Bourbon 2009 Financial Results

Maritime Activity Reports, Inc.

March 18, 2010

For 2009, Bourbon reported robust earnings driven by the growth of the Offshore Division. EBITDA excluding capital gains was up 9.4%. “The 2009 results illustrate the good increase of the offshore activity due to the growth of the fleet and to its utilization rate, which remains high despite the market downturn during the year,” said Jacques de Chateauvieux, Chairman & Chief Executive Officer of Bourbon. “Net income group share reached a satisfactory level compared with 2008, when capital gains on sales of vessels and sales on equity interests were recorded.”

Revenue growth for the year reflected two contrasting changes:
- The strong growth in Offshore Division revenues (+20.5%), helped in particular by favorable exchange
- The sharp decline in Bulk Division revenues, due to the change in charter rates.

Excluding capital gains, gross operating income (EBITDA) reached €346.3 million for the year, i.e. an increase of 9.4% for the group. The EBITDA of the Offshore Division alone grew by €70.8 million i.e. plus 29.4%. Gross operating income (EBITDA) was nearly stable at €347.5 million after taking into account very high capital gains recorded in 2008.

Operating income came to €213.1 million, down 10.9% compared with 2008 when the Bulk Division posted a historically high performance essentially attributable to capital gains on sales. The strong improvement in financial income despite the increase in indebtedness reflects falling interest rates and a reversal of the trend observed year on year in terms of unrealized losses recorded in 2008.

Net income, group share amounted to €155.4 million, down 30.8% compared with an exceptional year in 2008, when substantial capital gains from the sale of non-strategic activities were recorded. Return on capital employed, measured by the ratio of EBITDA to average capital employed excluding installments on vessels under construction, is 16.8%, in line with the strategic plan objective for 2012 at 18%.

With average annual revenue growth of 29% in the first two years the Horizon 2012 plan already completed, the Offshore Division, which concentrates 86% of the capital employed by the Group, is ahead of the 2012 objective, which is set at 21%.

In the year 2009, BOURBON took delivery of 71 new Offshore vessels, including 20 new Bourbon Liberty vessels, which are very popular with clients. Revenues from the directly owned fleet came to €739.3 million, up 27.1%. Over the period, the supply fleet had a utilization rate of 89.3%. Gross operating income (EBITDA) was up 26.6% at €313.4 million in the context of a favourable euro-dollar exchange rate. Operating income was up 39.2% at €193.9 million.

In the 2nd half of 2009, in an environment that continued to deteriorate, revenues from the directly owned fleet rose by 10.9% compared with the second half of 2008. Gross operating income (EBITDA) rose by 5% to €154.7 million. Operating income was up 3.5% at €89.5 million.

Marine Services
In the year 2009, revenues earned by the directly owned Marine Services fleet rose by 29.8% compared with 2008. 27 new supply vessels and 43 crewboats were commissioned in 2009. At end-December, the fleet included a total of 32 new generation Bourbon Liberty vessels, appreciated by clients due to the logistics cost savings they allow. Revenues earned by chartered vessels fell by €18.8 million. Gross operating income (EBITDA) amounted to €256.3 million, up 23.9% compared with the previous year.

In the 2nd half of 2009, revenues from the owned fleet rose to €309.5 million an increase of €35.9 million compared with the same period in 2008. Revenues from chartered vessels were down by €23.5 million. Gross operating income (EBITDA) year on year is practically stable at €123.1 million, the effect of business growth being cancelled out by the downturn in market conditions.

Subsea Services
In the year 2009, Subsea Services revenues came to 148.4 million euros, up 12.0% compared with the previous year. 1 new IMR vessel was commissioned in 2009. Gross operating income (EBITDA) surged by 39.8% to €57.1 million.

In the 2nd half of 2009, in a market downturn, revenues were up by 3.6% compared with the same period in 2008. Gross operating income (EBITDA) rose over the same period by 32.6% to €31.6 million.

In 2009, the performance of the Bulk Division was marked by:
- A collapse in charter rates in 2008, followed by a steady reverse trend in 2009;
- The effects of BOURBON’s strategy of commitment to clients over the long term which enabled it to spread out over time the impact of market fluctuations;
- Implementation of the directly owned fleet growth strategy with the arrival of 7 new bulk carriers.

Revenues amounted to €119.3 million, down 49.2% from 2008. Gross operating income excluding capital gains came in at €37.4 million. Operating income amounts to €27.3 million, down 73.7% from 2008 when a capital gain from disposal of €27.6 million was recorded. Return on capital employed, measured by the ratio of EBITDA to average capital employed excluding installments on vessels under construction was 23.8%.

In the 2nd half of 2009, revenues amounted to €58.8 million, down 42.0% compared with the same period in 2008. This decline was due to 2 negative base effects:
- BOURBON benefited in the 2nd half of 2008 from long-term contracts signed previously at high rates, which came to an end in 2009
- The Baltic Supramax Index (BSI) average in the 2nd half of 2009 is down 41.6% compared with the same period in 2008. Although below the exceptional level reached on the market, the BSI has nonetheless remained in constant progression.

Gross operating income excluding capital gains amounted to €16.5 million, down 58.6%. Operating income, which did not include any capital gains, unlike the previous year, totaled €10.1 million, down 84.8%.

Offshore Division
Given the expected increase in demand for oil, the faster pace of decline in production in existing fields, and the necessity in the medium term to reconstitute reserves, an upturn in oil and gas activity is expected in 2010. Production maintenance activities should be the first to benefit, followed in the second half of 2010, by drilling activities.

In parallel with the recovery in demand forecast, the offer of vessels will be contingent on the number of vessels actually delivered in 2010, the number of old vessels decommissioned and the number of demolitions. In accordance with its Horizon 2012 plan and its strategy of “investing to reduce client costs”, BOURBON will continue to take delivery of new modern high-productivity vessels, such as the Bourbon Liberty vessels, which provide the offshore continental market with replacement vessels that transport more, consume less and have the maneuverability of vessels operating in deepwater offshore.

Bourbon is now well placed to withstand the impact of the excess capacity of high-tonnage vessels particularly those destined for deepwater offshore to respond to the demand in continental offshore, and to reap the full benefit of the impact of the recovery.

Bulk Division
Charter prices on the market will continue to depend on dynamic growth in China, the number of new vessels actually delivered in 2010, and the level of demolition which may well continue at the historically high rate seen in 2009. Echoing the Offshore Division, although on a lesser scale, the Bulk Division will continue to expand its fleet of owned bulk carriers and will take delivery of six 58,000-tonne Supramax vessels in 2010; however, there continues to be some uncertainty about the delivery of the Panamax ordered in India. Having sold two 49,000-tonne vessels in January 2010, generating a capital gain of 23 million dollars, the Bulk Division owned fleet is expected to consist of a minimum of 16 vessels by the end of 2010.

At the Combined Shareholders’ Meeting to be held on June 9, 2010, a proposal will be made to pay a dividend of €0.90 per share, which is an increase of 10% taking into account the issue of bonus share per 10 shares held in 2009.


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