2014

Orient-Express Hotels Reports Third Quarter 2012 Results

HAMILTON, BERMUDA, November 1, 2012 /PRNewswire/ --

  • Same store revenue per available room ("RevPAR") in local currency equal to year-ago quarter; up 5% excluding impact of partial closure of Copacabana Palace in Rio de Janeiro
  • Strong performance in North America and Asia-Pacific, with same store RevPAR up 12% in both regions
  • Resilient performance in Europe despite poor macro-economic conditions, with revenue from owned hotels, same store RevPAR and EBITDA all ahead of 2011 on a local currency basis
  • Third quarter total revenue before real estate down 8% to $160.4 million from $173.5 million; up 1% excluding effects of currency and partial closure of Copacabana Palace
  • Third quarter adjusted EBITDA before real estate down 10% to $41.6 million from $46.1 million; up 2% excluding effects of currency and the partial closure of Copacabana Palace
  • Central overheads down $2.0 million from the year-ago quarter
  • Proceeds of $42.1 million received from completion of sale of The Observatory Hotel, Sydney;  $11.2 million of proceeds used to repay debt
  • Announced new river cruise operation in Myanmar that will commence operations in July 2013
  • Completed €35.0 million ($44.4 million) refinancing of loans secured on Grand Hotel Timeo and Villa Sant'Andrea, both in Sicily
  • Positive early indications for overall 2013 bookings; up 11% for total owned hotels from the same time last year

Orient-Express Hotels Ltd. (NYSE: OEH, http://www.orient-express.com) (the "Company"), owners or part-owners and managers of 45 luxury hotel, restaurant, tourist train and river cruise properties operating in 22 countries, today announced its results for the third quarter ended September 30, 2012.

Revenue before real estate was $160.4 million in the third quarter of 2012, down $13.1 million or 8% from $173.5 million in the third quarter of 2011. Excluding the effects of weaker local currencies compared to the US dollar and the temporary partial closure of the Copacabana Palace, revenue before real estate was up by 1% compared to the third quarter of 2011.

Revenue from owned hotels for the third quarter was $131.1 million, down $9.2 million or 7% from $140.3 million in the third quarter of 2011. On a same store basis, owned hotels RevPAR was flat in local currency and down 6% in US dollars. Excluding the impact of the partial closure of Copacabana Palace, same store RevPAR in local currency was 5% ahead.

Trains & cruises revenue in the third quarter was $26.0 million compared to $28.9 million in the third quarter of 2011, a decrease of 9% in local currency or 10% in US dollars.

Adjusted EBITDA before real estate was $41.6 million for the third quarter, down $4.5 million from $46.1 million in the prior year period. The principal decrease from the prior year quarter was at Copacabana Palace, where EBITDA was down $2.1 million as it was partially closed for renovation. Other notable decreases were at Hotel Cipriani, Venice (down $1.6 million), share of earnings from Hotel Ritz, Madrid (down $0.6 million) and British Pullman (down $0.5 million). These decreases were partially offset by increases at the two Sicilian hotels (up $0.9 million), Hotel das Cataratas, Iguassu Falls (up $0.8 million) and Charleston Place, South Carolina (up $0.6 million).

Adjusted net earnings from continuing operations for the third quarter were $14.5 million ($0.14 per common share) compared with $20.5 million ($0.20 per common share) in the third quarter of 2011.

"Despite continuing economic uncertainty in Europe, revenues held up well and same store RevPAR in local currency was unchanged from last year on a global basis," said Philip Mengel, Director and Interim Chief Executive Officer. "In fact, in local currency and excluding the effects of the temporary closure of Copacabana Palace as part of its planned refurbishment, same store RevPAR was up 5% from the prior year quarter, reflecting the tremendous strength and guest appeal of our unmatched collection of iconic assets. In Europe, revenues from owned hotels were up by $2.6 million on a local currency basis even with the tough macro-economic conditions in that market.

"We continue to make good progress on our program of reinvestment in core properties with important investments underway or completed at Mount Nelson Hotel, La Samanna, El Encanto and '21' Club as well as Copacabana Palace. The formal opening of Palacio Nazarenas in September further strengthens our luxury presence in Peru.

"We are seeing the benefits of our investments in the financial performance of many properties. In Sicily, for example, our local currency RevPAR in the third quarter was 19% ahead of the prior year, reflecting completion of the refurbishment of the Grand Hotel Timeo and Villa Sant'Andrea. Looking forward, we expect to realize the benefits of this year's renovation projects starting in the current quarter.  Early indications for 2013 bookings across the collection are positive, with bookings for total owned hotels 11% ahead of where they were at the same time last year."


