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Belmond Ltd. Reports Fourth Quarter and Full Year 2017 Results

Fourth Quarter 2017

Full Year 2017

Recent Highlights

2017 Highlights

Belmond Ltd. (NYSE: BEL), owners, part-owners or managers of 46 luxury hotel, restaurant, train and river cruise properties, excluding one scheduled for a 2018 opening in London, which operate in 24 countries, yesterday announced its results for the fourth quarter and full year ended December 31, 2017.

Roeland Vos, president and chief executive officer, remarked: “Our results in the seasonally low fourth quarter of 2017 were generally in line with expectations. While we acknowledge adjusted EBITDA was down overall due to decreased results from our trains businesses and planned investment in brand awareness activities, we are encouraged that our business drove a steady increase in RevPAR.

The final quarter of 2017 follows a year that was defined by certain challenges that were beyond the Company’s control, most notably events in Brazil impacting our two hotels there, and Hurricanes Irma and Jose, which caused significant damage to our two hotels in the Caribbean. Excluding the impact of Brazil, full year adjusted EBITDA would have increased $4.3 million, or 4%.

Our business has withstood the events of the last 12 months and in doing so, it has proven its resilience. At the same time, we have continued to focus on executing our strategic plan and, on this front, we can be pleased with the building blocks we have put in place to position the business for success in the next 12 months, and beyond. Most recently, our development pipeline continues to gain traction with the addition of the stunning and historic Tuscan resort, Castello di Casole to our portfolio, announced earlier this month. This latest acquisition marks another incremental step towards realizing our ambition to double the size of the Company.

Looking ahead to 2018, we see positive indications in the majority of our existing portfolio and, coupled with the investments we have made in the first two years of our five year plan, we believe momentum continues to build and that this will support the delivery of our 2018 growth targets, despite some continued headwinds in Myanmar. In particular, we stand to benefit from having our development team now fully-staffed. We are projecting that our same store, constant currency RevPAR growth for 2018 will be between 2% and 6% on a constant currency basis.”

Fourth Quarter 2017 Operating Results

Revenue for the fourth quarter of 2017 was $117.3 million, a $3.1 million increase from revenue for the fourth quarter of 2016. In constant currency, revenue for the fourth quarter of 2017 decreased $2.8 million or 2% from the fourth quarter of 2016. The year-over-year decrease comes principally from Belmond La Samanna, St Martin, which was closed for refurbishment during the fourth quarter of 2017 after it was damaged by Hurricanes Irma and Jose in September 2017.

Net losses attributable to Belmond Ltd. for the fourth quarter of 2017 were $29.8 million ($0.29 per common share), which compared to net earnings attributable to Belmond Ltd. of $6.7 million ($0.07 per common share) for the fourth quarter of 2016. This decrease was largely the result of a non-cash impairment charge in one of the Company’s Peruvian rail joint ventures of $58.5 million (Belmond’s 50% share $29.3 million) and a non-cash impairment charge related to goodwill at Belmond Cap Juluca of $5.5 million both of which were recorded in the fourth quarter of 2017.

Adjusted net losses from continuing operations for the fourth quarter of 2017 were $6.3 million ($0.06 per common share), a $7.7 million decrease from adjusted net earnings from continuing operations of $1.4 million ($0.01 per common share) for the fourth quarter of 2016.

Same store RevPAR for owned hotels for the fourth quarter of 2017 increased 12% from the prior-year quarter. On a constant currency basis, same store RevPAR for owned hotels increased 6% from the prior-year quarter as a result of a two percentage point increase in occupancy and a 2% increase in average daily rate (“ADR”).

Adjusted EBITDA for the fourth quarter of 2017 was $16.0 million, a $0.4 million or 2% decrease from adjusted EBITDA of $16.4 million for the fourth quarter of 2016. In constant currency, adjusted EBITDA for the fourth quarter of 2017 decreased $1.6 million or 10% from the fourth quarter of 2016, largely due to a decline from owned trains and cruises and our Peruvian rail joint ventures.

As previously reported, the islands of Anguilla and St Martin were hit by Hurricanes Irma and Jose in September when both Belmond La Samanna on St Martin and Belmond Cap Juluca on Anguilla were closed for the season. Both properties are included in Belmond’s global insurance program which provides a combined property damage and twelve month business interruption cover of $30.0 million for the Caribbean as well as separate flood insurance cover. In addition, Belmond La Samanna has a separate property damage insurance policy of €4.9 million ($5.8 million) covering the eight villas at the resort.

