group s workforce was as follows: (workforce) Onshore personnel 1,539 1,639 Seagoing personnel 4,251 5,349 - Offi cers 2,466 2,968 - Crews and other 1,761 2,381 TOTAL 5,790 6,988 The Group s personnel costs were: (in millions) Personnel costs

154 4 Notes CONSOLIDATED FINANCIAL STATEMENTS to the consolidated financial statements 5.4 SIGNIFICANT EVENTS AFTER THE END OF THE REPORTING PERIOD On March 6, 2017, the Group signed an agreement with a number of fi nancial institutions and partners to restructure its principal debt in the amount of million. In this context, thus restructured its debt as set out in note This restructuring agreement, which was signed on March 6, 2017, will enter into force by June 30 and at the latest by July 15, 2017, once the conditions precedent and subsequent have been satisfi ed: the signature of agreements to reschedule 143 million in balloon loans, the Group obtaining fi nancing in the amount of 60 million and agreements in principle for an additional 60 million, the renegotiation of the agreement with ICBC Financial Leasing and obtaining the repayment of an advance granted to JACCAR Holdings during the negotiations for the acquisition of gas business activities, as well as the satisfaction of certain administrative and documentary conditions. As of the closing date, the Group had already taken various initiatives to fulfi ll the conditions precedent for the agreement. The Group initiated discussions with all the fi nancial partners concerned by the signature of rescheduling agreements of the 143 million in balloon loans; it should be borne in mind that such loans are generally refi nanced when they fall due so as to be aligned with the useful life of the funded economic asset. As of the closing date, the Group had obtained an agreement in principle regarding a fi ve-year fi nance lease agreement making it possible to refi nance a PSV Bourbon Explorer for 23.3 million. The entry into force of this agreement remains subject to the satisfaction of certain conditions precedent aligned with those of the restructuring agreement signed on March 6. A term sheet has also been signed with the fi nancial partners for the fi nancing of three vessels under fi nance leases in the amount of 18 million, and a mandate letter has been signed covering fi nancing in the amount of 60 million. Other fi nancing is being discussed with foreign fi nancial partners. It is expected that these discussions will be concluded in the second half of As of the closing date, the Group had also fi nalized the renegotiation of the agreement with ICBC Financial Leasing and had obtained a formal repayment commitment for the advance granted to JACCAR Holdings during the negotiation of the acquisition of the gas business activities. It should also be noted that, as of the closing date, no event specifi ed in the conditions subsequent of the agreement (notably the administrative and documentary conditions) had occurred; the Group further believes that the risk of any of these events occurring before the entry into force of the agreement is weak. As announced on April 12, 2017, in line with the negotiations that led to the restructuring of its principal debt, also reached an agreement to reorganize lease payments on the vessels covered by the sale and bareboat chartering contracts concluded with ICBC Financial Leasing in 2013 and This agreement provides for a USD240 million reduction in s charter payments between 2016 and 2018 in consideration for the two-year extension of the initial bareboat charter period at a rate of 8% and more favorable commercial terms for ICBC Financial Leasing. This agreement will not have a material impact on the Group s consolidated fi nancial statements since it does not affect the qualifi cation of the bareboat chartering contract of the vessels. In accordance with IFRS, the bareboat charter costs will be recognized on a straight-line basis from the date of renegotiation and for the remaining term of the contract. In connection with the restructuring of its debt, the Group performed an analysis of the modifi cations made to the loans in question, in accordance with IAS As of the closing date, the Group analyzed the principal loans representing the majority of the restructured debt; the result was that the changes made are not considered signifi cant and there is no extinction of the loans in question. The loans in question will therefore remain on the balance sheet. A substantive analysis of the other loans will be carried out once the remaining documentation has been fi nalized. 5.5 RELATED-PARTY TRANSACTIONS Relations with the SINOPACIFIC Group The Chairman of Corporation s Board of Directors is a partner in the naval construction company SINOPACIFIC, through JACCAR Holdings SAS, a subsidiary of Cana Tera SCA. Mr. Jacques d Armand de Chateauvieux is also a Director of SINOPACIFIC. As of December 31, 2016 and 2015, there were current orders for two vessels. Orders amounted to USD72.4 million with prepayments generated of USD45.6 million, covered up to USD36.5 million by installment return guarantees granted by SINOPACIFIC. Relations with an executive In December 2014, Corporation signed a noncompetition agreement with Mr. Laurent Renard, Executive Vice- President Finance and Administration at Corporation who has decided to retire, with the intent of preserving the legitimate interests of the Company and its subsidiaries. This agreement, which took effect on January 1, 2015, involves the payment in installments of a sum of 300,000 to take place at the latest on January 31, 2016, January 31, 2017 and January 31, In 2016, a fi rst amount of 110,000 gross was paid. Relations with JACCAR Holdings A Cash Management Agreement was signed between through one of its subsidiaries, JACCAR Holdings SAS (which company is a shareholder of ). As of December 31, 2016, the amount of the advance including interest granted to was 40.5 million. 152

155 CONSOLIDATED FINANCIAL STATEMENTS Notes to the consolidated financial statements 5.6 EXECUTIVE COMPENSATION Compensation paid to the Chief Executive Officer and the Executive Vice Presidents Compensation of the Chairman and Chief Executive Officer Until May 26, 2016, Mr. Jacques d Armand de Chateauvieux, in his capacity as Chairman of the Board of Directors, received no direct compensation from Corporation other than Directors fees. On May 26, 2016, the General Meeting of Shareholders renewed Mr. Jacques d Armand de Chateauvieux s term as Director, and the Company s Directors, at a Board meeting held on the same day, renewed his term as Chairman and decided to combine the positions of Chairman of the Board of Directors and Chief Executive Offi cer of the Company and to appoint him, Chairman and Chief Executive Offi cer of Corporation. At its meeting on July 4, 2016, the Board of Directors of Corporation, on the proposal of the Nominations, Compensation and Governance Committee, decided that the components of Mr. Jacques d Armand de Chateauvieux s compensation as of January 1, 2016 would be as follows: 3 a fi xed annual salary of 144,000; 3 variable compensation, entirely linked to the Company s performance, corresponding to 1% of surplus net income (group share) for the year in question and limited to a maximum of 500,000. With respect to variable compensation, the Board of Directors did not follow the recommendation of the AFEP-MEDEF Code, which provides that variable compensation must be subject to the achievement of specifi c objectives, but instead granted variable compensation with terms similar to the compensation terms of the other shareholders (that is to say, a percentage of net income where it is positive). This decision was based on the fact that the objectives set for the two other corporate offi cers, linked to quantitative and qualitative performance criteria, cannot apply to the Chairman and CEO, who is the Company s principal shareholder. Mr. Jacques d Armand de Chateauvieux has no other commitments from the Company. At its meeting on March 13, 2017, the Board, after approving the Company s fi nancial statements, noted that net income (group share) was negative. Therefore, no variable compensation will be paid to Jacques d Armand de Chateauvieux for fi scal year Compensation of the Executive Vice Presidents The compensation paid to Executive Vice Presidents has a fi xed component and a component which is variable annually. Some years they are also allocated stock options or stock purchase options linked to performance. For the variable portion, several years ago the Board of Directors defi ned a calculation procedure based on fi xed compensation; variable compensation can reach 50% of fi xed compensation if the objectives are achieved, and up to 70% if the objectives are exceeded. The objectives are reviewed and voted on each year by the Board of Directors upon the proposal of the Nominations, Compensation, and Governance Committee, and aligned in part with the objectives of the Group s key executives as well as with the objectives relating to the Group s strategic priorities. The degree to which each objective must be achieved is precise and progressive, but is not made public for reasons of confi dentiality. The two Executive Vice Presidents also have the use of a Company car. On the basis of the objectives defi ned at the meeting of March 7, 2016, the Board of Directors, having heard the opinion of the members of the Nominations, Compensation, and Governance Committee, which examined the extent to which the various performance criteria had been achieved and analyzed the personal contribution of each of the Executive Vice Presidents, and after deliberations, fi xed the variable compensation to be paid for fi scal year This component is 10% of the gross annual fi xed compensation, compared to 41% for Achievement of objectives for fiscal year 2016 % target % granted Economic parameters: 40% 0% - Target for free cash fl ow 20% Not achieved - Target for EBITDA excluding capital gains 20% Not achieved Operational parameters/hse: 40% 0% - Target for average utilization rate of the fl eet 20% Not achieved - Target Group TRIR 20% Not achieved Personal contribution 20% 20% TOTAL 100% 20% 153

156 4 Notes CONSOLIDATED FINANCIAL STATEMENTS to the consolidated financial statements Summary table of the compensation, options, and shares granted to each Executive Director in office as of December 31, 2016 (en euros) Jacques d Armand de Chateauvieux, Chairman and Chief Executive Officer Year 2015 Year 2016 Compensation due for the year (detailed in table ) 30, ,000 Variable long-term compensation allocated over the year - - Value of stock options awarded during the year (detailed in 5.6.3) - - Value of the performance stock granted during the year - - TOTAL 30, ,000 Christian Lefèvre, Executive Vice President Year 2015 Year 2016 Compensation due for the year (detailed in table ) 556, ,162 Variable long-term compensation allocated over the year - - Value of stock options awarded during the year (detailed in 5.6.3) - - Value of the performance stock granted during the year - - TOTAL 556, ,162 Gaël Bodénès, Executive Vice President Year 2015 Year 2016 Compensation due for the year (detailed in table ) 389, ,825 Variable long-term compensation allocated over the year - - Value of stock options awarded during the year (detailed in 5.6.3) - - Value of performance shares awarded during the year - - TOTAL 389, ,

157 CONSOLIDATED FINANCIAL STATEMENTS Notes to the consolidated financial statements Summary table of the compensation of each Executive Director in office as of December 31, 2016 (in euros) Jacques d Armand de Chateauvieux, Chairman and Chief Executive Officer Due for the year Year 2015 Year 2016 Paid over the year Due for the year Paid over the year Fixed compensation ,000 72,000 Variable compensation Variable long-term compensation Exceptional compensation Directors fees (1) 30,000 29,000 30,000 30,000 Benefi ts in kind TOTAL 30,000 29, , ,000 (1) The amount due is likely to vary according to the number of meetings held following the Combined General Meeting. Christian Lefèvre, Executive Vice President Due for the year Year 2015 Year 2016 Paid over the year Due for the year Paid over the year Fixed compensation 370, , , ,006 Variable compensation (1) 153, ,750 37, ,550 Variable long-term compensation Exceptional compensation Directors fees (2) 30,000 29,000 30,000 30,000 Benefi ts in kind (3) 3,044 3,044 6,156 6,156 TOTAL 556, , , ,712 (1) Variable compensation is payable the following year, after approval of the fi nancial statements by the General Meeting. (2) The amount due is likely to vary according to the number of meetings held following the Combined General Meeting. (3) Company car. 4 Gaël Bodénès, Executive Vice President Due for the year Year 2015 Year 2016 Paid over the year Due for the year Paid over the year Fixed compensation 265, , , ,005 Variable compensation (1) 109,975 99,375 26, ,975 Variable long-term compensation Exceptional compensation Directors fees for terms of offi ce served in the Group Benefi ts in kind (2) 14,740 14,740 18,320 18,320 TOTAL 389, , , ,300 (1) Variable compensation is payable the following year, after approval of the fi nancial statements by the General Meeting. (2) Company car + unemployment insurance for senior executives. No supplementary pension scheme has been granted by, nor any benefi t in kind other than those mentioned in the tables above, for the Chief Executive Offi cer and for each of the Executive Vice Presidents. 155

158 4 Notes CONSOLIDATED FINANCIAL STATEMENTS to the consolidated financial statements Commitments of any kind made by the Company to its corporate officers Executive Directors affected by the recommendation of AFEP-MEDEF Jacques d Armand de Chateauvieux, Chairman and Chief Executive Offi cer Start date of term of offi ce: End date of term of offi ce: General Meeting called to approve the fi nancial statements for the year ended Christian Lefèvre, Executive Vice President Start date of term of offi ce: End date of term of offi ce: General Meeting called to approve the fi nancial statements for the year ended Gaël Bodénès, Executive Vice President Start date of term of offi ce: End date of term of offi ce: General Meeting called to approve the fi nancial statements for the year ended Employment contract Supplementary pension scheme Indemnity or benefits payable or potentially payable due to termination or change of function Indemnities under a non-compete clause Yes No Yes No Yes No Yes No x x x x Not applicable x x x Not applicable x x x Stock options exercised during the year by each Executive Director No subscription or purchase stock options were granted or exercised in

159 CONSOLIDATED FINANCIAL STATEMENTS Notes to the consolidated financial statements 5.7 SCOPE OF CONSOLIDATION List of Corporation s fully consolidated companies % control of capital held directly or indirectly % interest in capital held directly or indirectly Country Corporation Parent company Parent company France (Paris) Aequo Animo Shipping Navegação Lda Portugal (Madeira) Aries Marine Pte.Ltd (ex Marine Network Asia Pte.Ltd) Singapore Bahtera Sri Kandi Asset Ltd (ex Bourbon Labuan Asset) Malaysia Bahtera Sri Kandi Marine SDN.BHD (ex Bourbon Malaysia Offshore Mitra SDN.BHD) Bahtera Sri Kandi Offshore Ltd (ex Bourbon Offshore Malaysia Labuan Ltd) BAOS Holding Ltd Cyprus BAOS Provider Ltd Cyprus BON Crewing AS Norway BON Management AS Norway Bourbon AD France Bourbon Asia Asset Pte Ltd Singapore Bourbon Assets Singapore Pte Ltd Singapore Bourbon Baltic Ltd Liability Company Russia Bourbon Black Sea Romania Bourbon Brazil Participações Brazil Bourbon Cap RE Luxembourg Bourbon Capital Luxembourg Bourbon Capital Holdings USA United States Bourbon China Group Ltd China Bourbon Cormorant Lease SAS France Bourbon East Asia Pte Ltd Singapore Bourbon Far East Pte Ltd Singapore Bourbon Gabon SA Gabon Bourbon Gaia Supply France Bourbon Ghana International France Bourbon Ghana Ltd Ghana Bourbon International Mobility SA Switzerland Bourbon Interoil Nigeria Ltd Nigeria Bourbon Logistic Nigeria Limited Nigeria Bourbon Logistics Indonesia Indonesia Bourbon Management (ex CFG) France Bourbon Marine Services Austral Mauritius Bourbon Marine Services Greenmar Mauritius Bourbon Maritime France Bourbon Offshore (ex Holding) France Bourbon Offshore Asia Pte Ltd Singapore Bourbon Offshore Craft France Bourbon Offshore DNT (ex DNT Offshore) Italy Bourbon Offshore Gaia France Bourbon Offshore Greenmar Switzerland 4 157

