The Globe and Mail

Go to the Globe and Mail homepage

Jump to main navigationJump to main content

Globe Investor

News Sources

Take control of your investments with the latest investing news and analysis

Press release from PR Newswire

Orient-Express Hotels Reports Second Quarter 2012 Results

Wednesday, August 01, 2012

Orient-Express Hotels Reports Second Quarter 2012 Results17:00 EDT Wednesday, August 01, 2012HAMILTON, Bermuda, August 1, 2012 /PRNewswire/ --Same store revenue per available room ("RevPAR") for the quarter up 3% in local currency and down 2% in US dollarsSecond quarter total revenue before real estate down 2% to $163.8 million from $167.8 millionSecond quarter revenue from owned hotels down 4% to $130.7 million from $135.6 millionAdjusted EBITDA before real estate for the second quarter down 3% to $41.5 million from $42.7 millionAdjusted net earnings from continuing operations for the second quarter up to $14.8 million from $10.2 millionOpened Palacio Nazarenas, a 55-key all-suite hotel in Cuzco, PeruEntered into agreements to sell The Observatory Hotel in Sydney and The Westcliff in JohannesburgOrient-Express Hotels Ltd. (NYSE: OEH, http://www.orient-express.com) (the "Company"), owners or part-owners and managers of 46 luxury hotel, restaurant, tourist train and river cruise properties operating in 23 countries, today announced its results for the second quarter ended June 30, 2012."We have experienced a challenging second quarter," said Philip Mengel, Director and Interim Chief Executive Officer. "The continued economic uncertainty in the Eurozone has affected demand for luxury travel from European sources, and the weakening of the euro and other currencies against the dollar has reduced the dollar value of our revenues."Despite these challenges," Mr. Mengel continued, "we are pleased that our underlying revenue in local currencies has continued to grow. Excluding the effects of currency movements, total revenue before real estate for the second quarter was $6.1 million, or 4%, ahead of the second quarter of 2011. If we look forward, total owned hotels' revenue on the books for the full year 2012 shows a 5% increase compared to 2011 when the effects of currency are excluded."Our strategy to redeploy capital from non-core properties is proceeding on plan. We have recently announced agreements to sell The Observatory Hotel and The Westcliff. The sale proceeds will be allocated to debt reduction, corporate liquidity and our active program of investments in core properties. In June, our Peruvian hotel joint venture opened Palacio Nazarenas, an all-suite property in Cuzco, Peru, and we have exciting revenue-enhancing investment projects in progress across the portfolio."Second Quarter 2012 Earnings SummaryRevenue before real estate was $163.8 million in the second quarter of 2012, down $4.0 million or 2% from $167.8 million in the second quarter of 2011. Excluding the effects of weaker local currencies compared to the US dollar, revenue before real estate was $6.1 million or 4% ahead of the second quarter in the prior year.Revenue from owned hotels for the second quarter was $130.7 million, down $4.9 million or 4% from $135.6 million in the second quarter of 2011. On a same store basis, owned hotels RevPAR was up 3% in local currency and down 2% in US dollars.Trains & cruises revenue in the second quarter was $27.0 million compared to $25.3 million in the second quarter of 2011, an increase of 7%.Adjusted EBITDA before real estate was $41.5 million for the second quarter, down $1.2 million from $42.7 million in the prior year period. The principal increases were in the Company's share of earnings from PeruRail (up $2.1 million compared to the same period in the prior year) and earnings from Venice Simplon-Orient-Express (up $1.0 million). Other improvements included the two Sicilian properties (up $0.9 million) and La Samanna, St. Martin (up $0.8 million), offset by decreases at Grand Hotel Europe, St. Petersburg, (down $1.3 million), Hotel Cipriani, Venice (down $1.2 million), Copacabana Palace, Rio de Janeiro (down $0.8 million), and an increase in central overheads of $0.9 million.Adjusted EBITDA for the second quarter includes an add-back of share-based compensation costs of $1.6 million (2011 - $2.0 million). Revenue and adjusted EBITDA before real estate do not include the results of The Observatory Hotel, Sydney, and The Westcliff, Johannesburg, both of which have been moved to discontinued operations.Adjusted net earnings from continuing operations for the second quarter were $14.8 million ($0.14 per common share) compared with $10.2 million ($0.10 per common share) in the second quarter of 2011. This increase was in part due to a $4.7 million reduction in interest expense compared to the second quarter of 2011.Company HighlightsOn June 15th, the Company's 50% Peru hotels joint venture opened its latest property, Palacio Nazarenas. The 55-key luxury urban retreat and former 16th century convent in Cuzco features oxygenated suites, a full-service spa offering a range of indigenous products, iPads for each room loaded with insider city guides, Cuzco's first outdoor swimming pool, and an all-day dining experience showcasing contemporary Andean cuisine by exciting young Peruvian chef, Virgilio Martinez.  During the four-year renovation process, archaeologists discovered many Incan artifacts, several of which are on display in the hotel.  Incan walls uncovered during excavations are preserved beneath glass floors in the spa's treatment rooms.During the quarter, the Company entered into an agreement to sell The Observatory Hotel.  The proceeds of the sale will be used to repay debt of $10.9 million, with the balance held in cash or reinvested in the Company's portfolio. Orient-Express will continue to operate the hotel until the expected closing of the transaction in mid-August 2012.  In July, the Company also entered into an agreement to sell The Westcliff. The transaction, which is conditional on the satisfaction of certain regulatory approvals, is expected to close by the end of the year. Under the terms of that transaction, Orient-Express has agreed to remain as manager of The Westcliff for a maximum period of twelve months from completion while the new owner develops its long-term refurbishment plans.Total gross proceeds from the sale of these two properties are expected to be $66.0 million. During the second quarter, $2.5 million cash was received from the completion of the sale of Bora Bora Lagoon Resort & Spa.The Company commenced in June the refurbishment of 121 rooms and suites in the main building of the Copacabana Palace.  As part of the three-month project, which is being carried out during the hotel's traditional low season, the lobby area will be enlarged and arrival experience improved. This project is the second phase of a major investment project started in the fourth quarter of 2011 when the Company refurbished 26 rooms and suites on the fifth floor of the main building, as well as the Cipriani restaurant.The Company will also complete the refurbishment of public areas and additional rooms at La Samanna during the third quarter, and has recently committed to refurbish rooms in the Oasis Wing of Mount Nelson Hotel in Cape Town, as well as ongoing improvements to the Company's three safari camps in Botswana. During August, the Company will complete a major renovation of the ballroom at the '21' Club in New York that will enhance the space for events and celebrations.In May, the Company introduced a new Orient-Express.com website, integrating responsive web design to deliver a seamless experience across all devices and platforms, from smartphones and tablets to internet-enabled televisions.  The project consolidated the Company's communications and commercial channels around its recently upgraded booking engine and is part of an overall strategy to speak to new audiences and markets while achieving efficiency of message and content across the Company.  