Both properties remain closed for refurbishment and we have made assessments regarding the nature and extent of the damage sustained and have prepared and submitted the insurance claims. We are in discussions with loss adjusters and insurers to finalize the claim and we expect to recover the full limit of our property insurance coverage. As previously reported, we expensed a deductible of $1.3 million in the third quarter and a further $0.2 million in the fourth quarter.

The Company intends to reinvest the insurance proceeds at Belmond La Samanna alongside additional capital to restore and improve the asset, but we have concluded that such an investment cannot be justified without a material change in the cost structure of the operation. Consequently, the Company has entered into a formal administrative process with the local labor authorities in order to achieve a material restructuring of the property’s workforce. While we cannot give any assurances that this restructuring will be approved by the French authorities, we believe that it is a necessary condition to re-opening Belmond La Samanna.

In the case of Belmond Cap Juluca, we have completed our assessments of the damage incurred, the repair costs and the additional opportunities to enhance the property having had the chance to spend more time on the planning and competitive analysis. We commenced construction in October 2017 and we expect to complete the refurbishment towards the end of 2018.

Our expectation is that total project costs at Belmond La Samanna will be in the range of $25.0 million to $30.0 million and at Belmond Cap Juluca will be in the range of $80.0 million to $90.0 million, after which we will have two completely refurbished properties. Once insurance proceeds of $30.0 million to $40.0 million have been taken into account, this will result in net investment across the two properties of between $65.0 million and $90.0 million.

On November 2, 2017, the Company completed the sale of its shares in Northern Belle Limited, which owned the Belmond Northern Belle rolling stock, for £2.5 million ($3.3 million) to a joint venture that operates other rail charter operations in the UK. This business was operating at a break-even level of EBITDA and was considered non-core to our trains and cruises segment. A loss of $0.8 million was recorded due to the recycling of cumulative translation adjustments into the profit & loss account.

Full Year 2017 Operating Results

Revenue for the full year 2017 was $561.0 million, an $11.2 million increase from revenue for the full year 2016. In constant currency, revenue for the full year 2017 decreased $0.6 million from the prior year.

Net losses attributable to Belmond Ltd. for the full year 2017 were $45.0 million ($0.44 per common share), a $81.3 million decrease from net earnings of $36.3 million ($0.36 per common share) for the full year 2016.

Adjusted net earnings from continuing operations for the full year 2017 were $12.1 million ($0.12 per common share), a $13.5 million decrease from $25.6 million ($0.25 per common share) for the full year 2016, largely due to a decline from the Company’s two hotels in Brazil that were impacted by the political and economic instability in the country coupled with a comparison period in which both hotels benefited from Rio de Janeiro hosting the Summer Olympics.

Same store RevPAR for owned hotels for the full year 2017 increased 1% from the prior year on a constant currency basis as a result of a 2% increase in average daily rate (“ADR”) partially offset by a one percentage point decrease in occupancy.

Adjusted EBITDA for the full year 2017 was $124.0 million, a $4.2 million or 3% decrease from adjusted EBITDA for the full year 2016. In constant currency, adjusted EBITDA for the full year 2017 decreased $8.9 million or 7% from the full year 2016.

Recent Company Highlights

Fourth Quarter 2017 Business Unit Results

Owned hotels:

Europe:

For the fourth quarter of 2017, revenue from owned hotels was $31.6 million, an increase of $5.2 million or 20% from $26.4 million for the fourth quarter of 2016. In constant currency, revenue for the region for the fourth quarter of 2017 increased $1.1 million or 4% from the prior year quarter primarily due to a $0.7 million or 6% revenue increase for the Company’s Italian hotels and a $0.5 million or 11% increase at Belmond Grand Hotel Europe, St. Petersburg, Russia. Revenue growth for the Company’s Italian hotels before their annual closure period from November to March was largely driven by the performances of Belmond Hotel Caruso, Amalfi Coast, Italy due to a 23% increase in ADR and Belmond Hotel Splendido, Portofino, Italy, which benefited from the addition of balconies to twelve of its rooms in March 2017. Growth in revenue at Belmond Grand Hotel Europe was due to increases in rates and occupancy, as well as from strong business in the newly renovated Krysha Ballroom.

In constant currency, same store RevPAR for owned hotels in the region increased 3% from the prior-year quarter as a result of a 2% increase in ADR and 1 percentage point increase in occupancy.