Company Highlights

The Company has continued to execute its strategy of redeploying capital and reducing debt through targeted divestments. During the quarter, the Company completed the sale of The Observatory Hotel.  The proceeds from the sale were $42.1 million, of which $11.2 million was used to repay associated debt. As previously reported in the second quarter earnings release, the Company entered into an agreement in July to sell The Westcliff, Johannesburg. The process of securing certain regulatory approvals necessary under that contract is underway and the transaction is currently expected to close by the end of the year.

As part of its strategy to redeploy capital, the Company has continued to invest capital into enhancing the existing portfolio to support growth in average daily rate ("ADR") and occupancy. Work continued during the quarter on the refurbishment of all rooms and suites in the main building of Copacabana Palace, which is scheduled for completion in early December in time for the high season. In late September, a portion of rooms in the main building were reopened, along with a restyled lobby that has been enlarged to offer 80% more floor space and two new mezzanine levels. The interruption at Copacabana Palace had a major impact on third quarter earnings, and the Company will benefit significantly going forward from its re-opening.

In September, the Company completed a remodelling of two of the private event spaces at the iconic '21' Club restaurant in New York City. The renovated Puncheon Room and former Main Dining Room can now accommodate 200 guests for a seated dinner and 450 guests for a reception, wedding or corporate event.  

The Company also continued work on the renovation of 30 rooms and the poolside restaurant in the Oasis wing of Mount Nelson Hotel, Cape Town, due to be completed this month.  The renamed Oasis Bistro will offer a brasserie-style a la carte menu on its alfresco terrace, which overlooks the hotel's main swimming pool and gardens.

The Company will also complete the refurbishment of public areas at La Samanna during the fourth quarter, in time for St. Martin's high season. The refurbishment will include a stunning new bar with panoramic sea views as part of a new layout designed to enhance the arrival and dining experiences.

In September, the Company announced that it will introduce a second river cruise operation in Myanmar beginning in July 2013. The ship, named Orcaella after the dolphins found in the inland waters of Myanmar, is leased and is currently under construction in Yangon to Orient-Express' specifications. The four-deck river cruiser will offer 25 spacious river-facing cabins with floor-to-ceiling sliding glass doors and Juliette balconies. Orcaella will operate between Yangon and Bhamo and the ship's shallow draft will allow it to cruise exciting itineraries on the remote Chindwin River, passing extensive mountain ranges towards western Myanmar as far north as Homalin, 30 miles from the Indian border.


The Company is continuing to pursue its previously announced plans to maximize opportunities from emerging markets and has retained the services of two leading sales representation companies specializing in the promotion of unique travel experiences and luxury hotels to the Chinese market from October 1, 2012. These companies will represent Orient-Express from offices in Singapore, Hong Kong, Taipei, Beijing, Shanghai and Guangzhou. The Company has also appointed an online agency to implement digital marketing strategies in Chinese as part of its integrated market-entry strategy.

In addition to its focus on positioning the portfolio for growth, the Company has also been focused on balance sheet management. During the quarter, it completed the refinancing of €36.8 million ($46.8 million) of long-term debt secured by the two Sicilian hotels with a new €35.0 million ($44.4 million) three-year facility. The full amount of the loan has been swapped to a fixed interest rate of 5.6%.

Operating Performance

Europe:  

In the third quarter, revenue from owned hotels was $83.6 million, down $5.4 million or 6% from $89.0 million in the third quarter of 2011. This decrease is largely attributable to a weaker euro, which lost 9% of its value compared to the US dollar from the same time last year. Excluding currency effects, revenue at the Company's European hotels was $2.6 million ahead of the third quarter of 2011, led by the two Sicilian properties, where the positive impact of the refurbishments has continued to drive rate growth with RevPAR in local currency up 19% over the third quarter of 2011.  

Same store RevPAR in Europe was up 2% compared to the prior year in local currency and down 7% in US dollars, where a weaker euro contributed to a 4% drop in ADR combined with a decrease in occupancy from 72% to 69%.

EBITDA for the quarter was $34.5 million, down $2.2 million from $36.7 million in the third quarter of 2011. Excluding currency effects, EBITDA was $1.0 million ahead of the third quarter of 2011. The growth in underlying trading was primarily achieved at the two Sicilian properties.

North America:  

The Company experienced strong performance from its North American assets. Revenue from owned hotels for the quarter was $21.7 million, up $0.8 million or 4% from $20.9 million in the third quarter of 2011. The growth was largely attributable to Maroma Resort and Spa, Riviera Maya, where additional international flights into Cancun contributed to a 12 percentage point increase in occupancy and a $0.4 million increase in revenue compared to the third quarter of 2011, and The Inn at Perry Cabin, St. Michaels, Maryland, which saw revenue growth of $0.4 million related to increased ADR as a result of the recent rooms renovation. Same store RevPAR in the region increased by 12% in US dollars due to a 9% increase in ADR and an improvement in occupancy from 63% to 65%.

