Belmond (BEL) 10-K/A 2011 FY Annual report (amended)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K/A

Amendment No. 1

(Mark One)

xANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2011

OR

oTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from            to           

Commission File Number 1-16017

ORIENT-EXPRESS HOTELS LTD.

(Exact name of registrant as specified in its charter)

Bermuda	98-0223493
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)

22 Victoria Street,

Hamilton HM 12, Bermuda

(Address of principal executive offices)

Registrant’s telephone number, including area code: (441) 295-2244

SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:

Title of each class	Name of each exchangeon which registered
Class A Common Shares, $0.01 par value each	New York Stock Exchange
Preferred Share Purchase Rights	New York Stock Exchange

SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: None.

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes x No o

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.  Yes o No x

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Act during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes x No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. (Not applicable. See third paragraph under Item 1—Business on page 4 of Form 10-K)

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company.  See definition of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Act. (Check one):

Large Accelerated Filer x	Accelerated Filer o
Non-Accelerated Filer o	Smaller reporting company o
(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).  Yes o No x

The aggregate market value of the Class A common shares held by non-affiliates of the registrant computed by reference to the closing price on June 30, 2011 (the last business day of the registrant’s second fiscal quarter in 2011) was approximately $1,103,000,000.

As of June 6, 2012, 102,891,537 Class A common shares and 18,044,478 Class B common shares of the registrant were outstanding.  All of the Class B shares are owned by a subsidiary of the registrant (see Note 15(d) to the Financial Statements (Item 8) in Form 10-K).

DOCUMENTS INCORPORATED BY REFERENCE:  None

EXPLANATORY NOTE

Orient-Express Hotels Ltd. (the “registrant”) is filing this Amendment No. 1 (the “Amendment”) to its Annual Report on Form 10-K for the fiscal year ended December 31, 2011, filed with the U.S. Securities and Exchange Commission (“SEC”) on February 29, 2012 (The “Original Filing”).

This Amendment is being filed because, pursuant to Rule 3-09 of SEC Regulation S-X, the registrant is required to file audited financial statements of Perurail S.A., a 50% owned unconsolidated company.  The financial statements of this unconsolidated company are filed in this Amendment under Item 15 - Exhibits and Financial Statement Schedules.

Except as described above, no other changes have been made to the Original Filing, and this Form 10-K/A does not amend, update or change any other items or disclosures in the Original Filing.  This Form 10-K/A does not reflect events occurring after the Original Filing and, other than providing the financial statements of the unconsolidated company named above under Item 15, does not modify or update the disclosures in the Original Filing in any way.

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PART IV

ITEM 15.Exhibits and Financial Statement Schedules

1. Financial Statements

Perurail S.A.

	Page Number
Report of independent registered public accounting firm	4
Financial statements - years ended December 31, 2011, 2010 and 2009:
Balance sheets (December 31, 2011 and 2010)	5
Statements of operations	6
Statements of cash flows	7
Statements of shareholders’ equity	8
Notes to financial statements	9

2. Financial Statement Schedule

Incorporated by reference to the financial statement schedule filed with the Original Filing.  No additional financial statement schedule is filed with this report on Form 10-K/A.

3. Exhibits

The index to exhibits appears below, on the pages immediately following the signature page to this report.

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BDO — Pazos, López de Romaña, Rodriguez S. Civil de R.L.

Report of Independent Registered Public Accounting Firm

Board of Directors and Shareholders

Perurail S.A.

Lima, Peru

We have audited the accompanying balance sheets of Perurail S.A. as of December 31, 2011 and 2010, and the related statements of operations, cash flows and shareholders’ equity for each of the three years in period ended December 31, 2011. These financial statements are the responsibility of the Company´s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.  Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Perurail S.A. at December 31, 2011 and 2010, and the results of its operations and its cash flows for each of the three years in period ended December 31, 2011, in conformity with accounting principles generally accepted in the United States of America.

Pazos, López de Romaña, Rodriguez S. Civil de R.L.

Lima, Peru

May 17, 2012

Countersigned by:

/s/ Manuel Pazos Vélez

Manuel Pazos Vélez

Certified Chartered Public Accountant

Register No. 01-05095

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Perurail S.A.

Balance Sheets

	December 31,
	2011	2010
	$’000	$’000
Assets
Cash and cash equivalents	4,310	3,340
Accounts receivable, net of allowances of $nil and $nil	6,146	5,530
Due from related parties	6,358	8,020
Prepaid expenses	1,270	1,218
Inventories	6,941	5,736
Total current assets	25,025	23,844
Property, plant and equipment, net of accumulated depreciation of $12,082 and $8,872	32,713	31,028
Intangibles, net of accumulated amortization of $262 and $218	208	190
Other assets	268	—
Total non-current assets	33,189	31,218
Total assets	58,214	55,062
Liabilities and Shareholders’ Equity
Working capital facilities	3,026	3,570
Accounts payable	4,207	4,172
Accrued liabilities	6,898	4,979
Current portion of long-term debt	4,405	2,069
Total current liabilities	18,536	14,790
Long-term debt	1,786	3,264
Deferred tax liability, net	5,856	5,270
Total long-term liabilities	7,642	8,534
Total liabilities	26,178	23,324
Commitments and contingencies
Shareholders’ equity:
Common shares S/1.00 par value (20,000,000 shares authorized) Issued - 20,000,000 (2010 - 20,000,000)	6,684	6,684
Legal reserve	821	821
Retained earnings	24,531	24,233
Total shareholders’ equity	32,036	31,738
Total liabilities and shareholder’s equity	58,214	55,062

The accompanying notes are an integral part of these financial statements.