160 4 Notes CONSOLIDATED FINANCIAL STATEMENTS to the consolidated financial statements % control of capital held directly or indirectly % interest in capital held directly or indirectly Country Bourbon Offshore Gulf Bahrain (Manama) Bourbon Offshore India Private Ltd India Bourbon Offshore Interoil Shipping-Navegação Lda Portugal (Madeira) Bourbon Offshore Marine Services (ex Bourbon AD3) France Bourbon Offshore Maritima Brazil (ex Delba Maritima Navegação) Bourbon Offshore MMI United Arab Emirates Bourbon Offshore Norway AS Norway Bourbon Offshore Pacifi c Pty Ltd Australia Bourbon Offshore Surf France Bourbon Offshore Triangle Egypt Bourbon Offshore Trinidad Ltd Trinidad Bourbon Offshore Ukraine (ex Bourbon Marine Services Ukraine Ukraine) Bourbon PS France Bourbon Salvage investments France Bourbon Services Luxembourg SARL Luxembourg Bourbon Ships AS Norway Bourbon Sourcing and Trading Pte Ltd (ex Bourbon Training Center Asia Pte Ltd) Singapore Bourbon Docking and Sourcing DMCEST (ex Bourbon Sourcing DMCEST) United Arab Emirates Bourbon Subsea PS (ex Bourbon AD1) France Bourbon Subsea Services France Bourbon Subsea Services Asia Pte Ltd Singapore (ex Bourbon Offshore DNT Asia Pte Ltd) Bourbon Subsea Services Investments France Bourbon SUN III (ex Bourbon AD2) France Bourbon Supply Asia Pte Ltd Singapore Bourbon Supply Investissements France Bourbon Tern Lease SAS France Bourbon Training Center & Simulator Pte Ltd Singapore Buana Jasa Bahari Pte Ltd Singapore BUMI Subsea Asia Pte Ltd Singapore BUMI Subsea Solutions SDN.BHD Singapore Caroline France Caroline France Caroline France Caroline France Caroline 63 SAS France Caroline 8 SAS France Cemtaf (ex Tribor) France Centre de Formation Offshore Pétrolier France Bourbon-Hydro Marseille Cusack Uruguay Delba Operadora de Apoio Maritimo Brazil Elbuque-Shipping LDA Portugal (Madeira) Endeavor France 158

161 CONSOLIDATED FINANCIAL STATEMENTS Notes to the consolidated financial statements % control of capital held directly or indirectly % interest in capital held directly or indirectly Country Financière Bourbon France Grena-Navegação LDA Portugal (Madeira) Holland Propeller Services B.V Netherlands Inebolu Petroleum Marine Services Ltd Company Turkey Inspares United Arab Emirates Jade-Navegação LDA Portugal (Madeira) Lastro-Companhia Internacional de Navegação LDA Portugal (Madeira) Latin quarter-serviços Maritimos Internacionais LDA Portugal (Madeira) Les Abeilles France Liberty 233 SNC France Liberty 234 SNC France Mastshipping-Shipping LDA Portugal (Madeira) Navegaceano-Shipping LDA Portugal (Madeira) Navegacion Costa Fuera Mexico Naviera Bourbon Tamaulipas Mexico Oceanteam Bourbon 101 AS Norway Onix Participaçoes e Investimentos, Portugal (Madeira) Sociedade Unipessoal Lda Opsealog France Perestania France Placements Provence Languedoc France PSV Support United States PT Surf Marine Indonesia Indonesia Saint Nikolas (ex Setaf) France Servicios y Apoyos Maritimos Mexico SGSP International France SNC AHTS France SNC Altair France SNC B.P.S. (ex TBN 9) France SNC B.P.S. (ex TBN 11) France SNC Bourbon Alienor (ex B.L. 230) France SNC Bourbon Amilcar France SNC Bourbon Arcadie (ex B.L. 201) France SNC Bourbon Auroch France SNC Bourbon Bison France SNC Bourbon CE Fulmar France SNC Bourbon CE Gannet France SNC Bourbon CE Grebe France SNC Bourbon CE Petrel France SNC Bourbon Diamond France SNC Bourbon Enterprise France SNC Bourbon Evolution France SNC Bourbon Evolution France SNC Bourbon Hamelin France SNC Bourbon Herald France SNC Bourbon Himalaya France SNC Bourbon Liberty France 4 159

162 4 Notes CONSOLIDATED FINANCIAL STATEMENTS to the consolidated financial statements % control of capital held directly or indirectly % interest in capital held directly or indirectly Country SNC Bourbon Liberty France SNC Bourbon Liberty France SNC Bourbon Liberty France SNC Bourbon Liberty 119 (ex B.L. 117) France SNC Bourbon Liberty 120 (ex B.L. 118) France SNC Bourbon Liberty France SNC Bourbon Liberty France SNC Bourbon Liberty France SNC Bourbon Liberty France SNC Bourbon Liberty 221 (ex B.L. 222) France SNC Bourbon Liberty France SNC Bourbon Liberty France SNC Bourbon Liberty France SNC Bourbon Liberty France SNC Bourbon Liberty France SNC Bourbon Liberty France SNC Bourbon Liberty 235 (ex B.L. 122) France SNC Bourbon Liberty France SNC Bourbon Liberty 237 (ex B.L. 234) France SNC Bourbon Liberty France SNC Bourbon Liberty France SNC Bourbon Liberty France SNC Bourbon Liberty France SNC Bourbon Liberty 247 (ex B.L. 121) France SNC Bourbon Liberty 248 (ex B.L. 239) France SNC Bourbon Liberty 249 (ex B.L. 233) France SNC Bourbon Liberty 251 (ex SNC Bourbon Artabaze) France SNC Bourbon Liberty France SNC Bourbon Liberty France SNC Bourbon Liberty 305 (ex TBN 3) France SNC Bourbon Liberty 306 (ex TBN 4) France SNC Bourbon Liberty 308 (ex TBN 2 ex 303) France SNC Bourbon Liberty 313 (ex TBN 5 ex 307) France SNC Bourbon Pearl France SNC Bourbon Ruby France SNC Bourbon Sapphire France SNC Bourbon Sirocco (ex TBN 6) France SNC Bourbon Supporter France SNC Bourbon Themis (1) (1) France SNC Bourbon Yack France SNC Liberty France SNC Liberty France SNC Liberty France SNC Liberty CE France SNC Liberty CE France SNC Liberty CE France SNC Liberty CE France 160

163 CONSOLIDATED FINANCIAL STATEMENTS Notes to the consolidated financial statements % control of capital held directly or indirectly % interest in capital held directly or indirectly Country SNC Liberty CE France SNC Liberty CE France SNC Liberty CE France SNC Liberty CE France SNC Surfer 2007 (1) (1) France SNC Surfer 2007 bis (1) (1) France SNC Surfer France SNC Surfer 2008 TT France SNC Surfer France SNC Surfer 2009 TT France SNC Surfer France SNC Surfer 2011 (ex SURFER 2010 TT) France SNC Surfer France SNC Surfer France SNC Surfer 325 (1) (1) France SNC Surfer 3603 (ex TBN 1) France SNC TBN France SNC TBN France Sonasurf Internacional-Shipping LDA Portugal (Madeira) Sonasurf Jersey Ltd Jersey Sopade (Sté participation développement SAS) France (Reunion) Toesa Uruguay VSSA Limited Malta (1) Liquidations/Dissolution List of companies consolidated by Corporation using the equity method % control of capital held directly or indirectly % interest in capital held directly or indirectly Country Bourbon Gulf Qatar Bourbon Marine Services Manila Inc Philippines Copremar Congo EPD (Yangzhou) Electronic Power Design, Co, Ltd China EPD Asia Group Ltd United States EPD Horizon Pte Ltd Singapore EPD Singapore Services Pte Ltd Singapore Jackson Offshore LLC United States Oceanteam Bourbon 4 AS Norway Oceanteam Bourbon Spares & Equipments AS Norway Sonasurf (Angola) Companhia de serviços Maritimos, LDA Angola Southern Transformers & Magnetics United States 161

164 4 Notes CONSOLIDATED FINANCIAL STATEMENTS to the consolidated financial statements 6/ Financial Glossary Adjusted data: The internal reporting (and thus the adjusted fi nancial information) records the performance of operational joint ventures on which the Group has joint control using the full integration method. The adjusted fi nancial 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 (IFRS 8). EBITDAR: revenue less direct operating costs (except bare-boat rental costs) and general and administrative costs. EBITDA: EBITDAR less bareboat charter costs. EBIT: EBITDA after depreciation, amortization and provisions and capital gains on equity interests sold, but excluding share of net income of companies under equity method. Operating income (EBIT) after share of results from companies under equity method: EBIT after share of net income of companies under equity method. Capital invested (or employed): including (i) shareholders equity, (ii) provisions (including net deferred tax), (iii) net debt; they are also defi ned as the sum of (i) net non-current assets (including advances on fi xed assets), (ii) working capital requirement, and (iii) net assets held for sale. Average capital employed excl. advances: is understood as the average of the capital employed at the beginning of the period and end of the period, excluding installments on fi xed assets. Free cash flow: net cash fl ows from operating activities after including incoming payments and disbursements related to acquisitions and sales of property, plant and equipment and intangible assets. 162

165 CONSOLIDATED FINANCIAL STATEMENTS Statutory Auditors report on the consolidated financial statements (year ended December 31, 2016) STATUTORY AUDITORS REPORT ON THE CONSOLIDATED FINANCIAL STATEMENTS (YEAR ENDED DECEMBER 31, 2016) This is a free translation into English of the Statutory Auditors report issued in French and is provided solely for the convenience of English speaking readers. This report should be read in conjunction with, and construed in accordance with, French law and professional auditing standards applicable in France. To the shareholders, In accordance with our appointment as statutory auditors by your Shareholders Meetings, we hereby report to you for the year ended 31 December 2016 on: 3 the audit of the accompanying consolidated fi nancial statements of Corporation (formerly ); 3 the justifi cation of our assessments; 3 the specifi c verifi cation required by law. These consolidated fi nancial statements have been approved by the Board of Directors. Our role is to express an opinion on these fi nancial statements based on our audit. I. OPINION ON THE CONSOLIDATED FINANCIAL STATEMENTS We conducted our audit in accordance with professional standards applicable in France; those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated fi nancial statements are free of material misstatement. An audit involves performing procedures, using sampling techniques or other methods of selection, to obtain audit evidence about the amounts and disclosures in the consolidated fi nancial statements. An audit also includes assessing the accounting principles used and signifi cant estimates made, as well as evaluating the overall fi nancial statement presentation. We believe that the audit evidence we have obtained is suffi cient and appropriate to provide a basis for our audit opinion. 4 In our opinion, the consolidated fi nancial statements give a true and fair view of the assets and liabilities and of the fi nancial position of the Group as at 31 December 2016 and of the results of its operations for the year then ended in accordance with International Financial Reporting Standards as adopted by the European Union. Without qualifying the above opinion, we draw your attention to Note 1.2 Basis for preparation of the consolidated fi nancial statements outlining the current restructuring of the majority of fi nancial debt that should be completed by 15 July 2017 and the related conditions precedent, as well as the reasons for which the going concern principle was maintained for the preparation of the consolidated fi nancial statements. II. JUSTIFICATION OF OUR ASSESSMENTS The accounting estimates contributing to the preparation of the fi nancial statements were made in an uncertain environment relating to the sharp slowdown in the offshore oil market that made it diffi cult to assess the economic outlook. It is in this context that, in accordance with the requirements of Article L of the French Commercial Code (Code de commerce) relating to the justifi cation of our assessments, we bring to your attention the following matters: Going concern: As stated in the fi rst part of this report, Note 1.2 Basis for preparation of the consolidated fi nancial statements mentions the conditions precedent relating to the current restructuring of fi nancial debt, their progress and management s assessment of whether the maintenance of the going concern principle is appropriate. We examined the provisions stipulated in the refi nancing agreement. Based on our work and the information made available to us to date, and as part of our assessment of the accounting policies adopted by your Company, we believe that the note to the fi nancial statements provides an appropriate disclosure on the Company s situation with regard to going concern. 163

166 4 Statutory CONSOLIDATED FINANCIAL STATEMENTS Auditors report on the consolidated financial statements (year ended December 31, 2016) Impairment tests: At each closing, the Company systematically performs impairment tests, under the terms and conditions described in Notes 1.4 Use of estimates Goodwill impairment tests and 3.1 Goodwill to the consolidated fi nancial statements, on goodwill that has been allocated the cash-generating units representing the lowest level at which goodwill is monitored for Group management purposes. In this way, owned ships, which presented a net amount of 2,336.2 million in the balance sheet as at 31 December 2016 and leased ships, for which the lease commitment amounted to 1,315.2 million, and which featured among the cash-generating units tested, were also subject to impairment tests. We examined the terms and conditions under which these impairment tests were implemented, as well as the cash fl ow projections and assumptions used and we verifi ed that Note 3.1 Goodwill provides an appropriate disclosure. We assessed the reasonableness of these estimates. These assessments were made as part of our audit of the consolidated fi nancial statements taken as a whole, and therefore contributed to the expression of our opinion in the fi rst part of this report. III. SPECIFIC VERIFICATION As required by law, we have also verifi ed, in accordance with professional standards applicable in France, the information relating to the Group presented in the management report. We have no matters to report as to its fair presentation and its consistency with the consolidated fi nancial statements. Lyon and Marseille, 21 April 2017 The Statutory Auditors EurAAudit C.R.C. Cabinet Rousseau Consultants Jean-Marc Rousseau Deloitte & Associés Hugues Desgranges 164

167 5 COMPANY FINANCIAL STATEMENTS PARENT COMPANY BALANCE SHEET CORPORATION SA 166 INCOME STATEMENT 168 NOTES TO THE COMPANY FINANCIAL STATEMENTS 169 STATUTORY AUDITORS REPORT ON THE FINANCIAL STATEMENTS (YEAR ENDED DECEMBER 31, 2016) 184 STATUTORY AUDITORS SPECIAL REPORT ON REGULATED AGREEMENTS AND COMMITMENTS

168 5 Parent COMPANY FINANCIAL STATEMENTS company balance sheet Corporation SA PARENT COMPANY BALANCE SHEET CORPORATION SA Assets (in thousands) Depreciation, amortization and provisions Net Net Gross I. Fixed assets Intangible assets Other intangible assets Property, plant and equipment Land Buildings Other property, plant and equipment Property, plant and equipment in progress Long-term financial assets Equity interests 42, ,499 42,499 Receivables from non-consolidated companies Loans TOTAL I 42, ,499 42,499 II. Current assets Inventories In progress Advances and installments on orders Accounts receivable Trade and other receivables Other receivables 835, , ,827 Other Marketable securities 5,711-5,711 5,007 Cash and cash equivalents Prepaid expenses TOTAL II 841, , ,849 Currency translation differences assets TOTAL ASSETS 883, , ,

169 COMPANY FINANCIAL STATEMENTS Parent company balance sheet Corporation SA Liabilities (in thousands) I. SHAREHOLDERS EQUITY Share capital 48,493 45,485 Additional paid-in capital 91,021 48,277 Legal reserve 7,878 7,878 Regulated reserves 15,395 15,395 Other reserves 431, ,442 Retained earnings 127, ,962 Profi t (loss) for the year 28,371 63,627 TOTAL I 749, ,066 II. OTHER EQUITY CAPITAL Income from issues of equity securities 119, ,723 TOTAL II 119, ,723 III. PROVISIONS FOR RISKS AND CONTINGENCIES For risks 5, For contingencies TOTAL III 5, IV. LIABILITIES Bank borrowings - - Other borrowings and fi nancial liabilities 1,050 1,050 Trade and other payables 415 1,103 Tax and social security liabilities Fixed asset and other payables - - Other liabilities 6,892 1,430 Deferred income - - TOTAL IV 8,500 3,701 Currency translation differences liabilities - - TOTAL LIABILITIES 883, ,