EBITDA in North America grew by 50% to $1.8 million compared to $1.2 million in the third quarter of 2011. Excluding $0.5 million of pre-opening costs at El Encanto, Santa Barbara, year-over-year EBITDA growth was $1.1 million, which included increases of $0.6 million at Charleston Place and $0.3 million at each of Maroma Resort and Spa and The Inn at Perry Cabin.

Rest of World:

Asia-Pacific:  

Revenue for the third quarter of 2012 was $8.4 million, an increase of $0.7 million or 9% compared to $7.7 million in the third quarter of 2011. Revenue growth in the region was led by The Governor's Residence, Yangon (up $0.5 million), as the recent surge in tourism in Myanmar has created unprecedented demand for accommodation in the country. Same store RevPAR for the region increased by 12% in US dollars due to an 8% increase in ADR and an increase in occupancy from 60% to 62% compared to the third quarter of 2011.

EBITDA was unchanged compared to the third quarter of 2011 at $2.8 million which included a one-off restructuring charge of $0.2 million.  

Southern Africa:  

Third quarter revenue from owned hotels was $3.9 million, down $1.0 million or 20% from $4.9 million in the third quarter of 2011, largely due to currency effects. Same store RevPAR was down 6% in local currency but down 17% in US dollars.  Despite decreased revenue, EBITDA was $0.3 million versus $0.1 million in the third quarter of 2011, as Mount Nelson Hotel continued to benefit from labor and other cost-saving initiatives.

South America:  

Third quarter revenue from owned hotels was $13.6 million, down $4.1 million or 23% from $17.7 million in the third quarter of 2011. A $4.9 million decrease resulted from the temporary partial closure of Copacabana Palace during the period for the planned refurbishment of rooms and public spaces, offset by growth at other properties. As a result, same store RevPAR in the region decreased by 27%.

EBITDA for the quarter was $1.1 million, a decrease of $1.4 million compared to $2.5 million in the third quarter of last year. This decrease was attributable to a reduction of $2.1 million at Copacabana Palace related to the refurbishment works, offset by an increase of $0.8 million at Hotel das Cataratas where strong demand from the domestic Brazilian market continued and the lease expense was favorably impacted by depreciation in the Brazilian real.

Hotel management & part-ownership interests:  

EBITDA for the third quarter of 2012 was $0.8 million compared to $1.3 million in the third quarter of 2011. The quarterly result included a $0.6 million decline from Hotel Ritz, Madrid, which struggled due to difficult economic conditions in Spain.

Restaurants:  

Revenue from '21' Club in the third quarter of 2012 was $2.1 million compared to $2.5 million in the same quarter of 2011 as the summer closure was one week longer in 2012 than in 2011. EBITDA was a loss of $0.6 million compared to a loss of $1.8 million in the same quarter of 2011 due to a non-recurring legal settlement of $1.5 million recorded in the third quarter of 2011.

Trains & cruises:  

Revenue for the third quarter of 2012 was $26.0 million, down $2.9 million or 10% from $28.9 million in the third quarter of 2011. This decline is largely attributable to certain factors impacting passenger numbers on the UK day-trains, including the Olympic Games which diverted attention and kept visitors away from other London attractions, and a weak economic climate which affected charter business.

EBITDA was $8.0 million compared to $9.0 million in the third quarter of 2011.

Central costs: 

In the third quarter of 2012, central overheads were $7.1 million compared with $9.1 million in the prior year period. This decrease includes a $0.8 million decrease in compensation costs and directors' fees and a $0.9 million decrease in legal and professional fees.

In addition, the Company incurred $0.8 million of non-cash share-based compensation expense compared to $1.2 million in the third quarter of 2011. The Company also incurred $0.2 million of central marketing costs compared to $nil in the prior year period, as it continued to invest in new marketing initiatives and expand its geographic presence.

Real estate:  

In the third quarter of 2012, the Company recorded an EBITDA loss of $1.6 million from real estate activities. The loss includes $1.0 million at Porto Cupecoy, Sint Maarten, compared with a loss of $1.4 million in the third quarter of 2011. During the quarter four condominium units were sold, bringing cumulative sales at the end of the quarter to 122, or 66% of the total number of units, of which 115 have been transferred to customers.

In addition $0.7 million cash proceeds were received during the quarter, and a $0.6 million loss was recorded, from the sale of two final units at Keswick Estate, Virginia, that were not part of the sale of the hotel property.

Depreciation and amortization:  

The depreciation and amortization charge for the third quarter of 2012 was $10.5 million, down from $11.2 million in the third quarter of 2011.

Interest: 

The interest charge for the third quarter of 2012 was $8.9 million, down $3.8 million from $12.7 million in the prior year quarter. This movement was largely due to a reduction in swap termination costs of $1.7 million compared to the third quarter of 2011, coupled with lower interest rates and the reduction in debt over the last 12 months. In addition there was $1.0 million of capitalized interest during the quarter related to the El Encanto construction project.