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Perurail S.A.

Statements of Operations

	December 31,
	2011		2010		2009
	$’000		$’000		$’000
Revenue, net	72,918		53,218		63,509
Expenses:
Cost of services	(41,660	)	(31,887	)	(35,204	)
Depreciation and amortization	(3,254	)	(2,739	)	(1,820	)
Selling, general and administrative	(14,359	)	(10,350	)	(10,536	)
Total expenses	(59,273	)	(44,976	)	(47,560	)
Gain on insurance settlement	—		646		—
(Loss)/gain on disposal of fixed assets	—		(211	)	149
Earnings from operations	13,645		8,677		16,098
Interest expense, net	(768	)	(684	)	(1,031	)
Foreign currency, net	(42	)	67		429
Net finance costs	(810	)	(617	)	(602	)
Earnings before income tax	12,835		8,060		15,496
Provision for income taxes	(3,859	)	(2,252	)	(4,102	)
Net earnings	8,976		5,808		11,394

The accompanying notes are an integral part of these financial statements.

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Perurail S.A.

Statements of Cash Flows

	December 31,
	2011		2010		2009
	$’000		$’000		$’000
Cash flows from operating activities:
Net earnings	8,976		5,808		11,394
Adjustment to reconcile net earnings to net cash provided by operating activities:
Depreciation	3,210		2,694		1,778
Amortization	44		45		42
Amortization of finance costs	36		39		39
Loss/(gain) on disposal of fixed assets	—		211		(149	)
Change in deferred tax	586		831		1,400
(Decrease)/increase in employees’ profit sharing	—		(2	)	20
Change in allowance for doubtful accounts	—		—		(1	)
Change in assets and liabilities:
Increase in accounts receivable	(616	)	(817	)	(394	)
(Increase)/decrease in inventories	(1,205	)	909		(1,974	)
(Increase)/decrease in prepaid expenses	(88	)	(215	)	328
Increase/(decrease) of accounts payable	35		1,280		(785	)
Increase/(decrease) in accrued liabilities	1,919		2,670		(2,462	)
Decrease/(increase) in due from related parties	1,662		(5,262	)	(89	)
Total adjustments	5,583		2,383		(2,247	)
Net cash provided by operating activities	14,559		8,191		9,147
Cash flows from investing activities:
Proceeds from disposal of fixed assets	—		—		460
Capital expenditures	(5,225	)	(4,930	)	(7,089	)
Net cash used in investing activities	(5,225	)	(4,930	)	(6,629	)
Cash flows from financing activities:
Payment of dividends	(8,678	)	—		(4,800	)
Payments on working capital facilities	(7,413	)	(3,418	)	(2,388	)
Proceeds from working capital facilities	6,869		2,133		6,375
Principal payments under long-term debt	(2,943	)	(2,013	)	(1,617	)
Proceeds from issuance of long-term debt, net of issuance costs	3,801		—		73
Net cash used in financing activities	(8,364	)	(3,298	)	(2,357	)
Net increase/(decrease) in cash and cash equivalents	970		(37	)	161
Cash and cash equivalents at beginning of year	3,340		3,377		3,216
Cash and cash equivalents at end of year	4,310		3,340		3,377

The accompanying notes are an integral part of these financial statements.

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Perurail S.A.

Statements of Shareholders’ Equity

	Common Shares at Par value	Legal reserve	RetainedEarnings		TotalComprehensiveIncome/(Loss)
	$’000	$’000	$’000		$’000
Balance, January 1, 2009 (unaudited)	59	14	19,263
Capitalization	6,625	—	(6,625	)
Dividends	—	—	(4,800	)
Net earnings	—	—	11,394		11,394
					11,394
Balance, December 31, 2009	6,684	14	19,232
Legal Reserve	—	807	(807	)
Net earnings	—	—	5,808		5,808
					5,808
Balance, December 31, 2010	6,684	821	24,233
Dividends	—	—	(8,678	)
Net earnings	—	—	8,976		8,976
					8,976
Balance, December 31, 2011	6,684	821	24,531

The accompanying notes are an integral part of these financial statements.

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Perurail S.A.

Notes to Financial Statements

1.Summary of significant accounting policies and basis of presentation

(a)Business

Perurail S.A. (hereinafter the “Company”) was incorporated in the city of Lima, Peru in 1999.

The Company is 50% owned by Orient-Express Hotels Ltd. incorporated in Bermuda, and 50% owned by Peruvian Trains & Railways S.A. incorporated in Peru.

Its headquarters and registered address are located at Av. Alcanfores # 775, District of Miraflores, Department of Lima.