170 5 Income COMPANY FINANCIAL STATEMENTS statement INCOME STATEMENT (in thousands) I. OPERATING INCOME Income from services - - Revenue - - Reversals of provisions (and amortizations), expense transfers Other income - - TOTAL I II. OPERATING EXPENSES Other purchases and external expenses 3,623 3,826 Taxes and similar levies Wages and salaries 72 0 Social security contributions 3,817 1 Provisions for amortization - - Provisions for current assets - - Provisions for risks and contingencies - - Other expenses TOTAL II 8,710 5,054 OPERATING INCOME/LOSS (8,545) (4,915) III. FINANCIAL INCOME Financial income from investments 40,106 61,922 Income from other securities and fi xed asset receivables - - Other interest receivable and similar income 1,291 2,372 Reversals of provisions and expense transfers - - Foreign exchange gains 2 0 Net income from sale of securities - - TOTAL III 41,399 64,294 IV. FINANCIAL EXPENSES Depreciation allowance and provisions - 7,169 Interest and similar expenses 7,352 5,334 Foreign exchange losses - 20 Net loss from sale of securities - - TOTAL IV 7,352 12,523 FINANCIAL PROFIT/LOSS 34,047 51,771 INCOME FROM CURRENT OPERATIONS 25,502 46,856 V. NON-RECURRING INCOME Income from management operations - - Income from capital transactions Reversals of provisions and expense transfers 500 5,622 TOTAL V 744 5,776 VI. NON-RECURRING EXPENSES Expenses on management operations Expenses on capital transactions 3, Amortization, depreciation and provisions 5,396 - TOTAL VI 8, NON-RECURRING INCOME (8,040) 4,791 VII. INCOME TAX (10,909) (11,980) Total income 42,308 70,209 Total expenses 13,937 6,582 PROFIT (LOSS) FOR THE YEAR 28,371 63,

171 COMPANY FINANCIAL STATEMENTS Notes to the Company financial statements NOTES TO THE COMPANY FINANCIAL STATEMENTS Notes to the balance sheet before appropriation of earnings for the year ended December 31, 2016, showing a total of 883,960 thousand and to the comprehensive income statement for the year, presented in the form of a list and showing a profi t of 28,371 thousand. The fi scal year covered a period of 12 months from January 1, 2016 to December 31, The notes and tables presented below form an integral part of the annual fi nancial statements. The consolidated fi nancial statements were approved by the Board of Directors on March 13, 2017 and again on April 18, 2017 to take account of events after the reporting date. 1/ Accounting policies and methods The annual fi nancial statements for the fi scal year ended December 31, 2016 have been prepared and presented in accordance with the provisions of the French Commercial Code, the Accounting Decree of November 29, 1983, respecting the principle of prudence and independence of fi scal years and assuming going concern basis. On March 8, 2017, announced a sustainable restructuring of the majority of its fi nancial indebtedness, or million, in connection with its Stronger for longer action plan. The Stronger for longer action plan includes measures to improve the Company s liquidity and reduce new fi nancing needs for the years to come. provides support services to the oil industry; as a result, its business is signifi cantly infl uenced by that of its clients. Since October 2014, the price of oil per barrel has dropped signifi cantly. The price of a barrel of Brent went from USD99 in 2014 to less than USD40 at the end of 2015, and reached USD27 in the fi rst quarter of The collapse in the price of oil set off an immediate response from the oil companies, which reduced their exploration and production expenses for the second consecutive year, for a reduction of 25% on a worldwide scale in 2015 and another 24% in 2016 (source: IFP Energies nouvelles). This cyclical downturn in the market affected the companies that provide services to oil companies. In the face of this economic slowdown in oil activity, was able to remain resilient thanks to its targeted positioning and strong operational measures (in particular, its cost control policy). To manage this cyclical low point, the Group also conducted discussions with its fi nancial partners in order to restructure its fi nancing for the coming years. These discussions resulted in the signature of an agreement on March 6, 2017 with a number of fi nancial institutions and partners to restructure its principal debt in the amount of million. As announced on April 12, 2017, in line with the negotiations that led to the restructuring of its principal debt, also reached an agreement to reorganize lease payments on the vessels covered by the sale and bareboat chartering contracts concluded with ICBC Financial Leasing in 2013 and This agreement provides for a USD240 million reduction in s charter payments between 2016 and 2018 in consideration for the two-year extension of the initial bareboat charter period at a rate of 8% and more favorable commercial terms for ICBC Financial Leasing. As the discussions progressed, standstill agreements were entered into for dates on which capital was paid on the loans in question, whereas the interest related to these payments was paid. As of December 31, 2016, the payments in question totaled 90 million. As part of the agreement signed on March 6, 2017, thus restructured its debt as follows: 3 out of long and medium-term debt totaling 692 million, 365 million of repayments due between 2016 and 2018 have been rescheduled and reduced to an amount of 63 million not repayable until The remainder of the debt, i.e. 629 million, will henceforth be repaid progressively between 2019 and 2025; the weighted average of the spreads applicable to these facilities will initially represent approximately 2.1% from October 1, 2017, then approximately 3.1% from January 1, 2020 and lastly approximately 4% from January 1, 2022; 3 short term facilities amounting to million will be refi nanced and maintained at this level from 2017 to 2020 inclusive, before being repaid progressively afterwards, while 22 million in shortterm credits will be maintained and repaid progressively as from 2018; the weighted average of the spreads applicable to these facilities will initially and from the completion date represent 1.9%, then 2.9% from January 1, 2020 and lastly 3.9% from January 1, 2022; As the discussions progressed, standstill agreements were entered into for dates on which capital was paid on the loans in question, whereas the interest related to these payments was paid. As of December 31, 2016, the payments in question totaled 90 million. The agreement entered into with the Group s principal fi nancial partners therefore restructures the repayments of its club deal loans, its bilateral loans, its fi nance leases, and its short-term loans, while 5 169

172 5 Notes COMPANY FINANCIAL STATEMENTS to the Company financial statements also providing for an increase in the loans margins progressively over the extended payment schedule, as well as the granting of additional sureties. In consideration of the restructuring, the Group agreed to a number of restrictions, in particular regarding its indebtedness, cash fl ow, assets disposals, investments as well as the dividend policy. Regarding the payment of dividends in cash, it is subject to a leverage ratio: if this ratio is not achieved, the payment in cash associated with the dividend shall not exceed 10 million, with the specifi cation that the dividends owed to JACCAR Holdings shall be not be paid in cash; dividend payments in cash may be made as soon as the leverage ratio has been achieved whereas payment in shares may be made without any limitations regardless of the leverage ratio. The refi nanced loans will include fi nancial covenants: (i) a debtto-equity ratio taking into account certain off-balance sheet items (until the effective date of IFRS 16) that must be lower than 3.2, (ii) a liquidity ratio facilitating minimum cash position amounts within the Group, and specifi cally, 50 million at the level of the subsidiary that centralizes the cash position as well as (iii) a minimum adjusted EBITDAR commitment. This restructuring agreement, which was signed on March 6, 2017, will enter into force by June 30 and at the latest by July 15, 2017, once the conditions subsequent have been lifted and the conditions precedent have been satisfi ed namely, the signature of agreements to reschedule 143 million in balloon loans, the Group obtaining fi nancing in the amount of 60 million and agreements in principle for an additional 60 million, the renegotiation of the agreement with ICBC Financial leasing and obtaining the repayment of an advance granted to JACCAR Holdings during the negotiations for the acquisition of gas business activities, as well as the satisfaction of certain administrative and documentary conditions. As of the closing date, the Group had already taken various initiatives to fulfi ll the conditions precedent for the agreement. The Group initiated discussions with all the fi nancial partners concerned by the signature of rescheduling agreements of the 143 million in balloon loans; it should be borne in mind that such loans are generally refi nanced when they fall due so as to be aligned with the useful life of the funded economic asset. As of the closing date, the Group had obtained an agreement in principle regarding a fi ve-year fi nance lease agreement making it possible to refi nance a PSV Bourbon Explorer for 23.3 million. The entry into force of this agreement remains subject to the satisfaction of certain conditions precedent aligned with those of the restructuring agreement signed on March 6. A term sheet has also been signed with the fi nancial partners for the fi nancing of three vessels under fi nance leases in the amount of 18 million, and a mandate letter has been signed covering fi nancing in the amount of 60 million. Other fi nancing is being discussed with foreign fi nancial partners. It is expected that these discussions will be concluded in the second half of As of the closing date, the Group had also fi nalized the renegotiation of the agreement with ICBC Financial Leasing and had obtained a formal repayment commitment for the advance granted to JACCAR Holdings during the negotiation of the acquisition of the gas business activities that specifi es the fi nancing methods JACCAR Holdings intends to use to make this repayment. It should also be noted that as of the closing date, no event specifi ed in the conditions subsequent of the agreement (notably the administrative and documentary conditions) had occurred; the Group further believes that the risk of any of these events occurring before the entry into force of the agreement is weak. This agreement should enable the Group to manage the decline in business in the event that the low point of the cycle lasts longer, without hindering the planned transition toward new business models rendered possible by the digital revolution. In light of the steps that the Group has already taken, and given the Management deems it highly probable that all of the conditions precedent and the resulting debt restructuring will occur and will be implemented by June 30, 2017, thus strengthening the Company s liquidity and reducing its need for new fi nancing for the coming years as a result of the restructuring and of other steps taken to reduce operating expenditures, the Management believes that it will have suffi cient liquidity to pay its obligations as they come due over the 12 months following the closing date of its fi nancial statements. Therefore the parent company fi nancial statements as of December 31, 2016 were prepared on a going concern basis. The presentation of the annual fi nancial statements takes into account the provisions of ANC Regulation relating to the French General Accounting Plan. The method used when stating the value of items in the fi nancial statements is the historical cost method. 170

173 COMPANY FINANCIAL STATEMENTS Notes to the Company financial statements 2/ Shareholders equity 2.1 SHARE CAPITAL STRUCTURE As at December 31, 2016, Corporation s share capital, totaling 48,493,096.71, was divided into 76,342,603 shares. The change in the share capital was as follows: Number of shares thousands Share capital at December 31, ,195,528 31,883 Options exercised between January 1, 2007 and May 31, ,957 5 Capital increase by issuance of bonus shares through the capitalization of paid-in capital (one bonus share for ten existing shares) following the Combined General Meeting of May 29, ,020,247 3,189 Options exercised between June 1, 2007 and December 31, , Capital increase by issuance of bonus shares through the capitalization of paid-in capital (one bonus share for ten existing shares held) following the Combined General Meeting of June 3, ,546,130 3,523 Options exercised between January 1, 2009 and June 3, , Capital increase through the capitalization of paid-in capital following the granting of bonus shares to employees on November 2, , Options exercised between June 3, 2009 and December 31, , Options exercised between January 1, 2010 and March 31, , Capital increase through the capitalization of paid-in capital following the granting of bonus shares to employees on February 22, ,463 1 Options exercised between April 1, 2010 and December 31, , Options exercised between January 1, 2011 and June 1, , Capital increase by issuance of bonus shares through the capitalization of paid-in capital (one bonus share for ten existing shares held) following the Combined General Meeting of June 1, ,155,681 3,910 Capital increase through the capitalization of paid-in capital following the granting of bonus shares to employees on November 2, , Options exercised between June 1, 2011 and November 2, , Capital increase by issuance of bonus shares through the capitalization of paid-in capital (one bonus share for ten existing shares) following the Combined General Meeting of May 28, ,778,153 4,305 Cancelation of treasury shares as part of a capital reduction on May 04, 2015 following the Board decision of February 23, 2015 (2,953,357) (1,876) Capital increase resulting from the distribution shares in payment of the 2015 dividend, following the Combined General Meeting of May 26, ,736,272 3,008 Capital stock at December 31, ,342,603 48,493 5 Following the decision taken by the Extraordinary General Meeting on May 29, 2007, the share capital was increased by 3,188,879 from 31,888,801 to 35,077,680 through the capitalization of a portion of the paid-in capital. This capital increase was completed by the issuance of 5,020,247 shares allotted to shareholders in the ratio of one new share for ten existing shares. The options exercised in 2007 resulted in the issuance of 245,527 shares and a capital increase of 155,960. The excess subscription price over the par value was recognized as a share premium in the amount of 1,795,735. Following the decision taken by the Extraordinary General Meeting on June 3, 2009, the share capital was increased by 3,522,922 from 35,229,221 to 38,752,143 through the capitalization of a portion of the paid-in capital. This capital increase was completed by the issuance of 5,546,130 new shares allotted to shareholders in the ratio of one new share for ten existing shares. The options exercised in 2009 resulted in the issuance of 102,970 shares and a capital increase of 65,407. The excess subscription price over the par value was recognized as a share premium in the amount of 1,728,930. On November 2, 2009, the issuance of bonus shares to benefi ciary employees meeting the criteria used by the Board of Directors of August 27, 2007 led to a capital increase of 48,799 through the capitalization of a portion of the paid-in capital. This capital increase was completed by the issuance of 76,824 new shares. The options exercised in 2010 resulted in the issuance of 343,856 shares and a capital increase of 218,417. The excess 171

174 5 Notes COMPANY FINANCIAL STATEMENTS to the Company financial statements subscription price over the par value was recognized as a share premium in the amount of 7,255,299. Following the decision taken by the Extraordinary General Meeting on June 1, 2011, the share capital was increased by 3,910,110 from 39,101,110 to 43,011,221 through the capitalization of a portion of the paid-in capital. This capital increase was completed by the issuance of 6,155,681 new shares allotted to shareholders in the ratio of one new share for ten existing shares. The options exercised in 2011 resulted in the issuance of 47,025 shares and a capital increase of 29,870. The excess subscription price over the par value was recognized as a share premium in the amount of 1,051,361. On November 2, 2011, the issuance of bonus shares to benefi ciary employees meeting the criteria used by the Board of Directors of August 27, 2007 led to a capital increase of 29,400 through the capitalization of a portion of the paid-in capital. This capital increase was completed by the issuance of 46,284 new shares. Following the decision taken by the Extraordinary General Meeting on May 28, 2013, the share capital was increased by 4,305,507 from 43,055,075 to 47,360,582 through the capitalization of a portion of the paid-in capital. This capital increase was completed by the issuance of 6,778,153 new shares allotted to shareholders in the ratio of one new share for ten existing shares. Following the Board s decision of February 23, 2015 to cancel treasury shares, the capital was reduced by 1,875,983 from 47,360,582 to 45,484,599 and the difference between the overall purchase cost of buying the canceled treasury shares and their par value was charged against the item Other reserves. Following the decision of the Combined General Meeting of May 26, 2016 and the payment of the portion of the 2015 dividend in new Company shares on July 18,2016, the share capital was increased by 3,008,497 to 48,493,097 by incorporation of a portion of the issuance premiums account, through the issuance of 4,736,272 new shares. Number of securities Issued during Reimbursed Class of securities At year-end the year during the year Ordinary shares 76,342,603 4,736,272-3 NUMBER OF SHARES OUTSTANDING BETWEEN THE OPENING DATE AND THE CLOSING DATE Increases Decreases Number of shares 71,606,331 4,736,272-76,342,603 Number of treasury shares held (401,792) (1,362,216) 1,337,432 (426,576) TOTAL 71,204,539 3,374,056 1,337,432 75,916,027 3 NUMBER OF VOTING RIGHTS AT DECEMBER 31, 2016 Number of shares outstanding 76,342,603 Of which number of treasury shares with no voting rights 426,576 Number of shares with voting rights 75,916,