Adjusted EBITDA for the region for the quarter of $2.2 million represented an increase of $0.8 million or 57% from $1.4 million for the fourth quarter of 2016. In constant currency, adjusted EBITDA for the region for the fourth quarter of 2017 decreased $0.3 million or 18% from the prior year quarter. This was due to a $0.4 million decrease in adjusted EBITDA at the Company’s Italian hotels, in part due to Belmond Hotel Cipriani, Venice, Italy, which hosted an important event for leading global wedding planners that is expected to benefit the hotel and wider portfolio in this key business activity in the future, and legal expenses incurred in connection with the hotel’s recent judicial successes in defending its trademark rights for the European Union.

North America:

Revenue from owned hotels for the fourth quarter of 2017 was $34.0 million, down $3.6 million or 10% from $37.6 million for the fourth quarter of 2016. In constant currency, revenue for the region for the fourth quarter of 2017 decreased $3.6 million or 10% from the prior year quarter primarily due to a fall in revenue of $5.7 million at Belmond La Samanna and $0.8 million at Belmond El Encanto, Santa Barbara, California, offset by a $2.2 million or 13% increase in revenue at Belmond Charleston Place, Charleston, South Carolina. Belmond La Samanna was closed for the duration of the fourth quarter of 2017 after it was hit by Hurricanes Irma and Jose in September 2017 and Belmond El Encanto was closed for nearly three weeks during the Thomas Fire in Santa Barbara in December 2017. Belmond is preparing an insurance claim for property damage and business interruption at Belmond El Encanto, which is expected to be in the region of $2.0 million and will be finalized in the first quarter of 2018. Belmond Charleston Place saw strong growth due to increases in both ADR and occupancy from a comparative period when it was hit by Hurricane Matthew in October 2016.

In constant currency, same store RevPAR for owned hotels in the region increased 10% from the prior-year quarter due to a 6% increase in ADR and 4% increase in occupancy.

Adjusted EBITDA for the region for the quarter was $8.0 million, an increase of $0.5 million or 7% from $7.5 million for the fourth quarter of 2016. In constant currency, adjusted EBITDA for the region for the fourth quarter of 2017 increased $0.5 million or 6% as a result of a $1.3 million increase in adjusted EBITDA at Belmond Charleston Place offset by a $1.0 million decrease in adjusted EBITDA at Belmond El Encanto. Operating losses of $1.4 million at Belmond La Samanna and $1.7 million at Belmond Cap Juluca have been added back to adjusted EBITDA for the fourth quarter of 2017 while the properties are closed for renovation.

Rest of world:

Revenue from owned hotels for the fourth quarter of 2017 was $35.6 million, an increase of $1.9 million or 6% from $33.7 million for the fourth quarter of 2016. In constant currency, revenue for the fourth quarter of 2017 increased $1.3 million or 4% from the prior year quarter, principally as a result of an increase in revenue of $1.2 million or 22% at Belmond Hotel das Cataratas, Iguassu Falls, Brazil, $0.8 million at Belmond La Résidence d’Angkor, Siem Reap, Cambodia and $0.8 million or 13% at Belmond Mount Nelson, Cape Town, South Africa. Belmond Hotel das Cataratas benefited from a seven percentage point increase in occupancy combined with strong growth in food and beverage revenues. Belmond La Résidence d’Angkor saw an increase in revenue following the property’s closure for renovation from May to November 2016 and Belmond Mount Nelson Hotel benefited from higher occupancy compared to last year. This was offset by a decrease in revenue of $0.7 million at both Belmond Copacabana Palace, Rio de Janeiro, Brazil and Belmond Governor’s Residence, Yangon, Myanmar.

In constant currency, same store RevPAR for owned hotels increased 5% from the prior-year quarter as a result of a 4% increase in occupancy and 1% increase in ADR.

Adjusted EBITDA for the region for the quarter of $8.6 million increased $0.4 million or 5% from adjusted EBITDA of $8.2 million for the prior-year quarter. In constant currency, adjusted EBITDA for the region increased $0.2 million or 3% from the prior-year quarter largely as a result of adjusted EBITDA increases of $0.6 million and $0.4 million at Belmond La Résidence d’Angkor and Belmond Hotel das Cataratas respectively, offset by a $0.6 million decrease in adjusted EBITDA at Belmond Governor’s Residence.

Owned trains & cruises:

Revenue for the fourth quarter of 2017 was $12.6 million, up $0.4 million or 3% from $12.2 million for the fourth quarter of 2016. In constant currency, revenue decreased $0.7 million or 6% primarily as a result of the sale of the Belmond Northern Belle train at the beginning of the period which had contributed an additional $1.8 million of revenue in the fourth quarter of 2016. Additionally Belmond Orcaella, the river cruise ship in Myanmar, contributed a $0.9 million decrease in revenue compared to the prior year quarter. In November 2017, the Company provided notice of termination to the owner of Belmond Orcaella in respect of its charter agreement. This was offset by a $0.9 million or 21% increase in revenue for Venice Simplon-Orient-Express driven by promotional activity following the release of the Hollywood movie ‘Murder on the Orient Express’ and $1.1 million other increases.