Tax:  

The tax charge for the third quarter of 2012 was $7.4 million compared to a charge of $2.2 million in the same quarter in the prior year. The primary reason for the increase was that the third quarter 2011 tax charge included a deferred tax benefit of $4.2 million, arising in respect of fixed asset timing differences following depreciation of local currencies against the US dollar, compared to a charge of $nil in the third quarter of 2012.

Investment:  

The Company invested a total of $23.2 million in ongoing projects during the third quarter of 2012, including $10.3 million for the restoration of El Encanto, $4.5 million for the refurbishment of Copacabana Palace, $1.4 million for the refurbishment of public areas at La Samanna, $1.0 million for the remodeling of banquet space at '21' Club, $1.0 million at Mount Nelson Hotel for the refurbishment of 30 rooms and the pool-side restaurant, and the balance for routine capital expenditures.

Balance Sheet

At September 30, 2012, the Company had long-term debt (including the current portion and debt of consolidated variable interest entities) of $606.0 million, working capital loans of $1.1 million and cash balances of $121.6 million (including $20.1 million of restricted cash), resulting in total net debt of $485.5 million compared with total net debt of $531.1 million at the end of 2011. At September 30, 2012, the ratio of net debt to trailing 12-month adjusted EBITDA (before real estate) was 4.6 times.

Undrawn amounts available to the Company at September 30, 2012 under short-term lines of credit were $3.3 million, bringing total cash availability (excluding restricted cash) at September 30, 2012 to $104.8 million.

At September 30, 2012, approximately 51% of the Company's debt was at fixed interest rates and 49% was at floating interest rates. The weighted average maturity of the debt was approximately 2.8 years and the weighted average interest rate was approximately 4%. The Company had $52.8 million of debt repayments due within 12 months. These amounts are expected to be met through a combination of operating cash flow, proceeds from divestments of non-core assets, refinancing of the facilities and utilization of available cash.

Other Developments

On October 18, 2012, the Company confirmed receipt of a letter that day from The Indian Hotels Company Limited ("IHCL") and certain other members of the Tata group of companies, in which those parties and a fund controlled by Montezemolo & Partners made an unsolicited proposal to acquire all outstanding shares of Orient-Express Hotels Ltd. The Board of Directors of Orient-Express Hotels Ltd. is evaluating the proposal in consultation with its financial and legal advisors and will respond in due course in accordance with the best interests of the Company and its shareholders.

* * * * * * * *


ORIENT-EXPRESS HOTELS LTD.

SUMMARY OF OPERATING RESULTS

(Unaudited)

                                                   Three months ended
 
                                                     September 30,
    $'000 - except per share amounts              2012        2011
    Revenue and earnings from unconsolidated
    companies
    Owned hotels
    - Europe                                      83,560      89,045
    - North America                               21,659      20,921
    - Rest of world                               25,890      30,370
    Total owned hotels                            131,109     140,336
    Hotel management & part-ownership interests   1,180       1,727
    Restaurants                                   2,078       2,518
    Trains & cruises                              25,997      28,933
    Revenue and earnings from unconsolidated
 
    companies before real estate                  160,364     173,514
    Real estate revenue                           2,131       3,875
    Total (1)                                     162,495     177,389
 
    Analysis of earnings
    Owned hotels
    - Europe                                      34,517      36,739
    - North America                               1,813       1,168
    - Rest of world                               4,240       5,346
    Hotel management & part-ownership interests   809         1,313
    Restaurants                                   (642)       (1,832)
    Trains & cruises                              8,047       8,951
    Central overheads                             (7,134)     (9,137)
    Share-based compensation                      (817)       (1,184)
    Central marketing costs                       (233)       -
    EBITDA before real estate and impairment and
    loss on disposal                              40,600      41,364
    Real estate                                   (1,648)     (1,438)
    EBITDA before impairment and loss on disposal 38,952      39,926
    Impairment                                    -           (40,853)
    Loss on disposal                              -           (18)
    EBITDA                                        38,952      (945)
    Depreciation & amortization                   (10,549)    (11,184)
    Interest                                      (8,938)     (12,703)
    Foreign exchange                              (57)        (4,595)
    Earnings / (loss) before tax                  19,408      (29,427)
    Tax                                           (7,351)     (2,190)
    Net earnings / (loss) from continuing
    operations                                    12,057      (31,617)
    Discontinued operations                       5,625       (18,450)
    Net earnings / (loss)                         17,682      (50,067)
    Net loss attributable to non-controlling
    interests                                     43          146
    Net earnings / (loss) attributable to
    Orient-Express Hotels Ltd.                    17,725      (49,921)
    Net earnings / (loss) per common share
    attributable to Orient-Express Hotels Ltd.      0.17       (0.49)
    Number of shares - millions                   102.89      102.60


(1)   Comprises earnings from unconsolidated companies of $2,520,000 (2011 - $3,214,000) and revenue of $159,975,000 (2011 - $174,175,000).