175 COMPANY FINANCIAL STATEMENTS Notes to the Company financial statements 2.2 CHANGES IN EQUITY (in thousands) Share capital Share premiums Reserves and retained earnings Profit (loss) for the year Balance as of December 31, 2015 prior to the appropriation of income 45,485 48, ,677 63, ,066 Capital increase 3,008 42, ,752 Appropriation of 2015 income 63,627 (63,627) - Dividends paid (71,205) - (71,205) Profi t (loss) for the period ,371 28,371 Other changes BALANCE AS OF DECEMBER 31, 2016 PRIOR TO THE APPROPRIATION OF INCOME 48,493 91, ,099 28, ,984 Total 3/ Stock option (subscription or purchase) plans, bonus share award plans 3.1 STOCK OPTION SUBSCRIPTION OR PURCHASE PLANS Corporation issued eleven stock option or purchase plans, three of which were in force as of December 31, 2016, representing 3,223,509 stock options at that date. Their main features are shown in the table below: December 2011 November 2012 December 2013 Date of authorization by the Combined General Meeting June 1, 2011 June 1, 2011 June 1, 2011 Date of authorization by the Board of Directors December 5, 2011 November 30, 2012 December 2, 2013 Number of stock options authorized 2,789,050 29,700 1,037,000 Total number of allotted stock options adjusted as at ,240,809 29, ,000 Number of benefi ciaries 1, Start date December 2015 November 2016 December 2017 Expiration date December 2017 November 2018 December 2019 Subscription price in euros adjusted as at Subscription price in euros (before adjustment) N.b.: the only ground for early exercise is the death of the employee

176 5 Notes COMPANY FINANCIAL STATEMENTS to the Company financial statements 3.2 BONUS SHARE ALLOCATION In 2013, the Board of Directors authorized a restricted stock award of existing or new shares to the salaried members of staff, or certain categories of them, of all of Corporation s subsidiaries. The vesting of the shares was subject to fulfi llment of the conditions and criteria laid down by the Board of Directors, as described below: 3 60% of the shares were contingent on employment at the end of two years: recipients still employed by on December 2, 2015 fulfi lled this condition; 3 40% of the shares were subject to employment at the end of two years and the attainment of performance criteria: 3 20% was awarded if the 2013/2014/2015 average TRIR (Total incidents recorded per million hours worked based on 24 hours per day) was 0.65 or less; 100% of this criterion was attained with an average of 0.60, 3 20% was granted if the fl eet availability rate in 2015 was greater than or equal to 95%; 100% of this criterion was attained with an average of 96.4%. The allotted shares were covered by the share buy-back that took place in December 2016 Date of authorization by the Combined General Meeting June 1, 2011 Date of authorization by the Board of Directors December 2, 2013 Number of benefi ciaries 2,103 Total number of allotted bonus shares adjusted as at ,400 Corporate offi cers Vesting date of the shares for French residents December 2, 2015 (1) Vesting date of the shares for foreign residents December 2, 2017 (1) End of lock-up period December 2, 2017 Total number of canceled or voided shares 136,000 Shares awarded (1) to French residents after two years 312,000 Bonus shares to be allotted to foreign residents in ,400 (1) The vesting period is two years for French residents (followed by a two-year lock-up period) and four years for foreign residents (with no lock-up period). 4/ Other equity capital As of December 31, 2016, the bond issues totaled 119,723 thousand. These perpetual securities give Corporation the right to repay them at par starting in October They provide the right to a semiannual fi xed rate coupon at 4.70% for the fi rst three years, a coupon that will be mandatory if dividends are paid. At the end of the fi rst three years, the loan will be repayable at par solely at s initiative. In the event of non-repayment on such date, the coupon will be stepped up as follows: 3 years 4 to 6: Reseted 3-year Midswap Fixed Interest Rate +650 bps; 3 year 7 to 9: Reseted 3-year Midswap Fixed Interest Rate +850 bps; 3 year 10 and after: Floating Interest Rate 3mth Euribor +1,050 bps. Following year 10, the coupon will be payable on a quarterly basis instead of a half-year basis. The clauses that trigger payment of the coupons are as follows: 3 dividend payment on equity securities; 3 purchase of equity securities; 3 purchase or redemption of any parity securities. The payment of interest remains optional in all other cases. In the event of non-payment of interest, the interest is capitalized. Unpaid, capitalized interest becomes payable: 3 on the date of the next coupon payment; 3 in the event that the loan is repaid; 3 in the event of a court-ordered liquidation (whether or not voluntary) of the issuer. As of December 31, 2016, 1.05 million has been recognized as accrued interest not due corresponding to the share in the interest that will be paid during the fi rst half of

177 COMPANY FINANCIAL STATEMENTS Notes to the Company financial statements 5/ Gross long-term financial assets Equity interests were valued at their purchase price (historical cost method), excluding the costs incurred in their acquisition. At year-end, the inventory value of the shares is based on the percentage of equity held, adjusted to take any unrealized gains or losses into account. For corporate securities listed on a regulated market, the inventory value applied corresponds to the average price over the last month. The inventory value of securities in foreign currency is converted at the exchange rate on the closing date. Where necessary, the gross value of the securities was adjusted to this inventory value by applying a provision. Where a portion of a set of securities conferring the same rights is sold, the entry value of the sold portion is estimated using the FIFO method (First In, First Out). The change in gross long-term fi nancial assets can be analyzed as follows: (in thousands) Increases Decreases Equity interests 42, ,506 Receivables from non-consolidated companies TOTAL 42, ,506 6/ Provisions A provision is recognized where there exists an obligation towards a third party and it is likely or certain that this obligation will result in an outfl ow of resources in favor of that third party without receiving at least an equivalent value in exchange. Provisions are calculated in the amount corresponding to the best estimation of the outfl ow of resources needed to extinguish the liability. (in thousands) Increases Decreases Provisions for risks and contingencies: Provisions for guarantee of liabilities on sales of investments Provisions for foreign exchange losses Provisions for taxes Other provisions for risks and contingencies (1)(2)(3) 5,217 4,860 (500) 857 Subtotal 5,753 5,396 (500) 857 Provisions for impairment: Equity interests Accounts receivable - - (62) 62 Current accounts Marketable securities Subtotal 8 - (62) 70 5 TOTAL 5,761 5,396 (562) 927 Of which allowances and reversals: - from operating activities - (62) - fi nancial non-recurring 5,396 (500) (1) Following the most recent events in an old litigation, an additional provision for litigation was allocated in (2) In 2016, 319,000 treasury shares were allocated for free. Since the grant date was set at February 12, 2017, a 2.4 million provision was allocated on a prorated basis from December 2015 to December (3) As of December 31, 2016, 60,568 treasury shares had not been granted. A provision for risks of 389 thousand has been formed in the event that these shares are canceled. 175

178 5 Notes COMPANY FINANCIAL STATEMENTS to the Company financial statements 7/ Receivables and liabilities Receivables and liabilities were valued at their par value. Provisions for impairment of receivables were recognized to compensate for any risks of non-recovery. (in thousands) Gross amount Up to 1 year More than 1 year Accounts receivable: Other trade receivables Income tax Value added tax 2 2 Group and associates (1) 835, ,076 - Sundry receivables Prepaid expenses TOTAL 835, ,322 - (1) Group and associates receivables mainly refer to a current account advance in the amount of 822 million. (in thousands) Gross amount Up to 1 year 1 to 5 years More than 5 years Liabilities: Bank borrowings - falling due less than 1 year after contracted falling due more than 1 year after contracted Borrowings and other fi nancial liabilities 1,050 1, Trade and other payables Social security and other social welfare bodies Income tax Other taxes and similar payments Debt on non-current assets Group and associates 6,892 6, Other liabilities TOTAL 8,500 8, / Advances to executives Pursuant to Articles L and L of the French Commercial Code, no advances or loans were awarded to executives of the Company. 176

179 COMPANY FINANCIAL STATEMENTS Notes to the Company financial statements 9/ Marketable securities Marketable securities at December 31, 2016 correspond solely to treasury shares. With respect to other marketable securities, a provision for impairment is recorded where the acquisition cost of the shares is greater than the average stock price for the month of December. CM CIC Securities is responsible for managing the liquidity contract, in accordance with the AMAFI charter (47,008 shares at December 31, 2016). The statement of treasury shares held at the end of the year is as follows: Number shares as of Number shares as of Increase in Reduction in Gross Net (in thousands) fiscal year fiscal year Values Provisions Values Excluding liquidity contract (1) 399, ,676 (312,200) 379,568 5,187 (2,760) 2,427 Liquidity contract 2,700 1,069,540 (1,025,232) 47, TOTAL 401,792 1,362,216 (1,337,432) 426,576 5,711 (2,760) 2,951 (1) These shares are intended to cover share purchase options or any other employee shareholding scheme. The marketable securities arising out of the KEPLER-CHEVREUX contract are the subject of a provision for risk of 2,760 thousand (see note 6 Provisions (2) & (3)). Based on the share price at December 31, 2016, which was 12.25, the total value of treasury shares held amounted to 5,226 thousand. 10/ Cash and cash equivalents Cash held in banks was valued at its par value, i.e. 429 thousand. 11/ Deferred income and expenses 5 (in thousands) Prepaid expenses Deferred income - - TOTAL Prepaid expenses refer essentially to the account operation payment to CM CIC Securities. They must be recognized under the operating result. 177

180 5 Notes COMPANY FINANCIAL STATEMENTS to the Company financial statements 12/ Currency translation di erences on receivables and liabilities in foreign currencies Receivables and liabilities in foreign currencies were converted and recognized in euros based on the latest known exchange rate. At December 31, 2016, no unrealized foreign exchange gains or losses existed. 13/ Factors impacting several balance sheet items 13.1 ASSETS (in thousands) Prepayments and accrued income: - - Operating activities Financial transactions - - Commercial paper Related parties: 877, ,798 Equity interests 42,506 42,506 Receivables from non-consolidated companies Loans Trade and other receivables 123 Other receivables (1) 835, ,292 TOTAL 877, ,798 (1) Other receivables mainly refers to a current account advance in the amount of 822 million LIABILITIES (in thousands) Accruals and deferred income: - - Operating activities - - Financial transactions - - Notes payable - - Related parties: 6,481 1,307 Borrowings and other fi nancial liabilities - - Trade and other payables Group and associates 6, TOTAL 6,481 1,

181 COMPANY FINANCIAL STATEMENTS Notes to the Company financial statements 14/ Executive compensation The members of the Board of Directors, including its Chairman and the members of the Nominating, Compensation and Governance Committee and Audit Committee, together received 374,000 in Directors fees in 2016 for performing their duties. The Chairman of the Board of Directors received 72,000 in such capacity for the period July-December / Details of non-recurring income and expenses (in thousands) 2016 Non-recurring expenses 8,784 From management operations 1 From capital transactions 3,387 Net book value of equity interests sold - Share buybacks 281 Penalties following tax audits 0 Other 3,106 Non-recurring amortization, depreciation and provisions 5,396 Tax provision 536 Other provisions for risks and contingencies 4,860 Non-recurring income 744 From management operations - From capital transactions 244 Income from sale of equity investments - Share buybacks 235 Other 9 Reversals of provisions and expense transfers 500 Tax provision reversal - Reversal of provision for guarantee of liabilities - Reversal of risk provision / Related parties (in thousands) Financial expenses (1) 1,712 - Financial income (2) 41,397 64,294 (1) Financial expenses consist of the allocation of FINANCIERE s 2015 loss. (2) Financial income corresponds to income from equity interests (dividends) in the amount of 40,106 thousand and interest on current account advances in the amount of 1,291 thousand. 179

182 5 Notes COMPANY FINANCIAL STATEMENTS to the Company financial statements 17/ Income tax Distribution (in thousands) Income before tax Tax due Net income after tax Income from current operations 25,502-25,502 Short-term non-recurring income (8,040) - (8,040) Long-term non-recurring income Income tax following tax adjustments - - Tax on dividends - (764) (764) Tax grouping surplus - 11,673 11,673 ACCOUNTING INCOME 17,462 10,909 28,371 Income from current operations was subject to tax disallowances (non-deductible expenses on income from current operations) and deductions (non-taxable proceeds on income from current operations) in order to determine a tax base at the statutory-rate. The same method was used to determine the taxable long-term non-recurring income and the corresponding tax. The tax grouping surplus for 2016 was 11,978 thousand after deducting the competitiveness and employment tax credit (CICE) for 2016 in the amount of 305 thousand. As at December 31, 2016 Corporation had tax defi cits that can be carried forward of 16,921 thousands and tax defi cits related to tax consolidation that can be carried forward of 509,914 thousand. Corporation opted to use the French tax consolidation scheme from January 1, The scope of consolidation at December 31, 2016 was composed of the following companies: Corporation Maritime Placements Provence Languedoc Offshore Surf Les Abeilles St Nikolas Bourbon Supply Investissements Bourbon Offshore CEMTAF Bourbon Offshore Craft Bourbon Salvage Investments Bourbon Offshore Gaia Bourbon Gaia Supply Bourbon Subsea Services Bourbon Subsea Services Investments Bourbon PS Bourbon Subsea PS Bourbon Sun III ex Bourbon AD2 Bourbon Offshore Marine Services ex Bourbon AD3 Bourbon AD4 SNC AHTS1 SNC Liberty 201 SNC Liberty 204 SNC Liberty 212 SNC Liberty 233 SNC Liberty 234 SAS Caroline 8 SNC Altair SAS Caroline 20 SAS Caroline 21 SAS Caroline 22 SAS Caroline 23. The taxation agreement stipulates that the tax charge is borne by the subsidiary, as is the case in the absence of tax consolidation. The tax saving related to the defi cit, kept by Corporation, is treated as an immediate gain. 18/ Increase and reduction in future tax liability (in thousands) Increase Provisions for risks and contingencies - 5,621 Currency translation differences Assets - - TOTAL - 5,621 Reduction Contribution to age and disability pensions - - Provisions (foreign exchange losses) - - Provisions for risks and contingencies 4,895 - Tax income from partnerships 4,393 - Currency translation differences Liabilities - - TOTAL 9,