The purpose of the Company is the operation of passenger and freight transport by rail, as well as ground cargo transport services for the Cerro Verde mine.

In order to perform its corporate purpose, in August 2000 the Company entered a lease with Ferrocarril Transandino S.A. by which the Company was granted access to and use of the tracks, locomotives, coaches, wagons, machine shops and parts of the train stations of the South and South-East Railways operated by Ferrocarril Transandino S.A. Under this contract, various rates are established and payable for the use of locomotives, coaches and wagons based on traveled kilometers, which are settled on a monthly basis.

In January 2010, heavy rains caused floods that destroyed various sections of the railway on the Cuzco-Machu Picchu route.  As a result, the Company could not operate on this route for approximately three months while repairs were carried out.  Management claimed under the Company’s insurance for the costs of repairs and the disruption of the Company’s business.  In October 2010, the Company received settlement of outstanding insurance claims and recognized a gain of $646,000 related to business interruption insurance.

(b)Basis for the presentation

The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and reflect the results of operations, financial position and cash flows of the Company.  The financial statements have been prepared using the historical cost basis in the assets and liabilities and the historical results of operations directly attributable to the Company in the normal course of business.

“FASB” means Financial Accounting Standards Board. “ASC” means the Accounting Standards Codification of the FASB and “ASU” means an Accounting Standards Update of the FASB.

(c)Estimates

The Company bases its estimates on historical experience and also on assumptions the Company believes are reasonable based on the relevant facts and circumstances of the estimate. The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.

Estimates include, among others, the allowance for doubtful accounts, allowance on devaluation of various suppliers, long-lived asset impairment, depreciation and amortization, taxes and contingencies.  Actual results could differ from those estimates.

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(d)Foreign currency

The functional currency of the Company is the US Dollar which is also the reporting currency of the Company. The local currency is Nuevos Soles.

Foreign currency transaction gains and losses are recognized in earnings as they occur. Transactions in currencies other than the Company’s functional currency (“foreign currencies”) are recorded at the exchange rates prevailing on the dates of the transactions. All monetary assets and liabilities denominated in foreign currencies are translated at the exchange rates prevailing at the reporting date. Non-monetary items carried at historical cost are translated at the exchange rate prevailing on the date of transaction. Exchange differences arising from changes in exchange rates are recognized in earnings as they occur.

(e)Cash and cash equivalents

Cash and cash equivalents include all cash balances and highly-liquid investments having original maturities of three months or less.

(f)Accounts receivable and allowance for doubtful accounts

The Company states its accounts receivable at their estimated net realizable value. The Company maintains allowance for doubtful accounts for specifically identified estimated losses resulting from the inability of its customers to make required payments.

(g)Inventories

Inventories include supplies for minor maintenance of fixed assets.  Inventories are valued at the lower of cost or market value under the average cost method.

(h)Income taxes

Current portion of income tax

Income tax for the current period is measured at the amount expected to be paid to the taxation authorities. The rates used and regulations applied to compute the amount are those in force as of the balance sheet date.

Deferred portion of income tax

The Company accounts for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of transactions and events that have been recognized in the financial statements but have not yet been reflected in the Company’s income tax returns, or vice versa.

Deferred income taxes result from temporary differences between the carrying value of assets and liabilities recognized for financial reporting purposes and their respective tax bases.  Deferred taxes are measured at enacted statutory rates and are adjusted as enacted rates change. Classification of deferred tax assets and liabilities corresponds with the classification of the underlying assets and liabilities giving rise to the temporary differences or the period of expected reversal, as applicable.  A valuation allowance is established, when necessary, to reduce deferred tax assets to the amount that is more likely than not to be realized based on available evidence.

In evaluating the Company’s ability to recover deferred tax assets, management considers all available evidence, both positive and negative, which includes reversals of deferred tax liabilities, projected future taxable income, tax planning strategies and recent financial operations. Management reassesses the need for valuation allowances at each reporting date. Any increase or decrease in a valuation allowance will increase or reduce respectively the income tax expense in the period in which there has been a change in judgment.

Income tax positions must meet a more-likely-than-not threshold to be recognized in the financial statements. Management recognizes tax liabilities in accordance with U.S. GAAP applicable to uncertain tax positions, and adjusts these liabilities when judgment changes as a result of the evaluation of new information not previously available. Due to the complexity of some of these uncertainties, the ultimate resolution may result in a payment that is materially different from the Company’s current estimate of the tax liabilities. These differences will be reflected as increases or decreases to income tax expense in the period in which the actual tax liabilities are determined or the statute of limitations has expired.  The Company recognizes interest and penalties related to unrecognized tax benefits within the income tax expense line in the statements of operations. Liabilities for uncertain tax benefits are included in the balance sheets and classified as current or non-current liabilities depending on the expected timing of payment. At December 31, 2011 and 2010, the Company did not record any liabilities for uncertain tax positions.

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(i)Property, plant and equipment, net

Property, plant and equipment, net are stated at cost less accumulated depreciation.  The cost of significant renewals and betterments is capitalized and depreciated, while expenditures for normal maintenance and repairs are expensed as incurred.

