REGISTRATION DOCUMENT - Bourbon

MANAGEMENT REPORT3Risk factorsIt is clear that the requirements will become increasingly strict andthat this trend will continue. However, these changes are generallypredictable, as the authorities have allowed for an adaptation phasethat is compatible with the realities of the marine industry.The changes may consist of:3 new technical rules applicable to new vessels, especially in thearea of emissions into the atmosphere;3 restrictions on navigation in certain regions, principally Europeand North America;3 a hardening of controls and sanctions, especially in the aboveregions;3 the establishment of an environmental tax system, as alreadyapplied in Norway.BOURBON has a recent fl eet with an average age of 6 years, whichis an advantage in meeting these changes.Although BOURBON considers that these changes can, in the main,be predicted and wherever possible tries to anticipate new regulatoryrequirements, tightening of regulations or their implementation wouldbe likely to lead to new operating conditions for BOURBON’s activitiesand could lead to increased operating expenses, limitations on thescope of its business with certain clients or in certain geographicalareas or, more generally speaking, may slow down its growth.BOURBON cannot guarantee that signifi cant and/or rapid changesto current regulations would not, in the future, have a signifi cantlyprejudicial effect on its business, fi nancial position, results or outlook.BOURBON’s activities may cause damage to people,property or the environment. This could also lead to it havingto bear significant costs where such events are not coveredeither by the contract or by insurance.The risks of an environmental or human disaster largely relate to thepresence of the vessel in an operational situation and the potentialconsequences of accidents associated with the cargo or the voyage.Although the accident rate has been cut by around half in the lasttwenty years, marine shipping is not risk-free. BOURBON appliesthe regulations detailed above and has adopted a set of procedures,charters and codes of conduct which frame practices on-board thevessels.As BOURBON is a service company, it is not directly responsible forany manufacturing processes except for the operation of its marineresources. BOURBON does, however, follow good marine practiceand complies with its clients’ demands whenever its vessels drawnear to offshore installations, port facilities or any other sensitive orprotected areas. In particular, BOURBON rigorously adheres to theISM Code as well as to industry standards including, in particular,those defi ned by the IMCA (International Marine ContractorsAssociation), an association of which BOURBON is a member andwhich is an umbrella body for companies active in offshore andmarine and subseaengineering. In 2011, BOURBON continuedto make changes to its safety management system to ensure itwould meet the new requirements of the OCIMF (Oil CompaniesInternational Marine Forum), an organization including over 80 oilcompanies worldwide. BOURBON thus places the concerns of itsclients at the heart of its strategy.BOURBON fi rmly believes that accidents can be avoided byprevention and that it is possible to limit pollution. Training andexercises are designed to give personnel the best possiblepreparation for emergencies.Due respect by all BOURBON employees to best work practices andprocedures derived from the above principles is regularly verifi ed viainternal audits.BOURBON’s performance regarding the safety of individuals isconstantly monitored. According to a survey by the InternationalSupport Vessel Owner’s Association (ISOA), which incorporates theleading players in offshore oil and gas marine services, BOURBON’ssafety performances are among the best in the market. In 2011,BOURBON’s recordable incidents rate (TRIR) was 0.68 per millionhours worked.BOURBON’s strategy in this area is described in section 5.1.4 of themanagement report.Although it is not possible to completely nullify the impact of transportactivities on the environment, BOURBON makes every effort toimprove its record through technical solutions and by acting toimprove the attitudes of all those involved. The decision to opt for thediesel-electric propulsion system on its most recent vessels is thusaimed at signifi cantly reducing the consumption of fossil fuels, andconsequently, the level of polluting emissions into the atmosphere.BOURBON’s strategy concerning the environment is described insection 5.2 of the management report.The activities of offshore services are governed by contractsplacing a general obligation of due care on BOURBON and sharedresponsibility with the client.This so-called “knock-for-knock” system is based on an agreementbetween a supplier of resources such as BOURBON and its client,under the terms of which each agrees to bear the cost of damagesthat may be caused to its property and/or personnel during theperformance of the supply contract.It is accompanied by a waiver of reciprocal recourse between theparties, extended to their respective insurance companies.This mechanism is essential in the offshore activity, in particular byenabling each of the operators to keep its risks in proportion to thevalue of the assets it uses and/or owns as well as to its own fi nancialscope and consequently to limit the costs of the correspondinginsurance.Despite the measures and mechanisms put in place, we cannotdiscount the possibility that, in the future, claims made againstBOURBON could result in a signifi cant level of liability for BOURBONand BOURBON cannot guarantee that all the claims made against itor all the losses that may be incurred will be effectively or suffi cientlycovered by its insurance policies, this being to the detriment ofBOURBON’s reputation and image and having a signifi cantlyprejudicial effect on its business, fi nancial position, results andoutlook.BOURBON - 2011 Registration Document 41