183 COMPANY FINANCIAL STATEMENTS Notes to the Company financial statements 19/ O -balance sheet commitments In connection with bareboat lease transactions and under a loan, Corporation guaranteed a total of 1,218 thousand for its subsidiaries. 20/ Events after the reporting period On March 6, 2017, the Group signed an agreement with a number of fi nancial institutions and partners to restructure its principal debt in the amount of million. In this context, thus restructured its debt as set out in note 1. This restructuring agreement, which was signed on March 6, 2017, will enter into force by June 30 and at the latest by July 15, 2017, once the conditions precedent and subsequent have been satisfi ed: the signature of agreements to reschedule 143 million in balloon loans, the Group obtaining fi nancing in the amount of 60 million and agreements in principle for an additional 60 million, the renegotiation of the agreement with ICBC Financial Leasing and obtaining the repayment of an advance granted to JACCAR Holdings during the negotiations for the acquisition of gas business activities, as well as the satisfaction of certain administrative and documentary conditions. As of the closing date, the Group had already taken various initiatives to fulfi ll the conditions precedent for the agreement. The Group initiated discussions with all the fi nancial partners concerned by the signature of rescheduling agreements of the 143 million in balloon loans; it should be borne in mind that such loans are generally refi nanced when they fall due so as to be aligned with the useful life of the funded economic asset. As of the closing date, the Group had obtained an agreement in principle regarding a fi ve-year fi nance lease agreement making it possible to refi nance a PSV Bourbon Explorer for 23.3 million. The entry into force of this agreement remains subject to the satisfaction of certain conditions precedent aligned with those of the restructuring agreement signed on March 6. A term sheet has also been signed with the fi nancial partners for the fi nancing of three vessels under fi nance leases in the amount of 18 million, and a mandate letter has been signed covering fi nancing in the amount of 60 million. Other fi nancing is being discussed with foreign fi nancial partners. It is expected that these discussions will be concluded in the second half of As of the closing date, the Group had also fi nalized the renegotiation of the agreement with ICBC Financial Leasing and had obtained a formal repayment commitment for the advance granted to JACCAR Holdings during the negotiation of the acquisition of the gas business activities. It should also be noted that, as of the closing date, no event specifi ed in the conditions subsequent of the agreement (notably the administrative and documentary conditions) had occurred; the Group further believes that the risk of any of these events occurring before the entry into force of the agreement is weak. As announced on April 12, 2017, in line with the negotiations that led to the restructuring of its principal debt, also reached an agreement to reorganize lease payments on the vessels covered by the sale and bareboat chartering contracts concluded with ICBC Financial Leasing in 2013 and This agreement provides for a USD240 million reduction in s charter payments between 2016 and 2018 in consideration for the two-year extension of the initial bareboat charter period at a rate of 8% and more favorable commercial terms for ICBC Financial Leasing

184 5 Notes COMPANY FINANCIAL STATEMENTS to the Company financial statements 21/ Subsidiaries and equity interests (in thousands) Form Share capital Equity other than capital % owned Detailed information on subsidiaries and equity interests whose inventory value exceeds 1% of Corporation s share capital A Subsidiaries (more than 50% owned by Corporation) Bourbon Maritime France SAS 3, , Financière Bourbon France SNC 626 8, B Equity interests (10% to 50% of capital owned by Corporation) Information regarding the other subsidiaries and equity interests A Subsidiaries (more than 50% owned by Corporation) 1. French subsidiaries Foreign subsidiaries B Equity interests (10% to 50% of capital held by Corporation) 1. French subsidiaries Foreign subsidiaries N.b: for foreign companies, the share capital and equity are converted at the closing rate, while the result and revenues are converted at the average rate. 182

185 COMPANY FINANCIAL STATEMENTS Notes to the Company financial statements Equity interests Book value Gross Provisions Net Income/ loss from the last fiscal year Loans and advances granted by Corporation Securities and endorsements given by Corporation Pre-tax revenues from the last fiscal year Dividends received by Corporation 41, ,722 56, ,269 40, ,

186 5 Statutory COMPANY FINANCIAL STATEMENTS Auditors report on the financial statements (year ended December 31, 2016) STATUTORY AUDITORS REPORT ON THE FINANCIAL STATEMENTS (YEAR ENDED DECEMBER 31, 2016) This is a free translation into English of the Statutory Auditors report issued in French and is provided solely for the convenience of English speaking readers. This report should be read in conjunction with, and construed in accordance with, French law and professional auditing standards applicable in France. To the Shareholders, In accordance with our appointment as Statutory Auditors by your Shareholders Meetings, we hereby report to you for the year ended 31 December 2016 on: 3 the audit of the accompanying fi nancial statements of Corporation (formerly ); 3 the justifi cation of our assessments; 3 the specifi c procedures and disclosures required by law. These fi nancial statements have been approved by the Board of Directors. Our role is to express an opinion on these fi nancial statements based on our audit. I. OPINION ON THE FINANCIAL STATEMENTS We conducted our audit in accordance with professional standards applicable in France. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the fi nancial statements are free of material misstatement. An audit involves performing procedures, using sampling techniques or other methods of selection, to obtain audit evidence about the amounts and disclosures in the fi nancial statements. An audit also includes assessing the accounting principles used and signifi cant estimates made, as well as evaluating the overall fi nancial statement presentation. We believe that the audit evidence we have obtained is suffi cient and appropriate to provide a basis for our audit opinion. In our opinion, the fi nancial statements give a true and fair view of the assets and liabilities and the fi nancial position of the Company as of 31 December 2016 and of the results of its operations for the year then ended in accordance with generally accepted accounting principles in France. Without qualifying the above opinion, we draw your attention to Note 1 Accounting policies to the fi nancial statements outlining the current restructuring of the majority of fi nancial debt that should be completed by 15 July 2017 and the related conditions precedent, as well as the reasons for which the going concern principle was maintained for the preparation of the fi nancial statements. II. JUSTIFICATION OF OUR ASSESSMENTS The accounting estimates contributing to the preparation of the fi nancial statements were made in an uncertain environment relating to the sharp slowdown in the offshore oil market that made it diffi cult to assess the economic outlook. It is in this context that, in accordance with the requirements of Article L of the French Commercial Code (Code de commerce) relating to the justifi cation of our assessments, we bring to your attention the following matters: Going concern: As stated in the fi rst part of this report, Note 1 Accounting policies to the fi nancial statements mentions the conditions precedent relating to the current restructuring of fi nancial debt, their progress and management s assessment of whether the maintenance of the going concern principle is appropriate. 184

187 COMPANY FINANCIAL STATEMENTS Statutory Auditors report on the financial statements (year ended December 31, 2016) We examined the provisions stipulated in the refi nancing agreement. Based on our work and the information made available to us to date, and as part of our assessment of the accounting policies adopted by your Company, we believe that the note to the fi nancial statements provides an appropriate disclosure on the Company s situation with regard to going concern. Participating interests: Participating interests, which present a net amount of 42,499,000 in the balance sheet as at 31 December 2016, were stated at purchase cost and written down based on their value in use according to the terms and conditions described in Note 5 Gross longterm investments to the fi nancial statements. We assessed the approach adopted by, as described in this note, based on the items available to date and performed sampling tests to verify the application of such approach. These assessments were performed as part of our audit approach for the fi nancial statements taken as a whole and therefore contributed to the expression of our opinion in the fi rst part of this report. III. SPECIFIC VERIFICATIONS AND DISCLOSURES In accordance with professional standards applicable in France, we have also performed the specifi c verifi cations required by law. We have no comments to make on the fair presentation and consistency with the fi nancial statements of the information given in the Board of Directors management report and in the documents addressed to Shareholders with respect to the fi nancial position and the fi nancial statements. Concerning the information presented in accordance with the requirements of Article L of the French Commercial Code relating to remuneration and benefi ts received by corporate offi cers and any other commitments made in their favour, we have verifi ed its consistency with the fi nancial statements, or with the underlying information used to prepare these fi nancial statements and, where applicable, with the information obtained by your Company from companies controlling your Company or controlled by it. Based on these procedures, we attest to the accuracy and fairness of this information. Pursuant to the law, we have verifi ed that the management report contains the appropriate disclosures as to the identity of and voting rights held by shareholders. Lyon and Marseille, 21 April 2017 The Statutory Auditors EurAAudit C.R.C. Cabinet Rousseau Consultants Jean-Marc Rousseau Deloitte & Associés Hugues Desgranges 5 185

188 5 COMPANY FINANCIAL STATEMENTS Statutory Auditors special report on regulated agreements and commitments STATUTORY AUDITORS SPECIAL REPORT ON REGULATED AGREEMENTS AND COMMITMENTS Shareholders Meeting held to approve the fi nancial statements for the year ended 31 December This is a free translation into English of the Statutory Auditors special report on regulated agreements and commitments issued in the French language and is provided solely for the convenience of English speaking readers. This report on regulated agreements and commitments should be read in conjunction with, and construed in accordance with, French law and professional auditing standards applicable in France. It should be understood that the agreements and commitments reported on are only those provided by the French Commercial Code and that the report does not apply to those related party transactions described in IAS 24 or other equivalent accounting standards. To the Shareholders, In our capacity as Statutory Auditors of your Company, we hereby report to you on regulated agreements and commitments. The terms of our engagement require us to communicate to you, based on information provided to us, the principal terms and conditions of those agreements and commitments brought to our attention or which we may have discovered during the course of our audit, as well as the reasons justifying that such agreements and commitments are in the Company s interest, without expressing an opinion on their usefulness and appropriateness or identifying other such agreements and commitments, if any. It is your responsibility, pursuant to Article R of the French Commercial Code (Code de commerce), to assess the interest involved in respect of the conclusion of these agreements and commitments for the purpose of approving them. Our role is also to provide you with the information stipulated in Article R of the French Commercial Code relating to the implementation during the past year of agreements and commitments previously approved by the Shareholders Meeting, if any. We conducted the procedures that we deemed necessary in accordance with the professional guidelines of the French National Institute of Statutory Auditors (Compagnie Nationale des Commissaires aux Comptes) relating to this engagement. These procedures consisted in agreeing the information provided to us with the relevant source documents. AGREEMENTS AND COMMITMENTS SUBMITTED TO THE APPROVAL OF THE SHAREHOLDERS MEETING Agreements and commitments authorised during the year We hereby inform you that we have not been advised of any agreement or commitment authorised during the year to be submitted to the approval of the Shareholders Meeting pursuant to Article L of the French Commercial Code. AGREEMENTS AND COMMITMENTS PREVIOUSLY APPROVED BY THE SHAREHOLDERS MEETING Agreements and commitments approved in prior years a) with continuing effect during the year Pursuant to Article R of the French Commercial Code, we have been informed that the following agreements and commitments, previously approved by Shareholders Meetings of prior years, have remained in force during the year. With Mr. Laurent Renard, Executive Vice President and Chief Financial Officer of Nature and purpose: Considering Mr. Laurent Renard s seniority within, the strategic positions he held for over 10 years and his extensive knowledge of s business, strategy and outlook and the fi nancial, economic, commercial and technical information to which he had access, as well as his privileged relations with customers, a non-compete undertaking relating to the termination of a manager s duties upon retirement was concluded in order to preserve the legal interests of and the Group s subsidiaries. Parties concerned: Mr. Laurent Renard, Executive Vice President and Chief Financial Offi cer of until 31 December Terms and conditions during the year: Under the 3-year agreement signed by the Company with Mr. Laurent Renard in December 2014 and effective as of 1 January 2015, a series of payments totalling 300,000 (compensation in the form of a salary) shall be made on 31 January 2016, 31 January 2017 and 31 January 2018 at the latest. Thus, a gross payment of 110,000 was made in this respect in

189 COMPANY FINANCIAL STATEMENTS Statutory Auditors special report on regulated agreements and commitments b) without effect during the year 1. With SINOPACIFIC Group companies With ZHEJIANG SHIPBUILDING Co, Ltd Nature and purpose: Ship orders placed with ZHEJIANG SHIPBUILDING Co, Ltd, with advances on construction contracts. Parties concerned at the signature date: Mr. Jacques d Armand de Chateauvieux, Chairman and Chief Executive Offi cer of and partner in SINOPACIFIC. Terms and conditions during the year, unchanged in relation as of December 31, 2015: As at 31 December 2016, orders in progress concerned one ship for an amount of $46.8 million. On the same date, these orders resulted in the payment of advances totalling $39.1 million, covered for up to $36.5 million by advance payment guarantees granted by SINOPACIFIC SHIPBUILDING. With CROWN HERA, Ltd and ZHEJIANG SHIPBUILDING Co, Ltd Ship orders with ZHEJIANG SHIPBUILDING Co, Ltd via CROWN HERA, Ltd under the framework agreement signed between OFFSHORE ( subsidiary) and CROWNSHIP, Ltd and ZHEJIANG SHIPBUILDING Co, Ltd involving 62 ships to be delivered between 2012 and Nature and purpose: Order for eight PSV offshore ships (SPP 35 design). Parties concerned at the signature date: Mr. Jacques d Armand de Chateauvieux, Chairman and Chief Executive Offi cer of and director of SINOPACIFIC and Mrs. Lan Vo, director of and of SINOPACIFIC. Terms and conditions during the year, unchanged in relation as of December 31, 2015: The order totalled $204.8 million and is subject to the terms of the framework agreement signed on 25 June It replaces the initially planned order of 20 SPU 1000s. As at 31 December 2016, orders in progress concerned one ship for an amount of $25.6 million and resulted in the payment of advances totalling $6.5 million, not covered by advance payment guarantees. Lyon and Marseille, 21 April 2017 The Statutory Auditors EurAAudit C.R.C. Cabinet Rousseau Consultants Jean-Marc Rousseau Deloitte & Associés Hugues Desgranges 5 187

190 5 188

191 6 REPORT OF THE CHAIRMAN OF THE BOARD OF DIRECTORS REPORT OF THE CHAIRMAN OF THE BOARD OF DIRECTORS ON THE MODUS OPERANDI OF THE BOARD OF DIRECTORS AND ON INTERNAL CONTROL AND RISK MANAGEMENT PROCEDURES 190 STATUTORY AUDITORS REPORT PREPARED IN ACCORDANCE WITH ARTICLE L OF FRENCH COMPANY LAW (CODE DE COMMERCE) ON THE REPORT PREPARED BY THE CHAIRMAN OF THE BOARD OF DIRECTORS OF THE COMPANY CORPORATION

192 6 Report REPORT OF THE CHAIRMAN OF THE BOARD OF DIRECTORS of the Chairman of the Board of Directors REPORT OF THE CHAIRMAN OF THE BOARD OF DIRECTORS ON THE MODUS OPERANDI OF THE BOARD OF DIRECTORS AND ON INTERNAL CONTROL AND RISK MANAGEMENT PROCEDURES To our Shareholders, Pursuant to the provisions of Article L of the French Commercial Code, the object of this report is to inform shareholders of: 3 the composition of the Board of Directors and the application of the principle of balanced gender representation; 3 the manner in which the Board of Directors planned and organized its work during the year ended December 31, 2016, and the internal control and risk management procedures established by the Company; 3 the restrictions placed by the Board of Directors on the powers of the Chief Executive Offi cer; 3 the fi nancial risks linked to the impact of climate change and the measures that the Company is taking to mitigate them by implementing a low-carbon strategy in all areas of the business; 3 the Code of Corporate Governance used by the Company and the provisions of the Code that have not been followed; 3 the particular methods for shareholder participation in General Meetings; 3 the principles and rules established by the Board of Directors for determining the compensation and benefi ts of any kind granted to corporate offi cers. This report, drafted by the Chairman of the Board of Directors, was prepared based on the work carried out by various Company departments, in particular the Group s Legal and Accounting and Internal Audit Departments. It was approved by the Board of Directors at its meeting on March 13, 2017, following a preliminary review by the Audit Committee. The Company applies the corporate governance practices set out in the AFEP-MEDEF Corporate Governance Code for listed companies, which are those primarily taken into account in preparing this report. This Code can be found on the website The internal regulations of the Board of Directors are available on the Company s website. 1/ Composition of the Board of Directors and manner in which it plans and organizes its work 1.1 COMPOSITION OF THE BOARD OF DIRECTORS During its meeting held on March 13, 2017, the Nominating, Compensation and Governance Committee reviewed current Company practices in the light of the provisions of the AFEP- MEDEF Corporate Governance Code, as interpreted in the guide to the application of the AFEP-MEDEF Code published by the High Committee on Corporate Governance (November 2016 version). The committee concluded that the Company s practices were consistent with the recommendations, except for two provisions which are not applied for the reasons given in the table in section 3.4 of the management report. At December 31, 2016, the Board of Directors was composed of ten Directors, including three women making up 30% of the Board and three foreign nationals (Austrian, Chinese and Nigerian), all of whom have senior management experience and different and complementary skillsets. As provided for in Article 18 of the Company s bylaws, the Board may appoint up to two advisors. At December 31, 2016, Henri d Armand de Chateauvieux, a shareholder owning more than 5% of the share capital and a member of the concert party, appointed advisor by the Board at its meeting of August 25, 2014 for a three-year period has taken offi ce after serving as a Director of the Company for many years. He assists the Board in its work and attends Board meetings in an advisory and non-voting capacity. 190