Depreciation expense is computed using the straight-line method over the following estimated useful lives:

Installations	33 years
Machinery and equipment	10 years
Transport units	5 years
Improvements to locomotive and rolling stock assets under lease	26 years
Owned locomotives and rolling stock	26 years
Furniture and fixtures	10 years
Computer equipment	4 years
Operating assets	10 years

(j)Intangibles, net

Software costs are recorded under assets and classified as intangibles if such costs are not part of the related hardware. Software is amortized using the straight-line method.

Amortization expense is computed using the straight-line method over the following estimated useful lives:

Logo and trademarks	30 years
Software and licenses	4 years

(k)Impairment of long-lived assets

The Company’s management evaluates the carrying value of long-lived assets for impairment by comparing the expected undiscounted future cash flows of the assets to the net book value of the assets if certain trigger events occur. If the expected undiscounted future cash flows are less than the net book value of the assets, the excess of the net book value over the estimated fair value is charged to current earnings. Fair value is based upon discounted cash flows of the assets at a rate deemed reasonable for the type of asset and prevailing market conditions, sales of similar assets, appraisals and, if appropriate, current estimated net sales proceeds from pending offers. The Company evaluates the carrying value of its long-lived assets based on its plans, at the time, for such assets and such qualitative factors as future development in the surrounding area, status of expected local competition and projected incremental income from renovations. Changes to the Company´s plans, including a decision to dispose of or change the intended use of an asset, can have a material impact on the carrying value of the asset.

(l)Financial leasing

For financial leasing transactions, the method used consists of showing under fixed assets the total cost of the contract and its corresponding liability. Financial expenses are charged to operations in the period in which they become due, and depreciation of assets is charged to operations based on their useful life.

(m)Employees’ length of service compensation

The provision for employees’ length of service compensation included under taxes and other accounts payable is charged to operations as the compensation becomes due.

(n)Revenue recognition

Passenger transport revenue includes ticket revenue that is recognized when the related services are provided.  Rail freight and cargo revenues are recognized when the freight and cargo reaches their destination. Ground cargo transport services revenues are recognized on a fixed fee basis per month, plus variable fees per ton transported when the services are provided.  Revenues are presented net of taxes collected from customers and remitted to governmental authorities.

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Revenues in providing these services are recognized, as appropriate, when:

1.The amount of revenues can be reliably quantified;

2.The transaction-related economic benefits are likely to flow to the Company;

3.The degree of completion of the transaction, on the date of the balance, can be reliably quantified; and

4.The costs incurred in providing the services, as well as those still to be incurred until completed, can be reliably quantified.

Deferred revenue includes all ticket revenue for tickets sold, but the related services have not yet been provided.

(o)Interest expense, net

The Company capitalizes interest during the construction of assets. There was no capitalized interest in 2011, 2010 and 2009.

(p)Deferred financing costs

Debt issuance costs incurred in connection with the placement of long-term debt are capitalized and amortized to interest expense over the term of the related debt.

(q)Risk and uncertainties

The Company’s activities expose it to a variety of financial risks: market risks (including interest rate risk and exchange risk), credit risk, and liquidity risk. The Company’s risk management program tries to minimize the potential adverse effects on its financial performance. Management is aware of the market conditions and, based on its knowledge and experience, controls the exchange, interest rate, credit and liquidity risks, following the policies approved by the Board of Directors. The most important aspects of these risks are:

Liquidity risk

Liquidity risk is the risk that cash may not be available to pay obligations at their maturity at a fair value. The Company controls the required liquidity through a proper management of asset and liability maturity dates, so that the flow of cash matches future payments.

Credit risk

The Company’s financial assets that are potentially exposed to concentration of credit risk are mainly trade accounts receivable, accounts receivable from related parties and from shareholders, and various accounts receivable.

Interest rate risk

The Company´s exposure to this risk arises from changes in the interest rates in its financial assets and liabilities. The Company keeps mainly long-term debt subject to a floating interest rate.  Management does not expect to incur significant losses due to interest rate risk.

Exchange risk

The Company carries out its transactions mostly in foreign currency, but management estimates that any fluctuation will not adversely affect the results of the Company’s operations.

(r)Employee profit sharing

In accordance with Peruvian law, employee profit sharing is limited to 18 times an employee’s monthly average salary. The excess of calculated statutory employee profit sharing is paid to the Peruvian government and is treated as an additional tax. The Company’s practice is to recognize the employee profit sharing as part of operating cost and any excess profit sharing is recognized as part of current income tax. The Company has a 5% rate for calculating employee profit sharing.  To date, no excess profit sharing has been recognized.

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(s)Recently Issued and Adopted Accounting Guidance

Recently Issued Accounting Guidance to be Adopted

In December 2011, the FASB issued ASU 2011-11, Balance Sheet (Topic 210):  Disclosures about Offsetting Assets and Liabilities which enhances disclosures required by U.S. GAAP by requiring improved information about financial instruments and derivative instruments that are either offset in accordance with either Section 210-20-45 or 815-10-45 or subject to an enforceable master netting arrangement or similar agreement, irrespective of whether they are offset in accordance with either Section 210-20-45 or 815-10-45.  This update is effective for annual reporting periods beginning on or after January 1, 2013, and interim periods within those annual periods.  The Company does not expect the adoption of this guidance will have a material impact on its financial statements.