ORIENT-EXPRESS HOTELS LTD.

SUMMARY OF OPERATING INFORMATION FOR OWNED HOTELS

                           Three months ended
 
                              September 30,
                             2012      2011
    Average Daily Rate
 
    (in US dollars)
    Europe                       801       831
    North America                317       292
    Rest of world                347       364
    Worldwide                    529       541
 
    Room Nights Available
    Europe                    87,957    88,412
    North America             61,882    62,250
    Rest of world            101,384   100,648
    Worldwide                251,223   251,310
 
    Rooms Nights Sold
    Europe                    60,935    63,648
    North America             40,197    39,260
    Rest of world             44,538    49,372
    Worldwide                145,670   152,280
 
    Occupancy
    Europe                       69%       72%
    North America                65%       63%
    Rest of world                44%       49%
    Worldwide                    58%       61%
 
    RevPAR (in US dollars)
    Europe                       555       598
    North America                206       184
    Rest of world                153       179
    Worldwide                    307       328
 
                                                    Change %
    Same Store RevPAR                                     Local
     (in US dollars)                            US dollar Currency
    Europe                       555       598       -7%       2%
    North America                206       184       12%      12%
    Rest of world                153       179      -15%     -13%
    Worldwide                    307       328       -6%       0%



ORIENT-EXPRESS HOTELS LTD.

SUMMARY OF OPERATING RESULTS

(Unaudited)

                                                     Nine months ended
 
                                                       September 30,
    $'000 - except per share amounts                 2012        2011
    Revenue and earnings from unconsolidated
    companies
    Owned hotels
    - Europe                                      170,198     180,409
    - North America                               80,719      75,948
    - Rest of world                               98,306      99,655
    Total owned hotels                            349,223     356,012
    Hotel management & part-ownership interests   3,155       4,504
    Restaurants                                   9,886       9,956
    Trains & cruises                              62,426      61,764
    Revenue and earnings from unconsolidated
 
    companies before real estate                  424,690     432,236
    Real estate revenue                           5,164       7,190
    Total (1)                                     429,854     439,426
 
    Analysis of earnings
    Owned hotels
    - Europe                                      53,720      58,697
    - North America                               15,899      12,231
    - Rest of world                               23,108      21,214
    Hotel management & part-ownership interests   1,701       3,623
    Restaurants                                   181         (2,093)
    Trains & cruises                              15,736      14,237
    Central overheads                             (22,589)    (21,903)
    Share-based compensation                      (4,400)     (4,795)
    Central marketing costs                       (844)       -
    EBITDA before real estate and impairment and
    gain on disposal                              82,512      81,211
    Real estate                                   (4,677)     (4,358)
    EBITDA before impairment and gain on disposal 77,835      76,853
    Impairment                                    -           (40,853)
    Gain on disposal                              -           502
    EBITDA                                        77,835      36,502
    Depreciation & amortization                   (31,593)    (32,553)
    Interest                                      (22,556)    (32,830)
    Foreign exchange                              (655)       (2,525)
    Earnings / (loss) before tax                  23,031      (31,406)
    Tax                                           (15,064)    (7,241)
    Net earnings / (loss) from continuing
    operations                                    7,967       (38,647)
    Discontinued operations                       5,993       (20,879)
    Net earnings / (loss)                         13,960      (59,526)
    Net earnings attributable to non-controlling
    interests                                     (132)       (148)
    Net earnings / (loss) attributable to
    Orient-Express Hotels Ltd.                    13,828      (59,674)
    Net earnings / (loss) per common share
    attributable to Orient-Express Hotels Ltd.       0.13       (0.58)
    Number of shares - millions                   102.83      102.50


(1)   Comprises earnings from unconsolidated companies of $5,810,000 (2011 - $4,647,000) and revenue of $424,044,000 (2011 - $434,779,000).

ORIENT-EXPRESS HOTELS LTD.