193 REPORT OF THE CHAIRMAN OF THE BOARD OF DIRECTORS Report of the Chairman of the Board of Directors The Board of Directors appoints its Chairman from among its members. Half of the current members of the Board of Directors have joined the Board in the past three years. They were chosen for their expertise, experience and knowledge of the strategic challenges posed by the complex market in which operates. They also represent the interests of the two concert party members bound by the shareholders agreement, as mentioned in the latest version of the Board s internal regulations dated August 25, 2014, available on the Company s website. At the Combined General Meeting of May 23, 2017, the Board of Directors will nominate two women for the position of Director. The General Meeting will be asked to ratify the temporary appointment of one of the candidates, co-opted to replace Astrid de Lancrau de Bréon, who resigned from offi ce on February 1, 2017 upon taking up the post of Chief Financial Offi cer of Corporation. The two candidates, chosen because they have complementary skillsets to those already represented on the Board, will bring a fresh perspective to the Group s strategic thinking, particularly regarding the digital transformation. If the General Meeting endorses the nominations, the Board will be 40% composed of women, with four women and six men. This is regarded as a fair representation of women on the Board, in accordance with the provisions of Law No of January 27, 2011 (the Copé-Zimmermann Law). A list of the Directors, the date on which their term of offi ce expires, a summary of their CVs, a table of the Directorships held or which have been held during the past fi ve years, including outside the Group, and the shares of the Company that they hold, can be found in section 3.2 of the management report. Directors are appointed by the General Meeting of Shareholders for a term of three years. Between two meetings, in the event of a vacancy due to death or resignation, temporary appointments may be made by the Board of Directors and submitted for ratifi cation by the next meeting. The Board of Directors is staggered in accordance with the recommendations of the AFEP-MEDEF Code, with members re-elected on a rolling basis to ensure the continuity of the work performed by the Board and its committees. Even if the Board currently has only one advisor, it should be noted that if necessary, pursuant to Article 18 of the Company s bylaws, an advisory board composed of a maximum of two advisors may be appointed by the Board of Directors for a three-year term. It shall assist the Board of Directors in its work and attend Board meetings in an advisory and non-voting capacity. General rules relating to the composition of the Board and the appointment of Directors End of tenure General Meeting called to approve the fi nancial statements for the year ended December 31, 2016 General Meeting called to approve the fi nancial statements for the year ended December 31, 2017 General Meeting called to approve the fi nancial statements for the year ended December 31, 2018 Directors whose term is set to end Astrid de Lancrau de Bréon (who resigned with effect from February 1), Guillaume d Armand de Chateauvieux, Baudouin Monnoyeur, Bernhard Schmidt Agnès Pannier-Runacher, Philippe Salle, Mahmud Tukur Jacques d Armand de Chateauvieux, Christian Lefèvre, Xiaowei Wang Changes to the Board s composition during the 2016 fiscal year and since the beginning of the 2017 fiscal year GM/BM date Appointment Renewal Departure CGM Jacques d Armand de Chateauvieux, Christian Lefèvre, Xiaowei Wang BM Adeline Challon-Kemoun (appointed temporarily to replace Astrid de Lancrau de Bréon for the duration of her term) Astrid de Lancrau de Bréon (resigned) 6 191

194 6 Report REPORT OF THE CHAIRMAN OF THE BOARD OF DIRECTORS of the Chairman of the Board of Directors Independence of Board members with respect to the criteria specified in the AFEP-MEDEF Code The Board of Directors reviews annually and on an individual basis, after conferring with the Nominating, Compensation and Governance Committee, the individual position of each Director having regard to all of the AFEP-MEDEF Code s rules on independence. The rules class a Director as independent when he or she has no relationship of any nature with the Company, the Group or its management, which could compromise the exercise of his or her free judgment according to the specifi c independence criteria recommended by the AFEP-MEDEF Code. At its meeting on March 13, 2017, the Board discussed whether Directors relations with the Company were signifi cant or not. As a result, on the advice of the Nominating, Compensation and Governance Committee, the Board of Directors considered four of its members to be independent according to both qualitative and quantitative criteria: Agnès Pannier- Runacher Philippe Salle Bernhard Schmidt Mahmud Tukur Not to be, either currently or at any time in the previous fi ve years: - an employee or Executive Director of the Company; - an employee, Executive Director or Director of a company that the Company consolidates; - an employee, Executive Director or Director of its parent or a company that the parent consolidates. Compliant Compliant Compliant Compliant Not to be an Executive Director of a company in which the Company holds a directorship, directly or indirectly, or in which an employee appointed as such or an Executive Director of the Company (currently in offi ce or having held such offi ce for less than fi ve years) is a Director. Compliant Compliant Compliant Compliant Not to be a customer, supplier, investment banker or commercial banker: - that is material for the Company or its Group; - or for a signifi cant part of whose business the Company or its Group accounts. Compliant Compliant Compliant Compliant Does not have close family ties with any corporate offi cer in the Company. Compliant Compliant Compliant Compliant Not to have been an Auditor of the Company within the previous fi ve years. Compliant Compliant Compliant Compliant Has not been a Director of the Company for more than 12 years. Compliant Compliant Compliant Compliant Moreover, on the basis of the same assessment criteria, following a proposal from the Nominating, Compensation and Governance Committee, the Board concluded that the two candidates to be nominated as Directors at the next General Meeting would be considered independent. 1.2 PRINCIPLE OF GOVERNANCE The Board of Directors has had its own internal regulations since December 10, 2007, defi ning its methods of organization and operation supplementing the prevailing legal and statutory provisions. This document has been reviewed regularly to adapt it to changes in governance rules and practices. The most recent version of the internal regulations is available in full on the Company s website at under Group Corporate Governance Board of Directors Related Documents. The internal regulations also include a Director s charter which sets out the rights and obligations of the Directors, in addition to the rules concerning the ban and/or other restrictions on trading by the Directors in the Company s shares, particularly when they have information not yet made public ( inside information ) or during blackout periods prescribed by law or recommended by the AMF. In that regard, the Company notifi es Directors of the restrictive periods at the start of the fi scal year according to the fi nancial calendar established for the year. 192

195 REPORT OF THE CHAIRMAN OF THE BOARD OF DIRECTORS Report of the Chairman of the Board of Directors Every member of the Board of Directors is individually required to comply with these internal regulations. Every newly appointed Director is made aware of his or her responsibilities and undertakes to comply by signing the Director s charter. Directors ownership of Corporation shares Although French law no longer requires Directors of incorporated companies to hold a minimum number of shares, section 13-V of the Company s bylaws requires each Director to own at least 300 shares. Directors duty of confidentiality Directors have a general duty of confi dentiality concerning Board and committee discussions and with regard to information of a confi dential nature of which they become aware as part of their responsibilities as Directors. The general duty of confi dentiality of Directors has been extended to all of the information and documents of which they are aware as part of their responsibilities as Directors. Obligation to declare conflicts of interest Every Director must continually ensure that their personal situation does not place them in a situation of confl ict of interest with the Group. In accordance with the Director s charter, any Director who has a confl ict of interest must inform the Board so that it can make a ruling, and he or she must abstain from participating in debates and voting on the corresponding resolution. Every Director is also required to make a statement certifying whether or not there is a situation of a confl ict of interest, even if potentially: 3 when they are appointed; 3 every year, as required by the Company during the preparation of the Registration Document. Additional information on the corporate officers To the Company s knowledge, in the past fi ve years, no corporate offi cer: 3 has been found guilty of fraud; 3 has been involved in a bankruptcy, receivership or liquidation; 3 has been found guilty of any offense or been subject to any offi cial public sanction issued by any statutory or regulatory authority; 3 has ever been prevented by a court of law from acting as a member of any administrative, management or supervisory body of any issuer, or from participating in the management or conduct of the business of any issuer. In addition, apart from under related party agreements, concerning potential confl icts of interest, no corporate offi cer has been involved in any arrangement or agreement with the major shareholders, clients, suppliers or others, by virtue of which he has been selected as a Director or as a member of Management. These agreements are not a source of confl ict of interest as they are negotiated and dealt with under normal conditions. To the Company s knowledge, on the date of this document, and subject to these same reserves, no confl ict of interest has been identifi ed between the duties of each member of the Board of Directors and the Management with regards to the Company in their capacity as corporate offi cers and their private interests or other duties. To the Company s knowledge, on the date of this document, with the exception of the Shareholders Agreement signed on June 26, 2014 between JACCAR Holdings, Cana Tera, Jacques d Armand de Chateauvieux, Henri d Armand de Chateauvieux, Mach- Invest and Mach Invest International, which entered into effect on June 30, 2014 for a term of fi ve years as from such date, and which includes undertakings with respect to transfers of the Company s securities (AMF decision No. 214C236 of June 30, 2014), and subject to the collective retention undertakings described in section 2.8 in the part 1.4 of Other Legal and Financial Information, the members of the Board of Directors and of the Management have not agreed to any restrictions on the sale of their shares of the Company. 1.3 MANNER IN WHICH THE BOARD OF DIRECTORS PLANS AND ORGANIZES ITS WORK Role of the Chairman of the Board of Directors The Chairman organizes and directs the work of the Board of Directors, and provides the General Meeting with a report on said work. He supervises the proper functioning of the Company s administrative bodies compliance with the principles and practices of good governance, particularly with regards to the Board s specialized committees. He ensures that the Directors are capable of performing their duties and that they are properly informed. On May 26, 2016, the Annual General Meeting of Shareholders re-elected Jacques d Armand de Chateauvieux to the Board of Directors. At a Board meeting held the same day, the Company s Directors resolved to combine the roles of Chairman of the Board of Directors and Chief Executive Offi cer of the Company and to appoint Jacques d Armand de Chateauvieux as Chairman and Chief Executive Offi cer of the Corporation. The choice of corporate governance model is explained in section 3.1 of the management report

196 6 Report REPORT OF THE CHAIRMAN OF THE BOARD OF DIRECTORS of the Chairman of the Board of Directors Duties of the Board of Directors On the recommendation of the Management, the Board of Directors determines the Group s medium-term strategy and reviews it regularly, appoints the corporate offi cers in charge of managing the Company in accordance with that strategy, oversees the management of the Company and ensures the quality of the information provided to the shareholders and the markets. The Board of Directors examines and approves the medium-term strategic plan and, every year, the annual budget. It ensures that they are properly implemented. The Board of Directors receives regular briefi ngs and can obtain information at all times on any changes in the activity or results of the Group, its fi nancial position, indebtedness, cash position and more generally on any of the Group s commitments, particularly any diffi culties calling into question the implementation of any of the guidelines in the strategic plan. The Board determines the objectives in terms of fi nancial structure and keeps itself appraised of changes to that structure. The following decisions fall within the exclusive authority of the Board of Directors: (a) entry into any strategic partnership in an amount exceeding ten million euros ( 10,000,000) or for a duration exceeding two (2) years; (b) determination of the Company s dividend policy; (c) any planned merger, spin-off, or partial asset contribution; (d) any capital increase (including any decision to eliminate the shareholders pre-emptive subscription right either immediately or in the future) in kind or in cash, including capital increases resulting from a merger, partial asset contribution or contribution in kind; (e) issuance of any securities, whether or not giving access (immediately or in the future) to the Company s share capital or voting rights; and (f) any decision to hire or appoint any employee or corporate offi cer to be a member of the Executive Committee or to be Chief Executive Offi cer of the Company and its subsidiaries. The Board of Directors reviews and approves the information published in the Registration Document. It approves the composition of the Group s Management. The Board of Directors reviews its composition whenever necessary. It reviews its functioning annually. Meetings of the Board of Directors The Board of Directors meets as often as required by the interests of the Company. All Directors receive the information necessary to perform their duties, particularly to prepare for every Board meeting. The written texts and documents in support of items on the agenda are sent to them in advance, in the week preceding the meeting, for prior consideration and analysis. The Directors also receive all information on signifi cant events occurring in the Company between Board meetings. The minutes of the meetings of the Board of Directors are drafted at the end of each meeting and sent to all the Directors within the stipulated deadlines. The minutes are generally subject to their express approval at the following Board meeting. The Statutory Auditors are invited to the meetings in which the Board of Directors closes the fi nancial statements. The Board of Directors held seven meetings in 2016, with an average duration of three hours for Board meetings dealing with ongoing topics (six meetings), and a whole day for strategic Board meetings (one meeting). Four Board meetings also took place by conference call to discuss specifi c items requiring prompt and strategic decisionmaking, to which the Directors responded very swiftly. The Directors were also consulted via electronic means, as provided for by the bylaws and the Board s internal regulations, in order to give their opinions on specifi c subjects when necessary. 194

197 REPORT OF THE CHAIRMAN OF THE BOARD OF DIRECTORS Report of the Chairman of the Board of Directors 3 TABLE SUMMARIZING ATTENDANCE RATES AT BOARD AND COMMITTEE MEETINGS IN 2016 Directors Board Audit Committee Nominating and Compensation Committee Jacques de Chateauvieux 100% - - Astrid de Lancrau de Bréon 86% - 100% Christian Lefèvre 100% - - Guillaume de Chateauvieux 100% 100% - Baudouin Monnoyeur 100% - - Agnès Pannier-Runacher 100% 100% - Philippe Salle 71% - 100% Bernhard Schmidt 86% - 100% Mahmud B Tukur 71% 100% - Xiaowei Wang 86% - - Advisor Henri de Chateauvieux 100% - - The meetings of the Board of Directors in 2016 focused on reviewing and discussing the following issues: 3 monitoring of day-to-day management: 3 detailed review of Group activity, 3 approval of interim company and consolidated fi nancial statements, approval of annual company and consolidated statements, 3 review of the Group s cash position and indebtedness, 3 implementation of the share buyback program, 3 review of the risk management and internal audit system, 3 monitoring of the competitive environment and the business environment in which the Group operates, especially in a challenging market, 3 preparations for the Annual General Meeting and proposal to set a dividend, 3 review of the annual budget; 3 strategic guidelines: 3 review and discussion of the areas for strategic change and diversifi cation of the Group s economic model, including the plan to acquire the Gas business of JACCAR Holdings, 3 how to secure the Company s future during the upswing in the offshore oil and gas market and accommodate new innovative services able to fulfi ll the expectations of its clients, notably through digitization/digital transformation, 3 monitoring of local partnerships and decisions to implement new joint venture agreements and formation of companies both in France and abroad, 3 disposals of non-strategic assets, 3 currency hedging policy; 3 functioning of corporate bodies: 3 change in governance, 3 systematic follow-up of committee reports presented at the next Board meeting after these committee meetings, 3 consideration of all aspects of compensation paid to corporate offi cers, 3 evaluation, corporate governance rules, and Director status with respect to independence criteria, 3 approval of Board reports, 3 composition of the Board and recruitment of new Directors, 3 composition of the Management, 3 policy on gender equality and equal pay, 3 review of the Group s CSR issues and performance, 3 review of the succession plan for key talent and senior executives of the Company; 3 authorization and review of related party agreements pursuant to Article L of the French Commercial Code. Accordingly, as no new related party agreement was authorized or concluded during the year, the Board of Directors continued to monitor the agreements authorized and concluded in previous years and still in effect, particularly concerning vessel orders. In addition, at its meeting on December 5, 2016, the Board conducted its annual review in accordance with the provisions of Article L of the French Commercial Code, informing the Statutory Auditors of this. This review, which was carried out without the Statutory Auditors, was based on dossiers prepared by the Management, taking into account, among other factors, compliance with the objectives of the strategic plan, the ability of the shipyards to deliver quality products on time and within budget, and the competitiveness of the products given the prevailing 6 195