Adjusted EBITDA for the quarter was a loss of $0.9 million, a $1.1 million decrease from adjusted EBITDA of $0.2 million for the fourth quarter of 2016 largely due to the sale of Belmond Northern Belle and cessation of Belmond Orcaella, the Company’s river cruise in Myanmar.

Management fees:

Adjusted EBITDA from management fees for the fourth quarter of 2017 was $3.8 million, a decrease of $0.5 million or 12% from $4.3 million for the fourth quarter of 2016 due to lower fees from PeruRail.

Share of pre-tax earnings from unconsolidated companies:

Adjusted share of pre-tax earnings from unconsolidated companies for the fourth quarter of 2017 was $3.6 million, a decrease of $1.4 million or 28% against $5.0 million for the fourth quarter of 2016 due to an adjusted EBITDA decrease of $1.6 million or 35% for the Company’s Peruvian train joint venture, PeruRail, as a result of increases in fuel costs and other operating expenses.

An impairment charge of $58.5 million was recorded in Ferrocarril Transandino S.A. (“FTSA”), the Company’s joint venture that has a concession from the Government of Peru to operate the track network in southern and southeastern Peru. Belmond’s equity share of this impairment is $29.3 million which is recorded in share of earnings from unconsolidated companies and has been added back to adjusted EBITDA. The concession had an initial term of 30 years from 1999 with the option to apply for six 5-year extensions. In December 2017 the joint venture received a denial of its third extension request. As a result, the joint venture can no longer conclude that the remaining three extensions are probable and has therefore reduced its expectation of the total expected life of the concession to the contracted term of 35 years of which 17 years are remaining as of December 31, 2017. This triggered an impairment test of the assets within the joint venture and the shorter time period over which to recover the carrying value of the assets has led to an impairment charge being recorded in the fourth quarter. The life of the concession is now expected to expire in 2034. The Company is also a 50% owner of the PeruRail joint venture, which operates and manages rolling stock, including the Belmond Andean Explorer and Belmond Hiram Bingham, and is not anticipated to be impacted by the shortening of the expected FTSA concession life as it can continue to run trains on the track after the conclusion of FTSA’s concession.

Central overheads:

For the fourth quarter of 2017, adjusted central overheads of $6.1 million were $0.8 million or 12% lower than adjusted central overheads of $6.9 million in the prior-year quarter, mainly due to increased development and other corporate headcount to support the Company’s strategic growth plan, offset by increased cost recovery from our consolidated subsidiaries.

Impairment of goodwill:

In the fourth quarter of 2017, the Company recorded a $5.5 million impairment charge relating to goodwill at Belmond Cap Juluca. The impairment was triggered by an increase in capital expenditure requirements following the damage sustained when Hurricanes Irma and Jose hit the property in September 2017.

Depreciation and amortization:

For the fourth quarter of 2017, depreciation and amortization of $17.0 million was $4.2 million or 33% higher than depreciation and amortization of $12.8 million for the prior-year quarter, primarily as a result of the recent completion of various capital projects and accelerated depreciation expense to write-off assets that are expected to be replaced.

Provision for income taxes:

For the fourth quarter of 2017, provision from income taxes was a benefit of $11.0 million compared to a benefit of $8.8 million for the prior year quarter. This increase in benefit is largely due to a net credit of $10.3 million in the U.S., mainly arising from changes to the US tax code enacted in December 2017, including the decrease in deferred tax liabilities as a result of the reduction in corporate tax rate from 35% to 21%. One-off tax credits of $4.4m arose in the fourth quarter of 2016, mainly as result of settlement of prior year tax audits.

Investments

During the fourth quarter of 2017, the Company invested a total of $24.8 million in its portfolio, including $5.8 million on the refurbishment of Belmond Cap Juluca; $2.5 million on the acquisition of an additional villa at Belmond Hotel Caruso; $2.0 million on the full refurbishment of the Pergula Restaurant at Belmond Copacabana Palace; $1.8 million on corporate projects, which included the Company’s new enterprise resource planning system and website and $1.7 million at Belmond Grand Hotel Europe for improvements to the hotel’s elevators and renovation of its deluxe rooms.