SUMMARY OF OPERATING INFORMATION FOR OWNED HOTELS

                           Nine months ended
 
                             September 30,
                             2012      2011
    Average Daily Rate
 
    (in US dollars)
    Europe                       743      765
    North America                376      348
    Rest of world                366      356
    Worldwide                    486      483
 
    Room Nights Available
    Europe                   223,163  222,244
    North America            189,464  189,855
    Rest of world            301,870  298,863
    Worldwide                714,497  710,962
 
    Rooms Nights Sold
    Europe                   128,728  132,135
    North America            126,724  124,979
    Rest of world            160,775  160,783
    Worldwide                416,227  417,897
 
    Occupancy
    Europe                       58%      59%
    North America                67%      66%
    Rest of world                53%      54%
    Worldwide                    58%      59%
 
    RevPAR (in US dollars)
    Europe                       429      455
    North America                252      229
    Rest of world                195      192
    Worldwide                    283      284
 
                                                   Change %
    Same Store RevPAR                                    Local
     (in US dollars)                           US dollar currency
    Europe                       429      455       -6%       2%
    North America                252      229       10%      10%
    Rest of world                195      192        2%       3%
    Worldwide                    283      284        0%       4%


ORIENT-EXPRESS HOTELS LTD.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

 
                                                    September 30, December 31,
    $'000                                                    2012         2011
 
    Assets
 
    Cash and restricted cash                              121,593      103,318
    Accounts receivable                                    47,179       44,599
    Due from unconsolidated companies                      10,077       10,754
    Prepaid expenses and other                             20,452       20,089
    Inventories                                            44,674       44,499
    Other assets held for sale                             18,726      105,173
    Real estate assets                                     29,905       32,021
    Total current assets                                  292,606      360,453
 
    Property, plant & equipment, net of accumulated
    depreciation                                        1,147,743    1,107,657
    Property, plant & equipment, net of accumulated
    depreciation
 
    of consolidated variable interest entities            184,418      185,788
    Investments in unconsolidated companies                65,686       60,012
    Goodwill                                              162,497      161,460
    Other intangible assets                                18,762       19,465
    Other assets                                           42,218       36,034
                                                        1,913,930    1,930,869
 
    Liabilities and Equity
 
    Working capital loans                                   1,114            -
    Accounts payable                                       27,793       28,998
    Accrued liabilities                                   102,430       87,617
    Deferred revenue                                       40,778       29,400
    Other liabilities held for sale                           266        3,262
    Current portion of long-term debt and capital
    leases                                                 51,023       77,058
    Current portion of long-term debt of
    consolidated variable interest
 
    entities                                                1,795        1,784
    Total current liabilities                             225,199      228,119
 
    Long-term debt and obligations under capital
    leases                                                465,799      466,830
    Long-term debt of consolidated variable
    interest entities                                      87,397       88,745
    Deferred income taxes                                  91,553       94,036
    Deferred income taxes of consolidated variable
    interest entities                                      60,499       61,072
    Other liabilities                                      38,024       39,542
    Total liabilities                                     968,471      978,344
 
    Shareholders' equity                                  943,131      950,330
    Non-controlling interests                               2,328        2,195
    Total equity                                          945,459      952,525
                                                        1,913,930    1,930,869
 



ORIENT-EXPRESS HOTELS LTD.

RECONCILIATIONS AND ADJUSTMENTS

(Unaudited)

                                                                Nine months
                                           Three months ended       ended
    $'000 - except per share amounts         September 30,     September 30,
                                            2012      2011     2012     2011
 
    EBITDA                                   38,952     (945)  77,835   36,502
    Real estate                               1,648     1,438   4,677    4,358
    EBITDA before real estate                40,600       493  82,512   40,860
 
    Adjusted items:
    Pre-opening expenses (1)                    472         -     779        -
    Write-down of receivable (2)                  -         -     500        -
    Write-off of fixed assets (3)                 -         -     391        -
    Management restructuring (4)                544     3,191     544    4,580
    Impairment (5)                                -    40,853       -   40,853
    Legal settlement (6)                          -     1,546       -    2,546
    Loss / (gain) on disposal (7)                 -        18       -    (502)
 
    Adjusted EBITDA before real estate       41,616    46,101  84,726   88,337
 
    Reported net earnings/(loss)
    attributable to Orient-Express Hotels
    Ltd.                                     17,725  (49,921)  13,828 (59,674)
    Net loss/(earnings) attributable to
    non-controlling interests                    43       146   (132)    (148)
    Reported net earnings/(loss)             17,682  (50,067)  13,960 (59,526)
    Discontinued operations net of tax      (5,625)    18,450 (5,993)   20,879
    Net earnings/(loss) from continuing
    operations                               12,057  (31,617)   7,967 (38,647)
 
    Adjusted items net of tax:
    Pre-opening expenses (1)                    306         -     506        -
    Write-down of receivable (2)                  -         -     500        -
    Write-off of fixed assets (3)                 -         -     313        -
    Management restructuring (4)                412     3,228     412    4,395
    Impairment (5)                                -    40,853       -   40,853
    Legal settlement (6)                          -     1,005       -    1,655
    Loss / (gain) on disposal (7)                 -        12       -    (326)
    Loan financing costs (8)                    100       693     100    1,841
    Interest rate swaps (9)                   1,422     2,965   1,599    3,481
    Foreign exchange (10)                       196     3,396     344    1,928
 
    Adjusted net earnings from continuing
    operations                               14,493    20,535  11,741   15,180
 
    Reported EPS attributable to
    Orient-Express Hotels Ltd.                 0.17    (0.49)    0.13   (0.58)
    Reported EPS from continuing
    operations                                 0.12    (0.31)    0.08   (0.38)
    Adjusted EPS from continuing
    operations                                 0.14      0.20    0.11     0.15
    Number of shares (millions)              102.89    102.60  102.83   102.50


See footnotes on following page.