In December 2011, the FASB issued ASU 2011-12, Comprehensive Income (Topic 220):  Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income in Accounting Standards Update No. 2011-05.  The amendments in this update defer certain provisions of ASU 2011-05, Comprehensive Income (Topic 220):  Presentation of Comprehensive Income (see below), including the requirement to present reclassified adjustments separately with their respective components of net income and other comprehensive income.  During the deferral period, the existing requirements for reclassification adjustments on the face of the financial statements in which comprehensive income is reported or disclosure in the notes to the financial statements remain applicable.  The amendments in this accounting standards update is effective for fiscal years and interim periods within those years beginning after December 15, 2011.  The adoption of this guidance will not have a material impact on the Company’s financial statements.

In June 2011, the FASB issued ASU 2011-05 to increase the prominence of other comprehensive income in the financial statements.  This accounting standards update provides that an entity that reports items of other comprehensive income either as a continuous single statements of comprehensive income containing two sections - net income and other comprehensive income - or in two separate but consecutive statements.  This accounting standards update is effective for fiscal years and interim periods within those years beginning after December 15, 2011. Other than presentational changes to the primary financial statements, the adoption of this guidance will not have a material impact on the Company’s financial statements.

In May 2011, the FASB and the International Accounting Standards Board issued a new accounting standard that amends the wording used to describe many of the requirements in U.S. GAAP for measuring fair value and for disclosing information about fair value measurements. This accounting standard does not extend the use of fair value accounting but provides guidance on how it should be applied where its use is already required or permitted by other standards within U.S. GAAP or International Financial Reporting Standards. This accounting standards update is effective for fiscal years and interim periods within those years beginning after December 15, 2011.  The Company does not expect the adoption of this guidance will have a material impact on its financial statements.

Recently Adopted Accounting Guidance

In March 2011, the Securities and Exchange Commission issued Staff Accounting Bulletin (“SAB”) No. 114 to revise and rescind portions of the interpretive guidance included in the codification of the SAB Series.  The updates in the accounting bulletin represent updates to accounting guidance references and other conforming changes to ensure consistency of referencing throughout the SAB Series. The guidance is intended to harmonize interpretive guidance in the codified SABs with current authoritative guidance in the FASB’s ASC.  This standard was effective beginning March 28, 2011.  The adoption of this guidance did not have a material impact on the Company’s financial statements.

2.Property, plant and equipment, net

The major classes of property, plant and equipment are as follows:

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	December 31,
	2011		2010
	$’000		$’000
Land	437		437
Installations	1,263		653
Machinery and equipment	1,418		1,418
Transport units	2,522		2,404
Improvements to locomotive and rolling stock assets under lease	30,419		26,599
Owned locomotives and rolling stock	3,221		3,221
Furniture and fixtures	3,790		3,068
Works in progress	1,725		2,100
Less: accumulated depreciation	(12,082	)	(8,872	)
	32,713		31,028

The major classes of assets under capital leases included above are as follows:

	December 31,
	2011		2010
	$’000		$’000
Locomotives and rolling stock	2,642		2,340
Less: accumulated depreciation	(263	)	(173	)
	2,379		2,167

3.Intangibles, net

Intangibles consist of the following as of December 31, 2011 and 2010:

	Year ended December 31, 2011
	Logo and trademarks	Software andlicenses	Total
	$’000	$’000	$’000
Carrying amount:
Balance as of January 1, 2011	122	286	408
Additions	—	46	46
Transfers	—	16	16
Balance as at December 31, 2011	122	348	470
Accumulated amortization:
Balance as of January 1, 2011	42	176	218
Charge for the period	4	40	44
Balance as at December 31, 2011	46	216	262
Net book value:
As at December 31, 2010	80	110	190
As at December 31, 2011	76	132	208

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	Year ended December 31, 2010
	Logo and trademarks	Software andlicenses	Total
	$’000	$’000	$’000
Carrying amount:
Balance as of January 1, 2010	122	266	388
Additions	—	20	20
Transfers	—	—	—
Balance as at December 31, 2010	122	286	408
Accumulated amortization:
Balance as of January 1, 2010	38	135	173
Charge for the period	4	41	45
Balance as at December 31, 2010	42	176	218
Net book value:
As at December 31, 2009	84	131	215
As at December 31, 2010	80	110	190

Amortization expense for the year ended December 31, 2011 was $44,000 (2010-$45,000; 2009-$42,000).

Estimated amortization expense for each of the years 2012 to 2016 is $44,000.

4.Working capital facilities

Working capital facilities are composed of the following, all repayable within one year:

	December 31,
	2011	2010
	$’000	$’000
Working capital facilities	3,026	3,570

Bank loans accrue an annual average interest rate of 4.36% (2010-4.95%).

The Company had approximately $6,000,000 of working capital lines of credit at December 31, 2011 (2010-$5,900,000) issued by various financial institutions and having various expiration dates, of which $2,974,000 was undrawn (2010-$2,330,000).