Features of the new design include real time social media feeds and TripAdvisor reviews, enhanced online reservation capabilities and greater access to recommended travel experiences across the Company's portfolio.Operating PerformanceEurope:  In the second quarter, revenue from owned hotels was $70.9 million, down $5.8 million or 8% from $76.7 million in the second quarter of 2011. This decrease is largely attributable to a weaker euro, which lost 11% of its value from the same time last year compared to the US dollar. Excluding the effects of currency movements, the underlying revenue in local currencies was $2.3 million ahead of the second quarter of 2011, led by the two Sicilian properties where the refurbishments have had a positive effect on demand from higher-spending clientele.Same store RevPAR in Europe was flat compared to the prior year in local currency and down 7% in US dollars, where a weaker euro contributed to a 3% drop in average daily rate ("ADR").EBITDA for the quarter was $26.8 million, down $2.0 million from $28.8 million in the second quarter of 2011. Excluding the effects of weaker local currencies, EBITDA was $1.1 million ahead of the second quarter of 2011. The growth in underlying trading was primarily driven by the two Sicilian properties, Villa San Michele, Florence and Grand Hotel Europe.North America:  Revenue from owned hotels for the quarter was $30.0 million, up $2.3 million or 8% from $27.7 million in the second quarter of 2011. The growth was spread across most properties but continued to be led by Charleston Place where strong results were driven by corporate and group business. Same store RevPAR in the region increased by 9% in US dollars due to a 7% increase in ADR and a 2 percentage point improvement in occupancy.EBITDA in North America grew by 30% to $6.9 million compared to $5.3 million in the second quarter of 2011. This EBITDA growth included $0.6 million at Charleston Place and $0.8 million at La Samanna where the 2011 investment in rooms had a positive effect. There was also a $0.3 million increase in EBITDA at the two Mexican properties.Rest of World:Southern Africa:  Second quarter revenue from owned hotels was $3.6 million, down $0.4 million or 10% from $4.0 million in the second quarter of 2011. Same store RevPAR was up 19% in local currency and down 3% in US dollars due to currency movements affecting ADR in US dollar terms. EBITDA was a loss of $0.5 million compared to an EBITDA loss of $0.8 million in the second quarter of 2011, as the properties benefited from labor and other cost savings.South America:  Second quarter revenue from owned hotels was $20.0 million, down $1.7 million or 8% from $21.7 million in the second quarter of 2011. This decrease included a $0.5 million increase at Hotel das Cataratas, Iguassu, offset by a decrease of $2.3 million at Copacabana Palace. Compared to the second quarter of 2011, the Brazilian real depreciated by 23% versus the US dollar, negatively impacting the revenue reported by the Brazilian hotels.Same store RevPAR in the region decreased by 2% in US dollars as a result of a 6% decrease in ADR offset by an increase in occupancy to 61% from 59% in the second quarter of 2011.EBITDA for the quarter was $4.3 million, a decrease of $0.3 million compared to $4.6 million in the second quarter of last year. This was due to an increase of $0.6 million at Hotel das Cataratas where business from the domestic Brazilian market was strong, offset by a decrease of $0.8 million at Copacabana Palace.Asia-Pacific:  Revenue for the second quarter of 2012 was $6.3 million, an increase of $0.8 million or 15% compared to $5.5 million in the second quarter of 2011. Revenue growth in the region was led by Napasai, Koh Samui (up $0.5 million), which benefited from its new lagoon, and The Governor's Residence, Yangon (up $0.4 million), as Myanmar further opens up to international tourism, which is expected to continue due to the recent relaxing of US restrictions in the country. Same store RevPAR increased by 15% in US dollars due to a 9% increase in ADR in US dollar terms and an additional 2 percentage point increase in occupancy compared to the second quarter of 2011.EBITDA was $1.3 million compared to $1.2 million in the second quarter of 2011.Hotel management & part-ownership interests:  EBITDA for the second quarter of 2012 was $1.6 million compared to $2.5 million in the second quarter of 2011. The quarterly result included a $0.7 million decline from Hotel Ritz, Madrid, which has struggled in the difficult economic conditions prevailing in Spain.Restaurants:  Revenue from '21' Club in the second quarter of 2012 was $3.9 million compared to $4.1 million in the same quarter of 2011, due to temporary noise disruption from neighboring construction. EBITDA was $0.5 million compared to an