Footnotes:

    (1)Pre-opening expenses at El Encanto.
    (2)Write-down of receivable balance within central costs.
    (3)Non-cash write-off of fixed asset balances.
    (4)Restructuring and redundancy costs.
    (5)Impairment charges on Porto Cupecoy and one owned property.
    (6)Settlement of employee litigation at '21' Club.
    (7)Gain on disposal of New York hotel project.
    (8)Amortization of deferred financing costs on repayment of debt.
    (9)Change in fair value of derivatives that are not designated in hedging
    relationships and the ineffective portion of derivatives designated in hedging
    relationships
    (10) Non-cash item arising on the translation of certain assets and
    liabilities denominated in currencies other than the functional
 
    currency



ORIENT-EXPRESS HOTELS LTD.

RECONCILIATIONS AND ADJUSTMENTS (CONTINUED)

(Unaudited)

                                         Twelve
                                         months
                                          ended
                                      September   Nine months ended  Year ended
                                            30,      September 30,   December 31,
    $'000                                  2012     2012         2011     2011
 
    EBITDA                               88,567   77,835       36,502   47,234
    Real estate                           6,722    4,677        4,358    6,403
    EBITDA before real estate            95,289   82,512       40,860   53,637
 
    Adjusted items:
    Pre-opening expenses (1)                779      779            -        -
    Write-down of receivable
    (2)                                     500      500            -        -
    Write-off of fixed assets
    (3)                                     391      391            -        -
    Management restructuring
    (4)                                     648      544        4,580    4,684
    Impairment (5)                       18,378        -       40,853   59,231
    Legal settlement (6)                      -        -        2,546    2,546
    Gain on disposal (7)               (16,042)        -        (502) (16,544)
    Other (8)                             5,063        -            -    5,063
 
    Adjusted EBITDA before
    real estate                         105,006   84,726       88,337  108,617
 
    EBITDA                               88,567   77,835       36,502   47,234
 
    Depreciation and
    amortization                       (42,938) (31,593)     (32,553) (43,898)
    Interest                           (29,988) (22,556)     (32,830) (40,262)
    Foreign exchange                    (2,401)    (655)      (2,525)  (4,271)
    (Loss) / earnings before
    tax                                  13,240   23,031     (31,406) (41,197)
    Tax                                (30,173) (15,064)      (7,241) (22,350)
    Net (loss) / earnings from
    continuing operations              (16,933)    7,967     (38,647) (63,547)
    Discontinued operations               2,823    5,993     (20,879) (24,049)
 
    Net (loss) / earnings              (14,110)   13,960     (59,526) (87,596)
 


Footnotes:

  1. Pre-opening expenses at El Encanto.
  2. Write-down of receivable balance within central costs.
  3. Non-cash write-off of fixed asset balances.
  4. Restructuring, redundancy and associated legal and other costs.
  5. Goodwill and fixed asset impairment charges on owned properties and Porto Cupecoy and share of impairment in unconsolidated companies. 
  6. Settlement of employee litigation at '21' Club.
  7. Gain on disposal of New York hotel project and excess '21' Club development rights.
  8. For year 2011, non-cash fixed asset write-off related to the refurbishment of La Samanna, non-recurring charge for settlement of VAT claim in Mexico, write-off of costs related to abandoned projects and costs associated with the office move of the principal UK administrative subsidiary. 


ORIENT-EXPRESS HOTELS LTD.

NET DEBT TO ADJUSTED EBITDA CALCULATION

(Unaudited)

                                                 Twelve months ended and as at
                                               September 30,       December 31,
    $'000                                            2012                2011
 
    Cash
    Cash and cash equivalents                      101,536              90,104
    Restricted cash                                 20,057              13,214
 
    Total cash                                     121,593             103,318
 
    Total debt
    Working capital facilities                       1,114                   -
    Current portion of long-term debt and
    capital leases                                  51,023              77,058
    Current portion of long-term debt of
    consolidated variable interest entities          1,795               1,784
    Long-term debt and obligations under
    capital leases                                 465,799             466,830
    Long-term debt held by consolidated
    variable interest entities                      87,397              88,745
 
    Total debt                                     607,128             634,417
 
    Net debt                                       485,535             531,099
 
    Adjusted EBITDA before real estate             105,006             108,617
 
    Net debt / adjusted EBITDA before real
    estate                                           4.6 x               4.9 x