Balance Sheet

At December 31, 2017, the Company had total debt of $707.2 million and cash balances of $184.1 million, resulting in total net debt of $523.1 million and a ratio of net debt to trailing-twelve-months adjusted EBITDA of 4.2 times, which compared to net debt of $435.1 million and a ratio of net debt to trailing-twelve-months adjusted EBITDA of 3.4 times at December 31, 2016.

Outlook

The Company is providing the following RevPAR and other guidance for the first quarter and full year 2018:

    First Quarter 2018   Full Year 2018
         
Same store worldwide owned hotel RevPAR growth guidance (1)        
         
On a constant currency basis   2% – 6%   2% – 6%
In U.S. dollars   5% – 9%   7% – 11%
         
Statement of operations guidance ($ millions)        
         
Adjusted central overheads   $7.9 – $8.9   $32.0 – $36.0
Adjusted share-based compensation   $0.8 – $1.8   $4.2 – $8.2
Adjusted central marketing costs   $2.6 – $3.6   $3.9 – $7.9
Depreciation and amortization (2)   $14.9 – $15.9   $61.2 – $65.2
Interest expense (3)   $7.9 – $8.9   $31.6 – $35.6
Tax expense (4)   $(10.8) – $(9.8)   $22.7 – $26.7
         
Cash flow guidance ($ millions)        
         
Cash interest expense (3)   $7.0 – $8.0   $29.2 – $33.2
Cash tax expense (5)   $4.5 – $5.5   $21.0 – $25.0
Scheduled loan repayments (3)   $1.1 – $2.1   $4.3 – $8.3
(1) Projected same store RevPAR growth for the first quarter ending March 31, 2018 and full year ending December 31, 2018 excludes the operations of Belmond Cap Juluca, Anguilla, British West Indies, which was acquired in May 2017, Belmond La Samanna, St Martin, which is closed for refurbishment following Hurricanes Jose and Irma in September 2017 and Belmond Savute Elephant Lodge, Chobe Reserve, Botswana which closed for refurbishment in November 2017.
(2) Projected depreciation and amortization expense for the first quarter ending March 31, 2018 and full year ending December 31, 2018 includes forecast accelerated depreciation related to expected renovations at the Company’s properties.
(3) Interest expense, cash interest expense and scheduled loan repayments guidance includes the impact of the Company’s corporate credit facility refinancing, which closed on July 3, 2017.
(4) Tax expense guidance includes the Company’s share of provision for income taxes of unconsolidated companies.
(5) Cash tax expense guidance does not include the Company’s share of provision for income taxes of unconsolidated companies.

BELMOND LTD.
EARNINGS RELEASE SCHEDULES
TABLE OF CONTENTS

     
Statements of Condensed Consolidated Operations  

11

Segment Information – Revenue and Adjusted EBITDA   12
Summary of Operating Information for Owned Hotels   13
Condensed Consolidated Balance Sheets   14
Reconciliations – Adjusted EBITDA and Adjusted Share of Pre-Tax Earnings from Unconsolidated Companies   15
Reconciliations – Adjusted Net Earnings / (Losses)   16
Net Debt to Adjusted EBITDA   17

BELMOND LTD.
STATEMENTS OF CONDENSED CONSOLIDATED OPERATIONS
(Unaudited)

                 
$ millions – except per share amounts  

Three months ended
December 31,

 

Twelve months ended
December 31,

    2017   2016   2017   2016
                 
Revenue   117.3     114.2     561.0     549.8  
                 
Expenses:                
Cost of services   55.1     53.6     239.9     240.1  
Selling, general and administrative (1)   54.1     48.5     238.2     198.5  
Depreciation and amortization   17.0     12.8     62.9     52.4  
Impairment of goodwill   5.5         5.5      
Impairment of property, plant and equipment           8.2     1.0  
                 
Total operating costs and expenses   131.7     114.9     554.7     492.0  
                 
(Loss) / gain on disposal of property, plant and equipment   (0.6 )   0.2     (0.2 )   0.9  
                 
Earnings from operations   (15.0 )   (0.5 )   6.1     58.7  
                 
Gain on extinguishment of debt               1.2  
Interest income   0.5     0.3     1.1     0.9  
Interest expense   (7.9 )   (6.1 )   (32.5 )   (29.2 )
Foreign currency, net   (0.3 )       (3.0 )   9.2  
                 
(Losses) / earnings before income taxes and earnings from unconsolidated companies, net of tax   (22.7 )   (6.3 )   (28.3 )   40.8  
                 
Benefit / (provision) for income taxes   11.0     8.8     (6.6 )   (16.4 )
                 