EBITDA loss of $0.4 million in the same quarter of 2011 due to a non-recurring legal settlement of $1.0 million recorded in the second quarter of 2011.Trains & cruises:  Revenue increased by $1.7 million or 7% to $27.0 million in the second quarter of 2012 from $25.3 million in the prior year period, largely due to a $2.1 million increase from the Company's PeruRail joint venture generated by increased passenger numbers and a $1.1 million increase from the Venice Simplon-Orient-Express, which is on target to achieve a record year.EBITDA was $8.0 million compared to $6.1 million in the second quarter of 2011. This improvement was largely due to a $2.1 million increase in share of results from PeruRail and a $1.0 million increase from Venice Simplon-Orient-Express compared to the second quarter of 2011.Central costs:  In the second quarter of 2012, central overheads were $8.0 million compared with $6.6 million in the prior year period. This increase was attributable to a $0.5 million increase in cash compensation costs, a $0.8 million increase in legal and professional fees and a $0.5 million receivable write-off (a non-recurring item added back for the purposes of calculating adjusted EBITDA).In addition, the Company incurred $1.6 million of non-cash share-based compensation expense compared to $2.0 million in the second quarter of 2011. Starting in the second quarter of 2012, the Company has begun adding back share-based compensation costs in calculating adjusted EBITDA before real estate and adjusted net earnings from continuing operations.The Company incurred $0.3 million of central marketing costs, as it continued to invest in developing awareness of the Orient-Express brand.Real estate:  In the second quarter of 2012, there was an EBITDA loss of $1.5 million from real estate activities, related to Porto Cupecoy, Sint Maarten, compared with a loss of $1.9 million in the second quarter of 2011. One condominium unit was sold at Porto Cupecoy during the quarter, bringing cumulative sales at the end of the quarter to 118, or 64% of the total number of units.Depreciation and amortization:  The depreciation and amortization charge for the second quarter of 2012 was $10.5 million, down from $10.9 million in the second quarter of 2011.Interest:  The interest charge for the second quarter of 2012 was $6.4 million, down $4.7 million from $11.1 million in the prior year quarter. This decrease was due to the reduction in net debt over the last twelve months, a non-recurring charge of $1.7 million in the second quarter of 2011 related to the write-off of deferred finance costs and $1.0 million of interest capitalized in the second quarter of 2012 in relation to the construction at El Encanto, Santa Barbara, compared to $nil in the second quarter of 2011.Tax:  The tax charge for the second quarter of 2012 was $7.5 million compared to a charge of $10.0 million in the same quarter in the prior year. The primary reason for the movement was that the charge in the second quarter of 2012 included a deferred tax credit of $2.4 million arising in respect of fixed asset timing differences following depreciation of local currencies against the US dollar, compared to a charge of $1.0 million in the second quarter of 2011.Investment:  The Company invested a total of $26.0 million during the second quarter of 2012, including $10.6 million for the ongoing restoration of El Encanto, $2.1 million primarily related to the construction of five new suites at Hotel Splendido, Portofino, $2.6 million primarily for the ongoing refurbishment of Copacabana Palace, $1.7 million for completing the remaining works at the two Sicilian properties and the balance for routine capital expenditures.Balance SheetAt June 30, 2012, the Company had long-term debt (including the current portion and debt of consolidated variable interest entities) of $615.1 million, working capital loans of $0.5 million and cash balances of $86.1 million (including $14.5 million of restricted cash), resulting in total net debt of $529.5 million compared with total net debt of $531.1 million at the end of 2011. At June 30, 2012, the ratio of net debt to trailing 12-month adjusted EBITDA (before real estate) was 4.5 times.Undrawn amounts available to the Company at June 30, 2012 under short-term lines of credit were $3.9 million, bringing total cash availability (excluding restricted cash) at June 30, 2012 to $75.5 million.At June 30, 2012, approximately 50% of the Company's debt was at fixed interest rates and 50% 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 4.2%. The Company had $114.7 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.