198 6 Report REPORT OF THE CHAIRMAN OF THE BOARD OF DIRECTORS of the Chairman of the Board of Directors market conditions. At the end of this review, the Board of Directors concluded that it was in the Company s interest to continue with the related party agreements that had been authorized and concluded in previous years. The Board also held a day-long strategy meeting when the Directors discussed the challenges facing the Company, including the Group s future business model, other than the diversifi cation of the business into gas, and its adaptation to the digital revolution linked to the digital transformation in offshore oil and gas marine services. The Directors also receive a monthly newsletter (unless a Board meeting is scheduled for that month) informing them of the follow-up to the decisions taken by the Board, the general market situation, and changes in the main operational indicators. Where necessary, they are also able to question members of the Management and may communicate with each other privately without Executive Directors being present. 1.4 ASSESSMENT OF THE BOARD OF DIRECTORS AND THE COMMITTEES The last formal assessment of the Board of Directors took place in late 2015 in the form of a detailed questionnaire. The conclusions of this self-assessment were positive overall, particularly regarding: 3 the composition and operation of the Board; 3 the proper balance in the composition of the committees; 3 the clear and comprehensive minutes on the work performed by the committees; 3 a signifi cant involvement of the Directors in the work of the Board; 3 a strong climate of trust among members of the Board of Directors facilitating quality discussions and great freedom of expression; 3 the subjects addressed during the meetings appropriate to the challenges facing the Company. The results of this self-assessment raised certain points which the Chairman of the Board addressed in These included a request for technical discussions to be in French, given the native language of the majority of Board members. Both specialized committees also performed a self-assessment of their functioning in Once a year during the intervening years when the Board does not conduct a formal assessment, it devotes one item on its agenda to a discussion of its procedures and the diversity of its membership. At the end of Board meetings, the Directors frequently share their opinion of the meetings, expressing any need for additional information, or alternatively their satisfaction with the quality of the preliminary documents provided and the Board proceedings in general. 1.5 SPECIALIZED COMMITTEES OF THE BOARD OF DIRECTORS The Board of Directors is assisted in its work by two specialized committees: the Audit Committee and the Nominating, Compensation and Governance Committee. These committees cannot be delegated powers reserved by law or bylaws to the Board of Directors, nor can they reduce or limit the powers of the Management. Depending on its remit and where appropriate, each committee issues proposals, recommendations and advice for the Board Audit Committee The mission of the Audit Committee is to assist the Board of Directors so that it can monitor the accuracy and consistency of s company and consolidated fi nancial statements, the quality of internal control and the information available to shareholders and the markets. The Audit Committee works as a specialized committee to oversee questions relating to the preparation and control of accounting and fi nancial information pursuant to Articles L and L of the French Commercial Code introduced by Order No of December 8, 2008, as amended by Order No of March 17, 2016 which extended the Audit Committee s responsibilities. In this context: 3 it reviews any changes in IFRS, the internal control structure and any matters pertaining to fi nancial presentation, particularly for the Registration Document; 3 it manages the procedure for selecting Statutory Auditors before submitting the results to the Board; it examines their independence and objectivity; 3 it oversees the process of preparing fi nancial data and, where appropriate, makes recommendations to ensure their integrity; 3 it reviews in advance and gives its opinion on the draft annual and interim fi nancial statements; 3 it examines the relevance and consistency of the accounting policies and standards used to prepare the fi nancial statements and prevents any non-compliance with those standards; 3 it ensures that any changes in the scope of the consolidated companies are presented, and provides any necessary explanations; 3 it evaluates the Company s risk exposure and off-balance sheet commitments; 3 it assesses the effectiveness and quality of the Group s internal control systems and procedures and, where necessary, the effectiveness of the internal auditing of procedures for preparing and processing accounting and fi nancial data, without compromising its independence, ensuring in particular that the Internal Control Committee has been appointed and operates satisfactorily; 3 it reviews the fi nancial and cash position; 196

199 REPORT OF THE CHAIRMAN OF THE BOARD OF DIRECTORS Report of the Chairman of the Board of Directors 3 it examines the procedures adopted to evaluate and manage signifi cant risks; 3 it reviews the Chairman s report on the Modus Operandi of the Board of Directors and internal control and risk management procedures; 3 it examines the fi nancial commitments given to shipyards handling orders authorized according to the procedure for related party agreements, for vessels under construction; 3 it makes recommendations concerning the Statutory Auditors, whose appointment (or reappointment) is proposed at the General Meeting; 3 it monitors the performance of the Statutory Auditors and if necessary takes into account the observations and conclusions of the French Audit Offi ce Board (HCCC) following the audits carried out; 3 it approves the provision by the Statutory Auditors of services other than the certifi cation of the accounts; 3 it reports regularly to the Board of Directors on the results of the certifi cation of the accounts, on how this work has contributed to the integrity of the fi nancial data, and on the role it played in this process. It also informs it immediately of any diffi culties encountered. The Audit Committee follows the recommendations issued on July 22, 2010 by the AMF working group on Audit Committees. Composition and Modus Operandi of the Audit Committee The Audit Committee consists of at least three members appointed by the Board of Directors. The duration of the members term of offi ce coincides with their term as Directors. The committee members appoint their Chairman from among themselves. For the deliberations of the committee to be valid, at least half of its members must be present. Directors who take part in the meeting by videoconference or telecommunication methods are deemed to be present provided that these methods enable them to be identifi ed and ensure their effective participation. The nature and application conditions of these methods are set by a decree of the French Conseil d État. The Audit Committee adopted internal regulations on March 10, 2010 which were revised at the meeting of the committee on August 28, As of December 31, 2016, the committee is composed of three people, including two Independent Directors, complying with the proportion of at least two thirds recommended by the AFEP-MEDEF in listed companies: 3 Agnès Pannier-Runacher, Independent Director, who chairs the committee; 3 Guillaume d Armand de Chateauvieux; 3 Mahmud Tukur, Independent Director. Its members all have recognized fi nancial and accounting expertise, as evidenced by their professional background (see section of the management report). The Audit Committee reviewed the fi nancial statements prior to their examination by the Board of Directors. When the annual and interim fi nancial statements are closed, the members of the Audit Committee consult the Statutory Auditors on the methods used to carry out their work. The Executive Vice President and Chief Financial Offi cer attended all committee meetings. The Audit Committee is regularly informed of the risk management procedures deployed within the Group, as well as of the work conducted by internal audit, which was the subject of two presentations during the year by the Director of Internal Audit. The Audit Committee may, when it deems it necessary, question Senior Management, the Finance Department, the Director of Internal Audit or any other member of management. The Chairman of the Audit Committee reports to the Board on the work of the committee and issues its recommendations at the start of each session of the Board of Directors meeting following a committee meeting. Work of the Audit Committee The Audit Committee met three times in The attendance rate of the members at the committee meetings was 100%. The Statutory Auditors attended committee meetings discussing the closing of the audited fi nancial statements. In this context, they explained the context in which they carried out their duties and presented their conclusions. During those meetings, the committee: 3 examined the fi nancial statements for the year ended December 31, 2015, and the 2016 interim fi nancial statements; 3 reviewed related party agreements; 3 assessed the management of foreign exchange risk and in particular unrealized foreign exchange losses; 3 analyzed the risks in the countries in which the Group operates; 3 reviewed the Group s fi nancial position, indebtedness and cash position; 3 analyzed the results of the impairment tests on the Group s cashgenerating units; 3 evaluated the fi nancial risks relating to the shipyards where the Group s vessels are built; 3 oversaw and evaluated the work of the Internal Audit Department and approved the audit plan for 2017; 3 reviewed the independence, fees and duties of the Statutory Auditors of the Company. It also pre-approved other assignments carried out by the Statutory Auditors; 3 recommended the Board s proposal for the reappointment of the Principal Statutory Auditor Nominating, Compensation and Governance Committee The main responsibilities of the Nominating, Compensation and Governance Committee are to issue recommendations, proposals and remarks to the Board of Directors and to assist it in the following areas: 3 examining all proposals for nomination to a position as a member of the Board of Directors or to any position as a corporate 6 197

200 6 Report REPORT OF THE CHAIRMAN OF THE BOARD OF DIRECTORS of the Chairman of the Board of Directors offi cer, formulating an opinion on those proposals and/or a recommendation to the Board of Directors; 3 recommending the total amount and distribution of Directors fees to be proposed to the General Meeting; 3 recommendations concerning the compensation, pension and benefi ts system, in-kind benefi ts and other pecuniary rights, including any stock options for new or existing shares awarded to the corporate offi cers and/or Executive Directors of the Group. To do so, the committee is kept informed of the compensation policy for the Group s key managers; 3 examining the overall policy for awarding stock options for new or existing shares, bonus shares to employees and any form of staff incentive in the Company s results; 3 examining the succession plan for members of the management team and for key talent in senior positions within the Group; 3 monitoring governance practices and proposing governance rules to the Board to be applied by the Company. Composition and Modus Operandi of the Nominating, Compensation and Governance Committee The committee consists of at least three members appointed by the Board of Directors. The committee appoints its Chairman from among its members. The committee meets at least once a year. As of December 31, 2016, the Nominating, Compensation and Governance Committee is composed of three members, two of whom are Independent Directors: 3 Philippe Salle, Independent Director, who chairs the committee; 3 Astrid de Lancrau de Bréon; 3 Bernhard Schmidt, Independent Director. Astrid de Lancrau de Bréon resigned as Director on February 1, 2017 upon taking up her post as Chief Financial Offi cer of Corporation. The composition of the Nominating, Compensation and Governance Committee will be reviewed at the fi rst Board of Directors meeting after the next Annual General Meeting. The Nominating, Compensation and Governance Committee adopted internal regulations on March 15, The Chairman and Chief Executive Offi cer participates in the committee s discussions on nominations. The succession plan for key positions within the Company is submitted annually to the committee. Work of the Nominating, Compensation and Governance The committee met twice in 2016 with a 100% attendance rate. The committee dealt with various issues, particularly: 3 reviewing the independent status of Directors; 3 monitoring of the recruitment for the vacant position due to the departure of the Chief Financial and Administrative Offi cer; 3 reviewing the fi nal candidates. Since one of the members of the committee, Ms. Astrid de Lancrau de Bréon, is one of the candidates under consideration, the Committee met without her; 3 the decision to propose to the Board that they accept the candidacy of Ms. Astrid de Lancrau de Bréon as Deputy Chief Executive Offi cer in charge of Administration and Finance; 3 reviewing the candidacies for new Directors affecting the current confi guration of the Board of Directors; 3 evaluating the performance and quality of management of each corporate offi cer; 3 the compensation of the corporate offi cers and defi nition of the criteria for the variable part in accordance with industry practice and in line with the compensation paid to the other executives in the Company; 3 reviewing the appointment of the CEOs of the Company s subsidiaries; 3 reviewing the succession plan for key talent holding senior positions within the Group. 1.6 PRINCIPLES AND CRITERIA FOR THE DETERMINATION, DISTRIBUTION AND ALLOCATION OF THE FIXED, VARIABLE AND EXCEPTIONAL COMPONENTS OF TOTAL COMPENSATION AND BENEFITS OF ANY KIND FOR EXECUTIVE CORPORATE OFFICERS IN 2017 The compensation policy and all the elements of compensation of corporate offi cers are detailed in section 3.3 of the management report and on the report required pursuant to Article L of the French Commercial Code included in the section 3.5 of the management report. 1.7 SHAREHOLDER PARTICIPATION IN THE GENERAL MEETING The methods for shareholder participation in General Meetings are described in Article 19 of the Company s bylaws and in the section 1.4 of Other Legal and Financial Information. 1.8 FACTORS THAT COULD HAVE AN IMPACT IN THE EVENT OF A PUBLIC OFFERING The information referred to in Article L of the French Commercial Code is included in section 6.4 of the management report. 198

201 REPORT OF THE CHAIRMAN OF THE BOARD OF DIRECTORS Report of the Chairman of the Board of Directors 2/ Internal control and risk management procedures The internal control system described in this report refers to the Company and all its consolidated entities (referred to hereunder as ). However, no matter how well designed and applied it is, internal control, like any control system, cannot provide an absolute guarantee that the risks targeted by it will be totally eliminated. 2.1 INTERNAL CONTROL OBJECTIVES The internal control arrangements at are designed to ensure: 3 compliance with laws and regulations; 3 application of the instructions and guidelines set by Management; 3 the proper operation of internal processes, particularly those helping to protect its assets; 3 the reliability of fi nancial data. They generally contribute to overseeing its activities, the effectiveness of its operations and the effi cient use of its resources. 2.2 NOTION OF INTERNAL CONTROL Internal control affects everyone from governance bodies through to all employees. Being observant and seeing to it that the system operates properly is a constant concern shared by all the operational and functional managers collectively as they work to achieve the objectives assigned to them. By contributing to preventing and controlling the risk of not achieving the objectives that has set itself, the internal control function plays a key role in the conduct and management of its various activities. In this way, the internal control system adopted by is backed by: 3 a structure that includes a clear defi nition of responsibilities, with adequate resources and skills, backed by information system procedures and appropriate tools and practices; 3 the internal distribution of relevant and reliable information, knowledge of which enables everyone to fulfi ll their responsibilities; 3 a system designed to identify and analyze the key risks relating to the Company s objectives and to establish procedures for the management of those risks; 3 control activities in keeping with the challenges inherent in each process, designed to ensure that actions are taken to limit and, to the extent possible, reduce and gain control over any risks likely to affect the Group s ability to meet its goals; 3 oversight of the internal control system. 2.3 CONTROL ENVIRONMENT Organizing and implementing the internal control system means raising the awareness of all s employees and getting them involved. The control environment thus includes the behaviors of the people responsible for the internal control of accounting and fi nance General organization of internal control Under the authority issued by the Board of Directors, the Group is managed by the Chief Executive Offi cer assisted by three committees: 3 the Executive Committee The Executive Committee is the decision-making body accountable towards clients, employees and shareholders for implementing the strategy and achieving the objectives of the Group. It examines the best options for achieving the strategy, particularly in the areas of safety, innovation, human resources and cost control. It decides on priorities and allocates the resources and the means necessary for the growth of the Company. 3 the Performance Committee Under the authority of the Executive Committee, the Performance Committee is responsible for the management, analysis and coordination of the Group s safety, fi nancial and business performance in line with the budget. In addition to the members of the Executive Committee, this committee is composed of four members representing the Group s central functions. 3 the Management Committee Under the authority of the Executive Committee, the Management Committee oversees the implementation of the strategic objectives and deals with questions of general interest to the Group in its monthly meetings. In addition to the members of the Executive Committee and Performance Committee, this committee is composed of ten members representing the Group s central functions as well as the heads of the main subsidiaries. The central functions involve experts in the business lines specifi c to the Group or else they involve conventional support functions. They propose the Group strategies and policies in their respective areas and provide assistance to the operating units, ensuring among other things that best practices are disseminated. The Company adopts guidelines and other internal standards which must be followed and implemented within the Group