Management evaluates the operating performance of the Company's segments on the basis of segment net earnings before interest, foreign exchange, tax (including tax on unconsolidated companies), depreciation and amortization (EBITDA), and believes that EBITDA is a useful measure of operating performance, for example to help determine the ability to incur capital expenditure or service indebtedness, because it is not affected by non-operating factors such as leverage and the historical cost of assets.  EBITDA is also a financial performance measure commonly used in the hotel and leisure industry, although the Company's EBITDA may not be comparable in all instances to that disclosed by other companies.  EBITDA does not represent net cash provided by operating, investing and financing activities under US generally accepted accounting principles (US GAAP), is not necessarily indicative of cash available to fund all cash flow needs, and should not be considered as an alternative to earnings from operations or net earnings under US GAAP for purposes of evaluating operating performance.

Adjusted EBITDA and adjusted net earnings/(loss) of the Company are non-GAAP financial measures and do not have any standardized meanings prescribed by US GAAP.  They are, therefore, unlikely to be comparable to similar measures presented by other companies, which may be calculated differently, and should not be considered as an alternative to net earnings, cash flow from operating activities or any other measure of performance prescribed by US GAAP.  Management considers adjusted EBITDA and adjusted net earnings/(loss) to be meaningful indicators of operations and uses them as measures to assess operating performance because, when comparing current period performance with prior periods and with budgets, management does so after having adjusted for non-recurring items, foreign exchange (a non-cash item), disposals of assets or investments, and certain other items (some of which may be recurring) that management does not consider indicative of ongoing operations or that could otherwise have a material effect on the comparability of the Company's operations.  Adjusted EBITDA and adjusted net earnings/(loss) are also used by investors, analysts and lenders as measures of financial performance because, as adjusted in the foregoing manner, the measures provide a consistent basis on which the performance of the Company can be assessed.

Because the principal activities of the Company relate to its hotels, restaurants, tourist trains and cruises, management considers the revenue from these activities to be a better measure of performance than total revenue which includes real estate sales from past developments of for-sale residences adjoining some of the Company's hotels, currently a small part of the Company's overall business.

This news release and related oral presentations by management contain, in addition to historical information, forward-looking statements that involve risks and uncertainties.  These include statements regarding earnings outlook, investment plans, debt reduction and debt refinancings, asset sales and similar matters that are not historical facts.  These statements are based on management's current expectations and are subject to a number of uncertainties and risks that could cause actual results to differ materially from those described in the forward-looking statements.  Factors that may cause a difference include, but are not limited to, those mentioned in the news release and oral presentations, unknown effects on the travel and leisure markets of terrorist activity and any police or military response, varying customer demand and competitive considerations, failure to realize hotel bookings and reservations and planned property development sales as actual revenue, inability to sustain price increases or to reduce costs, rising fuel costs adversely impacting customer travel and the Company's operating costs, fluctuations in interest rates and currency values, uncertainty of negotiating and completing proposed asset sales, debt refinancings, capital expenditures and acquisitions, inability to reduce funded debt as planned or to agree bank loan agreement waivers or amendments, adequate sources of capital and acceptability of finance terms, possible loss or amendment of planning permits and delays in construction schedules for expansion or development projects, delays in reopening properties closed for repair or refurbishment and possible cost overruns, shifting patterns of tourism and business travel and seasonality of demand, adverse local weather conditions, changing global or regional economic conditions and weakness in financial markets which may adversely affect demand, legislative, regulatory and political developments, possible challenges to the Company's corporate governance structure, and the uncertain outcome of the pending offer by Indian Hotels Co. Ltd to acquire outstanding Company shares.  Further information regarding these and other factors is included in the filings by the Company with the U.S. Securities and Exchange Commission.

* * * * * *

Orient-Express Hotels Ltd. will conduct a conference call on Friday, November 2, 2012 at 10:00 am EDT (2.00 pm GMT) which is accessible at +1 877 249 9037 (US toll free) or +44 (0)20 7136 2055  (Standard International).  The conference ID is 7848989.  A re-play of the conference call will be available until 7:00 pm (EST) Thursday, November 8, 2012 and can be accessed by calling +1 866 932 5017 (US toll free) or +44 (0)20 7111 1244 (Standard International) and entering replay access number 7848989#.  A re-play will also be available on the Company's website: http://www.orient-expresshotelsltd.com. Financial media requiring further information should contact Vicky Legg, Director of Corporate Communications, on +44 (0)20 3117 1380 or vicky.legg@orient-express.com.

Contacts:

Martin O'Grady
Vice President, Chief Financial Officer
Tel: +44-20-3117-1333
E: martin.ogrady@orient-express.com        

Amy Brandt
Director of Investor Relations
Tel: +44-20-3117-1323
E: amy.brandt@orient-express.com


 

SOURCE Orient-Express Hotels Ltd




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