(Losses) / earnings before earnings from unconsolidated companies, net of tax   (11.7 )   2.5     (34.9 )   24.4  
                 
(Losses) / earnings from unconsolidated companies, net of tax provision of $(8.5), $1.7, $(4.5) and $5.7   (18.0 )   3.3     (10.2 )   11.0  
                 
(Losses) / earnings from continuing operations   (29.7 )   5.8     (45.1 )   35.4  
                 
Net earnings from discontinued operations, net of tax provision of $Nil, $Nil, $Nil and $Nil       1.0     0.2     1.0  
                 
Net (losses) / earnings   (29.7 )   6.8     (44.9 )   36.4  
                 
Net earnings attributable to non-controlling interests   (0.1 )   (0.1 )   (0.1 )   (0.1 )
                 
Net (losses) / earnings attributable to Belmond Ltd.   (29.8 )   6.7     (45.0 )   36.3  
                 
EPS attributable to Belmond Ltd.   (0.29 )   0.07     (0.44 )   0.36  
Weighted average number of shares – millions   102.33     101.77     102.17     101.60  
(1) Selling, general and administrative expenses include operating costs of businesses plus central overheads, share-based compensation and central marketing costs. Selling, general and administrative expenses also included acquisition-related costs associated with the May 26, 2017 acquisition of Cap Juluca of $14.1 million for the twelve months ended December 31, 2017. Selling, general and administrative expenses also included certain trains and cruises expenses of $2.1 million and $8.1 million respectively that were reclassified from cost of services in the three and twelve months ended December 31, 2017.

BELMOND LTD.
SEGMENT INFORMATION
(Unaudited)

                 
$ millions  

Three months ended
December 31,

 

Twelve months ended
December 31,

    2017   2016   2017   2016
                 
Revenue                
                 
Owned hotels                
– Europe   31.6     26.4     212.4     199.1  
– North America   34.0     37.6     149.3     145.9  
– Rest of world   35.6     33.7     124.2     130.3  
Total owned hotels   101.2     97.7     485.9     475.3  
Owned trains & cruises   12.6     12.2     63.2     59.3  
Management fees   3.5     4.3     11.9     15.2  
                 
Revenue   117.3     114.2     561.0     549.8  
                 
Adjusted EBITDA                
                 
Owned hotels                
– Europe   2.2     1.4     73.7     67.6  
– North America   8.0     7.5     29.8     29.4  
– Rest of world   8.6     8.2     24.5     33.1  
Total owned hotels   18.8     17.1     128.0     130.1  
Owned trains & cruises   (0.9 )   0.2     4.4     4.3  
Management fees   3.8     4.3     15.3     15.2  
Share of pre-tax earnings from unconsolidated companies   3.6     5.0     15.4     17.1  
    25.3     26.6     163.1     166.7  
                 
Central overheads   (6.1 )   (6.9 )   (27.8 )   (26.3 )
Share-based compensation   (0.8 )   (1.7 )   (5.8 )   (7.7 )
Central marketing costs   (2.4 )   (1.6 )   (5.5 )   (4.5 )
                 
Adjusted EBITDA   16.0     16.4     124.0     128.2  

BELMOND LTD.
SUMMARY OF OPERATING INFORMATION FOR OWNED HOTELS

                 
   

Three months ended
December 31,

 

Twelve months ended
December 31,

    2017   2016   2017   2016
                 
Room Nights Available                
Europe   59,621   58,907   273,756   271,963
North America   57,592   63,974   255,862   256,726
Rest of world   93,660   94,944   374,478   376,952
Worldwide   210,873   217,825   904,096   905,641
                 
Room Nights Sold                
Europe   32,867   32,095   176,129   175,060
North America   36,992   38,874   171,906   171,392
Rest of world   55,593   52,072   200,537   204,944
Worldwide   125,452   123,041   548,572   551,396
                 
Occupancy                
Europe   55%   54%   64%   64%
North America   64%   61%   67%   67%
Rest of world   59%   55%   54%   54%
Worldwide   59%   56%   61%   61%
                 
ADR (in U.S. dollars)                
Europe   516   430   740   676
North America   404   433   426   421
Rest of world   384   383   380   388
Worldwide   424   411   510   490
                 
RevPAR (in U.S. dollars)                
Europe   284   234   476   435
North America   259   263   286   281
Rest of world   228   210   203   211
Worldwide   252   232   309   298
                 
Same Store RevPAR (in U.S. dollars) (1)                
Europe   284   234   476   435
North America   259   235   272   254
Rest of world   230   217   207   218
Worldwide   254   227   311   297
                 

Same Store RevPAR (% change)

 