202 6 Report REPORT OF THE CHAIRMAN OF THE BOARD OF DIRECTORS of the Chairman of the Board of Directors s entities are organized by business segment and led by a Sponsor: 3 Marine services; 3 Subsea Services; 3 Fleet management; 3 International partnerships; 3 Personnel services. Each business contains dedicated operating units. The operating units carry out the strategy in compliance with the budgets assigned to them by their respective Boards of Directors. They have broad authority to ensure the best possible customer satisfaction. They are directly involved and have the proper authority to perform internal control. In addition, the operating units report quarterly to the Executive Committee on their operational and fi nancial performance Presentation of the overall organization of the Group s internal control systems The different internal control activities serve to make certain that the procedures and standards defi ned by the Group are in line with the guidelines defi ned by the Management. Operating standards and procedures The Group s policy in terms of conducting operations and controlling risks is clearly defi ned by a management system contingent on: 3 empowering Management to implement and monitor this policy; 3 and issuing organizational and management procedures aimed at compliance with regulations, controlling operating risks, managing health and safety and the environment, training and certifi cation of employees, maintenance, purchases, analysis and the treatment of incidents and accidents. Internal control procedures related to the preparation and treatment of financial and accounting information The processes covered fall into two categories: those that enable information to be entered into the accounting data base and fi nancial and accounting information to be generated, and the procedures for year-end closure and fi nancial communication. The reliability of the fi nancial and accounting information that is published is underpinned by a set of mechanisms, rules, procedures and controls. Gradually documenting and formalizing procedures will help to reinforce this reliability. This mainly involves the following: 3 the Group s planning process. It results in the drafting of the annual budget, which makes it possible to break the Group s strategic guidelines down into operational action plans. In this spirit, the Management Control Department supervises and coordinates the budget control system using a manual of procedures that sets the management rules and methods for preparing the budget and the management report applicable to both the operational level and the Group level; 3 procedures for consolidating the fi nancial statements in accordance with rules established and approved by Management. The Company draws up its consolidated fi nancial statements according to IFRS. An integrated software program is used to consolidate the Group s fi nancial statements. The interim and annual consolidated fi nancial statements are presented to the Audit Committee prior to their approval by the Board of Directors; 3 procedures for drafting the Registration Document to ensure accuracy, consistency, compliance with applicable laws and regulations, and the quality of the fi nancial information. 2.4 MANAGING INTERNAL CONTROL The internal control systems are themselves the subject of controls, on an ongoing basis by Management as well as through periodic evaluations by bodies that do not have direct authority over operations nor responsibility for them Audit Committee The attributes of the Audit Committee and the work conducted by it are described in section of this report Internal Control and Risk Committee As of December 31, 2016, the Internal Control Committee was composed of the Executive Vice President and the Executive Vice President, Operations. The Internal Audit, Risk Director and group Compliance Offi cer presents the audit results and main conclusions. This committee is tasked with examining the quality of internal control, managing risks and implementing the internal audit plan and the compliance program within : 3 it approves the Group s annual internal audit plan before its presentation to the Audit Committee; 3 it examines the conclusions and recommendations made following the quarterly audits by the Internal Control Committee; 3 it examines the quality of follow-up to action plans by Group entities in response to internal audit recommendations; 3 it oversees follow-up to risk mapping and action plans for major risks; 3 it supervises the compliance program within the Group; 3 it examines any other matter relating to internal audit, internal control or risk management and compliance that it wishes to include on its agenda. 200

203 REPORT OF THE CHAIRMAN OF THE BOARD OF DIRECTORS Report of the Chairman of the Board of Directors Group Internal Audit, Risk Management and Compliance Department The mission of s Internal Audit, Risk Management and Compliance Department is to help the Group manage its risks through a systematic, disciplined and complementary approach to: 3 internal audit ; 3 risk management; 3 compliance. Group Internal Audit is an independent and objective department that makes sure has full control over its operations, offers advice on improvements and so contributes to create value added. It helps the organization achieve its objectives by systematically and methodically assessing procedures for risk management, control and corporate governance and by making recommendations on how these could be more effective. Risk management allows to identify, evaluate, manage and monitor the risks it faces. Risks of all kinds are monitored: operational, fi nancial, strategic, human resources, regulatory and reputational. Compliance includes all measures already in place or to be implemented within to ensure compliance with ethical rules and external and internal regulations. As of December 31, 2016, the Group Internal Audit, Risk Management and Compliance Department is composed of seven people, including a Director, fi ve Internal Auditors of whom two are dedicated to onshore audits and three to vessel audits, and an expert in charge of Compliance. Risk Management is directly managed by the department s Director Group Internal Audit As of December 31, 2016, Group Internal Audit reported to the Executive Vice President and to the Executive Committee. It has access to the Chairman and Chief Executive Offi cer and to the Chairman of the Audit Committee as necessary. It reports regularly to the Audit Committee on its analysis of the Group s internal control. Group Internal Audit covers all fi elds and functions of companies, including the operational businesses, all other functional and operational activities as well as the information, IT and management systems. It carries out internal audits (assurance and advice) or investigations for the Group as a whole and subsidiaries as necessary. It carries out audits of operations, fi nances, effectiveness, compliance, acquisitions or major projects, which may be recurrent or one-off. These audits cover all high-level management, business and support processes. It leads and promotes internal control throughout the Group and validates the effectiveness of internal control and risk management. s Internal Audit Department is a member of the French Institute of Internal Audit and Control (IFACI). Following an independent external audit carried out by IFACI Certifi cation, in December 2013 s Internal Audit Department was awarded certifi cation of compliance with international internal audit standards. Its certifi cation was renewed in January This certifi cation recognizes the professionalism of the Group Internal Audit team and attests that it has implemented internal audit methods meeting the highest international professional standards Key Group internal controls The Group has prepared a manual of key basic controls. This manual groups the 80 key controls into seven main Group administrative and fi nancial processes. This guide applies to all of the Group s entities Group control of operating businesses The Group s HSE (Health, Safety and Environment) managers and referring offi cers carry out regular controls of operating units to check the effectiveness of the system and the proper application of standards. Furthermore, every operating unit is subject to periodic or one-off external audits aimed at making certain that its internal organization and its vessels meet the recommendations under standards or codes that are either mandatory or adopted intentionally Quality management system The Quality Department is responsible for seeing to it that an integrated quality management system is set up and maintained. Under this system the Group is broken down by the nature of each process: strategic, support, key or evaluation. 2.5 STATUTORY AUDITORS As of December 31 each year, the Statutory Auditors perform a complete audit of the fi nancial statements of Corporation and all its subsidiaries. An interim audit that takes the form of a limited review is also conducted by the Statutory Auditors on June 30 each year. Their work provides the Group with reasonable assurance regarding the reliability and accuracy of the accounting and fi nancial information produced. In the course of their audit, the Statutory Auditors review the internal control system in order to identify and evaluate the risk of any signifi cant misstatement in the fi nancial statements so that they can design and implement their audit procedures

204 6 Report REPORT OF THE CHAIRMAN OF THE BOARD OF DIRECTORS of the Chairman of the Board of Directors 2.6 RISK MANAGEMENT Risk management is a group-wide process that involves a large number of players (operating and functional departments, risk managers, process owners, Executive Committee, Audit Committee, Internal Audit, insurance). The risk management process covers the updating of risk mapping and risk management, monitoring and control. In 2016, the Group completely updated its risk mapping enabling it to map its biggest potential risks precisely. The potential risks identifi ed were of many different kinds, both at the Group level and in terms of its operational activities. The Internal Audit, Risk Director and Group Compliance Offi cer is responsible for the design, implementation and leadership of the risk management process. 2.7 COMPLIANCE s compliance program is composed of seven steps: 3 Tone at the Top: the Executive Committee has undertaken to promote compliance and maintain a culture of ethical decisionmaking within the Group; 3 risk evaluation: identifying all risks of non-compliance in order to develop the tools, techniques and corrective measures necessary to prevent these risks; 3 policies and procedures: the establishment and deployment of specifi c guidelines ensures that adequate compliance processes exist within the Group; 3 communication: the deployment of the program is regularly communicated to all employees; 3 in 2015, the Group also successfully launched an e-learning compliance program aimed at all onshore and offshore employees; 3 coordination and monitoring: a centralized compliance function is in operation and coordinates the Group s entire compliance program; 3 penalties: any infringement of the compliance rules is taken extremely seriously and the appropriate penalties are imposed where necessary. In 2014, the Group implemented a dedicated compliance organization with 26 compliance managers across the Group s subsidiaries and which report to the Group s compliance team. is a member of the circle of compliance (LCDC), which aims to promote, publish, advise, train and educate those involved in the economic, political and media-related arenas about compliance with corporate ethics, mainly with respect to Corporate Social Responsibility (CSR). 3/ Powers of the Chief Executive O cer and of the Executive Vice Presidents The positions of Chairman of the Board of Directors and Chief Executive Offi cer of the Company were combined by the Board of Directors at its meeting on May 26, The Chairman and Chief Executive Offi cer and the Executive Vice Presidents have all necessary powers to carry out investments and divestments approved by the Board in accordance with the budget and/or strategy defi ned by the Board; beyond said budget and/or strategy, they must seek the approval of the Board for investments and divestments of amounts equal to or exceeding 10 million. The following decisions fall within the exclusive authority of the Board of Directors: (a) entry into any strategic partnership for an amount exceeding ten million euros ( 10,000,000) or for a duration exceeding two (2) years; (b) determination of the Company s dividend policy; (c) any planned merger, spin-off, or partial asset contribution; (d) any capital increase (including any decision to eliminate the shareholders pre-emptive subscription right either immediately or in the future) in kind or in cash, including capital increases resulting from a merger, partial asset contribution or contribution in kind; (e) issuance of any securities, whether or not giving access (immediately or in the future) to the Company s share capital or voting rights; (f) any decision to hire or appoint any employee or corporate offi cer to be a member of the Executive Committee or to be Chief Executive Offi cer of Corporation SA and its subsidiaries. The Chairman and Chief Executive Offi cer 202

205 REPORT OF THE CHAIRMAN OF THE BOARD OF DIRECTORS Statutory Auditors report STATUTORY AUDITORS REPORT PREPARED IN ACCORDANCE WITH ARTICLE L OF FRENCH COMPANY LAW (CODE DE COMMERCE) ON THE REPORT PREPARED BY THE CHAIRMAN OF THE BOARD OF DIRECTORS OF THE COMPANY CORPORATION (YEAR ENDED 31 DECEMBER 2016) This is a free translation into English of the statutory auditors report issued in French prepared in accordance with Article L of French company law on the report prepared by the Chairman of the Board of Directors on the internal control and risk management procedures relating to the preparation and processing of accounting and fi nancial information issued in French and is provided solely for the convenience of English speaking users. This report should be read in conjunction and construed in accordance with French law and the relevant professional standards applicable in France. To the Shareholders, In our capacity as Statutory Auditors of Corporation (formerly ) and in accordance with Article L of French company law (Code de Commerce), we hereby report on the report prepared by the Chairman of your company in accordance with Article L of French company law (Code de Commerce) for the year ended 31 December It is the Chairman s responsibility to prepare, and submit to the Board of Directors for approval, a report on the internal control and risk management procedures implemented by the company and containing the other disclosures required by Article L of French company law (Code de Commerce), particularly in terms of corporate governance. It is our responsibility: 3 to report to you on the information contained in the Chairman s report in respect of the internal control and risk management procedures relating to the preparation and processing of the accounting and fi nancial information, and 3 to attest that this report contains the other disclosures required by Article L of French company law (Code de commerce), it being specifi ed that we are not responsible for verifying the fairness of these disclosures. We conducted our work in accordance with professional standards applicable in France. INFORMATION ON THE INTERNAL CONTROL AND RISK MANAGEMENT PROCEDURES RELATING TO THE PREPARATION AND PROCESSING OF ACCOUNTING AND FINANCIAL INFORMATION The professional standards require that we perform the necessary procedures to assess the fairness of the information provided in the Chairman s report in respect of the internal control and risk management procedures relating to the preparation and processing of the accounting and fi nancial information. These procedures consisted mainly in: 3 obtaining an understanding of the internal control and risk management procedures relating to the preparation and processing of the accounting and fi nancial information on which the information presented in the Chairman s report is based and the existing documentation; 3 obtaining an understanding of the work involved in the preparation of this information and the existing documentation; 3 determining if any signifi cant weaknesses in the internal control procedures relating to the preparation and processing of the accounting and fi nancial information that we would have noted in the course of our engagement are properly disclosed in the Chairman s report. On the basis of our work, we have nothing to report on the information in respect of the company s internal control and risk management procedures relating to the preparation and processing of accounting and fi nancial information contained in the report prepared by the Chairman of the Board in accordance with Article L of French company law (Code de Commerce). 6 OTHER DISCLOSURES We hereby attest that the Chairman s report includes the other disclosures required by Article L of French company law (Code de commerce). Lyon and Marseille, 21 April 2017 The Statutory Auditors French original signed by EurAAudit C.R.C. Cabinet Rousseau Consultants Jean-Marc Rousseau Deloitte & Associés Hugues Desgranges 203

206 6 REPORT OF THE CHAIRMAN OF THE BOARD OF DIRECTORS 204

207 OTHER LEGAL AND FINANCIAL INFORMATION 7 GENERAL INFORMATION ABOUT CORPORATION SA AND ITS SHARE CAPITAL 206 TRADEMARKS, LICENSES, PATENTS, PROPERTY, PLANT AND EQUIPMENT 217 AGENDA OF THE COMBINED GENERAL MEETING OF MAY 23, DRAFT RESOLUTIONS FOR THE COMBINED GENERAL MEETING OF MAY 23, STATUTORY AUDITORS REPORT ON THE SHARE CAPITAL REDUCTION 228 STATUTORY AUDITORS REPORT ON THE ISSUE OF SHARES AND VARIOUS MARKETABLE SECURITIES WITH CANCELLATION OF PREFERENTIAL SUBSCRIPTION RIGHTS 229 STATUTORY AUDITORS REPORT ON THE ISSUE OF ORDINARY SHARES AND/OR VARIOUS MARKETABLE SECURITIES RESERVED FOR MEMBERS OF A COMPANY SAVINGS PLAN 230 STATUTORY AUDITORS REPORT ON THE AUTHORISATION TO GRANT SHARE SUBSCRIPTION AND/OR SHARE PURCHASE OPTIONS 231 PERSONS RESPONSIBLE FOR THE REGISTRATION DOCUMENT AND FOR THE FINANCIAL STATEMENT AUDIT 232 CROSS REFERENCE TABLES