2017 REGISTRATION DOCUMENT

BOURBON 2017 Registration Document 70 MANAGEMENT REPORT 3 Risk factors The need for BOURBON 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, BOURBON has implemented cost-cutting action plans which have been effective thanks to the intensive efforts of staff. BOURBON is also endeavoring to radically transform its work methods in general so that it can return to profitability 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 insufficient 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. 5.2 RISKS RELATING TO BOURBON’S BUSINESS Non-compliance by BOURBON 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. BOURBON’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 flag 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 specific 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 fitting-out of vessels; 3 the Convention on Standards of Training, Certification and Watchkeeping for Seafarers (STCW) lists the qualifications 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) defines 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 defines the fundamentals for safety management for marine shipowners and operators, on board the vessels and at offices 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 2013. The great majority of nations adhere to these conventions but they sometimes incorporate their own specific 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 classification societies. Their sphere of influence covers the audit of organizations, monitoring construction and periodic visits to vessels in operation. The main classification societies are members of the IACS (International Association of Classification Societies), which monitors the harmonization of their rules and actions. Delegations of power to classification societies are covered by formal agreements with individual countries. BOURBON 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. BOURBON constantly monitors the situation and keeps up-to-date regulatory information at head office 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; 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. BOURBON has a modern fleet with an average age of 8.8, which is an advantage in responding to these changes. Although BOURBON considers that these changes can largely be predicted and wherever possible tries to anticipate new regulatory