* * * * * * * * ORIENT-EXPRESS HOTELS LTD.SUMMARY OF OPERATING RESULTS(Unaudited) Three months ended June 30, $'000 - except per share amounts 2012 2011 Revenue and earnings from unconsolidated companies Owned hotels - Europe 70,850 76,684 - North America 29,995 27,740 - Rest of world 29,838 31,161 Total owned hotels 130,683 135,585 Hotel management & part-ownership interests 2,237 2,853 Restaurants 3,942 4,097 Trains & cruises 26,963 25,273 Revenue and earnings from unconsolidated companies before real estate 163,825 167,808 Real estate revenue 1,219 1,660 Total (1) 165,044 169,468 Analysis of earnings Owned hotels - Europe 26,807 28,817 - North America 6,895 5,346 - Rest of world 5,150 4,901 Hotel management & part-ownership interests 1,636 2,530 Restaurants 484 (409) Trains & cruises 8,011 6,122 Central overheads (7,977) (6,621) Share-based compensation (1,572) (2,040) Central marketing costs for brand awareness campaign (333) - EBITDA before real estate and loss on disposal 39,101 38,646 Real estate (1,505) (1,876) EBITDA before loss on disposal 37,596 36,770 Loss on disposal - (86) EBITDA 37,596 36,684 Depreciation & amortization (10,518) (10,889) Interest (6,402) (11,052) Foreign exchange (1,525) 1,092 Earnings before tax 19,151 15,835 Tax (7,479) (10,023) Net earnings from continuing operations 11,672 5,812 Discontinued operations 6 (591) Net earnings 11,678 5,221 Net loss/(earnings) attributable to non-controlling interests 96 (67) Net earnings attributable to Orient-Express Hotels Ltd. 11,774 5,154 Net earnings per common share attributable to Orient-Express Hotels Ltd. 0.11 0.05 Number of shares - millions 102.89 102.47 (1) Comprises earnings from unconsolidated companies of $3,336,000 (2011 - $2,198,000) and revenue of $161,708,000 (2011 - $167,270,000).ORIENT-EXPRESS HOTELS LTD.SUMMARY OF OPERATING INFORMATION FOR OWNED HOTELS Three months ended June 30, 2012 2011 Average Daily Rate (in US dollars) Europe 772 799 North America 372 349 Rest of world 341 347 Worldwide 502 514 Room Nights Available Europe 85,827 85,659 North America 63,791 64,155 Rest of world 100,282 99,554 Worldwide 249,900 249,368 Rooms Nights Sold Europe 52,139 54,323 North America 45,894 45,095 Rest of world 50,296 48,687 Worldwide 148,329 148,105 Occupancy Europe 61% 63% North America 72% 70% Rest of world 50% 49% Worldwide 59% 59% RevPAR (in US dollars) Europe 469 507 North America 268 245 Rest of world 171 170 Worldwide 298 305 Change % Same Store RevPAR Local (in US dollars) US dollar currency Europe 469 507 -7% 0% North America 268 245 9% 10% Rest of world 171 170 1% 3% Worldwide 298 305 -2% 3% ORIENT-EXPRESS HOTELS LTD.SUMMARY OF OPERATING RESULTS(Unaudited) Six months ended June 30, $'000 - except per share amounts 2012 2011 Revenue and earnings from unconsolidated companies Owned hotels - Europe 86,638 91,364 - North America 59,060 55,027 - Rest of world 72,416 69,285 Total owned hotels 218,114 215,676 Hotel management & part-ownership interests 1,975 2,777 Restaurants 7,808 7,438 Trains & cruises 36,429 32,831 Revenue and earnings from unconsolidated companies before real estate 264,326 258,722 Real estate revenue 3,033 3,315 Total (1) 267,359 262,037 Analysis of earnings Owned hotels - Europe 19,203 21,959 - North America 14,086 11,063 - Rest of world 18,868 15,868 Hotel management & part-ownership interests 892 2,310 Restaurants 823 (261) Trains & cruises 7,689 5,286 Central overheads (15,456) (12,766) Share-based compensation (3,582) (3,612) Central marketing costs for brand awareness campaign (611) - EBITDA before real estate and gain on disposal 41,912 39,847 Real estate (3,029) (2,920) EBITDA before gain on disposal 38,883 36,927 Gain on disposal - 520 EBITDA 38,883 37,447 Depreciation & amortization (21,044) (21,369) Interest (13,618) (20,127) Foreign exchange (598) 2,070 Earnings / (loss) before tax 3,623 (1,979) Tax (7,713) (5,051) Net loss from continuing