5.Accrued liabilities and deferred revenue

A breakdown of accrued liabilities and deferred revenue is as follows:

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	December 31,
	2011	2010
	$’000	$’000
Value added tax	372	173
Other taxes	706	309
Employees’ length of service compensation	95	80
Vacation payable	557	424
Remuneration and profit sharing payable	1,812	717
Advance payments received from passengers	861	524
Deferred revenue	1,741	1,203
Provision for purchases and services	479	1,236
Other accounts payable	275	313
	6,898	4,979

6.Long-term debt, obligations under capital lease and fair value disclosures

(a)Long-term debt

Long-term debt consists of the following:

	December 31,
	2011	2010
	$’000	$’000
Loans from banks collateralized by property, plant and equipment payable over periods of 1 to 5 years, with a weighted average interest rate of 4.89% and 4.07%, respectively.	5,464	4,100
Obligations under capital lease (see Note 6(b))	727	1,233
	6,191	5,333
Less: current portion	4,405	2,069
	1,786	3,264

Long-term debt obligations of the Company at December 31, 2011 totaling $2,625,000 have been classified within current liabilities, as it was out of compliance with a leverage covenant and a debt service coverage ratio covenant in its loan facilities.  Subsequent to December 31, 2011, the Company received a waiver on the debt service coverage ratio from the lender.  Discussions with the lender to bring the Company into compliance are continuing.

Deferred financing costs related to the above outstanding long-term debt were $88,802 at December 31, 2011 (2010-$124,529) and are amortized to interest expense over the term of the corresponding long-term debt.

The following is a summary of the aggregate maturities of long-term debt excluding obligations under capital leases at December 31, 2011:

Year ending December 31,	$’000
2012	3,887
2013	1,262
2014	315
	5,464

(b)Obligations under capital leases

The following is a summary of future minimum lease payments under capital leases together with the present value of the minimum lease payments at December 31, 2011:

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Year ending December 31,	$’000
2012	653
2013	130
2014	136
Minimum lease payments	919
Less: amount of interest contained in above payments	192
Present value of minimum lease payments	727
Less: current portion	653
	74

The amount of interest deducted from minimum lease payments to arrive at the present value is the interest contained in each of the leases.

(c)Fair value of financial instruments

Certain methods and assumptions were used to estimate the fair value of each class of financial instruments for which it is practicable to estimate fair value. The carrying amount of cash and cash equivalents, accounts receivable, accounts payable, accrued liabilities and working capital facilities approximates fair value because of the short maturity of those instruments. The fair value of debt is calculated by discounting back future interest and principal payments using a discount factor which reflects the Company’s current credit metrics. This factor is derived from credit analysis using inputs such as profit, cash generation, and level of debt.

The estimated fair values of the Company’s financial instruments as of December 31, 2011 and 2010 are as follows:

	December 31, 2011
	Carrying amount	Fair value
	$’000	$’000
Cash and cash equivalents	4,310	4,310
Accounts receivable	6,146	6,146
Working capital facilities	3,026	3,026
Accounts payable	4,207	4,207
Accrued liabilities	6,898	6,898
Long-term debt, including current portion	6,191	6,201

	December 31, 2010
	Carrying amount	Fair value
	$’000	$’000
Cash and cash equivalents	3,340	3,340
Accounts receivable	5,530	5,530
Working capital facilities	3,570	3,570
Accounts payable	4,172	4,172
Accrued liabilities	4,979	4,979
Long-term debt, including current portion	5,333	5,348

The carrying values of non-financial assets that are measured on a non-recurring basis approximate their fair values.

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7.Income taxes

The provision for income taxes consists of the following:

	Year ended December 31,
	2011		2010		2009
	$’000		$’000		$’000
Pre-tax income	12,835		8,060		15,496
Current tax charge	(3,273	)	(1,421	)	(2,702	)
Deferred tax charge	(586	)	(831	)	(1,400	)
Total	(3,859	)	(2,252	)	(4,102	)

The reconciliations of the Peru income tax rate to the Company’s effective tax rate for the three years ended December 31, 2011 are as follows:

	Year ended December 31,
	2011	2010		2009
	%	%		%
Peru income tax rate	30	30		30
Permanent differences	—	(2	)	(4	)
Effective tax rate	30	28		26

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.  The following represents the Company’s net deferred tax liabilities:

	December 31,
	2011		2010
	$’000		$’000
Provisions included in books	282		240
Other deferred tax assets	—		40
Net deferred tax assets	282		280
Fixed assets and intangibles	(5,981	)	(5,345	)
Structure fee loans	(26	)	(37	)
Exchange rate related to fixed assets	(131	)	(104	)
Other deferred tax liabilities	—		—
Tia Maria project expenses	—		(64	)
Deferred tax liabilities	(6,138	)	(5,550	)
Net deferred tax liabilities	(5,856	)	(5,270	)

Net deferred tax liabilities are presented on the face of the balance sheet.  The Company required no provision in respect of uncertain tax positions under ASC 740 and believes that it is reasonably possible that within the next 12 months this provision will not change.