U.S.
dollar

 

Constant
currency

 

U.S.
dollar

 

Constant
currency

Europe

 

21%

 

3%

 

9%

 

6%

North America

 

10%

 

10%

 

7%

 

7%

Rest of world

 

6%

 

5%

 

(5)%

 

(11)%

Worldwide

 

12%

 

6%

 

5%

 

1%

(1) Same store RevPAR data for the three and twelve months ended December 31, 2017 and December 31, 2016 excludes the operations of Belmond Cap Juluca, which was acquired in May 2017, Belmond La Samanna which is closed for refurbishment following Hurricanes Jose and Irma in September 2017, Belmond Savute Elephant Lodge which closed for refurbishment from November 2017 and Belmond La Résidence d’Angkor, which closed for refurbishment in May 2016 and re-opened in November 2016.

BELMOND LTD.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)

         
$ millions   December 31,   December 31,
    2017   2016
         
Assets        
Cash   180.2   153.4
Restricted cash   3.1   1.8
Accounts receivable   34.4   25.8
Due from unconsolidated companies   12.8   12.2
Prepaid expenses and other   13.3   12.3
Inventories   23.1   23.9
         
Total current assets   266.9   229.4
         
Property, plant & equipment, net of accumulated depreciation   1,168.0   1,074.7
Investments in unconsolidated companies   64.6   79.3
Goodwill   120.2   113.3
Other intangible assets   19.8   13.9
Other assets   14.1   13.5
         
Total assets (1)   1,653.6   1,524.1
         
Liabilities and Equity        
Accounts payable   15.8   16.4
Accrued liabilities   79.5   69.0
Deferred revenue   32.8   31.3
Current portion of long-term debt and capital leases   6.4   5.3
         
Total current liabilities   134.5   122.0
         
Long-term debt and obligations under capital leases   700.8   585.8
Liability for pension benefit   0.6   1.4
Deferred income taxes   115.4   122.3
Other liabilities   3.0   5.4
Liability for uncertain tax positions   0.5   0.3
         
Total liabilities (2)   954.8   837.2
         
Shareholders’ equity   698.5   686.5
Non-controlling interests   0.3   0.4
Total equity   698.8   686.9
         
Total liabilities and equity   1,653.6   1,524.1
(1) Balance at December 31, 2017 includes $206.3 million (December 31, 2016 – $210.3 million) of assets of consolidated variable interest entities (“VIEs”) that can only be used to settle obligations of the VIEs.
(2) Balance at December 31, 2017 includes $123.0 million (December 31, 2016 – $121.6 million) of liabilities of consolidated VIEs whose creditors have no recourse to Belmond Ltd.

BELMOND LTD.
RECONCILIATIONS – ADJUSTED EBITDA AND
ADJUSTED SHARE OF PRE-TAX EARNINGS FROM UNCONSOLIDATED COMPANIES
(Unaudited)

                 
$ millions  

Three months ended
December 31,

 

Twelve months ended
December 31,

    2017   2016   2017   2016
                 
Adjusted EBITDA reconciliation:              
                 
(Losses) / earnings from continuing operations   (29.7 )   5.8     (45.1 )   35.4  
Depreciation and amortization   17.0     12.8     62.9     52.4  
Gain on extinguishment of debt               (1.2 )
Interest income   (0.5 )   (0.3 )   (1.1 )   (0.9 )
Interest expense   7.9     6.1     32.5     29.1  
Foreign currency, net   0.3         3.0     (9.2 )
(Benefit from) / provision for income taxes   (11.0 )   (8.8 )   6.6     16.4  
Share of (benefit from) / provision for income taxes of unconsolidated companies   (8.5 )   1.7     (4.5 )   5.7  
    (24.5 )   17.3     54.3     127.7  
                 
Restructuring and other special items (1)   4.3     (0.7 )   11.7      
Acquisition-related costs (2)           14.0      
Loss / (gain) on disposal of property, plant and equipment   0.6     (0.2 )   0.2     (0.9 )
Impairment of goodwill and property, plant and equipment   5.5         13.7     1.0  
Impairment of assets in unconsolidated companies   30.1         30.1     0.4  
                 
Adjusted EBITDA   16.0     16.4     124.0     128.2  
(1) Represents adjustments for insurance deductibles and losses while Belmond Cap Juluca and Belmond La Samanna are closed following the impact of Hurricanes Irma and Jose, restructuring, severance and redundancy costs, pre-opening costs and other items, net.
(2) Represents professional fees incurred in preliminary design and planning, structuring, assessment of financing opportunities, legal, tax, accounting and engineering due diligence and the negotiation of the purchase and sale agreements, and other ancillary documents, with the principal owner and leaseholder, together with three owners of villas and separate subleases, as well as a memorandum of understanding and ground lease with the Government of Anguilla.
         
