2017 REGISTRATION DOCUMENT

BOURBON 2017 Registration Document 124 CONSOLIDATED FINANCIAL STATEMENTS 4 Notes to the consolidated financial statements 1.5.15 Finance leases Assets held under finance leases are recognized as assets of the Group, i.e . when in substance, the contract grants to the Group most of the risks and benefits 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 defined in note 1.5.5. 1.5.16 Revenue Revenue is recognized when it is probable that the future economic benefits will flow 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. 1.5.17 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 financial statements based on the tax situation of each company and/or based on the tax consolidation scope for the companies concerned. Deferred taxes result from: 3 temporary differences between taxable profit and accounting profit; 3 consolidation restatements and eliminations; and 3 tax loss carryforwards, 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. 1.5.18 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 classified 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 classified as: 3 fair value hedges when they hedge the exposure to changes in the fair value of a recognized asset or liability, or a firm commitment (except for the exchange risk); 3 cash flow hedges when they hedge the exposure to variability in cash flows that is attributable either to a specific risk associated with a recognized asset or liability, or to a highly probable forecast transaction or to the exchange risk on a firm commitment; 3 hedges of a net investment in a foreign operation. The hedge on the foreign currency risk of a firm commitment is recognized as a cash flow 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 identification 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 flows attributable to the hedged risk. The Group expects that the hedge will be highly effective in offsetting changes in fair value or in cash flows. 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 financial 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 firm commitment, or an identified portion of such financial assets or liabilities, which is attributable to a specific 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 firm commitment is designated as a hedged item, the subsequent cumulative change in the fair value of the firm commitment attributable to the hedged risk is accounted for as an asset or a liability, and the corresponding profit 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 longer meets the criteria for hedge accounting, or when the Group cancels the designation.