operations (4,090) (7,030) Discontinued operations 368 (2,429) Net loss (3,722) (9,459) Net earnings attributable to non-controlling interests (175) (294) Net loss attributable to Orient-Express Hotels Ltd. (3,897) (9,753) Net loss per common share attributable to Orient-Express Hotels Ltd. (0.04) (0.10) Number of shares - millions 102.80 102.45 (1)   Comprises earnings from unconsolidated companies of $3,290,000 (2011 - $1,433,000) and revenue of $264,069,000 (2011 - $260,604,000).ORIENT-EXPRESS HOTELS LTD.SUMMARY OF OPERATING INFORMATION FOR OWNED HOTELS Six months ended June 30, 2012 2011 Average Daily Rate (in US dollars) Europe 691 721 North America 404 374 Rest of world 374 355 Worldwide 463 456 Room Nights Available Europe 135,206 133,832 North America 127,582 127,605 Rest of world 200,486 198,215 Worldwide 463,274 459,652 Rooms Nights Sold Europe 67,793 68,487 North America 86,527 85,719 Rest of world 116,237 111,411 Worldwide 270,557 265,617 Occupancy Europe 50% 51% North America 68% 67% Rest of world 58% 56% Worldwide 58% 58% RevPAR (in US dollars) Europe 347 369 North America 274 251 Rest of world 217 200 Worldwide 270 263 Change % Same Store RevPAR Local (in US dollars) US dollar currency Europe 347 369 -6% 1% North America 274 251 9% 10% Rest of world 217 200 9% 11% Worldwide 270 263 3% 7% ORIENT-EXPRESS HOTELS LTD.CONDENSED CONSOLIDATED BALANCE SHEETS(Unaudited) June 30, December 31, $'000 2012 2011 Assets Cash and restricted cash 86,050 103,318 Accounts receivable 50,718 44,599 Due from unconsolidated companies 12,569 10,754 Prepaid expenses and other 22,051 20,089 Inventories 44,491 44,499 Other assets held for sale 65,910 105,173 Real estate assets 30,747 32,021 Total current assets 312,536 360,453 Property, plant & equipment, net of accumulated depreciation 1,120,319 1,107,657 Property, plant & equipment, net of accumulated depreciation of consolidated variable interest entities 185,013 185,788 Investments in unconsolidated companies 63,411 60,012 Goodwill 159,531 161,460 Other intangible assets 18,987 19,465 Other assets 39,534 36,034 1,899,331 1,930,869 Liabilities and Equity Working capital loans 487 - Accounts payable 29,000 28,998 Accrued liabilities 96,326 87,617 Deferred revenue 38,677 29,400 Other liabilities held for sale 937 3,262 Current portion of long-term debt and capital leases 112,416 77,058 Current portion of long-term debt of consolidated variable interest entities 1,789 1,784 Total current liabilities 279,632 228,119 Long-term debt and obligations under capital leases 413,015 466,830 Long-term debt of consolidated variable interest entities 87,849 88,745 Deferred income taxes 90,649 94,036 Deferred income taxes of consolidated variable interest entities 60,690 61,072 Other liabilities 39,037 39,542 Total liabilities 970,872 978,344 Shareholders' equity 926,087 950,330 Non-controlling interests 2,372 2,195 Total equity 928,459 952,525 1,899,331 1,930,869 ORIENT-EXPRESS HOTELS LTD.RECONCILIATIONS AND ADJUSTMENTS(Unaudited) Six months Three months ended ended $'000 - except per share amounts June 30, June 30, 2012 2011 2012 2011 EBITDA 37,596 36,684 38,883 37,447 Real estate 1,505 1,876 3,029 2,920 EBITDA before real estate 39,101 38,560 41,912 40,367 Adjusted items: Write-down of receivable (1) 500 - 500 - Pre-opening expenses (2) 307 - 307 - Write-off of fixed assets (3) - - 391 - Loss/(gain) on disposal (4) - 86 - (520) Legal settlement (5) - 1,000 - 1,000 Management restructuring (6) - 975 - 1,389 Share-based compensation (7) 1,572 2,040 3,582 3,612 Adjusted EBITDA before real estate 41,480 42,661 46,692 45,848 Reported net earnings/(loss) attributable to Orient-Express Hotels Ltd. 11,774 5,154 (3,897) (9,753) Net loss/(earnings) attributable to non-controlling interests 96 (67 (175) (294) Reported net earnings/(loss) 11,678 5,221 (3,722) (9,459) Discontinued operations net of tax (6) 591 (368) 2,429 Net earnings/(losses) from continuing operations 11,672 5,812 (4,090) (7,030) Adjusted items net of tax: Write-down of receivable (1) 500 - 500 - Pre-opening costs (2) 200 - 200 - Write-off of fixed assets (3) - - 313 - Loss/(gain) on disposal (4) - 56 - (338) Legal settlement (5) - 650 - 650 Management restructuring (6) - 780 - 1,166 Share-based compensation (7) 1,572 2,040 3,582 