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8.Shareholders’ equity

(a)Share capital and additional-paid in capital

At December 31, 2011, the Company’s share capital consisted of 20,000,000 fully subscribed and paid shares (2010-20,000,000) with a par value of S/1.00 each, all carrying the same rights.

In May 2009, the Company recorded a capitalization of earnings from exposure to inflation in 1999 to 2004 amounting to 21,188 shares, equivalent to S/21,188. As of the capitalization date, earnings from exposure to inflation were included as part of common shares. As a consequence, no additional movement was required in the statements of shareholders’ equity.

Also in May 2009, the Company recorded a capitalization of retained earnings amounting to 19,776,812 shares, equivalent to S/19,776,812 ($6,625,398), increasing common shares at par value.

The shareholders of the Company are as follows:

	Number of Shares	Percent of Ownership
Orient-Express Hotels Ltd.	10,000,000	50.00
Peruvian Trains & Railways S.A.	10,000,000	50.00
	20,000,000	100.00

(b)Legal reserve

In accordance with Peruvian law, a minimum 10% of the annual profits that can be distributed has to be transferred to a legal reserve until it equals 20% of the paid-in capital. The legal reserve can be used only to offset losses, but must be replenished and cannot be distributed as dividends, except in case of liquidation. The Company may capitalize the legal reserve but must replenish it in the year immediately after profits are obtained.

For the year ended December 31, 2010, the Company increased its legal reserve by the amount of $807,000, which has been set aside from the earnings corresponding to the 2010 period.  For the year ended December 31, 2011, the Company will increase its legal reserve by $821,000 in the year ending December 31, 2012.  Calculations of the legal reserve are based on locally prepared financial statements in accordance with “Ley General de Sociedades” in Peru.

(c)Retained earnings

Retained earnings may be capitalized or distributed as dividends, by resolution of the shareholders. The Company´s distributable profits are limited to the amount of retained earnings available under local statutory provisions. As from 2003, dividends and any other form of distributed profit are subject to a withholding tax at a 4.1% rate on the distributed amount to be borne by the shareholders who are individuals, whether or not domiciled in Peru, or who are juridical persons not domiciled in Peru. Any dividends distribution must be proportionate to the shareholders’ contribution.

9.Employees’ profit sharing

According to Peruvian law, employees have a share of 5% of the Company profits before income tax. Employees’ profit sharing is computed on the taxable net income balance of the year subject to tax, as assessed for local purposes.

10.Information by segments

Accounting standards require that the Company present financial information by segments. Segments are determined by the form in which the management organizes the Company to make decisions and assess the business performance.  In this regard, management considers that the Company operates one single reportable segment.

11.Commitments and contingencies

Outstanding contracts to purchase fixed assets were approximately $5,171,000 at December 31, 2011 (2010 - $nil).

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12.Supplemental cash flow information

	Year ended December 31,
	2011	2010	2009
	$’000	$’000	$’000
Cash paid for:
Interest	367	306	1,034
Income taxes	964	2,048	3,356

13.Other comprehensive income

The components of comprehensive income were as follows:

	Year ended December 31,
	2011	2010	2009
	$’000	$’000	$’000
Net earnings	8,976	5,808	11,394
Comprehensive income	8,976	5,808	11,394

14.Related party transactions

Accounts receivable include non-interest bearing loans extended to the Company’s shareholders. The amount due from shareholders to the Company at December 31, 2011 was $476,825 (2010-$4,081,712).

Accounts receivable from Ferrocarril Transandino S.A. for working capital, according to estimates, will start to be paid in 2011. The amount due from Ferrocarril Transandino S.A. at December 31, 2011 was $8,133,096 (2010-$7,733,398).

The amount due to Ferrocarril Transandino S.A. at December 31, 2011 was $51,580 (2010-$78,958) and relates to the invoicing for the access and use of the railway, locomotives and rolling stock, stations and yards, and loans.  These accounts accrue no interest. In 2011, the Company received services from Ferrocarril Transandino S.A. in the amount of $18,980,248 (2010-$15,076,132; 2009-$20,218,000), including the value added tax (2011-18%; 2009 and 2008-19%).

The amount due to Orient-Express Peru S.A. at December 31, 2011 was $1,903,982 (2010-$1,340,664) relating to the invoicing of management fees and expense reimbursements established in the current management agreement.

The amount due to Peru OEH S.A. at December 31, 2011 was $296,358 (2010-$2,374,850) relating to temporary working capital facilities provided, which accrues no interest and will be paid in 2012.