$ millions  

Three months ended
December 31,

 

Twelve months ended
December 31,

    2017   2016   2017   2016
                 
Adjusted share of pre-tax earnings from unconsolidated companies reconciliation:          
                 
(Losses) / earnings from unconsolidated companies (1)   (18.0 )   3.3     (10.2 )   11.0
Share of (benefit from) / provision for income taxes of unconsolidated companies   (8.5 )   1.7     (4.5 )   5.7
Impairment of assets in unconsolidated companies   30.1         30.1     0.4
                 
Adjusted share of pre-tax earnings from unconsolidated companies   3.6     5.0     15.4     17.1
(1) Represents the Company’s share of earnings from unconsolidated companies.

BELMOND LTD.
RECONCILIATIONS – ADJUSTED NET EARNINGS / (LOSSES)
(Unaudited)

                 
$ millions – except per share amounts  

Three months ended
December 31,

 

Twelve months ended
December 31,

    2017   2016   2017   2016
                 
Adjusted net earnings reconciliation:        
                 
(Losses) / earnings from continuing operations   (29.7 )   5.8     (45.1 )   35.4  
Restructuring and other special items (1)   4.3     (0.7 )   11.7      
Acquisition-related costs (2)           14.0      
Loss / (gain) on disposal of property, plant and equipment   0.6     (0.2 )   0.2     (0.9 )
Impairment of goodwill and property, plant and equipment   5.5         13.7     1.0  
Impairment of assets in unconsolidated companies   30.1         30.1     0.4  
Gain on extinguishment of debt (3)               (1.2 )
Accelerated depreciation   1.8         3.5     1.3  
Interest adjustments       (1.4 )   0.6     (1.4 )
Foreign currency, net (4)   0.3         3.0     (9.2 )
Tax-related adjustments (5)   (10.2 )   (2.4 )   (10.2 )   (1.8 )
Income tax effect of adjusting items (6)   (9.0 )   0.3     (9.4 )   2.0  
                 
Adjusted net (losses)/earnings from continuing operations   (6.3 )   1.4     12.1     25.6  
                 
EPS from continuing operations   (0.29 )   0.06     (0.44 )   0.35  
Adjusted EPS from continuing operations   (0.06 )   0.01     0.12     0.25  
Weighted average number of shares (millions)   102.33     101.77     102.17     101.60  
(1) Represents adjustments for insurance deductibles and losses while Belmond Cap Juluca and Belmond La Samanna are closed following the impact of Hurricanes Irma and Jose, restructuring, severance and redundancy costs, pre-opening costs and other items, net.
(2) Represents professional fees incurred in preliminary design and planning, structuring, assessment of financing opportunities, legal, tax, accounting and engineering due diligence and the negotiation of the purchase and sale agreements, and other ancillary documents, with the principal owner and leaseholder, together with three owners of villas and separate subleases, as well as a memorandum of understanding and ground lease with the Government of Anguilla.
(3) Represents $4.0 million negotiated discount on repayment less $2.8 million tax indemnification provided to partners in respect of such discount.
(4) Non-cash item arising from the translation of certain assets and liabilities denominated in currencies other than the functional currency of the respective entity.
(5) Represents increase in benefit for income taxes following a reduction in the corporate tax rate in the U.S. from 35 to 21 percent.
(6) Represents income tax effect of adjusting items by applying the applicable statutory tax rate to the adjusting items.

BELMOND LTD.
NET DEBT TO ADJUSTED EBITDA
(Unaudited)

         
$ millions – except ratios   Twelve months ended and as at
   

December 31,
2017

 

December 31,
2016

         
Cash        
Cash and cash equivalents   180.2   153.4
Restricted cash (including $0.8 million and $0.8 million classified within long-term other assets on the balance sheet for 2017 and 2016, respectively)   3.9   2.6
         
Total cash   184.1   156.0
         
Total debt        
Current portion of long-term debt and capital leases   6.4   5.3
Long-term debt and obligations under capital leases (1)   700.8   585.8
         
Total debt   707.2   591.1
         
Net debt   523.1   435.1
         
Adjusted EBITDA   124.0   128.2
         
Net debt / adjusted EBITDA   4.2   3.4
(1) Long-term debt is after the deduction of unamortized debt issuance costs and discount on secured term loans.

Posted by on February 27, 2018.

Categories: Financial

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