3,612 Loan financing costs (8) - 1,148 - 1,148 Interest rate swaps (9) (189) 497 177 516 Foreign exchange (10) 1,040 (797) 148 (1,469) Adjusted net earnings/(loss) from continuing operations 14,795 10,186 830 (1,745) Reported EPS attributable to Orient-Express Hotels Ltd. 0.11 0.05 (0.04) (0.10) Reported EPS from continuing operations 0.11 0.06 (0.04) (0.07) Adjusted EPS from continuing operations 0.14 0.10 0.01 (0.02) Number of shares (millions) 102.89 102.47 102.80 102.45 See footnotes on following page.Footnotes:Write-down of receivable balance within central costs.Pre-opening expenses related to the development at El Encanto.Non-cash write-off of fixed asset balances.Gain on disposal of New York hotel project.Settlement of employee litigation at '21' Club.Restructuring and redundancy costs.Share-based compensation costs.Amortization of deferred financing costs on repayment of debt.Change in fair value of derivatives that are not designated in hedging relationships and the ineffective portion of derivatives that are designated in hedging relationships.Foreign exchange is a 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 June Six months ended Year ended 30, June 30 December 31, $'000 2012 2012 2011 2011 EBITDA 48,670 38,883 37,447 47,234 Real estate 6,512 3,029 2,920 6,403 EBITDA before real estate 55,182 41,912 40,367 53,637 Adjusted items: Write-down of receivable (1) 500 500 - - Pre-opening expenses (2) 307 307 - - Write-off of fixed assets (3) 391 391 - - Gain on disposal (4) (16,024) - (520) (16,544) Legal settlement (5) 1,546 - 1,000 2,546 Management restructuring (6) 3,802 - 1,389 5,191 Share-based compensation (7) 6,723 3,582 3,612 6,753 Impairment (8) 59,231 - - 59,231 Other (9) 5,063 - - 5,063 Adjusted EBITDA before real estate 116,721 46,692 45,848 115,877 EBITDA 48,670 38,883 37,447 47,234 Depreciation and amortization (43,573) (21,044) (21,369) (43,898) Interest (33,753) (13,618) (20,127) (40,262) Foreign exchange (6,939) (598) 2,070 (4,271) (Loss) / earnings before tax (35,595) 3,623 (1,979) (41,197) Tax (25,012) (7,713) (5,051) (22,350) Net loss from continuing operations (60,607) (4,090) (7,030) (63,547) Discontinued operations (21,252) 368 (2,429) (24,049) Net loss (81,859) (3,722) (9,459) (87,596) Footnotes:Write-down of receivable balance within central costs.Pre-opening expenses related to the development at El Encanto.Non-cash write-off of fixed asset balances.Gain on disposal of New York hotel project and excess '21' Club development rights.Settlement of employee litigation at '21' Club.Restructuring, redundancy and associated legal and other costs.Share-based compensation costs.Goodwill and fixed asset impairment charges on owned properties and Porto Cupecoy and share of impairment in unconsolidated companies.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 cost associated with office move of principal UK administrative subsidiary. ORIENT-EXPRESS HOTELS LTD.NET DEBT TO ADJUSTED EBITDA CALCULATION(Unaudited) Twelve months ended and as at June 30, December 31, $'000 2012 2011 Cash Cash and cash equivalents 71,562 90,104 Restricted cash 14,488 13,214 Total cash 86,050 103,318 Total debt Working capital facilities 487 - Current portion of long-term debt and capital leases 112,416 77,058 Current portion of long-term debt of consolidated variable interest entities 1,789 1,784 Long-term debt and obligations under capital leases 413,015 466,830 Long-term debt held by consolidated variable interest entities 87,849 88,745 Total debt 615,556 634,417 Net debt (1) 529,506 531,099 Adjusted EBITDA before real estate 116,721 115,877 Net debt / adjusted EBITDA before real estate 4.5 x 4.6 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, and possible new challenges to the Company's corporate governance structure.  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 Thursday, August 2, 2012 at 10.00 hrs EDT (15.00 BST) which is accessible at +1 877 249 9037 (US toll free) or +44 (0)20 3140 8286  (Standard International).  The conference ID is 9423387.  A re-play of the conference call will be available until 7pm (EDT) Thursday, August 9, 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 9423387#.  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.comSOURCE Orient Express Hotels Ltd