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Dated: June 13, 2012
		ORIENT-EXPRESS HOTELS LTD.
	By:		/s/ Martin O’Grady
			Martin O’Grady
			Vice President—Finance and Chief Financial Officer

EXHIBIT INDEX

ExhibitNo.	Incorporated byReference to	Description
3.1	Exhibit 3.2 to June 15, 2011 Form 8-K/A Current Report (File No. 1-16017)	Memorandum of Association and Certificate of Incorporation of Orient-Express Hotels Ltd.
3.2	Exhibit 3.2 to June 15, 2007 Form 8-K Current Report (File No. 1-16017)	Bye-Laws of Orient-Express Hotels Ltd.
3.3	Exhibit 1 to April 23, 2007 Amendment No. 1 to Form 8-A Registration Statement (File No. 1-16017)	Rights Agreement dated June 1, 2000, and amended and restated April 12, 2007, between Orient-Express Hotels Ltd. and Computershare Trust Company N.A., as Rights Agent
3.4	Exhibit 4.2 to December 10, 2007 Form 8-K Current Report (File No. 1-16017)	Amendment No. 1 dated December 10, 2007 to Amended and Restated Rights Agreement (Exhibit 3.3)
3.5	Exhibit 4.3 to May 27, 2010 Form 8-K Current Report (File 1-16017)	Amendment No. 2 dated May 27, 2010 to Amended and Restated Rights Agreement (Exhibit 3.3)
4.1	Exhibit 1.1 to November 3, 2010 Form 8-K Current Report (File No. 1-16017)	Secured Facility Agreement dated October 28, 2010 for Orient-Express Hotels Ltd. and certain subsidiaries arranged by Barclays Bank PLC and other banks

The registrant has no instrument with respect to long-term debt not listed above under which the total amount of securities authorized exceeds 10% of the total assets of the registrant on a consolidated basis.  The registrant agrees to furnish to the SEC upon request a copy of each instrument with respect to long-term debt not filed as an exhibit to this report.

10.1	Exhibit 10.1 to 2008 Form 10-K Annual Report (File No. 1-16017)	Orient-Express Hotels Ltd. 2000 Stock Option Plan
10.2	Exhibit 10.2 to 2008 Form 10-K Annual Report (File No. 1-16017)	Orient-Express Hotels Ltd. 2004 Stock Option Plan
10.3	Exhibit 10.3 to 2008 Form 10-K Annual Report (File No. 1-16017)	Orient-Express Hotels Ltd. 2007 Performance Share Plan
10.4	Exhibit 10.4 to 2009 Form 10-K Annual Report (File 1-16017)	Orient-Express Hotels Ltd. 2007 Stock Appreciation Rights Plan
10.5	Exhibit 10.1 to June 7, 2012 Form 8-K Current Report (File No. 1-16017)	Orient-Express Hotels Ltd. 2009 Share Award and Incentive Plan

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ExhibitNo.	Incorporated byReference to	Description
10.6	Exhibit 10.3 to 2004 Form 10-K Annual Report (File No. 1-16017)	Amended and Restated Agreement Regarding Hotel Cipriani Interests dated February 8, 2005 between James B. Sherwood, Hotel Cipriani S.r.l. and Orient-Express Hotels Ltd.
10.7	Exhibit 10.4 to 2004 Form 10-K Annual Report (File No. 1-16017)	Amended and Restated Right of First Refusal and Option Agreement Regarding Indirectly Held Hotel Cipriani Interests dated February 8, 2005 between James B. Sherwood and Orient-Express Hotels Ltd.
10.8	Exhibit 10.11 to 2006 Form 10-K Annual Report (File No. 1-16017)	Form of Severance Agreement between Orient-Express Hotels Ltd. and each of Filip Boyen (dated December 1, 2006), Roger Collins (dated December 1, 2006), Martin O’Grady (dated November 15, 2007), Philip Calvert (dated December 5, 2008) and Roy Paul (dated February 1, 2011)
10.9	Exhibit 10.12 to 2006 Form 10-K Annual Report (File No. 1-16017)	Form of Severance Agreement between Orient-Express Hotels Ltd. and each of Edwin Hetherington (dated December 1, 2006), David Williams (dated December 1, 2006) and Richard Levine (dated February 21, 2012)
10.10		Form of Indemnity Agreement between Orient-Express Hotels Ltd. and each of its non-executive directors (John Campbell, Mitchell Hochberg, Prudence Leith, Robert Lovejoy and Georg Rafael dated October 30, 2009, and Harsha Agadi and Philip Mengel dated June 9, 2011) *
11		Statement of computation of per share earnings *
12		Statement of computation of ratios *
14		Code of Business Conduct and Ethics for Directors, Officers and Employees of Orient-Express Hotels Ltd. *
21		Subsidiaries of Orient-Express Hotels Ltd. *
23.1		Consent of Deloitte LLP relating to Form S-3 Registration Statement No. 333-165092 and Form S-8 Registration Statements No. 333-58298, No. 333-129152, No. 333-147448, No. 333-161459 and No. 333-168588 *
23.2		Consent of Pazos, López de Romaña, Rodriguez S.C.relating to Form S-3 Registration Statement No. 333-165092 and Form S-8 Registration Statements No. 333-58298, No. 333-129152, No. 333-147448, No. 333-161459 and No. 333-168588
31		Rule 13a-14(a)/15d-14(a) Certifications
32		Section 1350 Certification
99.1		Corporate Governance Guidelines of Orient-Express Hotels Ltd. *
99.2	Exhibit 99.1 to June 1, 2010 Form 8-K Current Report (File No. 1-16017)	Judgment of Bermuda Supreme Court dated June 1, 2010 in D.E. Shaw Oculus Portfolios LLC et al. vs. Orient-Express Hotels Ltd. et al.
101		Interactive data file *

* Previously Filed

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